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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The company developing a coal-export terminal on the Columbia River in Washington State remains optimistic about the project's prognosis, but the viability of that project, the Millennium Bulk Terminal, may be in question given a slowdown in Asian coal-fired power development, fierce local opposition to the project and a welter of permitting challenges.
The U.S. already has several coal-export terminals operating. Executives from the proposed Millennium Bulk Terminal in Longview, Washington, have said their project will help meet the projected future demand for coal in Asia. The multi-phase project, valued at about $680 million, is expected to be able to export up to 44 million tons of coal per year. The proposed facility would bring in coal from the western U.S. with trains, stockpile it at the facility and then export the coal by ship. The project has been under development since 2011. For more on this project, see February 24, 2015, article Executive: Proposed Coal-Export Terminal in U.S. Northwest Responds to Asian Market Demand and November 13, 2012, article--Industry Coalition Battles Local Opposition to Northwest Coal Export Terminals.
The Millennium project is being developed by Lighthouse Resources Incorporated (Salt Lake City, Utah), formerly known as Ambre Energy N.A. Arch Coal Incorporated (OTC:ACIIQ) (St. Louis, Missouri) had owned 38% of the project, but after Arch filed for Chapter 11 bankruptcy protection earlier this year, it sold its stake to Lighthouse Resources, which now owns the 100% of the proposed terminal project.
On April 29, the project received a draft environmental impact statement (DEIS) from the Washington State Department of Ecology (Lacey, Washington). A final EIS is due in 2017. Before construction of the Millennium project can begin, it must secure about 20 different permits from eight local, state and federal agencies, including six permits from the Washington ecology agency. Washington Governor Jay Inslee (D), to whom the ecology agency reports, has made climate change a signature issue.
The DEIS was issued the same week China decided to dramatically reduce its future use of coal to generate electricity. On April 25, the Chinese government announced as many as 200 planned coal-fired power projects may not be completed. Construction of some approved coal-fired generators may be pushed out until 2018, according to a report in The New York Times. The 200 or so planned projects that may not be completed have aggregate generating capacity of 105,000 megawatts (MW).
Although environmental regulations have stymied new-build coal-fired power plants in the U.S. for several years, coal-fired power plants are being developed at a rapid pace in several parts of Asia. The Chinese government's April announcement may dim the outlook for the growth of coal-fired power in that country, but other Asian nations, including India, Indonesia, Turkey and Vietnam, still are actively developing billions of dollars of coal-fired power plants.
"Even with the Chinese government's decision, there still are a lot of coal plants on the drawing board in China," remarked Britt Burt, Industrial Info's vice president of global research for the Power Industry. "I don't see that country completely moving away from new-build coal plants on the horizon, as we have seen in the U.S. and Europe. It's a slowdown, not a halt. On a global basis, coal continues to be the lead fuel driving new-build power plant activity," Burt continued.
After the Washington ecology agency released its DEIS on the proposed terminal April 29, about 267,000 public comments were filed with the state's ecology agency, spokesman David Bennett told Industrial Info. The agency estimated about 1,900 people spoke at the three public hearings it held on the proposed terminal in May and June. Bennett said he attended all three public hearings but could not say what portion of speakers supported the proposed project and what portion opposed it. "There were lots of voices from inside and outside the community and inside and outside the state," he added.
Bennett cautioned that what was released April 29 was just a draft environmental impact statement. "No permitting requirements or conditions were discussed in the draft EIS," Bennett said in an interview. He could not say when in 2017 the agency would issue its final environmental impact statement. If the project receives all required permits, it could begin construction in 2018. Phase I, through which up to 25 million tons of coal could be exported each year, could be operating by late 2019. Phase II of the terminal, which would add another 19 million tons of export capacity, could be operating by late 2021.
In a prepared statement released the day the DEIS was made public, Bill Chapman, chief executive and president of the proposed terminal project, said of the DEIS, "This major milestone moves us one step closer to creating family-wage jobs in Longview, while meeting Washington's strict environmental standards."
