CA-Black-Transp

Gateway Pacific Terminal


By Dave Gambrel

The U.S. coal exporting community could not imagine a more perfect place than Cherry Point from which to export America’s cleanest coal, coal produced in the Powder River Basin (PRB) of Montana and Wyoming. Over the last 10 years, some six or eight project developers took a shot at building a coal terminal in the Pacific Northwest. Of the two that are left, Millennium and Gateway Pacific Terminal (GPT), GPT was the only one standing when the race began, and may be the only one left standing when built.

In the 1980s, nearly 30 years before China imported its first coal, Whatcom County, Washington, set aside a large industrial complex at a county site called Cherry Point. Initially occupied by petroleum refining and primary metals manufacturing, the site was large enough to also accommodate additional heavy industry, and was ideal for exporting coal in large, economically competitive vessels. It had:

  • Deep water, which is essential for docking and loading Panamax and Capesize vessels;
  • Proximity to Asian countries enabling lowest possible shipping costs;
  • Excellent labor pool. SSA Marine is a fully unionized shop and has full union support; and
  • Uniqueness. An ability to replace the world’s dirtiest coal with world’s cleanest coal.

Pacific International Terminals (PIT), a subsidiary of SSA Marine, has proposed building a deep-water marine terminal at Cherry Point in Whatcom County. In a related project, BNSF Railway has proposed adding rail facilities adjacent to the terminal site and installing a second track along the six-mile Custer Spur. Track intended for GPT usage would be heavy-duty CWR (continuous welded rail), which is extremely quiet.

One of the primary attractions of the site is its relative closeness to Asia (see Table 1).


Table 1 — Distance to Chinese Ports (nautical miles)

Both Norfolk and New Orleans, the main significant sources of low sulfur U.S. coals, are about the same distance from the three Chinese ports, and all are clearly twice as far as competing world sources in Australia and Indonesia.

GPT would be designed to handle up to 54 million metric tons per year (mtpy) of dry bulk commodities. Commodities would be transferred to the terminal by rail on the BNSF Railway’s Custer Spur. Modern material handling equipment would be installed and effective practices would be implemented to protect the safety of terminal employees and to protect the environment during terminal operations. The project area is zoned for heavy-impact industrial use and is located in the Cherry Point Industrial Zone that provides 2,100-2,200 jobs for Whatcom County and 11% of its total income. GPT would add another 1,230 jobs to a county deeply in need of more work.

TT Table2 Table 2 — The Businesses Currently Served by Cherry Point Industrial Zone

GPT announced July 15, 2014, that it submitted a new layout for the proposed terminal at Cherry Point. The new site plan incorporates an adjacent 350-acre parcel acquired by SSA Marine. With more land to work with, GPT was able to offer an alternative layout that reduces the footprint of the terminal infrastructure by 14% and reduces wetland impacts by 49%, according to SSA Marine Senior Vice President Bob Watters.

The property is located between the BP Refinery to the north and the INTALCO facility to the south. The property is also designated as part of the Cherry Point Management Area, under the Whatcom County’s Shoreline Management Program. The facility is located within the Cherry Point State Aquatic Reserve south of Birch Bay. The purpose of the Cherry Point Industrial District is to implement the policies of the Cherry Point Major Industrial Urban Growth Area (UGA) section by establishing a range of land uses and types of development appropriate for the area and to encourage large scale master planning of industrial sites to preserve sites of sufficient size to accommodate major port and industrial development.

THE TERMINAL
The terminal would consist of three basic components: the loop tracks for unit trains, the coal handling and storage facilities, and the ship-loading facilities. Nothing would be done using untried methods or unusual equipment. Methods for dust and spillage control would be similar to or identical to successful methods used elsewhere in the United States. Terminal construction would be completed in two development stages. Construction of stage 1 is expected to commence when all required federal, state, and local permits and authorizations have been obtained and environmental reviews have been completed.

RAIL
BNSF Railway would provide rail service via the Custer Spur, the only existing rail line serving the Cherry Point Industrial Zone. The Custer Spur branches west from the BNSF Railway’s Bellingham Subdivision main line at Custer, then travels west, then south another 6.2 miles. The width of the BNSF Railway’s existing right-of-way ranges from 70 feet to more than 150 ft. BNSF expects to acquire approximately 43 additional acres of contiguous rights-of-way adjacent to the currently owned rights-of-way. The additional land would be used for rail improvements required to support the terminal and for compensatory mitigation. The estimated area of acquisition is based on an average 40-ft linear embankment along the Custer Spur, additional width for an access road parallel to the Spur between Ham Road (BNSF Railway Milepost 1.86) and Brown Road (BNSF Railway Milepost 4.95), and extra width for construction of additional receiving and departure trackage.

BNSF is an industry leader in dust control, and imposes dust mitigation requirements under its Item 100 of BNSF Price List 6041. In addition to its load point specs, BNSF has built new facilities for re-spraying surfactant on coal in transit. The railroad’s new re-spraying facility at Pasco, Washington, would be ready for operations this year. Constructed for current coal shipments to Canada, the facility should also be available for coal shipments into Washington state.

