The U.S. Bureau of Land Management in Colorado on April 30 released a preliminary environmental assessment (EA) and unsigned finding of no significant impact for public comment on proposed coal lease modifications at the Bowie No. 2 longwall mine located about five miles northeast of Paonia.
The EA evaluates the continuation of mining operations adjacent for Bowie Resources LLC. Bowie’s application would add a total of about 500 acres to two federal leases in order to prevent the bypassing of about 3.25 million recoverable tons of federal coal.
The Bowie No. 2 mine has been in operation since 1997. The mine owners have said that last year they completed a shift of mining into a new reserve area, bypassing seam faults that caused a sharp dip in coal production in recent years. U.S. Mine Safety and Health Administration data shows that Bowie No. 2 produced 916,609 tons in the first quarter of this year, approaching its revived production target of as much as 5 million tons per year, following production of 2.2 million tons in all of 2011 and only 1.3 million tons in all of 2010.
The Bowie EA noted that the lease modifications would provide the opportunity for a logical extension of the Bowie B coal seam workings beyond the current mine plan. Bowie Resources holds approximately 11,228 federal lease acres and approximately 1,696 acres of fee coal at this operation, the EA added.
The BLM office in Colorado also announced April 30 that it will host a competitive coal lease sale on May 15 on an application filed by Oxbow Mining LLC, for a 786-acre tract in the Elk Creek area in Gunnison County. Oxbow currently operates the Elk Creek longwall mine just north of the town of Somerset. The 786-acre federal coal lease tract contains approximately 3.8 million tons of recoverable coal that will be bypassed if not leased. The Elk Creek mine has been in operation since 2002.
MSHA data shows that Elk Creek is headed in an opposite direction than that of Bowie No. 2. The Elk Creek mine produced only 570,841 tons in the first quarter of this year, down from a pace that saw 3 million tons of production in all of 2011 and 3.8 million tons in all of 2010. Oxbow Mining is looking to explore the federal Oak Mesa coal reserve nearby as it looks at a mine to replace Elk Creek when it runs out of coal in a few years.
There are three longwall mines located along the North Fork of the Gunnison River along a common Union Pacific rail line for transporting that coal. Bowie No. 2 and Elk Creek are located near each other, while Arch Coal’s (NYSE: ACI) West Elk mine is a bit further away at the end of the rail line. Oak Mesa is also accessible via that same UP line.