By Toni Todd
July 13, 2017 - Arch Coal, owner of the West Elk Mine in Somerset, is holding on by its fingernails to stay in business for a few more years in light of a depressed coal market and a new energy reality.
Representatives from the mine presented their recent proposal to Gunnison County commissioners with the hope of garnering commissioners’ support. The mine’s official request to the U.S. Forest Service (USFS) is to expand their existing federal coal leases by 1,720 acres to ensure potential coal reserves in their current area of operation are not overlooked.
The proposal also asks to apply the Colorado Roadless Rule’s exemption for coal mining operations in the expanded area. By their own estimates, the expansion will enable only a short-term extension of operations at the West Elk Mine, if they find coal.
The USFS’s 45-day public comment period began June 9 and ends July 24.
Comissioners’ biggest concern, and the issue they all agreed was most pressing, was the need to capture methane coming out of the mine, putting it to good use or flaring it off rather than letting it escape into the atmosphere.
While the presentation was not an official public hearing, a dozen or so interested citizens were there to listen, if not speak, at this past Tuesday’s meeting.
“If it’s not mined, as a resource, it’s lost. We’re not looking at an extended life beyond about 10 years,” said West Elk Mine environmental engineer Kathy Welt, though the implication was that the timeline could be shorter.
“After this [extension] gets absorbed by the parent lease, would that open the door for additional modification?” asked county commissioner Jonathan Houck.
“There is no extension, and no resource, beyond where we’re extending now,” said Welt. “Personally, I don’t think [coal is] coming back to previous levels. We’re just looking to continue for a few more years.”
“No long-term contract, no assurance of the resource being there—there could be issues that make it difficult or not profitable. Market conditions are changing, oil and gas are taking a more prominent role—this seems speculative,” said Houck.
Welt described a timeline since 2009 of environmental opposition with changed and reversed rulings related to Colorado’s Roadless Rule, all leading to this final request for an expanded land lease on the public land. Organizations that have filed motions and sued to prevent expansion on a variety of platforms include Earth Justice, Earth Guardians and High Country Conservation Advocates.
Last Mine Standing
The West Elk Mine is now the only mine left in Gunnison County’s North Fork area. According to a U.S. News and World Report article in April, The mine employs 220 miners at an average salary of $100,000. Welt told U.S. News many local businesses supply goods and services to the mine, and West Elk Mine pays more than $16 million in taxes and royalties. Miners and their families patronize local businesses and are involved in local communities and schools.
Miners at the West Elk Mine may have been heartened temporarily by the election of Donald Trump, but the year began with Arch Coal filing for Chapter 11 bankruptcy protection. The company is still in business, trying to stay afloat in a sea of cheap oil, cheap gas, solar and wind power.
Royalty Rate Discussion
Arch Coal is also requesting a continuation of a royalty rate reduction for its E-seam, from 8 percent to 5 percent, something the company gained approval for and enjoyed from 2012 to 2015. The E-seam, one of several mining locations, spans only a small portion of the West Elk Mine’s operations.
Royalty rates determine the amount a coal company pays to lease public land as a percentage per ton of coal sold. The lower royalty rate request is based on especially high extraction costs for the E-seam. These include parting, a visible thickness of rock that makes extracting the coal more difficult; a weak roof and sandstone channels; the presence of methane (CH4) gas; the need for a coal preparation plant; and the requirement for excessive floor support.
“This is a renewal of the same rate reduction on the same area that has not completed mining,” said Welt.
Houck asked why Arch requested a letter of support from the commissioners the last time a reduction in royalty rates was requested, but didn’t do so this time.
Welt said she didn’t think the commissioners would want or need to approve what had already been approved. “This was just an extension,” she said.
Commissioner John Messner noted that those royalties support local schools and training for laid-off miners.
Welt said they’re just trying to survive and maintain their workforce for a few more years. “We are asking for a letter of support,” she said.
Messner asked if the mine was interested in collaborating with the county on better methane capture and management.
Welt explained that capturing methane from a closed mine site is a “different animal” from doing so within an ongoing operation. “Capture of ventilation air does not seem like a viable option. We’re not ventilating for any other reason than for mine safety. We don’t want to blow up our miners.”
