Friday, July 29, 2011

Not a Done Deal: Coal Trains Through Bellingham

One of the more potent arguments advanced by supporters of the Gateway Pacific project at Cherry Point is that coal trains will inflict their presence on Bellingham whether or not the coal export terminal is built. We’ll get the burdens, but none of the benefits. (Kind of like Mt. Vernon and communities on south if the terminal IS built at Cherry Point, but never mind.)

The “train traffic is unavoidable” argument rests on the assumption that our neighbor to the north, Canada, will be able and willing to export at least as much additional American coal as would be exported through the Cherry Point terminal. This means that Canadian ports would have to handle an additional 48 million metric tons per year, or one and a half times as much coal as the largest export terminal currently operating in North America, to result in the same train traffic increase through Bellingham.

It has occurred to me that normal people, who have lives, may not know where Canadian coal export terminals are located.
  • The second largest coal export terminal in North America is located just north of Whatcom County and south of Vancouver: the Westshore Terminal at Roberts Bank, with an export capacity of 29 million tons per year (discussed in greater detail in my last blog).
  • Another coal export terminal, the Ridley Coal Terminal, is in Prince Rupert, B.C. That terminal currently has an export capacity of 12 million metric tons per year (website is here).

Prince Rupert is almost in Alaska – click here for a map. According to Google Maps, Prince Rupert is 664 miles north of my house, or a 17-hour drive. I’ve been there (by plane, not by car) – I went there for a conference celebrating the opening of its new container port in September 2007. It’s small, and isolated, and appeared to be very beautiful in the very rare moments when it’s not raining. In fact, I just remembered that I have a picture of my happy group touring the bulk terminal:

But back to Bellingham. What about it? Will coal trains carrying around 48 million metric tons of coal per year pass through Bellingham to Roberts Bank or Prince Rupert, whether the Cherry Point coal terminal is built or not?

Well, neither the coal companies nor the railroads have confided their deepest thoughts and secret plans to me. But what I’m seeing about coal in Canada, and coal export capacities in Canada, makes me . . . skeptical.

This is a long blog. Every word is fascinating, of course, but for those of you might have other things to do today, here’s the Cliff’s Notes version. The bottom line:

It’s not a “done deal” that large quantities of American coal will travel through Bellingham to Canada (see “Framing the Argument – ‘Done Deal’ or ‘Almost Nuts’?”, below).

  • The Westshore terminal at Roberts Bank is shipping around 3 million tons of American coal right now. Those greedy Canadians are using it to export their own coal.So coal producers don’t view it as a realistic venue for substantially increased exports (see “Coal Through Roberts Bank?” below).
  • As much as 2.5 million tons of American coal is slated for export per year from Prince Rupert between now and 2015 (See “What About Prince Rupert?” below).
  • 3 million (Roberts Bank) + 2.5 million (Prince Rupert) = 5.5 million. That’s less than 48 million.
  • If American coal were allocated all of Prince Rupert’s capacity, including a slated expansion, 24 million tons could be shipped from Prince Rupert by 2015. That’s still less than 48 million tons.
  • Canadians have their own coal. A lot of it. And they export it. (See “Does Canada Have Any Coal Mines?”, below.) Those greedy Canadians have not welcomed American coal to Prince Rupert with open arms – or without attaching strings. So it’s not realistic to think that 24 million tons of American coal will be shipped through Prince Rupert anytime soon.
  • American coal from the Powder River Basin travels 2,700 miles through Bellingham en route to Prince Rupert. This is the “longest coal haul in the world.” It uses track resources, fuel resources, and just doesn’t make sense on a long term basis to some commentators.
  • Maybe Prince Rupert will expand even more than has currently been planned. Maybe the coal industry will find a way to make a 2,700 mile haul feasible – “solar coal train engine” has a nice, futuristic ring to it, with that strong aftertaste of irony that flavors so much of the coal export discussion. Maybe Thomas the Tank Engine himself will be conscripted to haul coal, along with his talking friends, thereby converting coal trains into a desirable tourist attraction. None of these conjectures or possibilities establishes that equivalent train traffic is inevitable, however, if there is no coal terminal at Cherry Point.

You should make up your own minds, of course, but the “inevitability” of coal trains through Bellingham doesn’t pencil for me.

