Coal mines give update to DCED
Photo by Kathy Browning Participating in Delta County Economic Development’s quarterly meeting at Energy Tech in Paonia on Oct. 25 are (left to right) Weston Norris of West Elk Mine, Steve Weist of Oxbow Mine, Dewey Tanner of Bowie Resources, Mike Ludlow of Oxbow and Brad Harding of DCED.Delta County Economic Development (DCED) held its quarterly meeting at Energy Tech in Paonia on Oct. 25.
Brad Harding, DCED president, gave a brief overview of the past year.
"We are the economic development arm of Delta County. Our job is to encourage primary employers to do business here in Delta County, to retain those that are already here and to bring in new companies that fit our quality of life and what we see as valuable in the area," Harding said. Primary employers pay above average wages. "When someone earns at an above-average wage obviously there is a multiplier effect. They have discretionary income. They can spend in the community and it ultimately effects that community in a positive way."
The three mines employ 1,000 workers directly and many indirect workers. "DCED supports the coal mines," Harding said.
Steve Weist of Oxbow Mining gave an update of the Oak Mesa Mine Project which he has worked on for the last three years. It's located about eight miles north of Hotchkiss and to the east of the Leroux Creek drainage. In the future, another 1-1/2 miles of coal reserves could potentially be mined depending on the geology in the area before they would get into Forest Service land and have to deal with roadless issues. They anticipate finding between 100 and 150 million tons of recoverable coal which at 5 million tons a year will provide a 20- to 25-year mine life just in the area identified. If there is more coal adjacent, the mine life could be extended another 15 years.
"We're pretty excited about what the potential is," Weist said.
Oxbow hopes to begin exploratory drilling on Nov. 1. They will drill 25 core holes to actually take out a coal sample to test for its quality. They will also take a 25-foot sample from the roof and from the floor to determine the strength of both. That helps in planning the mine for pillar sizes, room openings and how wide to make the longwall panels.
"Hopefully we'll have a mine plan that will keep us in the valley for many years to come," Weist said.
Weston Norris has been with West Elk Mine since February. The mine sits entirely inside the Gunnison National Forest. Future reserves are also under national forest land. Goals of the company are to maintain excellent environmental health and safety performance, have high customer satisfaction and to ensure long-term viability for their operations.
West Elk Mine has had zero violations since 2000. The mine has received safety awards from 2009 to 2011.
West Elk Mine has 1,722 acres of federal coal leases. They have projected there are 10.1 million tons of reserves within the modification areas. The lease modifications will preserve 353 high-paying jobs in the North Fork Valley. The mine will generate $113 million in federal and state revenue with the lease modifications. The mine's economic impact in 2011 was $25 million in taxes and royalties. From that, $12.4 million was distributed to the state.
They produced 5.9 million tons of coal in 2011. The mine hopes to produce 7 million tons a year in the future.
Dewey Tanner spoke on behalf of Bowie Resources. The mine is the only one located entirely in Delta County at this time. The D seam portals opened in Nov. 1997 with the longwall starting on the D seam two years later. Bowie completed their downhill conveyor in June 2002 and the unit train loadout was completed five months later. They opened the B seam portal in Dec. 2003. Their wash plant was completed in July 2004. Longwall operations in the B seam started in April 2005 and in the western area in June 2011.
Currently, Bowie Resources employs 321 hourly, salary and temporary employees.
In 2011 Bowie Mine produced 2,580,203 tons of raw coal resulting in 2,221,926 tons of total coal shipments. This year through Oct. 21 raw coal production is up to 3,434,287 tons with total shipments of 2,988,549 tons. Bowie Resources customers include TVA in Kentucky, AEP in Virginia, C. Reiss in the Great Lakes, Pro Miner in Mexico and Ashgrove Cement in Nebraska. They shipped their first order to Japan — 40,000 tons — this month.
As of Sept. 30, Bowie has made $8.8 million in royalty payments, $777,000 in severance taxes, $2.3 million in excise taxes, $357,000 in reclamation taxes. They have a total payroll of $26.2 million. Bowie made $40 million in purchases of goods and services and $12.64 million in purchases of local goods and services within a 90-mile radius from Paonia to Grand Junction. Bowie spends $1 million every week. Medical expenses are $100,000 a week with the number one payee Delta County Memorial Hospital.
Bowie has applied for lease modifications to extend the life of the mine to 2020.
Before the meeting, Brad Harding of DCED explained more about a review done for Delta Timber that showed it would be a "job killer" to produce biomass products. Delta Timber was thinking of launching into a major endeavor with biomass products.
"They found out there really wasn't the market they thought was there for the end product. They were going to spend a lot of money, a lot of time and effort heading in that direction, and it probably turned out it was not the right way for them to go," Harding said.
The consultant's entire report on the project is at the DCED office. DCED helped Delta Timber win the grant funding to hire the consultant to do the study.
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