Baltimore Harbor energy facility study Baltimore Harbor study

[From the U.S. Government Printing Office, www.gpo.gov]

City of
Baltimore

Departm ent
of Planning

COASTAL ZONE
INFORMATION CENTER

Baltimore Harbor Energy Facility Study
Coastal Energy Impact Program
Coastal Resources Division
Office of Coastal Zone Management
1980/81

Funded By a Grant from the Baltimore City
Coastal Energy Impact Program Department of Planning
Office of Coastal Zone Management, Larry Reich, Director
Through the Coastal Resources Division,
State of Maryland

US Department of Commerce
NOAA Coastal Services Center Library
Charles

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Contents
I Volume I
Energy Facilities

Volume II
I Harbor Area Studies,
I Localized Energy Impacts
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TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY

I. Coal ......................................................... 1
II. Petroleum and Petroleum Products .............................. 6
III. Gas .......................................................... 9

CHAPTER I. INTRODUCTION ............................................ I-1

CHAPTER II. COAL

A. Overview ............................................ II-1
B. Trends ............................................. 11-9
C. Demand for Coal .................................... 11-20
D. Supply of Coal: Sources and Facilities ............ 11-37
E. Impact of Port Coal Traffic ........................ 11-49

CHAPTER III. PETROLEUM AND PETROLEUM PRODUCTS

A. overview ........................................... III-1
B. Demand ............................................. 111-7
C. supply ............................................. 111-9
D. Impact of Demand and Supply on the Use
of Land ............................................ 111-26

CHAPTER IV. GAS

A. overview ........................................... IV-1
B. Supply ............................................. IV-2
C. Future Demand ...................................... IV-6
V D. Impact .............................................. IV-7

LIST OF TABLES AND FIGURES

TABLES PAGE

Table II-1: Shipment of Coal Through the Port of
Baltimore by Mode of Transportation and
Type of Movement, 1977 ................................. 11-3

Table 11-2: Domestic Coal and Lignite Inland Traffic
originating andjerminating in Baltimore
Harbor,,1977 ............ a ............................... 11-4

Table 11-3: Domestic Inland Traffic Originating and
Terminating in Baltimore Harbor--Coal and
Lignite ................................................ 11-6

Table 11-4: Coal Dumpings at Baltimore, By Type of Traffic
Percent Change, Percent of Total, 1973-1978 ............ II-11

Table 11-5: Coal Dumpings at Baltimore and Other Atlantic
Ports, 1973-19781, Percent Change, Percent of
Total (Net Tons) ........................................ 11-14

Table 11-6: Coal Dumpings of Railroad Companies at Baltimore,
it By Type of Traffic, Percent Change, 1973-1978
(Net Tons) ............................................... 11-15

Table 11-7: Conrail Origin Coal to Its Canton Coal Pier
Baltimore and to the B&O's Curtis Bay Facility
for Export, Net Tons (0001s) Number, Percent
Change, Percent of Total, 1973-1979 ..................... 11-21

Table 11-8: Rail Rates on U.S. Coal Export from Mines to
Baltimore and Other Ports of Exit (Per Net Ton) ......... 11-30

Table 11-9: Estimate of Future Domestic Coal Demand at
Baltimore, 1980-1988 .................................... 11-38

Table II-10: Origin of Coal Shipped to Maryland, 1977 ................ 11-41
IL Table III-1: Petroleum and Petroleum Products Through the Port
Of Baltimore by Mode of Transportation and Type
of Movement, 1977 ....................................... 111-6

Table 111-2: Baltimore Region Fuel Consumption by Fuel
and Sector 1976, BTU's x 1012 ........................... 111-8

LIST OF TABLES AND FIGURES
(continued)

TABLES PAGE

Table 111-3: Baltimore Region Fuel Consumption by
Jurisdiction and Fuel 1976, BTU's x 1012 .............. III-10

Table 111-4: Waterborne Movement of Petroleum and Petroleum
Products Through Port of Baltimore, 1977 (Barrels) ...... 111-12

Table 111-5: Petroleum Imports Through the Port of Baltimore
by Product and Import Company, 1977, Percent of Total... 111-14

Table 111-6: Local Water Movements of Petroleum Products from
Suppliers to Utilities in the Port of Baltimore,
1978 (MmB13) ........................................... 111-15

Table 111-7: Baltimore Gas and Electric Generating Station
Summary ................................................ 111-16

FIGURES

Figure II-1: Domestic Inland Traffic Originating and
Terminating in Baltimore Harbor--Coal and Lignite ...... 11-5

Figure 11-2: Coastline Traffic Originating and Terminating in
Baltimore Harbor--Coal and Lignite (Tons) .............. 11-7

Figure III-1: Movement by Type Through Baltimore Harbor
Crude Petroleum (Barrels) .............................. 111-31

Figure 111-2: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Crude Petroleum (Barrels) .... 4 ....... 111-32

Figure 111-3: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Crude Petroleum (Barrels) ......... 111-33

Figure 111-4: Movement by Type Through Baltimore Harbor
Residual Fuel Oil (Barrels) ............................ 111-34

Figure 111-5: Coastwise Traffic Originating and Terminating
in Baltimore Harbor Residual Fuel Oil (Barrels) ......... 111-35

Figure 111-6: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Residual Fuel Oil (Barrels) ........ 111-36

LIST OF TABLES AND FIGURES
(continued)

FIGURES PAGE

Figure 111-7: Movement by Type Through Baltimore Harbor
Distillate Fuel Oil (Barrels) ........................... 111-37

Figure 111-8: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Distillate Fuel Oil (Barrels) ........ 111-38

Figure 111-9: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Distillate Fuel oil (Barrels) ..... 111-39

Figure III-10: Movement by Type Through Baltimore Harbor,
Gasoline (Barrels) ..................................... 111-40

Figure III-11: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Gasoline (Barrels) ................... 111-41

Figure 111-12: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Gasoline (Barrels) ................ 111-42

Figure 111-13: Movement by Type Through Baltimore Harbor, Asphalt,
Tars and Pitches (Barrels) ............................. 111-43

Figure 111-14: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Jet Fuel (Barrels) ................... 111-44

.Figure 111-15: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Jet Fuel (Barrels) ................ 111-45

Figure 111-16: Movement by Type Through Baltimore Harbor, Jet
Fuel (Barrels) ............................... 111-46

Figure 111-17: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Naphtha and Petroleum
Solvents (Barrels) .................................... 111-47

Figure 111-18: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Naphtha (Barrels) ................ 111-48

Figure 111-19; Movement by Type Through Baltimore Harbor,
Naphtha (Barrels) ..................................... 111-49

Figure 111-20: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Kerosene (Barrels) .................. 111-50

LIST OF TABLES AND FIGURES
(continued)

FIGURES PAGE

Figure 111-21: Domestic Inland Traffic Origina ting and
Terminating in Baltimore Harbor, Kerosene
(Barrels) ............................................. 111-51

Figure 111-22: Movement by Type Through Baltimore Harbor,
Kerosene (Barrels) ........... 6 ........................ 111-52

Figure 111-23: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Lubricating Oils and Greases
(Barrels) ...... : ...................................... 111-53

Figure 111-24: Domestic Inland Traffic Orig@nating and Terminating
in Baltimore Harbor, Lubricating Oils and Greases
(Barrels) .............................................. 111-54

Figure 111-25: Movement by Type Through Baltimore Harbor,
Lubricating Oils and Greases .....i .................... 111-55

Figure 111-26: Coastwise Traffic Originating and Terminating in
Baltimore Harbor, Other Petroleum Products (Barrels).. 111-56

Figure 111-27: Domestic Inland Traffic Originating and Terminating
in Baltimore Harbor, Other Petroleum Products ......... 111-57

Figure 111-28: Movement by Type Through Baltimore Harbor, Other
Petroleum Products .................................... 111-58

EXECUTIVE SU4MARY

I. COAL

A. Dynamics of Movement

An analysis of the port traffic by mode of transportation and type
of traffic shows how Baltimore functions as a port and how coal impacts the
local economy:

� Of the coal destined to Baltimore, most, or over four-
fifths comes in by rail, while two-thirds goes out again
by water to foreign nations, other ports in this country
and big users on inland waterways. This outbound coal
traffic is an important export industry that induces out-
side economic activities to Purchase Baltimore services,
generating local jobs and income.

0 Almost all (96 percent) of the rail inbound traffic
involves further handling in the form of transfer to
another transportation mode or break of bulk. Such
handling generates local jobs and income in transportation
services, warehousing and ship repair.

� The other one-third of the coal coming into Baltimore is
consumed locally by Baltimore's industries and is an
important input for Baltimore's most important export
industry, the steel industry. Pour-fifths of the locally
consumed coal involves further handling in the form of
local barge movements occurring entirely within the port,
generating transportation service jobs. A small but grow-
inq portion of locally consumed coal is an input-into one
of Baltimore's most important tertiary service industries,
the electric power industry.

B. Trends

The following are highlights of the most important coal trends
occurring in Baltimore:

0 Despite many claims of rapid growth in amount of coal
handled through the port of Baltimore, trends have been
quite moderate and fluctuating from 1973 to 1978. No
clear direction or trend could be discerned based upon an
analysis of the data alone from this period.

T.he significant increase in export coal occurring in 1979
in Baltimore may mark the beginning of a new direction of
greater or more consistent growth.

The improvement in Baltimore's position relative to other
Atlantic Coast Ports in amount of coal dumped is strik-
ingly evident.

A steady increase in the importance of Baltimore in the
Atlantic Coast in handling coal is occurring despite the
erratic trends in local coal traffic, because the amount
of coal handled in Atlantic Coast Ports, particularly
Hampton Roads, has suffered steady erosion during the same
period.

C. Demand for Coal

The following factors have been found to be responsible for increas-
inq demand for exports in Baltimore.

National and International

0 Low domestic electricity growth, slower than expected
shifts of utilities to steam coal and sluggish demand of
the steel industry for metallurgical coal have contributed
to excess capacity in the coal industry resulting in
readily available reserves at depressed prices that are
attractive for export.

0 Increased shipping costs induced by rise in oil prices
make U.S. coal cheaper for Europe compared to more cost-
competitively mined Australian coal.

0 The political necessity of some countries with large coal
needs such as Japan to diversify their sources of supply,
in some respects, benefits the U.S.

0 The withdrawal of some big European suppliers from the
market benefits U.S. export.

0 The increasing number of foreign utility conversions to
coal has been cited as favoring U.S. export but has not
been verified.

0 Some countries who have placed restrictions on export of
their scarce coal resources cannot satisfy large demands
being generated.

Regional and Sectional

0 Baltimore is in close proximity to places where steam coal
is mined.

Baltimore has more favorable r *ailroad rates than Hampton
Roads for steam and other coal located to the north and
West that more than compensates for its more distant
location from Europe.

High demurrage fees caused by limited capacity are being
experienced to the same degree in other ports, cancelling
any disadvantage to Baltimore.

0 Equalization of freight rates such as occurred with Phila-
delPhia may divert exports from-Baltimore.

The following factors will be responsible for increases in domestic demand
for coal in Baltimore and environs:

0 national policy favoring new coal burning power plants or
conversion of oil burning power plants to coal.

0 BG&E conversion of Wagner plants Nos. 1 and 2 to coal in
1985.

0 BG&E construction of a new power plant at Brandon Shores
scheduled'for conversion to coal in 1984 and 1988.

Conversion of BG&E's Crane plant No. 1 to coal in 1983.

Delaware Power and Light Company construction of new coal
power plant by 1987 or 1988.

Future Demand

0 Future demand is expected to increase moderately at sus-
tained levels, but be somewhat below the current abnormally
high levels. The port could support from 20-24 million
tons per year of export coal traffic in the next de cade.

0 The current physical capacity of port and transportation
facilities would constrain the handling of moderate growth.

0 Differential impacts on diversions of traffic may occur in
Baltimore according to the degree to which it keeps abreast
of other Ports in accommodating national and international
demands.

Domestic Coal

0 Future demand for local coal will almost double
due to conversions of local utility,plants,

0 Future demand for local metallurgical coal may decline.

0 Future demand for local steam coal may increase more than
four times.

The principal impact of increases in local demand will be
on local railroad facilities.

Im2act of Demand on Facilities

The following is expected to be the chief impact of increases of exports
and domestic shipments and port-related investment on the transportation infra-
structurer particularly the railroad:

Increa'sed servinq yard capacity will be necessary if any
P1 further expansion of export facilities occur at Curtis
Bay, given the fact that there is not much room for such
expansion, because of built up adjacent residential areas.

0 The capacity of B&O rail lines serving Curtis Bay may be
strained. The degree to which this occurs is related to
serving yard capacity and operation in Curtis Bay. Also,
the increased capacity on this segment of the line may
dampen Projected industrial growth further south in Fair-
field and Marley Neck. This requires further monitorinq
and evaluation on the part of the city.

0 Railroad line improvements will be needed to serve coal
burning power plants coming on line in Wagner Plant and
Brandon Shores* Such improvements should be made cogni-
zant of the need for railroad access to Fairfield and
Marley Neck.

0 Diversion of Conrail's export traffic from Baltimore and
Philadelphia should help alleviate mainline tunnel prob-
lems and some of,the capacity problems of Bayview yards.

Conrail may not be able to fully share in the growth demand
for steam coal from local utilities because of congestion
and capacity problems at Bayview yards, and their Canton
Coal Pier. Major investments and operational improvements
will be required.

Impact of Proposals

Numerous proposals have been made by firms to improve waterside facili-
ties. The followinq are the expected impacts of some of these proposals:

0 The Island Creek project when completed will help the
Curtis Bay export Pier achieve close to its theoretical or
nominal capacity in handling about 14 million tons of coal
per year.

The Consolidated Coal Project for converting the Cottman
Canton Ore Pier to coal will add a significant amount of
capacity for export of coal from the port: 10 million
tons of coal per year.

0 These two projects alone could be enough to satisfy the
moderate growth in export demand projected over the next
decade: 20 to 24 million tons of coal per year.

Proposals for Through Traffic

Much of Conrail's through traffic destined 'to PEPOD's plants at Morgantown
and Chalkpoint is routed by Conrail through the Bayview yards. Current traffic
volumes on the Amtrak/Conrail line are handled without much delay, but if
Amtrak rescheduled Corridor service to operate trains every half hour in each
direction and increased intercity and local commuter service, the amount of
freight traffic that could be handled on this main Corridor would be severely
constrained. Four alternative basic solutions have been proposed, but none
has been adoPted:@/

0 continuation of operations as they are now with several
capacity improvements to eliminate interference problems.

0 separation of freiqht and passenger service by shifting
all through freight traffic to the B&O main line from
Winans to aaYview.

0 shifting of passenger service to the B&O line to take
advantage of its proximity to the center of Baltimore.

0 diversion of through freight from the corridor to tunnels
under Baltimore harbor to bypass the center of Baltimore.

Impact of Port Coal Traffic

Economic

Coal most closely approximates bulk transshipment and could conserva-
tively, for example, add about 361 million to the local economy, if coal
exports should double.

Environment

The principal impact of the movement and storage of coal will be to
increase emissions of fugitive particulate matter.

!/Peat, Marwick Mitchell & Co., Study of the R;il System of the
Baltimore Region, Final Report, Prepared by the Maryland Department of
Transportation, September 30, 1976.

Recorrimended Policies of Local Government

The city must find a way to seek partnership with or otherwise induce the
railroads to make the following high priority investments to ensure that coal
facilities operate at their intended capacity, do not exacerbate local traffic
problems, and hurt freight traffic or other industries:

0 Increase serving yard capacity in the vicinity of Canton
ore pier and Curtis Bay.

0 Increase the line capacity to Curtis Bay, Wagner, Brandon
Shores, Fairfield and Marley Neck.

0 Implement operational improvements and encourage consoli-
dation of or expansion of the railroads' facilities at
their Bayview yards.

Other line capacity problems such as the Howard Street tunnel may be relieved
by reduced export traffic from Conrail. The ultimate solution to the B&P tun-
nel capacity problem should be the result of initiatives of the Federal gov-
ernment in cooperation with the C&O and Conrail. Rerouting of Conrail traffic
on the B&O main line as indicated in three alternatives posed, will relieve
congestion at Bayview, allow for Planned increases in Amtrak passenger service
and will allow the converted Canton Ore Pier to operate more effectively.

1I. PETROLEUA AND FETROLELM PRODUCTS

The analysis of the movement of petroleum and petroleum products through
the Port of Baltimore inclicates that:

0 Pipelines provide for the largest volume of petroleum
coming into Baltimore, transporting "clean" products.

0 Waterborne movements accommodate the next largest volume
of imports into the Port, transporting mostly ndirty"
products and smaller amounts of clean products that cannot
be handled because of the limited capacity of the pipeline.

0 Baltimore is a major net importer and consumer of refined
petroleum and petroleum Products. It has practically no
refineries.
0 Refineries in such cites as New York City and 'Philadelphia
on the east coast, Puerto Rico and the Virgin Islands in
the Caribbean, and Houston and the Baton Rouge on the Gulf
Coast are major suppliers of products for Baltimore.

0 Baltinore has a small but important role as a distributor
or transshipper of petroleum products via the inland
waterway for a region extending from Virginia to New
Jersey.

7 - _

A small, but significant amount of movement of petroleum
products occurs entirely within Baltimore port on barges
from oil company terminals to local consumers, primarily
BG&E.

0 The major portion of residual oil is consumed by utilities
and manufacturing. Residential housing units consume the
major portion of distillate oil as home heating fuel.

Within the greater Baltimore region, the City of Baltimore
and the areas surrounding the city within Baltimore County
consumed the most petroleum products: the city ranked
first in consumption of distillate and diesel oil; the
surrounding county area ranked first in the consumption of
residual and gasoline.

0 In regard to waterborne movement of individual petroleum
products, the following should be noted:

The small amount of crude petroleum imported into
Baltimore reflects the small amount of refining done
in the city.

Residual imports are largest in volumeF qenerate a
considerable amount of local movement within the port
and are largely handled by two oil companies. The
principal customer for residual is BG&E.

Distillate imported into Balt@more is second most
important in terms of volume. Most goes to storage
for distribution by truck, but some is shipped out
again over inland waterways serving a sectional
market.

Gasoline imported into Baltimore ranks third in
importance and Baltimore plays an important role in
redistributing gasoline over a wide sectional market
to destinations located on inland waterways.

Although the import of asphalts was relatively small,
it comprised a significant portion of all oil exported
from Baltimore largely because of the presence of
asphalt refineries in or near Baltimore.

The small volume of naphtha imported into Baltimore is
handled by one company with a small amount consumed
in the manufacture of SNG by BG&E.

The demand for electricity is expected to grow at a rate of about four
percent per year, half of what it was in the early 1970s. BG&E estimates,
optimistically, that its peak demand will grow by five percent this year and

about four percent per year through the 1980s. The reasons for this slow
growth are:

0 a national, and to some extent, local economy that is
growing at a slower rate;

0 increasing conservation practices by customers;

increasing use of more efficient appliances; and

continuing rise in the price of electricity.

Slow growth has resulted in the following:

0 the postponement of the opening of the Brandon Shores plant
from 1982 to 1984; the new unit will start on coal; and

0 the decision of BG&E not to join with PEPOD in building
the Dickerson plant in Montgomery County.

In addition to slow growth, the following plants will be converted to
coal and will no longer require residual oil:

0 Wagner units #1 and #2 are scheduled to be converted to
coal in 1985; these Plants consumed 1,628,000 barrels of
oil in 1978 (see Table 111-7); and

Crane's unit #1 will be converted to coal in 1983; it
consumed 1,835,620 barrels of oil in 1978.

These reductions will reduce Hess and Exxon's imports of residual oil and will
reduce local barge movements of oil to utility plants.

The prospects are for diminished imports of residual oil durinq the next
decade. Residual oil is one petroleum product that must come by water and has
the largest volume of import compared to any petroleum product in the port.

Prospects are for stable or 'somewhat diminished demand for clean products
for the following reasons:

0 slower growth or possibly decline in the use of gasoline
as it becomes more expensive and the consumer buys more
gas-efficient cars; and

0 more restricted travel and conservation on the part of the
consumer.

Aside from utility demand, there will also be a lower demand for home
.heatinq fuel for the following reasons:

0 slower industrial and population growth qenerally;

0 practice of energy conservation on the part of customers
as oil prices rise; and

conversion by customers from oil to other fuels.

The Port of Baltimore will experience diminished waterborne traffic for
clean oil through the port in the next two to three years because Colonial will
have completed its addition of pipeline capacity between Mitchell Junction,
Virginia and Dorsey, Maryland. Approximately 20 percent of clean product
traffic that is currently going by water will be diverted to the Pipeline.

Impacts

Land Use

0 The decline in demand for petroleum products and expansion
of the pipeline is likely to result in underutilization of
Piers and facilities by major petroleum suppliers.

0 Large amounts of port land are being Pre-empted by
petroleum uses that no longer demand water access.

Economic

0 Reduction in port petroleum traffic will undoubtedly
result in some reduction of local port jobs and income in
transportation services and ship repair.

Environment

Environmental problems are not unmanageable and will be'
lessened somewhat in view of slow gro
wth or decline of
petroleum traffic.

II I. GAS

The following are the key findings of the analysis of the gas in the
baltimore region:

Traditional sources of supply from Columbia are unlikely
to change. Gas will generally be more available. Growth
in demand will slow partly because of BG&E policies. Pri-
orities will not be used to allocate gas.

0 Columbia's Cove Point LNG facility presents special safety
requirements and requires special monitoring at the
regional or state level.

BG&EIs present peak shaving plants are unlikely to expand
because of slow growth in demand, economic factors and
restricted sites:

Sprinq Gardens LNG Plant does mt impact the port,
has a limited size site, but could possibly expand
its storaqe facilities.

Notch Cliff Propane-Air plant does not directly,
impact the port. With a shift from oil to gas,
expansion of production of this type of gas is
Possible, but the suburban site may be sensitive to
any expansion requirements.

Soller's Point SNG plant directly impacts the port
requiring local movement of naphtha by barge.
Economics do not now favor expansion, but: if
expansion should occur, it will be at another site.

CHAPTER 1--INTRODUCTION

Baltimore owes much of its existence as a mature industrial and commercial
city on the east coast to its harbor. The city has evolved around the port.
Baltimore harbor is also the site of a vast array of coastal energy activities
and facilities. Furthermore, new energy activities and facilities have
recently been proposed for the harbor. Despite this,. practically no analysis
has focused on the impact of energy goods movement and production on the port.
The purpose of this report is to analyze the dynamics of energy goods movement
through the Port of Baltimore in order to determine the physical, economic, and
environmental impacts of the operation, location, and expansion of energy and
supporting transportation facilities on the coastal zone of Baltimore harbor.

The study is for the Department of Planning of the City of Baltimore in
cooperation with the Energy Coastal Zone Admi nistration of the Department of
Natural Resources in the State of Maryland. Federal funds for this study were
provided under the Coastal Zone Management Act of 19,72, as amended in 1976.
Tt established the Coastal Energy Impact Program to assist states and local
governments to plan for and manage the impacts of energy facilities and activ-
ities affecting their coastal areas.

This is a particularly propitious time to undertake such a study because
the national concern about the ability of ports and supporting transport
facilities to handle the increasing demands for export of U.S. coal. Baltimore
will undouhtedly be in the forefront if a national policy is ever developed to
deal with the effectiveness of the nation's ports. It is the second largest
exporter of coal in the nation. Among Atlantic Coast ports, it generally ranks
fourth in the volume of such energy qoods as crude petroleum, distillate fuel
oil, and residual fuel oil. In 1977 it exported 13.1 percent of the nation's
coal and 10.4 percent of its miscellaneous petroleum and coal products..!/ it
imported about three percent of the nation's distillate fuel oil and gasoline.
It performed important transhipment functions to locations on the inland water-
way for asphalt, distillate fuel oil, residual fuel oil, and lubricating oils.
Purely local movements within the port were quite high, comprising seven per-
cent of such movements nationally.

Coal, petroleum and petroleum products, and liquefied gases accounted for
just over half of the total volume of commodities moved through Baltimore har-
bor. Of the total volume of goods moved through Baltimore, energy commodities

I/Waterborne Commerce of the United States, calendar year 1977, Depart-
ment of Army, Corps of Engineers.

such as coal III pprcootl 8nd rosidual fuel oil 114,4 percentl were very impor-
tant. Coal arcounted for half of all foreign exports in the port. Residual
fuel oil accounted for 11.6 percent of all foreign imports, 30.3 percent of all
imports from other ports on the coast, and over half of movements generated
entirely within the port. Almost 90 percent of local barge movements within
the port were generated by oil and coal.

manufacturing exports are important to Baltimore's economy in terms of
their value and the employment they generate. In 1976 almost five percent of
the shipments of manufacturing establishments in the Baltimore metropolitan
area were exports-V Total manufacturing shipments were valued at almost 11
billion dollars and Baltimore exports amounted to just over a half billion
dollars. About 4.8 percent of all persons employed in manufacturing establish-
ments in Baltimore were directly related to exports, No comprehensive survey
exists on the impact of imports or the effect of traffic on other sectors of
the economy.

The report that follows discusses in detail the principal energy commodi-
ties of coal, petroleum and petroleum products, and gas in three separate
chapters. Each chapter considers the dynamics of port movement, demand, and
supply in terms of sources, facilities and transportation. The chapters con-
clude with an assessment of the impact of future trends on port facilities,
land use, environment, and the economy.

2/U.S. Bureau of Census, Annual Survey of Manufacturers, 1976, "Origin
of Exports of Manufacturing Establishments".

CHAPrER II--ODAL

A. OVER Vi EW

I National Perspective

Coal is the most important energy commodity handled by the port of
Baltimore. Baltimore ranks second in the nation in the amount of coal handled.
Most of the nation's coal is moved through the East and Gulf ports, primarily
from the large Northern and Mid-Atlantic ports (See Table No. II-1). Facili-
ties for handling the export of coal on the West Coast are negligible. Hampton
Roads, Virginia, which includes the ports of Norfolk and Newport News, is the
nation's largest coal-export port. In the first quarter of 1980, Hampton Roads
shipments of 13.8 million tons accounted for 79 percent of all U.S. coal sent
overseas. Baltimore accounted for 13 percent of the volume, while the Gulf
ports of New Orleans and Mobile shipped three percent each-L/

2. The Baltimore Port

'Phe port of Baltimore is served by three railroads. The Baltimore
and Ohio (8&0) division of the Chesapeake & Ohio (C&O) Railroad, carrying the
K; largest amount of coal traffic, serves Baltimore mainly from the north and
west, and Consolidated Rail Transportation Corporation (Conrail) serves Balti-
more primarily from the north and east. Canton Railroad is a local switching
railroad that interchanges with the B&O, Conrail, local industries and its own
piers in the Canton area of the Port, one of Baltimore's oldest and most
crowded industrial areas. The B&O has a relatively modern coal pier in Curtis
Bay in the western part of the port which is the principal facility for export
of coal in the port. The pier also handles local barge movements of coal.
Conrail operates an old and relatively obsolete Canton Coal Pier in the Canton
area in the east end of the Port, that is-entirely involved in local barge
movements of coal within the port area, primarily servicing Bethlehem Steel.
Bethlehem Steel has its own piers on which it receives imports of barge coal
from Baltimore or Hampton Roads. Canton Railroad performs no interchange in
coal traffic and is of interest chiefly because some of its facilities have
been under active consideration for conversion to coal.