Framing the Argument: “Done Deal” or “Almost Nuts”?

A typical discussion of the coal train issue took place on KBAI Radio’s “The Joe Show” about a month ago (click here for a link to the podcast) . Ken Oplinger, President and CEO of the Bellingham-Whatcom Chamber of Commerce, strongly supports the project. This is an edited paraphrase of radio host Joe Teehan’s interview with Ken Oplinger– my stenography skills aren’t what they could be – but it catches the drift:

Joe: Trains will come through Bellingham, and that’s a big non-starter for a lot of folks. Eighteen, nineteen trains a day, almost a train an hour through Bellingham is quite a lot.

Ken: . . . .You’ve got a number of trains, as you know, going to Roberts Bank and will start going through clear up to Prince Rupert in the near future. Trains for the terminal are a marginal increase. The trains will be there anyway.

Joe: Is that a done deal, that they will expand those facilities up there?

Ken: The brief answer to your question is yes. There isn’t enough room to increase that much at Robert’s Bank, but there will be an increase allowing a couple of other trains to go up. But where the real increase is going to be is at Prince Rupert.

Joe: Trains will really go through Bellingham to Prince Rupert?

Ken: What BNSF tells us is that they get more money per mile is for coal than any other commodity. They want it on their rails as long as possible. They want the trains here, not in Canada. If we don’t build this project, we’re going to have those trains.

Joe: . . .It sounds almost nuts.

Could Joe be right?

Coal Through Roberts Bank?

The coal that would be exported from Cherry Point, according to current contracts, would come from Peabody Coal’s Powder River Basin mines in Wyoming. Let’s start out by looking at current west coast exports of Powder River Basin coal.

This section and the next section of the blog, I might add, are based on this article in Coal Age, “the Magazine for Coal Mining and Processing Professionals.” Coal Age is a trade journal. It’s not written for the “Green Troops” of “enraged enviro-zealots.” And yes, it is the very same article that coined the timeless call to “gird [our] hemp-laced loins,” as discussed quite fully in my previous blog and the comments thereon.

Anyway –

Cloud Peak Energy is exporting coal to Asia from its Spring Creek Mine in Montana. (Cloud Peak, Spring Creek -- what beautiful names!)

In 2009, Cloud Peak exported 1.6 million metric tons through Roberts Bank. In 2010 it exported just over 3 million tons, “hampered only really by terminal capacity.” Here’s the situation:

Though constrained because of overall port capacity, Cloud Peak is the only PRB producer with an actual export footprint: it has leased space at Westshore. But with highly valuable Canadian coking coals crowding out all other room both at Westshore and across the way at Neptune Terminals, that little footprint allowed the company to really stay in the game and move forward. However, like all other producers, until a new high capacity terminal “is built, we are capacity constrained. Those who can, are feverishly working on building a port now,” Marshall said.

So, around 3 million tons, and probably not a whole lot more, of Powder River coal can be exported from the Westshore terminal at Roberts Bank.

What about Prince Rupert?

With Vancouver’s ports “already completely congested,” Arch Coal announced in January 2011 that it plans to export Powder River Basin coal through Prince Rupert. It has a five-year agreement allowing the export of up to 2 million tons of coal in 2011 and up to 2.5 million tons of coal for 2012 through 2015.

[Remember: Cherry Point would have a 48 million ton capacity.]

The Prince Rupert terminal can load up to 12 million tons of coal per year, with expansion plans that could increase the facility’s capacity to 24 million tons by 2015. Will Powder River Basin coal take up this capacity?

I don’t think so. Thanks to Coal Age. Which says:

Canadian coking coal producers, furious a ‘Crown’ or quasi-state owned company, would sell precious capacity space to a foreign producer were eventually assuaged because the deal mandates that part of Arch’s fees will be used to expand the overall facility.

So, what we KNOW is that as much as 2.5 million tons per year of coal can be shipped from Powder River Basin to Prince Rupert through 2015.

And after 2015, nothing is inevitable.

Why do I say that?

The train trip from Wyoming through Bellingham to Prince Rupert is 2,700 miles – the longest coal train haul in the world.

