Gulf Coast joins export coal rush

Dolphins leap out of the water near a ship passing Pelican Island in Galveston Bay, a lush bird habitat with prime fishing spots. Dolphins leap out of the water near a ship passing Pelican Island in Galveston Bay, a lush bird habitat with prime fishing spots. Photo: Brett Coomer Photo: Brett Coomer Image 1 of / 27 Caption Close Gulf Coast joins export coal rush 1 / 27 Back to Gallery

An island in Galveston Bay better known for flounder fishing and the Seawolf submarine park is the latest link in a chain of ports mobilizing to ship American coal out of the country.

The Texas, Mexico & Pacific Railroad LLC, a short-distance rail company headquartered in Galveston, has signed an option agreement with the Galveston Board of Wharves to build a pricey railway bridge and tracks to a new coal terminal on Pelican Island, where as much as 15 million tons of coal could be exported yearly.

In choosing a Gulf Coast port, developers likely will avoid the opposition that has confronted efforts in Washington and Oregon where environmentalists and other groups vigorously are fighting proposed coal export operations.

Pelican Island is a fierce contrast in uses, like so much of the land here.

Its 3,515 acres are home to Texas A&M University at Galveston and oceanography students cross to the island every day. Company logos and installations familiar to any Gulf Coast resident - Shell, Halliburton, and Baker Hughes - line one shore. A large section of the island is used for pumping in dredge material removed to maintain depth in the ship channels.

There also are acres and acres of green, bird habitat and prime fishing spots. With no plans yet drawn, it's too early to say how the coal facility may affect those.

For the coal to arrive from its source in the Rocky Mountains, the Texas, Mexico & Pacific must first build a railway bridge, with the cost heavily dependent on which of two suggested routes it follows: The rail company and its investors estimate they'll pay $600 million if it runs between Galveston and Pelican Island, $1.2 billion if it spans the longer distance across Galveston Bay from Texas City.

Texas, Mexico & Pacific Managing Director John Helsley said the company has not yet signed a contract with a particular coal mining company, but he's talking to half a dozen.

"We're getting calls from mining groups that want to export to China, Japan, Korea, Germany and India," he said.

Until recently exporting coal from the United States was not such big business. The fuel was needed at home. Now, U.S. coal customers are disappearing; power plants are closing at a pace few would have predicted a few years ago.

Shale gas alternative

But in Asia electrical grids are still ramping up to bring first light to hundreds of millions of people, and the new lights are often powered by coal.

"Here we are trying to get away from it, while other people are trying to get into it," says Helsley.

Producers can fetch stronger prices in Asia. There are several factors at work domestically: Shale gas has become economically competitive with coal in some places, and it burns cleaner, sometimes much cleaner, depending on which coal bed and which gas play are compared.

Federal regulators also acted last December on two decades of entreaties by child health experts to limit mercury emissions from electrical generating plants. Mercury is a fetal poison released when coal is burned in giant furnaces. Burning coal also releases significant amounts of climate-changing carbon dioxide.

No resident resistance

These issues are not always foremost on the minds of port directors whose concern is local economies. Investment in coal terminals brings fees and attracts dollars for other projects.

"A new rail connection would cause an explosion in development on Pelican Island," said Galveston Port Director Mike Mierzwa. "I have oil storage people who would take advantage of that. I have more and more cruise ships."

Galveston has become a major cruise home port. A five-day trip floats vacationers to Cozumel, Mexico, and back. Carnival Cruise Lines, Royal Caribbean, Princess Cruises and, as of recently, Disney Cruise Lines, all sail from the island.

The Port of Galveston tried to develop Pelican Island with a liquefied natural gas import facility in 2004. Residents said the agency violated the state Open Meetings Act and sued. This time port officials have met regularly with residents, sharing initial sketches, which is all that exists so far.

"We haven't heard from them yet, but I'm sure they'll make themselves known," Mierzwa, the port director, says.

The railroad company plans to hire an engineering firm by Nov. 1, and an environmental review will follow.

Galveston isn't the only port on the Texas Gulf with coal export plans. Over the summer, coal giant Peabody Energy Corp. announced it would export through Kinder Morgan Energy Partners' Deepwater Terminal in Pasadena and the Houston Bulk Terminal in the Port of Houston.

Another major player, Ambre Energy, is looking at exporting coal through Corpus Christi; Cline Mining has also expressed interest.

"There is just so much coal that needs to be moved, it's really not competition," said Helsley of Texas, Mexico and Pacific.

The Sierra Club has published a report critical of the coal port expansion in Corpus Christi. Together with several residents, it also objected in public comments.

In Pacific Northwest

But this opposition pales compared with that in the Pacific Northwest where a coalition of 87 environmental organizations called Power Past Coal is fighting proposed coal export facilities in Washington and Oregon. In Bellingham, Wash., 800 people turned out in March for a meeting intended to merely lay out future environmental review for a large coal export terminal.

"The West Coast is shut down," says Helsley.

Some who object to exporting coal are concerned about local shoreline damage, or damage to fish habitat. But for many, it's about shifting emissions from the U.S. to Europe and Asia.

"Opening up the Powder River Basin to the export market will have a devastating effect on the climate and will lock in another 50 years of dirty investment in fossil fuel infrastructure," said Earthjustice attorney Jan Hasselman, who has led the legal work of the Northwest environmental coalition.

For now, Gulf Coast coal export companies appear free to proceed, bound only by the vagaries of coal markets, and the considerable cost of transport all the way through the Gulf and Panama Canal. But not by public protest.

John Lambert and Chris Teachworth, 34, out for some afternoon flounder fishing on Pelican Island, considered that Galveston could use more business. "The thing is, coal is dirty," Lambert noted. "As long they're only moving it and it doesn't mess anything up."

ingrid.lobet@chron.com