Cooooooal Train!

Why is an Australian energy company so eager to export coal to China through the Northwest?
This post is part of the research project: Northwest Coal & Oil Exports

Have you heard the one about the Australian company that wanted to ship coal from Wyoming to China through Washington?

coal train - Flickr KimonBerlinBut this one is no joke:  Ambre Energy, an Australian coal and oil-shale venture, recently obtained approval from Cowlitz County officials to set up a coal export facility at the Longview, WA port on the Columbia River.  Under Ambre’s plan, trains would carry over five million tons of coal each year to Longview, load it onto cargo ships, and ultimately sell it to feed China’s skyrocketing demand for coal-fired electric power.  When burned, the coal shipped through Longview will add about 9 million tons of carbon to the atmosphere.  (So much for Washington’s leadership on climate issues:  the coal sent through this one Washington terminal will release more carbon than the entire city of Seattle.  If you think that deserves a “yikes,” just wait:  several additional, larger coal terminals are on the drawing board.)

But the question that intrigued me about this whole situation was:  why Longview?  Why, of all ports, did the Ambre settle on this one?

The answer, as far as I can tell, comes down to cost:  shipping coal through Longview could save China, and the international coal conglomerate, a bunch of money.

Here’s why.

Powder River Basin (PRB) coal is dirt cheap.  In 2009, you could buy a ton of Wyoming coal for $11.72(“Dirt cheap” is no exaggeration.  A quick web search suggests that topsoil can run somewhere around $20 per ton.)

There are two reasons why it’s so cheap.  First, as fossil fuels go, PRB coal is pretty thin stuff.  Burning a pound of the “sub-bituminous” coal from the Powder River Basin releases about 8,500 BTUs, about a third less energy per pound than the bituminous coals that are more commonly burned in Chinese power plants. 

A second reason that PRB coal is cheap is that the costs of long-distance shipping can add up—and the Powder River Basin is (no offense!) way out in the boondocks.  As of 2001—the most recent data I could find—it cost about a penny to ship a ton of PRB coal one mile.  I imagine that those costs have risen with inflation; but even so, at a penny per mile, shipping PRB coal to Longview could cost nearly $10 per ton, and possibly significantly more.

And then there’s the cost of international shipping.  It costs between $20,000 and $50,000 per day to lease a good-sized cargo vessel—a “Panamax” ship, which is largest size that can fit through the Panama canal, and also the largest ship that the other berths at the Longview port can handle.  A Panamax vessel can handle about 60,000-80,000 tons of cargo, and the trip from the Northwest to Shanghai takes about 12 days.  (This source suggests 11 days from Vancouver to Shanghai,  and this one says 13 days from Seattle to Shanghai.  Obviously, it all depends on how fast the boat travels, but I’m not sure what speed winds up being most economical at today’s fuel and boat rental costs.)

So, all told, it costs at least $14 to ship a ton of coal  from the Powder River Basin to a Chinese port—and that’s excluding any handling costs in the ports themselves.  Then, when you factor in the low energy density of PRB coal, that’s the equivalent of about $20 per ton of the Chinese coal that it’s competing with.  And remember, this is a rock bottom estimate; transportation costs can be volatile, and if they spike to the high end of their historic range the transportation costs could rise north of $30 per ton.

So, getting back to my original question:  why Longview?  Well, it’s simple.  Longview offers what is the lowest cost for getting PRB coal to China. 

Even if other Northwest ports could handle the over 5 million tons of coal per year, most of them (save perhaps Portland) are farther away by rail.  Even an extra 100 miles of rail travel — the distance, roughly, from Longview to Tacoma—might significantly cut into Ambre’s profits.  When margins are thin, boosting costs by $1 per ton can make a huge difference to profitability.

But imagine what would happen if Ambre couldn’t find a west coast terminal to ship its coal.  The next closest alternative would be Houston/Galveston:  an additional 600 miles or so by rail, compared with Longview, plus an extra 12 days by boat through the Panama Canal.  All told, shipping coal through Galveston rather than Longview would add a bare minimum of $11 per ton to transportation costs, and possibly much more.  And once again, adjusting for the relatively low energy-density of PRB coal, that $11 cost penalty translates into nearly $17 per ton of Chinese coal.  And on top of all that, with China seemingly committed to a strong-dollar/weak-yuan policy, that $17 may actually wind up being even more expensive to Chinese consumers, once exchange rates are factored in.

