Midwest drought slows barge deliveries to coal-fired power plants

Washington (Platts)--15Aug2005

As the Midwest's worst drought in years continues lowering water levels on the
Mississippi and other rivers, power plants are receiving less barge-delivered
coal, and shipping rates could rise.

Larry Daily, president of Alter Barge Line Inc., told Platts Coal Trader on
Friday that the river levels are the worst he's seen in six or seven years.
"1988 was the worst I've ever seen, but we're not there yet. But another three
or four weeks, and we'll certainly be there."

Bettendorf, Iowa-based Alter's fleet of 320 barges and six towboats have been
squeezed this summer, and Alter estimates the low river levels is costing his
company $200,000-$300,000/month. Alter operates on the Mississippi River from
New Orleans to St. Paul, Minn.

"Everyone is light loading," said Lynn Muench, vice president of Midcontinent
operations for American Waterways Operators. Barges leaving St. Louis are
loading between 2-3 feet less, and every inch is about 17 tons of coal.

Muench said that the barge companies absorb the cost on contract shipments,
"but when it comes to the spot markets, the customer bears the brunt, and the
contract losses eventually increase contract prices."

Ingram Barge Co., which operates on the Mississippi, Ohio and Illinois rivers,
said tow sizes remain significantly below normal due to narrowing widths.
"Also, there are several spots on the Mississippi where it is one-way traffic
or daylight only traffic," said P.B. "Kaj" Shah, Ingram's vice president of
customer service. "Low-water levels have caused us to reduce the draft [depths
of the barge below the waterline] to 9 feet from 9 feet 6 inches normal on the
Illinois. On the upper Miss, we have reduced our draft from 9 feet 6 inches to
9 feet. On the Ohio and Lower Mississippi, we have reduced draft to 9 feet
from 11 feet."

Shah said the lower Mississippi and Ohio rivers are the areas of most concern.
"If we don't get additional rain soon, it is possible that we will experience
a complete shutdown of the Lower Ohio and/or the Lower Mississippi at some
point during the next few weeks."

Where the Ohio River joins the Mississippi near Cairo on Illinois' southern
tip, several barges ran aground beginning a week ago. Those vessels have since
been cleared and that stretch has reopened on a case-by-case basis, with
barges allowed to pass if they sit high enough, the Coast Guard office in
Paducah, Ky., said. 

"That's not necessarily a typical trouble area there," a spokesman said. "The
last time we saw low water this severe or extreme was in 1997, then previously
in 1988." 

Mike Brashier, manager of the open hopper barge fleet from Memco Barge Lines,
a subsidiary of American Electric Power, told Platts Coal Trader that the
company has had to reroute deliveries and divert railcars to other loading
terminals to avoid shallow spots on the rivers -- what he called a Band-Aid
approach. 

"We have one plant that burns primarily Powder River Basin coal. We've had to
cut loadings from 11 feet to 8 feet 9 inches," Brashier said. At 110 tons for
every 6 inches, he said deliveries have been cut 385,000 tons on 15-barge
tows. The plant normally takes one tow every other day.

To get coal to AEP's 2,607-MW coal-fired plant in Rockport, Ind., which burns
eastern coal, Brashier said Memco can't get barges to Pittsburgh so trains are
being rerouted to AEP's Cook Coal Terminal at MP 947 on the Ohio River to
avoid shallow parts of the river. Still, the barges have been cut to 9-foot
drafts from 11-foot 6-inch drafts, cutting 8,250 tons from every tow. The
plant receives daily deliveries. 

"We're not to 1988 levels yet, but with the weather forecasts I'm seeing,
we're getting there." In 1988, he said rivers like the Ohio and Mississippi
looked more like beaches with creeks running through them than the commercial
rivers they are.

Commercial traffic on the Mississippi is moving, although any further drop in
the water level may make shipping troublesome, according to the Army Corps of
Engineers. The Corps is charged with maintaining a navigational channel at
least nine feet deep and 300 feet wide on the river. 

Around St. Louis, the National Weather Service said the Mississippi's level
would continue to decline over the next month. Some potentially strong
rainfall was expected in coming days in northwest Missouri, but whether that
helps -- feeding into the Missouri River then into the Mississippi River --
depends on the rain's intensity. 

A Coast Guard advisory Aug 9 recommended that deep-draft barges -- those with
the heaviest loads -- be moved out of the Upper Mississippi as soon as
possible. The Corps has been scrambling to keep the river open, using a
247-foot-long dredger up the river to lower the bottom of St. Louis' harbor.  

A commercial dredge hired by the Corps recently reopened the Kaskaskia River
in Illinois and has been sent south to go to work near Cape Girardeau, Mo. 

"Once you've lost a day on the river, you can't recover it," said Alter's
Daily. "We're getting rain [Friday], but not enough to cure the river. We need
a couple weeks of steady rain every few days."

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