Oregon governor wants feds to look at coal export terminal issues

Oregon Gov. John Kitzhaber called on federal agencies April 25 to conduct a comprehensive analysis of the environmental, community, economic, transportation and energy security impacts of proposed coal exports to Asia before proceeding with further permitting and leasing decisions.

Several coal export terminal projects have been proposed recently in Oregon and Washington state to meet booming demand for U.S. coal, particularly out of the Powder River Basin, in Asian markets.

Kitzhaber released a letter that he wrote to Interior Secretary Ken Salazar and officials at the U.S. Bureau of Land Management and U.S. Army Corps of Engineers calling for a programmatic and comprehensive environmental impact statement (EIS) and outlined his concerns in a speech to the “Future of Energy” Conference in Portland.

“Work is currently underway at many locations in Oregon and Washington to secure the necessary approvals for coal export facilities to ship coal from the Powder River basin to Asia,” said the governor. “I have concerns about proceeding in this direction in the absence of a full national discussion about the ramifications inherent in this course of action. The Environmental Impact Statement that the Department of the Interior is currently relying on to issue leases for coal extraction from public lands in the Powder River basin addressed the environmental effects of transport and use of coal in the mid-western and eastern United States for domestic energy production, but it did not evaluate the effects of coal exports to Asia.”

Notable is that Rep. Ed Markey, D-Mass., the ranking Democrat on the House Natural Resources Committee, on April 24 asked the Government Accountability Office (GAO) to conduct its first review of the government’s coal leasing program since 1994. Markey said his request comes as U.S. coal companies lay the groundwork to ship hundreds of millions of tons of federally leased coal overseas at premium prices. Domestic coal producers exported 107 million tons of coal in 2011 – the most since 1991 – and Peabody Energy (NYSE: BTU) told investors recently that U.S. coal export capacity could grow to 250 million tons by 2017.

Kitzhaber said the U.S. has the largest known coal reserves in the world, and currently exports approximately 80 million-100 million tons of coal each year. The current proposals in Oregon and Washington could result in an additional 157 million tons of coal exports, more than doubling the U.S. export capacity, with all of this increase going to fuel growth in energy production in Asia, he added.

“Most of the as-yet unexamined environmental, health, community, economic impacts associated with this tremendous increase in coal transport to the west coast would be shouldered by Oregon and Washington,” Kitzhaber said. “Further, the environmental effects of further Asian coal-fired generation, in terms of air quality impacts on the west coast of the United States, have not been analyzed. Increases in ozone, mercury, and particulates could have both significant environmental and economic effects in this country, by requiring U.S. industry to adopt additional pollution controls in order to meet air quality standards.”

The governor added: “If the United States is going to embark on the large scale export of coal to Asia it is imperative that we ask – and answer – the question of how this decision fits into the larger strategy of moving to a lower carbon future. In the lack of a clear policy on this point we will simply be deciding by not deciding.”

In the meantime, projects are moving along. For example, the Morrow Pacific project, which is developing coal export capacity in Oregon, said April 25 that it is seeking bids from local companies Gunderson and Vigor Industrial to create 20 enclosed barges for its export project. The project has option agreements with both the Port of Morrow and Port of St. Helens, and has submitted permits to the Corps and the Department of State Lands. The Morrow Pacific project will ship low-sulfur coal by rail from the Powder River Basin to an enclosed warehouse at the Port of Morrow. From there, enclosed barges will move the coal to the Port Westward Industrial Park at the Port of St. Helens. An enclosed transloader will then transfer the coal from barges to oceangoing vessels bound for Asian trading allies, such as Japan, South Korea or Taiwan. Between the Port of Morrow facility until the coal arrives in Asia, there will be no visible coal and little, if any, coal dust, the developer said.

The Morrow Pacific project is backed by Ambre Energy, an Australian company that recently bought shares in the Decker coal mine in Montana and the Black Butte coal mine in Wyoming. “When the project begins operation, Ambre anticipates shipping 3.5 million metric tons of coal per year to trade allies such as Japan, South Korea and Taiwan,” said the project website. “The overall capacity of the Morrow Pacific project is 8 million metric tons per year.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.