Deseret seeks new reserves for captive coal mine in Colorado

The U.S. Bureau of Land Management said in a notice to be published in the April 1 Federal Register that it plans a May 29 lease auction on coal reserves that a Deseret Power Electric Cooperative affiliate needs for a captive coal mine.

The auction will cover Red Wash Tracts 1 and 2 in Moffat and Rio Blanco counties, Colo. This coal lease sale is being held in response to a lease by application (LBA) filed by Blue Mountain Energy, the Deseret affiliate that runs the Deserado longwall mine, which supplies coal via dedicated rail line to Deseret’s Bonanza power plant in Utah.

The federal coal reserves to be offered consist of all reserves recoverable by underground mining methods in a 3,154.76-acre area. The tracts contain an estimated 21.3 million tons of recoverable coal reserves. The underground minable coal is ranked as C bituminous coal. The estimated coal quality on an as-received basis for the tracts includes: 8,000-10,600 Btu/lb; volatile matter of 23.8%-35.93%; moisture of 10%-15.0%; sulfur content of 0.3%-0.95%; and ash content of 7%-20%.

This is in theory a competitive auction, but considering this mine’s distance from any other existing coal mine, a competitive bid from any outside party is very unlikely.

Blue Mountain Energy is currently the holder of seven federal coal leases, BLM said in leasing documents issued last fall. The Deserado mine was permitted in 1981 and has been producing coal since 1983. As of January 2012, the mine has shipped more than 44 million tons of clean coal to the Bonanza plant. A high-capacity longwall was installed in December 1986. The Deserado mine is considered a captive mine since all coal produced is sold and shipped to its sole customer, Bonanza. The coal is transported 37 miles from the mine to the power plant via electric train.

U.S. Mine Safety and Health Administration data shows that Deserado produced 1.7 million tons in 2012 and 2 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.