Washington (Platts)--17Feb2011/622 am EST/1122 GMT

The developer of a coal export terminal in southwest Washington denied reports this week that the company sought to deceive government officials about the size of its project, pledging to continue seeking a permit for the 5 million st facility it originally proposed.

No matter the size of the current plans, Millennium Bulk Terminal CEO Joe Cannon said the project he has previously described as a "test case" for the coal industry could suffer from the disclosure of internal documents detailing discussions for a facility that could handle 60 million st annually.

Officials in Cowlitz County were caught off-guard by the plans revealed in court documents last week.

Environmental groups on Tuesday asked the county to rescind a shoreline development permit for the terminal on the Columbia River in Longview, while a state board considering an appeal of the permit decided to allow the plans for a larger terminal to be admitted as evidence. The county is weighing its options.

"I don't want to be quoted as saying that we don't think more coal could go through there, we do. ... [But] there is no [additional] permit waiting or being developed right now," Cannon said in an interview. "It clearly could be a setback for the project ... there's no question there was thought and effort."

Soon after taking over the company in mid-October, Cannon said he instructed colleagues to stop engineering work and other planning for a larger facility. But documents show that as late as October 28, executives at the company, then a subsidiary of Australian-based Ambre Energy, were discussing by email the politics and logistics of going forward with a second project phase that would expand the facility to 20 million st a year.

"What we concluded internally is we're not going to go forward with another permit application right now," Cannon said. "We don't have the time, energy or capacity to be dealing with two permits."

Part of the decision came about in the lead-up to a change in ownership. Millennium is now a joint partnership between Ambre and Arch Coal, which share seats on a five-member board of directors. Arch has agreements to ship up to 2 million st of coal through the Millennium terminal.

The Millennium project is being driven by strong Asian demand for thermal coal from the Powder River Basin and, to a lesser extent, other western US mining basins.

While demand for coal may be hot, infrastructure in the region is lacking, a point Cannon said would prevent any of the types of ramp-ups contemplated in the company's documents.

"We would be looking at expansion, but there are a very large number of considerations," he said. "There's the market; there's the financing; you've got transit -- the whole rail issue, not just on the site but in the city; and you've got all the environmental considerations."

--Peter Gartrell, peter_gartrell@platts.com

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