COMMENT
To the outside observer, SSA Marine has patiently endured the attacks of bussed-in out-of-state protestors and highly organized write-in campaigns, but is still steadfastly committed to revitalizing the struggling economy of Whatcom County. Some have argued that the company stands to make a fortune on the terminal, but those people are apparently not aware of the coal industry bankruptcies that have occurred in recent years. One could not justify any argument that a fortune could be made, and certainly not in the foreseeable future.

Gateway Pacific Terminal conceptual site plan. Gateway Pacific Terminal conceptual site plan.

The majority shareholders of SSA Marine are natives of Bellingham, and are determined to replenish and grow the job base in their hometown and county. The difference is that GPT wants to provide jobs and economic opportunities to friends and to people that desperately need jobs, and they want to be able to make that happen. One must understand the company’s history to understand its dedication to this project. In 1949, Fred Smith formed Bellingham Stevedoring Co., the beginning of cargo handling operations for what would become Stevedoring Services of America (SSA) in 1984, and SSA Marine in 2003. Even though the company’s headquarters has moved south to Seattle, it still owns Bellingham Stevedoring Co., and has deep roots in the community.

Coal producer Cloud Peak Energy has purchased a 49% stake in GPT. Cloud Peak paid $2 million up front and will pay up to $30 million in future permitting costs. The Crow Tribe will have an option to secure 5% from Cloud Peak Energy. In the short term, SSA Marine gets an infusion and some relief from what has already been an expensive permitting process. Watters said cost relief was not the reason for the deal, however. “The real benefit for us is now we get a strategic partner on the coal side of the business,” he said. “It brings a strategic partner into the project that understands and helps us understand the end users.”

NEW CHINESE ENVIRONMENTAL RULES FAVOR PRB COALS
To existing users of PRB coal, many claims of fearful “Chicken Littles” are humorous. One such claim is that burning U.S. coal in China will feed the boilers of power plants that will in turn pollute the air that will travel back to North America in the air currents. The silliness of such a worry is that everyone knows China would not stop burning its own highly polluting coals just because someone in the U.S. was worried.

In 2007, a U.S. environmental group met with Chinese environmental officials to discuss air pollution. One result of those meetings was that three main population centers, Beijing, Shanghai and Guangzhou could no longer import coals that exceeded 1% sulfur. One of the characteristics of PRB coals is most of them are much lower in sulfur than 1%. This factor greatly promotes the desirability of PRB coals to Chinese utility customers.

HISTORY AND STATUS
In 1992, PIT applied for permits from Whatcom County, Washington, and the U.S. Army Corps of Engineers to construct a deepwater multimodal ship-loading terminal at Cherry Point. PIT withdrew the application prior to initiation of NEPA environmental review.

Later that year, Whatcom County issued a determination of significance under the State Environmental Policy Act (SEPA) and initiated scoping. At that point, the process was delayed. Whatcom County updated the determination of significance and scoping notice in 1995, beginning the environmental review process, and issued draft and final environmental impact statements in 1996 and 1997. Whatcom County issued project permits following a series of legal proceedings and a settlement agreement in 1999.

In 2011, PIT proposed changes and updates to the GPT proposal; the 2011 proposal included revisions to the shoreline substantial development permit issued in 1999. Whatcom County determined the requested revision to the shoreline substantial development permit did not meet the applicable revision criteria and that a new shoreline substantial development permit would be required. This SEPA process will include review of the revised proposal in light of the shoreline substantial development permit criteria. Whatcom County will use information developed through the SEPA process to inform the county’s decision, including their decision on the shoreline permit.

As a deep-water, multimodal marine terminal for the export and import of dry bulk commodities, the terminal has been designed to meet the operational needs of PIT and to service dynamic international bulk commodity markets successfully over the long term. The terminal design provides maximum flexibility to handle a wide range of commodities as market needs and customer demands change over time. The deep-draft wharf and storage and handling areas allow the terminal to load large, oceangoing vessels efficiently for shipment of commodities to Asian and other international markets. The ship-loading conveyor would depart the east-west reclaiming conveyor and run a half-mile to the dock, the first half over land and the latter half over water.

Because the terminal would handle a broad range of dry bulk commodities during its functional life, it will be designed so that only minor changes in infrastructure would be required to accommodate different commodities, or to change from export to import. A large land area is needed to provide sufficient space to store cargo temporarily at the terminal and to support the required rail infrastructure. In addition, a deep-draft wharf is necessary to accommodate the large Panamax and Capesize vessels that currently service the import/export commodity trade.

ADDITIONAL INFORMATION
The purpose in providing this brief report has been to acquaint the reader with the GPT project in general. Details of the project can be accessed at www.whatcomcounty.us/993/Gateway-Pacific-Terminal-Proposed-Project and www.nws.usace.army.mil.

Dave Gambrel obtained his master’s degree in electrical engineering in Seattle, and lived in Mercer Island, Washington, for eight years. He is a consultant/writer in the coal transportation industry.