River Movement of Coal Down
The State Journal
7 August 2014
By Jim Ross
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
“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.