3. Dynamics of Coal Movement Through baltimore

A detailed analysis of coal traffic through Baltimore by mode of
transportation and type of traffic clearly shows how Baltimore functions as a
port and how coal impacts the local economy:

L/"Loads Get Heavier For Coal Roads, Ports", Wall Street Journal,
July 22, 1980.

a@; coal (24 percent) and residual fuel oil (14.4 percent) were very impor-
t"int. Coal accounted for half of all foreign exports in the port. Residual
fuel. oil accounted for 11.6 percent of all foreign imports, 30.3 percent of all
imports from other ports on the coast, and over half of movements generated
entirely within the port. Almost 90 percent of local barge movements within
the port were generated by oil and coal.

manufacturing exports are important to Baltimore's economy in terms of
their value and the employment they generate. In 1976 almost five percent of
the shipments of manufacturing establishments in the Baltimore metropolitan
area were exports.Y Total manufacturing shipments were valued at almost 11
billion dollars and Baltimore exports amounted to just over a half billion
dollars. About 4.8 percent of all persons employed in manufacturing establish-
ments in Baltimore were directly related to exports. No comprehensive survey
exists on the impact of imports or the effect of traffic on other sectors of
the economy.

2/U.S. Bureau of Census, Annual Survey of Manufa6turers, 1976, "Origin
of Exports of Manufacturing Establishments".

TABLE NO. II-I

Sh ipment of Coal Through the Port of Baltimore by
Mode of Transportation and Type of Movement, 1977

Mode of Transportation Direction
ancl Type Traffic In Out

Railroada/

Chesapeake and Ohio 8,417,000 118,000
Conrail 800,000
Subtotal 9,217,000

waterborne@/

Import 16 Export 7,054,113
Coastwise Receipts 82 Coastwise Shipments 10
Internal Receipts 1,819,982 Internal Shipments 410,203
Subtotal 1,820,080 7,346,326

Grana Total 11,037,06Q 2,464,32@

Consumed Locally 3,572,754
( In-Out) I
Local Water Movements 1,474,004
Other 2,098,750

Sources:

a/Baltimore-Area Rail System Study, Draft Final, Northeast Corridor
Project, Federal Railroad Administration, U.S. Department of Transportation,
May 25, 1979.

b/National Coal Association, Coal Traffic Annual, 1979 and 1978.

11-4

TAB LE NO. I I - 2

Domestic Coal and Lignite Inland Traffic Originating and
Terminating in Baltimore Harbor, 1977

DEL. DEL.
RIVER RIVER S UBTOT A L
ORIGIN: DESTINATION: BALT N.J. PA. NORT H TOTAL

BALTIMORE 1,474,004 410,205 410,203 1,884,203 (401,203)

DELAWARE (NJ)

DELAWARE (R-DE)

SCHUYLKIL R

SUBTOTAL NORTH

CHESAPEAKE BAY

POTOMAC R.

YOR K R.

HAMPTON ROADS 1,819,982

S UBTOt A L 1,819,982

TOTAL 3 2 9 3,90 2
(1, 819,9 0 2)

Source: Waterborne Commerce of the United States Part 1, Waterways Harbors,
Atlantic Coast, 1977, Department of Army Corps of Engineers

%I u I-

Domp!zftir Inland Traffic Originating and
Terminatinq in Baltim(,)rp Harbor Coal and Lignite

DFL.&Wav F-IqFz Gis)

<100,000

100,000 - 500,000

500,000 - I'VOU'UVO

11000 000

Sou, Army Corps of Engineerst Waterborne Commerce of thp unit-aa qt-zl_

TABLF NO. 11-3

I-lom e s In I a nd Tr a ftic Uriqinatinq anl
Terminating in Baltimore Harbor--Coal and Lignite

BALT. N. Y. PHILA. P.R. HOUST. HONOL. GUAM

BALr ImORE 10

BOSTON, MA

NEW YORK CITY, NY 82

NDRI'HR)RT, LI, NY

PHILADELPHIA, PA

PUERTO RICO

ST. CROIX, VI

mISSISSIPPI RIVER

BATON ROUGE, LA

LAKE CHARLES, LA

HOUSTON, TX

FORT ARI' HUR, T X

TEXAS CITY, TX

CDRPUS CHRISTI, TX

PAS CAUD U IA,

Source: Waterborne Commerce of the United States# Parisr Waterways Harbors,
Atlantic Coast, 1977, Department of Army Corps of Engineers

FIGURE No. 11-2

Coastline Traffic Originating and
Terminating in Bal.timore Harbor Coal and Lignite (Tons)

it
NS-W YOV-K,

mw@ 100,000 - 500,001-)

500,000 - 1,000,0()o
ir 1.3.1000,000
all,

Z r@ i onAAr Year 1977

facility to use coal. This amounted to 594,000 tons delivered by the B&O on
barges from its Curtis Bay coal pier.2/ Another 800,000 tons of coal was
delivered into baltimore by'Conrail and moved by barge from its Canton Coal
Pier to Bethlehem Steel's piers at Sparrow's Point. The small amount of local
water movement remaining, 'about 80,000 tons, was accounted for by B&O shipment
of coal by barge to Bethlehem from its Curtis Bay coal pier..!/ The two
million tons of the remaining differential were probably directly delivered by
rail or truck to local industries.

Other significant water and rail movements complete the picture of move-
ments of coal in and through Baltimore. A small proportion of the total coal
coming into Baltimore, about 16 percent or less than two million tons, was
received by barge via internal waterways. Designated as internal receipts,
this movement consists of domestic inland traffic from,Hampton Roads, Virginia
by barge over the Chesapeake bay, terminating in Baltimore to serve Bethlehem
Steel (see lable No. 11-2). Bethlehem owns a large, deeper draft 25,000 ton
capacity barge that helps to ship this specialty coal required from southern
mines. These mines are served only by the Chesapeake & Ohio and Norfolk &
Western, operating out of Hampton Roads.' Similarly, an Opposing outbound water
movement of coal originates in Baltimore and moves by barge via the Chesapeake
bay and Chesapeake and Delaware (C&D) Canal, and terminates at the Public Ser-
vice Gas and Electric Company of New Jersey's Mercer powerplant on the Delaware
River. This accounts for about 400,000 tons, designated as internal shipments.

It pays the New Jersey utility to use this more roundabout route rather
than going to Philadelphia and barging upriver, because the "inside Delaware
River" rates are higher than the "outside the Cape" rates. The present route
involves hauling coal by rail (Conrail) from mines in northern and western
Pennsylvania on Conrail via: Altoona, Pa.; Harrisburg, Pa., Columbia, Pa.;
Perryville, Md.; Bayview yard, Baltimore; to Canton Coal Pier in the port,
where the coal is loaded on barges via the C&O canal-.@/ Some of the New
Jersey utility's coal is also shipped by the B&O from its barges at Curtis Bay.

Coastwise shipments occur over the ocean among ports of the United States.
In Baltimore, such coastwise shipment is not very important. The main inter-
coastal interchange of coal in and out of Baltimore is with the Port of New
York (see Table No. 11-3). The inbound movement from New York to Baltimore is
greater than the reverse movement (see Table No. 11-3). Coastwise movements
ould have significance in "topping off" a ship's cargo. Recently, large
ocean-going vessels have stopped in Baltimore, filling their holds with coal
Cuntil the draft of the ship reaches the 39 foot depth that marks the Baltimore

2/National Coal Association, Origin, Cost and Quality of Contract and
Spot Coal Deliveries by Plant for 1977, p. 86. See also interviews with
Robert Lowe, Obt. 23, 1979.

A/Interview with Herman E. lehtke, Bethlehem StAel, Nov. 7, 1979.

5/Interview', F. Miles Day. Nov. 9, 1979.

channel. I he ship then moves to Hampton i@oads to fill the remainder of its
Capacity at deeper channel depths prevailing in that port.

B. TRENDS

The following are highliqhts of the most important coal trends occurring
in Baltimore:

0 Despite many claims of rapid growth in amount of coal
handled through the port of Baltimore, trends have been
quite moderate and fluctuating from 1973 to 1978. No clear
direction or trend could be discerned based upon an
analysis of the data alone from this period.

The significant increase in export coal occurring in 1979
in Baltimore may mark the beginning of a new direction of
greater or more consistent growth.

0 The improvement in Baltimore's position relative to other
Atlantic Coast ports in amount of coal dumped is strikingly
evident.

0 A steady increase in the importance of Baltimore in the
Atlantic Coast in handling coal is occurring despite the
erratic trends in local coal traffic, because the amount of
coal handled in Atlantic Coast ports, particularly Hampton
Roads, has suffered steady erosion during the same period.

I. Introduction: Statistics and Compone nts of Coal Traffic

Many statistics that have been cited in support of growing coal traf-
fic through the port of Baltimore have been inconsistent and bewildering. Some
ambiguity arises because the unit of measure is not defined as to whether long
tons (metric unit common in shipPinq data) or short tons (net tons) are being
'Juoted. Other confusion arises from differing time periods represented. Still
greater ambiguity arises over the lack of definition of coal traffic cited.
Most often, the coal trends quoted refer to export only or the amount of coal
shipped from Curtis Bay coal pier, Baltimore's only export coal facility.
0
Often, purely local barge movements, internal shipments and receipts to and
from other ports are not accounted for. For example, not all coal moved from
Curtis Bay coal pier is for export, some moves by barge locally to Bethlehem
or to local utilities.

The one-time snapshot of the movement of coal through the port above indi-
cated that coal traffic encompasses more than the export of coal. The trends
reconstructed for analysis in this report therefore attempt to take into
account a more inclusive definition of coal traffic, based on a concept of
total amount of coal dumped landside at Baltimore and other ports by railroads.
The concept is broader than export coal and accounts for the varied ways of
moving coal water side: foreign export, "inside the capes" movement, and other
water movements. It does not, however, take into account inbound domestic

II-10

inland water movements of coal shipped directly to local customers (e.g.,
internal receipts to Bethlehem) or other water movements that do not involve
local railroads (almost negligible in.baltimore). Data available for analysis
are from 1973 to 1978.

Using baltimore data as an example of the scope of statistics on dumPed
coal it was tound that a major portion of dumped coal, almost 70 percen, in
1978, is exported to foreign destinations (see Table 11-4). A smaller, but
significant amount of dumped coal in Baltimore, over one quarter, travels
"inside the capes" over'domestic inland waterways (including the Chesapeake
bay) or as local water movements occurring entirely within the boundaries of
ports* "Other" water shipments involving movements over the ocean to other
domestic ports account for only about 4 percent of the total coal dumped in
1978.

An abundance of evidence has been cited indicating growth of Baltimore
coal traffic, but none has used the broad concept of dumped coal. Moreover,
trend data on dumped coal are current only to 1978. According to interviews,6/
in 1947 11 million tons of coal were shipped through Baltimore. This is cer-
tainly higher than indicated by data on dumped coal for the years in this
decade analyzed in this report (1973-1978). However, based on current 1980
monthly volumes being handled in Baltimore, 11 to 12 million tons are expected
to be shipped through the port, exceeding the 1947 level. Interviews-7/ indi-
cate that in 1979, 8,153,048 long tons (equivalent to 9,821,162 metric tons) of
coal passed through Baltimore. Other sources-8/ indicate that coal shipments in
Lialtimore increasc@-_d 52.2 percent from the 1978 total of 5.9 million tons to a
total of almost nine million tons in 1979, a record for the port. Still other
sources-2/ state that the total tonnage of Curtis Bay had already set a record
in 1979 exceeding the previous high of 8.4 million tons shipped during 1977.

In order to clarify the contusion, to establish comparability with data on
dumped coal used in this report and to update such data to take into account
more recent trends as they occurred in 1979, a comparison was made between the
figures quoted above and data on dumped coal. The comparison revealed that the
previous figures quoted (with only slight differences) were comparable to only
that portion of dumped coal statistics that refer to foreign export. The 52.2
percent increase during 1979 quoted above was applied to the 5,386,852 tons of
dumped coal exported from baltimore in 1978 to arrive at an estimate of about
8,883,689 tons of coal exported from Baltimore in 1979 (see Table No. 11-4).

6/Interview with Alnert J. Knighton, Ray 21, 1980.

1/Ibid.

8/David Reiss, "Port Tonnage for 1949 up 15.4%," Baltimore Sun,
December 30, 1979, p. K-7.

-2/David Reiss, "Ship to Top Off Load in Hampton Roads", Baltimore Sun,
November 11, 1979.

TABLE NO. 11-4

Coal Dumpings at Baltirw)re, By Type ot Traffic, Percent Change,
Percent of Total, 1973-1978

Year Total Coal Dumpings Foreign Export Inside Capes Other

1973 6,714,470 4,326,612 2,386,858
1974 8,049,684 5,939,712 2,109,972
Change: No. +1,335,214 +1,612,100 -276,886
+19.9 +37.2 -11.6
of Total 73.8 26.2

1973 9,064,579 6,596,513 2,468,066
Change: No. +1,014,895 +656,801 +358,094
% +12.6 +11.1 +17.0
% of Total 72.8 27.2 --

1976 8,328,387 6,4219,105 1,722,945 126,337
Change: No. -736,192 -167,408 -695,121 +126,337
% -8.1 -2.5 -28.2 --
% of Tot a 1 77.2 21.3 1.5
1977 9223,275 7,076,424 1,698,112 448,729
Chang e : No. +894,888 +647,319 -74,833 +322,392
% +10.7 +10.2 -4.2 +255.2
of Total 76.7 18.4 4.9
1978 8,41,547 5,836,852 2,273,467 331,228
Change: No. "781,728 -1,239,572 +575,355 -117,501
-8.4 -17.5 +33.9 -26.2
of Total 69.1 26.9 3.9
1979 N/A 8, 88 3, 88 9!t/ N /A N /A
Change: No. +3,046,837
% +52.2
of Tota 1

!!/Estimatp based on a 52.2% increase.

Source National Coal Association, Coal Traffic Annual, 1979 and 1978.

11-12

'1he estimate is Comparable to the "almost nine mil lion tons" quoted but was one
million tons below the data in long tons cited above,!O-/ suggesting that the
long ton quote may represent more than just exported coal and be comparable to
total dumped coal.

2. Trends in Coal Dumper] In Baltimore

-3. Total Coal Dumped

An analysis of trends in total coal dumped in Baltimore indi-
cates how easy it is to misinterpret the amount of growth in coal traffic in
baltim:)re. Trends from 1973 to 1978 show that in actual fact, overall growth,
althouqh significant, has by no means been very substantial and has shown quite
a bit ot variation. It is very difficult to differentiate any clear trend from
6 the period covered by the data because the initial bass.- and terminal years of
the data series are atypical. The year 1973 is an unusually low level from
.1 which to establish a base for comparison. Also, 1978 was the year of a coal
strike which constrained growth. Overall, total coal dumped in Baltimore
increased 20.5 percent from 1973 to 1978. However, discounting 1973 as rePre-
senting an abnormally low level of coal traffic to start a trend# the increase
from 1@174 to 1978 was only 4.8 percent. An examination of the pattern of
yearly trends would-therefore be more instructive.

In absolute numoers, tonnages have varied within a narrow range between
eight arid.9.2 million tons in the period from 1974 to 1978. Yearly growth
rates have been moderate, ranging between about 10 to 20 percent with declines
of eight percent occurring in two of the five years. The direction of trends
is uneven and is not easily extrapolated to project future trends. After a
large increase from a nadir in 1973, growth diminished and eventually declined
from 1974 to 1976. Decline was followed by a healthy recovery of 10 percent
in 1977, reaching a peak level of 9.2 million tons for the whole period. A
decline occurred immediately thereafter in 1978 as a result of the coal strike.
The tonnage handled in that year was only slightly above that handled in 1976.

b. 1@xport Coal

Trends in dumped coal exported in Baltimore generally reveal the
Same Pattern of trends as all coal dumped in Baltimore, which is natural since
export coal comprises such a large proportion ot total coal dumped, varying
from 69 to 77.2 percent in the period analyzed (see Table No. 11-4). Trends
in export coal, however, appear more volatile at the beginning and end of the
period when compared to total coal dumped, with a greater growth rate oc currinq
during 1974 and a greater decline in. 1978. Apparently, export coal suffered
most from the coal mine strike. based on the 1979 estimate of exports previ-
ously discussed, a substantial recovery in exports of over 50 percent has
occurred after 1978. Part of the recovery may be a statistical artifact
reflecting the low 19.78 levels resulting from the coal strike. Using 1974 as
a more typical base year to establish long term trends, however, exports have

10/8,153,048 long tons is equivalent to 9,821,162 net tons.

11-13

increased at an almost comparable rate of 49.6 percent in the period from 1974
to i979, inaicating that first time growth occurring in Baltimore in 1979 has
oeen substantial and its influence over previous trends is pervasive. Simi-
larly, it may well mean there is Potential for future large increases.

Export traffic has been an increasingly important component of Baltimore
traffic until 1976 when it achieved a peak of 77.2 percent share of total
traffic (see Table No. 11-4). Its share has declined since that time largely
because of increases in "other" type traffic and the negative impact of the
coal strike in 1978. As a result# for the first time, its share of total
traffic was under 70 percent, at 69.1 percent. Based on the substantial rise
in exports in 1979, however, its share of total traffic may be as high as 80
percent or above in 1979. In 1978, the substantial increases in the more
local "inside the capes" traffic helped to compensate and maintain some sta-
bility in the face of declines occurring in exports during that year. Up to
that time, "inside the capes" traffic had been declining.

C. Baltimore Trends In a Regional Context

Baltimore trends appear more positive when compared to comPar-
able trends in dumped coal in the Atlantic Coast ports of New York, Philadel-
phia and Hampton Roads (see Table No. 11-5). In the Atlantic Coast as a whole,
after substantial growth in 1973, sharp declines in growth occurred, with
increasingly steep rates of decline in the years from 1976 to 1978. As a
result of this trend, baltimore is the only port to show a consistent, steady
increase in its importance as a coal port. In 1978, it handled almost one-
third of coal dumped at Atlantic Coast ports which is more than double its 15
percent share of Atlantic coast dumped coal in 1973. In 1978, for the first
time since 1973, Hampton Roads had less than two-thirds of Atlantic port traf-
fic in coal, largely because of the steep declines in that port's traffic
occurring in 197'8 because of the coal strike. In 1973, Hampton Roads handled
over 80 percent of coal on the Atlantic coast, but it has shown a steady
decline in its share since that time. Mines served by the railroads going into
Hampton Roads apparently were much more severely affected by the strike than
those served by Baltimore's railroads. Also, Hampton Roads coal tonnage did
not benefit from significant increases in "inside the capes" traffic as did
Baltimore. Before 1978, however, Hampton Roads was experiencing a steady ero-
sion of its share of Atlantic coast traffic. Some of the competitive factors'
between the two ports will be discussed in later sections on supply and demand*

d. Railroads and Coal Dumped in Baltimore

The Baltimore and Ohio (B&O) railroad has consistently carried
about 90 percent of the coal traffic through Baltimore (see Table No. 11-6).
Tonnages on the B&O ranged from 5.3 million in 1973 to a 8.3 million peak in
1977. The B&O's superior port facilities make it the only railroad capable of
directly exporting through the port of Baltimore. Conrail tonnages, on the
other hand, ranged from .79 million in 1976 to a peak of 1.4 million tons as
recently as 1978. Its Canton Coal pier is a more limited facility and most of
its traffic involves either purely local shipments from its pier to Bethlehem
Steel or internal shipments over domestic inland waterways to utilities such
as Mercer in New Jersey. For this reason, except during 1974, Conrail has
consistently had better growth in the so-called "inside the capes" traffic

ow ow ow M, ow ow low dw

Table No. IT-5

Coal Dumpinqs at Baltimore and Other Atlantic Ports,
1973-1978, Percent Change, Percent of Total
(Net Tons)

Port/Railroad 1973 1974 1975 1976 1977 1978

NEW YORK
Conrail 999,458 737,039 550,934 990,400 814,971 614,643
Change: No. -- -262,419 -186,105 +439,466 -175,429 -200,328
% -- -26.3- -25.3 +79.8 -17.7 -24.6
% of Total 2.4 1.5 1.1 2.2 2.2 2.44

PHILADELPHIA
Conrail 142,683 1,390,547 833,657 466,812 344,291 71,30F
Change: No. -- +1,247,864 -556,890 -366,845 -122,521 -272,985
% +874.6 -40.0 -44.0 -26.2 -79.3
of Total .34 2.8 1.6 1.0 .9 .3

BALTIMORE
B&O 5,335,871 7,021,871 7,904,504 7,534,070 8,330,130 6,97-1,150
Change: No. -- +1,686,000 +882,633 -370,434 +796,060 -1,356,980
% -- +31.6 -12.6 -4.7 +10.6 -16.3
% of Total 79.5 87.2 87.2 90.5 90.3 82.6
Conrail 1,376,432 1,026,027 1,160,075 794,317 893,145 1,468,397
Change: No. -- -350,405 +134,048 -365,758 +98,828 +575,252
% -- -25.5 +13.1 -31.5 +12.4 +64.4
% of Total 20.5 12.7 12.8 9.5 9.7 17.4,
Western
Maryland 2,167 1,786 -- -- -- --
Total 6,714,470 8,049,684 9,064,579 8,328,387 9,223,275 8,441,547
Change: No. -- +1,335,214 +1,014,895 -736,192 +894,888 -781,728
% -- +19.9 +12.6 -8.1 +10.7 -8.4
of Total 15.8 +16.0 17.8 18.1 24.8 33.5

HAMPTON ROADS
C&O 9,224,231 13,324,855 13,588,571 11,301,817 6,943,358 5,689,171
Change: No. -- +4,100,624 +263,716 -2,286,754 -4,358,459 -1,2S4,187
% -- +44.5 +2.0 -16.8 -38.6 -18.1
% of Total 26.7 33.0 33.5 31.2 25.8 35.3
Norfolk-
Western 25,311,264 27,040,797 26,988,993 24,804,490 19,927,559 10,416,277
Change: No. -- +1,729,533 -51,804 -2,184,503 -4,876,931 -9,511,282
% -- +6.8 -.2 -8.1 -19.7 47.7
of Total 73.3 67.0 66.5 68.7 74.1 64.7
Total 34,535,495 40,365,652 40,577,564 36,106,307 26,870,917 i6,105,448
Change: No. -- +5,830,157 +211,912 -4,471,257 -9,235,390 -10,765,469
% -- +16.9 +.5 -11.0 -25.6 -40.1
% of Total 81.5 79.9 79.5 78.7 72.1 63.8

GRAND TOTAL 42,392,XO6 5@0-
9 2 4 IL&U_ 7 3 4 45-8 06 3@7_ 2 54 4 25,23 _944
Change: No. +6,150,81,8 +438,810 -5,137,828 -8,638,452 -12,020,510
% +19.2 +.95 -10.1 -18.8 -32.3

Source: National Coal Assocation, Coal Traffic Annual, 1979 and 1978.

TABLE NO. 11-6

Coal DumPinqs of R ailroad COmPanies at Baltimore# by Type of Traffic,
Percent Change, 1973-1978
Ne t To n s)

Change

1973 1974 Number Percent

90TAL 6,714,470 8,049,684 +1,335,214 +19.9
B&O 5,335,871 7,021,871 +1,686,000 +31.6
Conrail 1,376,432 1,026,027 -350,405 -25.5
wM 2,167 1,786 -381 -17.6

Foreiqn Export 4,327,612 5,939,712 +1,612,100 +37.2

E3 &0 4,155,845 5,534,135 +1,378,290 +33.2
Conrail 169,600 403,791 +234,191 +1.38.1
WM 2,167 1,786 -381 -17.6

Inside CaPes 2,386,858 2,109,972 -276,886 -11.6

B&O 1,180,026 1,487,736 +307,710 +26.1
Conrail 1,206,832 622,236 -584,596 48.4

Other

6 &0
Conrail

Source: National Coal Association, Coal Traffic Annual, 1979 and 1978.

TABLE No. 11-6 (Continued)

Coal Dumpings of Railroad COIDpanies at Baltimore,
by Type of Traffic, Percent Change, 1973-1978
(Net Tons)

Change

1975 Number Percent

'10TAL 9,064,579 +1,014,895 +12.6
B&O 7,904,504 +882,633 +12.6
Conrail 1,160,075 +134,048 +13.1
WM --

Foreiqn Export 6,596,513 +656,801 +11.0
B&O 6,311,963 +777,828 +14.1
Conrail 284,550 -119,241 -29.5
WM -- -- --

Insile Capes 2,468,016 +358,094 +17.0
S&O 1,592,541 +104,805 +7.0
Conrail 875,525 +253,289 40.7
WM -- -- --

Other
B&O
Conrail
wM

11-17

TABLE No. 11-6 (Continued)

Coal Dumpings of Railroad Companies at Baltimore,
by Type of Traffic, Percent Change, 1973-1978
(Net Tons)

Change

1976 Number Percent

90TAL 8,328,387 -736,192 -8.1
B&O 7,534,070 -370,434 -4.7
Conrail 794,317 -365,758 -31.5
WM --

Foreign Export 6,429,105 -167,408 -2.5
B&O 6,429,105 -117,142 +1.9
Conrail --
wM

Inside Capes 1,772,945 -695,121 -28.2
1,104,965 -487,576 -30.6
Conrail 667,980 -207,545 23.7
MM

Other 126,337
B&O --
Con ra i 1 126,337
wM

TABLE No. 11-6 (Continued)

Coal DumPings of Railroad Companies at Baltimore,
bY TYPe of Traffic, Percent Chanqe, 1973-1978
(Ne t To n s)
1977 Number Change Percent

10TAL 9,223,275 +894,888 +10.7
B&O 8,330,130 +796,060 +10.6
Conrail 893,145 +98,828 +12.4
wM --

Foreiqn Export 7,076,424 +647,319 +10.1
B&O 7,076,424 +647,318 +10.1
Conrail --
wM --

Inside CaPes 11698,112 -74,833 -4.2
B W 746,912 -358,053 -32.4
Conrail 951,200 +283,220 42.4
W14

Other 448,729 +322,392 +255.2
B WO 302,506
Conrail 146,233 19,896 +15.7
wM

TABLE No. 11-6 (Continued)

Coal DumPings of Railroad Companies at Baltimore,
by Type of Traffic, Percent Chanqe, 1973-1978

Change

1978 Number Percent

TOTAL 8,441,547 -781,728 -8.4
J3 &0 6,973,150 -1,356,980 -16.3
Conrail 1,468,397 +575,252 +64.4
W111 --

For eiqn Export 5,836,852 -1,239,572 -17.5
5,836,852 -1,239,572 -17.5
Conrail
W114

Inside Capes 2,273,467 +575,355 +33.9
B&O 883,329 +136,417 +18.3
Conrail 1,390,138 +438,938 46.1
W4 --

Other 331,228 -1-17,501 -26.2
B &0 252,969 49,537 16.4
Conrail 78,259 67,974 -46.5
wM

11-20

than the B&O. It is largely because of growth in this type of traffic that
Conrail's arrount of coal handled grew while-the B&O traffic actually declined
in 1978.

Trends in B&O coal traffic mirror the.Pattern of total coal dumped in
Baltimore in the period from 1973 to 1978 that has been discussed previously.
Conrail follows the B&O pattern except in the beginning and end years of the
period. In the initial year, its traffic declined substantially while B&O
traffic increased. For reasons explained above, in 1978 its traffic increased
markedly while B&O declined significantly. Conrail generally had,more favor-
able growth rates than the B&O except during 1974 and 1976.

As shown in Table 11-6, the Western Maryland Railroad, now a division of
the B&O, did some exporting from its Port Covington coal pier, but this was
discontinued in 1974, because the pier was redundant and inefficient. Table
11-6 also shows that Conrail did a small arrount of exporting from its Canton
Coal Pier until 1975 when it was discontinued because of the fragility of the
pier abutments. Thereafter coal traffic originating through Conrail from mines
served in Pennsylvania was routed over B&O lines through Baltimore, terminating
for export in the B&O's Curtis Bay port facility. Data on dumped coal do not
show this traffic as Conrail traffic, but include it under B&O's export data.
The Conrail data in this statistical series refer only to goods dumped and
moved from Canton Coal Pier.

