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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A Colorado coal mine slated for closure has new life after its owner signed contracts requiring expanded production.
Colorado's Twentymile Mine, owned by Peabody Energy Corporation (NYSE:BTU) (St. Louis, Missouri), was ramping down operations prior to Peabody's announcement January 23. The mine, which opened in 1983, reached peak production of 8.6 million tons of low-sulfur coal per year. But as deposits thinned, production fell to 4.9 million tons/year. As recently as last month, the mine was scheduled to close by early 2015.
But that all changed January 23, when Peabody said it would invest $200 million to open up the Sage Creek mine portal and relocate the existing longwall mining system to expand production at the site. The energy company said it had secured long-term coal-supply commitments totaling 40 million tons from Twentymile.
Over the next 16 years, some of that coal will go to the Hayden Power Station, located in northwest Colorado and operated by Public Service Company of Colorado (Denver, Colorado), a subsidiary of Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota). Xcel spokesman Mark Stutz told Industrial Info that the two-unit, 446-megawatt (MW) generator would "continue and expand" its use of coal from the Twentymile Mine. "Hayden has been receiving its coal from the Twentymile Mine for many years, and will do so again under the new contract," he added in a subsequent statement. Hayden burns 1.6 million tons of coal per year and accounts for about 10% of Xcel's generating capacity in Colorado, Stutz said.
The agreement "ensures an economic supply of coal to the Hayden Station to support the installation of new, state-of-the-art emissions control equipment, so that the plant can be operated beyond 2016," Stutz told The Denver Post in a statement.
Some of the new production from Twentymile will go to Xcel power plants in the Denver area that are scheduled to close or fuel-switch in the next few years, Stutz told Industrial Info. One of these plants is the Valmont Power Station, a 186-MW generator scheduled to close by 2017. Another is the Cherokee Power Station. One unit at Cherokee is scheduled to close later this year, a second unit is scheduled to close in 2015, and a third is scheduled to be converted to natural gas by 2017.
Cherokee burns about 1.5 million tons of coal per year, while Valmont burns about 600,000 tons per year. Stutz said that Valmont and Cherokee receive their coal from Peabody and a variety of other suppliers.
Aside from Xcel, Peabody said some of the incremental production from Twentymile would be exported, while some would go to industrial uses. Aside from Xcel, Peabody said some of the incremental production from Twentymile would be exported, while another portion would go to industrial uses.
In a statement to Industrial Info, Peabody spokeswoman Beth Sutton said, "We see our operations continuing well into the future and intend to remain a long-term player in Colorado, building on our half-century history there. Our strong reserve position offers terrific flexibility. More than half the long-term volumes are dedicated to the Hayden Station. We also have long-term contracts for other domestic power plant customers in addition to exports to Europe."
In its January 23 announcement, Peabody said the mine expansion involved developing the new Twentymile Sage Creek portal in the existing Wadge coal seam and moving the longwall. The new portal will access an additional 105 million-ton northern reserve block of high-Btu, low-sulfur coal. Permits are in place for development of the longwall panel, with development work expected to begin in May 2012. Longwall production is anticipated in the second half of 2015, the company said.
The St. Louis energy conglomerate said coal from the Twentymile Mine has a heating value of 11,200 Btu per pound and low sulfur and ash content. Its longwall panels are 1,000 feet wide and more than two miles long.
"Peabody's 9 billion-ton reserve base allows us to serve long-term U.S. customer demand, as well as emerging export opportunities," Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce, said in a statement. "This project builds upon nearly a half century of Peabody operations in Colorado and a valued customer relationship with the Hayden Station."
The Twentymile mine created $730 million in direct and indirect economic benefits for the region this past year, Peabody said. Peabody Energy is the world's largest private-sector coal company and a global leader in clean-coal solutions. Peabody recently reported 2011 full-year net income of $946 million on revenue of $7.8 billion. Coal production in 2011 increased slightly to 251 million tons from 246 million tons in 2010.
