bobwilcox The railroads between the Powder River Basin and the Midwest refused to give the pipeline easements under their right of ways. Later, they paid millions in legal settlements but by then pipeline was dead, dead, dead. I think the railroads were foolish, the states would never have let the water been exported out of the drought prone High Plains.
The railroads between the Powder River Basin and the Midwest refused to give the pipeline easements under their right of ways. Later, they paid millions in legal settlements but by then pipeline was dead, dead, dead. I think the railroads were foolish, the states would never have let the water been exported out of the drought prone High Plains.
"I think the railroads were foolish."
I have been thinking, maybe they were not so foolish? What made me think about it is an article by Fred Frailey I just read. It describes the coal slurry situation in the 70's from the perspective of BN Chairman and Vice Chairman, Lou Menk and Bob Downing.
One point from the article is that expanding and rebuilding the railroad into the Wyoming coal fields was a high risk move. To use an expression from the airplane business, it sounds to me that the BN was "betting the company" on the project. Some on the BN board were strongly against it:
"BN's board was divided, says Downing. Two board members in particular were vociferous in their opposition to putting the company at risk in this manner. At the critical August 1974 board meeting, Menk appealed for the support of his directors and begged for them to approve the building/rebuilding plan. After the vote in favor, director Norton Simon stormed out of the meeting past a group of BN managers waiting outside. Soon thereafter he resigned."
So, I am thinking that there was plenty of reason to be worried about something that might derail the project, like coal slurries.
The other point from the article is that the coal slurry threat was very real. The firm Bechtel claimed slurries could move coal more cheaply than railroads:
"As for coal slurry, construction giant Bechtel Corp. threw its weight behind this technology, claiming it could move coal from Wyoming to markets for less than railroads could. It sought a federal law giving it eminent domain for acquiring necessary land. The possibility (later disproven) that Bechtel's economic claims for coal slurry might actually be true hung over the railroad industry for years."
Now, I have no experience in railroading. Plus I was only 5 years old in 1975 when the BN was making this move into coal. So I will defer to you, Bob, and other professionals here who were in the industry in that time. But right now, I am wondering if railroads were maybe not so foolish in fearing the coal slurry pipelines, even though in hindsight they look that way. I dunno. I'm a complete beginner on this topic.
Thanks.
Here is a link to the article I quoted from:
Frontiersmen of the Powder River Basin: http://cs.trains.com/trccs/blogs/fred-frailey/archive/2009/09/25/frontiersmen-of-the-powder-river-basin.aspx
- Rails West
Falcon48 Paul_D_North_Jr: Bob's memory is better than mine. The "legal settlements" he refers to were judgments from anti-trust suits which found that several railroads conspired to drive at least one of the pipeline companies out of business. He's also right about the water issue - a populist "hot button" - and the railroads were also successful in using the political process by lobbying to prevent Congress from granting "eminent domain" / condemnation rights to the coal slurry pipelines to obtain easements and rights-of-way across those railroads, parks, your lawn, etc. But I suspect the biggest nail in the coffin was the development and refinement of unit train operations, which drove the cost of transporting coal by rail down to the point where the pipeline was not competitive. Although, in view of later 1980's and 1990's price increases by BN, one could argue that it was priced too low in the late 1970's - whether mistakenly or deliberately to preclude the pipeline competition, who can say ? Finally, the cost of money - capital - to invest in the pipeline soared in the late 1970's - my first mortgage in July 1980 was at 11-3/4%, and at the time we thought we got a pretty good deal. For the huge amount of all-new money that the pipeline would have needed to get built, those interest costs were an economic 'show-stopper'. - Paul North.
