The U.S. Bureau of Land Management office in Grand Junction, Colo., is seeking public comment until Nov. 9 on the preliminary environmental assessment for a federal coal lease modification for the shut McClane Canyon deep mine of Rhino Resource Partners LP (NYSE: RNO).
The mine is located on BLM land about 18 miles north of Fruita, Colo. The CAM-Colorado LLC unit of Rhino is seeking to adjust the lease boundary to provide reliable access to coal reserves within existing leases. The lease modification would prevent the possible bypass of 16.2 million tons of federal coal. The BLM has created a preliminary environmental assessment which identifies the possible positive and negative impact that this project may have on the environment.
CAM-Colorado sought a 317-acre modification to federal coal lease C-0125439 to ensure long-term access to unmined reserves located north and south of the existing mine workings. The lease modification would add reserves of 1.98 million tons of federal coal that might not be mined by any other method in the future.
Adverse geologic conditions located along the eastern boundary of coal lease C-0125439 have raised concerns about the long term access to unmined reserves located both north and south of existing mine workings within the existing leasehold, said the preliminary EA. The proposed lease modification would allow entries to be developed to the east around the existing old McClane workings and north to reserves located in lease C-0125439. It is estimated that as much as 2.18 million tons (recoverable) to the north and possibly 14 million tons (recoverable) to the south could be bypassed depending on which coal seam is mined. These estimates of primarily federal coal do not include 1.98 million tons of federal coal in the proposed lease modification.
Company needs, when the mine is restarted, to work around bad geology
The existing McClane Canyon mine workings are in the Upper Cameo Coal Bed. Adverse geological conditions encountered in the eastern extent of the mine workings have isolated access from existing workings to the reserves to the north. The coal reserves to the north occur in both the Upper and Lower Cameo Coal Beds and are isolated by faulting to the west, deep cover, and high sulfur to the east. Because of thin interburden between the Upper and Lower Cameo coal beds, accessing the reserves to the north by driving underneath the McClane Canyon workings through the Lower Cameo Seam would be very risky at best, BLM noted. A corridor around the existing mine is needed to access the reserves to the north.
Coal reserves to the south are restricted by mine workings where adverse geology was encountered. As a result, mainline access to the south is limited to a small corridor. The narrow corridor does not provide the necessary distance to accommodate an adequately sized barrier pillar and a five-entry mainline section with large pillars to protect the entries from the effects of deeper overburden and stresses. Attempting to develop the corridor for long-term access would be risky and could potentially “sterilize” reserves to the south, BLM noted.
Coal in the area of the proposed lease modification is only minable from the McClane Canyon mine, which is far away from any other existing mines in the state. A large block of high-sulfur coal and deep overburden (+1,500 ft) isolates the proposed lease modification area from developments originating from the east. Development from the east would have to mine through the high-sulfur coal or deep overburden areas to reach the lease modification area. CAM controls access to the lease modification area from the west and south. High cover would likely preclude access to the lease modification area from the north.
Rhino said in August that it has reduced staffing at McClane Canyon and has placed this operation on a “care and maintenance” schedule pending market improvement. This is a small mine that lost its captive customer with the closure around the end of 2010 of the Cameo coal-fired power plant in the region. McClane Canyon is near the Red Cliff longwall-capable coal reserve, which would support an 8-million-ton/year mine, that CAM has been trying for several years to lease from BLM.
U.S. Mine Safety and Health Administration data shows the McClane Canyon mine as “non-producing,” that its last coal production was in the fourth quarter of 2010 and that it turned out 199,650 tons in all of 2010.