US prepares for export bonanza as 'decade of coal' approaches
World demand for United States coal as an energy source has begun its long-expected rise, further brightening the prospects for the domestic coal industry in the 1980s.
It complements steps being taken by the Carter administration to step up the use of coal in the US as an alternative fuel to oil. President Carter's synthetic fuels program, recently approved by Congress, could stimulate the need for an extra 150 million to 200 million tons of US coal this decade. And the Carter administration is pushing legislation for more federal funding to help US utili ties switch more rapidly from oil to coal.
In addition, leaders at the recent Western economic summit in Venice agreed on a goal of doubling coal production and consumption by 1990.
However, the growing overseas appetite for American coal has in some respects caught domestic suppliers by surprise. "The problem is in the delivery system. It's saturated," explains John Pisani, manager of port planning with the US Maritime Administration.
Last year's near-doubling of world oil prices brought quickened interest in American steam coal (the kind used to fire boilers to generate steam) on the part of Japan and West European countries. Using US coal to generate heat and electricity, according to estimates by the Department of Energy (DOE), costs European and Japanese utilities only about two-thirds the expenditure for producing equivalent amounts of energy by using imported oil.
Consequently, spot purchases of US steam coal have jumped sharply this year. In the first four months of 1980 steam coal shipments to buyers outside North America were 3 million tons, compared with a total of 2.5 million tons in all of 1979, according to the National Coal Association.
US railroads and ports have been bottlenecked by the increase in demand, and some coal company officials say overseas sales could be substantially increased if domestic transportation and shipping facilities were improved.
Older East Coast ports, where most US coal now is loaded for export, are strained to capacity. Port terminals and railyards like those in Norfolk and Newport News, Va., major export points, have been designed to handle metalurgical coal (a blend of hard coals used in making steel). They are not well suited for handling the greater quantities of steam coal.
Steam coal requires more land for storage than many East Coast ports have available, Mr. Pisani said. He expects some improvements in coal delivery systems in the East, as well as major new export activity in the coming years at ports along the gulf coast, where there is land for expansion.
Mobile, Ala., is recognized as one of the most promising coal export areas. The port of Mobile is spending $20 million to double its coal-shipping capability over the next five years.
Also, the projected completion of the Tennessee-Tombigbee waterway project by 1986, linking Mobile with the Tennessee River, will make it feasible to ship coal down to the gulf from inland mines.
The port of New Orleans also is expected to be a major coal export point as economics make the higher-sulfur coal of the Midwest increasingly attractive to foreign buyers. Most steam coal exports now are coming from the Appalachian region.
"By the end of the century we will see coal exports [through New Orleans] up 500 percent," predicted Henry G. Joffray, associate port director the Crescent City.
Long-term contracts are the key to upgrading rail and port facilities in the US to meet growing world steam coal demand, which the DOE expects to rise from the 2.5 million tons exported last year to more than 80 million tons by 1990. Coal industry officials want the assurance of steady sales growth well into the future before spending the millions of dollars needed to improve export facilities.
Gayle Jackson, director of planning at Peabody Coal Company in St. Louis, says she believes the development of an efficient infrastructure in the United States for exporting coal will take longer than many now believe. But she notes that Peabody and other coal producers are already negotiating contracts with overseas buyers that will provide the financial incentive for improvements in coal- movement facilities.
These, she says, will be ready to accommodate the rapid increase in coal exports in the 1990s.