Conrail-originated export traffic is significant in view of the local
problems associated with the rail movements it generates at the Howard Street
tunnel. The decision of Conrail to concentrate its export facilities in
Philadelphia (see later discussion) will result in the diversion of some of
this traffic from Baltimore. Separate data obtained from Conrail's Open Top
Hopper business group show that Conrail-oriqinated export traffic is small but
significant (see Table No. 11-7). It ranged from a low of about .65 million
tons in 1974 to a high of about 1.2 million tons in 1976. In 1979, Conrail
estimates it originated about 11 percent of Curtis Bay export traffic. A
steady drop in Conrail's share of Curtis Say export traffic has occurred from
peaks arOUnq 17 percent in 1975 and 1976. When Conrail-originated export
traffic is subtracted from B&O export data and added to Conrail data, Conrail's
growth rates improve in the years 1975 and 1976, but become worse in other
years.

C. DEMAND FOR CDAL

I. Introduction

Demand for coal in-Baltim3re can he segregated int o three basic com-
ponents all of which have distinct domestic and export markets: steam coal,
metallurgical coal, and industrial and retail coal. Steam coal refers to coal
used for the production of power by utilities. Metallurgical coal is used as
raw material in making coke which is subsequently used,to make iron and steel
Industrial and/or retail coal is used as boiler fuel or for direct heat in
other industrial and/or cormnercial operations. Similar to the nation, the two
most important components of demand in Baltimore are steam and metallurgical
coal.

MW M@

11-21

TABLE NO. TI-7

C.,nrail Oriqin Coal To Its Carton Coil Pier Baltimore and To The B&O's Curtis Day Facility for Export,
Net Tons (OCO' r) Numher , Percent Cnance , Percent of Total , 1973-1979

Conrail Export
Grand Total Export2/ Percent of
Canton Coal Pier B.0 Curtis Bay Pier Total Baltimore Total Export

Ye -- r Domestic Ex-vort Total Export

1973 Co. 1,510.9 241.6 1,725.5 861.4 2,617.9 4,327.6 60.5
1974 No. 704.0 425.9 1,11-9.9 646.3 1,776.2 5,939.7 29.9
Chance -806.9 +184.3 -622.6 -219.1 -841.7 +1,612.1
% Chance3 -53.4 +76.3 -35.5 -25.3 -32-3 +37.3
% o-17 Total 39.6 24 63.6 36.4 -- --

1975 8-2.4 282.0 1,154.4 1,324.6 2,279.0 6,596.5 34.5
Chatioe +168.4 -143.9 +24.5 +478.3 +502.8 +656.8
% C!iance +23.9 -33.8 +2.2 +74 +28.3 +11.1
-,f -otal 39.3 12.4 50.7 49.3 -- --

19-76 !;0. 777.4 -- 77.4 1,152.8 1,927.2 6,429.1 30.0
Chance -98.0 -282.0 -380 28.2 -351.8 -167.4 --
% Chance -11.2 -100 -32.9 +2.5 -15.4 -2.5
% nf Ictal 40.2 -- 40.2 59.8 --

19 -17 1:0. 923.1 923.1 1,014.9 1,938.0 7,076.0 27.4
Cha---e +148.7 +148.7 -137.9 +10.8 +646.9 --
% C!!ange +19.2 +19.2 -12 +.5 +10.1
% cf Total 47.6 47.-6 52.4 -- --

19-8 t!o. 1,472.4 IF472.4 793.7 2,266.1 5,636.8 38.8
Chance +549.3 +549.3 -221.2 +328.1 -1,239.2 --
% Cl.arge +59.5 +59.5 -21.8 +16.9 -17.5
% of Total 65.0 65.0 35.0 -- --

1979 No. 1 2,000.0 2,000.0 1,000.0 3,000.0 8,883.7 33.8
C@ance +527.6 +527.6 +206.3 +733.9 +3,046.9 --
% C@anqe +35.8 +3S.8 +26 +32.1 +52.2
% nt* Total 66.7 66.7 33.3 -- --

!/Estimates for both Curtis Bay and Canton.

Z/Total export coal dumped in Baltimore, National Coal Association, Coil Traffic Annual, 78-79.

!/Percent of grand total. -

Sour,--F-s: Canton - Conrail station department reports
Curtis Bay - Tidewater Coal. Bureau in New York
Data provided by Conrail Open Top Hopper Business Group, 10/20/79.

11-22

The quality and cost o-f steam and metallurgical coal differ and have
important implications for demand.

a. Steam Coal

Por utilities, steam coal is a major cost component of their end
product--kilowatt hours of electricity produced. Utilities, therefore, are
very sensitive to the pr-ice of steam coal. In an etfort to hold down costs,
utilities tend to buy lower quality coal which has high volatility, high ash
content and lower Btu content. The main constraint on the quality of steam
coal is the sulfur content imposed by environmental regulations. Utility long
term demand is more predictable and less subject to economic vagaries compared
to the more volatile steel industry that needs metallurgical coal. Most util-
ity coal, therefore is bought on longer term contracts and in large quantities
so that substantial cost savings can be achieved. Also utilities consume pul-
verized coal which is cheaper. Because of t6e larqe quantities involved, they
can command cheaper unit train rates. The coal consumed in the industrial
sector is generally the same as steam coal and is priced similarly, except
economies inherent in large quantities are not available because of the smaller
quantities demanded.

The chief constraint on the quality and therefore the price of steam coal
is the sulfur content of the coal. Environmental regulations have been an
important factor in establishing such quality levels and therefore have influ-
enced demand. Originally, States Were given responsibility to develop ambient
air quality standards. Such State regulations were established by statute anct
air quality standards differed according to the degree of the State's commit-
ment.

Beginning in Auqust 1, 1971 and extending through September 1978, however,
the federal government took over responsibility for regulating air quality of
new utility plants built in that period* Any plants constructed were required
to met an emission standard for sulfur dioxide (S02) of 1.23 pounds of S02
for every million Btu,s of coal burned. The method by which the utility was to
achieve this standard was its own business. It could buy low sulfur coal with
7 percent sulfur content or could install expensive scrubbers. Economic deci-
sions were based on the economics unique to each plant location. For examPleo
ior a plant located in a region where high sulfur coal was plentiful, the
installation of an expensive scrubber allowed it to use the available hi qh
sulfur coal at minimal transportation cost. With the availability of low sul-
fur western coal, many utilities did not make such a Capital cost expenditure
and opted for use of low sulfur coal.

As of September, 1978 the rules applying to new plants changed. The 1.23
pounds of S02 per million Btu remained; however, utilities were required to
use the best Available Control Technology (BACT) to remove 70 percent of the
sulfur in coals that had a sulfur content of .6 percent or less and 90 percent
in coals with a sulfur content from .6 percent or above, up to the 1.2 pound
limit* Since it normally takes five years to builcl a utility plant, the
effects of this regulation should be felt beginning in 1983. It would require
that new plants install scrubbers, thereby permitting the burning of high sul-
fur coal. This would contribute to a shift in the demand for high sulfur coal.

11-23

Those Plants built between 1971 and 1978 and opted for low sulfur coal may be
locked into low sulfur coal and become a captive market for this more expensive
coal.

b. Metallurgical Coal

Por the steel industry, coal is not a critical cost component of
production and it can therefore afford to pay more for coal in order to assure
quality and availability. The ideal coal for the steel industry has low vola-
tility, low ash, high carbon content, and high Btu content. This type of coal
may or may not have lower sulfur content. These qualities give metallurgical
coal higher strength and coke yield. This type of coal is less available and
commands higher prices. Over time, there haVe been significant improvements in
converting pig iron steel and converting coke to,pig iron. The replacement of
the open hearth process by the basic oxygen process and electric furnace, as
has occurred in Bethlehem Steel at Sparrows Point, has resulted in gains in
efficiency with less raw material being needed to produce steel. When prices
of metallurgical coal are particularly high, formcoke made from lower grade
coals, can be used instead of cokes with the cost savings offsetting ineffi-
ciencies inherent to the formcoke process. Most important, in recent yearst
coke yields (ratios of coal to coke produced) have been becoming lower (higher
ratios) reflecting a shift from expensive and scarce lower volatility coal
blends to a greater proportion of high volatile coals. Since high volatile
coals with low sulfur content can also be used as steam coal, there is an
increasing overlap, under certain circumstances between the demand for metal-
lurgical and steam coal. When demand is strong, there is increasing competi-
tion for this "swing" coal, making it more difficult for utilities to procure
it. However, when demand for metallurgical coal is low and large supplies
exist, as has just recently been the case, a coal producer with readily avail-
able, high-volatile metallurgical reserves will be willing to sell such coal
at lower prices to the steam market.

This section attempts to provide a perspective and to evaluate factors
that affect components of demand in Baltimore, Particularly steam and metal-
lurgical coal. The three perspectives important in understanding demand that
underlie present and future trends in Baltimore are: (1) national or interna-
tional (2) sectional or regional, and (3) local demand.

National and international economics in the supply and demand for comPet-
ing fuels as well as ior coal chiefly affect Baltimore's export trends in both
steam and metallurgical coal. Exports have been a very volatile segment of
coal trade in Baltimore. Understanding the national and international events
behind the recent rise in exports in Baltimore is crucial to an evaluation of
Baltimore's future needs relating to the capacity of its port.

Regional or sectional demand refers not only to demand in the immediate
Baltimore metropolitan area, but its trade relationships in the middle or
northern Atlantic region extending from Hampton Roads, Virginia, to New Jersey.
The relationship of Baltimore to its supply regions in Pennsylvaniat Maryland
is also an important factor defining its regional trade rela-
and West Virginia
tionships. Some of these relationships will be discussed in more detail in a
later section on supply. Regional considerations are important particularly in
relation to domestic power industry's demand for steam coal and for demand for

11-24

metallurgical coal from the local steel industry in Baltimore. Also, regional
factors explain why Baltimore alone among all the Atlantic ports is garnering
an increasing share of exports.

Domestic or local demand for coal originates within the United States
involving customers in-other cities or ports, along inland waterways or in the
port of Baltimore. This demand is associated with the needs of a few large
steel and utility plants and can be readily quantified and projected (see later
section on demand).

The following factors have been found to be responsible for increasing
demand for exports in Baltimore.

National and International

Low domestic electricity growth, slower than expected
shifts of utilities to steam coal and sluggish demand of
the steel industry for metallurgical coal have contributed
to excess capacity in the coal industry resulting in
readily available reserves at depressed prices that are
attractive for export.

0 Increased shipping costs induced by rise in oil prices
make U.S. coal cheaper for Europe compared to more cost-
competitively mined Australian coal.

The political necessity of some. countries with large coal
needs such as Japan to diversify their sources of supply,
in some respects, benefits the U.S.

0 The withdrawal of some big European suppliers from the
market benefits U.S. export.

0 The increasing number of foreign utility conversions to
coal has been cited as favoring U.S. export but has not
been verified.

0 Some countries have placed restrictions on export*of their
scarce coal resources cannot satisfy large demands being
generated.

Regional and Sectional

0 Baltimore is in close proximity to places where steam coal
is mi ned'.

0 Baltimore has more favorable railroad rates than Hampton
Roads for steam and other coal located to the north and
west that more than compensates for its more distant loca-
tion from Europe.

0 High demurrage fees caused by limited capacity are being
experienced to the same degree in other ports, cancelling
any disadvantage to Baltimore.

11-25

Equalization of freight rates such as occurred with Phila-
delphia may divert exports from Baltimore.

The following factors will be responsible for increases in domestic demand
for coal in Baltimore and environs:

0 National policy favoring new coal burning power plants or
conversion of oil burning power plants to coal.

BG&E conversion of Wagner plants Nos. I and 2 to coal in
1985.

0 BG&E construction of a new power plant at Brandon Shores
scheduled for conversion to coal in 1984 and 1988.

0 Conversion of @G&Eps Crane plant No. 1 to coal in 1983.

0 Delaware Power and Light Company construction of new coal
power plant by 1987 or 1988.

Future Demand

a The current physi cal capacity of port and transportation,
facilities would constrain the handling of moderate growth.

0 Differential impacts on diversions of traffic may occur in
Baltimore according to the degree to which it keeps abreast
of other ports in accommodating national and international
demands.

Domestic Coal

0 Future demand for local coal will almost double largely
due to conversions of local utility plants.

0 Future demand for local metallurgical coal may decline.

0 Future demand for local steam coal may increase more than
four times.

0 The principal impact of increases in local demand will be
on local railroad facilities.

2. National and International Factors Influencing Export Demand

The United States has had a long history of coal export, most of which
has been limited to the more costly, high quality metallurgical coal. Steam

11-26

coal traditionally has not been exported in any significant volume, except to
Canada. Asia and Europe's demand for steam coal have traditionally been met by
imports from Australia, Poland and South Africa. Nationally, in 1980, steam
coal exports have been cited as running at an equivalent annual rate of 8.5
million (net) tons.up sharply from an export of 2.2 million tons in 1979-I.L/
In 1979, for example, almost 65 million tons of coal were exported. Of this
amount, 14 million tons of steam coal were sent to Canada and 43 million tons
were metallurgical coal exports to Japan and EuroPe-L?/ Since total U.S. pro-
duction in 1979 was about 770 million tons, it can be seen that the remaining
less than 2.5 million tons of steam coal exported was relatively insignificant.

The demand for coal in the nation has risen slowly from 1973 to 1977, but
not as fast as has been forecast, according to the National Coal Associa-
tion-ILY Production of coal actually declined in 1978 after the peak had
been reached in 1977. Although coal production rose again to exceed 700 mil-
lion tons in 1979, overall the net increase has been relatively small and
fluctuating over the years-141/ As a result, there is still considerable
surplus capacity in the coal industry today. During this period, production
increased to respond to the slow but steady rise in demand for domestic steam
coal on the part of new coal burning power plants that have been built or old
ones that converted. Howevere there have been slower than expected increases
in electricity demand. Increasinq Costs of conversion because of environmental
regulation have slowed the switch to coal. Demand for metallurgical coal, on
the other hand, has been sluggish and declininq since the recession in 1974
dampened the growth in the steel industry. Except possibly for Japan, world
steel markets have shown the same pattern. U.S. metallurgical coal has been
relatively expensive. As a result, major coal importing countries have been
increasingly going to other countries such as Australia for their metallurgical
coal. Consequently, U.S. metallurgical exports have declined in the middle and
latter portion of the decade. In summary, slower than expected shifts of util-
ities to steam coal and sluggish demand for metallurgical coal have contributed
to excess Capacity in the coal industry.

A number of circumstances help explain the sharp rise of U.S. steam coal
exports occurring during the later half of 1979 and continuing into 1980.

a. Increasing Shipping Costs

Part of the increase in U.S. exports is due to the increased
.price of ship fuel. Mainly, as a result of increased OPEC oil prices since the

LL/Thomas Petzinger Jr., "Inadequate U.S. Port Facilities Threaten
Potentially Huge Market For Coal," Wall Street Journal, July 29, 1980.

12/Christopher Madison, "The Coal Industry Remains Uneasy, But an 'Export
Boom May Be On The Way," National Journal, May 24, 1980, p. 848.

13Y"lower Demand, Falling Prices Make Coal Industry Sick," Baltimore
Sun, November 11, 1979.

LI/Ibid.

11-27

Iranian crisis, there has been a sharp increase in the price of bunkering fuel
for ships carrying coal. The United States is closer to Europe than other coal
exporters, particularly Australia, and therefore, has a cost advantage. Tradi-
tionally, Australian price for coal f.o.b. the port has been significantly less
than the comparable U.S. price, but U.S. producers now can transport coal to
Europe for less than Australia and overcome the cost differential. The higher
price of ships' fuel that has helped U.S. export of coal to Europe, theoreti-
cally, however, should hurt U.S. trade with Japan. It has been cited that the
umitomo Corporation in Japan may import as much as 100 million tons of steam
coal by 1990 and that such big tonnages could not be satisfied by Australia,
South Africa and China alone-1-5/ Most important, Japan may have politi- cal
and diplomatic reasons for including th U,S* among its suppliers*

b. Withdrawal of Poland as an EKR2rter

Last year, Poland, a major coal producer and exporter to Europe,
began to withdraw from the European market in favor of expanded trade with the
Eastern bloc of nations and the Soviet Union; which are beginning to experience
energy shortages.

C. U.S. Surplus Capacity and Iow Prices

As indicated by trends explained above, the coal industry is
relatively sick. The symptoms a re declining coal prices and low'demand. It
has been estimated by the National Coal Association that demand in 1978 was
running 150 to 200 million tons below capacity and has kept coal pri,ces from
rising.-I-6/ Prices of domestic'coal on the open market in 1978 ranged from
$19/ton to $27/ton-12/ In the summer of 1979, the marked increase of OPEC fuel
prices made the exported price of U.S. coal appear more economically favorable.
It has been estimated that the U.S. exported price coal at about $50/ton, is
one-third cheaper than oil with equivalent energy content-LY Most brokers on
the spot export market are making contracts ranging from $36 - $46 a long ton
(332 - 841/net ton).19/ These low prices have stimulated exports and have
helped sop up some of the excess capacity. Under these conditions, metallur-
qical high volatile coal is being dumped and sold for export as steam coal at
depressed prices (see discussion above).

15/1'homas Petzinzer, Jr., "Growing Market Overseas For Steam Coal Begins
to Draw on big Supply," Wall Street Journal, Feb. 7, 1980.

16/"lower Demand, FallinY Prices Make Coal Industry Sick," Baltimore Sun,
March 11, 1979.

17/Ibid.

18/1-homas Petzinzer, Jr., "Inadequate U.S. Pbrt Facilities Threaten
Potentially Huge Market For Coal"i Wall Stre et Journal.

19/Thomas Petzinzer, Jr., "Growing Market Overseas For Steam Coal Begins
to Draw on Big Supply, "Wall Street Joui:nal, Feb. 7, 1980.

11-28

Most of the export contracts, however, remain short-term. Foreign coun-
tries are uncertain as to this country's ability to solve its port capacity
problem and under such conditions are reluctant to sign long-term contracts.
Already, a significant backlog of ships waiting in East coast ports results in
as much as 19 days delay in port. It has been estimated that the demurrage
fees or costs of detention resulting from such delay can result in $6 to $8
being added to the per ton cost of exported coal (see discussion below).-LO/
Transportation costs of coal will increase under ICC regulations in September.
It is possible that if a further increase in such transportation-related costst
a sudden reversal of the current weak market or increase in production costs
should occur, that the price of coal would rise and no longer be economically
attractive for export, However, it is expected that the price of oil may al so
rise and counterbalance such trends.

d. Conversion of Foreign Utility Plants to Coal

It has been claimed that increases in U.S. exports of coal have
resulted from the actions of European countries in converting their generating
plants from oil as a source of fuel to coal. However, based on United States
experience, it takes from three to five years to build or convert a plant.
Under such circumstances, it is believed unlikely that conversions would qen-
erate sudden, sharp increases in demand. Much is still unknown, however, about
the current and future status of foreign utility plants in regard to coal.
Such data will have to be verified before conversion can be established as a
.contributing factor.

e. Institutional Factors

Some countries, such as South Africa, tax their exports and set
a limit on the amount that can be exported in the interests of conserving a
critical resource. Even with higher taxes, such coal has been attractive as an
export. However, this policy limits the ultimate capacity of such countries in
satisfying large export demands and may be a factor favoring export from the
United States. Many countries, as a matter of diplomatic policy, prefer to'
diversify their sources of supply to reduce-their vulnerability to external
events. The U.S. may be benefitting from such diversification, particularly
in regard to Japan. It has been claimed that the declining value of the dollar
has helped increae imports, but the National Exporters Association asserts that
the in1luence of this factor is minimal.2-1/

3. Regional and Sectional Factors Influencing Export Demand

In Baltimore, the export of metallurgical coal held its own during
1979, showing strong demand. The increase in export demand for steam coal came

20/Interview with Albert N. Knighton, May 21, 1980.

@L/David Ress, "October Coal Exports Set Port Record," Baltimore Sun,
November 2, 1979.

11-29

on top of metallurgical ex port demand-_L/ This trend intensified during
1980. For example, whereas the Chesapeake and Ohio piers in Baltimore and New-
port News have mainly handled metallurgical coal, steam coal in 1980 accounted
for about 37 percent of their shipments. Japan, traditionally has accounted
for 41 percent of the exports from Baltimore, comprised mostly of metallurgical
coal.-L/ Over the past several years, Nippon Koran KK (NKK), the second
largest steelmaker in Japan, has exported an average of 800,000 tons of coal
per year through Baltimore and is one of the ports largest customers._L4/

Largely because of Japan, substantial levels of metallurgical exports have
been maintained in Baltimore, countering sluggish trends in metallurgical coal
demand occurring nationally. Baltimore may be one of the chief beneficiaries
of Japan's policy of diversification or its diplomatic policy in desiring to
maintain good,trade relationships with the U.S.

A number of competitive factors among Baltimore and other Atlantic coast
ports explain the increase in demand for coal export from Baltimore. The pre-
vlous section explained national and international factors influencing the
increased demand from Japan and Europe for U.S. steam coal. Increases in
export of steam coal have also occurred in Baltimore and the same explanatory
factors apply to the increases occurring in Baltimore. The section below
focuses on Baltimore's particular advantages and disadvantages in benefitting
from secular trends.'

a. Proximity to Coal Fields

One of Baltimore's main advantages for the export of coal is its proximity
to places where steam coal is mined: West Virginia, Pennsylvania, and western
Maryland* In contrast, Hampton Roads has access to vast quantities of higher
quality, higher priced, metallurgical coal located in coal fields further
south. The lower priced quality steam coal accessible to Baltimore is cur-
rently the type of coal most in demand from toreign countries.

b. Favorable Railroad Rates

Baltimore's proximity to steam coal mines is reflected in more favorable
rail rates from such mines to Baltimore compared to Hampton Roads. It is more
expensive to ship lower priced steam coal from a mine in western Pennsylvania
to Hampton Roads than it is to Baltimore. Moreover, as shown in Table No.
11-8' rail rates from Baltimore to its supply areas are seven percent cheaper
than'rail rates from Hampton Roads to its supply areas. Baltimore is not only
closer to the right kind of coal, but is generally closer to places where coal
is mined. It s hould be noted that Conrail serving Baltimore and Philadelphia

22/David Ress, "Port Tonnage For 1979 Up 15.4%," Baltimore Sun,
December, 30, 1979, p. K-7.

23/Interview with Albert J. Knighton, May 21, 1980.

n
24/David Ress, "October Coal Exports Set Port Record, Baltimore Sun,
November, 1979.

11-30

TABLE NO. 11-8

Rail Rates on U.S. Coal Exports from Mi nes
To Baltimore and Other Ports of Exit
(Per Net Ton)

BIT Lk4 I NO US

Origin District Hampton Roads Baltimore Philar3elPhia

Pocahontas - New River 11.99
Kanawha Thacker - Kenova 12.23.
Kentucky biq.Sandy 12.51 -- --
Reynoldsville -
Clearfield - Cumberland
Piedmont - Somerset -- 11.20 11.20
Greenburq 11.48 11.48
estmoreland West Virginia 11.92 11.92
Gauley 11.92 11.92
W

ANTHRACITE

Origin District Philadelphia Baltimore

All Regions: Prepared & Mine Run Sizes $ 9.42
Buckwheat #1 & Smaller Sizes 9.84 --
Schuylkill Region: Prepared 12.42
Lehigh & Wyoming Regions: Prepared 12.42
All Regions: Pea & Smaller Sizes 12.04

Note: Includes the 13.7% rate increase, effective October 15, 1979.

Source: National Coal Assocation, Coal Traffic Annual, 1979, p. 11-26.

11-31

gives both cities access to the same supply areas, but there is no differential
in the rail rate, except that Philadelphia's proximity to anthracite mines is
reflected in lower rail rates. At one time, Baltimore had a favorable seven
cents per ton transportation rate differential on the Penn Central from bitu-
minous mines in Pennsylvania compared to Philadelphia. Baltimore was closer to
these Pennsylvania mines because the distribution of rail trackage favored Bal-
timore, contributing to lower rail costs. The equalization of the rate, the
lack of Conrail export facilities in the port of Baltimore (se6 later discus-
sionl and the difficulties of interchanging with B&Os export facilities in the
port have probably been influential in Conrail's decision to expand its port
facilities in Greenwich Pier, Philadelphia even though this Pier is not as
modern or as deep as the B&O's Curtis Bay facility.

C. Proximity to Europe

Hampton Roads is a half-a-day closer to Europe than Baltimore. It
takes an additional half-a-day going to and a half-a-day coming back into Bal-
timore. This is equivalent to a day's ship cost of about $19,000. However,
the higher rail rate from steam coal mines in Pennsylvania to Hampton Roads
results in extra costs that are greater than the extra cost of the ship coming
into Baltimore. It is cheaper for a ship to come the extra distance to pick
up a load of coal in Baltimore than it is for the railroad to move it to
Hampton Roads from Baltimore.

d. Channel Depth

The depth of water in the Baltimore port and channels is 39 feet,
six inches, while the depth in Hampton Roads is 45 feet. Attempts to dredge
the Baltimore channel and harbor to 45 feet have not been realized because of
controversy about where to put the spoils. A ship therefore can load much
deeper in Hampton Roads and this reduces the unit costs of shipping coal to and
from Hampton Roads compared to Baltimore. Reduction in unit costs is particu-
larly important for customers requiring steam coal because, for reasons noted
earlier, low coal prices are particularly important for their profitable oper-
ation. The relatively shallow channel in Baltimo re compared to Hampton Roads,
however, is not an important factor in Japanese metallurgical coal trade which
has been an important component of Baltimore trade. Japan must use 70,000 ton
Panamax ships that have a draft capable of passing the relatively shallow
Panama Canal.

e. Demurrage Fees

The limited capacity of Baltimore's port to handle the large
demands placed upon it. for export of coal will be discussed and evaluated in
detail in a later section dealing with supply. T he delays in loading ships
resulting from such limited capacity, however, have implications for demand
which will be discussed here. In May, it typically took 21 days for ships to
load at Baltimore because they were waiting for a berth. A'$19,000 per day
demurrage fee is charged by ship owners for each day a ship is in port above
that normally required for loading. It has been estimated that demurrage fees
have added $6 to $8 to the per ton cost of coal shipped from Baltimore.
Instead of a 338/ton cost of coal shipped from the port of Baltimore, costs per

11-32

ton now are about 345/ton. Based on the previous discussion, it can be seen
that this cost is still competitive with the costs of equivalent energy pro-
vided by a barrel of oil, but further increases could negate the advantages of
exporting steam coal from Baltimore. However, such delays are common in Hamp-
ton Roads as well. To the extent that such delays are equal among ports, there
will be no competitive disadvantage to Baltimore'in comparison to other ports.

4. -Future Export Demand

A major issue for Baltimore is--how long will present high levels of
export demand be sustained in the future? An evaluation of the prospects for
future demand is important in order to ascertain the size and scope of capital
investment in Baltimore's port'and whether such investments can be justified or
payed back within a reasonable period of time. This analysis indicates that
current very high demand for export of U.S. coal to foreign nations is largely
the result of market conditions: a glut of U.S. steam and metallurgical coal
is now on the market at low prices that are attractive to foreign nations.
Markets are notorious for their variability and their impacts are often short-
term. The present market is the result of lower growth in the demand for
energy, depressed economic conditions in the durable goods industrie@s supplied
by the steel industry, and long term lower productivity of the U.S. steel
industry in competition with other nations, particularly Japan.

In large part, these events are cyclica I and conditions will undoubtedly
get better. Under such circumstances, U.S. coal prices will rise somewhat.
Also, as the present high level of reserves are consumed at a rapid rate, the
surplus of U.S. coal will eventually be reduced. Industry is expected to
increasingly convert to coal, increasing domestic demand for steam coal. These
trends will tend to increase the price of U.S. coal, making it less attractive
for foreign nations to import. It is therefore expected that the current
abnormally high levels of export demand will abate somewhat and that demand
will be more moderate in the future.

Some of the factors responsible for the current depressed domestic market
for U.S. coal, however, have their origin in long term secular trends, and
current market conditions may signal a continuation of these secular trends in
the future: lower overall U.S. growth in the consumption of energy and the
reduced role of the steel industry in the nation's industrial structure. These
trends will tend to moderate or dampen any increase in U.S. coal prices. Addi-
tionally, oil prices are ex'pected to increase in the long term, making U.S.
coal more attractive to other nations, despite some increase in its price.
Under such conditions, foreign nations are expected to increasingly rely on
coal for some of their power needs. Worldwide demand for coal will therefore
increase. As demand increases, and coal becomes relatively more scarce and
valuable, foreign coal producers may increasingly restrict their exports or
gradually withdraw from the international market to support their own needs or
those of favored nations.

It is expected that Baltimore could attract moderate sustained growth in
exports, if there were no physical capacity restraints in the port or trans-
portation facilities. Under such conditions it would be possible for the port
to more than double its exports to levels of 20 to 24 million tons per year.

11-33

The chief limitation on the export of coal will not be demand, but will be
related to the conditions of supply, particularly the limited capacity of U.S.
ports and transportation facilities such as Baltimore. These limitations,
themselves, may be responsible for altering the price structure of coal suffi-
cient-ly to influence export demand. For example, if moderate demand continues
to exceed the nation's capacity, it may induce increased handling and other
transportation costs which will have to be factored into an increased price for
U.S. coal. More directly, current delays at ports are expected to continue,
because large and extensive capital expenditures necessary to remedy capacity
Problems will take some time to implement. The length o f the delay, however,
may be reduced somewhat because the reduction from abnormally high levels of
demand will reduce the number of ships queuing at U.S. ports. The resulting
lower number of days delay in port will lower demurrage fees, reducing the unit
price of U.S. coal.

In general, the extent to which Baltimore, because of capacity problems,
cannot meet even more moderate demand for export coal, higher prices for coal
will be maintained, making U.S. coal exported from Baltimore less competitive
on the foreign market and reducing foreign exports. If one port succeeds in
solving its problems before another, distinct competitive advantages may occur#
possibly resulting in large diversions of coal trade from one port to another.
Deepening ports, providing additional piers and increasing railroad capacity
for handling coal will reduce unit costs of transporting coal and the demurrage
fees associated with delay.

5. Factors Influencing Domestic Demand for Coal

Domestic demand, d istinguished from export demand, is that portion of
total demand that occurs as coastwise movements between Baltimore and another
port, internal receipts and shipments over domestic inland waterways and as
purely local shipments within the port of Baltimore itself. The factors
influencinq this type of demand are entirely different from those exerting an
influence on 'export demand. In 1977,.about 3,704,281 tons of coal was handled
in such domestic movements of which about 60 percent was internal movements and
almost 39 percent was purely local movement. CDastwise shipments, largely to
and from New York, were almost negligible. It is estimated that most, or about
71 percent of domestic demand, was comprised of metallurgical coal going to
Bethlehem Steel. The remaining 29 percent was destined to utilities..

a. Metallurgical Coal

The bulk of coal received by Bethlehem Steel in 1977, or almost
70 percent, consisted of internal movements of metallurgical coal from southern
mines to Hampton Roads and then by barge directly to Sparrows Point. Such a
movement is expected since most of the higher quality metallurgical coal is
located in the "southern" region (see section on supply). The remaining share
comes from Pennsylvania and West Virginia fields @served by Conrail and shipped
by barge from the Canton Coal pier. The future demand for metallurgical coal
and these types of movements is dependent on level of economic activity at
Bethlehem Steel and the general health of the steel -industry, especially on
the East coast. At present, the steel industry is in a slump, in large Part
resulting from a decline in domestic automobile production. Bethlehem Steel,
last year expected the demand for coal to remain stable, depending on the

11-34

health ofthe steel industry. It serves a market extending from New England
to Florida. The further industrial growth of the South has made that segment
of the market more important. Also, U.S. Steel has a big competitive plant
further north in Philadelphia that influences demand occurring in Baltimore.
At best, it is believed that domestic demand for metallurgical coal will be
sluggish and may decline somewhat in the next few years.

b. Steam Coal

Although steam coal shipped to utilities now comprises only a
little less than 30 percent of domestic demand for coal in Baltimore, its
share is expected to grow* The national policy of inducing local utilities to
convert to coal or to build new coal-burning plants is a factor favoring local
growth. Strict environmental regulation (see previous discussion) governing
the quality of air pollution tends to make the conversion or the construction
of such new plants expensive, which tends to slow or retard such growth.

(1) Wagner

In 1977, 594,000 tons of coal was shipped to BG&E's Wagner
Plant Number 3 entirely through the B&O via rail barge from its Curtis Bay
facility. In 1979, the volume of coal handled at Wagner was relatively stable,
declining only slightly to 545,000 tons-_L/ By 1980, BG&E decided to diversify
its sources of supply at Wagner and 170,000 tons of its coal requirements will
be shipped by Conrail through its Canton Coal pier. Wagner's existing oil
burninq units number 1 (137 Mgw) and number 2 (134 Mgw) are scheduled to be
converted to coal in 1985-26/ Conrail hopes to serve these Wagner plants in
the same manner it now serves unit number 3, but it will be in competition for
such service with B&O, since both the B&O and Conrail serve some of the same
coal supply areas in Pennsylvania.

(2) Brandon Shores

BG&E is constructing a new power plant at Brandon Shores
not far from the Wagner power plant complex. It will consist of two units of
600 megawatts each. Unit number 1 was originally scheduled to start up on oil
in January, 1982, but has been shifted to 1984 for start-up on coal. Unit
number 2 originally scheduled to start up on coal in January 1985, is now
scheduled to start up in 1988. Conrail and B&O are expected to compete to
serve this plant. Much depends upon what types of coal are used in the plants
in relation to the fields served by either or both of the two railroads.

A number of options are being considered for transportion of coal to
Brandon Shores that may influence whatrailroad(s) serve the site. First,

25/"Cost and Quality of Fuels for Electric Utility Plants - 1979, Energy
Information On Data Reports", Energy Information Agency, DOE, June, 1980, p. 81.
_L6/This and subsequent -conversion dates were. obtained from ICF data on
Edison Electric Institute's survey of utility CEOs.

11-35

coal could be brought in by rail and barges as is now done for Wagner further
north. In such case, either or both railroads could provide the service as is
now done at Wagner. Second, BG&E could require the coal to be brought by rail
(Chesapeake & Ohio or Norfolk & Western) to Hampton Roads and then transport it
,by deeper barges over the Chesapeake Bay to Baltimore. In such a case, local
railroads may not be involved at all. Mor'eover, if present depths at Brandon
Shores are similar to those currently at Wagner and permit only the docking of
shallow draft barges# further changes at the site may be required to handle
coal under this option. Deepening of the channel raises the issue of where to
put the spoils. Third, coal could be shipped directly by rail to the plant
over-existinq B&O tracks in the vicinity of the plant. This trackage already
goes to Wagner and some adjustment and rehabilitation would be required to
make it operational for Brandon Shores. Additional property might be required
because, at presents, there is only a single track and a need to provide space
for coal dumpers.

(3) Crane Plant

BG&E's Crane number I plant., located northeast of Baltimore
on the Middle River is expected to convert to coal in 1983. Some shipments of
coal may be required before that time to make tests for the type of coal they
intend to burn. Since the Crane 'plant is served by both Amtrak and Conrail
lines, Conrail can serve this plant. (bnrail can deliver coal directly to the
plant by using road crews on diesel trains or, if electrified trains are used,
it can stop the train at Bayview and then change to diesel to make the deliv-
ery. The latter is more time consuming, costly and could exacerbate present
congestion problems that already exist at Conrail's Bayview yards.

The Crane station has cyclone units that require low fusion temperatures.
Normally, such temperatures are obtained from coal with a high sulfur content.
Kentucky low fusion ash coal is the only type of coal that can be used in these
units and at the same time, meet the government's low sulfur content require-
ments. The railroad that serves the mines producing this type of coal is the
Louisville and Nashville (L&N) which has just been merged with the Chesapeake
and Ohio as part of the Family System. The requirements, however, are small
enough to require only a single or a few cars shipment.

(4) Delmarva Plants

The Delmarva Power and Light Company presently operates an
oil-fired plant at Vienna, Maryland. A new 500 mgw coal-fired generatinq unit
is being built adjacent to this plant and-is expected to be in operation in
either 1987 or 1988. The utility has bought an abandoned railroad in Dorches-
ter County that extends 10.2 miles from Vienna to Hurlock where it connects to
a short line railroad operated by Maryland Delaware Railroad Company and
leased by the State of Maryland from the reorganized Penn Central Corpo ration
(PENNCD). This line eventually connects with Conrail's Eastern Shore Branch.
travelling further north. Three alternatives are being considered to supply
this Plant. An all rail routing from Wilminqton directly to the plant would
not affect the Port of Baltimore. Another alternative would be for Conrail to
barge the coal from Baltimore across the Chesapeake Bay to rail connection from
the shore to the plant. A third option would be to use a combination of the

11-36

two previous alternatives. A new Indian River plant built by Delmarva in
Delaware is scheduled to open in September 1980, requiring over 1,000,000 tons
of coal. One third of its supply of coal will come from West Virginia and be
shipped from the South Via Norfolk, with the rest coming from Pennsylvania via
Conrail from the north through Wilminqton. Neither route would affect the
port of Baltimore.

(5) Morgantown and Chalkpoint

Potomac Electric and Power Company (PEPC0) owns two plants
at Morgantown-and Chalkpoint. In 1979, the Chalkpoint plant required 1,00,200
tons of coal and the Morgantown Plant required 2,431,000 tons of coal handled
as traffic going through Baltimore. Train crews carrying this traffic are
relieved at BaYview yard and the train then goes on through the Union and B&P
tunnels over Conrail lines to Bowie, Maryland. In peak months, there are as
many as 60 train movements or an average of two trains per day, but most of the
traffic is routed to Bowie at night. Congestion potential at Bayview yards is
aggravated when crews are changed. Sharp curvatures at the tunnels limit oper-
ating capacity of the line, exacerbating congestion at Bayv.iew (see later sec-
tion). In the Past, this traffic averaged two to three million tons a year.
Conrail is hopeful that traffic will stabilize at the 1979 level of about
three and one-half million tons.

(6) Intercoastal Shipments of Steam Coal

As indicated previously, the shipment of coal from Balti-
more to other Atlantic coast ports is relatively insignificant. However, with
Baltimore's proximity to coal mines producing steam coal, and considering the
rail access problems at other Atlantic coast ports such as New York and Boston,
it is not unlikely that prospects for increase in intercoastal shipment of coal
will occur as utilities in these large Atlantic coast cities build or convert
to coal-powered plants. Some traffic already exists to New York. In 1980, for
the first time, the B&O began shipping coal through Baltimore destined for a
generating station in New England. The Chessie system expects such shipments
to increase as more utilities convert to coal-_L/

6. Future Domestic Demand for Coal at Baltimore-A Surmnar

Domestic demand is expected under optimistic conditions to about
double by 1988 (see Table No. 11-9). Present domestic consumption includes the
curent coal demands of Wagner No. 3 and Mercer as well as the estimate of about
2,620,000 tons of local demand for Bethlehem Steel. The current three and one-
half million tons of domestic demand is expected to increase to about seven
million tons in 1988. The local demand for metallurgical coal is expected to
decline slightly as sluggish trends in the nation's steel industry continue.
On the other hand, based on present estimates of coal conversions, the local

27/Carole Shifrin, "Chessie RR Reports Glowing Outlook", Washington Post,
April 22, 1980.

11-37

demand for steam coal on the part of utilities is expected to increase more
than four times to about 5 million tons. No estimate has been made of the
amount of intercoastal shipment of steam coal that is likely to occur. Never-
thelesst such shipments are likely to increase and in this respectt the total
estimate may be considered conservative.

Most discussion centers around the future magnitude of export coal, but
substantial gains are expected in Baltimore local coal traffic based on the
demands of local industries and utilities. Most of the waterborne traffic
necessary to accommodate such demands will be on barges either from Baltimore
or Hampton Roads. Most of Bethlehem's coal will likely be shipped directly to
its piers, from Hampton Pbads and as such, have a minimal impact on the port
and rail facilities. On the land side, railroads will experience substantial
increases in volume of traffic, which when added to potential increases in
export demand may tax the CaPacity of existing facilities.

D. SUPPLY OF COAL: SOURCES AND FACILITIES

1. Introduction

This section explains how coal is supplied to Baltimore; the origin
of coal; the routes by which coal is transported; the capacity of transporta-
tion and port facilities to accommodate coal. The previous section on demand
expected moderate sustained demand for export coal durinq the coming decade.
Additionally, local demand for coal going through the port may double by 1988.
1he exact quantities of demand projected are not crucial because the degree to
which these projections will be achieved will depend upon the operating capac-
ity and condition of local transportation and port facilities, Indications are
that the present physical capacity of the port and its supporting transporta-
tion facilities will not, in their Present condition,, be able to accommodate
the future demand projected. It is expectedt for example, that under condi-
tions of future moderate sustained growth, demand will be sufficient to allow
the port of Baltimore to more than double its exports to levels of 20 to 24
million tons per year.

The present capacity of the port is deficient by more than half this
level. Whereas the doubling of local demand could possibly be accommodated at
exi8tin9 port facilities, indications are that railroad lines an" yard fac ili-
ties may be strained beyond their present capacity. Railroad and yards supply-
ing coal to the port of Baltimore will have to accommodate a quadrupling of
demand, including both export and local demand.

As noted previouslyt if the port succeeds in solving its capacity prob-
lems it will help create conditions for cheaper U.S. export coal, which will,
itself, promote future growth in this type of traffic. Additionallyt the port
will preclude the possibility of any diversion of coal traffic that might
result from the actions of other competitive ports orf the Atlantic coast.
Additional piers will reduce delays and lower demurrage fees. Deepening Chan-
nels will allow larger ships to call on the port, reducing unit transportation
costs. The market has already begun to respond to strong demand and deficient
facilities. Numerous proposals have been made by firms to improve waterside

IT-38

T AB LE NO. 11-9

Estimate of Future Domestic Coal Demand at Baltimore, 1980-1988

Yea r Steam Coal-I/ Metallurgical Coal Total

1980 960,000 2,620,000 3,580,000

1982 1,995,000 2,000,000 3,995,000

1983 3,326,000 2,000,000 5,326,000
1985 4,139,000 2,000,000 6,139,000
1988 5,001,000 2,000,000 7,001,000

Source: ICP estimates.

11-39 -

facilities: the Island Creek proposal for coal storage and possibly, another
pier in Curtis Bay; Consolidated Coal's proposal lor conversion of the Canton
Railroad Company's ore pier and other properties for coal use. Other possible
Proposals have been in the study stage: conversion of the Curtis bay ore pier
for coal; the re-activation or improvement of the Port Covington Coal pier; the
Boston Metals Company proposal; etc.

The following are the expected impacts of these proposals:

0 The Island Creek project when completed will'help the
Curtis Bay export pier achieve close to its theoretical or
nominal capacity in handling about 14 million tons of- coal
Per year.
k
0 The Consolidated Coal project for converting the Cottman
Canton Ore Pier to coal will add a significant amount of
capacity for export of coal from the port: 10 million
k tons of coal per year.

0 These two projects alone could be enough to satisfy the
k moderate growth in export demand projected over the next
decade: 20 to 24 million tons of coal per year.

0 Any further major Capital investments should be evaluated
carefully in view of the limits on export demand projected
above, such investments have the potential of reducing the
full utilization of existing facilities and may require
major infrastructure investments in railroad transpor-
tation.

Most consideration has been given to improvements related to water side
facilities. Increased capacity constraints on railroads and their inability
to solve them# however, could nullify the benefits of such water side improve-
'k ments. Improvement of line capacity will res *ult in increased ability to handle
the larger unit trains anticipated with strong demand. Improved or expanded
yard and storage facilities will reduce railroad car demurrage fees, help keep
the line clear of non-productive empty cars, aid the railroad in more promptly
k meeting shipping schedules and reduce handling and terminal costs, in general.
Failure to address such railroad problems could increase handling, terminal
and transportation costs, making the port and U.S. coal less competitive for
export. The analysis shows that transportation costs from mine to port are in
many ways more critical than water side.shippinq costs and Baltimore's chief
Advantage as a coal exporter is in the area of railroad transportation costs
which is reflected in its proximity to coal mines.
k
r_% The following is expected to be the chief impact of increases of exports
and domestic shipments and port-related investment on the transportation
infrastructure, particularly the railroad:

0 Increased serving yard capacity will be necessary if any
k further expansion of export facilities occur at Curtis
Bay, given the fact that there is not much room for such
expansion, because of built up adjacent residential areas.

11-40

The Capacity of B&O rail lines serving Curtis Say may be
strained. The degree to which this occurs is related to
serving yard capacity and operation in Curtis Bay. Also,
the increased capacity on this segment of the line may
dampen projected industrial growth further south in Fair-
field and Marley Neck. This requires further monitoring
and evaluation on the part of the city.

0 Railroad line improvements will be needed to serve coal
burning power plants coming on line in Wagner Plant and
Brandon Shores. Such improvements should be made cogni-
zant of the need for railroad access to Fairfield and
Marley Neck.

.0 Diversion of Conrail's export traffic from Baltimore and
Philadelphia should help alleviate mainline tunnel problems
and some of the capacity problems of Bayview yards.

0 Conrail may not be able to fully share in the growth demand
for steam coal from local utilities because of congestion
and-capacity problems at Bayview yards, and their Canton
Coal Pier. Major investments and operational improvements
will be required.

2. Origin and Pouting of Coal

Most of Baltimore's coal comes from the regions served by its two
railroads: Conrail and the B&O.

a. Cbnrail

Conrail serves what is known as northern Appalachia, in particu-
lar the Bureau of Mines' coal regions known as Eastern and Western Pennsylvania
(see Table No. II-10). The names for these regions are som--what misleading.
Eastern Pennsylvania consists of most of what is geographically known as cen-
tral Pennsylvania. In actual fact# most of Baltimore's coal,comes from the
geographic central and western portions of the state. Almost 60 percent of
the coal shipped to Maryland comes from Pennsylvania, not all of it shipped by
Conrail. Although this region has some low sulfur coal, it is mostly charac-
terized by deposits of coal with medium to high sulfur content. It also is a
substantial source of metallurgical coal for Bethlehem Steel in Baltimore.
Bethlehem receives most of its "Northern Low" (northern low sulfur coal) via
Conrail and B&O from this area. Most of this coal comes from Bethlehem's own
captive mines in Pennsylvania. These mines are in Cresson and Ebensburg,
Pennsylvania via the Cambria and Indiana Railroad just west of Altoona,
Pennsylvania. Cresson coal usually moves separately and is not consolidated
with shipments of other coal from other locations. Coal is also obtained from
the Pawn mines via the Bechinger and Lake Erie railroad interchanging with
Conrail north of Pittsburgh at butler and Kiski junctions.

The B&O serves some of the same areas in Pennsylvania served by Conrail.
For example, the Monongahela railroad interchanges with both B&O and Conrail

ml@ ow Imr 1mrI nor I=- EMIR 11w, Nor mw 1@ EW OWT ow- m-

11-41

Table No. II-10

Origin of Coal Shipped to Maryland, 1977

Coal Shipments (Net Tons)

Total Rail Other
Percent of Percent of Percent of
Bureau Of Mines Supply Region Number Total Number Total Number Total
Eastern Pensylvania 4,854 58.8. 3,653 84.'9 1,201 32.4
Western Pensylvania 252 3.1 -- -- --
Northern West Virginia and
Panhandle 1,332 16.1 579 13.5 753 20.4
Southern No. 1 374 4.5 19 0.4 355 9.6
Southern No. 2 1,437 17.4 48 1.1 1,389 37.6

Total 8,249 100.0 4,249 100.0 3,698 100.0

Source: National Coal Association, Coal Traffic Annual, 1979.

11-42

south of Pittsburgh. both have equal rates. At Punxsutawney, in central
Pennsylvania, both Conrail and B&O service the same locations.

Conrail routes its coal-from the mines through Altoona, Harrisburg, Colum-
bia, Pa., Perryville to Bayview yards at Baltimore. Once at Bayview, depending
upon the destination of the coal, it can go to the port.via. two routes.

At Bayview, most of the coal trains destined to Bethlehem Steel or other
local customers have their crews changed and their electric locomotive replaced
by a diesel locomotive so that the coal can*proceed on the President's Branch
line to Conrail's Canton Coal pier. Here the coal is dumped and loaded at
Conrail yards near the pier on to barges to proceed to Bethlehem Steel's coal
pier at Sparrows Point. The coal is yarded twice: once at Bayview and once
at its terminus in Canton Bay. Theoretically, the coal going to Canton from
Harrisburg should go via the President's Branch line without stopping and be
yarded" only at Conrail's loading yard at Canton Coal pier. Since the main
line is electrified and the President's line is not, a time consuming, ineffi-
cient and costly double yarding process occurs. Bayview classification yard at
the south end has 32 tracks with a capacity for 1,216 cars. Its north end used
for receiving, departure and storage has a Capacity for 1,320 cars. Despite
this, Bayview, yards lack capacity to receiver store, classify and dispatch
trains and therefore often cause congestion on the main AMTRAK line when its
receiving tracks are full. Such double yarding only exacerbates this problem.
Another indication of such congestion at Bayview is that the B&O handles empty
coal cars as far north as Perryville, Maryland to avoid further congestion of
Conrail's facilities in Baltimore.

Conrail coal destined for export at B&O's Curtis Bay actually exceeded in
tonnage its levels of domestic coal in the years from 1975 to 1977, but
declined somewhat thereafter,. This Conrail export traffic is "triple" yarded.
At Bayview, the train crews and locomotives are changed.' The diesel train
goes on to interchange with the B&O at Mount Vernon yards in north central Bal-
timore. B&O moves the Conrail cars from the Mount Vernon yard through the B&O
Howard Street tunnel to eventually join its line to Curtis Bay where the coal
is dumped and loaded from its yards near Curtis Bay Coal pier.

Normally, Conrail's interchange with B&O would be accomp lished at Bayview
yards since the B&O also has'a bayview yard in close proximity. Due to conges-
tion, however, the interchange is accomplished at the much smaller Mount Vernon
yard which has 14 tracks and capacity of 730 cars. The interchange with the
B&O is awkward since Conrail's cars must be backed into the interchange, but
this does not appear to be a major problem. Track condition has not been good
and this problem has been intensified with use by loaded coal cars. Triple
yarding is even more time consuming, inefficient and costly than double yard-
ing. The Howard Street tunnel is old, sinqle-tracked and trains are subject
to vandalism, but the trains that use the tunnel have been well within the
operating capacity of the tunnel.

b. Baltimore and Ohio

The Baltimore and Ohio railroad routes coal traffic in the
Baltimore terminal area from the south, west and northeast via main and branch

11-43

lines. It serves about 70 mines in central and southern West Virginia and
portions ol northwest ern West Virginia, Pennsylvania and Maryland* It competes
directly with Conrail in segments of ce ntra I, Pennsylvania. The northern West
Virginia and Panhandle area Bureau of Mines' district served by the B&O shipped
16.1 percent of all the coal coming into Maryland (see Table No. II-10). This
area has medium to high sulfur coal as well as substantial metallurgical coal.

The principal dispatching center from West Virginia, particularly central
and northwestern West Virginia is Grafton, West Virginia. Smaller satellite
rail centers such as Parkersburg and Pairmount, %bst Virginia also feed into
Grafton. Prom Grafton, all coal feeds into Baltimore vi&the Cumberland, Mary-
land gateway. On the other hand, the principal dispatch center for Peennsyl-
vania is Somerset, Pennsylvania. Thereafter-the coal goes directly into the
Cumberland gateway. Before entering the.Baltimore terminal area, two grades
exist on the main linelbetween Grafton and Cumberland: the lesser grade occurs
after Grafton and the steeper grade is near Altamont. Plour diesel unit helper
trains are needed to assist coal trains up the grades. This slows down
delivery times, but a tunnel is not feasible.

East of Cumberland the grades are better and B&O can haul-twice the number
of cars with its four diesel units. The B&O recently constructed a S4.7 mil-
lion new Brunswick coal yard that can handle 3,300 cars and one to one and one-
half unit trains of up to 100 cars. The yard is able to hold additional coal
cars when storage capacity at the Curtis Bay Coal pier is limited. The yard
has increased the capacity of the whole system to move its coal. Prom 9.7 mil-
lion tons of coal moved annually in 1977, the B&O now has the capacity to move
12 to 15 million tons annually. After the Brunswick yard, the coal moves
directly to join the B&O mainline in the Baltimore area, proceeding on to the
yards at Curtis Ilay where coal is blended, dumped and loaded onto ships*

C. Southern Route

Hampton Roads is the main port serving the so-called southern
Appalachian mines. The Bureau of Mines' districts Southern Number I and 2
cover this area. Southern number 1 district covers portions of West Virginia
and Virginia and comprises only about five percent of all the coal traffic
destined to Maryland (see Table II-10). Southern number 2 covers West
Virginia, Virginia, Kentucky, Tennessee and North Carolina and comprises about
17 percent of all coal traffic destined to Maryland. The Nor folk and Western
(N&W) and the Chesapeake and Ohio (C&O) operate out of Hampton Robids serving
mines in these areas. The N&W handles West Virginia and a portion of southwest
Virginia coal. The C&O covers some of the same territory and penetrates
Kentucky. Bethlehem receives its "Southern Low* (low sulfur) coal from the N&W
and its "Southern High" (high sulfur) coal through the C&O from West Virginia
and Kentucky. Almost all the coal from Southern No. 2 district is shipped to
Maryland from Hampton Roads via large barges throuqh the Chesapeake Bay to
Sparrows Point at Bethlehem Steel. It has little direct impact on the port.

d. Through Traffic

Much of Conrail's through traffic destined to PEPOD's plants at
Morgantown and ChalkPoint (see previous discussion) is routed by Conrail

11-44

through the BaYview yards. Trains make a stop there to Change crews, thereby
using up some of the Capacity of this yard. The train must then proceed uphill
through the Union and B&P tunnels in Baltimore before it goes to Potomac yards
near Washington, D.C. Another reason that cars are held in Bayview is that the
limited size and capacity of the tunnels limit the size of through trains that
can traverse the tunnel. The Union tunnel is located just prior to entering
Pennsylvania Station and the B&P tunnel begins immediately west of Penn Station
proceeding to Fulton Junction whre the system meets the Western & Maryland.
Two sharp curvatures in the B&P tunnel, one of 80 at Pennsylvania Avenue and
one of 5* at John Street require the use of a gauntlet track in the middle of
the tunnel. Large freight trains cannot use the double track and must use the
gauntlet track. As a result, special switching is required and only one train
can use this portion of the track while the. train is clearing the curvature.
One study estimated that the total passenger and freight operation passing
through this segment of the main line to be between an average of 105-110
trains per day. Current traffic volumes on the Amtrak/Conrail line are handled
without much delay, but if Amtrak rescheduled Corridor service to operate
trains every half hour in each direction and increased intercity and local com-
muter service, the amount of freight traffic that could be handled on this main
Corridor would be severely constrained. Four alternative basic solutions have
been proposed, but none has been adopted:28/

continuation of operations as they are now with several
capacity improvements to.eliminate interference problems.

separation of freight and Passenger service by shifting
all through freight traffic to the B&O main line from
Winans to Bayview.

shifting of passenger service to the B&O line to take
advantage of its proximity to the center of Baltimore.

0 diversion of through freight from the corridor to tunnels
under Baltimore harbor to bypass the center of Baltimore.

3. Terminal and Support Facilities

This section discusses the size and capacity of existinq and
potential terminal facilities such as piers and railroad serving yards for
handling coal traffic.

