Coal Age Magazine - For nearly 100 years, Coal Age has been the magazine that readers can trust for guidance and insight on this important industry.
Issue link: https://coal.epubxp.com/i/603417
shipping coal to two Kentucky utility customers — Louisville Gas & Electric Co. and Big Rivers Electric Corp. Rhino is contracted to sell 800,000 tons a year for five years to LG&E;, a PPL Corp. sub- sidiary, and 1.1 million tons through 2017 to Big Rivers, a H enderson-based generation and transmission co-op. P ennyrile produced 623,647 tons of high-sulfur steam coal in the first nine months of 2015, federal Mine Safety and Health Administration figures show. The mine produced only 229,910 tons in 2014, its first year of operation. According to Funk, the company has received regulatory approval for Pennyrile's deep-cut mining plan, which has con- tributed to the mine's rising productivity. "During the fourth quarter," Funk said, "we will increase the c oal processing capability of the Pennyrile preparation plant, which should lead to future cost improvements." The mine, he added, gives Rhino additional diversification "and we expect it to be a significant generator of stable cash flow as it ramps up to its full potential run rate of two million tons per year." In August, Rhino completed the approximately $5.7 million sale of its oil and natural investment of approximately 1,900 net mineral acres in the Cana Woodford region of western Oklahoma. Proceeds from the transaction were used to reduce the outstand- ing balance on Rhino's revolving credit facility. Environmental Activists Target Signal Peak Reserves In late October, Signal Peak Energy (SPE)was weighing a possible appeal of a Montana Board of Environmental Review decision ear- lier in the month that at least temporarily placed on hold the com- pany's planned major expansion of its bituminous coal longwall mine, formally known as the Bull Mountains mine, near Roundup in Musselshell County. SPE is seeking to add 7,161 acres to its existing mining permit. The additional acreage would add 176 million tons of coal in place, or 110 million tons of mineable coal, enough to continue longwall opera- tions for another decade. The amended permit also would enable the company to expand the mine from five to 14 longwall panels, but would not result in the installation of any additional longwalls. The Montana Environmental Information Center and the Sierra Club appealed the Montana Department of Environmental Quality's (DEQ) approval of the amended permit to the state review board, claiming DEQ's material damage assessment and determination "employed the incorrect legal standard" and that the case record before the agency did not "affirmatively demon- strate" the "mine expansion was designed to prevent material damage to the hydrologic balance." In a 4:1 vote, the review board agreed to send SPE's permit application back to the DEQ for further consideration. The mine's proposed expansion "is a considerable undertak- ing," the board said. "It promises sizeable economic benefits in the short term. However, as the Montana Department of State Lands determined years ago, it also threatens significant economic harm in the long term." The Bull Mountains are an arid landscape, the board noted, and existing ranching operations and ecosystems are wholly dependent on the area's limited water resources. This is where the board committed two errors, the board added. "First, DEQ's material damage determination failed to consider whether the mine expansion would lead to violations of water quality standards," the board said. "Second, the record evidence did not affirmatively demonstrate that the mine expansion is designed to prevent material damage to the hydrologic balance outside the permit area." I nstead, the board continued, "it demonstrated only that the m ine expansion, as currently designed, may or may not cause mater- ial damage outside the permit area in the next 50 years and that there may or may not be water resources available for mitigation." As a result, the board said, DEQ's permit decision must be set aside and the matter returned to the agency "to complete a lawful cumulative hydrologic impact assessment." Mike Dawson, a SPE spokesman, said in a statement the com- pany was reviewing the board's decision "to determine the i mpact" on the mine. He also said Signal Peak continues to oper- ate normally. The mine, owned by FirstEnergy Corp. and Boich Cos., both of Ohio, and Pinesdale LLC, a wholly owned subsidiary of Swiss com- modities trader Gunvor Group Ltd., produced 4.8 million tons of coal through the first three quarters of 2015, down from a high of 8.6 million tons in 2014. Most of the coal is shipped overseas. CSX to Close Mechanical Shops in Corbin As CSX continues to evaluate network resources and match them to demand in a changing business environment, the company announced the closure of the mechanical shops in Corbin, Kentucky. The shops at Corbin were primarily used to maintain, inspect, and service locomotives and rail cars for coal trains moving from Central Appalachia to the eastern consumption regions. The deci- sion to close the locomotive and car shops and a locomotive ser- vice center is the result of reduced need for locomotive and car maintenance there because of the significant decline of the region's coal traffic. Approximately 180 active CSX employees who work at the facil- ities and in support roles will be affected. All affected employees at Corbin will receive at least 60 days of pay and benefits. Union employees also may have other benefits available in accordance with their labor agreements. Many furloughed employees will be eligible for jobs in higher-demand areas on CSX's network. Mechanical management employees at Corbin will be offered relocation opportunities as they are available, or will be eligible for severance benefits. The Corbin rail yard will remain open and train operations will continue. Approximately 100 engineering and transportation employees will remain at Corbin to support and manage the yard traffic. A small number of mechanical employees will also remain to support train operations. Corbin continues to be an important part of the CSX network for the movement of automobiles, con- sumer products and other freight. The combination of low natural gas prices and regulatory action has significantly decreased CSX's coal movements over the past four years, with more than $1 billion in coal revenue declines during that time. CSX remains committed to delivering strong service to cus- tomers in the region. CSX also remains committed to the com- monwealth of Kentucky, with more than 2,900 miles of track in the state, an automotive distribution center in Louisville and the new Casky rail yard in Hopkinsville. n e w s c o n t i n u e d 18 www.coalage.com November 2015