Here we go again.
Just last week, Peabody Energy, the world’s largest coal company, announced plans to export 24 million tons of coal annually from a large new shipping terminal to be built at Cherry Point near Bellingham. That’s enough coal to make Bellingham one of the biggest coal exporting sites in all of North America. And yet, it may be only half the story.Because the planned terminal will be built to accommodate 54 million tons of bulk materials—dedicated, in the plans, to cleaner commodities like grain—it would be relatively easy for Peabody to double its stated export targets. And now, in an interview with The Guardian, a senior vice president with Peabody is quoted saying:
We’ve just announced a west-coast port project called Cherry Point in northern Washington which would come out of our Wyoming mines and could reach up to 50m tonnes a year…
So, now that 50 million tons is on the table, I’ll point something out: that’s probably not the full story either. It’s widely rumored that Peabody has told investors it intends to ship 100 million, or even 140 million tons, of coal annually from the West Coast, though it’s unlikely that much material could move through Cherry Point.
Peabody’s coal export plans seem to be following the same tangled route laid out by Ambre Energy, a coal company with plans for a facility at Longview, Washington. Ambre’s subsidiary initially asked for approval of a 5 million ton per year coal terminal. But then a legal challenge brought to light damning evidence that Ambre was really planning to move 20 or 60 million tons per year. And then the AP obtained further documents showing that Ambre executives were discussing an 80 million ton coal export project in Longview.
For context, 50 million tons is roughly a year’s supply of coal for 10 coal-fired power plants the size of the one at Centralia. So the much-lauded phase-out of coal there, by 2025, will be just slightly more than a rounding error in coal consumption trends if Peabody gets its way.
Or, as the Peabody exec himself put it:
We’re 100% coal. More coal. Everywhere. All the time.
Then the coal company came with the world’s largest shovelAnd they tortured the sod and stripped all the landWell, they dug for their coal till the land was forsakenThen they wrote it all down as the progress of man.And daddy won’t you take me back to old Campbell CountyDown by the Belle Fourche where the grasslands layWell, I’m sorry my son, but you’re too late in askingMister Peabody’s coal train has hauled it away.apologies to Mr. Prine
Raising exports is a major priority for business and government and will result in enormous U.S. job creation and economic growth. We may agree to disagree on these benefits, but let’s at least start the discussion with an accurate set of facts. 1)Peabody has an agreement to export up to 24 million metric tons of coal annually at the planned Gateway Pacific Terminal in northwest Washington. 2)The terminal is being permitted to ship 48 to 54 million metric tons of volumes of a variety of commodities, which will be dependent on market demand, terminal capacity and other factors. These plans are contained in permitting documents, are part of the public record and will be part of a broad stakeholder process. 3)The reference to “rumors” of Peabody exporting 100 million to 140 million tons is not about planned export volumes but refers to the forecast growth of seaborne subbituminous coal demand in the Pacific Rim, as stated in our port announcement. Pacific Rim market demand is expected to increase by 100 million metric tons per year by 2015, up from current demand of 140 million metric tons. This demand will be supplied by Indonesia, the U.S. and other countries.Beth SuttonPeabody Energy
Finally someone from inside the industry says something.. Someone from Millennium should have done the same thing earlier.. Thanks Beth…
Eric de Place
Beth,Thanks for joining in the comments thread here. In the coming weeks, I’ll be writing more about the Cherry Point plans. I do strive for 100% accuracy, so I hope you feel encouraged to set the record straight if you think I’ve erred.I don’t believe I’ve made a factual mis-statement in the piece, but perhaps you can clear something up for me. Are you willing to go on record that Peabody does NOT, in fact, plan to export 100 million tons or more via the West Coast to Asia? Is that something you can share definitively with your investors?
Eric,Would it matter what Peabody plans at present? Based on past behavior, they will do whatever maximizes profit. If the demand exists and the coal is available at a price that demand can support, they will export the coal – unless we stop them.
Beth, thank you for your input. I love Sightline for its insights and its educated comments, but often it’s missing a representative from the other side of the debate—just like most other comments save for the trolls. I welcome anyone and everyone to weigh in, so that we can all understand better.
Eric, Peabody plans to ship some of the best quality coal in the world to Asian nations that are leading in global GDP growth as they create energy access for literally hundreds of millions of people. We ship thermal and metallurgical coal to customers on six continents, and yes, we will continue to evaluate opportunities for additional export capacity over time. We are not interested in credentializing rumors by commenting on them, but I would add that we currently ship modest volumes to Asia from Canada, which has several ports that account for the vast majority of west coast coal exports to Asia. Our export agreement with the Gateway Pacific Terminal gives us rights to ship 24 million metric tons of coal annually. These volumes are a part of total terminal capacity that will be permitted to move up to 54 million metric tons of all bulk commodities at capacity, including up to 48 million metric tons of coal, depending on market demand and other factors. To put this in perspective, the U.S. exported approximately 73 million metric tons of coal this past year. The 100 million metric tons of increased seaborne demand we referenced as the point of confusion reflects the forecast annual increase in seaborne demand for subbituminous coal among all nations in Asia from all exporting countries. Thanks for the opportunity to further clarify.
The British took opium to China. Peabody will take coal. Long-term, the coal will be much more damaging.