Paul_D_North_Jr: Bob's memory is better than mine. The "legal settlements" he refers to were judgments from anti-trust suits which found that several railroads conspired to drive at least one of the pipeline companies out of business. He's also right about the water issue - a populist "hot button" - and the railroads were also successful in using the political process by lobbying to prevent Congress from granting "eminent domain" / condemnation rights to the coal slurry pipelines to obtain easements and rights-of-way across those railroads, parks, your lawn, etc. But I suspect the biggest nail in the coffin was the development and refinement of unit train operations, which drove the cost of transporting coal by rail down to the point where the pipeline was not competitive. Although, in view of later 1980's and 1990's price increases by BN, one could argue that it was priced too low in the late 1970's - whether mistakenly or deliberately to preclude the pipeline competition, who can say ? Finally, the cost of money - capital - to invest in the pipeline soared in the late 1970's - my first mortgage in July 1980 was at 11-3/4%, and at the time we thought we got a pretty good deal. For the huge amount of all-new money that the pipeline would have needed to get built, those interest costs were an economic 'show-stopper'. - Paul North.
Bob's memory is better than mine. The "legal settlements" he refers to were judgments from anti-trust suits which found that several railroads conspired to drive at least one of the pipeline companies out of business.
He's also right about the water issue - a populist "hot button" - and the railroads were also successful in using the political process by lobbying to prevent Congress from granting "eminent domain" / condemnation rights to the coal slurry pipelines to obtain easements and rights-of-way across those railroads, parks, your lawn, etc.
But I suspect the biggest nail in the coffin was the development and refinement of unit train operations, which drove the cost of transporting coal by rail down to the point where the pipeline was not competitive. Although, in view of later 1980's and 1990's price increases by BN, one could argue that it was priced too low in the late 1970's - whether mistakenly or deliberately to preclude the pipeline competition, who can say ?
Finally, the cost of money - capital - to invest in the pipeline soared in the late 1970's - my first mortgage in July 1980 was at 11-3/4%, and at the time we thought we got a pretty good deal. For the huge amount of all-new money that the pipeline would have needed to get built, those interest costs were an economic 'show-stopper'.
- Paul North.
I think you're right about the reasons the ETSI pipeline project died. In fact, if my recollection is correct (questionable at my age), the final nail in the ETSI coffin was the first PRB coal contract UP and WRPI (CNW) made. It was with Arkansas Electric - one of ETSI's major projected customers, and the rates were much lower than the rates ETSI assumed railroads would charge (and that ETSI would have to beat to be viable.
With respect to the damages various railroads paid in the ETSI antitrust litigation, most of those were the result of settlements. But ATSF didn't settle (probably because they thought their involvement in the anti-ETSI activity was pretty insignificant, although I don't know this as a fact). As a result, they ended up with a $250 million judgement against them (under antiturst laws, actual damages are trebled), which was a lot more than any of the settling railroads reportedly paid.
With respect to BN's pricing strategy in the early PRB days, I wasn't with BN so I can't know for sure what their strategy was. But the thinking outside of BN was that they had made a bad mistake - they didn't properly identify all of the costs that heavy coal traffic would impose on the railroad. Essentially they treated the new coal traffic as incremental traffic. In other words, the priced it as if it were simply additional traffic that would be handled over existing infrastructure. In fact, on a rail line handling heavy coal traffic, the coal is really the base traffic for which the railroad must be built and maintained. When they realized the mistake, heads rolled and BN attempted to raise their coal rates. The attempted increases galvanized their utility customers, who began to bring rate challenges against the increases. That, in turn, created a cottage industry of lawyers and consultants who make their livelihoods from coal rate challenges- one reason (although not the only one) these cases have persisted over the years.
Thanks, Erik. That's exactly the kind of insight i was hoping someone would provide. To clarify a wee bit, because DC doesn't have cycles or phases, the connections between different DC systems don't need to first match up the cycles and phases as AC interconnections must, to prevent some kinds of electrical mayhem. And that's all I know about that . . .
Paul_D_North_Jr That's usually called a "mine-mouth" plant. Unfortunately, it suffers from one problem the same as the coal slurry pipeline - lack of water. The plant needs large quantities of cooling water for its steam turbines to run efficiently - why, I can't explain well, so I'll leave it to a mechanical engineer or someone else who understands thermodynamics and heat engines well - and that amount of water is scarce and hence zealously guarded in those coal field regions.
