PacifiCorp pursues Cottonwood coal reserve development in Utah

Under its Fossil Rock Fuels LLC unit, PacifiCorp is looking to explore the Cottonwood coal reserve, which the company has said is a key to its future coal mining operations in Utah.

PacifiCorp was helping to ensure the future of its coal-fired Hunter and Huntington power plants in Utah when it obtained the undeveloped Cottonwood coal reserve from Arch Coal (NYSE: ACI), making that deal a prudent one, said PacifiCorp fuels official Cindy Crane. Rebuttal testimony by Crane was filed May 25 at the Wyoming Public Service Commission as part of a rate case by PacifiCorp affiliate Rocky Mountain Power.

“The acquisition of these reserves was prudent and consistent with the Company’s long-term fueling strategy of supplying the Utah plants through the mining of strategic coal reserves coupled with long-term and short-term coal purchases,” Crane wrote about Cottonwood. “These reserves are central to the continued operation of the Hunter and Huntington plants.”

The Cottonwood coal reserve leases are adjacent to the company’s existing, but inactive Trail Mountain federal coal leases and to the company’s existing Deer Creek federal coal leases. Deer Creek is an active longwall mine, while Trail Mountain is a longwall operation that has been shut for years but could be revived in the future. The company is currently conducting hydrological, geological and environmental studies of the Cottonwood leases and the coal drilling and core sampling program starts in early June, Crane noted in the May 25 testimony.

In a Feb. 8 letter, the U.S. Forest Service’s Ferron/Price Ranger District invited public comment on a proposed coal exploration project. Fossil Rock Fuels sent a notice of intent to the Manti-La Sal National Forest and Utah Division of Oil, Gas, and Mining (UDOGM) to conduct coal exploration on these lands. The Manti-La Sal National Forest is considering issuing a special use permit authorizing Fossil Rock Fuel to occupy Forest Service lands for the purpose of drilling 27 coal exploration holes within a state lease for Cottonwood. The drilling would begin the summer of 2012 and continue through 2014, the notice said.

The exploration area is located approximately 10 miles northwest of Orangeville in Emery County. A map from Fossil Rock Fuels shows the Cottonwood tract as just northwest of the shut Trail Mountain mine, and west of both Deer Creek and PacifiCorp’s Huntington power plant.

Crane didn’t say in the May 25 testimony whether Cottonwood would be accessed via the Deer Creek works, revived Trail Mountain works, or new entries. PacifiCorp is maintaining the coal reserves at Trail Mountain, with the U.S. Bureau of Land Management on Jan. 30 approving a company request to pay “advance” royalties during the October 2011-September 2012 period, with the money to be paid based on imaginary production of 31,650 tons of coal. Those royalties prevent BLM from terminating three underlying, long-dormant federal coal leases that were previously lumped into one logical mining unit.

Crane, as President of Fossil Rock Fuels, wrote a July 2011 letter to the state Division of Oil, Gas and Mining informing it of the Cottonwood buy from Arch, with that letter filed by the agency under the Trail Mountain permitting program. “For your information, the referenced state coal leases were transferred and assigned from Ark Land Company to Fossil Rock Fuels, LLC,” said the Crane letter. “The assignments were approved by the Director of the Utah School and Institutional Trust Lands Administration effective June 27 2011. It is our understanding that Ark Land or another affiliate of Arch Coal was working with your agency on a coal exploration plan for these leases beginning as early as this year. With the transfer and assignment to Fossil Rock Fuels, LLC, we will be submitting our own exploration plans for your consideration and approval in the coming months. It is our intent to commence drilling next field season in 2012 and continue in years beyond. In addition, we will also submit the appropriate road use and special use permit applications to accompany our exploration plans.”

PacifiCorp said in its Feb. 27 Form 10-K annual report that it intends to mine the Cottonwood coal reserves in the future, with estimated recoverable tons within the tract put at 47 million. The Form 10-K shows Deer Creek with 27 million tons of recoverable coal left to mine as of the end of 2011, which is a figure that may move around over time as more coal reserves for the mine are assessed. The U.S. Mine Safety and Health Administration database shows Deer Creek with 792,720 tons of coal production in the first quarter of this year, coming off 3.1 million tons of output in all of 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.