As the B&O evolved into today’s CSX Transporta-tion, CONSOL Energy, now a diversified miner and natural gas provider, has grown into the nation’s underground high-technology, high-production longwall leader. While setting a standard of safety and environmental excellence throughout its mines, both surface and underground, the company has also aggressively pursued new markets and opportunities for its premium metallurgical, PCI and thermal coals. Key to the company’s successful growth strategy into worldwide markets is the increasing throughput of coal through CONSOL Energy’s wholly-owned Marine Terminal located in the historic Port of Baltimore.

 

During 2011, a record 12.6 million tons of coal was shipped through the terminal, besting the 1995 shipment total of 12.4 million tons. Today, almost 20% of the company’s total coal portfolio is committed to the international market. With domestic thermal markets withering, the terminal is expanding its infrastructure to handle an increasingly vital role.

CONSOL’s Most Important 200 Acres
Located on 200 acres along the north shore of the Patapsco River, CONSOL Energy’s Baltimore Marine Terminal in the Port of Baltimore is the only major East Coast coal terminal served by two rail lines—Norfolk Southern and CSX. “Not only do we get the flexible logistics of dual service, our shippers can also can put unique blends together,” said Chris Marsh, vice president, Baltimore Marine Terminal. By owning the terminal, CONSOL Energy has “control over our own access to the export market,” he said.

The terminal features high-speed, high-capacity equipment that provides coal transshipment directly from rail cars to ocean-going vessels. The terminal also has ground storage available for more than 1.1 million tons of coal. During 2008, only 8.9 million tons of coal was shipped through the terminal. In the last four years, throughput has increased by more than one-third and, going forward, the 20-million-ton horizon beckons.

Similar to the rest of the U.S. coal industry, CONSOL Energy is participating in the growth of world coal markets. Analysts are hopeful that these markets could expand another 55% by 2035. To better service that demand growth, the terminal has begun an infrastructure expansion that will allow CONSOL Energy to increase the amount of coal that can annually be exported through the terminal from 14 to 16 million tons and beyond.

Following CONSOL’s annual shareholder meeting in May, CEO Brett Harvey told reporters at the Pittsburgh Post-Gazette that he expects international demand will allow the company to expand the physical capacity at its terminal by another 4 million tons, to 20 million tons of capacity. “The Baltimore Terminal expansion is valuable in terms of expanding our coal into the world markets,” he said during CONSOL Energy’s first quarter earnings call in late April.

The strong export market is now bringing back production and helping re-open mines that were idled due to the continuing flat domestic economy. “Our Blacksville mine is returning to work on the strength of thermal sales to China and India. CONSOL Energy continues to leverage its export capabilities through our Baltimore Terminal. Thermal sales for the quarter will go to Asia and Europe, Central and South America,” said Bob Pusateri, executive vice president, sales, marketing and transportation.

Between CONSOL Energy’s Marine Terminal and the smaller Curtis Bay Terminal on the other side of the Baltimore Harbor, there’s roughly 24 million tons of throughput capacity.

“CONSOL and its coal marketing and sales partner, Xcoal, control about 18 million to 19 million of that 24 million. We are currently not restricted in our ability to be able to get volumes of coal offshore. As the utility market, longer-term, settles out with respect to some of the [new EPA regulations] and these units get shuttered in, we know that our emerging market is China and India, and, make no doubt, we are ready to serve that market. We have the tools to do it. We have the cost structure to do it,” said Pusateri. And it’s safe to say that the Marine Terminal’s role is central to this new international paradigm.

Safety & Environmental Dedication
As most are all too aware, the coal industry operates with a bull’s-eye on its back. Each day environmental groups try to figure out one new way to turn people against it. Because CONSOL Energy’s Baltimore Terminal sits adjacent to the famous Inner Harbor, it regularly has two to three news helicopters hovering over it each morning and evening doing the traffic and weather reports. “If anything happens, we are instantly front page news. Our view is, don’t worry about it: rise to the occasion. Our pride turns into our sense of professionalism. That professionalism turns into productivity. And our productivity keeps us safe and effective,” said Marsh.

Every decision CONSOL Energy makes—from the crewmember out in the yard to Marsh in his corner office—is reflective of CONSOL’s values. “Our values here are safety, environmental compliance and continuous improvement. As a company, we’re over 140 years old. You don’t survive that long if you don’t evolve. It’s not enough just to be productive, we have to do so in a safe manner while constantly being excellent stewards of the environment,” said Marsh.

The market forces that have determined the evolution of the Marine Terminal are really a timeline of both CONSOL Energy’s progression, but also the changing nature of the role of the U.S. in the seaborne export markets. Sections of today’s Baltimore Marine Terminal date back to 1916. Over the decades, the piers have been rebuilt, the yard layout changed, and the equipment continuously upgraded. The current facility was constructed in 1983, largely to serve the European steam market.

Coal Handling in the Terminal
Once trains come in the front door, they land on one of the Marine Terminal’s four inbound tracks. When a train is ready to dump, it is sequenced in. First, the train goes through the Marine Terminal’s long thaw shed which helps weaken any ice that may have formed during transport. Then, the train is moved by an indexer that positions two cars at a time into the rotary dumper. To better monitor activity, the Marine Terminal recently installed a brand new dumper cab. The operator now has larger windows and better visibility. In terms of controls, the operator now uses a joystick similar to those used by fighter pilots. “He has total control over the movement of the cars,” said Marsh.

