The U.S. Bureau of Land Management signed off on May 30 on an application by the Ark Land unit of Arch Coal (NYSE: ACI) to do exploration drilling on parts of three federal coal leases at the Sufco longwall mine in Sevier County, Utah.
Ark Land had applied for nine exploration boreholes that are within the Spring Hollow area located adjacent to the Convulsion Canyon portal area. The proposed action is substantially the same as the actions analyzed in 2011, as well as in previous years, with the drill sites located less than a half mile from previous drill sites drilled in past years. This exploration would be done from June through November of this year, said a BLM approval document, on leases U-47080, U-63214 and SL-062583.
Last year, Arch’s Canyon Fuel Co. LLC, which operates the Sufco mine, filed a map with the Utah Division of Oil, Gas and Mining that lays out the recoverable reserves for the mine. The map noted that reserves in the Greens Hollow tract, on the northwest side of the mine in the Lower Hiawatha seam, are under lease application at the BLM and are not actually in hand yet. The current longwall location was shown as east of there, around the Pines coal tract. The map also showed reserves in the mine plan held by Utah School and Institutional Trust Lands Administration (SITLA).
Another map that Canyon Fuel submitted to DOGM in July 2011 lays out the mine plan for the 2011-2015 period. Most of the mining in the early part of that period is in the Muddy lease from SITLA, with a gradual transition to the southwest, south of the unleased Greens Hollow tract. There is a point noted where the Lower Hiawatha seam will be accessed through the Upper Hiawatha seam.
The Greens Hollow tract covers 6,175 acres containing an estimated 56.6 million tons of recoverable coal resources. Two seams of coal occur in the Greens Hollow lease area, the Upper and Lower Hiawatha. The Lower Hiawatha seam has mineable coal thickness throughout the lease, so all mining would occur in the Lower Hiawatha, said a December 2011 final environmental impact statement on this leasing.
Said Arch Coal’s Feb. 29 annual Form 10-K report: “Sufco is an underground mining complex located on approximately 25,700 acres in Sevier County, Utah. The Sufco mining complex extracts steam coal from the Upper Hiawatha seam. We control a significant portion of the coal reserves through federal and state leases. The Sufco mining complex had approximately 48.6 million tons of proven and probable reserves at December 31, 2011. The coal seam currently being mined could sustain current production levels through 2020, at which point a new coal seam will have to be accessed in order to continue mining. The Sufco complex currently consists of a longwall, three continuous miner sections and a loadout facility located approximately 80 miles from the mine. We ship all of the coal raw to our customers via the Union Pacific railroad or by highway trucks. Processing at the mine site consists of crushing and sizing. The rail loadout facility is capable of loading an 11,000-ton train in less than three hours.”
U.S. Mine Safety and Health Administration data shows that Sufco, Utah’s largest coal mine, produced 1.7 million tons in the first quarter of this year and 6.5 million tons in all of 2011. The mine is a major supplier to PacifiCorp, the operator of three coal-fired plants in Utah.