Those who envision the United States becoming the Saudi Arabia of coal overlook a serious shortcoming: Our coal transportation system is so expensive it jeopardizes not only the potential for increased coal exports but also the switch-over to coal by major domestic utilities.
In fact, rapid increases in rail rates within the past six years have spurred imports of foreign coal, despite our vast domestic reserves. For example:
* Central Power and Light of Corpus Christi, Texas, after investigating the prospect of burning Colorado coal, changed its mind when rail rates soared nearly 100 percent. Now, CP&L is testing African coal, shipped 7,000 miles across the Atlantic and over 80 miles from the port, but still cheaper than American.
* The Tampa Electric Company, forced by clean air laws to burn low sulfur coal, found it was paying $33 per ton delivered for Appalachian coal. The company found it could import coal from Poland for $25-$26 per ton, and plans to meet 25 percent of its coal needs with imports for the near future.
* The city of San Antonio, which built a $250 million coal power plant in 1973 when the delivered price for western coal was $7.90 per ton, saw rail rates drive up the price to nearly $20 per ton in five years, costing city consumers $ 30.8 million. Now San Antonio is testing Australian coal supplied by the Mitsubishi Company of Japan.
American railroads, with unit trains of over 100 cars each pulled by a battery of locomotives, are the major carriers hauling coal long distance, and in recent years they have been facing fuel costs rising 300 percent since 1967 and labor rates up 175 percent in the same period. These have been passed through to electric consumers, who until now have had no choice in the matter.
But there is an alternative, a cheaper, cleaner, quieter, inflation-proof mode of coal transport just waiting for the chance to prove itself. It is the pipeline alternative.
Coal slurry pipelines -- which move powdered coal mixed with water or other liquid through underground lines -- promise to free electric consumers from spiralling rail rates. Two relatively short operating lines have been built in the United States, and eight major projects have been announced, some to span over a thousand miles from the coal fields of Wyoming and Appalachia to electric generating plants in Texas, Louisiana, Georgia, and Florida.
A national network of pipelines could be the key to increased coal exports. Boeing Engineering and Construction Company, a subsidiary of the aircraft firm, has invented a process whereby slurried coal is pumped to offshore terminals. Then some of the water is removed to make a denser mixture, which is pumped directly into the holds of specially equipped ships. At the port of destination , the slurry is pumped out, dried, and the coal is ready to be burned. Boeing estimates its process can deliver coal to Japan for $18 per long ton, compared to $30 for conventional shipment.
So why aren't construction crews getting pipelines off the drawing boards and into the ground? The answer to that question has more to do with politics than technology or economics, but fortunately a solution is at hand.
Like the Dutch boy with his finger in the dike, the railroads have blocked legislation in Congress to promote the construction of coal pipelines by according them the same power to acquire rights-of-way long enjoyed by natural gas pipelines and the railroads themselves.
The legislation addresses the problem raised by westerners concerned over the loss of local water to pipeline operations. The bill -- the Coal Slurry Pipeline Act of 1980 -- leaves all decisions regarding use of water up to the states themselves. Recent studies suggest that transport of coal by pipeline uses one-seventh less water than conversion at the minemouth itself in arid western regions.
Plans have recently been announced by Continental Resources Company to build a pipeline from southern Ohio and West Virginia to Florida and Georgia. This one project will create some 5,200 new mine-worker jobs in Kentucky, Tennessee, and southern Ohio, yielding $423 million in additional sales to coal producers in the region. Up to now, debate in Congress has centered on the availability of water for western pipeline projects. The Continental project, to make feasible the shipment of coal to cities like Tampa and Atlanta at the same time it provides whole new markets for Appalachian coal, makes the coal slurry question a truly national one, no longer a battle between western ranchers, railroads, and utilities.
The overriding issue before Congress is whether the railroad industry will be allowed to continue to prevent competition from coal pipelines, to the detriment of the American electric consumer and our national energy policy.