By Lee Buchsbaum, Associate Editor and Photographer
The Bowie No. 2 longwall mine, owned by Bowie Resources, is located at the west end of the North Fork of the Gunnison Valley in western Colorado. It was constructed to service a TVA contract, one that is still responsible for the majority of the coal they mine. But tough geology, declining markets and changing ownership slowed the mine down and eventually, temporarily curtailed production. Today, the Cedar’s Investment Group owns the mine. L&L Energy, a Chinese-American investment fund, is a secured lender and has a small stake. Cedar’s recently sold an interest in the mine to international coal trader Mercuria. Now Mercuria has a significant position in Bowie and functions as the mine’s marketing agent.
Historically, from 1999 to 2007, Bowie was consistently producing about 5 million tons a year. “That was our average and that was our target from 2008 and 2009. In 2010, we had some issues and we actually abandoned the northeast portion of the reserve and drove to the current mining area,” said Dewey Tanner, vice president and general manager, Bowie Resources. Unfortunately, Bowie went about 16 months without running the mine’s longwall. But now they have worked into a new area for Bowie. “We’re really excited to be working out our third panel in a new district. This year, we’ll probably produce about 4.3 million raw tons and we expect to do 5 million clean next year,” said Tanner.
Production-wise in the last year and a half, Bowie has moved from what was the northeast district, which had a lot of gas and roof problems, to another area that it has now traversed through.
“We’ve mined more than a hundred thousand linear feet, about 4 miles, since then. We’re now in the third longwall panel in our new district. In June 2012, the mine celebrated the first 500,000 ton production month since the struggles that began in 2007 and the redevelopment of the mine.”
Though producing out of the same seam as before, coal quality, particularly moisture, has changed. “We have a wash plant so we can give a customer a full 12,000 Btu product. And that’s been our benchmark, we produce some very hot burning coal here. It’s about 0.4% sulfur, 0.8 lb SO2 per million Btu, it’s 9% moisture, 7%-8% ash, it’s an excellent super-compliant coal product,” said Tanner.
Redevelopment & Learning to Navigate Faults
As it develops the mine, Bowie is mining to a 9-ft height and the seam’s as thick as 20 feet in places. “We like to retreat at about 11 ft on our longwall and we develop at 9 ft. It’s a Caterpillar longwall system with a Cat shearer,” said Tanner. Conditions in Bowie’s new mining area are very good, according to Tanner. “We’ve got the best conditions in our development section that we’ve had since 2007. Generally our roof and rib conditions are pretty good. We crossed a couple of faults coming over into this area, and we do have some faults to deal with, but we’ve learned how best to cross them, and in the big picture they’re not big deals.”
When Bowie encountered some rough geology and the mine shut down, there just wasn’t any place to move the longwall. Unfortunately, all that could be done was to keep it stabilized until crews developed a new block for it to mine. Also, in the area it was mining, Bowie was liberating as much as 13 million cubic feet of gas per day. “The area we’re in now doesn’t have the geological influences that the other had. Currently, we’re down to about a 1.3 million cubic feet of gas per day. The conditions are better. We’re much better prepared. The vent shaft helps us with that. Our employees have learned to cross faults. At one time a lot of folks didn’t think we could cross the faults that we had to, but we’ve become pretty creative about how to do it. We’ve come a long way in the last couple years,” said Tanner.
Currently, Bowie has several gob vent bore holes that liberate some methane, and it has studied various methods to see if it’s economical to capture it. Where the gas is located, as far as the Forest Service or the BLM is concerned, it doesn’t make sense to capture it. Complicating matters, it’s intermittent. “The gas will be there for a bit and then it won’t. But it’s not been enough to find ways to capture it,” said Tanner.
In total, Bowie’s new ownership has put about $20 million in the last 12 months or so into this coal mine. “We have a new ventilation shaft that cost more than $6 million. We have a new continuous miner, some new shuttle cars, some new diesel equipment that’s coming in, and we’ve done quite a bit of work rebuilding the infrastructure of our mine. Recently, we’ve added 100 employees. Previously, we were down to only 200 workers, but now we’re back up to 320 employees. Bowie is kind of like a Phoenix rising from the ashes of the old mine. Some folks didn’t think we’d make it past the 2010 timeframe, but we managed to get through and come out on the other side and succeed.”
Achieving & Maintaining a Social License
Besides mining through tough conditions and weathering a difficult market, the three North Fork mines are located in an area under increasing environmental scrutiny. Bowie is the largest employer and the largest taxpayer in Delta County. The region’s population is a mixture of ranchers, organic farmers, hippies, environmentalists, gas drillers and coal miners. With that composite, perhaps the hardest permit to get is a social license to operate. How do they do it? Bowie, as well as the other mines, is a good neighbor. “For example, if we put a conveyor in, we’ll do things to mitigate the light pollution. We’ll install hoods or shrouds on the light. If we put a fan in, we install noise suppression and updrafts so that the noise doesn’t go through the valley. We try to redirect the noise into the sky and then we’ll put silencers on it. In the winter, we often plow some of our neighbors’ roads. If we had a neighbor that had a dam and they needed a couple of hours of back-hoe work because their dam had a problem, they’ll call us up and we’ll help them fix it. It’s just a matter of being a good neighbor and being responsible. It’s pretty much the golden rule, and living by it,” said Tanner.
Bowie Gets in the Export Game
Currently, Bowie is exporting a small portion of its coal to Mexico, and is anxious about exporting some to the Pacific Rim and Asia. “When those deals come together, through our Mercuria partnership, we have some port space in Stockton, Calif.” Tanner hopes that initial tonnage capacity at the port will grow from 500,000 tons to 1.5 million over time. “While in the big picture that’s not much coal, it is an outlet and everything and anything helps.”
Rail Service in the North Fork
Rail service in the Valley came under quite a bit of criticism prior to the great recession. Back around 2007, these mines predicted they would load 20 million tons, though the railroad was geared up and prepared for only 17 million – 18 million tons. With a bottleneck in Denver, finally Union Pacific invested several million dollars to get things turned around.
“Since they increased their capacity, all three of us have not produced to that amount. We still did collectively 16 million – 17 million a year maximum, though between us all we’ll do maybe only 15 million out of the valley this year. It would be like us to beat the railroad up for years and then finally they spend the money and the market changes.” Since the railroad made some improvements, it has been performing very well, said Tanner. “They do a pretty good job of managing their business, their ups and downs. They do a good job taking care of us.”
Unlike most mines, however, Bowie has an independent contractor take over switching and loading services once the UP drops off an empty train. Once the train arrives, Load-Out Services, a subsidiary of Fenner-Dunlop, takes over. “They break it in half for us, load it and then they put it back together so it’s prepared to go. At that point, the railroad will bring their crew here,” said Tanner.
Though Bowie’s return is certainly a success story, production and shipments from the three mines in the North Fork of the Gunnison Valley are down, roughly 20% or so. “We are picking up. Both of our sister mines in the Valley have fully retained their employees through the downturn. They had some overtime and some contract labor that they minimized, and we did the same thing. There’s about 1,000 miners employed by these three mines in total. Arch’s West Elk has some great coal miners and an exemplary safety record. The Oxbow guys have done a good job with their coal mine too. We’re participating with Oxbow and looking at some future reserves to the west of us. Looks like we’ve got a good chance to get that started before year’s end. Though the coal market is tough, I think we can weather the storm. It’s not easy but I think we’re in better shape than most,” said Tanner.
