CHICAST ANI NOTME PERSZEREK TRANSPORTATION COMPANY
ZEIGEN FONTI SENATE PIELIC WORKS COMMITTEE
AN NATIONAL FOOLS AND ENERGY POLICY STUDY

National Pelem and Natural Gas Conservation
and Log Budson Act, June 11, 1975

Chicago and North Western Transportation Company is
ion & Lempest employee-owned company, operating in

of 1,000 les of railroad in eleven midwestern states,

s a territory bounded by Duluth, Minnesota on the north,
lanes on the east, St. Louis and Kansas City,

on the south, Lander, Wyoming on the west, and bakes,
ota on the northwest. One of its main lines extends
hicago, Illinois and Fremont, Nebraska at which point
ern interchanges substantial transcontinental teakkia
Pacific Railroad Company. At each of its major
t interchanges traffic with other rail carriera

g through routes to and from all points and piskaa
ed States.

Western is committed to the transportation NỀ

th 1973 and 1974 it transported in shana k‡ 19h, hahaha
bituminous coal. This coal originated in #mikhath
Illinois, western Kentucky, the Punahimhae #1*14*,
rn low sulphur fields. Most of the shal #prak
igins is transported in sol14 wwis ***** by
efficiency and car utilization can be achieved.
-short era, unit train technology 1# particularly

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Bethlehem Steel Corporation

The government must make sure that strong incentives are present to

encourage the development and utilization of all domestic fossil fuel reserves.

We submit that some of the major incentives which should be considered are:

(a) The price of domestic crude oil should be decontrolled.

Any accompanying windfall tax should provide exemption

for income which is devoted to further exploration and

development.

(b) The wellhead prices of new natural gas devoted to interstate
commerce and old natural gas under expiring contracts should
be deregulated. As with crude oil, no windfall tax should
be levied against income which is devoted to further
exploration and development. There are still large quantities
of natural gas which could be produced at prices competitive
with other fuels.

(c) A tariff should be placed on imported oil to insure that
its cost is maintained above domestic prices. Such action
would relieve fears of prospective investors in coal mining,
coal conversion, coal, liquefaction and gasification, and
related facilities, that a sudden drop in imported oil prices
would destroy the return on their investments.

Many of the steelmaking technologies, as well as those in other industries, have advanced in quality, productivity, and efficiency due to the availability of liquid and gaseous fuels. To forbid industrial facilities to use any fossil fuel other than coal would be catastrophic for the following

reasons:

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Bethlehem Steel Corporation

(a) Direct firing of coal would cause setbacks in product quality
in many processes. The deposition of particulate matter and
other products of coal combustion would cause deterioration
in surface quality of products being reheated or heat treated.
It would also cause rapid loss of thermal efficiency of
the furnaces requiring frequent shutdowns to perform
maintenance necessary to restore proper operations.
(b) Industrial plants would be forced to install many small
coal gasification facilities which would be inefficient
from both energy and capital standpoints.

(c) Large capital expenditures would be required to develop
transportation and distribution systems for moving coal
across country at the same time that an existing network
of interstate pipelines would see diminishing utilization.
Present rail transportation for coal industry expansion is
not currently available. Lead times for developing the

necessary transportation capacity are very long and are not

expected to improve.

Congress' approach should be to encourage the development of such

facilities as mine mouth combined cycle coal gasification/liquefaction and electric power generating facilities. Such installations would derive maximum energy from the available coal in producing electric power and clean gaseous and liquid fuels. Existing electrical and pipeline distribution systems would be more fully utilized. The existing industrial technologies would be sustained and the overall national capital drain could be kept at a much more tolerable level.

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Bethlehem Steel Corporation

A concern of the steel industry is the nation's supply of

metallurgical coal. High grade metallurgical coal is indispensable to the production of iron and steel. Because of its low sulphur content, it has become a necessary source for use in heat and power generation. This factor has already produced shortages of supply. S.1777 would aggravate this shortage. The Steel Industry had to import significant quantities of

metallurgical coal and coke during 1974 at premium prices because almost a quarter of the nation's metallurgical coal production was being exported. Shortfalls in the supply of metallurgical coal are expected to

continue worldwide

-

and perhaps worsen

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as projected expansion of steel

making facilities gets under way both here and abroad.

The supply/demand balance of metallurgical coal would be further

aggravated by government actions to bring about conversion to coal of oil

consuming utilities and industrial plants, unless provisions is made to prevent the use of metallurgical coal for this purpose. Burning metallurgical coal

to generate steam is a wanton waste of a precious resource.

One of the reasons for the present restraint by industry in the use of coal is the problem of meeting secondary air quality requirements. A relaxation of those requirements in areas where air quality would not be seriously damaged would increase coal usage at least until coal conversion and pollution abatement facilities could be developed further.

Bethlehem appreciates the opportunity to make its views known on

the proposed bill S.1777, and hopes that this statement will help formulate