So in short, if Ambre can’t find a Northwest port, shipping coal from Montana to China via Galveston would probably be a non-starter.  So it’s little wonder that international coal companies are so interested in finding a Northwest passage for Powder River Basin coal.


[Coal train photo courtesy of Flickr user KimonBerlin, distributed under a Creative Commons license.]

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  1. Andrea Faste says:

    OK, so it is super cheap to use Longview, WA…but now please figure out the “externalities” like how much coal dust will be put in the air as the coal is transferred from train to ship, and dusted over eastern Washington? And why, if the Chinese are getting big into solar and wind power, are they still wanting US coal? Of course, the big question is how do we convince Longview port officials that this is a BAD idea?

  2. Grant Sawyer says:

    The purposed coal export terminal in Longview is to be on privately owned land not at the publically owned Port of Longview. This fact makes it’s harder to stop as the property owners don’t have to care about public opinion only the profitability of the venture. Of course this is a very bad for the environment and we must get organized to stop it. The way to do so best is to mount legal challenges every step of the way to drive up their legal costs so high the project is no longer profitable. I know that approach really sucks but it’s the system we’ve been handed and we must work within it. Someday hopefully we will have a just system where the future is valued just as much as much as short term profitability.

  3. Paul Birkeland says:

    Excellent article, Clark.And I totally agree with Grant. I received an e-mail from Climate Solutions this morning that I’ll post below. They are joining a legal appeal to stop the permitting. They also recommend contacting the Governor. We all ought to do this. (NOTE: The hot links in the e-mail aren’t hot here. But you can go to and find all the references.)Let’s do this!FOWARDED FROM CLIMATE SOLUTIONSSometimes you have to say “NO” in order to truly say “YES.” Today, Climate Solutions spoke loudly and clearly: NO to exporting coal, and YES to a clean energy future. We joined in a legal appeal to help stop an Australia-based coal company from opening the door to make Washington the coal-export hub of the Pacific rim. This company proposes to send coal mined in Wyoming and Montana on trains through the Columbia River Gorge, via a port in Longview, and ship it across the Pacific to be burned in China. The coal shipped through this one facility would blow a giant hole in Washington’s goals to reduce global warming pollution—it would create more emissions than come from the entire city of Seattle and more than any single facility in the state. And other coal companies are already lining up with their own proposals. What kind of future do we want for our region? We can either harness our greatest natural resource—our know-how and ingenuity—to develop a strong local clean energy economy and export clean energy products and services. Or we can become a low-wage resource colony economy exporting raw materials like coal to China, where they will use it to manufacture goods to sell back to us. The time to make that decision is now. We should not walk away from the region’s legacy of leadership on climate change. We can do better.We are standing with people throughout the West Coast, who KNOW we can and must do better than becoming a resource colony to support the burning of dirty, dangerous coal. Here is the press release that explains more detail about the legal appeal.Here’s how you can help:Call Governor Gregoire at (360) 902-4111 and tell her to ensure that Washington says “No to coal export, and YES to a clean energy future.”Call Department of Natural Resources Commissioner Goldmark at (360) 902-1001 and tell him ensure that Washington says “No to coal export” and YES to a clean energy future.”There will also be an information session on this campaign tomorrow, Tuesday, Dec. 14th at 6 p.m. at the Broadway Gallery, 1420 Commerce, Longview, WA. For more information on the coal export issue, and to sign our petition, go here.Thank you for standing up for a clean energy future,Joelle Robinson, Climate Solutions Field Director

  4. Josef says:

    Grant is right, if you want to stop a project using the courts to oject & sue, baby, sue is generally a good way to go about it. Make sure you start by requesting an environmental impact statement/EIS and go thru the process very carefully.That said, I generally support the idea of America exporting things to China. Including coal.

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