King Coal: The underground economic engine that is Routt County’s Twentymile Coal Co.
January 20, 2013
Most never will go 1,500 feet underground and tour Colorado's most productive coal mine, located just 15 miles southwest of Steamboat Springs.
For that matter, most of the 20,000-plus people who call Routt County home probably give little thought to the mine or its local significance.
"They live right here with all this, and they don't even know," said John Papierski, a Twentymile Coal Co. miner who works three 13-hour shifts each week repairing the machines that build the tunnels that weave through a major coal seam beneath Routt County.
As long as the lights turn on when the switches are flipped, what happens at Twentymile Mine seemingly is irrelevant to most in Northwest Colorado.
There are daily reminders, however. Like the large coal bucket on display in downtown Oak Creek that reminds passers-by that coal is what brought many settlers here in the late 1800s. And there are the two coal-fired power plants in Hayden and Craig and the daily coal trains that pass through Steamboat Springs. They serve as subtle reminders that coal still is a big industry here.
"I'm not sure they actually know where their electricity is coming from," said Adam Patterson, a 25-year-old mine engineer whose face was covered in black coal dust after doing a survey of the mine's ventilation system earlier this month.
According to Yampa Valley Electric Association Manager Larry Covillo, electricity customers in Routt and Moffat counties get 65 percent of their electricity from coal-fired power plants operated by Xcel Energy.
At the underground Twentymile Mine headquartered along Routt County Road 27, 8.3 million tons of low-sulphur coal was unearthed in 2012, once again making it the most productive coal mine in Colorado. Nationwide, the mine ranked 21st in total coal production.
In 2011, the mine produced 29 percent of the coal unearthed in Colorado. The Colorado Mining Association reports that the average price per ton of coal that year was $39.61, making Twentymile's potential coal revenues in 2011 a whopping $328 million.
The economic impacts of the mine are vast. It's the second-largest employer and the largest property tax contributor in Routt County. With a $200 million investment in a new mine portal, Twentymile Coal Co. and its parent company — Peabody Energy, the largest private-sector coal producer in the world — appear committed to staying in Routt County so long as there is coal to pull from the earth and a market to sell it.
Heading to work
On a cold Tuesday morning in January, the parking lot at Twentymile Mine is filled with cars belonging to the 110 miners working underground that day. To help guarantee their cars will start after emerging from the mine at the end of their shifts, many of the workers have engine-block heaters plugged into rows of electrical strips. Some even are known to keep a heater running inside their cars.
No other buildings can be seen from the mine headquarters located along Foidel Creek. A sign displays a safety message for the miners as they walk into the building housing offices, equipment supply rooms and a locker room with dozens of overalls hanging from the ceiling. Outside the building is a yard full of construction equipment, a maintenance building, stacks of logs and other supplies used by the mine. In the distance, a conveyor belt climbs above a large pile of coal that is being moved around by a bulldozer.
Five shifts of miners take turns working at the mine 24 hours per day, 361 days per year. Altogether, Twentymile Mine employs about 500 people. Another 100 or so are contracted workers. Yampa Valley Medical Center, Routt County's largest employer, directly employs 582 people and has 22 independent contractors. Steamboat Ski Area is the third-largest employer with 250 full-time employees.
Twentymile employees have some significant spending power. According to the company, the entry-level hourly pay rate for an inexperienced miner is about $23. With a standard 40-hour work week, those entry-level workers make $47,840 annually. Opportunities to work overtime are ample, and miners also receive bonuses for not getting hurt and meeting production goals.
According to Twentymile, its employees have a benefits package valued at 40 percent of their annual earnings.
"We are probably one of the better employers in the community," Twentymile Mine Environmental Manager Jerry Nettleton said.
Employees' pay increases annually through merit raises, and miners earn more for having certifications such as having an electrical card or foreman's papers.
Mining provides a good paycheck. According to the Colorado Mining Association, the average pay and value of benefits for a coal miner in 2011 was $115,354.
With about two-thirds of its employees residing in Moffat County, the economic impacts of Twentymile Mine extend across county lines.
Yampa Valley Data Partners Executive Director Kate Nowak said the mine's economic impact in Routt County is significant. Using the estimated wage of a typical miner working at Twentymile, she calculated that the mine's Routt County employees have annual disposable incomes of $12 million after state and federal taxes. Nowak said $5.8 million of that total is spent locally each year, creating 21 jobs and $442,000 in sales tax revenue.
