Rail delays hit Powder River Basin Coal

2014-04-22T01:00:00Z 2014-05-30T11:22:18Z Rail delays hit Powder River Basin CoalBy TOM LUTEY tlutey@billingsgazette.com The Billings Gazette

In one of the coldest winters in recent memory, the heating plant at the University of North Dakota was running out of coal.

The trains that normally deliver a steady supply of Montana coal for the UND physical plant were stifled by weather and track congestion. The school was in trouble and as winter wore on, it appeared there was no end in sight.

“We haven’t been able to get coal for a long time. It’s been terrible,” said Larry Zitzow, UND facilities management director.

UND will spend a $500,000 to $1 million more on heating costs this year because coal shipments out of the Powder River Basin in Wyoming and Montana have been bottled up by railroad delays. The university is burning fuel oil and natural gas in place of coal at a considerably higher cost.

At coal-fired power plants across the country, coal piles shrunk to a six-year low as Americans turned up their thermostats and power plants shoveled in what coal they had, according to the U.S. Energy Information Administration. At the same time, coal train deliveries became less reliable across the Northern tier of the U.S., where weather combined with Bakken crude shipments to cause significant shipping delays for anything pulled across the country by locomotive. In the northern tier, that railroad is Burlington Northern Santa Fe.

“Based on what’s been shipped in the first month of 2014, we have seen BNSF deliver 50 to 60 percent of customer demanded unit trains,” said John Barr, Westmoreland Coal’s vice president of sales and power. “We’re getting trains every day, we're just not getting enough of them.”

Westmoreland operates the Absaloka Mine on the Crow Indian Reservation in Montana.

Unit trains are trains contracted to ship a single commodity, typically grain, oil or coal, in 100-plus car formations more than a mile long. Unit train shippers have been very outspoken about how bad shipping has become across the northern tier, often suggesting that one or more commodities get preferential treatment over the another. BNSF has been insistent that everyone is feeling the pinch equally.

In March, after a rail consultant for the Northern Plains Resource Council placed blame for the delays squarely on oil and coal shipments, BNSF told The Gazette the problem was partly due to weather and increased traffic, but also construction that slowed deliveries late into fall.

Construction slowed shipping right up to winter and then extremely cold temperatures slowed things further. In extremely cold weather, it becomes difficult to get a good seal on a train’s air brakes, BNSF’s Steve Forsberg told The Gazette. The bad connection means the trains have to pull shorter car runs, down to 4,500 feet from the normal 7,000 feet.

The shorter cars mean more trains and more crews are needed to haul the same amount of freight the railroad would normally haul with a smaller number of 7,000 foot trains.

BNSF is assuring customers that shipping will get better as the weather improves. The company is also adding 500 locomotives and new crews to meet demand.

Customers know that another construction season has started and non-weather delays are a given.

For coal shippers, the ongoing delays mean it will probably be difficult to deliver coal to power plants in July and August as Americans turn on their air conditioners and energy demand ratchets up.

“I don’t predict disaster. I predict muddling through and more expenses, and utilities would argue unnecessarily so,” said Thomas Canter, National Coal Transportation Association director.

Earlier in April, Canter told the federal Surface Transportation Board that his power-generating members were concerned about having safe stocks of coal on hand. He said he didn’t think rail conditions would improve until the first quarter of 2015.

Canter told The Gazette the biggest rail problems are centered in Chicago, a large rail hub where increased traffic and cold weather knotted up shipments across the region. There is no easy way out.

The small coal consumers like UND feel the pinch the most. At peak consumption, the university burns seven cars of coal a day, which isn’t enough demand for a unit train. Unit trains rule the tracks. Smaller shipments, known as splinter cars, take a back seat even when rail traffic is rolling smoothly.

Zitzow said the university is looking at partnerships with other splinter car customers to see if it can keep its coal supply flowing. The Grand Forks, N.D., campus is in the heart of sugar beet country. Sugar processors also rely on less than unit-train supplies of coal.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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