Coal news and updates

Barge firm scans Monongahela for new cargo

The decline of the Appalachian coal industry is forcing businesses that once depended on the black rock to turn their focus to gas and other commodities.

When the Hatfield's Ferry power station near Pittsburgh closed in October, Campbell Transportation Co. was a casualty.

For the previous five years, Campbell had shipped coal from West Virginia and other states to Hatfield's Ferry via the Monongahela River.

The closure idled 60 to 80 Campbell barges, says Chief Executive Peter Stephaich. He says he was blindsided by the decision to shut Hatfield's Ferry. "It was integrated into the grid," he says. "It had clean-coal technology. A plant like that shouldn't shut down."

First Energy Co., which operated the plant, cited weak electricity markets and the high costs of environmental compliance for closing the facility.

Pittsburgh-based Campbell says coal generates 70% of its revenue, down from 85% five years ago. The company predicts that coal will fall to below 50% within 10 years. The 50-year-old closely held company says it has annual revenue of more than $50 million and employs 500 people.

Campbell is coping by finding other goods to ship and by trimming the size of its fleet. The company, which owns 500 barges and 37 towboats, plans to scrap 30 coal barges this year, up from an average of five in previous years. It helps that scrap prices are relatively high. Campbell can get $40,000 to $60,000 by scrapping a barge, which costs $500,000 to buy new.

Campbell could become an early link in the supply chain to ship coal to Europe and Asia, though that is risky. "The export markets are promising but they're volatile," says Campbell President Michael Monahan. And proposed U.S. environmental regulations could restrain exports.

Campbell also is looking at the natural-gas industry for opportunities. Hydraulic fracturing, a fast-growing method for extracting gas from shale rock, generates considerable wastewater that often must be transported elsewhere for treatment. The Coast Guard has sought public comment on proposals that would allow shale-rock drillers to ship wastewater.

"The market will decide if the barge is a better option than trucks," says Mr. Stephaich, the Campbell CEO. "It'll depend on the origins and destinations of the wastewater."

Also, petrochemical plants, which use natural gas as a feedstock, could return to the region to take advantage of low gas prices and the proximity of Northeastern gas. That would provide opportunity for Campbell to ferry gas and chemicals. "We expect it," says Mr. Stephaich, "however, we could be wrong."

Campbell plans to begin transporting grain, as well, converting 10% of its barge fleet for the purpose. In some cases, that means installing fiberglass covers on barges.

Campbell's tugboats—pushing phalanxes of around a dozen barges, each carrying up to 1,800 tons of coal—remain a common sight on the Ohio and Monongahela rivers. This year, Campbell christened two $3 million tugs, the first major commercial vessels built in Pittsburgh in 30 years.

Still, the decline of Appalachian coal is a sea change.

"We're thinking of this as having to rebuild an entire platform," Mr. Stephaich says.

Source: The Wall Street Journal