BLM rejects bid for sprawling tract in Powder River Basin

Reprinted with permission from Environment & Energy Publishing, LLC. Not for republication by Wyoming media.

The Bureau of Land Management rejected a bid yesterday by Peabody Energy Corp. for leasing a major tract for coal mining in Wyoming’s Powder River Basin.

Peabody submitted the only bid for the South Porcupine Coal Tract — 3,243 acres, with more than 400 million tons of minable coal. BLM’s Wyoming office said the company’s $361.6 million offer failed to make the cut.

“After reviewing the bid, we determined that it could not be accepted because it did not meet the BLM’s estimated fair market value,” Larry Claypool, deputy state director for minerals and lands, said in a statement. Peabody wanted the land to extend its North Antelope Rochelle Mine, one of the country’s largest coal operations. The company can now submit a request for the land to be offered again.

It was a resubmitted bid that allowed Signal Peak Energy LLC to acquire for $10.6 million a 2,679-acre tract in Musselshell County, Mont., to extend the life of its Bull Mountains No. 1 underground mine. The company’s first bid of $5.3 million was rejected in November.

Environmentalists have been filing appeals and lawsuits in an effort to stop coal leases. While the industry accuses the Obama administration of shunning coal, green groups say BLM is paying too much attention to the resource.

In an interview this week, BLM Director Bob Abbey defended his agency’s handling of coal leases. “Coal is part of the ‘all of the above’ energy [plan] that we are pursuing in this country, and rightly so,” he said. “Over 40 percent of electricity that is generated in the United States comes from coal, and the Powder River Basin is a provider of this coal. So it’s important to this nation, it’s important to the economy. But as we look to the future, I think you are going to see less and less coal and more natural gas and other sources.”

With companies looking to export American coal, environmentalists hope to block industry efforts to secure additional port capacity on the West Coast for Asian coal exports. This week, environmentalists touted a petition with more than 40,000 signatures in opposition to new terminals in Washington state. Last week, Millennium Bulk Terminals-Longview LLC submitted requests for a new facility in Longview, Wash. The company is looking to invest $600 million and eventually ship more than 40 million metric tons of coal.

“Thousands of Northwest residents are determined to stop Millennium and other Big Coal companies from pursuing corporate profits at the expense of our health, environment, and economy,” Laura Stevens, Sierra Club associate organizing representative, said in a statement. “From Montana, to Spokane to Vancouver to Longview, the grassroots movement to prevent dirty, dangerous fossil fuel exports is growing each day.”

While leases proceed and experts predict a robust export market, U.S. demand has declined in the face of a mild winter, low natural gas prices and increased environmental oversight.

This week the Energy Information Administration said the futures price of central Appalachian coal was down sharply this year. The price fell more than 11 percent toward the end of last month, from $69.67 per short ton at the beginning of the year to $61.50 on Feb. 24.Earlier this week, Consol Energy Inc. announced it would reduce output at its Blacksville No. 2 mine in West Virginia, becoming the latest company to make such an announcement. Recently, James River Coal Co. announced a net loss of $39.1 million.”From 50,000 feet, we are doing really well,” CEO Peter Socha said in a conference call this morning.

He added, “The market is terrible right now. It has been terrible for a while.”

(Banner photo by Kimon Berlin)

Print Friendly

Published on March 6, 2012

{ 1 comment }

Inky March 7, 2012 at 11:58 am

Natural gas continues to spank King Coal.

Previous post:

Next post: