Xinergy unit pursues permits for West Virginia coal operation

The West Virginia Department of Environmental Protection said in an April 12 public notice that it has gotten an application from the South Fork Coal Co. LLC unit of Xinergy Ltd. for a permit on the No. 2 coal haulroad, which will be part of a new metallurgical coal mining complex in Greenbrier County.

The public notice marks the fact that this application, filed in December 2011, has been deemed as administratively complete, which is a fairly early permitting step. South Fork Coal had two other applications pending at the DEP’s mining division as of April 12. One was filed in June 2011 for the Clearco Loadout to be located near Duo in Greenbrier County. And the other was filed in February 2011 for the 852-acre Blue Knob No. 1 surface job, which would work splits of the Sewell coal seam at a site near Richwood in Greenbrier County.

The permit for the Blue Knob No. 1 job is still several steps short of final approval. Said an April 12 notation on the DEP website about a latest permitting step for this mine: “Bond calculated by John Scott as $2560 per acre x 852.06 acres, for a total bond amount of $2,183,680.00. This application proposes to incrementally bond and Increment #1 is 285.67 acres, therefore, the bond amount for Increment #1 is $732,160.00.” Bonds like this, which are a form of insurance, ensure reclamation of a property in the rare case that the permit holder defaults on its post-mining reclamation obligations.

Said a March 8 financial report by Xinergy about this project: “In January 2011, we acquired 14,000 acres of coal mineral leases in Greenbrier County, West Virginia through our wholly owned subsidiary, South Fork Coal Company LLC (‘South Fork’). The acquisition included permits that were recently transferred to the company by the West Virginia Department of Environmental Protection on the area known as Lost Flats. We received all necessary final approvals and permits in the fourth quarter of 2011 and began development work on this surface mine in December 2011. The Lost Flats mine is a high quality, mid-volatility metallurgical surface mine in the Sewell coal seams that began production in February 2012. The company also leased approximately 25,000 additional acres adjacent to this property in January 2012 that is expected to substantially increase our reserves.”

The financial report said that Xinergy intends to initially produce 10,000 to 20,000 tons per month at South Fork with shipments expected to begin in late March. Production is expected to increase to 50,000-60,000 tons per month in the third quarter of 2012, the company added. At South Fork, Xinergy expects cash mining costs to be between $95 and $100 per ton on the surface operations.

Lost Flats has been listed with the U.S. Mine Safety and Health Administration under various operators since 1987, with its last production prior to this restart coming in 1995. Blue Knob No. 1 was registered with MSHA on March 2.

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.