Exports Key To Reviving U.S. Coal Industry

On most days the docks at Longview, WA are largely empty, as quiet as the Columbia River on a still summer day.  Today there are more ducks than workers on the lonely dock and amongst the empty warehouses. But the site could be bustling again one thanks to another industry left for dead: U.S. coal.

The proposed Millennium Bulk Terminals project aims at making Longview a major site for exporting coal from the site to East Asia. Even as Americans reduce their dependence on coal in recent years, the rest of the world is increasing its demand.

The project, however, faced a setback earlier this month when the state of Washington’s Department of Natural Resources denied an aquatic land sublease for the project.

That state’s action illuminates the tension between environmental concerns and the economic opportunities provided by the world’s surging demand for coal.

“The growing Asian demand for coal exists regardless of any role played by U.S. exports,” said Bill Chapman, President and CEO for Millennium Bulk Terminals. “Capitalizing on this export opportunity will provide family-wage jobs from Wyoming to Washington state [and] deliver millions of tax dollars, while we meet strict environmental standards.”

Outside the United States many countries are ramping up their coal production. An ExxonMobil study projects coal will continue to be vital for decades. In the 2017 version of “The Outlook for Energy,” coal will be responsible for 30% of global energy production as opposed to 40% today. China begins work on at least one new coal-fired power plant every week according to a report produced by environmental Sierra Club and Greenpeace. Other countries in Asia including India and Vietnam are also expanding their coal-fired power generation fleet.

These developments may recast the energy debate in America. Critics of President-Elect Donald Trump’s energy policy have charged that he is unlikely to fulfill his promise to bring coal jobs back to America. Indeed, domestic use of coal for electricity production continues to plummet. In 2008, coal accounted for nearly half of all electricity generated in the United States. Today it is down to 30 percent. The decrease is due to a combination of new regulations and a steep drop in prices for natural gas, with which coal competes.

Even before any change in policy that the Trump administration may implement, exports during the second quarter of 2016 increased 0.5% to 14.2 million short tons the first quarter, according to the U.S. Energy Information Agency(USEIA).

“This is the first quarter to quarter increase in coal exports since first quarter 2013,” the USEIA reports.

Those exports could be ramped up if export terminal projects like the one at Millennium Bulk Terminals could move forward. Experts say if projects like the Longview terminal fail to gain final government approval due to NAFTA, American coal could be shipped to Asia from ports in Canada or Mexico.

Coal industry experts say there is not only an economic but an environmental argument for increasing American exports. U.S. coal tends to be “cleaner” than coal from other countries. The less moisture in a lump of bituminous coal the cleaner it will burn. According to the U.S. Energy Information Agency, the bituminous coal mined in the U.S. usually has a moisture content of less than 20%. Whereas the total moisture content in a similar amount of coal from Indonesia, the world’s largest coal exporter, is around 30%.

In addition, coal mining operations in other countries are often conducted with less environmental oversight than similar scale operations in the Untied States. As their business becomes increasingly untenable at home, U.S. producers are looking abroad.

“As it becomes increasingly difficult to mine, sell, and utilize coal in the United States, coal producers will have no choice but to look to export markets,” said Murray Energy CEO Robert Murray, “We have positioned ourselves through the acquisition of Colombian Natural Resources, related assets in Colombia and partnership with Javelin Global Commodities.”

Murray Energy is America’s largest underground mining company and employs 6,000 people across thirteen mines in Ohio, West Virginia, and Utah. Murray Energy is projecting that despite reduced demand due to cheap natural gas, the U.S. energy industry will still need 650 million to 700 million tons of thermal coal a year.

However, unlike in Japan and South Korea, where new cleaner-burning coal-fired power plants are coming online, much of the U.S. coal fleet is aging. Even following Trump’s election, many shutdowns remain on schedule. Michigan’s public utility recommitted itself to shut down its eight coal-fired power plants by 2030 in November.

The Trump administration could signal hope for the Longview project and others in the Pacific Northwest. President Elect Donald Trump has selected congressional representative Ryan Zinke (R-Montana) to head the Department of the Interior. Zinke has been a strong supporter of coal export projects in the past.

The proposed Longview facility, in Southwest Washington on site that once played a key role in the production of the warplanes which one World War II. The owners of the site rehabilitated wetlands near the proposed terminal. At maximum capacity the terminal will export 44 million metric tons of coal each year.

Robert Murray, whose office in St Clairsville, Ohio is filled with models of World War II aircraft is more pessimistic about the role exports can play.

“The export market alone cannot be a panacea for the destruction of domestic coal markets within the United States,” he said.


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