That's usually called a "mine-mouth" plant. Unfortunately, it suffers from one problem the same as the coal slurry pipeline - lack of water. The plant needs large quantities of cooling water for its steam turbines to run efficiently - why, I can't explain well, so I'll leave it to a mechanical engineer or someone else who understands thermodynamics and heat engines well - and that amount of water is scarce and hence zealously guarded in those coal field regions.
Some of the proposals for mine-mouth plants at Colstrip were projecting that up to half the flow of the Yellowstone river would be used for cooling water. Needless to say, this did not make Montanans very happy. (N.B. My dad was born and raised in eastern Montana and I have lots of relatives living still living in that state.)
I understand that the line losses with Ultra-High Voltage DC transmission are very low - but most lines are not that kind yet - darn near none, commercially. Also, I believe they have to be super-cooled to function that way. Again, I'll defer to someone with more expertise on the technology. So it may well be cheaper to haul the coal than pay the capital cost for thousands of miles of the new tranmission lines. Plus, the coal can be shipped to different plants as needs vary - the transmission lines are fixed.
I understand that the line losses with Ultra-High Voltage DC transmission are very low - but most lines are not that kind yet - darn near none, commercially. Also, I believe they have to be super-cooled to function that way. Again, I'll defer to someone with more expertise on the technology.
So it may well be cheaper to haul the coal than pay the capital cost for thousands of miles of the new tranmission lines. Plus, the coal can be shipped to different plants as needs vary - the transmission lines are fixed.
HVDC transmission lines don't need superconductors to have an advantage over AC lines. Roughly speaking, a two wire DC line can carry the same power as a three wire AC line when using the same conductor size and insulator strings. Power loss per mile with DC is a bit less than for AC. Another advantage for DC is the lack of a synchronous connection. The major disadvantage for DC is the cost and losses associated with the AC/DC conversion stations.
The dividing line is on the order of 500 miles, longer lines would be DC, shorter lines would be AC.
- Erik
Re: Murphy's above
Thanks, Murphy. I withdrew the comment you quoted. I might throw out some questions later after I've done some more reading.
Rails West (Also, since I see that someone has rated this thread 1 out of 5 stars (ouch ), I'll take that as a hint and gracefully bow out for now.)
(Also, since I see that someone has rated this thread 1 out of 5 stars (ouch ), I'll take that as a hint and gracefully bow out for now.)
Thanks to Chris / CopCarSS for my avatar.
Paul_D_North_Jr Bob's memory is better than mine. The "legal settlements" he refers to were judgments from anti-trust suits which found that several railroads conspired to drive at least one of the pipeline companies out of business. He's also right about the water issue - a populist "hot button" - and the railroads were also successful in using the political process by lobbying to prevent Congress from granting "eminent domain" / condemnation rights to the coal slurry pipelines to obtain easements and rights-of-way across those railroads, parks, your lawn, etc. But I suspect the biggest nail in the coffin was the development and refinement of unit train operations, which drove the cost of transporting coal by rail down to the point where the pipeline was not competitive. Although, in view of later 1980's and 1990's price increases by BN, one could argue that it was priced too low in the late 1970's - whether mistakenly or deliberately to preclude the pipeline competition, who can say ? Finally, the cost of money - capital - to invest in the pipeline soared in the late 1970's - my first mortgage in July 1980 was at 11-3/4%, and at the time we thought we got a pretty good deal. For the huge amount of all-new money that the pipeline would have needed to get built, those interest costs were an economic 'show-stopper'. - Paul North.
I'm somewhat familiar with the ETSI antitrust case against various railroads, although I wasn't directly involved with it One of the things that made this case difficult for the railroads is that they don't seem to have been very cognizant of antirust concerns in the various private measures they took against the project. As a general matter, it's OK for competing companies to collectively try to get government action that disables competitors (the constitutionally protected "right of petition'). And it's generally OK for an individual company to UNILATERALLY refuse to cooperate with a competitor. But it is not OK for a group of competing companies to collectively take private action to prevent a potential competitor from entering a market or drive it from a market.
