Keeping energy on track
WHEATLAND, Wyo. — In the time it takes to microwave a frozen dinner, another 120 tons of coal is dumped from a railroad car at the Laramie River Station. It’s a scene that can occur 200 times a day.
To keep electricity flowing to some 1.6 million homes, the power plant, which is owned by six electric utilities, burns up to 24,000 tons of coal every day. It requires a dependable, steady stream of coal.
This past year, however, the stream of coal was anything but steady, even though the plant is only about 100 miles from the Powder River Basin in northeast Wyoming, home to the nation’s top 10 producing coal mines.
Sapped by sporadic shipments, the power plant’s stockpile of coal dwindled to less than a week’s supply this past winter. Basin Electric Power Cooperative had to make plans for scaling back the plant’s operations and power output.
“It’s not increased generations causing the stockpile to go down,” said Basin Electric spokesman Floyd Robb. “It’s lack of coal deliveries.”
Basin Electric is not alone. Power plants around the country have seen their coal stockpiles dwindle, mainly because of problems with shipping coal out of Wyoming, as well as increasing worldwide demand for energy.
The result has been higher electric bills in some areas because power companies were forced to replace coal with more expensive natural gas to feed their plants.
“People call us the Saudi Arabia of coal. But if you don’t get it to the power plants, it doesn’t matter,” said Mike Grisso, executive director of the Alliance for Rail Competition, a shippers’ organization.
Power generating companies are not expecting any improvement this year. David Wilks, president of energy supply for the Minneapolis-based Xcel Energy, testified before a Senate committee last month that power companies may be forced to buy up to $2 billion worth of natural gas to make up for a coal shortfall.
The two main shippers of U.S. coal — BNSF Railway Co. and Union Pacific Railroad — say they are investing hundreds of millions of dollars in order to ship more Wyoming coal and keep up with an ever-growing demand for power.
Today’s railroads use a rail system that had not added track and other infrastructure for decades. In fact, before 2003, railroads had been abandoning miles of unprofitable and underused lines.
Just in the area of coal, “the rails have to keep up with 20 (million) to 30 million tons of increased shipments each year,” David Khani, an industry analyst with of Friedman Billings Ramsey in Arlington, Va., said.
At the same time, increasing imports of goods from China and elsewhere are competing for space and time on the nation’s rail system, he said.
With little margin between coal supply and demand, any disruption in train traffic, especially in the movement of coal out of Wyoming, will influence coal prices around the country, he said. That’s what happened a year ago when derailments in Wyoming stopped traffic briefly and slowed shipments for months.
Anthony Hatch, an independent transportation analyst in New York, said he believes railroads will meet future demands for shipping coal. But it will take time because of the enormous task of expanding the industry.
The first major rail expansion in the United States in about a century is in the works. The South Dakota-based Dakota, Minnesota & Eastern Railroad is seeking $2.5 billion in federal loans to extend and rebuild rail lines so it can haul Wyoming coal to the Midwest and Great Lakes regions. Its loan application is pending before the Federal Railroad Administration.
“What we’re seeing here is a rail renaissance,” Hatch said.