OHIO RIVER CORRIDOR
All the Makings
for A Positive Environment
for A Positive Environment
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| The first of 100 coke ovens are being installed by Sun Coke during the $140-million first phase of its new plant in Haverhill, Scioto County, Ohio. |
Walker is quick to point out the primary consideration of logistics in a decision as big as this one.
"One of the most important criteria we have for site selection is the overall logistics — the coal in and the coke back out," he says. "How much does it cost to get coal, how much to get the coke to market? We're really only using the river for a water source. All the coal comes in by rail and all the coke goes out by rail. Norfolk Southern has access into every steel mill except one in the country."
Sun's three operations will now have distinctly different annual capacities. The first phase in Haverhill is scheduled to produce 550,000 tons from its 100 ovens, but the company has been permitted to build as many as 300 more. Asked if there is an ideal capacity, Walker says it all comes from the blend of customer demand and what can be assembled, but either 1.2 million tons or 1.6 million tons is the optimum size. "If we have those kinds of choices, that's the direction we go," he says. "That size makes it a lot easier to carry those fixed costs. In Indiana, we have a 1.33-million-ton plant, and that requires some built-in, scheduled overtime for those workers."
The coke ovens' byproduct is energy from waste heat, so the availability of steam sales becomes a logistics issue all its own. Having the steam buyer within the same parent company makes discussions and integration a smooth process.
"We had a pretty good feel for what their steam demand was and the value of it," says Walker. "They were getting all that steam from gas-fired boilers. As it turns out, they've done some things to accommodate our plant, to increase their steam demand. They've had to spend some money, but it will completely take them off natural gas — with today's market, that's big savings."
Another important criterion is environmental, mainly because "being in a non-attainment area makes permitting difficult, if not impossible, even with new technology," says Walker. But that new emissions technology is indeed making a difference. Walker says it was perfected at the company's Virginia plant, and heat recovery was first implemented in Indiana. Now Haverhill will be the showpiece for both.
Labor flexibility and availability were both important factors that also received major scrutiny by Sun.
"We had a concern going into Haverhill," Walker says, "which is not real remote but not a big population center either. The project requires quite a number of people during construction. Our big numbers are in the area of masons. Then you start getting into boilermakers, and there is usually a shortage of electricians."
The local labor force also had been burned by the sudden closing of the New Boston coke plant a few years back, and that relatively dirty operation made Sun's case that much more challenging to make to the local community. But again, having a sister Sunoco company already in the neighborhood made the labor research both easy and reassuring.
"We're hoping what we've done there with the steam production might make it more feasible to expand production in the chemical plant eventually," says Walker. "There is a great work ethic in that area. They know what they want coming in. We made some deals with them to make sure they got the hours they need and so on. But you don't get any sense of 'us' vs. 'them.' "
When it comes to business strategy however, the project may give Sun's rivals no place to hide. As company documents state, "With a proven, proprietary technology, an important focus of Sun Coke is to pursue opportunities for additional coke plants in both the domestic and international markets."
"We've developed a business model here that we think works anywhere in the world, not just in the U.S.," says Walker. Haverhill's production should start up in early 2005.
"One of the most important criteria we have for site selection is the overall logistics — the coal in and the coke back out," he says. "How much does it cost to get coal, how much to get the coke to market? We're really only using the river for a water source. All the coal comes in by rail and all the coke goes out by rail. Norfolk Southern has access into every steel mill except one in the country."
Sun's three operations will now have distinctly different annual capacities. The first phase in Haverhill is scheduled to produce 550,000 tons from its 100 ovens, but the company has been permitted to build as many as 300 more. Asked if there is an ideal capacity, Walker says it all comes from the blend of customer demand and what can be assembled, but either 1.2 million tons or 1.6 million tons is the optimum size. "If we have those kinds of choices, that's the direction we go," he says. "That size makes it a lot easier to carry those fixed costs. In Indiana, we have a 1.33-million-ton plant, and that requires some built-in, scheduled overtime for those workers."
The coke ovens' byproduct is energy from waste heat, so the availability of steam sales becomes a logistics issue all its own. Having the steam buyer within the same parent company makes discussions and integration a smooth process.
"We had a pretty good feel for what their steam demand was and the value of it," says Walker. "They were getting all that steam from gas-fired boilers. As it turns out, they've done some things to accommodate our plant, to increase their steam demand. They've had to spend some money, but it will completely take them off natural gas — with today's market, that's big savings."
Another important criterion is environmental, mainly because "being in a non-attainment area makes permitting difficult, if not impossible, even with new technology," says Walker. But that new emissions technology is indeed making a difference. Walker says it was perfected at the company's Virginia plant, and heat recovery was first implemented in Indiana. Now Haverhill will be the showpiece for both.
Labor flexibility and availability were both important factors that also received major scrutiny by Sun.
"We had a concern going into Haverhill," Walker says, "which is not real remote but not a big population center either. The project requires quite a number of people during construction. Our big numbers are in the area of masons. Then you start getting into boilermakers, and there is usually a shortage of electricians."
The local labor force also had been burned by the sudden closing of the New Boston coke plant a few years back, and that relatively dirty operation made Sun's case that much more challenging to make to the local community. But again, having a sister Sunoco company already in the neighborhood made the labor research both easy and reassuring.
"We're hoping what we've done there with the steam production might make it more feasible to expand production in the chemical plant eventually," says Walker. "There is a great work ethic in that area. They know what they want coming in. We made some deals with them to make sure they got the hours they need and so on. But you don't get any sense of 'us' vs. 'them.' "
When it comes to business strategy however, the project may give Sun's rivals no place to hide. As company documents state, "With a proven, proprietary technology, an important focus of Sun Coke is to pursue opportunities for additional coke plants in both the domestic and international markets."
"We've developed a business model here that we think works anywhere in the world, not just in the U.S.," says Walker. Haverhill's production should start up in early 2005.