"I would say this is a nice impact of just one company in Routt County," Nowak said.
Routt County Commissioner Doug Monger said Twentymile Coal Co. pays a wage that sets a high standard when comparing wages at other companies. The jobs not only pay well, he said, but also are stable and can turn into careers for many of the workers.
"I think that's one of the biggest things is they provide long-term stability to our community," Monger said.
After driving down the ramp into the mine, the only things lighting the tunnel shaft are the headlights from the pickup driven by Pat Sollars, general manager of Peabody Energy's Colorado operations.
To prevent coal dust explosions, the tunnels are lined with white rock dust made of crushed limestone. Along either side are small doors that keep an airtight seal to control the ventilation in the tunnel. Old mining sections are sealed off and the massive conveyor system runs in an adjacent tunnel. Throughout the tunnels are large stashes of oxygen should something terrible happen.
None of this is new to most of the people touring the mine on this day in early January, but even after 36 years of mining, safety specialist Mark Gannon thinks the same sobering thought when heading underground.
"Usually, I think of the family and hope I get out of here because that's our goal," Gannon said.
High-profile mine accidents occasionally capture the attention of the world. That attention never has been focused on Twentymile Mine, which never has had a fatality in its 30 years of operation.
Twentymile maintains a safety record recognized industrywide, and the mine is in the running for having the best safety record of any Peabody Energy underground mine in the United States in 2012. During the year, the mine had two 100-plus-day streaks without a reportable injury.
"We're kind of proud of it," safety manager Mike Crum said.
In 2012, there were 0.92 incidents per 200,000 hours worked at Twentymile Mine. It is a new record for the mine and represents an incident rate significantly lower than the industry average, which was 3.38 in 2011, according to the federal Mine Safety and Health Administration.
Being safe is ingrained into the minds of miners, who wear hard hats, eye protection, steel-toed boots and highly reflective clothing. On their belts is an emergency air supply that is equipped with a tracking device. If a tragedy such as a fire were to occur and result in fatalities, brass tags worn by the miners would make it possible to identify their bodies. Those tags also are a reminder that despite the mine's safety record, it can be dangerous work.
Everyone who enters the mine flips over a plastic card on a wall signifying he or she is working below ground. Then the workers load into pickups, enter the tunnel and follow the coal seam for about eight miles to a depth of 1,500 feet.
Eight miles into the mine, more pickups and miners can be found around the longwall operation. It is the production hub of the mine and uses a shearer that moves as fast as 144 feet per minute along a 1,000-foot-long machine packed with hydraulics. During each pass, the shearer cuts the 9-foot height of the coal seam about 40 inches deep.
Sollars, who has worked at the mine for 25 years, pulls back a wall of plastic and looks into a cavern 9 feet tall that used to contain coal.
A cracking sound quickly is followed by the roof collapsing. The group members turn their heads from the ensuing dust cloud.
Sollars said the roof collapse is a routine part of longwall mining.
The longwall is the sophisticated workhorse operated by an eight-man crew. If new, the longwall would cost $100 million to $150 million.
"If our sales are up, we'll run about 18 hours a day," Sollars said.
A wall of mist keeps coal dust from getting to the miners on the longwall. For extra protection, members of the eight-man crew working on the longwall use a special helmet with a mask that funnels air past their faces to keep them from inhaling dust.
Nearby, a remote-controlled machine known as a continuous-miner is digging a new tunnel that the longwall will use once it is finished with its current section. Lasers help keep the digging on course.
"They are within inches after miles of cutting," Sollars said.
Like the longwall, coal from the continuous-miner is loaded onto a $50 million, 36,000-horsepower conveyor and sent to the surface.
"The 8-mile trek out of the mine," Sollars said.
After the continuous-miner makes a cut, a two-man crew of roof bolters secures wire mesh to the ceiling to keep it from collapsing. It is labor-intensive work and considered by many to be the hardest job at the mine.
All this is occurring under about 40 square miles of property owned by the mine. With all that land, Twentymile Coal Co. pays the most property taxes in Routt County, according to Assessor Gary Peterson. The Hayden Station coal-powered plant ranks second.
Peterson said that during the 2012 tax year, Twentymile's land had an assessed value of
$166.5 million. Peterson said the company will pay property taxes of nearly $2.87 million this year.
