BLM sets June 28 auction for second North Antelope Rochelle reserve

The latest in a series of U.S. Bureau of Land Management coal reserve auctions in the Wyoming Powder River Basin is set for June 28, for the North Porcupine tract that Peabody Energy (NYSE: BTU) wants to lease for its North Antelope Rochelle mine.

Peabody Energy on May 17 leased from BLM 402 million tons of ultra-low-sulfur coal reserves adjacent to North Antelope Rochelle in the South Porcupine tract. The company submitted the successful, lone bid of $1.11 per mineable ton. It had applied for North Porcupine and South Porcupine under one lease application, but BLM decided to split them up and hold two auctions in case an outside bidder was interested in one of the tracts but not both. Peabody failed to meet BLM’s secret estimate of fair market value for the South Porcupine reserve at a Feb. 29 auction, which triggered the need for a second auction on May 17.

The North Porcupine lease is being pursued by Peabody’s BTU Western Resources unit. The coal resource to be offered consists of all reserves recoverable by surface mining methods in lands located about 5 to 7 miles north of the Campbell/Converse county line, adjacent and up to 7 miles east of the Joint Line railroad, and adjacent to the western and northern lease boundary of the North Antelope Rochelle mine, said BLM in a May 25 Federal Register notice.

Arch Coal (NYSE: ACI), which owns the Black Thunder mine to the north, seems unlikely to be a competitive bidder for North Porcupine, since Peabody’s undeveloped School Creek mine is basically between North Antelope Rochelle and Black Thunder.

North Porcupine contains 6,364 acres, more or less, in Campbell County. This tract is adjacent to federal leases to the east and south as well as a state of Wyoming lease to the north, all controlled by Peabody. It is also adjacent to a federal lease to the east which is part of School Creek. It is adjacent to additional unleased federal coal to the west and north.

The tract contains surface mineable coal reserves in the Wyodak-Anderson coal zone currently being recovered in the adjacent, existing mine. The Wyodak-Anderson is the only mineable seam on the tract. The thickness ranges from about 69 feet in the east to about 96 feet in the west. Overburden depths range from about 196 to 430 feet thick. The tract contains an estimated 721,154,828 tons of mineable coal. The total mineable stripping ratio of the coal in bank cubic yards per ton is about 4:1. The North Porcupine coal is ranked as sub-bituminous C. The overall average quality on an as-received basis is 8,892 Btu/lb and 0.2% sulfur.

North Antelope Rochelle is the largest and most productive coal mine in the world, shipping 109 million tons of coal in 2011.

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.