Patriot Coal’s announcement two weeks ago that it is closing the huge Samples Mine, one of the largest mountaintop removal operations in the region, rightfully got a lot of media attention.
A lot of folks, including coal industry lobbyists and Coal Tattoo readers, blamed environmentalists and the push to end or at least much more strictly regulation mountaintop removal. Patriot officials made no mention of any permit holdups or other such issues, instead blaming the poor coal market and a corporate decision ” to concentrate production at lower-cost mining complexes.”
But there’s another part of this story that is pretty important … Patriot is making a concerted effort to re-examine its ability to mine its coal reserves with underground mining, rather than with huge mountaintop removal operations. And what are they finding? Well, here’s what Mark Schroeder, Patriot’s senior vice president, told industry analysts during a conference call just a few days before the announcement that Samples was closing:
The positive … for us is that as things get more difficult on the surface side, we have wonderful underground reserves that are out there, some of which are ready to go.
Whenever someone calls for a ban on mountaintop removal or even for slightly tougher regulations, the National Mining Association says such moves would jeopardize thousands of jobs and threaten the nation’s energy supply. But that’s not what Patriot Coal (the third largest producer of coal in the eastern U.S.) is telling its stockholders …
Not surprisingly, Patriot is most concerned about permit applications to continue mining at its huge Hobet 21 complex down along the Boone-Lincoln County border here in West Virginia (shown above in one of Vivian Stockman’s photos). One such permit, for a 400-acre operation called Hobet 22,already ran into problems, because of the WVDEP’s failure initially to require any limits on the operation’s selenium discharges to area streams. (This despite evidence that existing selenium discharges from Hobet’s existing operations were already pushing the Mud River watershed “to the brink of a major toxic event.”)
You’ll recall that Hobet last year warned employees of potential layoffs because of a challenge to that permit. That prompted the typical ” we’ll do whatever we have to do ” rhetoric from United Mine Workers President Cecil Roberts, and Gov. Joe Manchin ended up intervening. A deal was reached for more selenium monitoring and pollution controls, and the company promised to hire a forestry reclamation expert recommended by citizen groups.
But now, another Hobet extension permit, called Hobet 45, is on the list of strip-mining proposals that the federal EPA wants to take a closer look at before their Clean Water Act permits are approved by the Army Corps.
Whiting told stock analysts that if the permit isn’t issued soon, the company is looking at losing 500,000 to 1 million tons of production at Hobet sometime in the second half of 2010. But because of the time it’s already taken to get the permit, there will probably be some production lost:
We’re looking at some alternate plans to keep the dragline working for perhaps a few more months … we’re to the point that we’ve already waited long enough. There will be some impact.
Without the permit, production at the Hobet surface mine will wind down over the next two or three years. About 350 workers are employed at the operation. Said Whiting:
Frankly, it’s pretty hard to run that mine without the dragline swinging because it puts an awful lot of burden on the infrastructure, on just the truck and shovel component.
So it is important that we ultimately get that permit or move on to underground reserves or other projects.
Still … when asked point blank if not getting the surface mining permit would mean that Hobet couldn’t get the reserves proposed to be mined by Hobet 45, Whiting said this:
There may be some other more innovative method we could come up with over time to avoid those drainage areas and maybe so some pockets of it at certainly a higher cost in a different market.
There may be an engineering answer where we could get some of those reserves.
Make no mistake, Patriot Coal wants its strip-mining permits, as Whiting said:
It would be a travesty for these permits not to come through, because they are low-cost fuel for all of our customers and their customers and the citizens of this country.
… We certainly will be fighting the hard fight and making our case that when we’re complying with the laws of the land we should be granted these permits.
But, Whiting said:
… We’re hedged to manage through it either way it goes.