There was discussion of the financial feasibility of methane capture. Houck suggested, given the circumstances in the North Fork, and the impacts of methane on climate change and the environment, there should be greater considerations than market feasibility.
“Where I struggle is, when you guys hit some challenges, you ask for a royalty rate reduction,” said Houck. “On the environmental end, sometimes we have to spend more to do what’s right.”
The technology is there, he said, to capture or compress the methane produced in a working mine. “I think we have a responsibility. The North Fork area is the biggest producer of methane escape in the world. Regulations designed to reduce this are being scrapped. I want to be on the record saying when I supported the North Fork reinstatement, I hoped we could work together to reduce the escaped methane,” said Houck.
“We have done our job on the ventilation. We have reduced it to a third of what it was five years ago,” said Welt.
“I’m in support of a royalty rate reduction that goes directly to methane capture,” said Messner. Same thing goes for lease modification. But without methane capture, I’m not in support of expansion. I do appreciate the historic and current value of coal mines and how important they are to a lot of the citizens.”
“We look forward to working with you in good faith,” said Welt.
“What’s happening with the coal industry is a drastic change. We have to identify where the new jobs are that are going to replace these jobs. I appreciate that what your company does is provide jobs and resources. But coal is not the future… Climate change is real. I believe in the science. How do we transition this? We just can’t do business as usual.”
After the mine representatives left, commissioners, the county manager by phone and the county attorney continued the discussion.
“We’re going to get to a point where every coal mine will close in the county,” said Houck.
“I don’t think Arch Coal will be the last,” said commissioner Phil Chamberland. “They don’t have enough resource [coal]. But coal still produces over 30 percent of energy in this county. If that resource doesn’t come from here, it’s going to come from somewhere else. Coming from Venezuela or China or other places is a raw deal.
“I don’t see solar and wind being able to ramp up fast enough. I think hydrogen is really exciting and has a lot of potential to create what’s needed.”
Chamberland added, “I continue to support the Colorado Roadless Rule. If you lose the ability to negotiate in good faith, then people lose the will to come to the table. If we can’t come up with solutions for methane capture, which I support, then what’s the point?”
“We certainly have to work out some details as far as the methane capture agreement looks like,” said Messner, “and we need to ask what we can do to help the coal miners retrain for other jobs.”
“Any correspondence from the county that I put my name to has to address the things that I brought up,” said Houck.
County attorney David Baumgarten presented a few options for the commissioners. He suggested they request an extension on the comment deadline, to buy more time.
If the answer is no, he said, the coal company might be willing to participate with the county and the USFS to establish a commitment to methane capture anyway.
He reminded commissioners that the mine is exempt from the Land Use Resolution, the document that guides all land use decisions and approvals in the county.
“You might eliminate that exemption,” Baumgarten said. The likely result? “I could almost guarantee you’d end up in court,” he said, “but how strongly do you feel about this?”
“Arch Coal just went through a bankruptcy process and came out of it. If they go through another one, would we require some sort of bond be put in place to ensure this happens [as part of reclamation]?” asked Houck. “I’ve been reading about the capture technology out there. This idea that you can’t do it when the mine’s active is not true.”
He advocated for mandating methane capture both now and after the mine closes.
“The North Fork of the Gunnison is a place for a win,” said Houck. “We always say no one’s done this. No one’s done that. Sometimes being first is the best place to be.”
Baumgarten said Arch’s request to reduce the royalty rate for the E-seam seemed incomplete. “For them to obtain that reduction, they have to demonstrate that it’s necessary to promote development. The lease can’t be executed without that. There is a presumption of openness in the federal process and I don’t think they’ve done so. You [should] object until they can demonstrate the federal lease cannot be executed unless the royalty rate is reduced,” he said.
“The royalty rate discussion went right around Gunnison County,” said Houck. “That’s how, at a gut level, it felt to me.”
Commissioners will likely continue discussion of the mine’s proposal, their options, where they stand and the position they’ll take, both in negotiations with the West Elk Mine on methane control and capture, and on what appears to be a short future for coal mining in Gunnison County.