-L8/Peat, Marwick, Mitchell & Co., Study of the Rail System of the
Baltimore Region, Final Report, Prepared by the Maryland Department of
Transportation, September 30, 1976.

11-45

a Con ra i 1

(1) The Canton Coal Pier

The Canton Coal Pier is 425 feet lonq and 66 feet wide.
The nominal capacity of the Pier has been variously cited at 833,29/ 90030/ and
1,000-@_1/ per hour. During 1979 in warm weather the pier handled 100 cars per
day with one shift. This amounts to 8,000 tons per day or 800 tons per hour,
assuming an 8 hour day. Assuming 900 tons per hour nominal capacity, the oper-
ation has heen fairly close to capacity. The pier is operated by Baltimore
Contracting Company. The company dumps the coal out to the dock for loading on
barges by using a rotary dumper. A conveyor belt of four-ton cars receives the
coal and takes it to the barge where they are dumped and come back empty for
reloading. The pier is generally'old and obsolete and has been designated a
National Historic Landmark.' At one time, the pier accommodated smaller ocean-
going vessels and Conrail exported from the facility. EKport has been discon-
tinued, however, because of the fear that ships would hit the pier abutments
and pull the Pier into the water.

Conrail has made a study for reinforcement of some of the steelwork of the
pier but this is riot considered an expansion. At the present rate of operation
the pier can handle almost two million tons per year. The volume of activity
could be increased with extra shif ts. Conrail expects to share in the increase
in the coal traffic coming from future conversions of utility plants to coal.
Under such circumstances it would be likely to increase the shifts in the pier
and increase its capacity. Conrail could not deepen the channel in the vicin-
ity of the pier to handle larger coal ships for export because the pier pilings
do not go deep enough. Because of this, the equalization of Baltimore rail
rates with that of Philadelphia--and other factors, Conrail has made a deci-
sion to expand its export facilities in Philadelphia. This will diminish some
of the present problems associated with Bayview, and the routing of its export
freight traffic through Howard Street tunnel to Curtis Say. Even with extra
shifts, Conrail may be limited from accommodating the full potential of traffic
in the future local steam coal traffic generated by conversion of utility
plants.

(2) Conrail Coal Yards

The Conrail coal yards near the Canton pier consist of both
loaded and empty yards. The "loaded" car yard has been rebuilt at the cost of
$21,000,000 (mostly federal funds) as a result of the construction of 1-95.
When the work is finished, the yard will be bigger and more efficient than the

29/1978 Keystone Coal Industrial Manual.

30/Interview with F. Miles Day, Conrail Nov. 7, 1979.

11_/Port of Baltimore Handbook, 1978-1979, MarYland Department of Trans-
portation.

11-46

old yard. At one time, the yard had a total of 41 tracks. In January 1976
the number of tracks were reduced to 18; 12 for the loaded yard and six for
the empty yard. The rebuilt yards@ will have a total of,22 tracks: 17 for the
loaded yard and five for the empty yard. The new loaded yard is located fur-
ther north on what was previously empty land. Separate empty car tracks are
located further south. Some empty land remains further north and has not been
evaluated for new uses.

b. Baltimore and Ohio

(1) Curtis Bay Coal Pier

The Curtis Bay Coal pier is 900 feet long and has a tandem
and a single coal dumper. One is located on the north side for loading barges
and the other is on the south side for loading vessels. The pier has,.,the
d
capacity for loading one vessel and five barges simultaneously. The,,*an em
dumper is capable of handling two cars or 200 tons at a time. Much df the
equipment is either new or modernized as of 1966. The pier has traditionally
loaded about 2,500 tons per hour which approximates 7.2 million tons a year.
Nominal capacity for ships has variously been cited at 6,000 tons Per hour@L2/
and 35,000 per day-33/ The formal estimate of 6,000 tons per hour translates
into 17.3 million tons Per year. The estimate of 35,000 per day translates
into 12.6 million tons per year'.

It has been cited that Curtis Bay in 1979 handled 8,153,048 long tons of
coal or almost 10 million short tons. In April 1980,..L4/ it was estimated that.
one million tons were shipped through Curtis Bay and that it is expected to
generate 12 to 14 million tons of coal in 1980.

It is entirely conceivable that Curtis bay could approach the lower ranges
of nominal capacity in 1980. Assuming it takes one to one and one-half days-35/
to load a 60,000 ton ship at Curtis Bay and working a fuli month (30 days)
including extra shifts, @hen 20 ships can load coal per month, handling 14.4
million tons per year. This is in consonance with the Chesapeake & Ohio's
estimate that the New Brunswick yard expansion allows the Chessie to move 12-15
million tons annually..2-6/ Aside from a few problems with thawing coal, Curtis
Bay has been operating satisfactorily. It is doubtful, however, that Curtis Bay
would achieve its formal nominal caPacity of 17.3 million tons.

32/Ibid.

33/Interview, Waterman.

34/1978 Keystone Coal Industry Manual, p. 106.

35/Interview, Albert J. Knighton, May 21, 1980.

11-47

(2) Curtis bay Coal Yards

The Curtis Bay Yards service both the coal and ore piers
at Curtis bay. In 1975, the entire classification yard at Curtis Bay had 83
tracks and a car capacity of 2,900. A 1975 inventory indicated that the coal
Yard had 23 tracks and a capacity of 847 cars. A more current estimate cites
1,100 cars capacity at Curtis Bay feeding yards, with main holding yard at
Brunswick having space for 3,300 cars. The.feedinq yard is more crucial for
efficient pier loading. Assuming that on an average a 60,000 ton ship uses
coal from 950 rail cars, and assuming, as before, that 20 ships can be loaded
in a month at Curtis Bay, then 19,000 cars per month or 633 cars per day can
be loaded at Curtis Bay, operating atcapacity. If. on'the other hand, it is
assumed that a rail car accommodates 70 long tons, then 857 cars would be
required per ship which translates into 17,140 cars per month or about 570 cars
Per day at operating capacity. Both estimates are well within the present
capacity of the yard. Although there appears to be sufficient feeding yard
capacity to handle the nominal capacity of 14 million tons, loading may still
be tight. The calculation is simplified and does not include estimates of the
distribution of empty coal cars. These estimates are based on peak loading
times. It has been estimated-37/ that doubling the feeding yard capacity would
allow uninterrupted loading to occur and presumably decrease loading times and
increase Curtis Bay capacity.

(3) Island Creek Proposal

Related to problems and capacity of serving yards discussed
above is a proposal by Island Creek Coal Sales Company, a subsidiary of Occi-
dental Petroleum Corporation, to build a 25-acre coal stocking yard at Curtis
Bay on land leased from the Chesapeake and Ohio railroad. They expect to store
300,000 to 500,000 tons on the ground, depending on how many different grades
of coal are stored. About S20 million will be spent on tracks, dumping machin-
ery, scales, conveyor belts and other equipment. One advantage of using coal
stored on the ground is that the freezing problem that occurs in railroad cars
is avoided. Also, such storage can help assure more continuous and prompt
loading , since cargo will always be available. It will feed loading much
faster than a railroad car dumper. It eliminates the higtf demurrage fees that
can arise when coal in loaded rail cars waits'for unloading because of delay of
ships or mischeduling. It alleviates some of the tight scheduling problems in
getting the cars to meet the ships at the right time. It may aid in keeping
miners and mines working more continuously. It does, however, pre-empt the
land from being used for increasing the feeding yard capacity at Curtis Bay
which is another way of achieving continuous loading and increased capacity at
Curtis Bay.

-L6/Ibid.

37/Interview, Knighton, May 21# 1980.

11-48

(4) Port Covington Coal Pier

Port Covington Coal pier discontinued operation in 1974.
It has a nominal Capacity of 3,500 tons per hour. The Chesapeake & Ohio felt
that this was a redundant facility and that Curtis Say was sufficient to handle
its needs. Port Covington is a fixed loader pier. The coal dumper is on a
concrete foundation, only 450 feet from the bulkhead. It can# therefore, load
only the first three hatches on a 970-foot ship. The ship has to go out, swinq
around and come back three or four times because it can not load all the
hatches at one time. The yard at Port Covington can accommodate only 300 rail
cars compared to a ship capacity of 700 to 1,000 rail cars. A considerable
capital investment would be required to make the pier operational according to
modern demands and there is no room for expansion of feeding yard capacity even
if such an investment were made.

(5) Curtis Bay Ore Pier

The Curtis Bay Ore Pier is 650 feet long and has two elec-
trically operated traveling bridge cranes of 15 ton and nine ton capacities.
It is understood that conversion of this pier for use as a coal pier is being
considered. It has been cited that this Pier could attract an additional seven
million tons of coal through Baltimore-.@28/ There is no exact identification
of what portion of the 2,400 car capacity in the vicinity of Curtis Bay could
be assigned to the converted ore pier. The main problem with this proposal
will be finding sufficient feeding yard capacity. A pier is only as good as
its feeding yard.

C. Canton Railroad Company Ore Pier

Canton Pier No. 2, ope rated by the Cottman Company for the Canton Railroad
switching company is 1,418 feet long on the east side and 690 feet long on the
west side; it is geared for discharging of cargo or import. It has a very
stronq foundation and has ample area for ground storage and rail service. The
Canton Railroad has previously filed.for bankruptcy and the parent company
wishes to dispose of some *of the property, particularly the railroad. The
American Smelting and Refining Company had a plant adjacent to the ore pier.
'It has since been closed and the land is available for backup storage. Conrail
and other railroads could serve the pier*

The pier presently has two electrically operated bridge cranes at 90 ton
capacity and the conveying system operates full pier length. It is designed to
handle crates of cargo from the holds to the conveyor to the railroad cars or
dump trucks to stock. The process needs to be reversed for coal export. It
would be ideal to be able to both export and import.

38/Interview, Albert J. Knighton,. May 21, 1980.

11-49

The City has recently authorized $100 million in revenue bonds to help
Consolidation Coal Company convert the Canton Ore pier to a Coal Pier. The
plan calls for 570,000 ton storage CaPacity on the ground and its planned
capacity is 10 million tons per year. Railroad tracks will be built and
tandem rotary car dumpers will be used. Modification to the pier itself will
be minimal.

This facility will result in a major increase in the port's ability to
export coal. It will help the port meet the expected potential export demand
for coal from Baltimore. However, some of its effective capacity will be
limited by the congestion occurring at Bayview (see later discussion in E-3).
Moreover, the B&O, one of the railroads serving the facility, doesn't have as
direct access as Conrail. The Penn Mary yards have been known to suffer from
lack of capacity to meet delivery schedules at General Motors. The success of
the Coal pier will ultimately depend on the ability to provide a large feeding
Yard for both loaded and empty cars in the vicinity of the pier from the
vacated properties of the Canton railroad. No such plans have been officially
disclosed.

E.' IMPACr OF PORT (DAL TRAFFIC

This section briefly describes the impact of coal traffic on the local
economy, the environment and policies of local government.

1. Economic Impact
Coal as a bulk commodity requires far less handling* in the port than
general cargo. Coal is often handled in large scale by conveyors and other
labor saving devices. It can be stored in open-piles, can be treated roughly,
loaded easily, and inventoried by estimates rather than count. As mentioned in
the overview of this report, over four-fifths of coal traffic comes in by rail
and almost all of this involves some transhipment. A local economic study
categorizes bulk cargo in several classes, one of which is bulk transship-
ment,@L9/ which most closely approximates the impact of coal.

The direct impact of coal can be calculated by tracing c oal when it first
arrives by rail, comes into the port, out of the railroad car, across the piert
into ship or barge, to other local customers or for foreign export. Services
provided at each step in the process have an impact on the local economy. In
the process there are expenditures associated with the vessel: inspection,
stevedores, checking, clerking, cleaning, supplies# bunkering. There also
are: purchases by the crew while the ship is in port; port-related transPor-
tation costs; banking and service insurance, and miscellaneous port services
such as port managers, freight forwarders, etc.

The local impact study of the Port of Baltimore computed the average
amount expended for coal bulk transhipment for the various categories of ser-
vice listed above. The study found that each additional ton of coal would add

39/Hill, et al., The Fconomic Impact of the Port of Baltimore on the
Maryland Econo@@yT973, University of Maryland.

11-50

36.12 to the local economy. The service relevant to coal with the most mone-
tary impact (32.52 per ton) is railroad transportation. The least impact
(30.41 Per ton) occurs in crew expenditures, insurance and banking. A doubling
of coal exports as indicated in this report, would, for example, add about 61
million dollars to the local economy. The trucking expenses were included in
the bulk transhipment impact. This is not important for coal-.and may overstate
the coal impact. However, the impact is somewhat understated since no adjust-
ment was made for inflation. No estimate was made of indirect impact, induced
mpacts or employment impact. It is assumed that 'employment impacts would be
less than for general cargo. Impact is based on operations and no estimate is
given of the impact of direct investment in the port.

2. Land Use Impact

The most apparent land use impact of the expansion of coal facilities
involves the coal pier and loading facilities on valuable waterfront land, but
this is not the only or necessarily the most important impact of such activity
on land use. A successful coal operation will depend on extensive supporting
storage areas near the pier to facilitate the loading of ships. Alsor exten-
sive transportation uses will be required in the form of a railroad serving
yard or coal yard near the pier to help assure that trains get in and out
quickly. The requirement for extensive coal storage and transportation space
on or near valuable waterfront land raises the issue'of whether this is the
"best" use of such land. Use of large amounts of equivalent land for more
intensive industries that employ more people and need waterfront access would
provide more economic and social value to the city. Although extensive coal
supporting facilities by preempting such valuable land may preclude the possi-
bility of such development, no competing pressures for such major development
have occurred as yet in the port.

3. Railroad Impact

The impact of the expansion of coal facilities on railroads will be
major. In order for the pier to be efficiently utilized at maximum potential
capacity, they will be required to accept the loading and unloading of large
unit trains composed of 100 to 150 cars. Time consuming inefficiencies asso-
ciated with the break up of such large trains and their subsequent maneuvering
in yards should be avoided. Yards near the pier must be lonq,-.to efficiently
accommodate such trains and separate space should be alloted loaded and empty
Cars. It's doubtful whether sufficient space exists for such a yard configu-
ration,near the new proposed Canton coal pier. The Canton railroad yards and
the former American Refining Company property are available to be used -for
such yards but no detailed engineering plans have been presented. Alsot yards
will be competing with coal storage for the same space and both are necessary
for efficient operation. The new coal pier may result in cessation of opera-
tions at Conrail's old Canton coal Pier, rendering the newly built coal yards
unutilized. Further study would be necessary to determine whether yards at
such distant location could be used to support the new coal pier.

Unit trains operating over Conrail main lines using electric locomotives
would be required to stop at bayview to change crews in order to put on diesel
trains that are required over the President Branch line serving the new coal

11 -51

pier. Given the existing congestion problems at Bayview documented in this and
other reports it is unlikely that large numbers of unit trains could be handled
at Bayview. This may have negative impacts on other industries in the Canton
area served by the President Branch line and the Canton railroad. Part of the
Problem is the high density of freight and passenger traffic on the Conrail-
Amtrak main line near Bayview. Unit trains in large numbers will impede grade
crossings in the Canton area exacerbating vehicle congestion. Increased Amtrak
passenqe,r service planned for the Northeast Corridor by providing only 10 to 15
minute $@windows" on the crossover of lines at Bayview combined with large vol-
umes of unit trains, could paralyze service in the whole Canton area. All
diesel routing could provide some relief to Bayview congestion, but a major
rerouting of Conrail trains over parallel B60 lines offers the mo st promise
for relief of congestion.

4. Envirorunental Impact

The principal impact of the movement and storage of coal in the port
of Baltimore would be in the emission of fugitive particulate matter. Dust can
arise from coal where it is stored and more commonly when it is transmitted and
loaded by conveyor'belts. Also, storage of coal in large quantities can result
in spot fires caused by spontaneous combustion. The Maryland State Department
of Health and Mental Hygiene Regulations-4O/ state that "a person may not
cause or permit emissions from an unconfirmed source without taking reasonable,
precautions to prevent particulate matter from becoming airborne." These
regulations do not apply to iron and steel production or grain operations.

Illinois Air Pollution Control Regulations effective as of January 1980
provide an example of more strict and specific regulations relative to fugitive
particulate matter* "Storage piles of materials with uncontrolled e missions of
fugitive particulate matter in excess of 50 tons a year which are located with-
in a facility whose particulate emissions from all sources exceed 100 tons per
year shall be protected by a cover or spray with surfactant solution or water
as needed. . . ." The same procedures would apply to conveyor loading opera-
tions to storage piles and to the traffic pattern access areas surrounding
storage piles. The owner or operator. is required to develop an operating pro-
gram detailing the best management practices to achieve compliance with the
regulations.

5. Coal Traffic in the Port and Policies of Government

Government's most direct and positive action that can influence coal
traffic moving through the port is either direct investment in or direct oper-
ation of, facilities for the loading and transportinq of coal. The Maryland
Port Authority, a State agency operating in Baltimore is the most relevant
government'agency to undertake such@actions- When strong market conditions
exist for coal facilities, it is best for government to allow the private sec-
tor to take the initiative and make the investment, on the Premise that suffi-
cient demand exists to obtain a good return on investment. Ope-r-ating under

.1-0/Recodification of COMAR 10-18-01-10-18.07, adopted May 19, 1980 and
effective July 18, 1980.

11-52

this assumption the Maryland Port Authority has properly declined the option
to build and operate a coal facility on its own. Despite claims of strong
market demand, uncertainty often exists on the lonq term stability of such
market trends. When large sunk costs are involved in the capital investment,
the risks can be high. Under such conditions the private sector seeks local
government as a partner in providing funds for investment. The City of Balti-
more has helped fund Consolidated Coal Corporation Company's investment for
the conversion of the Canton Ore pier. In view of the limits to moderate
growth outlined in this report and the fact that two current projects, the
Island Creek and Consolidated Coal project may already meet most of projected
demand for export coal. The costs, benefits and impacts of any future proj-
ects, especially as they relate to the City, should be examined very closely
before the.city commits any further investment.

Much of port investment opportunity and development is beyond the direct
reach of the city. Many of the problems in making coal facilities work in the
port of Baltimore involve significant amounts of concurrent investment from the
railroads. The Chesapeake and Ohio has-been enjoyinq.peak earnings. Conrail
is still struggling to put together the pieces of the bankrupt Penn Central and
other rail lines. Railroad management, especially in the eastern half of the
nation, has been notable for its,conservatism. This is probably an out-qrowth
of past problems and low growth. The city must find a way to seek partnership
with or otherwise induce the railroads to make the following high priority
investments to ensure that coal facilities operate at their inte_@ded capacity
do not exacerbate local traffic problems, and hurt freight traffic or other
industries:

0 Increase serving yard capacity in the vicinity of Canton
ore pier and Curtis Bay.

0 Increase the line capacity to Curtis Bay, Wagner, Brandon
Shores, Fairfield and Marley Neck.

Implement operational improvements and encourage
consolidation of or expansion of the railroads' facilities
at their Bayview yards.

Other line capacity problem s such as the Howard Street tunnel may be relieved
by reduced export traffic,from Conrail. The ultimate solution to the B&P tun-
nel capacity problem should be the result of initiatives of the Federal qov-
ernment in cooperation with the C&O and Conrail. Rerouting of Conrail traffic
on the B&O main line as indicated in three alternatives posed, will relieve
congestion at Bayview, allow for planned increases in Amtrak passenger service
and will allow the converted Canton Ore pier to operate more effectively.

CHAPTER III--PETROLEUM AND PETROLEUM PRODUCTS

A. OVERVIEW

1. Introduction

The petroleum industry is complex and produces a great variety of
end products. Crude petroleum obtained from underground reservoirs is refined
or distilled to produce products with differences in viscosity, weight and
impurity content. Each of these numerous characteristics affects how petro-
leum is used as a solvent, fuel or lubricant, etc. The industry generally
classifies its products as clean or dirty. The products left as a residue
from distillation are known as dirty or black products. Residual fuel oil and
certain viscous asphalts are commonly referred to as dirty or black oils.
Residual oil is often called fuel oil No. 6 or bunkering oil, and 'is used as
fuel by utilities, ships, and industry. Clean oils are the main products from
the distillation and/or refining process and include: gasoline, distillate
comprised of home heating fuel (fuel oil No. 2) and industrial fuel (fuel oil
No. 4); kerosene; jet fuel, and naphtha.

The difference between these two classes of products has important impli--
cations for transportation. Clean products are generally light and volatile,
can be handled at ambient temperature and don't have to be heated. Black
products have to be heated and are too viscous to be pumped. Clean products
are therefore feasible for transport in pipelines while black products are
largely transported by ship.

Residual oil destined to utility plants of the electric power industry
and industry in general, must go by ship and heavy volumes are shipped through
most Atlantic c6ast ports, particularly the large northeastern Atlantic cities
such as New York, Hampton Roads, Boston and Baltimore. Also, these areas are
more dependent on oil as a source for electric power than other portions of
the nation. Distillate,fuel oil consisting of home heating fuel, commonly
called fuel oil No. 2, is the next largest in volume for most ports north of
Hampton Roads. The volume in these ports is not only related to the amount of
population located in the market area served by the ports but to the percent-
age of homes heated by oil, The volume of gasoline shipped to any port may
depend on the location of major distributors, terminals or refineries. For
example, the volume of crude petroleum imported into an area is generally
related to the presence of a refinery in a local area. Baltimore has only
small refinery operations located within the region and therefore, the volume
of crude oil imported is relatively small.

Baltimore generally ranks.fourth when compared to nine other Atlantic
ports in regard to the amount of crude petroleum, distillate fuel oil and

111-2

residual fuel oil shipped, Baltimore ranks sixth in the amount of gasoline
shipped.

The analysis of the movement of petroleum and petroleum products through
the Port of Baltimore indicates that:

0 Pipelines provide for the largest volume of petroleum
coming into Baltimore, transporting "clean" products.

0 Waterborne movements accommodate the next largest volume
of imports into the port, transporting mostly-"dirty"
products and smaller amounts of clean products that cannot
be handled because of the limited capacity of the pipeline.

0 Baltimore is a major net importer and consumer of refined
petroleum and petroleum products. It has practically no
refineries.

0 Refineries in such cites as New York City and.Philadelphia
on the east coast, Puerto Rico and Virgin Islands in the
Caribbean and Houston and Baton Rouge on the Gulf Coast
are major suppliers of products for Baltimore.

0 Baltimore has a small but important role as a distr,ibutor
or transshipper of petroleum products via the inland water-
way for a region. extending from Virginia to New Jersey.
0 A small,.bu t significant amount o'f'movement of petroleum
products occurs entirely.,within Baltimore port on barges
from oil company terminals to local consumers, primarily
BGEE*

0 The major portion of residual oil is consumed by utilities
and manufacturing. Residential housing units consume the
major portion of distillate oil as home heating fuel.

0 Within the greater Baltimore region, the City of Baltimore
and the areas surrounding'the city within Baltimore County
consumed the most petroleum products: the city ranked
first in consumption of distillate and diesel oil; the
surrounding county area ranked first in the consumption of
residual and gasoline.

0 In regard to waterborne movement of individual petroleum
products, the following should be noted:

The small amount of crude petroleum imported into
Baltimore reflects the small amount of refining done
in the city.

Residual imports are largest in volume, generate a
considerable amount of local movement within the port

111-3

and are largely handled by two oil companies. The
principal customer for residual is BG&E.

Distillate imported into Baltimore is second most
important in terms of volume. Most goes to storage
for distribution by truck, but some is shipped out
again over inland waterways serving a sectional
market.

Gasoline imported into Baltimore ranks third in
importance and Baltimore plays an important role in
redistributing gasoline over a wide sectional market
to destinations located on inland waterways.

Although the import of asphalts was relatively small,
it comprised a significant portion of all oil
exported from Baltimore largely because of the
presence of asphalt refineries in or near Baltimore.

The small volume of naphtha i mported into Baltimore
is handled by one company with a small amount
consumed in the manufacture of SNG by BG&E.

2. Port of Baltimore and the Movement of Oil

Oil companies receive, store, and distribute various petroleum prod-
ucts. Before the sixties, when oil pipelines were not prevalent, water was the
only economical way to move oil. Thus, most of the oil companies, attracted
by the deep water draft in Baltimore, located next to the water close to.one
another. In the port of Baltimore there are two general locations where con-
centrations of oil companies are found: Curtis.Bay and the Canton area. By
far the largest concentration of oil companies is in the Fairfield-Curtis Bay
area. Eleven oil companies are located here and have built storage facilities
for petroleum products of various types. They occupy a total of about 370.29
acres. Canton Bay area of the port has a much smaller concentration of
companies but one, Exxon, is a major importer with extensive facilities.

Several oil companies in Baltimore, Amoco, Exxon And Chevron, once pro-
cessed oil and operated refineries. Only one, the Chevron Asphalt Company,
remains. it is a small refinery that processes and refines viscous asphalt
oils to produce asphalt products. Refineries are expensive to build, but it
doesn't take much more money to operate a 100 million barrel refinery than a
one million barrel refinery. The refineries curr'ently in operation are there-
fore, large, servicing wide areas of the nation and requiring deeper draft
ships to handle large volumes of their products. Baltimore refineries were
uneconomic because they were small. The depth of the channel in Baltimore
would not be deep enough to accommodate large ships even if such large
refineries could be built.

oil pipelines began to be built during the fifties. The introduction of
pipelines on a large scale changed the oil industry's distribution pattern for
clean oil in the sixties. Two pip elines serve the east Coast. The larger one,

Colonial Pipeline Company, serves Baltimore directly through branches to both
Curtis Bay and Canton area terminals. The smaller pipeline, Plantation Pipe-
line Company stops at Newington, Virginia near Washington, D.C. Today, most of
the clean products entering Baltimore come via pipeline. Some clean products
still come in by water but only because of the limited capacity of the existing
pipeline serving Baltimore. Dirty oil still comes by ship. All oil companies
in the port are served by pipeline. Some companies which don't handle dirty
oil do not really need a port facility. However, heavy sunk costs in expensive
storage facilities make it very unlikely that any of the major oil companies
would move to inland locations near pipeline terminals or branches of pipe-
lines, despite the fact that land is cheaper and there is less congestion in
the suburbs.

Trucks play a role in transportation of petroleum and petroleum products.
Although they carry a small share of total oil brought into Baltimore the big-
gest role for trucks is in the distribution of oil. Oil is supplied either
directly by suppliers to their captive customers or from the oil company to
middlemen who store the oil and redistribute it to independent suppliers and
customers.

3. Dynamics.of movement of Petroleum Products Through the Port of
Baltimore

It has been estimated that in 1978, 65 percent of the total volume of
refined petroleum products coming into Baltimore came by pipeline, 30 percent
by barge and tanker, and five percent by truck *!/' Very little other support-
ing data were available on the destination, distribution and volume of pipe-
line and oil. Although pipelines are common carriers, such information is
considered proprietory in order to protect the confidentiality of the pipe-
line's customers. Most data are available for waterbornetransportation which
has the most direct impact on the port. The distribution of petroleum traffic
between pipeline and water transportation, however, has important policy
implications for the use of land near the water.

A one-time snapshot of the movement of petroleum in and out of Baltimore
is particularly difficult to obtain because storage is a very important factor
in the distribution of petroleum where it is not as important.in coal. Between
shipments, companies draw on their stored capacity--some of which may have
originally came into the port in the year prior to which the snapshot is being
taken. Thus a simple subtraction of the amount coming in during a year versus
the amount going out may not be a completely valid indicator of what is being
currently consumed locally for the year. However, despite such limitations a
picture appears to be possible and reasonable from what is known about
altimore from interviews and other sources.

In 1977 it was estimated that a total of 204 million barrels of oil came
into Baltimore, of this, almost 143 million barrels or sixty-five percent of

!/Robert Burg, "With'a Click and a Throb, Pipeline Carries City's Oil,"
Baltimore Sun, March 1979.