And so, as Coal Age says with nice understatement, “one of [Prince Rupert’s] major downsides” is its “extreme haulage distance.” The article observes, “While some have called Arch’s decision to send coal that far a ‘hail Mary move’ to ensure an Asian market presence, others see it as a prudent way to be seen as a player.”

Is a “hail Mary move” the same as a done deal? I didn’t play football in high school, but my father was a fan. I think they’re not the same.

Let’s look at another perspective: that of a rail consultant (click here for the article). First, we need to understand that the current route to Prince Rupert is not the most direct route from the Powder River Basin. The most direct route would go through the Canadian border at Sweetgrass, Montana, not at Blaine, Washington. As the article states,

The key fact here is that the alternate routing [through Montana] is approximately 800 miles shorter in distance, a significant difference of 30% for loaded coal trains. And not only is the route shorter, but there is less route congestion.

“Route congestion”? The “larger issue,” the article observes, “is the impact from navigating congested terminal areas including Vancouver WA, Tacoma, Seattle, and Vancouver BC.”

Yoo hoo! Don’t forget. . . Bellingham?

The article further observes:

Contribution of coal trains is critical to rail networks due to the tremendous amount of resources they consume. They consume many locomotives and significant amounts of fuel. They also devour a significant amount of line capacity while they are moving across the network (often at a pace slower than manifest rains), and they consume additional line and terminal capacity while stopped – when inevitably queuing to be loaded and unloaded.

Are these good things? It doesn’t sound like it. So why would anybody think that it’s a good idea to haul a heavy commodity like coal 2,700 miles before it even goes onto a tanker? These are the author’s words, not mine:

  • “Could this coal be a test of a new supply chain by the Chinese customer? These sorts of test runs have precedent around the world . . ..”
  • “Sometimes they are merely “loss leaders” – selling goods/services at a near loss on the promise of future gains. Perhaps the prospect of future China coal contracts is enough for both BNSF and CN to promote business on this (now) longest coal route in the world?”
  • “Another theory: Was this a contract partially borne from coal production issues in Australia due to the floods – in other words, is this move triggered by a short-term supply disruption?”
  • · “Has the coal market been impacted on the supply side, which compounds demand for coal due to ‘newer’ consumers such as China?
  • · “Or, could this be the beginning of a structural shift toward North American coal being shipped to China?”

Only the last bullet might lead to a “done deal” for trains running through Bellingham.

Or would it?

A couple of days ago, on July 27, Canadian Pacific railway held a conference call where it answered questions from investors (transcript is here). One investor asked whether Canadian Pacific might have an “opportunity” to handle Powder River Basin coal through Westshore and other Canadian export facilities. A Canadian Pacific spokesperson replied:

I think the question really for us over the medium term is whether this is long-term sustainable market, given the sourcing alternatives for thermal coal in Asia and whether on a long-term basis, if there's an investment that would be required, you would want to have the right type of commitment to do it. So I think my message to you would be is that we're looking at it.

To the extent that railroads are expressing uncertainty about long-term market sustainability and returns on investment, that sounds like an undone deal.

Does Canada Have Any Coal Mines?

Finally, it might be worth noting that the Powder River Basin is not the only coal-producing area that might want to use Canadian ports for coal export.

Teck owns all the coal mines in southeastern B.C. Here’s a blurb from Teck’s web site:

We are the world’s second largest exporter of seaborne steelmaking coal, with five mines in British Columbia and one in Alberta. We wholly own the Coal Mountain, Cardinal River, Fording River and Line Creek mines, and have a 95% partnership interest in the Elkview mine and an 80% joint venture interest in the Greenhills mine.

The bulk of our coal production is high quality steelmaking coal, also known as metallurgical coal. The majority of our coal is exported for steel production, with approximately 90% transported west by rail to the coast of British Columbia and shipped from there to Asia, Europe and South America. Our largest markets in Asia have traditionally been Japan, Korea and Taiwan, and now China is emerging as a significant importer of steelmaking coal.

We foresee strong growth in demand for steelmaking coal in China, which is currently undergoing the biggest process of urbanization and industrialization in human history.

Just a guess, but maybe Teck might be planning expanded coal exports through Canadian ports.

