The U.S. Bureau of Land Management on July 2 issued for public comment a draft environmental assessment on the Spruce Stomp coal tract, which Bowie Resources needs at new reserves for its Bowie No. 2 longwall mine in Colorado.
Bowie Resources and its principals, by the way, made a recent splash with an announced plan to buy Arch Coal’s (NYSE: ACI) three underground mines – Skyline, Dugout Canyon and SUFCO – in Utah. Bowie said at the time that most of the Bowie No. 2 reserves are dedicated to serving a contract with the Tennessee Valley Authority.
Bowie No. 2 is located about 5 miles northeast of Paonia in Delta County, Colo., along the North Fork of the Gunnison River. It is served by a Union Pacific branch rail line that also serves Oxbow Mining LLC’s Elk Creek longwall mine, and Arch Coal’s West Elk longwall mine (Arch has said it plans to keep West Elk).
The Spruce Stomp lease-by-application (LBA) area is immediately adjacent to existing federal coal leases at Bowie No. 2. The Bowie No. 2 mine, first developed by coal operator Larry Addington, has been in operation since November 1997. It is capable of producing approximately 5 million tons of coal annually, though it hasn’t worked back up to that level yet after getting out early this decade of a problem geology area that slashed production. U.S. Mine Safety and Health Administration data shows that the mine produced 937,890 tons in the first quarter of this year and 3.4 million tons in 2012.
Bowie holds approximately 11,730 federal lease acres and around 1,696 acres of fee coal. The “Proposed Action” under the draft EA is for the National Forest Service (NFS) to consent to the BLM to lease the NFS lands with conditions for use and protection of non-mineral interests. The Proposed Action is also for the BLM to issue a federal coal lease for the Spruce Stomp LBA tract (approximately 1,789 acres).
The Spruce Stomp LBA contains an estimated 8.02 million tons of federal coal reserves in the lower-B seam. While other coal is present in the LBA tract, the BLM Tract Delineation Report does not consider the other seams as economically minable given a variety of reasons. The tract is bounded on the south by currently leased federal coal and on the east by unminable (thin) coal (unleased). It is assumed that the coal would be transported to market using the existing coal handling facilities and existing spur rail line.
The government assumes that coal in the lower-B Seam would be extracted from longwall panels trending northwest-southeast. The foreseeable mine operations plan in the Spruce Stomp LBA tract is a northward expansion with new longwall panels planned from the existing lease to the south.
Tract holds less than two years of coal for this mine
The tract represents about 16 to 18 months of coal reserves based on the rate of mining currently employed at the Bowie No. 2 mine. The lower-B Seam coal in the tract would be mined from about 2015 to 2019. Some variations to these timeframes may occur based on permitting, unforeseen mining or geologic circumstances, coal contract variability, etc.
The federal plan assumes a longwall panel configuration that would mine under West Terror Creek. Overburden depths in the LBA tract for the B-seam range from about 950 feet in the southeastern portion under Terror Creek but gain overburden rather quickly, climbing out of the drainages to the north and west to 2,300 feet.
The draft EA also touched on actions for the future for all three mines (and one possible future mine) along the North Fork of the Gunnison. The reasonably foreseeable future actions are:
- Oxbow Mining (Elk Creek mine) was granted a 786-acre LBA with surface disturbance of approximately 5.63 acres on public lands and a 157-acre coal lease modification.
- Oxbow has submitted a lease modification of the East Elk Creek lease, requesting to add about 364 acres of NFS lands to its existing lease.
- Mountain Coal (Arch Coal subsidiary, West Elk mine) applied to construct, operate, and reclaim up to 159 E Seam methane drainage well (MDW) sites that would support 171 individual MDWs, and use or construction of about 26.1 miles of roads are in the final process of approval. Lease modifications would add approximately 1,700 acres to the West Elk mine. BLM is currently evaluating an exploration plan on these lease modifications.
- Oxbow Mining (Oak Mesa Project–coal exploration license) submitted a proposal to drill 43 exploration drill holes on private and federal lands into federal subsurface holdings. The entire exploration area covers about 13,873 acres. This would be brand-new, possibly longwall mine to the west of Bowie No. 2. Bowie No. 2 is actually between Oxbow’s existing Elk Creek mine and Oak Mesa reserve area, with rail access to any Oak Mesa mine to be through the same UP rail line that serves the existing mines.
- Bowie (Bowie No. 2 mine) was granted two lease modifications adjacent to current leases to the north under private and public lands. They add approximately 502 acres.
- Bowie (Bowie No. 2 mine) applied for an LBA area adjacent to current leases to the north under private, national forest and public lands and is in the first stages of National Environmental Policy Act (NEPA) analysis.