On reassessment CTL may be one of the best hopes for coal-digger-investors to recover any capital.
- plants at pitthead ==> railroads are not able to siphon off any earnings that may be available - strong demand for petroleum liquids - people like to ride high in a pick-up or SUV and kill/maim other road users.
Economics 1. Assuming a 60% loss of original fossil energy content (40% conversion efficiency) we have 1 billion tonnes of coal producing 400 million tonnes of burnable liquid fuel 2. 400 million tonnes burnable fuel is equiv to 2.8 billion barrels 3. Use refined pricing - $120 Brent + $10 refinery crack = $130*2.8 = $364 billion annual revenue. 4. Coal cost at $20 per tonne is $20 billion. that leaves $344 billion for conversion, profits, higher coal costs, etc. 5. fossil fuel in liquid form is high value - can be shipped by truck (one tanker of 15000 gallons needs only $500 to drive to a market from PRB). Keeps the railroads honest.
>If done most profits will go to new capital that has the technology and finance for this venture, e.g. XOM. > However by taking supply off the market ACI will benefit slightly. Additionally long-term ACI contracts will likely give digging cost + some profit for ACI.
By the time this comes to fruition many coals may be in Chapter 11. Survival is important - dividend cut anyone ?