Sunday, November 23, 2014

Gulf Coast Embraces U.S. Coal Shippers Rejected by West

Workers watch as petroleum coke (pet coke) is loaded onto the Turquoise Ocean bulk carrier at the Impala Terminals Burnside LLC facility in Darrow, Louisiana, U.S., on Tuesday, Sept. 23, 2014. (Credit: Derick E. Hingle/Bloomberg) Click to Enlarge.
When it comes to exporting American coal, the West Coast’s loss is the Gulf Coast’s gain.

While environmental opposition has stymied plans to build terminals in California and the Pacific Northwest, the Mississippi River town of Darrow, Louisiana, has a new $300 million export facility.  It’s part of a regional expansion that will increase capacity by 66 percent to 119 million metric tons by 2017, or more than half the national total, according to New York-based Doyle Trading Consultants LLC.

At least $898 million, or 64 percent of the total $1.4 billion companies such as Ambre Energy Ltd. were planning to invest on the West Coast, is being spent on terminals in the Gulf of Mexico.  Even as U.S. coal exports have fallen by 23 percent since 2012, producers are betting that foreign sales will rebound because a supply glut means their prices are now below competing cargoes from Australia and South Africa.

“In some parts of the U.S. you have the lowest cost coal in the world,” Carlos Fernandez Alvarez, a senior coal analyst at the International Energy Agency in Paris, said by phone Nov. 7.  “If you have the infrastructure to export that coal it will be competitive in many scenarios.”

Exports from Galveston, Texas, surged 29-fold since 2000 while volume at Mobile, Alabama doubled and New Orleans saw a more than 15-fold increase, government data show.

The U.S. is poised to use less coal because of increased energy efficiency, tighter environmental regulations and bountiful natural gas supplies as a result of the shale drilling boom.

The country’s 5.2 percent jump in coal consumption last year should reverse as at least 32 coal-fired power plants are retired, Energy Department data show.  President Barack Obama proposed in June to cut carbon dioxide pollutants by 30 percent by 2030 from 2005 levels, mostly by reducing the use of the fuel.

Coal is the country’s most abundant energy resource, with enough reserves to last 180 years.  That compares with 87 years for natural gas and 88 years for crude oil, government projections show.

Exports of coal will increase 33 percent to 128 million tons by 2020 and 148 million by 2030, the Energy Department forecast in its 2014 Annual Energy Outlook.

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