And it’s not like Canada isn’t interested in increased resource extraction. Cruising around the internet, I ran into this report in the Canadian Mining Journal:

Fortune Minerals, based in London, ON, has formed an 80:20 joint venture with Posco Canada to develop the Mount Klappan metallurgical coal project 330 km northeast of the port of Prince Rupert. Posco is a subsidiary of one of the world's largest steel producers with headquarters in South Korea.

With 2.8 billion tonnes of coal, Mount Klappan is called one of the largest undeveloped deposits of metallurgical coal in the world.

Just a wild guess, but if and when this mine is on-line, it might be aiming for the export market, and the closest export terminal for this Canadian coal might be the Canadian port of Prince Rupert.

All in all--

Maybe “the world’s longest coal haul,” running Powder River Basin coal 2,700 miles through Bellingham, will make sense in the long run --

Despite the fact that it takes place in an increasingly crowded urban rail corridor.

Despite the fact that it requires the burning of additional fuel, and that fuel may someday cost more than it does today.

Despite the fact that there does not seem to be evidence –convincing, publicly-available evidence, anyway – that the export terminal at Prince Rupert has the capacity to accommodate that much more American coal.
“Done deal”? Sounds almost nuts.

Coal train photograph by Paul K. Anderson.

Crooked photograph of people standing in the rain, trying to look happy, by the author.


Lee Buchsbaum, "West Coast Exports Materialize," Coal Age, March 24, 2011,

David Lehlbach, "The Longest Coal Train Haul in the World? Feb. 23, 2011,

"Coal Development: Fortune takes Posco as partner for Mount Klappan project," Canadian Mining Journal, Jul 13, 2011,

Wednesday, July 20, 2011

Whatcom County Exceptionalism

In my last blog posting, I talked about “three facts” relating to the Gateway Pacific coal terminal project at Cherry Point. After I posted it, I realized that I had left out the most important fact of all:

If the coal terminal is built out to its full capacity to handle 48 million metric tons of coal, we’d be Number One. The biggest coal export terminal in North America.

If coal export were the Super Bowl, we’d get the Vince Lombardi Trophy. If coal were a song, Whatcom County would go platinum. If coal were anything other than coal, the project sponsors would be sending out press releases: Whatcom County will be Number One!

But coal is –

--coal. Lumps of dirty stuff that you burn. Or rather, that they burn in China, but that Washington is trying not to, any more.

What made me think about our potential coal port exceptionalism was the statement at the end of this article: “The proposed [Cherry Point] facility would be twice the size of the largest coal shipping terminal on North America's West Coast, Westshore in Vancouver, British Columbia.”

Twice the size, I thought. Really? And if Westshore is merely the largest “on the West Coast,” where is the Very Biggest Coal Port of All?

I thought that would be easy to find out. I thought that a Google search would take me to a nice list of coal ports in a matter of seconds. It didn’t work that way. But what happened was even more interesting – I wound up in the middle of a bunch of article from Coal Age, an on-line version of a trade journal.

I love trade journals. I love it when they try to use colorful language. What could be more lyrical than this description of the forces opposing increased coal export facilities on the west coast?

“[Peabody Energy and Arch Coal] will have to win a fierce and potentially defining regulatory battle to build the ports as legions of enraged enviro-zealots gird their hemp-laced loins at the thought of dirty American coal being sent to even dirtier Asian power plants across the blue sea.”

If Hemingway were writing about coal, isn’t that what he’d say?

Well, no.

But what I like even more about trade journals is their hard-headed view of the world, which makes them a great source of information and insights. I’m going to blog about what I learned from Coal Age someday.

In the meantime, though, where is the Biggest North American Coal Port of All?

Representing Canada, the contender is:

Westshore: 29 million metric tons per year, according to its website. (So Cherry Point wouldn’t be twice as big. Only 1.7 times as big.)

Representing the United States is:

Hampton Roads, Newport News, Virgina: 32 million metric tons, according to this article in Coal Age.

The Westshore figure didn’t have a date. Maybe it’s outdated, and the foxy Canadians have out-coaled us. But based on 2010 figures, at least, the American champion and still All-North-American Largest Coal Port is. . .Hampton Roads.

The Cherry Point terminal would be one and a half times bigger. Thanks to Whatcom County, the title of “largest coal exporting facility” would stay here in the United States. Take that, Canada!

What does the largest coal port in North America look like? Here are some pictures.