But the ecology agency flagged one issue--the projected greenhouse gas (GHG) emissions associated with the terminal--that could be a stumbling block. In its summary of the 3,000-page DEIS, the agency wrote, "To address the potential impacts of greenhouse gas emissions attributable to (building the terminal), the Applicant will prepare a greenhouse gas mitigation plan that mitigates for 50% of the greenhouse gas emissions identified in the 2015 Energy Policy Scenario. For initial operations this is 693,723 metric tons of CO2e (or 50% of 1,387,446) per year from 2021to 2027. For operations at maximum capacity this is 1.27 million metric tons CO2e per year (or 50% of 2.53 million) from 2028 to 2038. The plan must be approved by the Washington State Department of Ecology. For mitigation that occurs in Cowlitz County, the plan will be approved by Cowlitz County and (the state department of) Ecology. The plan must be implemented prior to the start of operations. The measures described in the plan may include a range of mitigation options. The measures must achieve emission reductions that are real, permanent, enforceable, verifiable and additional. The emission reductions may occur in Washington State or outside of Washington State but must meet all five criteria."
In an interview, Diane Butorac, a regional planner with the Department of Ecology, said the DEIS and the EIS were "information documents." She said the proposed mitigation measures were not required in the DEIS or EIS, but if a permitting agency wanted to require a GHG mitigation plan as part of a permit application, winning a permit would be conditional on satisfying that requirement. After the agency completes its EIS next year, it will then open the permitting process.
Regarding the GHG emission issue, Chapman, the project's CEO, said: "We will call into serious question the suspect global modeling used to calculate greenhouse gas emissions for this local port project."
In a subsequent response to the DEIS, Millennium Bulk Terminals said, "The Draft EIS engages in an unprecedented geographic scope of review of GHG emissions by attempting to forecast the price and demand of coal, not just in the U.S., but across Asia. Applicants cannot be required, (as) the Draft EIS proposes, to mitigate for speculative GHG impacts created by the combustion of the coal overseas. Even the most aggressive of the GHG regulations proposed by (the Department of) Ecology would not require facilities to mitigate for any impacts beyond state boundaries."
"If finalized, the GHG analysis employed in the Draft EIS will violate the Commerce Clause of the U.S. Constitution," the statement continued. "By proposing to require the Applicants to mitigate for effects resulting from Asian coal consumption and by attempting to regulate effects resulting from federally regulated rail transportation, the Draft EIS runs afoul of well-established constitutional and federal preemption doctrinal constraints."
"The Millennium terminal project could really help open overseas markets to U.S. coal producers, at a time when they have been devastated by changes in the U.S. power market," commented Joseph Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry. "But sharply reduced future need for coal in China, coupled with the gauntlet of permits required to build the terminal, raise questions about the proposed terminal's viability."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
The U.S. already has several coal-export terminals operating. Executives from the proposed Millennium Bulk Terminal in Longview, Washington, have said their project will help meet the projected future demand for coal in Asia. The multi-phase project, valued at about $680 million, is expected to be able to export up to 44 million tons of coal per year. The proposed facility would bring in coal from the western U.S. with trains, stockpile it at the facility and then export the coal by ship. The project has been under development since 2011. For more on this project, see February 24, 2015, article Executive: Proposed Coal-Export Terminal in U.S. Northwest Responds to Asian Market Demand and November 13, 2012, article--Industry Coalition Battles Local Opposition to Northwest Coal Export Terminals.
The Millennium project is being developed by Lighthouse Resources Incorporated (Salt Lake City, Utah), formerly known as Ambre Energy N.A. Arch Coal Incorporated (OTC:ACIIQ) (St. Louis, Missouri) had owned 38% of the project, but after Arch filed for Chapter 11 bankruptcy protection earlier this year, it sold its stake to Lighthouse Resources, which now owns the 100% of the proposed terminal project.
On April 29, the project received a draft environmental impact statement (DEIS) from the Washington State Department of Ecology (Lacey, Washington). A final EIS is due in 2017. Before construction of the Millennium project can begin, it must secure about 20 different permits from eight local, state and federal agencies, including six permits from the Washington ecology agency. Washington Governor Jay Inslee (D), to whom the ecology agency reports, has made climate change a signature issue.
The DEIS was issued the same week China decided to dramatically reduce its future use of coal to generate electricity. On April 25, the Chinese government announced as many as 200 planned coal-fired power projects may not be completed. Construction of some approved coal-fired generators may be pushed out until 2018, according to a report in The New York Times. The 200 or so planned projects that may not be completed have aggregate generating capacity of 105,000 megawatts (MW).
Although environmental regulations have stymied new-build coal-fired power plants in the U.S. for several years, coal-fired power plants are being developed at a rapid pace in several parts of Asia. The Chinese government's April announcement may dim the outlook for the growth of coal-fired power in that country, but other Asian nations, including India, Indonesia, Turkey and Vietnam, still are actively developing billions of dollars of coal-fired power plants.
