Black Butte Coal looking to explore 38,738 acres of coal

Black Butte Coal, which was in part bought in 2011 by Australia’s Ambre Energy, has plans for a massive coal exploration program that comes to 38,738 acres around its operations in Sweetwater County, Wyo.

The U.S. Bureau of Land Management plans to publish in the March 4 Federal Register three separate notices that Black Butte Coal has applied for exploration licenses, and inviting any parties interested in sharing exploration expenses and results to contact BLM and the company. Such notices are required for exploration licenses. The invitation seems unlikely to be taken up by any other party due to the isolation of these reserves from other operations. Black Butte operates in an area of southwest Wyoming, outside of the Powder River Basin, that has only a handful of coal mining operations.

The three notices cover:

  • A total of 18,999 acres in Sweetwater County, near Salt Wells and Black Butte Coal’s Black Butte mine;
  • A total of 8,270 acres in Sweetwater County, near Point of Rocks and Black Butte Coal’s shut Leucite Hills mine; and
  • A total of 11,469 acres in Sweetwater County, near the Black Butte mine.

Ambre in November 2011 acquired 50% interests in the Decker mine in Montana and the Black Butte Coal operation in Wyoming, plus a 100% interest in the remaining reserves of the Big Horn Coal Co. and the Rosebud Coal Sales Co. It is now acquiring from Cloud Peak Energy (NYSE: CLD) the other 50% of Decker. The partner at Black Butte is Anadarko Petroleum (NYSE: APC). Ambre has aggressive plans to expand U.S. coal mining operations in large part to meet Pacific Rim export demand, and is also developing West Coast terminal facilities to get coal onto ships.

Black Butte Coal currently serves limited market

BLM’s office in Rock Springs, Wyo., on Feb 13 released a detailed look at the solid minerals reserves, including coal, in southwest Wyoming. Coal production in this area, including by Black Butte Coal, in support of the nearby Jim Bridger power plant of PacifiCorp and Idaho Power is expected to continue at current levels of about 9 million tons per year from both federal and private lands for the planning period, BLM noted.

“However, if new access to Asian export markets opens up at facilities currently under development in the Northwest by one of the owners of the Black Butte mine, both production and leasing could increase,” said the report, referring to Ambre Energy.

Coal is presently being mined in the Jim Bridger area by Bridger Coal Co. (BCC) which is owned by Pacific Minerals, a subsidiary of PacifiCorp (two thirds ownership) and Idaho Energy Resources, a subsidiary of Idaho Power (one third). The Bridger Mine was the first mine to open in the Point of Rocks-Black Butte coalfield. This mine opened in 1974 as a surface mine operation that fed the Jim Bridger plant, located adjacent to the mine. The mine now has both surface and underground operations, and, since 2002, Bridger Coal has produced an average of 5.6 million tons per year.

Black Butte Coal operates the Black Butte mine, which started producing coal in 1979, and the Leucite Hills mine, which is now being reclaimed. The Black Butte mine, located south of I-80 at Point of Rocks, recovers coal from the Almond, Lance, and Fort Union Formations. The operation consists of multiple pits. Since 2002, the Black Butte mine has produced an average of 3.4 million tons per year, the BLM report said. The Leucite Hills mine, located between the Black Butte mine and Bridger Coal operations on the north side of I-80, recovered coal from the Almond Formation.

Black Butte Coal opened a new pit (Pit 14) on the south end of its property in 2009 and is currently in the process of assessing the feasibility of opening another pit (Pit 15) on the north end of the property, the BLM report said. These additions will be necessary in order to maintain the current overall production levels from the mine since coal recovery operations were ceased at Leucite Hills in late 2009. Most of Black Butte’s production goes to the Jim Bridger plant with a small amount going to other customers.

The U.S. Mine Safety and Health Administration counts the Black Hills mine and the Leucite Hills mine as one combined operation in its database, with that data showing production of 2.9 million tons in 2012, down from 3.3 million tons in 2011.

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.