What does the second-largest coal port in North America look like? Here are some pictures.

What will our future look like, when we’re Number One?

Well, one thing that we know is that there will be more coal.

Monday, July 18, 2011

3 Things that Everybody Needs to Know About the Gateway Pacific Project at Cherry Point

I was talking to some friends over dinner last weekend, and because my friends are concerned citizens of Whatcom County, the conversation turned to the proposed terminal at Cherry Point.

“I don’t know of any reasons to support or oppose it,” one of my friends said. "Everybody I know is just waiting to get some information."

Well, I said, we already have some information, because there's a project application that provides a lot of facts.

"Project application?" she said. “Hasn’t the pier already been approved out there?”

There is an approved application from the 1990s, I said, but for a very different project. That was for a terminal that would allow the shipment of about 8 million metric tons of bulk commodities. The new project aims at 54 million tons.

Wow, she said, that’s a big difference. And then she asked:. “Won’t this help the farmers? They’ll be shipping grain, right?” And she mentioned that she read this in an ad for the project.

Not so much, I said. The project application says that the entire first phase is for the storage and shipment of coal, and that the second phase would provide for the shipment of other commodities. Maybe grain, but right now it looks like probably not. Anybody interested in this issue should read Floyd McKay’s article in Crosscut (click here), which indicates that agricultural shipments likely would be from outside Washington. Corn and soybeans, likely.

“You know,” she said, “they need to get this information out there: Three Facts about Cherry Point.

I'm not sure who “they” are, but what the heck -- it seemed like a good idea to me. So here are three facts about the Cherry Point project, as best I can determine from what’s on record. My sources are listed below, and if I’m wrong about any of these figures, please tell me and I’ll make corrections.

1. Is the project the same size and for the same purpose as the one that was already approved?

No – 54 million tons vs. 8.2 million tons; mostly coal versus a variety of bulk commodities.

2. Will the environmental impacts be the same?


At this point, you’re thinking “So who are you, Miss Know-It-All, to reach that conclusion before the Environmental Impact Statement is done? How do you know?”

I know because of the project application; all you have to do is read words on paper. The project application says that the project will have direct permanent impacts on around 141 acres of wetlands, compared to less than 6 acres for the old proposal.

Now, some people have no liking for wetlands and may not think that this is a big loss. And it’s true that the impact will have to be “mitigated.” But anybody who has worked in property development knows that 141 acres of wetlands is a lot. Wetlands just upland from an aquatic reserve seem particularly valuable, and many eyes need to be watching to see whether that “mitigation” will protect fish and water quality.

Does that mean that all environmental impacts will be more significant than the old project? Not necessarily, but when you look at the increase in size, it’s difficult to see how impacts could be reduced. Speaking of increases–

3. Will the amount of tanker traffic change?

Yes – from 140 vessels per year to 487 vessels per year at buildout.

In short:

THEN (1997)

NOW (2011)

(1) What and how much

8.2 million metric tons

“Near term”: Feed grains (wheat, barley, soybeans, corn and grain products); petroleum coke (including material from the adjacent refinery); iron ore; sulfur; potash, and wood chips

54 million metric tons

Coal: 48 million tons; 24 million tons is under contract..

Other dry bulk commodities: 6 million tons

(2) Wetland effects

5.86 acres

140.6 acres, permanent direct impacts

+ 21.3 acres, temporary direct impacts

161.9 acres, total direct impacts

(3) Marine vessel traffic

140 vessels/year

487 vessels/year at buildout.

Approximately 221 vessels (144 Panamax vessels and 77 Capesize vessels) per year during Phase 1 operations.

Information sources:


1996 Draft Environmental Impact Statement, available at

1997 Final Environmental Impact Statement, available at

Dept. of Ecology EIS comments, 1997, available at


Gateway Pacific Joint Aquatic Resources Permit Application, available at

Project Information Document, Chapters 4 and 5, Pacific International Terminals, Inc., 2/28/11, available at .

(PLEASE NOTE: this is Jean, not David, posting. As per usual, David didn’t know that I planned to post, hasn’t read this, and can comment below just like anybody else if he doesn’t like it.)

(Well, technically, he could remove the post if he doesn’t like it, but I don’t see him as the censoring type.)