Tri-State subsidiary buys Colowyo to ensure fuel source for Craig Station
When representatives at Rio Tinto informed managers at Craig Station it would honor its coal supply contract until 2017 and then close Colowyo Mine, officials at Tri-State Generation and Transmission Association, Inc. opened negotiations to purchase the mine. Colowyo Mine has been one of two major coal suppliers to the local power plant, the other being neighboring Trapper Mining Company. In December 2011, Tri-State, through its subsidiary Western Fuels-Colorado, closed on the acquisition ensuring a steady supply of coal for Craig Station’s estimated remaining lifespan of 30 to 40 years. On Tuesday, Colowyo Mine Manager Chris McCourt discussed the acquisition and future expansion projects during the Colorado Coal & Power Generation Conference in Craig. Colowyo currently mines about 2.3 million tons of coal per year, all of which goes to fuel Craig Station, McCourt said. That production is down about two-thirds from its peak years in 2007 and 2008 when Colowyo also fueled the Nucla Station in Western Colorado and other coal-fired power plants around the country. But with energy demands increasing in world markets, McCourt said the new management has shifted its focus to expansion. “I know it was very stabilizing for the area here to know this operation is going to be looking toward the future to provide long-term stability,” he said. Among some of the plans are to explore the viability of Colowyo’s reserves located beneath its current surface mines, McCourt said. Colowyo’s surface pits are expected to produce for about the next seven years, McCourt said. Then, the company may transfer to a subsurface operation. The company also is making plans to expand into its Collom Reserve. The Collom Reserve, McCourt said, features 27 seams and an estimated 200 million tons of coal. Colowyo is focusing on 12 seams to start, which would be mined from the surface at depths up to 30 feet. “We believe there is enough coal to last into Craig Station’s remaining generations,” McCourt said. “As coal markets pick back up, we will be expanding into other markets to sell this coal.”
“They want what the United States has, they want what the developed world has because electricity is a good thing. People who have access to electricity tend to live longer, they have a better quality of life. Those societies (have) lower rates of infant mortality, greater access to clean drinking water and a host of other things that boost their standard of living.”
— Stuart Sanderson, Colorado Mining Association president, about the increased demand for coal in developing nations
The Clean Air, Clean Jobs Act, sage grouse, and more stringent air quality regulations from the Environmental Protection Agency are among some of the concerns facing Northwest Colorado coal producers, industry officials said Tuesday.
State and local representatives from the coal and power generation industries addressed those concerns during the Colorado Coal & Power Generation Conference at the Holiday Inn of Craig, 300 S. Colorado Highway 13.
The annual event, hosted in recent years in Craig and Steamboat Springs, attracted more than 70 people and provided industry officials the opportunity to address the affects government regulations could have on their ability to deliver reliable electricity to American consumers.
The conference featured two separate panels of speakers, including Stuart Sanderson, Colorado Mining Association president; Jerry Nettleton, environmental manager at Twentymile Mine; Rick Johnson, manager of Tri-State Generation and Transmission Association, Inc.’s Craig Station; and Chris McCourt, manager of Colowyo Mine, among others.
After a brief welcome address by Moffat County Commissioner Audrey Danner, Sanderson delivered a presentation on the state of coal in 2012.
Sanderson stayed true to his comments from a week ago in which he said his discussion would be largely political in nature, focusing on President Barack Obama and the EPA’s “war on coal.”
Yet, despite a growing domestic shift toward natural gas and increased investment in renewable technologies, Sanderson said the state of coal is not as bleak as it may seem, especially when looking beyond American markets.
Sanderson cited developing nations like India and China, two countries embracing coal as a reliable source of energy. History may be playing a factor in the attraction of coal overseas, Sanderson said.
“They want what the United States has, they want what the developed world has because electricity is a good thing,” Sanderson said. “People who have access to electricity tend to live longer, they have a better quality of life. Those societies (have) lower rates of infant mortality, greater access to clean drinking water and a host of other things that boost their standard of living.”
Johnson played off Sanderson’s historical reference.
“Look at all of the underdeveloped countries that are anxious for coal and natural resources to develop their countries into what the United States of America used to be," he said.
Johnson also discussed costs Tri-State Generation and Transmission Association, Inc. will incur if the EPA approves in September the State Implementation Plan of the Clean Air, Clean Jobs Act.
According to that plan, Craig Station would be required to install a selective catalytic reduction device, in addition to other equipment upgrades, aimed at reducing the power plant's nitrogen oxide and sulfur dioxide emissions.
If approved next month, Craig Station would have five years to comply with the new regulations.
The new equipment and upgrades carry an estimated price tag of $300 million, plus $10 to $15 million in annual maintenance and repair costs.
Because Craig Station is a cooperative member of Tri-State, those costs would likely be passed down to consumers in the more than one million homes and businesses powered by the 1,311 megawatts of electricity generated in Craig, Johnson said.
It’s a significant cost to pass on to consumers, he argued, considering the Clean Air, Clean Jobs discussion was focused on visibility issues, not health or science-based concerns.
“There are significant cost increases (associated with Clean Air, Clean Jobs) without beneficial improvement to the environment,” Johnson said. “Hopefully with the elections coming up and more people beginning to realize what we’re doing with the economy in the United States, maybe people will start coming to some commonsense conclusions to get this society going again.”
Click here to have the print version of the Craig Daily Press delivered to your home.