Coal Exports (Dec 2012)

Over the past few years, United States coal consumption has declined steady from its 2007 peak (the US still ranks as the world’s second largest producer of coal).  While part of this decline could be attributed to changing domestic energy policies, the net effect is that coal producers must look for new markets to sustain mines.    For much of the world, coal remains an important source of electrical and industrial production, as net coal demand continues to increase.

In 2011, the US exported $16 billion dollars of coal, a record, and while Year to Date shipments in 2012 have declined slightly, but remain above historic levels.  (Energy Information Agency (EIA) estimates that coal shipments will decline in 2013, but remain above historic levels.)  The US ranked as the fourth largest coal exporter in 2010, behind Australia, Indonesia, and Russia.

The top markets for U.S. coal in 2011 are presented below, but the growth in coal demand in China (which traditionally sources coal from Indonesia and Australia) continues to increase.  The EIA projects that China will build the equivalent of the US electrical capacity base within fifteen years, making the demand to secure coal reserves a priority, but this also increases competition for other major coal consumers.  (This summer, India’s Abhijeet Group and Kentucky-based Booth Energy Group and River Trading Co., signed a 25 year agreement to ship 9 million tons of coal annually from Appalachia to India.

TOTAL ALL PARTNER COUNTRIES Value

Share

Brazil

1,715

10.7%

Netherlands

1,536

9.6%

Japan

1,182

7.4%

Korea

1,138

7.1%

Italy

985

6.2%

Ukraine

974

6.1%

India

927

5.8%

China

883

5.5%

United Kingdom

790

4.9%

Canada

728

4.6%

Other

5,109

32.0%

Total

15,967

 

While coal is mined throughout the United States, the top five coal producing states (and their relative share) are Wyoming (40%), West Virginia (12%), Kentucky (9.9%), Pennsylvania (5.4%) and Texas (4.2%).  While Western Coal is largely consumed within the Eastern United States, being blended with Eastern Coal to meet emission standards, most of the export coal comes from the Eastern U.S.

What does this mean for transportation?   Based on the Shipment of Origin, the top states for export shipments are West Virginia (33%), Pennsylvania (17%), Alabama (14%), Louisiana (10%), and Virginia (8%).  Of these top export regions, West Virginia led all states in net growth, with an almost doubling in the value of coal exports between 2010 and 2011.   (The shipment of origin for exports is based on where the product began its international move.  If coal was shipped to an export facility and blended, etc., it would be reclassified at the site where the storage and other activities began.)  The regional tie of Appalachian coal to export markets is also highlighted by top gateways for US coal being Norfolk, Baltimore, Mobile and the Lower Mississippi River.  (While there are plans to develop a mega bulk loading facility in the Pacific Northwest for mostly Western Steam coal, local groups are fighting the terminal’s development.  In part, shippers are also looking to expand coal exports from the lower Mississippi River.)

At the same time, most of the nation’s coal shipments move on rail, followed by barges, beyond drayage movements on truck.  (The 2007 Commodity Flow Survey indicated that railroads handled 92.5% of the coal shipped on a ton-mile ranking, while waters and waterway intermodal accounted for 5% of the nation’s ton-miles.)  For both rail and water, coal remains a large commodity, and if either mode is unable to handle coal shipments (as demonstrated by the current low water conditions), this may result in enormous costs to utilities and other users, especially if these shipments are routed to trucks.

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