As global coal giants prepare to meet escalating energy demand in Asia, one straight shot to market from the heart of coal country cuts right through Missoula.
Since roughly 2000, coal has been a steady commodity aboard trains running from the Powder River Basin to West Coast destinations, including ports in Canada and power plants in Oregon and Washington. Last year, Montana Rail Link ran five coal trains a day on average, half full, half empty, with the longest trains at 125 cars each.
Rail Link estimates those loads could grow in the next 10 years to 10 coal trains a day in all – five full, five empty. But it isn’t projecting that high an increase.
However, the largest coal companies in the world plan to move a much larger load.
Asia’s demand for energy is skyrocketing, and the Powder River Basin is chock full of coal that’s easy to mine. Coal companies want to export the Montana and Wyoming commodity, and the most direct route to ports on the West Coast is along the southern rail line through Missoula.
Every shovel of coal dug in Montana puts money in government coffers; in just one year, taxes generated from coal amounted to $118.4 million, according to the Montana Coal Council. But every train carrying it pushes diesel fumes into railyard neighborhoods, and every pound of coal burned releases greenhouse gas into the atmosphere.
So both detractors and boosters are keying in on the possibilities.
Last year, Gov. Brian Schweitzer traveled to Longview, Wash., to lobby for a coal export facility in Cowlitz County. The governor has long touted domestic coal as an economic engine for Montana and an alternative to foreign energy supplies.
“We have 56 counties in the state of Montana, but the most important county to the people of Montana today is Cowlitz County,” Schweitzer said at a January 2011 meeting covered by Longview Daily News.
But the governor doesn’t speak for all Montanans. Nick Engelfried helped form the Blue Skies Campaign in Missoula, and the group’s activists live along the rail lines from Billings to Sandpoint, Idaho, to Longview, Wash.
“We’re this community that has been a leader on environmental issues for so many years in so many ways,” Engelfried said of Missoula. “So to have this proposal to bring these coal trains through town on this scale is just kind of unacceptable. I think we need to stop this from happening as a community.”
Just last week, U.S. Department of Energy data analyzed by the Associated Press showed coal exports in 2011 reached 107 million tons, the highest level in two decades. By 2015, shipments to Asia could reach 140 million tons, according to a Western Organization of Resource Councils study.
Plans for massive shipments are more aspirational than set in stone, and according to Montana Rail Link, the landscape might be barrier enough to stymie large-scale coal-train traffic. MRL president Tom Walsh sees daunting hurdles to carrying even a fraction of the projected haul, including a couple of mountain tunnels each more than 3,000 feet long.
“Probably, our biggest pinch points really are the two mountain passes when it comes down to it, especially the Continental Divide,” Walsh said.
Power Consulting, a Missoula economics consulting company, is among a number of organizations tracking the issue, and the father-son team recently investigated the impacts of Powder River Basin coal heading from Montana and Wyoming to China.
“Arch Coal, Peabody and Warren Buffett are all betting on Montana shipping a lot more coal,” said Donovan Power, of Power consulting.
Estimates vary for the amount of coal slated to be shipped to ports on the West Coast. In an interview, Ed Gulick, past chairman of the Northern Plains Resource Council, said volumes in the next three to eight years will be in the order of 100 million to 120 million tons of coal a year, or 40 some more trains a day; since then, the council adjusted its estimate back up to 140 million tons a year.
The council is based in Billings, one of the choke points for traffic, and it’s a member of the Western Organization of Resource Councils.
The coalition conducted the study called “Exporting Powder River Basin Coal: Risks and Costs,” which documented increases in cargo.
“It’s already happening to some degree now,” Gulick said. “It’s ramping up quite a bit from where it was a few years ago.”
And there’s more to come. Last year, Peabody Energy shared a vision of pioneering “a new era” of coal shipments across the sea. The company announced an agreement to export up to 24 million metric tons of coal from a planned terminal in Whatcom County, Wash.
