January 30, 2010 at 4:22 pm #2776
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Oil, Coal Barges Back Up on Ohio River on Lock Damage (Update3)
By Aaron Clark
Jan. 29, 2010 (Bloomberg) — Barge traffic on the Ohio River halted at the Greenup Locks along the border between Kentucky and Ohio after a 240-ton gate was damaged, stopping shipments of coal to about 30 power plants and forcing at least one refinery to slow oil-product deliveries and curtail production.
The main lock is expected to be shut from six to eight weeks and an auxiliary waterway is scheduled to open Jan. 31, said Peggy Noel, a spokeswoman for the U.S. Army Corps of Engineers in Huntington, West Virginia. Thirty-three power plants in nine states received coal shipments through the passageway in 2008. Marathon Oil Corp.’s Catlettsburg, Kentucky, plant reduced output because barge operations were interrupted.
The closure will mean serious delays for river traffic, said Cornel Martin, president and chief executive officer for Waterways Council Inc. in Arlington, Virginia. “It is significant,” Martin said by telephone. “It will mean delays in supplies and added cost to moving products.”
In 2008 nearly 60 million tons of commodities valued at $9.8 billion traveled through the locks, according to Noel. More than half of that was coal. Major closures of the Greenup locks in the past 13 years have resulted in more than $26 million in transportation delay costs, according to the corps.
More than 123 million tons of coal, or about 11 percent of U.S. production, was transported on the Ohio River in 2007, including the equivalent of 84 percent of output from the Appalachia region, according to corps and the Energy Department. The river runs 981 miles from Pittsburgh, Pennsylvania, to Cairo, Illinois, where it joins the Mississippi river.
“It might temporarily push back the timing of coal deliveries,” said James Rollyson, an analyst at Raymond James Financial Inc. in Houston. “Given how high inventories are, generically, right now it’s not a big deal. If supply were tight there could be a risk for power outages.”
Most coal in the U.S. is shipped by rail, followed by truck and then barge, he said
Consumer coal stocks reached a record 207.1 million tons as of Sept. 30, due to the mild summer and lower industrial usage, according to the latest data from the department.
There are eight barge-towing vessels waiting to travel west through the locks while two are waiting to travel east and one is in the locks’ main chamber, according to Noel. Each tow typically has 15 barges attached to it and can pass through the main locks in about 45 minutes. The same shipment takes about three hours to pass through the auxiliary locks, said Noel.
A single barge carries the equivalent of 70 trucks or 16 railroad freight cars, according to Martin. The council advocates for the maintenance of inland waterways and ports, according to its Web site.
Operations at Catlettsburg, which accounts for about 6 percent of U.S. Midwest refining capacity, have been cut back “to allow for product containment during this time,” Linda Casey, a Marathon spokeswoman, said in an e-mail. The refinery can process 226,000 barrels a day of oil, according to data compiled by Bloomberg.
Marathon has the largest private inland petroleum products barge fleet in the U.S., according to the company’s Web site, with 15 inland waterway towboats and 196 barges.
The terminal, or rack, price in Cincinnati for 87-octane gasoline blended with 10 percent ethanol was $1.96 a gallon, according to data compiled by Bloomberg.
“The racks downstream from the refinery might see some tightening,” said Lewis Adam, president of ADMO Energy LLC, a supply consultant in Kansas City.
American Electric Power Co., the largest U.S. producer of power from coal, said the closure may delay some deliveries to its plants in the area, and that it maintains inventories adequate to prevent power disruptions.
“We really have no concerns about fuel supplies,” Pat Hemlepp, a spokesman for the Columbus, Ohio-based utility owner, said today in an interview. “This is just more evidence of the aging infrastructure on our waterways.”
To contact the reporter on this story: Aaron Clark in New York at firstname.lastname@example.org Last Updated: January 29, 2010 16:44 EST
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