The U.S. Bureau of Land Management (BLM) Utah State Office will at a June 17 auction offer for lease the Flat Canyon Tract in Sanpete County, which holds reserves for the Skyline underground coal mine.
BLM said in a notice to be published in the May 15 Federal Register that this coal lease sale is being held in response to a lease by application (LBA) submitted by Canyon Fuel Co. LLC to the BLM in 1998. The coal resources to be offered consist of all reserves recoverable by underground methods available in approximately 2,692.16 acres. The tract is adjacent to the Skyline mine, which contains other federal coal leases.
The coal beds contained in the Flat Canyon tract are under an average of 1,700 feet cover from the surface. The coal in the Flat Canyon tract has two economical coal beds; the Lower O’Conner B and the Flat Canyon beds. The minable portions of these coal beds are approximately 6 to 14 feet in thickness. The tract contains approximately 42 million tons of recoverable high-volatile B bituminous coal. The coal quality is based on an “as received basis” as follows: 12,400 Btu/lb, 5.8% moisture, 7.1% ash, 42.8% volatile matter, 43.8% fixed carbon and 0.5% sulfur.
The tract will be leased to the qualified bidder of the highest cash amount provided that the high bid meet or exceeds the BLM’s estimate of the fair market value (FMV) of the tract. An outside bidder would be very rare in an auction like this.
The BLM held a public hearing and requested comments on the Environmental Impact Statement (EIS) and the estimate of the Fair Market Value (FMV) of the Dry Canyon Tract in 2001. The BLM/U.S. Forest Service (USFS) prepared a Final Environmental Impact Statement and a Record of Decision in 2002. No appeals of the BLM decision to lease were filed during the appeal period. The USFS issued consent to lease in February 2013. In December 2014, the governor of Utah recommended proceeding with this lease sale.
Skyline is one of three Utah mines that Arch Coal (NYSE: ACI) sold to Bowie Resource Partners LLC earlier this decade. U.S. Mine Safety and Health Administration data shows that the mine produced 1.2 million tons in the first quarter of this year, 4.2 million tons in all of 2014 and 3.1 million tons in all of 2013.