While my information may be incomplete, my understanding is that the railroads involved in the case may have coordinated their PRIVATE actions against the ETSI project, particularly their denials of pipeline crossings, and meticulously documented those activities. In other words, they weren't very sensitive to antitrust issues - they didn't even imagine that what they were doing might be questionable under antitrust laws. That's understandable because railroads in that era had long been regulated cartels and commonly acted collectively, even if there were no good reason to do so. The proposed ETSI pipeline is a good example. There was no real reason for the railroads to coordinate their private responses to the pipeline project , since it was in each coal railroad's individual interest not to do anything which facilitated the project. They acted collectively because, in that era, that's the way they did business, and they saw nothing wrong with it, It took litigation like the ETSI and the Pinney Dock antitrust cases, and legislative developments like the Staggers Act and its limitations on collective ratemaking to cause senior railroad management to pay more attention to antitrust issues. You would not find railroads today doing what the railroads did in ETSI,
The irony is that the ETSI pipeline would almost certainly have failed regardless of railroad opposition, for reasons discussed in some of the other posts on this thread. By being insensitive to antiturst concerns, the railroads essentially bailed out the ETSI promoters.
The legal side of this slurries vs railroads issue looks interesting. A quick google turned up a lot of literature. Here is a preview of a NY Times letter that picqued my interest:
"To the Editor: Your Aug. 24 editorial about coal slurry pipelines was factually deficient. The focal point of railroad opposition to such pipelines is not the right of eminent domain but the matter of whether Congress should legislate special benefits to them when such benefits are not accorded to railroads."
I will have to do some research and see what I can learn.
Thanks for the contributions.
Paul_D_North_Jr That's usually called a "mine-mouth" plant. Unfortunately, it suffers from one problem the same as the coal slurry pipeline - lack of water. The plant needs large quantities of cooling water for its steam turbines to run efficiently - why, I can't explain well, so I'll leave it to a mechanical engineer or someone else who understands thermodynamics and heat engines well - - Paul North.
That's usually called a "mine-mouth" plant. Unfortunately, it suffers from one problem the same as the coal slurry pipeline - lack of water. The plant needs large quantities of cooling water for its steam turbines to run efficiently - why, I can't explain well, so I'll leave it to a mechanical engineer or someone else who understands thermodynamics and heat engines well -
To get a good "bottom" on the heat cycle. The greater the temp difference between the high and the low temp in the cycle, the more efficient - in general.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
jrbernier One of the other factors that even ended the 'demo' pipeline was the more severe than expected abrasion of the coal to the pipeline.
One of the other factors that even ended the 'demo' pipeline was the more severe than expected abrasion of the coal to the pipeline.
Interesting. I had not considered abrasion. But it makes sense. I have heard that the trans-Alaska, crude oil pipe-line is subject to some abrasion due to sand suspended in the crude oil. Abrasion from coal slurry must be considerably worse than crude oil.
One of the other factors that even ended the 'demo' pipline was the more severe than expected abrasion of the coal to the pipeline. All in all, the slurry idea had too many techincal and political issues.
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
Murphy Siding Gillette, Wyoming. I lived there at the time. That area is probably technically a desert. It is dryer than dry.
Gillette, Wyoming. I lived there at the time. That area is probably technically a desert. It is dryer than dry.
In about 1984 I went through Gillette on a road trip. It looked like a boom town. Work trucks everywhere. Coal trains passing through with a variety of locomotives -- BN, Milwaukee Road, MKT.