Peabody, which boasts its flagship North Antelope Rochelle Mine in the Powder River Basin as “the world’s most productive coal mine,” has projected the market for coal in the Pacific Rim will grow from 140 million metric tons per year to an estimated 250 million tons per year by 2015. And Peabody is poised to compete against suppliers across the Pacific.
“We’re opening the door to a new era of U.S. exports from the nation’s largest and most productive coal region to the world’s best market for coal,” said Peabody Energy chairman and chief executive officer Gregory H. Boyce in a statement.
In its most recent annual report, fellow energy behemoth Arch Coal touts the steps it took last January to expand coal sales from the Powder River Basin to Asia. Arch Coal bought a 38 percent stake in the shipping terminal in Longview, a $25 million investment in the Columbia River port.
So far, projections for coal shipments from the West Coast include the following:
n Just north of Bellingham, the Gateway Pacific Terminal is proposed to handle up to 48 million tons a year of coal and another six million tons a year of other material, such as wheat or potash, according to a spokesman for the project. This facility in Cherry Point has yet to be built, but if it is, it would be North America’s largest terminal; spokesman Gary Smith anticipates it could be 2014 before permits are in hand.
- In Longview, Wash., Millennium Bulk Terminals plans to develop an old aluminum facility at the port into a coal terminal that can handle 44 million tons of coal from its dock. An environmental study is under way and expected to be complete in 18 to 24 months.
- Two other export terminals are planned for Clatskanie, Ore., one to ship up to 8 million tons a year and the other to handle 15 million tons a year. Coos Bay in Oregon and the Port of Grays Harbor in Washington also are being eyed as possible jumping-off points to Asia.
The totals are a moving target, though, and one company helped muddy those waters. Millennium applied for a permit to ship 5.7 million tons a year, but internal documents showed the parent company had a target of 80 million tons.
Regardless of volumes, though, the most direct route slices right through Missoula. And Big Timber, Avon, Clinton, Paradise, Thompson Falls and Trout Creek.
It’s a longer trip, but Montana’s northern rail line heads in the same direction and could also see increased traffic.
“If what they say they want to do and what they’re investing in doing turns out to be true, they have to use the rails going through Montana,” said Power Consulting’s Thomas Power, an economist and professor emeritus at the University of Montana. “And the current route that they indicate will be used is the southern route.”
A Peabody spokeswoman said the company intends to ship from its Powder River Basin operations on the Burlington Northern Santa Fe Railway, and BNSF will determine where it travels.
Burlington Northern Santa Fe spokeswoman Suann Lundsberg said any discussion about how much volume the trains will ship to the West Coast – and on which routes – is “completely speculative” at this point, and will depend on customers’ needs.
“We would never forecast our volumes,” Lundsberg said.
Montana Rail Link leases the rail lines from Huntley to Sandpoint, Idaho, and has rights to the lines from there to Spokane. The company charges BNSF to “bridge” train cars through Montana.
MRL president Tom Walsh said if coal train traffic is coming through Montana, MRL will more than likely carry it because its line through Missoula is 100 miles shorter than the northern route through Great Falls.
But Walsh isn’t looking to haul nearly the amount the coal companies want to ship. In fact, Montana Rail Link’s projections for potential coal volume in the coming decade is just a fraction of the 40 to 60 trains a day others project. He’s looking at possibly moving five full coal trains a day on average in the next five to 10 years – and “in the most optimistic” scenario, eight – or 16, counting full and empty trains.
He said Montana Rail Link hasn’t ever considered the possibility it could carry an estimated 60 trains every day – full and empty, to and from the coal mines. Capacity is hard to estimate, but Walsh figured the company could grow to handle 25 trains a day at the most over the next couple of decades.
“It’s never even been in a remote dream – or nightmare – to be 60,” Walsh said.
“It’s never even entered our minds, the possibility of getting to that level.”
Estimates for increases vary because the variables are many. They include fluctuations in natural gas prices and the ability of ports to develop coal terminals.
