The OPEC of coal

Coal trains that rumble night and day out of Appalachian mines are carrying a fuel more to the world's liking with almost every passing crisis. War in the Persian Gulf, coming after high oil price jumps in 1979 and miner strikes in Poland and Australia, has helped boost US coal exports by two-thirds so far in 1980, or nearly to a level not anticipated until 1985.

What worries other nations, however, is that a sudden return of the once and future king of fuels someday could mean less-than-royal treatment by the world's largest coal supplier, the United States.

This quick jump in export, mainly to Western Europe, has caused renewed forecasts of the US becoming the "OPEC of coal" with an estimated 200- to 300 -year reserve in rich, thick veins under East and West mining fields.

"Nineteen hundred eighty exports are a good indication of what the future holds," says Connie Holmes of the US Coal Exporters Association. Eager to end the US trade deficit and reduce high miner unemployment, the Carter administration formed an interagency task force in May to solve roadblocks to the US leading the way into a new coal age.

Coal can provide two-thirds of the world's new energy supplies for next 20 years, stated an extensive World Coal Study by the Massachusetts Institute of Technology last May, with the US exports making up nearly half the market.

But even the possibility of a partial US energy monopoly in the future has ignited concerns among American allies now over possible supply cutoffs during an energy emergency or, less likely, the use of coal as a political weapon.

Such fears are not unfounded.

In 1973, point out delegations of coal buyers on recent visits to American coal companies, the Department of Agriculture helped farmers by blocking exports of soybeans in a market almost totally controlled by the US and central to Japanese diets.

Would the flow of US coal likewise be interrupted?

The sanctity of long-term coal contracts was to have been addressed by President Carter in a public meeting planned for Oct. 24 at the White House, but the forum was rescheduled until after the election Nov. 4, says Berhardt Wruble, head of the six-month- old coal export panal. "We want to disavow coal exports as a political weapon," he said.

Of more immediate worry to Europe, Japan, and other coal importers, however, have been long delays this year in loading ships at US coal ports, specifically the largest such harbor in Norfolk, Va., known as Hampton Roads.

Sudden demand for both utility-grade and steel-making US coal caught the nation's port facilities on the East and Gulf coasts unprepared, creating a bottleneck in the coal flow. The US coal and rail industry did not anticipate the fast conversion to coal of many European oil-fired plants in 1980 following last year's world oil price hikes.

Piers for loading were too few and too small to transfer enough of the coal from rail cars to conveyor belts and then to the hungry cargo holds that now must wait offshore.

At anchor in Chesapeake Bay of Virginia, for instance, are several dozen large ships that have swung at anchor for as long as 30 days waiting to take on coal from trains rolling down from the Appalachian hills. One day's waiting costs an average $15,000 for each ship, foreign buyers report. This delay adds upwards of 20 percent to the cost of coal delivered overseas.

"It's a joke," says Philippe Julienne, buyer for French coal users, "and yet it is frightening. By 1983, it will cost buyers at least $100 million extra for the delay."

Still, the high cost of waiting, offset somewhat by the US advantage of closer ports to Europe, has not caused the small energy armada to turn to more distant nations. Some ease-up in the long queues is reported at Baltimore and Philadelphia, although, Mr. Julienne says, "We expect no improvement for the next two years." By 1987, port capacity for coal exports is expected to increase by 100 million short tons if a number of industry construction projects are completed.

Of equal concern beyond the immediate need for faster and bigger dock loading facilities is a shift to larger coal ships. Projections foresee vessels displacing up to 150,000 deadweight tons -- compared with 60,000-ton colliers now in use -- by the late 1980s when demand for coal exports is expected to rise quickly as coal liquefaction plants come on line.

So far, no American harbor has been dredged from the normal 40 to 45-foot depths to the 55 feet required for the draft of these extra-tonnage tankers. Australia and South Africa, the largest exporters behind the US, already have such superports in use now or new ones coming on line soon, says Julienne, attracting the business of the new bigger ships.

"Whether the US gets more of the market remains to be seen," Julienne adds.

This snag in US coal export prospects is "very, very substantial," says Mr. Wruble. The White House task force, which plans to release its recommendations in December, is expected to call for shorter lead-times in dredging harbors to accommodate bigger ships, including larger oil tankers. Rather than a normal 10 or 20 year process for dredging, the panel is expected to call for design work on Hampton Roads and other large coal ports to be finished by the Army Corps of Engineers by 1984, speeding up both congressional and environmental reviews.

"Certainly, we have to recognize that the reviews of these projects are not ahead of our time. We just cannot sit around and say let's take another look at the environmental impact. The environmental concern has gotten too big. It makes sure that nothing happens," said Wruble. Environmentalists have opposed dredging because of the possibility of releasing toxic metals and other pollutants deposited over past decades in the brown ooze at the bottom of the nation's harbors.

Whatever happens to the recommendations, more federal involvement in this increasingly important US export is almost certain. Under consideration, for instance, are some guarantees of financial compensation if a coal contract is interrupted by the US government. Such guarantees would provide some degree of certainty that would allow long-term investment in new port and coal transportation facilities.

Also, coal buyers have expressed concern over the quality of shipments, often resulting in coal that either contains large quantities of pollutants or has insufficient heat content.

"We want to standardize quality of coal exports," said Wruble. This could be done, he suggests, by government coaxing US coal exporters to regulate quality themselves.

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