Peabody Energy gives OK to Sage Creek
Coal contracts are likely to secure hundreds of jobs in Routt County
January 27, 2012
Steamboat Springs — Peabody Energy announced this week that it will go forward this summer with plans to move its underground longwall coal mining operation a few miles from its present location in western Routt County to the new Twentymile Sage Creek portal.
The decision to move ahead with the $200 million project, which already has been approved by Routt County, is secured by 40 million tons in long-term coal supply agreements, Peabody officials wrote in a prepared statement. They include a 16-year agreement to provide coal to the nearby Hayden Station power plant, which is operated by Xcel Energy.
Coal production at the existing Twentymile Mine will continue as workers prepare the new mine, where production is expected to begin in the second half of 2015, Peabody spokeswoman Beth Sutton said Thursday.
Peabody has more than 350 employees at Twentymile, Sutton said.
"We see the operations continuing well into the future and intend to remain a long-term player in Colorado, building on our half-century history there," Sutton said.
Relocating the coal mine would allow Peabody to continue extracting low sulfur coal from the Wadge coal seam. It produced 7.1 million tons of coal in 2010.
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Peabody's news release reports that the Twentymile Mine created $730 million in direct and indirect economic benefits to the region in 2011. Sutton said the estimate is produced by tallying direct impacts — payroll that turns over in the economy and purchases of goods and services by the mine, for example — and multiplying them by four. She said that formula is a standard method of economic reporting.
Regional impacts go beyond Northwest Colorado to all of Colorado and beyond the state's borders, she said.
The Twentymile Mine is nearing the point that it no longer can access the coal it has been mining from its location west of Steamboat Springs. The mine is situated in a geologic area noteworthy for alternating ridges and draws (anticlines and synclines) where the coal, buried in layers of sandstone and shale, is sometimes within 100 feet of the surface and sometimes 1,200 feet below the surface, according to Twentymile officials who described the need to move the mine in April 2010.
The new Sage Creek operation would mine the same Wadge coal seam that Twentymile has been mining, but at a more accessible point a few miles to the northwest. The new mine portal already has been built, Sutton said. When the underground longwall panel is prepared, it will take about eight weeks to move the longwall itself, she said.
According to figures from the National Mining Association, the three coal mines in Northwest Colorado, Twentymile among them, combined to produce almost half of Colorado's total 2010 coal output of 25.1 million tons. The Colowyo and Trapper mines in Moffat County contributed 4.8 million tons, and Twentymile produced 7.1 million tons of coal.
Yampa Valley Data Partners pegged Moffat County coal mine employment at 391 people in December 2011 and Twentymile's at 452.
In 2007, Yampa Valley Data Partners reported the average salary of workers employed in mining in Routt County at $69,707 and in Moffat County at $68,451.
The news that Hayden Station electrical power plant has a 16-year contract with Twentymile Mine comes at the same time that Xcel is phasing down some coal-burning plants in Colorado under the Clean Air, Clean Jobs bill, and converting some to burning natural gas.
But Xcel Energy senior media representative Mark Stutz said Thursday that although change is coming to Hayden Station, there are no plans to phase it out.
"This means we plan to burn coal there for a long time,"
Stutz said. However, he added that Hayden Station is due to have new pollution controls in the form of selective catalytic emission technology by 2016.
Sutton confirmed that the majority of the 40 million tons in coal agreements secured by Twentymile will go to Excel, but said some of the locally mined coal will go to markets in Europe.
Stutz said that until 2017 some of the Routt County coal will go to Xcel's Valmont power plant in Boulder and some to its Cherokee plant in north Denver. Valmont will shut down in 2017. Cherokee shut down one of its four units in 2011 and will shut a second in 2012 and another in 2015, Stutz said. The fourth unit will be converted to natural gas in 2017.
Editor’s note: This article has been updated from its original version to reflect accurate statistics for coal production quantities in Northwest Colorado.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com