Texas Gas, Peabody work out deal to clear way for Bear Run mining

Texas Gas Transmission LLC gave notice on July 2 to the Federal Energy Regulatory Commission that it intends to replace approximately 9.3 miles of pipeline with about 11.9 miles of pipeline in order to get out of the way of surface mining at Peabody Energy’s (NYSE: BTU) Bear Run coal mine in Sullivan County, Ind.

Texas Gas proposes to abandon in place about 9.3 miles of its 12-inch diameter pipeline on the Slaughters-Montezuma system located in Sullivan County between Milepost 104.04 and Milepost 113.33, and replace and relocate that section of pipeline with 11.9 miles of 12-inch diameter pipeline from Milepost 104.04 to Milepost 115.92 (intersecting with old Milepost 113.33), to allow Peabody Bear Run Mining LLC to surface mine the area where the existing pipeline is located.

Approximately 9.3 miles of Texas Gas’ Slaughters-Montezuma pipeline traverses property owned by Bear Run, property that Bear Run intends to purchase, or property on which Bear Run intends to purchase the surface rights necessary to surface mine. Bear Run has informed Texas Gas that it will begin coal mining operations along the affected pipeline segment beginning in January 2013.

“Although the Bear Run mining project is large, by relocating the entire 9.3-mile segment at this time, Texas Gas will minimize costs and lessen environmental and landowner impacts that would otherwise result by sequentially relocating smaller segments of the line as mining proceeds,” the notice said. “Bear Run has agreed to fully reimburse Texas Gas for the project. Texas Gas proposes to abandon the approximately 9.3 miles of pipeline in place. Bear Run will remove the pipeline, in segments, in the course of its mining operation.”

Construction on the relocation project is scheduled to commence in early October 2012. Texas Gas will seek to commence operations of the proposed facilities by mid-December 2012, although certain cleanup activities are anticipated to continue into February 2013. The relocation has a total project cost estimated at $16,215,000.

Bear Run is expected to ship 8 million tons this year, its first-stage targeted maximum production rate, with the possibility of further expansion to 12 million tons per year by 2016. At the current production rate, Bear Run is the largest coal strip mine in the eastern U.S. After a production start in 2010, Bear Run turned out 6.6 million tons in all of 2011 and 1.8 million tons in the first quarter of this year, according to U.S. Mine Safety and Health Administration data. Among the mine’s customers is the new Edwardsport IGCC power plant of Duke Energy Indiana.

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.