Leases Could Generate up to $21 Billion in Bids, Royalty Revenue
Edited March 28, 2011 to add the following clarification:
On March 22, the Bureau of Land Management announced four lease sales and four future records of decision for coal tracts in Wyoming's Powder River Basin. The revenue estimates, which ranged from $13.4 billion to $21.3 billion, referred to revenue from the four lease sales, as well as from possible future lease sales under the records of decision.
The estimated total tonnage for the eight coal tracts is 2.3 billion tons of coal. The revenue estimates are based on the future price of mined coal between 2015 and 2030. The calculations include projected bonus bids and royalties and the State of Wyoming's severance and ad valorum taxes.
Edited March 24, 2011, to correct percentage of lease sales to Wyoming and Fed.
CHEYENNE, Wyoming -- Secretary of the Interior Ken Salazar announced today that the Bureau of Land Management (BLM) will hold four competitive lease sales in coming months, offering Powder River Basin tracts in Wyoming that contain an estimated 758 million tons of low sulfur coal. The total bonus bids and royalty payments over the life of these leases are estimated to generate $13.4 to $21.3 billion, 49 percent of which would go to the State of Wyoming.
"Coal is a critical component of America's comprehensive energy portfolio as well as Wyoming's economy,” Secretary Salazar said in making his announcement with Wyoming Governor Matt Mead. “As the number one coal producer from public lands, Wyoming provided nearly 40 percent of the domestic coal used to generate electricity last year and it's important that we continue to encourage safe production of this important resource.”
“I applaud Secretary Salazar and his agency for moving forward with these leases,” Governor Mead said. “The electricity our country needs to thrive has to come from somewhere and right now coal powers many of our cities and industries. This coal also keeps Wyoming men and women working.”
The four sales, responding to Lease by Application (LBA) filings from companies to continue efficient operations and production from existing Powder River Basin coal mines, will be held in Cheyenne in a sealed bid process.
In total, the four tracts cover 7,441.25 acres containing an estimated 758 million tons of mineable coal. The federal share of bonus bids and royalty payments from these leases, 51 percent, would go to the U.S. Treasury. These LBA sales are the first of more than a dozen that BLM expects to hold for Powder River Basin coal tracts over the next three years.
In addition, in coming months BLM expects to announce the availability of records of decision for the South Porcupine, North Porcupine, North Hilight and West Hilight coal sale tracts in the Wyoming portion of the Powder River Basin. Combined, these tracts cover 13,965.75 acres containing an estimated 1.6 billion tons of mineable coal.
The Powder River Basin is the largest regional producer of coal in the United States. In the Wyoming portion of the Basin, there are 13 active coal mines that produced about 428 million tons in 2010, while production from all coal mines in the state totaled 442.5 million tons last year, according to the U.S. Department of Labor's Mine Safety and Health Administration. Total coal production in the United States in 2009 was about 1.1 billion tons.
The Basin's coal contains 15 times less sulfur that eastern coal, so it burns relatively cleaner, releasing fewer greenhouse emissions. That has made it a top choice to use in coal-burning power plants, which generate about half of the Nation's electricity. Wyoming's cleaner-burning, low-sulfur coal provides nearly 40 percent of the coal used in these plants.
Last fiscal year, federal coal royalties in the Basin generated $598 million, which was shared with the State of Wyoming. The state's coal industry employs about 7,000 workers, each of which supports three related jobs in the private sector.
The anticipated sale dates of the four tracts announced today are:
May 11 -- West Antelope II North Coal Tract, a 2,837.63 acre area containing an estimated 350 million tons of mineable coal; offered in response to a LBA filed by Antelope Coal LLC.
June 15 -- West Antelope II South Coal Tract, a 1,908.6 acre area containing an estimated 56 million tons; offered in response to an LBA filed by Antelope Coal LLC.
July 13 -- Belle Ayr North Coal Tract, a 1,671.03 acre area containing an estimated 222 million tons; offered in response to an LBA filed by Alpha Coal West.
August 17 -- Caballo West Coal Tract, a 1,023.99 acre area containing an estimated 130million tons; offered in response to an LBA filed by Caballo Coal Company.