In what may not be world record time, but close to it, an April 27, 2012, application at the West Virginia Department of Environmental from a unit of Arch Coal (NYSE: ACI) for a permit on a big new deep mine in Taylor County on Jan. 24 cleared a review in a DEP regional office.
The pending application was transferred on Jan. 24 to the agency main office for final approval. It isn’t clear at this point if it could get hung up there due to any citizen protest. A permitting narrative on the DEP website shows no entry for a citizen protest during the course of the early permitting work. Without a protest, this permit could get a final approval in the next few weeks.
Usually, the DEP review for a major deep mine application takes at least a year, and often more than two years, from start to finish. In one fairly extreme example, CONSOL Energy (NYSE: CNX) has been permitting the Mason Dixon longwall mine, to work the Pittsburgh seam in Monongalia County, since July 2008, and the permit is still not out. The last permit milestone for Mason Dixon posted to the DEP website came in June 2012, so this permit doesn’t appear to be moving very fast. Long permit times can be a combination of factors like a company not wanting a permit too quickly as it waits for markets to develop for that coal, permitting technical complications and citizen protests.
The application that moved on Jan. 24 to the agency main office, from Arch Coal’s Shelby Run Mining Co. LLC unit, is for the Shelby Run room-and-pillar job, to work the Lower Kittanning coal seam at a site near Wendel in Taylor County. Arch Coal got this property in a June 2011 buy of International Coal Group. Notable is that ICG ran into trouble permitting the nearby Tygart Valley No. 1 deep mine, which is now known as the Leer mine and is in production.
Shelby Run Mining also applied Aug. 31, 2012, at the DEP for a permit on the new Tucker Run room-and-pillar mine, the latest piece of a planned new metallurgical coal mine complex in Taylor County. The application for Tucker Run covers a room-and-pillar job in the Lower Kittanning seam, located near Grafton. The application also covers a loading facility and 33 surface acres for support facilities for the deep mine. This followed the April 27 application from Shelby Run Mining for the Shelby Run mine.
The reserve area for these operations currently consists of the Tygart Valley No. 1 deep mine (recently renamed the Leer mine) that is in pre-longwall development production, with the longwall due in operation in 2013. U.S. Mine Safety and Health Administration data shows that this first mine, currently listed under ACI Tygart Valley (formerly ICG Tygart Valley LLC), produced 55,526 tons in 2012 and 9,761 tons in the fourth quarter of 2011, its first quarter of production. Notable is that MSHA data shows no Leer production at all in the second and third quarters of 2012, with almost all of last year’s output coming in the fourth quarter alone.
At least three mines planned in big Lower Kittanning seam reserve
Arch said in its February 2012 Form 10-K annual report that this Taylor County property includes about 165.9 million tons of deep coal reserves as of Dec. 31, 2011, of both steam and metallurgical quality coal in the Lower Kittanning seam, covering approximately 68,300 acres. Construction of the Leer mining complex began in June 2010 and initial coal production commenced in November 2011. At full output, Leer is designed to have 3.5 million tons of capacity per year of high quality coal that is suited to both the utility market and the high volatile metallurgical market.
Arch Coal has said it eventually plans to develop a multiple-mine complex producing high-vol A met coal at this site. A map the company has used shows Tygart Valley/Leer, with the Shelby Run reserve area just to the west of it. To the northwest of Tygart Valley/Leer, and to the north of Shelby Run, is the Tucker Run reserve area. To the northwest of Tucker Run is the Tygart No. 3 reserve. To the southwest of Shelby Run is the Rosemont reserve, which is also in Arch’s future development plans. Rosemont merges into the existing Sentinel complex of Arch. Sentinel is an operation also acquired in the ICG deal.
Arch has said the initial mining plan for the Shelby Run mine utilizes continuous miners with a run rate of about 1 million tons per year starting in 2015. Shelby Run would produce a high-vol A coal, like Leer, and also like Leer, could produce up to 3.5 million tons per year if it eventually becomes a longwall operation.
The Tucker Run mine, by the way, is still in permitting and is several steps short of a move to the main agency office. The DEP database shows two permitting milestones for Tucker Run on Jan. 25:
- The company mailed in Reclamation Surety Bond #09110216, from Fidelity and Deposit Co. of Maryland in the amount of $85,800.
- The company mailed in updated signature pages and two copies of the updated project maps.