The coal slurry pipeline was to start at the coal fields in the Powder River Basin near Gillette, Wyoming. I lived there at the time. That area is probably technically a desert. It is dryer than dry. There are no trees. The landscpae is about 50% scrub and short grass, 50% red dirt where nothing grows. Everything is covered with a layer of fine dust. I worked in a lumber yard. When you walked around in the yard, you left footprints in the dust. There was one little stream through town that dried up in the summer. Local water had so much sulfer in it, that it tasted like rotten eggs. Resataurants did not give you water unless you asked. Most also would give you lemon juice to kill the taste. Railroad opposition was one hurdle. The bigger hurdle was the lack of water. A good case could be made for the idea that the whole coal slurry pipeline was nothing more than a way to force the rail prices down. A side note: At the time, Gillette had big expectations for the coal slurry pipeline, and a project to turn coal into gasoline, called the Hampshire Energy project. Construction, jobs, economic development, money-money-money!! Both of these projects fell off a cliff within a couple weeks of each other, and the local economy went right down the drain. You had to get in line to move out town.
There was one major coal slurry pipeline in the US, from 1969 to 2005 - 273 miles from the Black Mesa Coal Mine in NE Arizona to the Mohave Generating Station at Laughlin, Nevada. See: http://en.wikipedia.org/wiki/Coal_pipeline
I believe there was also a shorter coal slurry pipeline that was actually placed into operation - a 'demonstration' or kind of 'beta test' back in that day, if you will - somewhere in the eastern US, such as from Kentucky to Ohio, etc. It operated for a few years, but was 'mothballed' when undercut by unit train rates.
When I first posted this thread, I had mistakenly understood that the slurry pipeline was to originate in Montana. But I realize now it was to start in Wyoming (where the coal is). Only the water was the come from Montana (and other states). Makes sense to me now (duh).
Anyway, I have been looking through a half dozen BN railroad employee magazines circa 1976, and all of them have editorial comments in them that are anti-pipeline. The comment above from Lou Menk is one. Many of the editorial bits in the magazine are also from the point of view of Montana. I gather from this ongoing information campaign that it was a very big deal for BN to win this fight.
This question might be a little off topic but if the coal slurry is used to generate electricity, wouldn't it be better to generate electricity near the coal fields and build a new transmission line or just pump it into the existing electrical grid and take it out in Askansas. This seems like a better soultion than even shipping by rail. Would there be that much loss in a very high voltage dc transmission line?
Has anyone considered that the coal slurry pipeline proponents were actually looking toward what was the end result - get large sums through litigation. This supposes that the RR's would react just as they did.
What if the RR's had instead said - if coal slurry is the way our country wishes to go then we already have the ROW in place??
I 'fumble-fingered' and apparently inadvertently trashed my supplemental post on this, so the best I can do right now is to provide the links to 2 Federal Appeals Court opinions, and recommend their 'background' sections for review and a lopt more information on all this, especially ETSI = Energy Transportation System, Inc.'s universal success in obtaining easements to cross railroad ROWs by acquisition of rights from the adjoining/ underlying fee owners and then 'Quiet Title 'litigation against the railroad, and the South Dakota water rights dispute:
880 F.2d 40 (U.S.C.A.8th Circuit, 1989) - http://ftp.resource.org/courts.gov/c/F2/880/880.F2d.40.88-5422.88-5375.88-2158.html
822 F.2d 518 (U.S.C.A. 5th Circ., 1987) - http://ftp.resource.org/courts.gov/c/F2/822/822.F2d.518.87-2177.html
For example, see this article from the April 1989 issue of Railway Age at -
http://findarticles.com/p/articles/mi_m1215/is_n4_v190/ai_7516227/
To add to the mix: Then Governor Bill Janklow of South Dakota tried to sell water from the Missouri River to ETSI, a pipeline development company. That didn't set well with downstream states who didn't think it was his to sell. That also caused some controversy with state residents as well. The water pipeline would have run from the Missouri River west, through the driest parts of S.D. and Wyoming.
Was there also some concern with what to do with water after delivery? Pollution control/water treatment at the end of the line would also add to the cost.