"Even with the Chinese government's decision, there still are a lot of coal plants on the drawing board in China," remarked Britt Burt, Industrial Info's vice president of global research for the Power Industry. "I don't see that country completely moving away from new-build coal plants on the horizon, as we have seen in the U.S. and Europe. It's a slowdown, not a halt. On a global basis, coal continues to be the lead fuel driving new-build power plant activity," Burt continued.
After the Washington ecology agency released its DEIS on the proposed terminal April 29, about 267,000 public comments were filed with the state's ecology agency, spokesman David Bennett told Industrial Info. The agency estimated about 1,900 people spoke at the three public hearings it held on the proposed terminal in May and June. Bennett said he attended all three public hearings but could not say what portion of speakers supported the proposed project and what portion opposed it. "There were lots of voices from inside and outside the community and inside and outside the state," he added.
Bennett cautioned that what was released April 29 was just a draft environmental impact statement. "No permitting requirements or conditions were discussed in the draft EIS," Bennett said in an interview. He could not say when in 2017 the agency would issue its final environmental impact statement. If the project receives all required permits, it could begin construction in 2018. Phase I, through which up to 25 million tons of coal could be exported each year, could be operating by late 2019. Phase II of the terminal, which would add another 19 million tons of export capacity, could be operating by late 2021.
In a prepared statement released the day the DEIS was made public, Bill Chapman, chief executive and president of the proposed terminal project, said of the DEIS, "This major milestone moves us one step closer to creating family-wage jobs in Longview, while meeting Washington's strict environmental standards."
But the ecology agency flagged one issue--the projected greenhouse gas (GHG) emissions associated with the terminal--that could be a stumbling block. In its summary of the 3,000-page DEIS, the agency wrote, "To address the potential impacts of greenhouse gas emissions attributable to (building the terminal), the Applicant will prepare a greenhouse gas mitigation plan that mitigates for 50% of the greenhouse gas emissions identified in the 2015 Energy Policy Scenario. For initial operations this is 693,723 metric tons of CO2e (or 50% of 1,387,446) per year from 2021to 2027. For operations at maximum capacity this is 1.27 million metric tons CO2e per year (or 50% of 2.53 million) from 2028 to 2038. The plan must be approved by the Washington State Department of Ecology. For mitigation that occurs in Cowlitz County, the plan will be approved by Cowlitz County and (the state department of) Ecology. The plan must be implemented prior to the start of operations. The measures described in the plan may include a range of mitigation options. The measures must achieve emission reductions that are real, permanent, enforceable, verifiable and additional. The emission reductions may occur in Washington State or outside of Washington State but must meet all five criteria."
In an interview, Diane Butorac, a regional planner with the Department of Ecology, said the DEIS and the EIS were "information documents." She said the proposed mitigation measures were not required in the DEIS or EIS, but if a permitting agency wanted to require a GHG mitigation plan as part of a permit application, winning a permit would be conditional on satisfying that requirement. After the agency completes its EIS next year, it will then open the permitting process.
Regarding the GHG emission issue, Chapman, the project's CEO, said: "We will call into serious question the suspect global modeling used to calculate greenhouse gas emissions for this local port project."
In a subsequent response to the DEIS, Millennium Bulk Terminals said, "The Draft EIS engages in an unprecedented geographic scope of review of GHG emissions by attempting to forecast the price and demand of coal, not just in the U.S., but across Asia. Applicants cannot be required, (as) the Draft EIS proposes, to mitigate for speculative GHG impacts created by the combustion of the coal overseas. Even the most aggressive of the GHG regulations proposed by (the Department of) Ecology would not require facilities to mitigate for any impacts beyond state boundaries."
"If finalized, the GHG analysis employed in the Draft EIS will violate the Commerce Clause of the U.S. Constitution," the statement continued. "By proposing to require the Applicants to mitigate for effects resulting from Asian coal consumption and by attempting to regulate effects resulting from federally regulated rail transportation, the Draft EIS runs afoul of well-established constitutional and federal preemption doctrinal constraints."
"The Millennium terminal project could really help open overseas markets to U.S. coal producers, at a time when they have been devastated by changes in the U.S. power market," commented Joseph Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry. "But sharply reduced future need for coal in China, coupled with the gauntlet of permits required to build the terminal, raise questions about the proposed terminal's viability."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