The South Routt School District is a major benefactor of the mine because 99.5 percent of the land lies within its district. Superintendent Scott Mader said
44.5 percent of the district's property tax revenue comes from taxes paid by Twentymile.
"By far, they are the largest," Mader said. "It helps everyone else's taxes by having a large mine like that."
The county's share of tax revenue the mine paid in 2012 was about $587,740. Peterson said the Twentymile Mine tax revenue is especially significant to local government coffers because the land has not experienced the drastic decrease in value that residential properties here have seen since 2008.
According to Peabody, Twentymile Mine's total direct economic contribution annually is about $200 million and comes from wages and benefits, taxes, state and federal royalty payments, capital investments and vendor contracts. For every one of those dollars spent, three additional dollars of indirect economic value are created for a total of $790 million in economic benefit, according to Peabody.
"For one entity, they probably have more economic impact than the ski area, in my opinion," Commissioner Monger said.
Twentymile and its employees also have a significant impact on local charities.
The company matches as much as $5,000 for each employee who gives to a qualified organization.
In 2012, Twentymile Coal Co. matched $60,000 that its employees gave to the United Way organizations in Routt and Moffat counties.
With the anticipated departure of TIC Holdings in Steamboat by the end of 2013, Twentymile and its employees are expected to be the top contributors to Routt County United Way, Executive Director Kelly Stanford said.
"They have consistently been supporting us," she said. "It's a significant part of what we do."
Aside from employee matches, Twentymile Coal Co. gave an additional $70,000 in charitable contributions in 2012.
This year, Peabody Energy plans to honor 10 to 12 teachers in Routt, Moffat and Eagle counties. On Jan. 10, Hayden Valley Elementary School kindergarten teacher Laura Voorhees became the first Routt County educator to be the recipient of one of Peabody's $1,000 Leaders in Education award.
In 2011, Peabody Energy gave a total of $9,548,000 in charitable contributions worldwide.
Looking to the future
Despite ongoing efforts to create cleaner-burning coal, the industry isn't immune from its critics and detractors, particularly environmental groups, the U.S. Environmental Protection Agency and some politicians.
The Sierra Club, for instance, considers coal to be the country's dirtiest energy source, and it is the club's goal to retire one-third of the nation's more than 500 coal plants by 2020.
In Colorado, the state's Renewable Energy Standard will require 30 percent of energy from renewable sources by 2020. The controversial Clean Air Clean Jobs Act signed by then-Gov. Bill Ritter in 2010 could force three coal-powered plants on the Front Range to convert to natural gas.
Coal, however, remains an abundant natural resource in Colorado.
According to the Colorado Geological Survey, coal provides the fuel to generate about 68 percent of Colorado's electricity, and an estimated 16 billion tons of coal that can be economically mined remain underground, placing Colorado eighth in the nation. At current production rates, there is enough coal in Colorado to last nearly 600 years, though production rates are expected to increase.
There is about four years' worth of coal to be mined from the existing portals at Twentymile Mine, Sollars said.
Years ago, Twentymile officials began planning where to mine next and since have built the Sage Creek Portal. They also are in the early stages of getting approval for a 392-acre reservoir that would provide a reliable water source for mining operations. The Trout Creek Reservoir would store about 12,000 acre-feet of water and would cost an estimated $16 million to build.
The reservoir would help support operations at Sage Creek Portal, which taps into the same 9- to 10-foot-high Wadge coal seam that Twentymile currently mines. It is estimated that the new portal can access an additional 105 million tons of low-sulphur coal. At current production rates, that would last about 13 years.
Nettleton, Twentymile's environmental manager, said the new portal represents a $200 million investment. Construction started in 2011 and much of the infrastructure is done, including tunnel entryways, a new substation and environmental controls. Some coal even has been produced, but Sollars said that was mined only to confirm what company officials had thought was down there.
Twentymile executives had hoped to move their longwall operation and fully transition production to the new portal by 2015. That timeline has been pushed back because of a softening of coal sales in 2012, Sollars said. Work on the new portal will not resume until January 2014.
Sollars said a number of factors impacted coal sales last year.
"The lack of winter last year was a big one," Sollars said. "Right now, natural gas prices are having an impact."
Construction and future production at the mine has been secured by a 16-year agreement with Hayden Station and export contracts.
Sollars is confident the coal industry will continue to have a place in Routt County.
"I hope so," Sollars said. "Peabody has plans for it."