Dominion Terminal Associates LLP
“You load 16 tons, what do you get? Another day older and deeper in debt,” as Tennessee Ernie Ford used to sing. But Dominion Terminal Associates LLP (DTA) loads a lot more than 16 tons. The capacity of its terminal, which transfers coal from railroad cars to vessels and barges, is 20 million tons annually.DTA’s highest-volume year was 1992, during which more than 18 million tons were shipped, and its lowest was slightly under 5 million tons shipped in 2006. This year, the company is operating at roughly a 14-million-ton rate.
“We don’t get involved with coal sales – DTA simply acts as a transfer terminal,” President Rick Cole explains. “We do not have knowledge of the sales price of the coal or of coal quality. Our job is to unload rail cars and then load the vessels as instructed by our shippers. DTA itself is not a for-profit entity. We are a limited liability partnership that passes its costs through to its owners.”
When the terminal was built by five coal companies 27 years ago, DTA presented the partners with a statement for the amount of money needed to operate the terminal during the following month. “They sent that money, and it’s worked that way for 27 years,” Cole says. The company celebrated its 25th anniversary in 2009.
DTA’s current parent companies are subsidiaries of three publicly-traded coal mining companies: Alpha Natural Resources LLC, which owns 40.625 percent of the facility; Arch Coal Inc., which owns 21.875 percent; and Peabody Holding Co. Inc., which owns 37.5 percent of the facility.
“I really don’t think at this point there is any producer of coal in the eastern United States that is large enough to justify operating a similar facility on its own accord, so you have to combine shippers to make it work effectively,” Cole asserts.
The production handled at DTA originates from mines located on CSX Transportation’s rail lines. Almost all the coal that comes in is mined in east Kentucky, southwest Virginia or West Virginia.
Ground Storage
DTA has two major competitors, one of whom, Kinder Morgan’s Pier IX facility, shares a common property line. Other competition is the Norfolk Southern Railroad, which operates a coal-loading facility at Lamberts Point in Norfolk, Va.
“We’re the largest outbound facility on the CSX in the United States,” Cole maintains. He admits Lamberts Point’s facility does a little more volume, but has no ground storage. Consequently, DTA and Pier IX can maintain greater volumes of coal ready for shipment while utilizing a smaller fleet of railcars.
With 100 acres, the company can stockpile as much as 1.7 million tons of coal. Typically, it’s between 500,000 and 1.1 million tons in storage. Ground piles ease blending of coals. DTA has the ability to do a tremendous amount of blending on some of the vessels it loads.
Automated Facilities
DTA uses programmable logic controllers (PLCs) to operate safely and efficiently. When a shipment is brought to the terminal, data from the railroad is downloaded into DTA’s system, which controls where the material is stacked based upon ownership and quality.
The machines have failsafe mechanisms to prevent stacking and reclaiming outside of preset coordinates in the stockyard. “The operator can’t accidentally put a shipment into the wrong pile – the system won’t allow it,” Cole insists.
He points out that through the ups and downs of the industry, DTA has worked hard to be highly efficient. “Besides the way we control our equipment with PLCs, we are constantly looking for improvements in technology that will help us work smarter,” he emphasizes. “But the nuts and bolts of the industry are not drastically different than when the facility was constructed in 1984.”
DTA is installing a new rail car dumper in spring 2011. Although there will be some differences in the system controls and the hydraulic and electrical systems, the new dumper is basically the same process that was installed at the facility 26 years ago. The original rail car dumper will have operated 27 years and will have dumped an estimated 300 million tons of coal over its lifetime. But eventually metal fatigue sets in.
“Most of our industry is operating equipment that is fairly old and is now very maintenance-intensive,” Cole points out. “Thanks to the support of our partners, we are able to maintain equipment availabilities in excess of 90 percent, even while utilizing equipment that is nearly 27 years old.”
Cole sees a strong future for DTA and others in the industry. “Going forward, we look for our business to be more stable than it has been in the past because of the growth in the Indian and Chinese economies” he says.
“Our fate and the fate of anyone depending upon the sale of coal into the world market ultimately depends upon the economies of India and China,” Cole asserts. “In the world of commodities, the U.S. economy is now the tail on the dog, and the Asian economies are the dog that wags the tail.”