Note: I’m going to continue updating this post as I come across new pieces of evidence.
At a Seattle Town Hall forum last week, SSA Marine VP Bob Watters’ claimed again—and despite much evidence to the contrary—that it doesn’t matter whether his firm builds a huge coal terminal near Bellingham. According to this theory, if Oregon and Washington communities don’t ship the coal then British Columbia ports will simply export it instead.
But it’s not true.
Coal industry leaders themselves—along with top analysts and journalists—agree that Canadian ports have nowhere near enough capacity to handle the staggering volumes planned for export from the Northwest states. Industry experts have repeatedly said that new terminals would mean dramatic increases in coal shipping. For example:
Some coal already moves from the Powder River Basin through the Pacific Northwest to an export terminal at the Port of Vancouver in British Columbia. But in an interview from Cheyenne, [Wyoming Infrastructure Authority Director Lloyd] Drain said existing West Coast port capacity to ship coal to Asia is maxed out.
— Tom Banse, NPR, May 18, 2015
US exporters have turned their attention to the Asian market and have been able to capture new market shares in Asia. However, US steam coal exports to Asia are constrained by the lack of export capacity on the West Coast despite several proposals to build new export terminals. Recent market development and strong environmental opposition have impeded the development of coal terminals in the Pacific Northwest so far.
— “US Coal Exports: the Long Road to Asian Markets,” Oxford Institute for Energy Studies, March 30, 2015
Getting PRB coal to China and the rest of the Asian market has been the challenge… Opening new coal terminals in Washington and Oregon was thought to be the simple solution… But efforts to develop coal ports in the Northwest have been hindered by opposition from environmental groups.
— Bruce E. Kelly, Railway Age, November 11, 2014
“If either of [the terminals in Washington] go through, that is a very sizable amount of coal for the Powder River Basin. That would be a game changer for the market, because the PRB would have an outlet outside the U.S.”
— Hans Daniels, Doyle Trading Consultants, Casper Star Tribune, September 2, 2014.
…Peabody needs new export routes from the Powder River Basin, specifically via the Pacific Northwest. Hauling coal by rail to the Upper Midwest, barging it down the Mississippi to the Gulf of Mexico, loading it into freighters, and shipping it through the Panama Canal to Guangzhou or Kolkata is a great way to kill your margins. Peabody needs new Asian markets, and to supply Asian markets, Peabody needs new export terminals on the West Coast.
— Richard Martin, Fortune Magazine, February 27, 2014.
With Canadian terminals close to capacity, even with existing expansions, new US coal exports will struggle to get offshore, presenters at the Coaltrans West Coast conference in Las Vegas said last week. …new shipments of US coal are unlikely to materialize unless the industry is able to develop any of the proposed coal export terminals in the Pacific Northwest, speakers said during Thursday and Friday presentations at the conference.
— Andrew Moore, Platts Coal Trader, June 17, 2013.
…this will depend crucially upon the expansion of port capacity, much of which is currently utilised for metallurgical coal exports, particularly at the Canadian West Coast terminals of Westshore and Neptune. This bottleneck prevents Powder River Basin (PRB) coal from reaching the Pacific Basin in large volumes.
— Deutsche Bank, Commodities Special Report, “Thermal Coal: Coal At A Crossroads,” May 9, 2013.
What is really needed for U.S. coal to be competitive in the Asian markets is export terminals on the West Coast that would cut shipping days from 18-22, down to 10-12. This is no secret to anyone with a cursory knowledge of the coal markets (or anyone living in the Pacific Northwest, for that matter).
— Seeking Alpha, April 22, 2013.
The market is down and we don’t have any export capacity.
— Marion Loomis, Wyoming Mining Association director, quoted by Darren Epps, “Construction halted at new Haystack mine in Wyoming due to weak coal markets,” SNL Financial, April 8, 2013.
We’ve got the assets in place, what we need now is the terminal.
— Colin Marshall, CEO of Cloud Peak Energy, quoted by Darren Epps, “Cloud Peak CEO: No obvious domestic growth story in PRB,” SNL Financial, March 6, 2013.
Canadian ports are actually at full capacity. A lot of the contracts, at least for the recent expansion proposals, have been for Canadian coal to be exported… I talked to the head of the Westshore Terminal, actually, and he told me that they are already contracted and that it’s not going to be American coal.
— Ashley Ahearn, coal export journalist, KUOW Public Radio at “EarthFix Seattle Coal Export Panel,” February 13, 2013.
At present, there is limited terminal capacity for the export of PRB coal to foreign markets. Our access to existing and any future terminal capacity may be adversely affected by regulatory and permit requirements, environmental and other legal challenges, public perceptions and resulting political pressures, operational issues at terminals and competition among North American coal producers for access to limited terminal capacity, among other factors.
— Cloud Peak Energy, Form 10-K, filed with US Securities and Exchange Commission on February 14, 2013.
We don’t have the capacity to offload the coal.
— Martin Loomis, Wyoming Mining Association director, quoted by Adam Voge, “Coal workers keep eye on foreign markets,” February 18, 2013, Casper Star-Tribune.
