Wyoming Gov. Mark Gordon contacted the Mexican government about the possibility of using the country’s ports to export the state’s coal to markets overseas, an official with the Mexican consulate’s office in Denver said Tuesday.
At a forum hosted by the Wyoming Business Alliance in Casper, Consul General Berenice Rendón-Talavera told the audience that the governor had briefly spoken to her office about the potential for striking a deal between Mexico and the Equality State – an accord similar to a deal hammered out between the states of Utah and Baja California in August 2018.
That deal would have allowed Utah coal and natural gas producers to transport extracted materials by rail over the U.S.-Mexican border to the port of Ensenada – a well-connected, international port located 65 miles south of San Diego.
In a Tuesday email to the Star-Tribune, a spokesman for the governor confirmed discussions had taken place, though he emphasized that any talks have so far been preliminary and lacking in significant detail.
“The governor has explored the option and had very preliminary conversations about moving natural resources, specifically coal, through Mexico,” the spokesman, Michael Pearlman, said in a statement. “There remain many logistical factors, and the cost-benefit analysis of the private sector will be the ultimate driver of exports through Mexico or another port.”
The revelation comes several months after Gordon told reporters his office was seeking a legal strategy to sue the state of Washington for restricting coal exports from its ports – a key terminal for Wyoming coal to be competitive in Asian markets.
Though it is currently possible for Wyoming coal producers to export coal through ports in British Columbia further up the coast, a 2016 study by the Sightline Institute in Seattle showed that Wyoming’s mines – producing coal with lower heat contents and further distances to travel – were at an economic disadvantage to coal produced in states like Montana, and unable to remain competitive: a factor that helped contribute to the bankruptcy of Cloud Peak energy earlier this year.
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“Coal from the Powder River Basin is much harder to export than coal from the northern mines, for economic reasons,” said Clark Williams-Derry, director of energy finance for the Sightline Institute. “Coal companies that have been exporting from the Powder River Basin successfully have been from the northern region.”
Williams-Derry said similar issues could present themselves for exports to the south, though it hasn’t been studied. While Wyoming does have rail access to the western coast of Mexico via the Union Pacific Railroad’s crossings at Calexico, Nogales, Laredo and Brownsville, according to company maps, it is unclear whether such a long journey would be economically feasible for Wyoming exports.
What helped make Utah’s agreement with Mexico work, Williams-Derry said, came down to coal quality – with Utah’s mines producing coal with BTU contents in the 1100s – and a shorter transit distance. That rare set of circumstances allowed Utah’s mines to remain competitive in those Asian markets.
Unless global coal prices were to spike — a highly unlikely prospect given current numbers — Williams-Derry said it would make little economic sense for Wyoming’s mines to try and export coal through Mexico.
“Logistically, it’s possible,” he said. “It’s the economics that are difficult.”