Blow to Pacific Northwest coal export plans as second project is scrapped

Efforts to boost coal export infrastructure in the US Pacific Northwest suffered a blow last week when a major project being advanced was scrapped.

According to the Alliance for Northwest Jobs & Exports, a bulk export facility at Coos Bay with a 10 million tonnes per year capacity will now not go ahead.

The Port of Coos Bay said improving the local rail line and building the coal terminal would have attracted $432 million in investments, created 3,132 jobs and $140 million in personal income.

The Coos Bay terminal which was first put on the drawing board in October 2011, was one of six projects in Washington and Oregon with a combined investment totaling over $2 billion to boost coal exports – primarily from the Powder River Basin in Wyoming – to lucrative markets in Asia.

Coos Bay is the second such project to fall by the wayside – in August last year RailAmerica scrapped plans to build a 5.5 million tonne terminal in Hoquiam, Washington.

Of the remaining four, Gateway Pacific Terminal (GPT) in Bellingham just south of the Canadian border is by far the biggest. With a 48 million tonne coal capacity and  another 8 million tonnes of grain or potash, GPT has the backing of world number one listed coal miner Peabody Energy.

Platts quotes Jonny Sultoon, lead analyst for Atlantic Coal Markets at Wood Mackenzie, as saying Coos Bay probably was probably the most likely to be scrapped because it lacked the producer backing which GPT and another project in the region Millennium Bulk Terminals enjoy:

"It's no secret the thermal markets are weak and the US has always been a swing supplier into the market," he said. "We still feel the demand pull longer-term is strong enough."

The outlook for the next 15 to 20 years shows continued demand in the Asian markets as utilities seek to diversify their coal supply from multiple countries. Despite the bulk of subbituminous coal in Indonesia, Sultoon said demand is expected to be enough that PRB coal will also be able to compete.