With those developments come dollars. According to Peabody, just the initial construction of the Gateway Pacific Terminal would “create more than 8,400 direct, indirect and induced jobs” and generate some $900 million in economic benefits.
Even at just five trains a day, coal shipments in 2011 contributed to $8.3 million in payroll for Montana Rail Link, a company based in Missoula. The average salary for a single employee is $67,000, more than double Missoula’s median household income.
Margins on coal are small, but the 2011 earnings translated into 124 jobs, Walsh said. Last year, the company moved 270,000 total “bridge car loads,” and of that, 110,000 were coal. “So it’s a big part of what we do, and if we didn’t have it we would be a much smaller company.”
He isn’t forecasting growth in leaps and bounds because of more coal, though. The company has seen ups and downs the last decade, and Walsh anticipates coal shipments will remain level in 2012.
Obviously, 140 million tons a year would translate into a significant increase in rail traffic. Each train is about 125 cars, and each car can carry 118 tons. So 140 million tons a year translates into 26 full trains a day, or 52 in all.
That’s more than double the maximum that Montana Rail Link handled in a recent crisis. Last year, when floods hit North Dakota, BNSF asked Montana Rail Link to help, and for six weeks MRL “doubled down” and ran roughly 25 trains a day instead of its average of 15.
“We couldn’t sustain that beyond a six-week period of time, because then we have to maintain our railroad,” Walsh said. “So we have these big windows of time to fix bridges and replace ties and all these things that we have to do.”
If traffic doubled, the company would have to extend sidings, like passing lanes for trains, and it possibly would have to add sidings as well, he said. But Walsh said that’s hard to fathom in country through the Northern Rockies.
“Especially if you think about our terrain,” he said. “I mean, you’re going along the Clark Fork River, and sometimes, you don’t have a lot of room.”
The energy market fluctuates, and Walsh predicts the future will bring new sources of fuel, new commodities for the rail company to transport: “There’s going to be things that ebb and flow through the years, and we may very well find in 15 years that coal is not what is going to be used as an energy source for the world.”
But activists from Billings to Missoula to Sandpoint and all the way to the West Coast are gearing up for a fight over coal.
Local leverage isn’t easy to come by – railroads are governed mostly by the federal government – but environmentalists are on the hunt for pressure points. West Coast port expansions must go through permitting, and environmental reviews offer one venue for public input.
Even though the reviews are being conducted in Washington, the Northern Plains Resource Council has requested scoping hearings for Montanans. Gulick also is asking that the assessments calculate cumulative effects of the hauls.
“We have sent comments saying that we should be looking at what the impacts are for transporting the coal to those ports and the impacts to the communities along the rail routes,” Gulick said.
Objections range from global ones, such as coal’s contributions to global warming, to a heady list of local ones:
- The amount of time trains could block traffic at rail crossings;
- Adverse health effects from added diesel emissions from additional train engines running through and idling in the Missoula railyard;
- The extra noise from trains coupling and horns blowing;
- Negative effects of coal dust spilling out of train cars and blowing through the air or landing on the tracks and leading to derailments.
By law, though, Montana Rail Link says it must ship what it’s given.
The company doesn’t get to turn away a load of coal because someone wishes it was windmill parts instead.
And when it’s mined in Montana, the coal pays. Earlier this year with support from Mayor John Engen, the Missoula City Council approved a $178,125 economic development grant to TerraEchos from the Big Sky Trust Fund. That fund pays for projects throughout the state, and 100 percent of the money comes from coal, according to Montana Coal Council executive director Bud Clinch.
Sometimes, motorists complain to Clinch about having to wait at a crossing for a coal train. Montana assesses a 15 percent tax on the value of coal loaded onto trains, and the total in 2011 was nearly $55 million. So Clinch likes to remind them of the amount of money each coal train represents in state, federal and other taxes, as it rolls past.
“Well, that’s $30,000 that our government just got that helps provide services of one kind or another,” Clinch said.