What A Great County!

Don sent me the link to this story: Kinder Morgan could increase coal shipping through Gulf of Mexico ports.

It makes more sense to export coal from west coast ports, but faux-environmentalists are hampering that, so KMP is planning to build more shipping terminals in Gulf-friendly states like Louisiana and Texas. Amazing how things work out.

Killing The Keystone --> More Diesel Trains and Semi's Hauling Oil; Now More Trains Hauling Coal

Updates

Later: See first comment below. This information about "40 more unit trains daily through Billings" is coming from an environmental group. I was spoofed. I thought 40 unit trains/day was a bit much. Maybe there is enough coal and enough demand to warrant 40 unit trains but now that I know a bit more about the source, I have to question the validity of the story. A huge thank you to "anonymous" for alerting me to a bit of hyperbole and its source.

Original Post

The faux-environmentalists killed the Keystone XL so that "they" could put more semi's on the road, and more diesel trains on the track. And, of course, this works out well for the oil companies: they pass on the extra cost of transportation to the mineral owners and/or the consumer, but they now have the flexibility of moving their oil where they want and not constrained by pipeline. Also, any pipeline spill, no matter how small, shuts down the entire pipeline for an indefinite period of time. Not so with a derailment or a motor vehicular accident: within hours things are back to normal.

Now this story: how would an extra 40 coal trains per day through downtown Billings, MT, affect quality of life there?

This is not a joke. [Well, maybe it is. See first comment below, and update above.] Forty more unit trains/day. Not forty more railroad cars, but forty more unit trains -- a 100-cars in a unit train.

The expected shipping of coal from the Powder River Basin to Asia is likely to increase train traffic through Billings, according to a conference brochure.

For investors: find those manufacturers building rail cars. 

Coal: Win-Win for Utility, Customers, Miner -- Not a Bakken Story

I generally don't post stories about coal, and even less so when the stories have to do with out-of-state suppliers and utilities. But this one is interesting enough, that I've included it as an exception. There are several lessons from this story, but I won't go into them. I will simply link the story and a couple of highlights, leaving it up to the reader to look for the lessons. I think it's a great story.

Link here, from the Billings Gazette.

Peabody Energy, which operates several mines in the Powder River Basin in Wyoming, has inked a six-year deal to provide coal to several electrical power plants in Missouri — a deal the buyer says was driven by a need to meet stricter federal environmental regulations.

The basin’s low-sulfur coal will allow Ameren Missouri to defer purchase of costly clean air filtration equipment, which would be paid for by higher rates — an estimated 15 to 20 percent hike by 2017 — charged to customers.

The company said the deal with Peabody is the “backbone” to its strategy to comply with new stringent federal regulations that require lower sulfur dioxide emissions.

Data points:

• A six-year contract for 91 million tons of coal
• Contract is between the largest Powder River Basin producer and the largest Powder River Basin customer
• The contract represents a growing market for low-sulfur Powder River Basin coal
• Ameren Missouri provides electricity for 1.2 million customers in central and eastern Missouri
• St Louis-based Peabody owns three coal mines in Wyoming's section of the Powder River Basin: Rawhide, Caballo, and North Antelope/Rochelle
• The mines produced 140 million tons of coal last year
• The total amount of coal from the entire Powder River Basin produced last year was 428 million tons

The story did not say which railroad, if any, will be transporting the coal, but Warren Buffett purchased Burlington Northern Santa Fe railroad in 2010.

Coal Not Wanted By Minnesota, California, Others, Will Be Shipped To Asia

Updates

June 17, 2011: Cloud Peak Energy successfully acquired nearly 60 million tons of coal which will help the company meet its growing exports to Asian markets.

The "key" words are "help meet." incredible.

Original Post

I don't know how many times I have posted similar stories, or sent e-mails regarding the same to others regarding this issue, but every time someone sends me a story that some state won't allow coal-produced electricity, or will minimize the use of coal, I simply reply that Asia will take all we can produce.

Here's an article to support my thesis.

While the US administration does what it can to destroy the domestic energy industry, and superficially raise energy prices through "cap and trade" talk, EPA regulations, etc., China and India are going to take advantage of the situation.

This is not rocket science.

I have to commend (again) Warren Buffett for having the foresight to buy Burlington Northern to ship coal to Asia. Note something else in this story: after all the hassle of trying to ship more coal out of a Washington State port, this new initiative will ship coal out of a Canadian port. A Washington State port refused to increase port facilities because it did not want to contribute to global warming.  Even Canada is looking better and better vis a vis the United States and energy.

I talk about the lost decade (2000 - 2010, see tag) but I fear we are headed for another lost decade.