For some U.S. users, it now makes sense to buy coal overseas and import it.
When the collier Marlin sailed into Hampton Roads on Jan. 14, it didn’t arrive like most coal ships do – empty.
Instead, with a belly full of 38,000 tons of Venezuelan coal, it delivered the first regularly scheduled shipment of the black rock imported to a port that remains the nation's largest coal exporter.
Hampton Roads began exporting Appalachian coal in 1883. Since then, hundreds of millions of tons of it has been hauled from the mountains by train to massive terminals in Norfolk and Newport News, where it was loaded aboard ships bound for steel mills in Europe, Asia and elsewhere.
But U.S. exports peaked at 112.5 million tons in 1981, according to the U.S. Energy Information Administration. As recently as 1991, Hampton Roads exported 65 million tons of coal, but shipments have fallen dramatically since then as customers turned to lower-priced coal from Australia, South America and Indonesia.
The shifting economics of coal mining and transportation globalized the coal trade. For some U.S. users, it now makes sense to buy coal overseas and import it. In 2005, according to the EIA, the United States imported 30.5 million tons of coal, even as exports slipped to 49.9 million tons.
To meet domestic demand, the coal infrastructure of Hampton Roads is being adapted to handle the imports. Coal import piers are being built at a power plant in Chesapeake and an export terminal in Newport News.
"I can see one day, in theory, importing more coal here than exporting," said David F. Host, president of T. Parker Host Inc., a Norfolk ship agency that serves many coal ships.
Dominion Resources Inc. bought the coal that came aboard the Marlin to fuel its Chesapeake Energy Center.
The company, the parent of Dominion Virginia Power, previously brought coal to the plant via train from the central Appalachian coalfields in Virginia, West Virginia and Kentucky. But when the Richmond-based utility's contract with Norfolk Southern Corp., expired at the end of 2006, it chose not to renew, Host said.
Instead, Dominion Resources turned to South America, Canada and Indonesia for coal, spokesman Dan Genest said.
Dominion Resources decided to make the switch because imported coal is less expensive than the coal it had been using and contains less sulfur and mercury, which pollute the air, Genest said. The cleaner, imported coal also will allow the utility to delay installing giant pollution filters, called scrubbers, in the power plant's smokestacks.
To unload the coal, Dominion is building an import pier at the plant, located on the Elizabeth River's Southern Branch just south of Military Highway. The facility is expected to be completed in May or June and will be able to handle about 1.6 million tons of coal per year, Genest said.
For now, coal ships are arriving about every 10 days at Giant Cement Co.'s nearby terminal. There, the coal is offloaded onto barges for the final leg to the power plant.
In Newport News, Kinder Morgan Energy Partners LP expects to begin driving piles this month for a new coal import pier adjacent to its export pier, Pier IX.
Kinder Morgan's new Pier X will be able to handle 9 million tons of imported coal annually, compared with the 12 million tons per year it can export from Pier IX. Work should be completed in early 2008, said Emily Mir Thompson, spokeswoman for the Houston-based firm.
The roughly 1,200-foot-long import pier at the Newport News terminal is part of a $70 million expansion project, which also includes lengthening the deck on Pier IX to make it easier to load coal and cement onto ships.
Kinder Morgan has a long-term contract with Drummond Coal Sales Inc. of Birmingham, Ala. Drummond will ship coal mostly from its Colombian coal mine through Pier X, said George Wilbanks, Drummond's president. The coal is intended for power plants, though Wilbanks wouldn't say if any utilities had committed to buying Drummond's coal.
Neither Kinder Morgan nor Drummond would discuss specifics of the contract.
Next to Kinder Morgan's terminal, Dominion Terminal Associates plans to adapt its Newport News coal pier to accept imports if it determines there is enough demand.
Dominion Terminal has the permits and engineering drawings all set to widen its pier to handle the additional cranes and conveyor belts to unload coal from ships, said Charles E. Brinley, its president and chief executive. Dominion Terminal is a partnership of Dominion Resources and three coal producers, Arch Coal Inc., Alpha Natural Resources Inc. and Peabody Energy Corp.
"If the market will be there to take the coal we would go forward with the project," Brinley said. "If there is not a market for the coal then we'll wait for it."
He wouldn't disclose the estimated cost of the upgrade, saying only it would cost more than $25 million. The work would take about a year, allowing it to import about 7 million tons annually, he said.
Norfolk Southern, which owns the region's third and by far its largest coal export terminal - Pier 6 at Lamberts Point in Norfolk, has no plans to begin importing coal there, said Robin Chapman, the Norfolk-based railroad's spokesman.
About 30 terminals and nearly three dozen power plants along the East and Gulf coasts can import coal, said Daniel Walton, a partner in Hill & Associates Inc., an Annapolis, Md., energy consulting firm.
Still, coal imports are dwarfed by the amount mined domestically. U.S. coal production was 1.1 billion tons in 2005, according to the EIA. Most goes to power plants.
Walton attributes the emergence of a market for imported coal to the deterioration of the central Appalachian mines that supply eastern U.S. power plants. The easily reached coal has already been mined and what's left is costlier to extract from the ground, he said.
Coal mined overseas is often found in thicker seams, closer to the surface than Appalachian coal, making it much less expensive to mine, said Bill Watson, the EIA's coal team leader. South American countries are expanding production and improving transportation between mines and their ports, he said.
Transporting coal aboard large ships is inexpensive as well, helping make such coal competitive in the United States, Watson said.
Dink Shackleford, executive director of the Virginia Mining Association, which represents the state's coal mines, blamed the rise in coal imports on overly strict coal mine regulations. That's pushed production overseas, he said.
But imported coal presents a new opportunity for Hampton Roads even as new terminals are built.
The Marlin delivered another first, after unloading the first regularly scheduled shipment of import coal.
After getting its holds scooped out in Chesapeake, the Marlin sailed to Newport News to pick up 45,800 tons of coal destined for Mexico, becoming the first collier, or bulk cargo ship, to both discharge and load coal in Hampton Roads, Host said.