111-5

the flow came via pipeline and about seven million came via truck (see Table

Baltimore exported about seven million barrels of petroleum products
which was only 3.5 percent of all petroleum and petroleum products coming into
Baltimore. However, most of these exports were, in fact, transshipments of
imports for redistribution over a wide sectional or local market in the mid-
Atlantic region. About 11.7 percent of imports into Baltimore were trans-
shipped in this manner to other nations, cities or to locations on the inland
waterway. Of these exports, almost all or about ninety percent, was trans-
shipped to points on the inland waterway. Baltimore, therefore, has a small
but important role as a distributor of petroleum products for a region along
the coast from Virginia to New Jersey.

Because Baltimore is not a producer of p6troleum products and therefore,
doesn't export in the usual sense of the word, it is important to know where
its imports come from. Just over half (53.3 percent) come from refineries in
other cities in the Gulf Coast, the Caribbean or New York City. These loca-
tions rather than Baltimore receive and process imports of crude oil in refin-
eries to produce petroleum products. About one-fourth (24.7 percent) of
Baltimore's imports are from foreign countries. No data are available as to
exact country of origin but the volume may be an indication of the increasing
competitive refining capability of producing countries, the lack of refining
capacity in the United States, or both. Finally, about one-fifth of the
petroleum products come from refineries located close to Baltimore in Virginia,
Philadelphia and New Jersey, along the inland waterway.

Baltimore is largely a consumer of petroleum products. If the amount of
petroleum and petroleum products going out of Baltimore is subtracted from the
amount coming into Baltimore, about 179 million barrels of petroleum products
are-consumed locally. If water movements only are considered, waterborne trade
accounts for about 54 million barrels consumed locally or about 27.5 percent
of all petroleum consumed locally and 88.3 percent of waterborne trade coming
into Baltimore. Most of waterborne imports are, therefore, consumed locally.

A small portion of the petroleum products destined for local consumption
is transshipped by barge to local customers located entirely within the port
of Baltimore. Such local water movements comprise about 7.6 percent of total
consumption and about 27.6 percent of water consumption. The bulk, or 72.4
percent of this local water movement or transshipment, consists of movement of
residual oil by barge to the Baltimore Gas & Electric utility plants, amounting
to almost 11 million barrels in 1977. The small amount remaining, about four
million barrels goes from importers to industrial users or other distributors
with terminal and storage facilities in the port. The movements from suppliers
to utilities within the confines of the port will be explained in more detail
later.

The remaining amount of petroleum consumed locally, about 182 million
barrels of oil, is held in storage for consumption and distribution between
shipments or provides accruals necessary for peak seasonal demand for certain
types of products such as home heating fuel. Thus, 89.1 percent of local con-
sumption involves no further transshipment by water. Most of such storage

TABLE III-1

Petroleum And Petroleum Products Through The Port Of Baltimore

By Mode of Transportation And Type of Movement, 1977

Mode of Transportation
and Type of Traffic In Out

Pipeline l/ 135,789,839
l/
Truck= 7,146,834

Subtotal 1421,936,673

Waterborn

Import 15,203,028 Export 229,503

Coastwise Receipts 32,681,124 Coastwise Shipments 432,987

Internal Receipts 13,374,340 Internal Shipments 6,480,084

Subtotal 61,258,492 7,142,574

Grand Total 204,195,165

From Water Total (Pipeline)-!/
2/
Consumed Locally@ 54,115,91 197,052,591

(In-Out)

Local Water Movements 14,981,522 14,981,522

Utilities 10,646,286 10,846,280
Other 4,135,242 4,135,24@

Other 5/-Storage
& Local Consumption 39,134,396 182,07 l,d69

-!/ICF Estimates

-@/Water movements in minus water movements out; total movements in minus

water movements out

!/Includes in movements by truck and pipeline

4/ F.E.R.C. Form 67

-@/Amount. consumed locally minus local water movements

111-7

comes from the pipelines. Waterborne traffic contributes to about one-fifth
(21.5 percent) or 39 million barrels of the local storage portion of consump-
tion. Storage is depleted as petroleum is distributed to suppliers, indepen-
dents or jobbers for direct consumption purposes. The velocity of the movement
from storage to consumer cannot be determined from available data. Further
discussion of the dynamics of storage will be outlined in a later section.

B. DEMAND

1. Introduction

Petroleum products have varied and distinct uses catering to several
segmented sub-markets with specialized needs. The sections on demand and
supply will disaggregate the broad category petroleum and petroleum products
into distinct products in order to understand the structure of demand unique
to each. Such an understanding is necessary before an assessment can be made
of the future potential of each product within the port and how the movement
of the product within the port can best be accommodated.

The various sectors of demand are analyzed for the major petroleum prod-
ucts based on published data available in 1976: residential homes, institu-
tions and government, and commerce and industry. The electric power industry.,
transportation and manufacturing are analyzed separately from commerce and
industry category because of the significance of their special energy require-
ments. The significant petroleum products considered in the data are:
distillate oil, residual oil, gasoline and diesel fuel. Demand for various
petroleum products is further analyzed for the region by geographical sub-
division: Baltimore City, Arundel County, Baltimore County, Carroll County,
Harford County, and Howard County.

2.. Sectors of Demand

Each of the petroleum products analyzed showed distinct concentra-
tions in regard to sectors of consumption. Since distillate oil consists of
No. 2 fuel oil which is used for general purpose home heating, over one-half
or 52.6 percent of the distillate fuel is consumed in the residential home
market (see Table 111-2). However, distillate also includes No. 4 fuel which
is extensively used in industrial plants and some commercial burners. Some of
this fuel may be also consumed by large government and institutional estab-
lishments as well. Government and institutions consume one-quarter of the
distillate whereas manufacturing consumes 17.8 percent.

Light diesel fuel is normally classified as distillate and is consumed
largely by the transportation sector, especially trucks, buses, railroads,
etc. Diesel is also used for low and medium speed engines and therefore, 21.5
percent is consumed by power plants.

Residual oil is a heavy oil obtained from residuals left in the refining
process. About one-half (49.8 percent) of this heavy-type oil is consumed by
utilities, while manufacturing establishments consume over one-third. Gasoline
is consumed entirely by the transportation sector, specifically automobiles
powered by the internal combustion engine.

UW; NW, Or OW Wr- Iftr NW, dW NW. OW, MW d1P dW

TABLE 111-2

Baltimore Region Fuei ConSurrPtion By 14el

1976, BTU's X1012

Inst. & .Gov. Comm. & Ind. Total Electric Transp. Mfg. Grand total
Fuel Resident. No. % Tot. No. Tot.
No. Tot. NO. Tot. No. Tot. No. % Tot. No. % Tot. No. % Tot.

coal 116 0.62 .06 0 .23 - - .22 0.85 16.73 64.9 8.79 34.1 25.7:; 1CO.n

7.94 17.2 46.23
Disill ate Oil 24.32 52.6 11.69 25.3 2.28 4.9 38.29 82.8 - 49.8 8.74 7.8 39.65 35.6 111.@C,
Residual Oil 2.08 1.9 3.63 3.3 1.99 1.8 7.63 6.8 55.48

Natural Gas 36.21 44.6 9.75 12.0 3.57 4.4 49.53 60.9 2.34 2.9 - - 29.34 36.1 81.2 ICO.0

- - 114.54 100.0 - - 114.54 icc.11
Gasoline - - 3.74 21.5 13.64 78.5 - - 17.38 100-C
Diesel - - - 63.80
Nuclear - 63.80 100.0

Total 62.70 13.6 25.13 5.5 7.84 1.7 95.67 20.8 142.09 30.8- 136.92 29.7 83.72 18.6 46C.61

Source: Maryland Bureau of Air Quality and Noise Control

111-9

Growth in the use of petroleum generally has been declining. As fuel
becomes more expensive, the growth in energy consumption in homes and espe-
cially commercial and industrial plants slows down. Better efficiency in the
construction of buildings, more use of energy conservation measures and prac-
tices in existing buildings, and the increasing of efficiency of some heating
systems have been factors contributing to these trends, particularly in dis-
tillate oil and to some extent in residual oil. Declines in the growth of
electricity, conversion of existing power plants to other fuels and construc-
tion of new power plants using other fuels have resulted in decline in the
growth of demand for residual oil. Less driving and more fuel efficient cars
have resulted in decline or slower growth in the consumption,of gasoline.

As shown in a latter section, these trends are expected to continue and
intensify in the future as oil prices continue to increase, more incentives are
passed by Congress for residential conservation and greater fuel efficiency is
achieved in automobiles.

3. Demand by Jurisdiction

The City of Baltimore with the largest population and the largest
number of residential units consumes the largest proportion of distillate oil
(35.8 percent) followed b@i the area immediately surrounding it within Baltimore
County which consumes one-quarter of the total regional demand for distillate
(see Table 111-3). Baltimore County outside the City of Baltimore consumed
the largest share of gasoline (36.4 percent) as might be expected considering
the relatively large population and greater dependence on the automobile in

this suburban area compared to Baltimore City. The city was second, consuming
one-quarter (25.9 percent) of the region's gasoline and was second in amount
consumed.

Baltimore County outside the city also consumed the greatest portion of
residual oil (44.9 percent) in the region. The location of utility plants and
industries in less congested areas located outside the city supports this
trend. The city was second, accounting for one quarter of residual oil con-
sumed, closely followed by Anne Arundel County.

The central city's concentration of heavy industries that use trucks and
railroads and a population that uses public transportation results in Balti-
more's relatively high share (38.5 percent) of regional consumption of diesel
fuel oil.

Baltimore County and outlyi'ng suburban areas are expected to gain an
increasing share of fuel oil as population and industry grow in the outer por-
tions of the region, while decline or slower growth occurs in the center city.

C. SUPPLY

1. Introduction

This section begins with an analysis of the movement of each key
petroleum product through the port in regard to origin, destination and

@Mw@m MM Not

III-10

TABLE 111-3

Baltimore Region Fuel Consumption By Jurisdiction And Fuel 1976, BTU's X 1012

JUSDICTION FUEL TOIAT@
Coal Distillate Oil Residual Oil Natural Gas Gasoline Diesel
Tot. No. Tot.. No. Tot. No. % Tot. No. t Tot. No. % No. To

Baltimore City .19 0.7 16.55 35.8 28.33 25.4 37.80 46.5 29.62 25.9 6.70 38.5 119.19 25.

Anne Arundel Co. 15.74 61.2 8.57 18.5 26.65 23.9 19.94 24.5 21.50 18.8 2.60 14.9 86.01 18.

Baltimore Co. 7.85 30.5 11.40 24.7 50.10 44.9 23.76 29.3 41.72 36.4 3.90 22.4 138.73 30.

Carroll Co. 1.94, 7.5 2.83 6.1 4.75 4.3 2.07 2.5 6.68 5.8 1.40 8.0 19.27 4.

Harford Co. - - 4.79 10.4 .81 0.7 2.92 3.6 8.31 7.3 1.73 @.q 18.56

Howard Co. - - 2.09 4.5 .71 0.6 3.74 4.6 7.12 6.2 1.09 6.3 14.73 3.

Total 25.72 100.0 46.23 100.0 111.35 100.0 81.21 100.0 114.55 100.0 17.42 100.0 460.311 100

IIncludes nuclear not included elsewhere

Source: Maryland Bireau of Air Quality and Noise Qontrol

transshipment. It then discusses the supply of facilities for transportation,
storage and shipment of petroleum and petroleum products.

2. Origin and Destination of__Key Individual Petroleum Products

a. Crude Petroleum

Crude petroleum is a mixture of hydrocarbons that exist in
liquid phase in natural underground reservoirs and remain liquid at atmospheric
pressure after passing through surface separating facilities. It includes
crude oil liquids, condensate gases in liquid form at atmospheric pressure and
non-hydrocarbons. Crude oil is the basic input into refinery operations. The
import of crude oil into Baltimore is, therefore, an indication of the presence
of small refinery operations (see Table 111-4).

Baltimore imported about four million barrels of crude petroleum. This
accounted for seven percent of all imports coming-into the port (see Table
111-4). About two-thirds of crude imports came to Baltimore from producers of
oil outside the country. The next largest share of crude, 27.4 percent, came
to Baltimore via inland waterways elsewhere along the coast and, in portions
of the Chesapeake Bay, from places where crude petroleum is imported, stored
and transshipped. Finally, almost seven.percent of crude oil came from other
ports in the domestic United States, principally St. Croix in the Virgin
Islands (see Figure 111-2). Although one refinery now exists in Baltimore, at
the time of analysis two may have existed in Baltimore. in 1977, for example,
Amoco imported all, or over two million barrels of the crude oil coming into
Baltimore (see Table 111-5). Crude oil comprises about 6.3 percent of all the
oil shipped to private companies in the port.

b. Residual Oil

Residual oil is topped crude oil obtained in refinery opera-
tions. It includes No. 5 diesel and a heavy residual fuel oil No. 6 sometimes
referred to as bunker oil C used for generation of heat or power. It also
includes acid sludge and pitch used for refinery fuels. Residual imports are
largest in terms of volume, generate considerable amount of local movement
within the port, and are largely handled by two oil companies. The principal
customer is BG&E.

Residual oil is the largest product in terms of volume imported into the.
port and comprises 41.5 percent of all petroleum products entering Baltimore
(see Table 111-4). The largest proportion (42.5 percent) of residual oil comes
from other ports on the coast to Baltimore. The second largest share (39.9
percent) comes from foreign countries and about 17.6 percent comes from inter-
nal shipments via refineries on inland waterways. Relating exports to the
total amount imported, transshipment to other places on the inland waterway
comprises 7.8 percent of all imports. Purely local movement within the port
to customers such as BG&E is very important and is e quivalent to almost one-
half (49.9 percent) the volume imported.

Refineries in Puerto Rico, New York City and Houston in that order ship
the most residual oil (see Figure 111-5). Other important sources are the

EW Mft'@ EW Mi" now M-1 dw- OW., MI MOM Mw ww''aw Mr, swi Nor M", M.

111-12

Table 111-4

Waterborne Movement Of Petroleum And Petroleum Products

1hrough Port Of Baltimore, 1977 (Barrels)

Foreian Coastwise Internal Local Total
Import Exj2or R
.17 eceipt Shipment Receipt S h iomen t In Out
ro@ I -jc t No. % Tot.-!/ No. % Tot No. % Tot. No . Tot. No. % Tot. No. Tot. No. TJt. No.- 't T)t. 14", -%
2rude Petroleum 2,747,377 66.2 - 282,864 6.8 - - 1,114,584 26.9 - - - - @4,144,825 7.0 -
@',a fiol i ne 77 .7,520 6.8 - - 8,003,110 70.4 69,643 3.6 2,639,354 23.1 1,891,853 96.4 18:2,60 9 1.16 11,419,934 19.2 1,961,496 29.2
Jet Fuel - - - - 99s,580 98.2 - - 18,634 1.8 - -
- 1,014,214 1.7 -
I
Kert'seal -261,906 34.9 - - 474,561 63.2 - - 15,000 2.0 99,024 100.0 125,522 16.,7 751,,467 1.3 99,024 1.5
Distillate Fuel Oil 1,561,987 13.4 - - 6,990,631 60.2 33,633 2.6 3,053,692 26.3 1,254,141 97.4 798,252 6.9 11,606,310 19.5. 1,287,804 11). 1
kesidual Fuel Oil 9,844,372 39.9 - - 10,493,153 42.5 - - 4,345,236 17.6 1,946,577 7.8 12,33S,196 50.0 24,682,i6l 41.6 1,946,577 2 @3. 5
V@jbricatinq Oils etc. 3,194 0.02 126,015 61.5 71,400 21.2 15,885 7.8 262,563 77.9 62,849 30.7 17,930 5.@3 337,157 0.6 204 749 3.o
N,iptha and Solvents - - - 882,773 97.4 16,453 100.0 23,310 2.6 - 1,736 0.2 906,063 1.5 16,4A 0.2
A!+halt, Tar Pitch - - - - 3,934,896 99.2 264,507 24.8 32,503 0.8 802,447 75.2 40,231 1-0 3,967,359 6.7 1,066,954 IS.,)
ot.h--r 6,672 1.2 103,488 71.2 522,114 94.7 28,836 19.8 22,572 4.1 12,990 6.9 6,042 1.1 551,358 'a. 9 14 51314 2.2
'I ot a 1 15,203,028 25.6 229,503 3.4 32i651,032 55.0 428,987 6.4 11,527,448 19.4 6,069,881 90.2 13,507,518 17.'0 59,381,558 74.6 6,728,371 H. 4

71), 617, 4 4 7
G r a rki Total

llPercent of total Imports
2/Percent of Total Exports
I/Percent of Total Imports

Source- Tabulations of unpublished data, Waterborne Commerce of the Unitecl States, Calcridar Year 1977f Vort I wotorwtiYa 41TUI slarl-Kti, At]-")t-jC'
Coast, Der)artment of Army, Corps of Engineers

Mississippi River and the Gulf ports of Corpus Christi and Baton Rouge. Most
residual is shipped from locations on the inland waterways in the northern
portion of Chesapeake Bay.

The three biggest importers of residual fuel oil are: Aremada Hess,
Steuart Petroleum and Exxon (see Table 111-5). In 1977, of the total residual
oil imported by ship into Baltimore, Aremada and Steuart Petroleum each
received about a third'and Exxon was fourth with 15.3 percent. Texaco and New
England Petroleum also had substantial imports. A considerable amount of
Steuart Petroleum's oil is handled by oil companies on consignment and is
transshipped by them elsewhere in the region which is not reflected in the
data.

A considerable amount of transshipment of imports occurs to local consum-
ers, mainly the utility plant of BG&E. Data for 1978 show that almost all the
residual oil shipped to utilities was shipped by Aremada Hess (52.5 percent)
and Exxon (45.3 percent). Texaco was the only other company involved with 2.5
percent (see Table 111-6). Most residual fuel went to Wagner plant (40.4 per-
cent) followed by Crane (31.2 percent) and Riverside (13.9 percent). Wagner
and Crane are both one of BG&Els three baseload facilities.

(1) Wagner

Wagner is located at Marley Neck just outside the city on
the bay and is accessible by scow or barge. Unit No. 3, a coal burning unit
receives coal by barge. Units No. i, 2 and 4, respectively 137Mgw, 134Mgw and
39BMgw, receive residual oil by barge (see Table 111-7). A gas turbine unit
of 14Mgw burns kerosene. Most of BG&E stations except Riverside also use No. 2
oil but much smaller amounts are consumed by gas turbines. Of the 4,308,200
barrels received at Wagner, two-thirds (54 percent) as supplied by Hess and the
rest by Exxon (see Table 111-6). Wagner has eight tanks with seven million
gallons capacity each for a total of 60 million gallons. It stores both #2 and
#6 oil separately. It also stores oil for BG&E's Gould Street and Westport
stations. It has a coal wharf and oil pier to handle imports of coal and oil.

(2) Crane

Crane Power Plant is located on the Middle River on Carroll
Island. Units No. 1 and 2 burn oil but Crane No. 2 is being converted to coal.
Each unit is 128Mgw (see Table 111-7). The plant is accessible by scow or
barge, receiving oil and coal shipments by water. Crane has three storage
tanks with five million gallons capacity each for a total storage of 15 million
gallons. Of the 1,330,700 barrels supplied to Crane, 76.6 percent came from
Exxon and 24.4 percent came from Hess (see Table 111-6).

(3) Riverside

Riverside located in Baltimore County east of Dundalk on
the Patapsco River has five steam combustion units with net dependable capa-
cities ranging from 58 to 78Mgw (see Table 111-7). It receives shipments by
barge of 1,486,650 barrels of'oil, of which 85.7 percent was supplied by Exxon
(see Table 111-6). The remainder was supplied by Hess. Data are not available
for gas turbine units, but Riverside's No. 6 unit burns natural gas.

111-14

TABLE TTr-5

Petroleum Imports Throucjh The Port Of Baltimore By Product And

Import
Company, 1977, Percpnt Of Total

PRODUCT
Distil-
Cre3e Gaso- Unlead. Jet K-,? ro- Fuel Oil Fuel Oil Distil- late Resi- Lubri-
COMPANY 0 it line Ga s Fuel sene No. 2 No. 4 late Less 4@ duAl cratR N a,:, t ha Total
krie rada Hess Coro. 29. 9 100.0 i00.0 95.0 34.2 100.0 3S.6

MOCO 100.0 - - 3.5 - - - 6.7

Belcher oil Co. - - - - - 54.2 - - - 0.6

Exxon - - - 95.7 75.9 45.7 100.0 15.3 - 13.7

Gulf Oil Corp. - - - - - - - 0.5 - - 0.4

Hudson Lubricarts - - - - 91.9 - 0.00

Interluoe Corp. - - - 8.0 - 0.00

Koch Industries, Inc. - 35.9 - - - - 0.006

MacMillian Ring Free - - - 1.9 - - 1.4

Mobil Oil Corp. - - - - 0.8 - - 0.7

N.E. Petroleum - - - 1.4 5.5 - - 4 . 4

Shell Oil Co. - - - - 0.6 - - 0.4

Standard Oil-Ohio - 30.04 - - - 0.5

Stewart Petroleum - - - - 33.0 - - 25.5

Texaco, Inc. - 4.0 - 2.5 22.6 - 6.9 - - 5.6

Walter Petroleum,
Inc. - - - 1.5 - - 1.4 - - 1.1

Total 10C.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Sources- Special Tabulations
Imp
-rican Petroleum Institute

@I @', ow Iw M @I MW ow; OW. lor @ MI, M

111-15

TABLF 1 11-6

Local Water Movements Of Petroleum- Product, From Suppliers To Utilities In The Port

2f Baltimore, 1978 (!,hBl3)

Utility Plant Gi:anc: ':utal
Philadel- Delmarva
Suoolier and Product Vaqner Crane RiverEide Westport. Gould St. Perryman phia Road Vienna Nur-be r I.Tot
Exxon

Re i-, i Jua 1 1,545.24 1,018.66 1,274.55 537. 16 437.73 4,813.4 44.5

Fuel Oil #2 24.00 24.0 0.2
Sibtotal 1,545.24 1018.66 1274.55 537.16 437.73 24.00 4, 837.4 44.7

H,2 S s
:I,e s i d u a 1 2,762.88 2,312.C4 212.10 34 . 56 277.58 5,599.16 51.6
Fuel Oil 42 3.27 25-40 22 .21 3.12 1.00 55.00 0.5
Subtotal 2,766.15 2,337.44 212.10 56.77 280.70 1.00 5,654.16 3_1

Texaco
Residual 256 256 13.4

AN OC 0
Fuel Oil #2 0.50 9.08 9.53 0.08

GOLF
Fuel Oil 02 1.01 9.07. 13.12 2.08 51.00 13.0 89.28 0.8

Total Residual 4,308.12 3,330.7 1486.65 571.72 715.31 24.00 256 10,692.5 96 . 5
% of Tot3l 99.8 98.9 100.00 92.80 99.30 31.6 100.0

Total Fuel Oil 42 4.78 25.4,0 22.21 3.1.2 52.00 107.51 0.9

t of Total 0.1 .8 3.6 0.4 68.4

Grand Total 4,312.9 3,365.17 1,486.65 616.13 720.51 76 13 256 10,846.42
% of Total 39.8 31.0 13.7 5.7 6.6 0.7 0.1 2.4 100.0

Source- F.E.R.C. Forms 67

owl ow SW mw owl on low ow mW m" m-

111-16

TABLE 111-7

Baltimore Gas And Electric Generating Station Summary

CAPACITY AMOUNT4 MODE5
PLANT UNIT TYPEI LOCATION WATERACCESS NAMEPLATE2 NETDEPEND FUEL3 CONSU,'4ED DELIVERY SUPPLIER6 CHAN-1E IN
(OIL-ml-MBL, CONSU:-'I"IION
COAL-103T)

CAUJERT CLIFFS 1 S.N. CALVERT CHESAPEAKE N UC
CO., i%ID BAY
2 S.N.

H.A. WAGNER 1 S.C. MARLEY CHESAPEAKE 132.8 137.0 F06 184.02 BARGE FOGHESS-2762.86 SWITCH 'ru La@-
NECK, BAY SULFUR OIL,
1980
2 S.C. A NNE CHESAPEAKE 136.0 134.0 F06 1167.21 BARGE EXXON- 1545.24 SWITCH TO COAL
AR@;N" DEL CO. BAY l9b 5
3, S.C. 359.0 319.0 COAL/FO6 460.85/ BAR3E F 02 -AMOC 0- 0 - 5 0 TO COAL,
12.06 19@5
4 S.C. 414.7 393.0 F06 2349.61 BARGE GULF 1.0i
GTI G.T. 16.0 11.0 F02 4.78 BARGE/TRUCK HESS 3.27
*COAL-b0,*,j3- 460.83

PRA@M% S@ORCS(84) 1 S.C. MARLEY NECK, CHESAPEAKE 610.0 610.0 F02 N/A BARGE/RAIL? N/A UNIT 1 WILL
BAY CHANGE TO COtL
(83) 2 S.C. ANNE 610.0 610.0 F06 N/A JANUAlY, 1934.
ARUNDEL CO.

C.P. CR;@';E 1 S.C. CARROLL MIDDLE 192.0 F06 1835.52 BARGE F06HESS- 312.04 uNiT 1 TO BE
ISLAND, RIVER CONVERTED TO
2 S.C. BALT. CO. 209.4 192.0 F06 1529.65 EXXON-1018.66 COAL lv@'IIEN TESTS
GTI G.T. 16.0 14.0 F02 34.47 F02GULF- 9.07 ARE COmPLETED
HESS- 25.40 ON FUEL QUALITY

RIVERSTDE 1 S.C. BALTIMORE PATAPSCO 60.0 58.0 P06 231.11 BARGE F06HESS- 212.10 SWITCH TO L(A@-
2 S.C. CO.,E. OF RIVER 60.0 59.0 F06 1529.65 EXXON 1274.55 SULFUR OIL,
3 S.C. DUNDALK 60.0 61.0 F06 105.05 1930
4 S.C. 72.3 78.0 P06 438.82
5 S.C. 31.3 65.0 F06 339.38
8 G.T. 25.0 22.0 F06 N/A
6 G.T. 121.5 128.0 F06 NIA
7 G.T. 25.0 22.0 F06 N/A

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>1 r,
rl rl 0 (n t- cn 0 cn 0 CA
"q @q Z (n m z 0 U) Z V, r

cl, r.

(4) Westport

Westport is located in the city on the Patapsco River. It
has a floating equipment barge and receives oil by water and by truck from
Wagner storage tanks. Its 458-68Mgw steam combustion units burn residual oil.
Of the 571,720 barrels delivered, 93.9 percent was supplied by barge.

(5) Others

Gould Street is located in the city in the Port Covington
area. Of the 720,510 barrels of oil supplied to this plant, 60.7 percent was
supplied by Exxon. The Philadelphia Road Plant, in the city north of Canton,
and the Perryman Plant on the Bush River in Harford County, both use #2 oil.

C. Distillate Fuel Oil

Distillate fuel oil is a general category for one of the petro-
leum fractions which is produced by distillation operations. Included are
products such as No. 1 and No. 2 heating oils, diesel oil and No. 4 industrial
fuel oil. Because no major refineries exist in Baltimore to produce distil-
late, all of it is imported. Over 11.5 million tons or almost one-fifth of
all the petroleum products is imported into Baltimore (see Table 111-4). Other
movements occur as outbound movements north and south along the inland waterway
(11 percent) as transshipments entirely within the port (6.9 percent). They
occur primarily to serve BG&E plants.

There is a great deal of seasonality and variation in demand for distil-
late fuel that often overloads the local transportation system in cold months.
The most economical way to meet peak demand is by large storage near the mar-
ket. About 20 percent of the tanks in Baltimore are needed to accommodate
seasonal demand. Demand for No. 2 heating oil is generally thirty times
greater in winter than in summer. There is a need to accrue large supplies to
accommodate such peak demand.

