The expansion at the Deepwater terminal near Houston will include Kinder’s installation of a shiploader and rail loop capable of handling three 135-car unit trains.
At its completion – slated for the second quarter of 2014 – the terminal will have an annual throughput capacity of 10 million tons.
KMP’s Deepwater and East Coast facilities offer dual rail access from Class 1 railroads and the International Marine Terminal, or IMT, provides inland waterway system barge access.
“Deepwater will be capable of handling panamax and post panamax-size vessels, while one East Coast terminal and IMT will be capable of handling cape-size vessels,” the companies said.
“These multiple transportation options will allow Arch to unlock incremental value for its domestic coal production and coal reserves over the next 10 years.”
The expanded throughput is expected to original from all of Arch’s coal producing regions, including the Powder River Basin, Appalachia and the Western Bituminous region. Eventually, that will grow to include output from the Illinois Basin.
Pending rail service agreements, Arch will ship coal at a guaranteed minimum volume through KMP’s terminals once the upgrades are completed, and the expansion will allow for port capacity to increase incrementally as Arch’s growing seaborne volumes also rise.
"The demand for export coal continues to grow and we are pleased to offer Arch and other customers options in various markets through our multi-location terminal network," Kinder Morgan Terminals president Jeff Armstrong said.
"We are also extending existing long-term coal agreements with Arch at our upriver terminals [Cora, Cahokia and Kellogg] in Illinois."
Arch president and chief operating officer John Eaves, who called the deal a “strategic partnership” for the two, said the producer could continue to significantly increase its participation in the global coal market.
"This dedicated capacity directly underpins our long-term strategy to grow Arch's coal exports fourfold in the next decade, and is consistent with our view that a global coal supply shortfall will persist over that time frame."
Securing more port capacity, Eaves said, also supported its international coal platform, especially with its growth over the past year.
"Along with the acquisition of the ICG assets, the opening of new business offices in Singapore and London, and previous equity investments in port terminals on the East Coast and West Coast, this agreement strengthens Arch's position as one of the top US suppliers in the seaborne coal trade," he said.