The railroads between the Powder River Basin and the Midwest refused to give the pipeline easements under their right of ways. Later, they paid millions in legal settlements but by then pipeline was dead, dead, dead. In think the railroads were foolish, the states would never have let the water been exported out of the drought prone High Plains.
From reading railroad trade magazines of the mid-1970's, I have learned that there was talk of construction of a coal slurry pipeline from the major coal fields to power plants elsewhere in the country -- like Arkansas. The system would have drawn water from sources in Montana. Naturally, there was opposition by railroads, and also by citizens of Montana who did not want water resources used in this way.Below are two pieces of published commentary that seem to capture both the opposition of the BN railroad, and of Montana citizens.I don't have any specific questions for the forum on this topic. I just thought I would post here to read the discussion that might follow. I encourage any first-time posters who were "there" to post their recollections.
Exhibit 1. News editorial from Lewiston, News-Argus
Coal SlurrySuppose someone proposed building a 38 inch pipeline from Montana to Arkansas to pipe our Treasure State water to the Southern state. There would be an awful howl, and well there should be as water is one of our most precious possessions. It should be kept in Montana as much as possible for local development that will create added opportunities, jobs, and tax aids for Montanans.Yet such a 38-inch pipeline is proposed to reach for 1036 miles from near Gillette in Wyoming to White Bluff in Arkansas. It would cost $750 million and carry 25 million tons of slurry coal (coal in liquid form) to power plants in Arkansas every year. People in that state and South Dakota (both would be hit by the withdrawal of the water) are up in arms. They want the water for use in their own states and, we think, quite rightly so.Incidentally, Montana too should be concerned, as some of the water that would be tapped flows through the Treasure State too on the surface and under the ground.If there were great savings in the cost of transporting the coal as slurry in the proposed pipeline -- savings that would be passed on to homeowners, the farmers, and others who use electricity -- there might be some reason to argue for the pipeline. But research shows that it would cost about seven-tenths of a cent per ton mile to transport the coal by pipeline compared with six-tenths of a cent per ton mile by railroad.In other words, it would be about 14.3 percent cheaper to ship the coal by rail, and at the same time Wyoming, South Dakota, and even Montana would have the much needed water for their own use that would otherwise be used to transport coal.This being so, what possible excuses can there be for building the slurry pipeline? It seems as simple as that. The slurry pipeline should not be built.Lewistown, Montana, News-Argus (October, 1976)
Exhibit 2. Comments by BN Chairman Louis Menk in railroad publication.
Menk: Rails Able to Meet Coal DemandAmerican railroads will be able to meet the nation’s rising demand for coal transportation, Louis W. Menk, BN chairman and chief executive officer, assured a meeting of legislators from five southwestern states. He cited rail industry figures that show the carrier's coal traffic has grown at a faster rate than U.S. coal production.The figures also show that last year, although the railroads handled 5.1 percent more coal, their surplus of coal cars averaged 6000 cars daily. Menk also cited two new studies that report the rail industry is equal to nation's plan to double coal production by 1985.One study, completed for the U.S. Department of Transportation, concluded the "anticipated coal traffic increases, even though affecting individual railroads unevenly, would not place unmanageable strain on rail capacity."The other study, done by the Hudson Institute, "finds the railroads should be able to increase their coal haulage as fast as mines can increase production."Menk assailed proponents of coal slurry pipelines, who "have not been setting any records for virtue when they discuss the railroad industry’s coal-hauling capacity. Or they are grossly under-informed." He urged the defeat of any new efforts by the slurry pipeline backers to obtain Federal eminent domain powers they need to take land for routes between coal mines in the West and electric generating plants."Conferring powers of eminent domain on coal slurry pipeline interests would be a dangerous mistake, because these pipelines would operate at the expense of the nation’s common carrier railroads and ultimately at the expense of the public interest," he said."The question before the country is not merely one of eminent domain for slurry interests but whether the United States railroads become a giant nationalized bureaucracy that has its Federal hand in every taxpayer's pocket."(September, 1976)
Our community is FREE to join. To participate you must either login or register for an account.