Most (82.6 percent) of the imports of distillate are fuel oil No. 2, a
distilled fuel for general purpose domestic heating (see Table 111-5). Other
distillate and industrial fuel oil #4 each comprise 8.4 percent and 8.8 per-
cent respectively of the total imports coming in by water. over half of the
other distillate fuel oil not elsewhere classified was imported by Belcher Oil
Company.

A small amount of fuel oil No. 2 was transshipped by companies to utili-
ties in 1978. This was only 1.6 percent of all fuel products shipped to util-
ities and is used for special purposes. Most went to Perryman (68 percent)
then Crane and Westport.

d. Gasoline

Gasoline is a complex mixture of relatively volatile hydrocar-
bons with or without small quantities of additives which have been blended to
form a fuel suitable for internal combustion 'engines, including special grades
for aviation engines. Gasoline has some seasonality, but not very much.

Specifications for gasoline in regard to vaporization pressure change with the
season. As a result, it can't be stored more than two months. Needs for gas
in the winter and the summer tend to be diffuse, but in the summer months
travel by automobile tends to be greater due to better weather conditions.
As a result, gasoline consumption tends to be higher in the summer.

Most gasoline is imported into Baltimore (see Table 111-4). A significant
portion of the amount imported goes out again or over internal waterways (16.5
percent) to such destinations as the New Jersey portion of the Delaware River,
the Pennsylvania portion of the Delaware River, the Schuykill River near
Philadelphia, but the bulk goes to southern destinations such as Chesapeake
Bay, York River, Virginia, Chostack River, Maryland (see Figure 111-12).

Gasoline (including unleaded gasoline) comprises 2.1 percent of all
petroleum products shipped by water to Private companies in the port of Balti-
more (see Table 111-5). The bulk of the shipments (39.6 percent) went to Koch
Industries, Inc. While one-third each went to Amerada Hess Corporation and
the Standard Oil Company of Ohio. Unleaded gas was imported by Hess.

e. Asphalt

Asphalt is a dark brown to black material which contains bitu-
mens which occur in nature and are obtained in petroleum processing. Consis-
tency varies from liquid to solvent. It is prepared as the residue from the
distillation of an asphaltic crude oil. The definition includes crude asphalt
as well as finished products such as: cements, fluxes, the asphalt contents
of emulsions, and petroleum distillates blended with asphalt.

Asphalt, tars, and pitches moved in.Baltimore comprised 9.6 percent of
national waterbcirne movement of this product. Asphalt imports were small but
not insignificant. Asphalt comprised about 6.7 percent of all petroleum
imports entering the port. It should be noted that a significant portion of
all exports of petroleum (15.8 percent) were asphalt products. The Chevron
Asphalt Company has a small refinery in Baltimore that produces asphalt.
Asphalt building materials' are an important export from Baltimore. No data
are available on the origins and destinations of ind.ividual shipments. It is
probable that most of the imports are in the form of crude asphalts as an input
into the asphalt refineries. Exxon has a small asphalt terminal in Richmond
and asphalt is shipped there by barge from Baltimore. Almost all imports come
from other domestic ports or the Caribbean Islands. Refined asphalt and its
products are the chief exports, the largest amount (75.2 percent) is destined
to big users on the inland waterway and the other one-quarter goes to other
ports in the United States.' It should be noted that some asphalt moves by
rail. f. Jet Fuel

Almost one million barrels or 1.7 percent of the total-petroleum
product imports was comprised of jet fuel, primarily destined for use at Balti-
more International Airport. Jet fuel consists of naptha-type (jet B) used for
turbo prop and turbo jet aircraft engines in the military and a kerosene-type
(jet A) used for commercial turbo jet and turbo prop airplanes. of course,

111-20

there are no outbound movements. The number of operations, number of refueling
stops, length of trips of commercial airlines will influence the amount of jet
fuel consumed. Increasing traffic and use of the airport as a terminal stop-
over for long distance flights will favor greater growth in shipment of jet
fuel in the future. Most (97.5 percent) of the jet fuel oil imported by water
was handled at Exxon's terminal. A small amount was imported by Texaco.

9- Naphtha

Naphtha is a generic term applied to refined, partly refined,
or unrefined petroleum products and liquid products of natural gas. Special
napthas are often used as paint thinners, cleaners, solvents, in the manufac-
ture of paints and varnishes. In Baltimore, naphtha is an important input
into the manufacture of synthetic natural gas (SNG) at BG&E's Sollers Point
plant. I

. In 1977, just under a million barrels of naphtha as imported into Balti-
more, about 1.5 percent of the total petroleum imported (see Table 111-4).
Most naphtha (97 percent) came via coast-wise shipments from refineries in
Puerto Rico, New York City and Houston, Texas (see Figure 111-18). A small
amount came in from the north from the Delaware River in Pennsylvania and
Delaware over inland waterways (see Figure 111-19). Some transshipment of
naphtha goes coastwise to other cities such as Philadelphia and New York City.
most of the naphtha imported into Baltimore in 1977 was handled by Amerada
Hess (see Table 111-5).

h. Kerosene

Kerosene is a petroleum distillate. It is a clean burning
product suitable for use as an illuminant in lamps or as range oil used in.
space heaters, water heaters, cooking stoves, etc. Kerosene is also used-as
fuel in small peak shaving units or gas turbines used by BG&E in-their power
plants.

Almost two-thirds of the kerosene coming into the port of Baltimore comes
via coastwise routes from Gulf refineries in Houston and Baton Rouge (see Table
111-4 and Figure 111-21)., Most of the rest comes from refineries in foreign
countries. A very small amount (1.9 percent) comes to the port over inland
waterways from refineries on the Pennsylvania and Delaware portions of the
Delaware River (see Figure 111-22). A significant amount of imports (16.7
percent) is transshipped locally within the port of Baltimore primarily to
such customers as BG&E. Kerosene is used in gas turbine units at Wagner and
Westport plants of BG&E. However, there are no data showing the volume of
shipments into these plants. Am erada Hess handles all the kerosene imported
into Baltimore by ship.

i. Lubricating Oils and Greases

Lubricating oils include all grades of lubricating oils from
spindle oil to cylinder oil and those used in greases. Lubricants comprised
only about 1.5 percent-of all petroleum products coming into Baltimore (see
Table 111-4). Most (11.9 percent) lubricating oils were recei@ved from refin-
eries along the Pennsylvania and Delaware portions of the Delaware River (see

111-21

Figure 111-25). Exxon has a large refinery in New Jersey which receives tank-
ers, produces lubricating oils and ships lubricant oils by barge to Exxon's
pier in the Canton area of Baltimore. About a fifth (21.2 percent) of all
lubricating oils came from other ports, largely New York City (see Figure
111-24).

In 1977 no totals were given for Exxon and almost all lubricant oils
imported were on consignment to Hudson Lubricants and interlube Corporation.
Exxon handles packages of lubrication oils. It brings such packages from its
refinery by barge. There is quite a large volume of packages and outgoing
shipment is often handled by truck.

3. Transportation and Facilities

This section discusses in more detail the physical facilities that
help transport, supply and store petroleum and petroleum products in the
region.

a. Pipelines

As mentioned previously in the overview two pipelines run from
the refineries in the Gulf Coast in Texas and Louisiana traveling 1500 miles to
serve the eastern seaboard: The Plantation Pipeline Company and the Colonial
Pipeline Company. The Plantation Pipeline with a 12" diameter is smaller and
stops at the outskirts of Washington, D.C. at Newington, Virginia south of the
beltway in Washington, D.C. Exxon, Shell, Amoco, City Services, Texaco, Gulf
and Crown all have bulk storage or tank farms in that area. Since this pipe-
line does not directly serve Baltimore it will not be discussed to-any length.

Construction of the Colonial Pipeline Company's pipeline along the eastern
seaboard states was begun in 1963 and completed February 1965. Almost as soon
as it was built it had reached its initial capacity of 800,000 barrels per day.
Subsequent.expansions were therefore undertaken in February and November of
1966 ' By the end of 1978 capacity had beenexpanded to 1,152 000 barrels per
day. Subsequent expansions increased the capacity to 1,464,0;0 barrels per day
by 1971. With further capacity expansions during 1976 and 1979, it is esti-
mated that current capacity is about 2,100,000 barrels per day, During 1979,
Colonial expected to handle 1,800,000 barrels per day.

Colonial has been operating near its full capacity since it was built.
Colonial claims that this occurs because it competes effectively with other
transportation modes for clean oil traffic. Coastal tankers from the Gulf and
Caribbean ports are its principal competitors. Long haul movements comprise
over half of Colonial's traffic. In 1978 for example, tankers charged an
average of $1.29 per barrel for transporting products from Houston, Texas to
New York as compared to Colonial's $.52 charge. Thus, average tanker rates
were two and one-half times Colonial's. Colonial's initial tarriff rates in
1964 were almost the same as those of the coastal tahker. Since that time
however, tanker rates have fluctuated widely from year to year, while Colonial
rates have been relatively stable. -As a result, the differential in rates has
increased substantially over the years in favor of Colonial.

111-22'

Rates in themselves# howeverr are only one component of the total trans-
portation cost of a barrel of oil. For example, the pipeline rate does not
take into account the cost of getting the products from a refinery into
Colonial which can vary depending upon the distance of the refinery from
Colonial. There is a substantial cost of truck transshipment from,pipeline to
final market which can vary depending upon a location of that market relative
to the nearest pipeline terminal. There are similar costs in getting products
from the nearest tanker terminal to the local market and from a refinery on
board a tanker.

One study claims that variables affecting differentials in costs between
pipelines and tankers can't be calculated very easily. it concluded that at
times tankers have been a,cheaper mode of transportation and that rarely has
the added cost by tanker been as much as a major fraction of a cent per gallon.
"Considering the fluctuation in the tanker rate and considering all the other
variables, it would be difficult to demonstrate that there was any significant
volume of tanker shipments at a total transportation cost significantly higher
than by pipeline."2/

In Baltimore, however, pipeline transportation maintains a distinct
advantage as a mode of transportation over tankers. It does hot pass very far
from the coast where most of the oil suppliers and tank farms are located. As
aresult of its proximity, it has been relatively easy to build branch lines to
the major terminals in the port. There is no costly, time-consuming transfer
from the pipeline tap to truck s in order to get oil to tank farms at the port.

Other general trends and characteristics make pipelines more competitive.
The rise in fuel prices since 1978 has changed the competitive relationship
between tankers and pipelines considerably. Fuel costs for shipping have esca-
lated and rates have increased substantially. Moreover, factors other than
rates and costs favor pipeline transportation. Pipelines consume very little
energy in moving their product compared to-other modes of transportation.
Their energy costs are two cents per million Btu per 100 miles travelled com-
pared to 3.5 cents for railroads. Pipelines are more reliable and are not
affected by adverse weather. They operate twenty-four hours a day, making it
easier to operate at,the pipeline's theoretical capacity. There is no noise,
water or air pollution associated with pipelines. Pipelines are safer than
other modes of transportation.

Colonial claims that it regularly operates its main line at over 98 per-
cent of its maximum continuous rated capacity. Demand for gas from oil company
suppliers has consistently exceeded' capacity. As a result of surplus demand,
the company has had to prorate space on its system. Each regular shipper's
allocation is based on its actual shipment during the previous 12 months in
proportion to line capacity less new shipper allocations. After its most
recent expansion, the entire pipeline system except portions between Richmond,
Virginia and Linden, New Jersey will be off proration. Thus, cus tomers in

2/morris S. Livingston, Oil Pipelines: Industry Structure, prepared for
the American Petroleum Institute, November 1978, p. 56.

111-23

Baltimore will still have to live with prorated allocations. Future expansions
of the Colonial pipeline, however, are planned that will increase pipeline
capacity in Baltimore. Colonial has announced plans to lay 140 miles of a
36-inch products pipeline between Mitchell Junction, Virginia and Dorsey,
Maryland.Y When such capacity is added in two or three years, it is
expected that clean products now being shipped by water will be diverted to
pipelines and that the waterborne transportation of clean products will become
negligible.

As the Colonial pipeline approaches Baltimore from the south, its diameter
is 32 inches. The main tap point on the pipeline for the Baltimore region,
called Dorsey Junction, is located-at Woodbine in Carroll County. From this
point, a 12-inch branch pipeline takes the oil to tank farms and terminals
located in Curtis Bay and South Baltimore. A second, smaller branch of six
inches, goes to British Petroleum's storage facilities at the outskirts of
Washington, D.C. Another short branch proceeds to an oil storage area in
Finksburg, not far from the pipeline. Further north, an eight-inch branch
comes south from Aberdeen in Harford County. It connects with a North Balti-
more terminal area by means of a transmission right-of-way, and travels via a
railroad right-of-way to service Exxon and Apex oil companies in the Canton
Bay area of the port.

All products in a pipeline must be piped one after another in a certain
sequence. A particular order is necessary in order to avoid mixing and con-
tamination. Refined products travel in batches of about 75,000 barrels.
Unleaded gasoline usually comes first. It is followed by leaded oils that tend
to wash the pipeline, and finally by kerosene. It has been variously estimated
that petroleum products move through the pipeline from five to seven miles per
hour and it takes anywhere from 10 days to three weeks for products to come
from Houston in the Gulf to Baltimore. Because of the allocation system, the
special sequence of movements required and the long travel time, a great deal
of planning and tight scheduling is required on the part of suppliers.

2. Water: Ships and Barges

a. Ships

The estimate by one company that 20 percent of its clean prod-
ucts come in by water appears to be a reasonable estimate for the port as a
whole. All residual oil still comes in by ship.. Black oils are handled in
one class of ship or barge, and clean oils are handled in a different class.
It is not very practical to clean black oil ships or barges to carry clean
oil. Most oil company berths handling clean or black oils can accommodate
ships of 30iOOO to 80,000 tons capacity. The new large oil tankers are no
longer used. At one time, big ships with clean fuel would arrive every nine
to 10 days in Baltimore. Now, small ships, carrying clean products, come in

Y"World Pipeline Projects Aiming for 62,376 Miles", Oil and Gas
Journal, January 21, 1980, p. 29.

111-24

once a month. According to one company, unloading a ship takes an average of
18 to 24 hours. A hinge pipe is used for such loading to avoid spills and
water pollution. Exxon has two berths, one capable of taking an 80,000 ton
ship and another for black oil ships with a capacity of 30,000 tons or less.

The big importers of oil with facilities for berthing of ships, in order
of their percentage of total imported oil shipped, are: Armerada Hess (38.6
percent), Exxon (13.7 percent), Amoco (6.7 percent), and Texaco (5.6 percent)
(see Table 111-5). Most of these port oriented suppliers import substantial
volumes of residual oil, ranging from 34.2 percent (Hess) to 6.4 percent
(Texaco) of the total imports. These companies have the flexibility to ship
clean products either by pipeline or ship, in case for any reason pipeline
access is restricted. Steuart Oil Company imports one-third of all the resid-
ual oil entering Baltimore. As noted.previously, its imports are handled by
consignment through local suppliers who transship to Steuart Petroleum's tank
farms on the Anacostia River.

b. Barge

The previous section analyzing the movement of individual
petroleum products showed that a significant proportion of movement of petro-
leum products occurs by barge. Most of this movement is a result of trans-
shipment, both within the harbor itself and to points outside on the inland
waterway. Barges in Baltimore harbor range in capacity from 15,000 to 70,000
barrels. The largest volume of barge movements occurs entirely within the
bounds of the port and is destined for BG&E. Almost 11 million barrels of oil
were shipped by barge in this manner in 1978 (see Table 111-6). Hess, Exxon,
and Amoco all participate in such shipments with the largest volumes carried
by Hess and.Exxon. The.Exxon pier, for example, can accommodate four barges--
two on each side.

Some clean products--for example, gasoline, heating oil, and diesel oil--
are shipped by barge to storage and terminal areas on the Chesapeake Bay.
There they are redistributed to customers. Some asphalt is shipped by barge
to Amoco's refinery in Richmond, Virginia. Other barges load ships tied up in
the port with bunkering fuel.

3. Storage

The bulk of an oil company's storage is for day-to-day operations,
between one ship or pipeline shipment and the next. It has been estimated
that 75 to 80 percent of the storage tanks that have been built are for this
k, purpose. The seasonality of demand characteristic of heating oil and, to some
extent, gasoline that was mentioned previously also creates the need for stor-
age. About 20 percent of the storage tanks that have been built are necessary
to accommodate such seasonal demand. The industry has found that it is uneco-
r nomical to-provide expanded transportation to accommodate peak loads and that
instead it is more economical to provide storage. The larger the tank, the
cheaper the cost per barrel of oil because the volume of the tank goes up as
the cube of a given dimension. Volume, therefore, increases faster than does
area and the associated parameters that affect cost. It costs $10 per gallon
just to build storage.

111-2!

Oil has always been difficult to handle.- Its flammability and volatility
present safety problems. Before 1974 when oil was cheap, the cost of storage,
handling and transportation was a large percentage of oil's delivered cost.
The efficiency with which it was handled was, therefore, an important element
in maintaining a competitive position of a company. Oil companies always,
therefore, paid a relatively great amount for storage or handling. Efficiency
ON of handling has a much bigger impact than in coal. Furthermore, the tax on
oil inventory and the fact that the company has to finance the value in the
tanks provide further incentives for efficiency in storage. Computers are
used to keep track of oil and there is very little slack in the system. All
storage capacity that is built is utilized to the highest extent possible.
Nevertheless, as the price of oil goes up as it has recently, the cost of
storage and handling becomes a smaller part of the whole picture.

The biggest tank-in Baltimore has a capacity of 100,000 to 150,000 barrels
of oil. With 42 gallons per barrel of oil, this is considered large by most
industry standards. Nevertheless, Piney Point, Maryland has a tank that holds
500,000 barrels. A size of 100,000 to 150,000 barrels, however, appears to be
standard on the east coast. Such tanks are 125 to 150 feet in diameter and 50
feet high. There are three storage or terminal areas in the city. The Gulf-
Hoffenberg storage facility is located about two miles north of Canton, and
this area has been called the north terminal area. In the port, the largest
terminal area is in the Curtis Bay area where 10 companies have storage facil-
ities comprising 370.29 acres. The largest in terms of area are Continental
oil (73.91 acres), Shell Eastern Petroleum Products (71.53 acres), Amoco (73.53
acres), and Hess Oil (28.57 acres). Although the Canton terminal area has only
two firms, the area occupied by one, Exxon (110.85 acres) is the most extensive
in the city. Exxon, for example, has hundreds of tanks of which 30 are large
and many are small. The terminal handles forty products composed of different
grades and quality of oil. All grades have to be segregated. Small tanks are
for low-volume products. Because of environmental requirements, all oils of
different grade in regard to sulfur content have to be segregated.

4. Trucks and Distribution

The two petroleum products with the largest volumes generated land-
side from the port are: home heating fuel and gasoline. Heating fuel is
allocated to home heating distributors based on historical demand. Some oil
companies such as Exxon used to be in the home heating oil distribution busi-
ness themselves, but have divested themselves of that operation. Some dis-
tributors such as Hoffenberg have their own terminals and receive their allo-
cation directly from the pipeline. Most, such as Marex, are supplied through
oil companies either by truck or barge. The distributor then uses smaller
trucks for distribution directly to the customer.

In Maryland, all service stations have been divested from oil com-
panies. Most big oil companies operate their wholesale operations directly
with service stations. In other areas oil companies deal with a distributor
and they distribute to stations, especially in rural and outlying areas. Some
distributors exist in Baltimore that deliver to small stations with small tanks
and pumps. Big oil trucks,from the oil supplier can't get into these service
stations.

1117-26

Exxon serves as a good example of bow trucks are used for distribution. A
large number of trucks averaging 450 every 24 hours visit the terminal. Volume
can be as high as 500 in the winter and as low as 300 in the summer. Many
trucks deliver gasoline directly to Exxon service stations. The market for
Exxon extends from north of the District of Columbia to Cumberland, Maryland to
Wilmington, Delaware and to the Eastern Shore of Maryland. Another large por-
tion of trucks are heating oil distributors. Some big trucks go to distribu-
tors with their own bulk facilities and then the distributor delivers by small
truck to individual customers. This often happens in the case of rural areas
such as Hagerstown. It is generally more economical to send small trucks to
the supplier's terminal in Baltimore.

The big volumes of truck traffic present problems for most oil companies
especially during peak season. This is particularly important in the Curtis
Bay area. Access of 1-83 and 1-95 under construction will help the companies
located in the Canton terminal area. It will provide especially good access
to the northeast. However, the building of a tunnel restricts the transport
of oil to the west. Oil, for safety reasons, cannot travel in a tunnel.
Extensive highway facilities are less prevalent in the Curtis Bay area.

5. Railroads

Shipment of petroleum products by rail is a very small movement com-
pared to the 1,000 rail tank cars that used to carry oil products. Customers
don't transport petroleum products by rail tank car anymore. Only railroads
using fuel for their own purposes and asphalt companies ship by rail tank cars.

D. IMPACT OF DEMAND AND SUPPLY ON THE USE OF LAND

1. Demand for Petroleum

a. National Trends

Since the oil embargo in 1973, national demand for electricity
has been in slump. Growth in electrical consumption actually declined in 1974
and showed very little growth in 1975 because of the,extended effects of the
recession. Previous to 1974, annual rates of growth nationally were seven to
eight percent. in 1976 the national growth rate rebounded to almost equal
that of the pre-1974 rates. Nevertheless, the succeeding years have shown
growth rates averaging three to four percent, well below those that prevailed
prior to 1974.

b. Local Demand

BG&E, one of the chief customers for residual oil--the most
important product shipped through the port in terms of volume--has mirrored the
direction of national trends. For example, the sale of electricity increased
only 4.8 percent in 1977 and 4.6 percent in.1978.

BG&E's peak demand is the amount of electricity it provides in its single
busiest hour of the year. Utilities such as BG&E usually build facilities so

111-27'

that they can exceed the peak by a substantial amount. As a result a great
deal of the capacity built remains unutilized during the remaining portions of
the year. This results in less efficiency which is reflected in higher rates
for the consumer. Moreover, the peak does not necessarily grow at the same
rate as total electricity. In the late 1960s and early 1970s,,BG&E's growth in
peak demand was about seven percent a year, approximately the national average.
Peak demand, however, dropped between 1975 and 1976 and again between 1977 and
1978..!/ In 1979, it grew modestly at a rate of 3.5 percent, slightly higher
than other middle Atlantic states but lower than most utilities in the south
and southwest-V Peaks in Baltimore have generally not been growing as fast
as sales, indicating *that BG&E does not have to build new plants. Its current
capacity is about 38 percent greater than its peak.q/ A factor in this big
reserve has been the Calvert Cliffs twin nuclear reactors.

2. Future Demand

Incentives for building,new utility plants are diminishing. New
generator plants are generally more efficient than old ones and they expand
the rate base or total company's investment upon which the utility is allowed
to earn a profit. Nevertheless, with inflation the cost of construction has
generally equaled or exceeded the benefits of the revenue from the bigger rate
base. In summary, the annual growth-demand for electricity is expected to be
half of what it was in the early 1970s at about four percent per year..Z/
BG&E estimates optimistically that its peak demand will grow by 5 percent this
year and about 4 percent per year through the 1980S.-Y The reasons for this
slow growth are:

a national, and to some extent, local economy that is
growing at a slower rate;

0 increasing conservation practices by customers;

in creasing use of more efficient appliances; and

continuing rise in the price of electricity.

YDavid Brown, "BG&E Again Slows Work on Arund'el Plant", Baltimore Sun,
November 27, 1979.

.VDavid Brown, "Utility Days a Tricky Game of Predicting Energy Needs,"
Baltimore Sun, December 2, 1979.

6/Ibid.

2/Ibid.

YDavid Brown, Baltimore Sun, November 27, 1979.

111-28

Slow growth has resulted in the following:

0 the postponement of the opening of the Brandon Shores plant from
1982 to 1984; the new unit will start on coal; and

0 the decision of.BG&E not to join with PEPCO in building the
Dickerson plant in Montgomery County.

In addition to slow growth, the following plants will be converted to
coal and will no longer require residual oil:

0 Wagner units #1 and #2 are scheduled to be converted to
coal in 1985; these plants consumed 1,628,000 barrels of
oil in 1978 (see Table 111-7); and

0 Crane's unit #1 will be converted to coal in 1983; it
consumed 1,835,620 barrels of oil in 1978.

These reductions will reduce Hess and Exxon's imports of residual oil and will
reduce local barge movements of oil'to utility plants.

The prospectsoare for diminished imports of residual oil during the next
decade. Residual oil is one petroleum product that must come by water and has
the largest volume of import compared to any petroleum product in the port.

Prospects are for stable or somewhat diminished demand for clean products
for the following reasons:

0 slower growth or possibly decline in the use of gasoline
as it becomes more expensive and the consumer buys more
gas-efficient cars; and

0 more restricted travel and conservation on the part of the
consumer.

Aside from utility demand, there will also be a lower demand for home
heating fuel for the following reasons:

0 slower industrial and population growth generally;

0 practice of energy conservation on the part of customers
as oil prices rise; and

Conversion by customers from oil to other fuels.
:n addition to reduced demand for petroleum products, the Port of Balti-
more will experience diminished waterborne traffic for clean oil through the
port in the next two to three years because by that time, Colonial will have
completed its addition of pipeline capacity between Mitchell Junction, Virginia
and Dorsey, Maryland. This will allow the pipeline to satisfy most or all of
the demand for movement of clean products. It will divert approximately 20
percent of clean product traffic that is currently going by water to the pipe-
line (see discussion above, under pipelines). If the port retains or expands

III-2S

its role as the focal point for redistribution of products to Chesapeake Bay
and other locations along the inland waterway, it could counter-balanice these
trends somewhat.

3. Impacts

This section briefly discusses the impact of future trends in
petroleum production shipped through the Port of Baltimore on land use, the
environment, and the local economy.

a. Land Use and Facilities

Facilities for directly handling petroleum appear more than
adequate. The chief problem may be, in fact, one of underutilization. The
highway transportation infrastructure is congested and needs improvement. The
decline in demand for petroleum products and the expansion of the pipeline is
likely to result in underutilization of piers and facilities by major oil
importers such Armada, Hess, and Exxon. Some consolidation or attrition may
occur in the long term. Nevertheless, there will still be continued import of
some residual oil by petroleum firms. Large storage facilities represented by
tank farms are likely to remain. They are served by the pipeline and represent
large capital investments. If oil companies were to start from scratch, they
would most likely build on inexpensive land near the pipeline terminal in the
nterior. A port facility is no longer necessary or even desirable for most
oil companies but oil companies had already made their investment decisions in
an era when the port was important and now have a large capital investment in
i

facilities which cannot readily be duplicated especially under today's infla-
tion. Traffic generated by tank farms may remain a problem unless improvements
to arterial roads and intersections are undertaken, especially in the Curtis
Bay area.

The principal issue in regard to use of land in the port for handling
petroleum is one of the highest and best use. One can claim that land at the
port is unique because of its water access and,that only those uses and activ-
ities that can capitalize on this unique attribute of the port should locate
there. If one accepts this assumption, the current location of oil companies
at or near the port is not the best and highest use of the land. Petroleum
storage facilities will continue to occupy valuable port land even though they
do not use the unique aspects of water access and their original reason for
locating waterside is no longer in force. For reasons discussed above, it is
unlikely that oil companies will pull up their roots and move elsewhere; nor
is natural attrition likely to occur in the immediate future (10 years).