After the train is dumped, it is released onto one of three empty tracks. The coal travels through a series of chutes and feeders. Then it is conveyed into transfer buildings where it gets sampled on the way into the coal yard. The coal then reports to a 72-inch yard belt. The Marine Terminal uses large stacker-reclaimers to stack the coal into stockpiles of roughly 150,000 net tons.

When a vessel arrives to be loaded, the stacker-reclaimer uses its bucketwheel to reclaim the coal. It digs coal from the stockpile and dumps it onto a conveyor. The conveyor passes through the machine onto an 84-inch yard belt that moves the coal back through the transfer buildings into a 2,000 ton silo. The coal is then sampled by another sampling system on its way to the ship loader. This five-story high machine transfers the coal from the belt into the holds of the ship.

“The primary aspect of our expansion project is to add a new outbound track and extend the one smaller inbound track. This will result in the terminal having four inbound and four outbound 130-car tracks so we can get a more balanced loading rhythm,” said Marsh. With the railroad’s assistance, CONSOL Energy expects to have the expanded track work done by the end of the year.

Another part of the expansion project was focused on fixing bottlenecks and enhancing material flow. That meant doing chute work inside these transfer points. “We had these old fashioned boxy type chutes where the coal would come off the belt, slam into a plate, drop down, slam into another plate and then work its way down and go to the next transfer point and then start slamming its way through those boxes too. As that met coal got pulverized into a fine dust, the coal would stick to the chutes and quickly build up. Then we’d have to stop everything and have crew members go in and hose the coal out,” said Marsh. CONSOL Energy contracted with Taggart Global to install curved chutes with ceramics and other materials to ensure that flow velocity is maintained.

“When you run a place like this, it’s all about planning, rhythm and execution. If you can’t get into a rhythm, it is difficult to achieve your volume goals. And to get into a rhythm, you have to be properly staffed, properly maintained, and you pretty much have to keep your big issues three to six months ahead of you. If you’re not thinking ahead and working with your partners to anticipate their needs and what they’re going to be, you will not be successful. We have 132 crewmembers who know their jobs, know what’s expected of them, and have been trained to execute those jobs safely,” said Marsh.

To make sure they are not co-mingling coals, picking up the wrong coal, or otherwise fouling up, the Marine Terminal has built in three levels of redundancy. Crews also group the coals into similar qualities near each other for further protection. “When you have up to five trains a day dumping here and you’re pumping out over 84,000 tons across the belts like we did in one day in mid-April—potentially a record amount, things can get challenging. For the most part, it’s all very straightforward. We just constantly allocate different footprints for different coals and we’re very carefully monitoring pile integrity to ensure consistency,” said Marsh.

The Xcoal Partnership
Xcoal Energy & Resources is a leading supplier of low, mid and high volatile hard coking coal to customers throughout the world. Xcoal also supplies semi-soft coking, PCI and anthracite coals from ports in Baltimore, Md., and Hampton Roads, Va., and is involved with mine development, mine financing and related infrastructure projects. CONSOL Energy has a marketing partnership with Xcoal, but not an ownership partnership. They have no competing priorities and no competing interests. “We’re in business together and we optimize that relationship,” said Marsh.

Some of the coal CONSOL Energy handles at the Marine Terminal is mined by other producers and blended with CONSOL Energy’s coal. “This is an example of the great partnership between Xcoal and CONSOL Energy. We have the might of all this production, financial stability, all this infrastructure. They’ve got a nimble entrepreneurial style. You put the two of us together and it is powerful, effective and efficient,” said Marsh.

Due to the shallow depth of the Baltimore harbor, some of the Xcoal vessels the Marine Terminal loads will later be topped off near Nova Scotia. The process only adds three steaming days to the entire trip going over to Asia, nominally a 48-day undertaking. “Xcoal figured out a way to get the efficiency of going from 130,000 up to 200,000 or more tons—it’s very innovative,” said Marsh. “For CONSOL Energy to meet the challenge of ensuring a competitive supply chain to customers in Asia, the company, in concert with its partner, Xcoal, will continue to top off vessels off the coast of Nova Scotia. This permits our customers to realize the benefit of lower ocean freight, while reducing the delivered cost of coal,” said Pusateri.

Increasing Volumes and Greater Market Penetration
A strange thing happens whenever you’re moving large amounts of tonnage through a terminal. The more tons you’re moving, the less inventory you have. But vessels can move coal out of the Marine Terminal faster than trains can deliver it. So when you have a lot of vessels coming at you, you will keep your inventory low. “Because the capacity of our process outbound is faster even than the process inbound, you really have to be balanced. This is a logistics exercise. I think what differentiates us from the other ports and terminals is that we really have the luxury to optimize the velocity,” said Marsh.

Evidence of these improvements is in the numbers now being handled. In the current down market, somehow the Marine Terminal is setting new outbound records. Last March, the terminal moved more than 1.3 million tons; May’s numbers were even higher. According to the latest figures released by CONSOL Energy, the company has 1.7 million tons of export coal booked for the second quarter. “We’re hopeful that we can duplicate that in the second half of the year. So our export volumes are continuing to grow.

“Customers like the fact that our coals are low in ash and they’re high-Btu. They travel extremely well. We’ve booked the vessel freights to allow this to happen. We have the capacity through CONSOL Energy’s terminal and others, and we’re really going to take advantage of this. We’ve broken into India for the first time in the first quarter,” said Pusateri. With assistance from Xcoal, CONSOL Energy’s coal no doubt will move ever further into emerging global markets.