Black Butte Coal looking to explore over new federal coal reserves

The U.S. Bureau of Land Management plans to publish in the Jan. 12 Federal Register a notice seeking companies to share exploration expenses and results with Black Butte Coal on federal coal deposits within 23,232 acres in Sweetwater County, Wyoming.

“Black Butte Coal Company has applied to the BLM for a coal exploration license on public lands in the Salt Wells area near the existing Black Butte Coal Mine located near Point of Rocks, Wyoming,” said the notice. “The purpose of the exploration program is to obtain geologic knowledge of the coal underlying the exploration area for the purpose of assessing the coal resources there.”

BLM also plans to publish a separate Jan. 12 notice about Black Butte Coal plans to explore another 11,469 acres of federal land near its existing mine.

These offers to share the exploration program is mandated by federal law, but are rarely taken up in cases like this, particularly since the Black Butte operation is so isolated from other existing coal mining operations. Black Butte Coal is a primary supplier to the nearby Jim Bridger power plant, which is co-owned by PacifiCorp and Idaho Power.

Notable is that PacifiCorp and Idaho Power, co-owners of the Jim Bridger power plant and the adjacent Bridger Coal Co. (BCC) mining operations in southwest Wyoming, plan to cut BCC production in coming years and take more coal from outside supplier Black Butte Coal. Cindy Crane, President and CEO of PacifiCorp d/b/a Rocky Mountain Power, described that change in heavily-redacted November 2014 testimony filed at the Washington Utilities and Transportation Commission. 

The Bridger plant is fueled by coal supplied by Black Butte and BCC. BCC is a joint venture that mines coal for delivery to the adjacent Bridger plant. PacifiCorp owns a two-thirds interest in BCC, and Idaho Power owns a one-third interest. PacifiCorp and Idaho Power have the same ownership percentages in the Bridger power plant itself.

A projected increase in the delivered price of Black Butte coal is a result of a request for proposals (RFP) for Wyoming coal conducted by the Bridger plant owners in June 2014. The current Black Butte coal supply agreement terminates during the first quarter of 2015.

The Bridger plant owners engaged both Ambre Energy, the operator of the Black Butte mine, and the Union Pacific Railroad in contract negotiations. The terms of the new coal supply arrangement for the Bridger plant reflect a fixed free-on-board  (FOB) price for Black Butte coal through 2017. The Jim Bridger plant owners also negotiated new rail rates with the Union Pacific through 2017.

An increase in BCC prices reflects the company’s updated mine plan, which was prepared in July 2014. Under the new mine plan, BCC’s volumes decrease by a redacted amount. The BCC tonnage reduction is primarily associated with updates to BCC’s underground mine plan. The mine plans for both BCC’s surface and underground operations were updated in July 2014. There are three significant factors contributing to decreased underground production in the July 2014 plan:

  • Reduction in continuous miner production shifts due to changes in workforce schedules for underground mine employees. The underground mine is now operating two 10-hour shifts, four days per week, compared to two 12-hour shifts, six days per week, in the October 2013 plan.
  • A reduction in the amount of coal produced by the longwall system; and
  • Shortening of the 15th 14 right longwall panel.

The underground mine has been unable to maintain two 12-hour shifts, six days per week, due to limited workforce availability. Since its inception early last decade, the BCC underground mine has experienced high turnover rates as underground miners have gained experience and pursued jobs in the trona industry in Southwest Wyoming. The mine has relied heavily on contract mining services, such as Price Mine Service, to supplement the workforce. Despite the contract labor, BCC has been unable to sustain the continuous mining activity that is necessary to support longwall panel development. The revised workforce schedule allows the mine to fully staff two 10-hour shifts, four days per week.

Despite these issues, BCC prices remain comparable to Black Butte, Crane said. BCC coal is also less expensive than other Southwest Wyoming coal supply options. As part of its coal RFP in June 2014, the Bridger plant owners sought coal supplies from the other coal mines in Southwest Wyoming—Westmoreland Coal’s Kemmerer mine, which supplies PacifiCorp’s adjacent Naughton power plant, and Kiewit Mining’s Haystack mine.

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.