Without fanfare, Peabody Energy (NYSE: BTU) recently withdrew its application, filed with the U.S. Bureau of Land Management in 2011, to lease a total of 1 billion tons of coal reserves at its existing North Antelope Rochelle mine, which is the largest coal mine in the U.S.
Said a notation on the website of the BLM office in Wyoming: “Application requested to be withdrawn on October 5, 2015. Request to be withdrawn & case closed effective October 15, 2015.”
That September 2011 application from Peabody subsidiary BTU Western Resources had covered the separate Antelope Ridge North (5,829 acres) and Antelope Ridge South (2,433 acres) tracts. BLM routinely splits one application for separate tracts into separate auctions.
North Antelope Rochelle and Arch Coal‘s (NYSE: ACI) nearby Black Thunder mine are by far the biggest coal mines in both the U.S. and in the Wyoming end of the Powder River Basin. Incidentally, the BLM on Jan. 7 of this year approved a request from Arch Coal to drop a 2006 application to lease the 957-million-ton, 5,944-acre West Jacobs Ranch reserve, which was supposed to be new coal for Black Thunder.
These lease applications are being dropped at a time when U.S. coal companies have been tightening belts and trying to work through the worst coal market downturn in years, a downturn that would only be prolonged and in some ways permanent if the U.S. EPA’s new Clean Power Plan survives multiple court challenges. A coal producer with two Wyoming PRB mines (Belle Ayr and Eagle Butte), Alpha Natural Resources, is currently in Chapter 11 bankruptcy protection.
The BLM website shows that six lease applications for Wyoming coal are still pending, with two of them for new coal reserves for Black Thunder: West Hilight tract, 440.4 million tons; and North Hilight tract, 263.4 million tons. No lease applications are pending for the North Antelope Rochelle mine anymore.
One of those six pending lease applications was filed on Aug. 20 of this year, by the Antelope Coal LLC subsidiary of Cloud Peak Energy (NYSE: CLD), for the West Antelope III tract, which covers 3,508 acres and 441 million tons of coal.
The other three still-pending lease requests are for:
- 2011 application, Alpha’s Belle Ayr West tract, for the Belle Ayr mine, 253 million tons;
- 2006 application, Cloud Peak’s Maysdorf II South tract, for Cordero-Rojo mine, 504 million tons; and
- 2006 application, from Kiewit Mining Properties for the Hay Creek II tract at the Buckskin mine, currently 51.9 million tons (down from an original application amount of 148 million tons). BLM in 2013 rejected a first Kiewit auction bid for this property as being below its secret fair market value figure, with the website saying Kiewit has asked for another auction.
As for how much time North Antelope Rochelle has without new coal reserves, that will depend in large part on its production rate. And also if Peabody moves in the meantime to lease more coal reserves within a BLM leasing system that takes years to work through. Peabody’s Feb. 25 Form 10-K annual report shows that the mine produced 118 million tons in 2014 and 111 million tons in 2013, and that as of the end of 2014 the mine had over 2.1 billion tons of assigned coal reserves in the proven and probable category, all of it under lease. Assuming the 118-million-ton/yr production rate, and that all of that coal is minable, that gives the mine nearly 18 years of operation.