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Date Posted: 08:01:43 11/21/10 Sun
Author: Peter Gartrell (Platt's Trader 11/22/2010)
Author Host/IP: 97-120-181-30.ptld.qwest.net / 97.120.181.30
Subject: Port Of Tacoma Torpedoes Coal Export Terminal Plan

Tacoma port torpedoes coal terminal plan

Platts Trader 11/22/10

The Port of Tacoma said late Friday

it has nixed plans for a large coalexporting

facility near Seattle after considering

“a multitude of business and

community factors.”

People familiar with the facility say

BNSF Railway and Union Pacific were

considering a terminal with capacity

to handle up to 20 million short tons a

year, but port commissioners concerned

with the potential outcry from environmental

activists backed off the plan.

Senior officials from both companies

have been studying the prospect of a

large terminal with a price tag between

$150 million and $300 million at Port

of Tacoma, Washington, for at least two

years, according to two sources familiar

with the plan. The companies want to

cash in on Powder River Basin producers experiencing growing

Asian demand for thermal coal, according to people

familiar with the companies’ thinking.

“We were recently approached by a large coal export

company interested in developing a coal export facility at

the Port of Tacoma,” Don Esterbrook, chief commercial officer

for the port, said in a statement e-mailed to Platts. “As

with all new business opportunities, we conducted a very

thorough evaluation, taking into consideration a multitude

of business and community factors. Based on our assessment,

we have decided that we will not pursue a coal export

facility at the Port of Tacoma.”

The discussions at Tacoma had advanced to the point

where terminal operator Kinder Morgan had drawn up

rough plans for a facility handling between 15 million

and 20 million st on about 100 acres, according to the

two sources, both of whom requested they not be named

because they are not authorized to speak to the press.

Environmental studies had yet to begin, but there was

room at the port for a new facility on an old sawmill site

currently being used to stage logs. There is also adequate

rail capacity for two coal trains a day and an available

ship berth.

Peabody Energy, the largest US producer by volume and

owner of three PRB mines, also was said to be involved in

the talks.

But progress toward building the terminal, which had

picked up steam in recent months, came to a halt earlier

during an executive session on November 4 held by Port

of Tacoma commissioners, according to the source familiar

with the decision. The commission is looking to increase

port business, the source said, but believes any sort of coal

project would be subject to strong opposition from environmental

activists and lengthy permitting delays.

“A groundswell of political support — both locally, statewide

and probably nationally — could bring it back to the

table,” a person familiar with the commission’s thinking said.

A spokeswoman for Governor Chris Gregoire, a Democrat,

said the office was not aware of the Tacoma project.

The drive for additional US export capacity along

the West Coast has picked up this year as Wyoming and

Montana coal producers see increased interest from Chinese

and Korean buyers to ship thermal coal across the Pacific.

On Tuesday, the Cowlitz County Commission in

southwestern Washington will vote on a shoreline permit

for Millennium Bulk Logistics, which is looking to

build a 5 million-st private terminal on the Columbia

River. A hearing this month before the commission drew

nearly 100 people, many of whom oppose the construction

of a coal terminal.

The growing Asian demand for US thermal coal, combined

with increasing shipments of metallurgical coal

from Canadian mines, has squeezed capacity at Westshore

Terminals outside Vancouver, British Columbia, the largest

coal export point in North America. The terminal currently

expects to ship 26.2 million st this year, 18% above

its 2009 total, and the highest tonnage since setting a

record in 1997.

Representatives of Peabody had not returned calls seeking

comment by press time. A Union Pacific spokesman

declined to comment, citing competitive issues. Kinder

Morgan also declined comment.

A BNSF spokeswoman declined to elaborate on the planned

port. “It is BNSF’s policy to not discuss our customers’ business

or potential business opportunities,” Suann Lundsberg wrote

in an e-mail. “As always, BNSF works with our customers on a

regular basis to evaluate new opportunities.”

Port managers up and down the West Coast have

said they get frequent inquiries about the possibility of

expanding coal business. The Port of Longview, also in

Cowlitz County, recently purchased 300 acres and is

examining the possibility of using it for a variety of uses,

including coal.

“In the last six months to a year, we kind of laugh about it

— ‘who’s calling this week about coal?’ [There is] a lot of interest

there from suppliers, brokers, all types of folks, so clearly

there’s some opportunity there,” Ken O’Hallaren, the port’s

executive director, said. “The inquiries are frequent and been

going on for some time now. A lot of people are looking to get

involved in the coal export business off the West Coast.”

But at the same time, he sees the same potential for

delays and opposition that have thrown the Port of Tacoma

off plans for a large coal terminal.

“The fact that there would be some permitting hurdles

wouldn’t necessarily cause us to shy away from a development

if we though it made sense for the port and the community,”

O’Hallaren said. “But if it looked like it was going

to turn into a multi-year process, then it would certainly

give us some pause here as whether you can go forward.”

— Peter T. Gartrell

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