Exporting Coal: Struggling U.S. Coal Industry Trying to Stay Relevant By Shipping Through the Northwest

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U.S. coal companies are facing some tricky math these days. Production levels have remained more or less the same since 2005, according to the Energy Information Agency (EIA), but during that time domestic consumption has dropped nearly 11 percent.

Where is all that extra coal going? Some is piling up at power plants, but increasingly, more and more of it is being shipped overseas.

The coal industry is hoping to accelerate that export trend, but their ability to keep delivering steady volumes of coal is entirely dependant on their ability to open up new export terminals at coastal ports around the country, particularly in the Pacific Northwest where the dirty rock could be more directly shipped to the burgeoning Asian markets.ย ย 

Still, aside from some regional coverage and some incredible work from organizations like the Sightline Instituteย and Climate Solutions, these Northwest export terminals arenโ€™t getting nearly the amount of attention from environmentalists and climate activists as, say, tar sandsย pipelines.

This post will serve as a basic overview of the current state of coal production and exports, and what the industry hopes to accomplish in comingย years.

Coal producersโ€™ย woes

American coal consumption is steadily decreasing, and particularly weak demand this year is wreaking havoc on the industry. As this Wall Street Journal article from Sunday describes, major producers like Arch Coal and Alpha Natural Resources are taking major hits to their profit numbers, and shares of both companies are down 72 percent in the past year. Those types of numbers make shareholders anxious and CEOsย panic.

U.S. coal consumption exports

Even worse (for the mining companies), weak demand โ€œhas caused coal inventories to pile up at utilities to the point where some are delaying contractedย deliveries.โ€

Of course, itโ€™s not all piling up at power plants. More and more coal is being exported every year.ย ย 

Arch, Alpha and the rest of the industry hope that increased coal demand from fast-growing China and India will help turn the tide. But that poses additional problems. U.S. companies are scrambling to increase their access to ports in the Gulf Coast and East Coast to ship coalย abroad.

U.S. coal exports and imports

By the numbers, coal exports are way up in recent years, but thereโ€™s only so much coal you can move through a crowded, busy port. Itโ€™s reasonable to assume that these export numbers will level off unless the companies are able to open up more exportย terminals.

Coal exportsย now

According to EIAโ€™s Quarterly Coal report, about 107 million tons of coal (107,258,561 short tons, to be exact) were exported in 2011. Thatโ€™s up from roughly 82 million tons in 2010 โ€“ a 31.3 percentย increase.

As you can see from this Sightline Institute graph, the vast majority of this coal was shipped from ports in the East and theย South.

U.S. coal exports by region

No surprise, then, that the vast majority of that coal was sold to Europe and countries in North and South America. Shipments to Asia represent barely one-quarter of all American coal exports, or roughly 27 million tons per year. (That number itself is way up from just a few million tons up throughย 2009.)

Meanwhile, production in the Powder River Basin of Montana and Wyoming is booming, and thereโ€™s currently no practical way to ship coal from the Northwest across the Pacific Ocean without going through Canada. **UPDATE: Read Steve Horn’s blog about the planned protest this Saturday to stop the BNSF coal trains.**ย 

Northwest exportย plans

While mining companies are now able to ship Powder River Basin coal through ports in British Columbia (though they struggle to compete in those venues with higher value Canadian coal), and are working to expand those terminals, the proposals for port towns in Washington and Oregon have the potential to dramatically increase exports toย Asia.

Once again, Eric de Place at the Sightline Institute has done exhaustive research on the current state of these proposals. Rather than duplicate his effort, Iโ€™ll share the descriptions from a Coal Exports FAQ report that Sightline put out last month. (Itโ€™s well worth downloading the entire report, by the way.)ย ย 

  • ย‹ย‹Cherry Point, Washington. SSA Marine is planning to build and operate the Gateway Pacificย Terminal, a new shipping facility north of Bellingham that would be capable of handling 48ย million tons of coal per year. Peabody Energy, the worldโ€™s largest private sector coal company,ย has already agreed to supply 24 million tons ofย coal.
  • ย‹ย‹Longview, Washington. Millennium Bulk Terminals, a subsidiary of the Australian coalย mining company Ambre Energy, purchased a port site on the Columbia River. Arch Coal, aย major American coal mining company, has a 38 percent stake in the site. Ambre hopes toย export 44 million tons of coal, with 25 million tons in the firstย phase.
  • ย‹ย‹Grays Harbor, Washington. According to newspaper accounts, RailAmerica is planning toย develop a coal export terminal at the Port of Grays Harborโ€™s Marine Terminal 3 that couldย handle 5 million tons of coal eachย year.
  • ย‹ย‹Port Westward, Oregon. Kinder Morgan is planning to build and operate a coal exportย terminal at the Port Westward Industrial Park near Clatskanie that will be capable of handlingย 30 million tons of coal per year, with 15 million tons in an initial phase of development.**See updateย below**
  • ย‹ย‹Port of Morrow, Oregon. Ambre Energy is planning to construct a facility on the Columbiaย River in eastern Oregon that will transfer coal from rail to barges that will be towed downriverย Port Westward where the coal will be loaded on ongoing vessels. The company says that theย system will be capable of handling 8 million tons perย year.
  • ย‹ย‹Coos Bay, Oregon. The Port of Coos Bay is considering a mysterious proposal known only asย โ€œProject Mainstayโ€ that officials say could export 6 to 10 million tons of coal perย year.

If each of these facilities were to operate at full capacity, Northwest ports would be shipping more than 140 million tons of coal each year, making it one of the largest coal-shipping regions in theย world.

Remember, in 2011 the U.S. exported about 107 million tons total, so these six terminals have the potential to more than double American coalย exports.

Last week I wrote about the Port of Morrow proposal, and Iโ€™ll update this list with links to any future coverage as those storiesย develop.

Update: Also check out Grist’s David Roberts’ recent post on coal exports, a greatย read.

**Portland General Electric this week rejected an initial proposal for a coal export terminal at the Port of St. Helens, citing the threat that coal dust could foul the air used for combustion in its two natural gas plantsย nearby.**ย 

Photo: Paul K. Anderson, viaย CoalTrainFacts.org
Graphs (except Sightline, as labeled): U.S. Energy Information Administration,ย Quarterly Coal Report.ย 

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Ben Jervey is a Senior Fellow for DeSmog and directs the KochvsClean.com project. He is a freelance writer, editor, and researcher, specializing in climate change and energy systems and policy. Ben is also a Research Fellow at the Institute for Energy and the Environment at Vermont Law School. He was the original Environment Editor for GOOD Magazine, and wrote a longstanding weekly column titled โ€œThe New Ideal: Building the clean energy economy of the 21st Century and avoiding the worst fates of climate change.โ€ He has also contributed regularly to National Geographic News, Grist, and OnEarth Magazine. He has published three booksโ€”on eco-friendly living in New York City, an Energy 101 primer, and, most recently, โ€œThe Electric Battery: Charging Forward to a Low Carbon Future.โ€ He graduated with a BA in Environmental Studies from Middlebury College, and earned a Masterโ€™s in Energy Regulation and Law at Vermont Law School. A bicycle enthusiast, Ben has ridden across the United States and through much ofย Europe.

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