BLM works on coal lease sale for Peabody’s El Segundo mine

The U.S. Bureau of Land Management said in a Jan. 9 Federal Register notice that it is making available for public comment an environmental assessment on an application by Peabody Natural Resources to lease 640 acres of new coal for the El Segundo strip mine in New Mexico.

BLM’s New Mexico State Office will hold a Feb. 8 public hearing to receive comments on the EA, Fair Market Value (FMV) and Maximum Economic Recovery (MER) documents covering the coal resources. Written comments should be received no later than March 11.

The coal resource to be offered for leasing is limited to coal recoverable by surface mining methods. The federal coal is located in lands outside established coal production regions, may supplement the reserves at the El Segundo mine and are located in McKinley County.

El Segundo is a fairly new mine (production start in 2008) of Peabody Energy (NYSE: BTU) that, according to U.S. Mine Safety and Health Administration data, produced 6.3 million tons in the first three quarters of 2012 (fourth quarter data isn’t in yet) and 8 million tons in all of 2011. It is located near and on the same rail spur as Peabody’s older Lee Ranch strip mine, which is on a descending production path. MSHA data shows Lee Ranch produced only 1.1 million tons in the first three quarters of 2012, 2 million tons in all of 2011, and had a 2000-2011 production peak of 6.9 million tons in 2003.

This lease would involve rare mining of non-private coal

El Segundo is a multiple seam surface coal mine, located about 35 miles north of Milan in McKinley County. The mine permit boundary encompasses approximately 15,000 acres in state and private surface ownership. Currently, the coal mined at El Segundo is privately owned. The blocks of federal coal that occur within the permit boundary are not currently mined, the EA noted. Leasing the “Project Area” covered by this application would add one section (640 acres) of private surface, where the mineral estate is federally owned, to existing mine operations.

Mining at El Segundo occurs in multiple pits with mine rates and sequencing determined primarily by coal quality and customer demand. Currently, active mining is occurring in six mining areas that are accessed by a network of haul roads, the EA noted. The mine supplies coal to multiple customers under long- and short-term coal contracts. Coal is mined using a dragline, dozers, shovels, and trucks, and is transported to customers via the BNSF Railway. Peak annual production is expected to be about 8.12 million tons. Total coal production for the 30-year life of the mine is estimated to be 135.98 million tons.

In the Project Area, coal would be recovered from up to nine seams, which range in thickness from 1 to 17 feet. Coal quality varies, requiring that coal be blended to produce a shippable product. The proposed activities in the Project Area are anticipated to begin in 2013. Coal removal would begin in 2014 and continue through 2023. Total surface disturbance associated with mining in the El Segundo lease area is anticipated to be 448 acres.

Mining would employ a dragline that would make east-west cuts across the Project Area, advancing to the north. Each cut would be 140 feet wide. To ensure miner’s safety, highwalls on the advancing face (north face) are typically designed to stand at a 65-degree angle when cut depths are less than 200 feet. When highwalls on the advancing face are over 200 feet, pre-benches (or safety benches) are used to accommodate equipment. These benches are typically 200 feet wide and 65 feet high. Electric front shovels and haul trucks would be used to create safety benches. Endwall (highwalls lateral to the pit advance) would also stand at 65 degrees at cut depths less than 200 feet. Endwalls higher than 200 feet would be benched with safety catch ledges about 25 feet wide, the EA added.

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.