The paradox is that although space and facilities for coal storage and
yards needing water access is at a premium, large amounts of port land are
being pre-empted by petroleum uses that no longer demand water access. Even
if policy tools did indeed exist at the local level to induce such activities
to move, at present it would be far beyond the capacity of local government to
implement them. Such policy tools would require a development agency to sub-
sidize and build consolidated tank farms at pipeline terminals in the interior
in order to induce firms to move. This seems unlikely and even if possible,
it is not at all certain that it would work. Another alternative would be to

111-30

buy or lease waterfront access and facilities from the oil companies for other
port use. This is a more feasible long-term possibility but the use of such
piers may be limited by the lack of existing railroad facilities or space for
yards to serve such piers in their new function. In the long term, the city
or port authority should adopt a policy of buying up available land and faci,l-
ities used for petroleum ior more intensive development that needs water
access, if any attrition should occur.

b. Economic Impact

In Baltimore, petroleum products are transshipped bulk products.
Their impact, therefore, is similar to that of coal explained in the previous
chapter. Reduction in port petroleum traffic will undoubtedly result in some
reduction of local port jobs and income in transportation services and ship
repair. A pipeline is a 'less intensive employer of people than oil companies
and will.not make up for the loss of jobs and income. Nevertheless, the port
may continue to function as an importer of residual oil and to the extent that
it retains and expands its transshipment function in the the Chesapeake Bay and
7
middle Atlantic region, it could minimize some of the effect of such losses.

1c. Environmental Impact

Environmental regulations impose limits on the sulfur content or
black oils. Bunkering oil used for fueling ships contains a high sulfur con-
tent, but such fuel'is burned at sea where there is no environmental problem.
The sulfur grade (content) requirements for oil used in outlying areas and in
Virginia is lower. Customers in the immediate Baltimore area are required to
use even lower content sulfur oils. Some of BG&E'S utility plants have had
emergency permission to burn higher grade sulfur oil (fourth grade). Wagner
and Riverside units, however, will switch to lower sulfur oil during 1980 (see
Table 111-7).

The decline in import activity will reduce the possibility of,oil spills
and leakages of oil that pollute the water as a result of loading and unload-
ing. As has been-explained previously, pipelines have practically no negative
environmental impact and expansion of their use augurs well for environmental
problems. There is some vaporization of hydrocarbons occurring from storage
tanks and from tanks of ships as they unload from storage tanks in the termi-
nal area. In general, environmental problems are not unmanageable and will be
lessened somewhat in the future in view of the slow growth or decline in
petroleum traffic.

111-31

FIGURE III-1

Movement By Type Through Baltimore Harbor

Crude Petroleum (Barrels)

IN E@00 r4> @OCLL- OT >OU
L
A

I NTOP-N&L

<100,000

100,000 1,000,000

1,000,000 - 5,000,000

> 5,000,000

Source: Army Corps OfL Engineers, Waterborne Movements of the United
States, Calendar Year 1977

Goaswise Traffic Originating And Terminating

In Baltimore Harbor, Crude Petroleum (Barrels)

-.100,000

MEOW
100,000 - 500,000

500,000 - 1,000,000

>1,000,000

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977

FIGURE 111-3

Domestic Inland Traffic Originating And Terminating In

Baltimore Harbor, Crude Petroleum (Barrels)

TIA/

--100,000

100,000 - 500,000
500,000 - 11000!000

> 1,000,000

Source: Army Corps of Enqineers, Waterbdhe commerce of the United

rII-34

FIGURE 111-4

Movement By Type lbrough Baltimore Harbor Residual

Fuel Oil (Barrels)

CC)&5rNA 1@;c

---100,000

100,000 - 1,000,000

1,000,000 - 5,000,000

> 5,000,000

Source: Army Corps of Engineers, Waterbc1he commerce of the United
States, Calendar Year 1977.

111-35

FIGURE 111-5

Coastwise 7taffic Originating And Terminating In

Baltimore Harbor, Residual Fuel Oil (Barrels)

kcow@ LA

@4oWMM IT

100,000
L-A TZ I In T Y,
100,000 - 500,00()

500,000 - 1,000,000

1,000,000

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977.

111-36

FIGURE 111-6

Domestic Inland Traffic originating and Terminating

In Baltimore Harbor, Residual Fuel Oil (Barrels)

txqAWAsw w4er-(PA400

V-14et-

<100,000

100?000 - 500,000

500,000 - 1,0 00, 000

> 11000,000

Source: Army Corps of Engineers, Waterborne Movements of the United

111-37

FIGURE 111-7

Movement By Type 11hrough Baltimore Harbor

Distillate Fuel Oil (Barrels)

OOTT
'>VU 1,4>

L
L-OCAi-

--100,000

100,000 - 1,000,000

1,000,000 - 5,000,000

>5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111-38

FIGURE 111-8

Coastwise waffic Originating And Terminating In

Baltimore Harbor, Distillate Fuel Oil (Barrels)

woo gaviv, LA

Tek* OITY Ty.

-100,000

100,000 - 300,000
I
500,000 - 1,000,000

1, 000, 000

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977.

FIGURE 111-9

Domestic Inland ITaffic originating and Terminating In

Baltimore Harbor, Distillate Fuel Oil (Barrels)

(AQ@@ BAY

< 100 , 000

100,000 - 500,000
500,000 - 1,000,6q

>1,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111-40

FIGURE III-10

Movement By Type Through Baltimore Harbor, Gasoline (Barrels)

IN E@Ou Nl>

COA51N4 1@c

L-OC4L-

100,000

100,000 1,000,000

1,000,000 - 5,000,000

> 5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111-41

FIGURE 111-11

Coastwise Traffic Originating And Terminating In

Baltimore Harbor, Gasoline (Barrels)

Poem

LAKE aibzLe;@ LA.

4100,000

100,000 - 500,000 -

500,000 1,000,000
M>11000-1000

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977.

------ --- --

Domestic Inland Traffic originating and Terminating In

Baltimore Harbor, Gasoline (Barrels)

MMONO SCAJAJYLY-JLJ-- V.14W,

. .. .. ......

100 , 000

100,000 - 500,000

500,000 - I IVUU 0 VUU
>11000,000 RAM PTC*j P'O@

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111-43

FIGURE 111-13

Movement By Type Through Baltimore Harbor, Asphalt,

Tars & Pitches (Barrels)

IN eou NIP 0 L7-r ',P>ou t4

VIZE 164

OCA

-------- <100,000

100,000 - 1,000,000

1,000,000 51000,000

> 5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111-44

FIGURE 111-14

Coastwise Traffic Originating And Terminating In

Baltimore Harbor, Jet Fuel (Barrels)

IN E@OU tJJ> @OCLL-

<100,000

100,000 1,000,000

1,000,000 5,000,000

>5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

FIGURE 111-1-5

Domestic Inland Traffic Originating and Terminating In

Baltimore Harbor, Jet Fuel. (Barrels)

F064-wrlwe,Ty'

100, 000

100,000 - 500,000

500,000 1,000 '000

> 1'.000 , 000

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977.

111-46
FIGURE 111-16

Movement By Type Through Baltimore Harbor, Jet Fuel (Barrels)

100,000

100,000 - 500,000
500,000 - 1,000,1000

>1,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United

111-47

FIGUM 111-17

Ooastwise Traffic Originating And Terminating In

Baltimore Harbor, Naptha And Petroleum Solvents (Barrels)

IN 1@00 t4p @OC&L- '0 OT

I-OCAL-

------- @ <100,000

100,000 1,000,000

1FOO0,000 - 5,000,000

>-510001000
47@

Source: Army Corps of Engineerst Waterborne Movements of the United
States, Calendar Year 1977.

CII-48

FIGURE 111-18

Domestic Inland Traffic Originating and Terminating In

Baltimore Harbor, Naptha (Barrels)

k C iT/

@--100'000

100,000 - 500,000

500,000 - 1,000 '000

>1,000,000

Source: Army Corps of Engineers, Unpublished Data for calendar Year 1977.

F1
GURE 111-19

Movement By Type Through Baltimore Harbor, Na2tha (Barrels)

<1001000

100,000 - 500,000

500,000 - 1,000,000

>1,000,000

Source: ArMY Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111- 50

FIGUFE 111-20

Coastwise Traffic originating And Terminating In

Baltimore Harbor, Kerosene (Barrels)

IN 1@00 NIP.

FOZE 16.

OC.&

--100,000

100,000 - 1,000,000

1,000,000 - 5,000,000

> 5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

FIGURE 111-21

Domestic Inland Traffic originating and Terminating In

Baltimore Harbor, Kerosene (Barrels)

EA-04 M@xAIF, LA -

HO*T" cm

--100,000

100,000 - 500,000

500,000 - 1,000 '000

>11000,000

Source: Army Corps of Engineers, Unpublished Data forCalendar Year 1977.

EII-52

FIGURE 111-22

Movement By Type Through Baltimore Harbor, Kerosene (Barrels)

4M AM)

100,000

100,006 - 500,000

500,000 - 1,000,000

> 1, 000,000

Source: Army Corps of Engineers, Waterborne Movements of the United

111-53

FIGUM 111-23

Coastwise Traffic Originating And Terminating In

Baltimore Harbor, Lubricating Oils'& Greases (Barrels)

IN f@00 NIJ> i-OC&L- zq Lrr '>Cfj t'j

OC-L

. ...... ---1001000

100,000 11000,000

1,000,000 - 5,000,000

>5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

FIGURE 111-24

Domestic Inland Traffic originating and Terminating In

Baltimore Harbor, Lubricating Oils & Greases (Barrels)

L
"NEW Yor-K

100,000

100,000 - 500, 000

500,000 - 11000,000

> 1,000,000
NJ

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977.

111-55

FIGURE 111-25

Movement By Type Through Baltimore Harbor,

Lubricating Oils & Greases

---100,000

100,000 - 500,000

500,000 - 1,0
00,000

>1,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

111-56

FIGURE 111-26

Goastwise Traffic Originating And Terminating In

Baltimore Harbor, Other Petroleum Products (Barrels)

4907 -'Pwu t4>

OCA

- 100,000

M 100,000 - 1,000,000

1,000,000 - 5,000,000

>5,000,000

Source: Army Corps of Engineers, Waterborne Movements of the United
States, Calendar Year 1977.

FIGURE 111-27

DOmestic Inland Traffic originating and-Terminating In

Baltimore Harbor, Other Petroleum Products

RWP-ro ii4co

'A 5&rM Poo 6'r L.A.

LAXe (:+4AzLe51

< 100 '000

100,000 - 500,000

500,000 - 1,000"000

>1,000,000

Source: Army Corps of Engineers, Unpublished Data for Calendar Year 1977.

FIGURE 111-28

Movement By Type Through Baltimore Harbor, other Petroleum Products

14 C4e5AFQ*3-:: SAY

< 100,000
100,000 - 500,ooo I.L

500,000 - 1,000,000

--1,000,000

Source: Army Corps of Engineersp Waterborne Movements of the United
rmlc@nrl;;r VaAr lQ77-

CHAPTER IV--GAS

A. OVERVIIW

Natural gas is the third most important fuel source consumed in the region
after gasoline and residual oil. About 17.6 percent of all fuel consumption in
the Baltimore region is natural gas (see Table 111-2). Almost half or about
44.6 percent of the natural gas was consumed in residences. Almost one-third
or 31.2 percent was consumed by manufacturing establishments. The greatest
share (46.5 percent) of natural gas consumed in the region went to Baltimore
City, and the immediate area around the city in Baltimore County consumed 29.3
percent (see'Table 111-3).

The Columbia Gas Transmission Corporation, the sole outside supplier of
gas, contracts with BG&E for gas on a daily and annual basis. Columbia sup-
plies BG&E from its traditional sources via pipeline from the southwestern
portion of the United States and from special facilities producing SNG and LNG.
The BG&E demand charge is based on average maximum daily requirements of A40
million cubic feet per day. This demand charge is paid whether BG&E uses the
gas or not. The demand charge is based on an average, however, and the actual
peak day in 1978 was 650 million cubic feet per day. It would be very costly
to pay for this high peak demand that only occurs one-twentieth of a year* It
is therefore economically advantageous for BG&E to have facilities to produce
gas for use on those peak days that exceed the average. These facilities are
called peak shaving plants.

The following are the key findings of the analysis:

� Traditional sources of supply from Columbia are unlikely
to change. Gas will generally be more available. Growth
in demand will slow partly because of BG&E policies. Pri-
orities will not be used to allocate gas.

0 Columbia's Cove Point LNG facility presents special safety
requirements and requires special monitoring at the
regional or state level.

� BG&E's present peak shaving plants are unlikely to expand
because of slow growth in demand, economic factors and
restricted sites.

Spring Gardens LNG plant does not impact the port,
has a limited size site, but could possibly expand
its storage facilities.

IV-2

Notch Cliff Propane-Air plant does not directly impact
the port. With a shift from oil to gas, expansion of
production of this type of gas is possible, but the
suburban site may be sensitive to any expansion
requirements.

Soller's Point SNG plant directly impacts the port
requiring local movement of naphtha by barge. Fco-
nomics do not now favor expansion, but if expansion
should occur, it will be at another site.

B. SUPPLY

1. Historic Supply--PiPeline

Columbia's traditional or "historic" sources of supply come via pipe-
line from Louisiana, Texas, and Oklahoma in the southwest. Other sources for
gas come from offshore in the Gulf and the pipeline company is also exploring
for gas at the foothills of the Rockies. Columbia imports gas from Canada and
Mexico but most of these sources are tied in with other systems and do not
affect Baltimore.

The Columbia gasline comes from Columbia to loudoun, Virginia to Washing-
ton, D.C. and goes northeast passing north of Baltimore. At this point there
are 10 gate stations that take gas off the Columbia pipeline into the Baltimore
distribution system. The gas is maintained constantly under pressure. Pres-
sure at the mainline gates and in the periphery is higher than in the older
portions of the pipeline system toward the center of the city. At the mainline
gate station pressure is 300 to 400 pounds per square inch (psi). The Balti-
more system branch line cuts it down to 200 psi. The older system toward the
center is composed of cast iron pipes and has lower pressure of 10 psi. For
example, when a line comes into Spring Gardens located at the center of the
system the pressure is considerably reduced. Generally in the city, gas is at
a medium or low pressure. A complete new system would all be under high,pres-
sure. There would be less pipe in the ground for the same deliverability.
All the lines are underground except on bridges. Currently, no physical con-
straints exist on the operation of the pipeline, and enough compression exists
to push the gas. Nevertheless, Columbia may have to consider more compression
and an additional pipeline five years hence.

2. Other Special Sources of Supply

Columbia has other sources of supply. These sources are not strictly
incremental but are "rolled in" with gas along with other Columbia sources and
they are not separately priced. At any one time there might be a mix of dif-
ferent sources of gas in the system and it would be very difficult to detei-
mine, if at all, the exact mix of gas from various sources at any one time.

a. SNG

Columbia has a synthetic gas plant at Greenspan, Ohio which
accounts for about eight percent of the gas coming in by pipeline to Baltimore.

IV-3

It is impossible to determine exactly how much 6altimore is getting from this
source at any one time.

b. LNG--Cove Ploint, Maryland

In 1973 Columbia LNG Corp oration, in cooperation with the Con-
solidated Natural Gas Company, began construction of a liquified natural gas
facility (LNG) on a 1,022 acre tract at Cove Point in Calvert County, situated
on the Chesapeake Bay* It was completed early in 1978 with the first tanker
arriving in March. The El Paso LNG Company owned and operated the tanker car-
riers which supplied the facility and delivered the gas from Agew, Algeria to
Maryland. Each carrier has a capacity of 125,000 cubic feet (33 million gal-
lons) of LNG. LNG tankers are approximately 1,000 feet in length and 140 feet
wide.

In 1977, the last year for which data were available, 5,260,000 of liqui-
fied gas were received by Baltimore from foreign sources. Another almost equal
amount was shipped out to other ports on the coast-1/

At Cove Ploint, the land facility consists of storage sections with four
tanks each, holding 62,000 cubic meters (370,000 barrels) of LNG, a regasifica-
tion (vaporizer) facility, administrative control buildings, fire/water tanks,
send-out pumps, and service buildings. The bay docking and offshore terminal
is located about 5,300 feet off shore. It has two tanker berths along the
2,500-foot pier which is connected to the@ shore by an underground tunnel con-
taining both LNG pipes and vapor return lines. As originally planned, it
called for having two ships arriving every week. However, the Cove Point
facility had start-up problems during the next year and a half. The problems
had to do with the availability of ships and the schedule of Algerian produc-
tion itself.

After the LNG is docked at the facility, pumps in the tanker discharge LNG
into,receiving tanks at each berth. From these vessels the liquid is relayed
by booster pumps through the tunnel to onshore storage tanks. The liquid is
withdrawn from short tanks, heated, and converted back to natural gas. After
regasification, it is moved out through an 87-mile, 36-inch underground pipe-
line to Loudoun County, Virginia to join the Columbia main pipeline. It was
originally expected that the facility would process 110 billion cubic feet of
gas annually. In actual fact, however, the amount imported at Cove Point only
provides eight percent of the Columbia total supply of gas to Baltimore.

Baltimore may at one time get a mix varying from 100 percent LNG to 100
percent historic gas and anywhere in between depending on the condition of the
system. Some component of BG&E's gas may always be LNG. BG&E is the first
customer--after it is discharged from Cove Point. In the summertime, it may
be as much as 100 percent LNG, and in the winter, gas may be-down to 50
percent LNG.

I/Waterborne Commerce of the United States, Calendar Year 1977, Part I,
Waterways and Harbors, Atlantic Coast, Department of Army, Corps of Engineers.

IV-4

3. Peak Shaving Plants

BG&E has three peak shaving plants, an LNG plant at Spring Gardens,
a propane-air plant at Notch Cliff, and an SNG plant at Soller's Point near
BG&Els Riverside plant.

a. SPring Gardens LNG Plant

At Spring Gardens, in the City of Baltimore, BG&E takes gas from
the pipeline and liquifies it, stores it and eventually sends it out into the
system during the winter. The facility has a storage capacity of 1 billion
cubic feet and a send out capacity of 187 million cubic feet per day. If BG&E
had to operate the plant for a sustained period, it would run out. Once this
plant goes dry, it is out of business. It is generally not possible to liquify
in the winter and BG&E must, therefore, wait for the summer. Pressure drops on.
the pipeline in the winter are higher, making liquification impractical. To
liquify, BG&E has to remove certain contaminants such a carbon dioxide and
heavy hydrocarbons such as propane and butane. The gas is then refrigerated at
263* F at which point it turns liquid. It is then stored in insulated tanks
and withdrawn during the winter and vaporized as needed. The processing plant
has three storage tanks and four pressure tanks.

Spring Gardens is located on the middle branch and used to get its oil by
barge but barge access is not possible now. There is a rail siding at Spring
Gardens but it is rarely used. It was refurbished when the plant was built.
Spring Gardens used to be a coal- and oil-fired plant, During the la3t 20
years it has not been used as such. Highway access to the site is more depend-
able and is considered good, although the condition of the roads is another
matter. Nothing that is needed at Spring Gardens requires it to be near the
water. Nevertheless, BG&E prefers this present location at the heart of the
distribution system.

This site was once the location for the oldest gas company in the world.
A few years ago the oldest and largest gas manufacturing facility was located
here. Bethlehem used to sell BG&E coke gas which was used here until 1950
before the advent of natural gas. As a result of these factors, all the older
gas distribution lines center on Spring Gardens. Land for expansion at Spring
Gardens is minimal but non-processing types of operation may increase at this
location. LNG is the least expensive and most flexible of the gases. Atmos-
phere for LNG, however, is not very good now. Zoning hearings would Present
problems for any expansion.

Spring Gardens is also the location where steam is produced for the cen-
tral business district. The other BG&E terminal plant at Camden Station also
produces steam and is closer to the central business district. A 24-inch
diameter pi,peline branches from these plants into town in a couple of loops.
Oil- or gas-fired burners produce steam that is distributed by underground
pipes. When gas is available as fuel, BG&E uses gas because it is cheaper.
Customers are billed so much for each hundred pounds of steam. The operation
has been economically marginal. It is a question of efficiency of large
boilers versus many small boilers. Deliverability is a factor in the system's
favor because it avoids the congestion and inefficiencies of feeding each

IV-5

building by truck. No consi deration has b een given for expansion and there is
a moratorium on steam sales. If BG&E took on any more load, it would have to
invest significant capital and it will not do so until the market changes.

b. Notch Cliff--Propane-Air Plant

ProPane-air is a process that vaporizes propane and blends it
with air for proper heating value. Propane is again blended with natural gas
to give it a burning character, The send-out facility is located at Notch
Cliff in Baltimore County. The daily capacity of the plant is 90 million cubic
feet per day. There is on-site storage for about 12 million gallons of propane
which converts to one billion cubic feet of gas. It can be kept running as
long as the supply is available.

Propane is transported to the site by truck or rail and is supplied by a
vendor in New Jersey named Gettes Oil. It is a hydrocarbon allocated by the
Department of Energy and the supplier and is assigned to BG&E based on a
1974-1974 base year volume.

When Gettes was out of propane, BG&E had to get it from Canada. It came
by rail in 30,000-gallon rail cars. This is the only occasion that BG&E used
rail. It took three to four weeks to get to Notch Cliff by rail. BG&E had to
pay demurrage and rental fees for delivery and the return trip. If there were
300 rail cars, BG&E could have made the delivery in one trip, but not that many
cars were available. It is more advantageous to use trucks on a short haul.
The turnaround times are not too high on a short haul. One trailer can accom-
modate 20,000 gallons of propane. A 10,000-gallon trailer loads to 8,000 gal-
lons because of weight reduction. Trucks normally make two-and-a-half trips
per day.

All send-out mixing is done at Notch Cliff. The site has six million
gallons of storage in an underground cavern. It sends its mixture by pipeline
to another site eleven miles away on the middle branch in Baltimore where an
above ground,refrigeration facility exists for storage of six million gallons.

Propane is allocated and its price is going up, but not as fast as gas
If a shift from oil to gas should occur, it might eventually favor expansion
of this type of gas. Since Notch Cliff is located in a good residential area,
there may be limits to expansion that can occur at the site.

C. Soller's Point--SNG

The SNG process involves a catalytic reforming of naphtha which
is a liquid-like gasoline. Naphtha is blended with steam and hydrogen at 901F
at.900 pounds pressure and run across a catalyst bed to convert it to methane,
carbon dioxide, and water. The plant has a capacity of 60 million cubic feet
per day. It has on-site storage for 24 million gallons of naphtha. Naphtha is
provided by Aremada Hess from its terminal location in Curtis Bay where it has
been brought in from Hess' refinery to its Curtis Bay Pier. It is then barged
across the harbor to the SNG plant in Soller's Point near Dundalk, where it is
pumped into storage. The Hessrefinery is located in the Virgin Islands and
the naphtha is transported by ship to the Hess terminal tanks in Curtis Bay.

IV-6

There is not enough depth of water at Soller's Point to accommodate a
ship even though it is next to Dundalk. The plant does not have channels of
significant depth. Soller's Pbint has a dock and a water depth of 12 feet cap-
able of accommodating 2 of the 8 barges provided by BG&E. It can accommodate
one naphtha barge and one coal barge at a time. In 1977 a total of about
90,608.3 barrels of naphtha were imported, 97.4 percent of which was shipped up
the coast, mainly from the Virgin Islands. Nevertheless, only about .2 percent
was transferred internally within the harbor. Soller's Point is next to BG&E's
Riverside plant whose dock is now used for fuel oil, although it used to be
used for coal. There is railroad access but it is not active. The rail line
was refurbished when the plant was constructed. The Riverside-Soller plant
complex needs its present water frontage. Production of 60 million cubic feet
per day means 12,000 barrels or 500,000 gallons per day. This would be very
hard to truck in, considering the neighborhood and traffic on Dundalk Avenue.

There is no reason for increasing capacity at Riverside. If an increase
would occur, it would occur at another site. Since naphtha is a petroleum
product, any increase would be expensive.

C. FUTURE DEMAND

The future of expansion of gas facilities is very uncertain. A moratorium
on gas use was instituted in 1973-1974. BG&E's supplier, Columbia, could not
provide full winter volume. Between Columbia and the Federal Power Commission,
a schedule of priorities was determined for BG&E's various customers* Low pri-
ority customers were curtailed in their use of gas. These were large industri-
al users who had other fuel alternatives. All residential customers received
a very high priority. Commercial activity with no alternatives was second in
priority. The moratorium continued to April of 1980 when DOE and Columbia went
to a zero curtailment policy, which is not quite abandonment of the moratorium.
BG&E still has priorities but buys all it can use.

A great deal of attrition in gas use occurred from 1974 to 1979. During
this period, the central business district was torn up and many businesses
went out of business* BG&E feels that the annual gas requirement was reduced
because of this attrition. Demand is not turning around due to increased
availability and skyrocketing costs of oil. BG&E will have to get back to
1973-1974 levels before it will expand. BG&E estimates that would occur 10
years from now unless major changes in federal policy occur. Although distri-
bution facilities could be expanded, no new peak shaving facilities are
anticipated.

There will be only a gradual increase in demand. The only negative factor
is the possibility of a two to three year gas bubble with great quantities of
gas available. A new level of supply might be reached only to be limited
again. The average daily consumption will increase only if people and industry
increase. At the time of the oil embargo, industries were the first to get off
the bandwagon and buy gas. Next were commercial firms driven by costs and pol-
lution problems. There have not been a great many new buildings built. Demand
is intermediate between no sales and wide open sales. It is BG&E's policy to
sell if a potential customer is next to an existing line or will pay for a new

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line. This eliminates small customers. The nature of the growth will shift
and industry investing in new development will generally be able to satisfy
their demands for gas.

D. IMPACP

This section considers the impact of trends in future demand, the use of
land, port activity, and the environment.

1. Use of Land

The use of land for further expansion at existing peak shaving plants
is limited by safety and environmental considerations and by low demand for
gas. Facilities at Cove Point and Spring Gardens are unlikely to be moved or
duplicated elsewhere because of the large capital investment involved.

Spring Gardens does not propose to expand any of its processes but nonpro-
cess activities such as storage could expand. The site is quite limited, how-
ever, and is located in a built-up, crowded residential section of south Balti-
more. If a land storage tank for some reason should fail, it could endanger
the lives of a large number of people. Even if there is not an immediate emis-
sion of an LNG, a vapor cloud may form. It could travel considerable distances
before it becomes nonflammable. The same safety concerns exist for Cove Point,
located in a more sparsely populated area. There is an additional concern for
collision and spills in the heavily traveled Chesapeake Bay corridor and its
location near BG&E's nuclear facility.

Soller's Point needs its present location on the water, but economics (see
previous discussion) make expansion unlikely. It is presently located in a.
heavy industrialized area near a neighborhood that is sensitive to its environ-
ment. Concerns have been expressed at hearings on the initiation of operations
,at Sollers Point about air and noise pollution.

Notch Cliff may experience problems.in expansion because of the suburban
quality of the neighborhood in which it is located.

2. Port Activity

No major impact on the port is expected from the Spring Gardens
facility because its water access is not active. It is not likely to use
water because of the plant's central accessibility to the pipeline system.
Notch Cliff is located inland and does not directly impact the port. It ships
by pipeline to a facility on the Middle River.

Naphtha is likely to continue to be imported by Hess at its terminal in
Curtis Bay at approximately the same volumes. Soller's Point will continue to
generate local barge traffic for naphtha. The Cove Point facility will
generate liquified gas imports but not at the volumes expected.

3. Environmental Impact

The danger of water spills exists at Cove Point. LNG could
continuously spread on water until it evaporates. There is a high probability

IV-8

of immediate ignition in such case s. Air and water pollution remain a concern
at Soller's Point (see discussion above).

4. Local Policy Impact

With heavy investment in capital facilities already in place and slow
growth in demand, BG&E gas facilities are likely to remain at their present
locations. There is little likelihood of expansion in the immediate future.
The present location of some of the facilities is not optimal because of their
potential safety problems and their proximity to built-up residential areas.
Local policy may not be effective in removing these plants from their present
locations. A local policy of careful monitoring and regulation is an option
that appears feasible. Future expansions, if they should be proposed, should
be reviewed in the light of the safety and environmental problems involved.
In any event, the system of gas plants will generate very little impact on the
port, above and beyond those already enumerated.

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