Arch Coal looks at reserves that would totally re-work Skyline mine

The U.S. Bureau of Land Management said in a May 1 Federal Register notice that it is looking for parties that would want to share an exploration program with Arch Coal’s (NYSE: ACI) Ark Land unit on a 595-acre coal reserve in Sanpete County, Utah, that might be the new future of the Skyline mine.

A BLM official told GenerationHub this exploration is on the west side of Electric Lake, which is a body of water that PacifiCorp uses for power plant purposes. Arch Coal had a dispute years ago with PacifiCorp about whether mining at Skyline on the east side of the lake was draining water out of the lake, through mine faults, into the mine works. That problem, plus geology issues in that area in the southwest part of the mine reserves pushed Arch a few years ago to shift mining into the north area, in and just south of the heavily-faulted Winter Quarters coal tract.

The BLM official noted that Arch has had a lease application pending for years that it hasn’t been pushing for on the Flat Canyon coal reserve on the west side of the lake. This new exploration is apparently an effort by Arch to re-look at prospects for mining again around Electric Lake once the Winter Quarters coal runs out.

Said Arch Coal’s Feb. 29 annual Form 10-K report about this operation: “Skyline is an underground mining complex located on approximately 13,200 acres in Carbon and Emery Counties, Utah. The Skyline mining complex extracts steam coal from the Lower O’Conner A seam. We control a significant portion of the coal reserves through federal leases and smaller portions through county and private leases. The Skyline mining complex had approximately 15.2 million tons of proven and probable reserves at December 31, 2011. The reserve area currently being mined could sustain current production levels through mid-2012, at which point we plan to transition to a new reserve area in order to continue mining. The Skyline complex currently consists of a longwall, two continuous miner section and a loadout facility. We ship most of the coal raw to our customers via the Union Pacific railroad or by highway trucks. We process a portion of the coal mined at this complex at a nearby preparation plant. The loadout facility can load a 12,000-ton train in less than four hours.”

The Skyline mine sold 2.9 million tons in each of 2011 and 2010, the Form 10-K showed.

A five-year mine plan map that Arch Coal’s Canyon Fuel Co. LLC unit submitted last year to the Utah Division of Oil, Gas and Mining shows a plan to gradually transition mining into the Winter Quarters tract on the mine’s north side, with only mining in that tract through the 2016 end of the plan period. The map shows a plan to work around a particularly faulted reserve area during this period, with a note that further exploration might show at least some of this area as minable. The sections around Electric Lake that Arch now plans to explore are some distance southwest of the existing mine works, the map shows.

Said a fact sheet about the coal-fired Huntington power plant on the PacifiCorp website: “Most water for plant operations is drawn from the Huntington River. Sufficient water for plant use is released into the Huntington River from the company-owned Electric Lake reservoir 23 miles north of the plant in Huntington Canyon.”

Said a July 2004 PacifiCorp report on its problems with water losses at that time out of Electric Lake: “It has been suggested by others that noted impacts on Electric Lake are due to the current drought, and that we should be evaluating ‘where the water is going’ rather than trying to point to the mine as the cause. A continued review of available data leads to the inescapable conclusion that the problems being noted at Electric Lake are in fact a direct result of mining activities conducted by the adjacent Canyon Fuel Skyline Mine.”

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.