Coal is king on the rails now, but maybe not forever

McClatchy NewspapersOctober 31, 2011 

WASHINGTON — A big part of what saved the freight rail industry from disaster lies not far beneath the rolling grasslands of eastern Wyoming.

Larry Kaufman, a transportation expert and author who worked in public affairs at BNSF predecessor Burlington Northern when it first tapped the vast coalfields of Wyoming's Powder River Basin in the 1970s, said coal is a great business for railroads. They've been hauling it for more than a century, and they invested billions of dollars on track and locomotives to move it.

Coal still generates half the country's electricity, and BNSF chief executive Matt Rose makes no apologies for it. BNSF runs dozens of mile-and-a-half-long coal trains every day from mines in Wyoming to power plants as distant as Georgia and Texas, and it's looking to expand its export coal business to serve growing demand overseas.

"We could eliminate all of our coal assets in this country, and it would be a disaster," Rose said in a recent interview. "We're going to need coal for a long time."

While freight railroads have aggressively pitched their environmental friendliness, many environmentalists don't like the fact that railroads haul half a billion tons of the fossil fuel a year, and that an increasing amount of it is fueling the growth of U.S. competitors such as China.

"We're supporters of rail as a mode of transport, but we do believe that what's being shipped is important," said Ross Macfarlane, a senior adviser at Climate Solutions, a Seattle-based environmental group. "Coal is a dirty and polluting commodity."

Some residents and environmentalists in Bellingham, Wash., oppose a proposed export terminal that could handle 24 million tons of coal a year from the Powder River Basin, brought there by BNSF trains to load onto Asia-bound ships.

"We believe as developing countries develop, they are going to need enormous amounts of energy," Rose said. "People are building coal plants all over the world."

But environmental concerns might not be what sends coal trains into the history books along with the steam locomotive or the telegraph operator. Railroads can make money hauling other goods, too, and they aren't spending hundreds of millions of dollars on new facilities to run more coal trains.

For one thing, they're hauling turbines for wind farms. They're also moving the heavy equipment used in unconventional natural gas drilling. As natural gas becomes more abundant and less expensive, it could displace coal at power plants nationwide.

But the big bet is intermodal service, picking up containers that also travel aboard ships and truck trailers. Rose's railroad recently spent $85 million to eliminate a major bottleneck in New Mexico on its busy Chicago-Los Angeles corridor. This improvement was meant to speed up dozens of daily trains of containers and trailers.

BNSF also is building a $250 million intermodal terminal in Edgerton, Kan., about 40 miles southwest of Kansas City, and a $500 million terminal is planned for Southern California, the primary gateway for manufactured goods from overseas to consumer markets throughout the U.S.

While the coal business now accounts for a quarter of railroad revenues, Kaufman said that coal's future boils down to simple economics, and industry leaders know it.

"They understand what's happening to coal, and they understand they're not able to change it," Kaufman said.

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McClatchy Newspapers 2011

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