River movement of coal down - Beckley, Bluefield & Lewisburg News, Weather, Sports

River movement of coal down

Posted: Updated:

By JIM ROSS

For The State Journal

Central Appalachian coal continues to lose market share while Northern Appalachian coal is growing. Meanwhile, more coal is moving by rail and less by river.

Those are some trends that appear as transportation executives discuss their business outlook and as the federal government posts numbers on use of locks and dams on the Ohio and Kanawha rivers.

Coal shipping by barge in West Virginia took a significant drop in the second quarter when compared with last year, especially where the Kanawha is concerned. The Winfield Locks and Dam, the busiest on the river, saw coal tonnage drop nearly 28 percent in the second quarter. Meanwhile, coal movements through the Robert C. Byrd Locks and Dam on the Ohio River between Huntington and Point Pleasant likewise fell.

Numbers show a long-time trend may be reversing. For years, more coal has moved down the Ohio past Huntington than moved upriver, but in the second quarter, more moved up than down.

On the rail side, CSX and Norfolk Southern are moving more coal for use in power plants, but they are moving less coal that is used in making steel.

Export markets for met coal are particularly weak because of slow demand and increased production from Australia, according to Don Seale, chief marketing officer for Norfolk Southern.

One thing helping the thermal coal side is that utilities are replenishing stockpiles that had been drawn down as power plants increased output during an unusually cold winter. Some utilities generated more power from natural gas last year as prices fell, but with gas prices going back up, the utilities are burning more coal.

“The Southeastern stockpiles are at a level that they’re being replenished coming off the winter,” Seale said in a recent conference call with investment analysts. “We expect that replenishment to continue in the second half of 2014, and also higher natural gas prices have created a situation where thermal coal is dispatching at a higher rate in the South than it did this time last year.”

Central Appalachia, which includes southern West Virginia, will continue to lose market share to Northern Appalachia, which includes northern and North Central West Virginia, and the Illinois and Powder River basins, Seale said.

“We’re seeing a continued conversion of utility coal from Central Appalachia, with higher cost of production, to the Illinois basin and to Northern Appalachia,” Seale said. In the second quarter, about 34 percent of Norfolk Southern’s thermal coal shipments originated in Central Appalachia and 31 percent in Northern Appalachia, Seale said. Illinois Basin coal, which has been increasing production in recent years, accounts for about 19 percent of shipments, he said.

“So we’re seeing Illinois Basin growth take place, and we’re certainly seeing Northern Appalachia growth take place, both into the Southeast. We expect that trend to continue,” Seale said.

Data from the Energy Information Administration show that West Virginia has held its own so far this year in deliveries of coal to power plants in the United States. Deliveries were up about 8 percent through May, although that growth was not evenly distributed. Counties with the greatest production also showed the most growth in deliveries. Monongalia and Ohio counties in the north showed the greatest increase in deliveries, although Kanawha and Logan counties also showed growth.