View Project Report - 41000987 300007834
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Colorado's Twentymile Mine, owned by Peabody Energy Corporation (NYSE:BTU) (St. Louis, Missouri), was ramping down operations prior to Peabody's announcement January 23. The mine, which opened in 1983, reached peak production of 8.6 million tons of low-sulfur coal per year. But as deposits thinned, production fell to 4.9 million tons/year. As recently as last month, the mine was scheduled to close by early 2015.
But that all changed January 23, when Peabody said it would invest $200 million to open up the Sage Creek mine portal and relocate the existing longwall mining system to expand production at the site. The energy company said it had secured long-term coal-supply commitments totaling 40 million tons from Twentymile.
Over the next 16 years, some of that coal will go to the Hayden Power Station, located in northwest Colorado and operated by Public Service Company of Colorado (Denver, Colorado), a subsidiary of Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota). Xcel spokesman Mark Stutz told Industrial Info that the two-unit, 446-megawatt (MW) generator would "continue and expand" its use of coal from the Twentymile Mine. "Hayden has been receiving its coal from the Twentymile Mine for many years, and will do so again under the new contract," he added in a subsequent statement. Hayden burns 1.6 million tons of coal per year and accounts for about 10% of Xcel's generating capacity in Colorado, Stutz said.
The agreement "ensures an economic supply of coal to the Hayden Station to support the installation of new, state-of-the-art emissions control equipment, so that the plant can be operated beyond 2016," Stutz told The Denver Post in a statement.
Some of the new production from Twentymile will go to Xcel power plants in the Denver area that are scheduled to close or fuel-switch in the next few years, Stutz told Industrial Info. One of these plants is the Valmont Power Station, a 186-MW generator scheduled to close by 2017. Another is the Cherokee Power Station. One unit at Cherokee is scheduled to close later this year, a second unit is scheduled to close in 2015, and a third is scheduled to be converted to natural gas by 2017.
Cherokee burns about 1.5 million tons of coal per year, while Valmont burns about 600,000 tons per year. Stutz said that Valmont and Cherokee receive their coal from Peabody and a variety of other suppliers.
Aside from Xcel, Peabody said some of the incremental production from Twentymile would be exported, while some would go to industrial uses. Aside from Xcel, Peabody said some of the incremental production from Twentymile would be exported, while another portion would go to industrial uses.
In a statement to Industrial Info, Peabody spokeswoman Beth Sutton said, "We see our operations continuing well into the future and intend to remain a long-term player in Colorado, building on our half-century history there. Our strong reserve position offers terrific flexibility. More than half the long-term volumes are dedicated to the Hayden Station. We also have long-term contracts for other domestic power plant customers in addition to exports to Europe."
In its January 23 announcement, Peabody said the mine expansion involved developing the new Twentymile Sage Creek portal in the existing Wadge coal seam and moving the longwall. The new portal will access an additional 105 million-ton northern reserve block of high-Btu, low-sulfur coal. Permits are in place for development of the longwall panel, with development work expected to begin in May 2012. Longwall production is anticipated in the second half of 2015, the company said.
The St. Louis energy conglomerate said coal from the Twentymile Mine has a heating value of 11,200 Btu per pound and low sulfur and ash content. Its longwall panels are 1,000 feet wide and more than two miles long.
"Peabody's 9 billion-ton reserve base allows us to serve long-term U.S. customer demand, as well as emerging export opportunities," Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce, said in a statement. "This project builds upon nearly a half century of Peabody operations in Colorado and a valued customer relationship with the Hayden Station."
The Twentymile mine created $730 million in direct and indirect economic benefits for the region this past year, Peabody said. Peabody Energy is the world's largest private-sector coal company and a global leader in clean-coal solutions. Peabody recently reported 2011 full-year net income of $946 million on revenue of $7.8 billion. Coal production in 2011 increased slightly to 251 million tons from 246 million tons in 2010.
View Project Report - 41000987 300007834
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
