BLM considers exploration plan by Colorado coal producer GCC Energy

The U.S. Bureau of Land Management in Colorado is seeking comments until Oct. 5 on a preliminary environmental assessment that analyzes an exploration license application submitted by coal producer GCC Energy.

The 23-hole drilling proposal, which covers federal coal underlying predominately private land, would aid GCC in locating coal resources adjacent to its King II deep mine located near Hesperus, Colorado. The exploration license application proposes the use of a small rig to collect core samplings from depths of up to 600 feet. Existing routes would be used to access drill sites and no new roads have been proposed. After drilling, all disturbed areas would be re-seeded and drill holes would be plugged per state standards to protect groundwater.

“If the core sampling data indicates there is an economic coal resource, the company would be required to go through a competitive process, additional environmental analysis and community involvement to apply for the rights to develop the coal,” said Connie Clementson, BLM Tres Rios Field Manager.

Currently, BLM noted, there are seven producing coal mines in Colorado (two are surface mines, the remaining five are underground) totaling 60,000 acres and with an estimated economic output of $1.2 billion. There are 55 coal leases in Colorado, covering 88,677 acres.

The King coal mine began operation in 1938 at the current location in Hesperus, Colorado, and obtained its first federal coal lease in 1941. Coal production has occurred and is currently occurring on federal and private mineral leases and, beginning in 2007, a state of Colorado lease. Both the King I and King II mines were operated by GCC until 2009 when mining operations ceased at the King I mine site.

The King II mine currently operates 24 hours a day and is operating under an approved mine plan that authorizes annual production of up to 1.3 million tons of coal annually. The King II mine employs about 165 persons with annual salaries and employee benefits of approximately $12 million. Surface facilities at the King II site cover approximately 25.5 acres, with an underground mining operation of about 565 acres as of July 2015. The mine is known for coal with low sulfur, ash, and alkali content, which is sold off site, mostly in the U.S. southwest and Mexico for the manufacture of cement and for local home heating. GCC has applied for this exploration license to explore potentially mineable coal north of the existing underground operations at the King II mine site.

This is an operation that at one time was owned by major coal producer Alpha Natural Resources, but was sold off to a Mexico-based cement company, Grupo Cementos de Chihuahua SA de CV, that needs it for local coal supply for its cement-making operations. U.S. Mine Safety and Health Administration data shows that GCC Energy out of King II produced 462,092 tons in the first half of this year, and 970,780 tons in all of 2014.

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.