BLM sets May 15 lease auction for new Elk Creek coal reserve

The U.S. Bureau of Land Management office in Colorado plans a May 15 lease auction on the Elk Creek East coal tract that Oxbow Mining LLC needs as additional reserves for its Elk Creek longwall mine in Gunnison County.

The tract covers 725.9 acres, more or less, said a BLM auction notice in the April 11 Federal Register. It contains an estimated 3.96 million tons of recoverable coal. The underground minable coal is ranked as bituminous B. The estimated coal quality in the D seam on an as-received basis for the seam is: 12,005 Btu/lb; 34.72% volatile matter; 7.47% moisture; 0.67% sulfur; and 11.27% ash.

Oxbow Mining is a unit of Florida-based Oxbow Corp., run by prominent businessman and former America’s Cup sailor Bill Koch. The Elk Creek mine produced 3 million tons in 2011, 3.8 million tons in 2010 and 5.7 million tons in 2009, according to U.S. Mine Safety and Health Administration data.

In March, BLM approved a 159-acre addition to an existing federal lease at the Elk Creek mine that added 35,000 tons of recoverable coal. The small size of that addition allowed BLM to approve it without holding a lease auction.

Incidentally, Oxbow Mining last year was seeking an exploration license from BLM for a new coal reserve area called Oak Mesa that is fairly near but not contiguous with the existing Elk Creek mine. The Oak Mesa reserves can be accessed via the same Union Pacific rail line that serves Elk Creek. Oxbow Mining is looking at Oak Mesa as a replacement mine when Elk Creek runs out of coal.

“Coal exploration drilling is needed to determine seam reserve availability for possible development of a new underground coal mine within Delta County, by Oxbow Mining LLC,” said a BLM exploration report. “The proposed Oak Mesa exploration area is located in Delta County to the west of the Orchard Valley Mine. The exploration drilling will be used to confirm the quality and quantity of the coal within this area. … This area contains approximately 13,873 acres more or less.”

Oxbow Corp. noted in a brief May 2011 statement that Oak Mesa, north of the town of Hotchkiss, is a historical mining area with a rich legacy of coal mining. A 2000 U.S. Geological Survey report has shown there is more than 744 million recoverable tons of coal in the North Fork Valley. “This step in exploration is an opportunity for Oxbow to continue producing clean, low-sulfur, super-compliant Colorado coal,” said Randy Litwiller, Vice President of Oxbow Mining. “And allow us to provide a stable future for our 360 [Elk Creek] employees and their families.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.