By Tom Ross

October 12, 2015 - Citing the economic struggles the coal industry is experiencing, Peabody Energy, operator of Twentymile Coal Company in Routt County, has formally asked the Federal Energy Regulatory Commission for a two-year extension in the permitting process for the 400-acre Peabody Trout Creek Reservoir. The reservoir would be created by an earthen dam just below the confluence of Trout and Middle creeks upstream from where the former flows into the Yampa River near Milner.

“While PTCR intends to continue with this project, the economics of the coal industry have impacted the ability of PTCR to continue with the significant capital investments needed to execute and complete the required resources studies this year to develop this project,” Peabody Director of Real Estate Development Brian Yansen wrote in a letter to the agency.

Worldwide demand for coal continues to drop, and the Trout Creek announcement fits with remarks about the company’s fiscal strategy made by a Peabody spokesman to St. Louis Public Radio this week.

Peabody’s Vic Svec told the radio station his company is optimistic the coal market will rebound, but in the meantime, the company is intent on conserving cash and reducing its debt. Peabody laid off 250 executive and regional employees in the U.S. over the summer and sold some of its mines.

Peabody has said the purpose of building the reservoir is to ensure the company has an adequate long-term supply of water needed to wash coal from its mining efforts in coal seams between Hayden and Oak Creek.

Peabody had been intent in the past several years on moving its longwall mining operations at Foidel Creek Mine (commonly called Twentymile Mine) to a new mine portal at the planned Sage Creek Mine, where the Wadge Coal Seam it has been mining at Twentymile is closer to the surface.

Recently, however, Peabody has shown an interest in mining coal from the Wolf Creek Coal Seam, about 150 feet deeper than the the Wadge Seam at Twentymile. The company has applied to the Colorado Division of Reclamation, Mining and Safety for a revision to its existing approved mining plans to allow it to develop and mine in the Wolf Creek Seam. Doing so will require a 160-acre expansion of the existing permit, which encompasses about 22,450 acres.

Twentymile General Manager Pat Sollars told the Craig Daily Press a year ago his company has thoroughly investiagted the potential of the Wolf Creek Seam.

“Exploration is pretty much complete,” he said in October 2014. “We’ve identified the reserves, we’ve identified the quality. We’ve started initial slopes down into that reserves. The market really determines how we move the mine.”

Peabody wrote in its application to the CDRMS that it would use six longwall panels in the underground Wolf Creek mining operation.

Steamboat Today reported in March that Peabody had applied to the Bureau of Land Management for an expansion that would allow to to extend mining in the Wadge seam and transition into the Wolf Creek Seam.

Peabody’s stock, trading as BTU, closed at $24.49 Friday, representing a decrease of 85.37 percent from the same date a year ago. Worldwide demand for coal has dropped steeply, including a significant decline in China, where the economy is reeling. The share price has fallen almost 97 percent in the past five years.

Yahoo Finance reports the company recently executed a reverse stock split, lumping 15 shares into a single share in order to avoid the price falling below $1.

This map shows the location of the proposed Trout Creek Reservoir.