Kemper Plant Generates Power
Mississippi Power’s Kemper coal gasification facility has produced its first batch of power, putting it one step closer to coming online for good. Company officials said the milestone was achieved October 12, and it is now eyeing an in-service date on or before November 30. It will be supplied in part with the state’s lignite. In the meantime, it will continue in the startup phase with testing to include syngas, natural gas or a combination of both. This also includes production of electricity by the project’s second gasifier and operating both combustion turbines using all syngas.
Once online, the facility in Gulfport will be one of the first U.S. large-scale power plants using integrated gasification combined cycle (ICGG) technology. “The generation of electricity using syngas is just the latest example of our company’s commitment to deliver on our promise that Kemper will provide Mississippi Power customers with safe, reliable energy for decades to come,” Mississippi Power Chairman, President and CEO Anthony Wilson said. “Achieving this latest milestone means that we are implementing innovative 21st-century technology right here in Mississippi.”
In the many years the 582-megawatt Kemper has been under development, it has been riddled with growing cost problems, including equipment repairs, as well as opposition issues. Earlier this year, Southern Co. — parent company of Mississippi Power — estimated the price tag at about $7 billion. One initial cost estimate was about $2.8 billion.
The 528-MW facility will use integrated gasification combined cycle (ICGG) technology.
Arch Emerges From Chapter 11
After eight months, Arch Coal has completed its financial restructuring and has emerged from Chapter 11 bankruptcy. The producer has claimed $300 million of cash on its balance sheet as it begins again, along with debt of $363 million, consisting of a new term loan and capital leases. Officials noted that its total debt is only 7% of what it was prerestructure. Arch, which continued to operate throughout the bankruptcy process, began trading on the New York Stock Exchange once again October 5 under the ticker symbol ARCH. “Today marks the beginning of a new era for Arch Coal,” CEO John Eaves said. “We are extremely pleased with what we have accomplished during our highly expeditious restructuring process, and are eager to move forward with our compelling plan for value creation. He also said he was confident that all of the pieces are in line for the company to succeed long term, including “an extraordinary workforce, cost-competitive assets, a high-quality reserve base, a clean balance sheet and an excellent management team.”
Arch, emerging as the second largest thermal coal producer in the U.S., first filed for Chapter 11 in January.
Ramaco’s Brook Operation Moving Forward
The Wyoming Environmental Quality Council (EQC) has voted unanimously to permit Kentucky-based Ramaco to develop its Brook mine north of Sheridan, Wyoming, despite objections to the plan. Company CEO Randall Atkins told the Associated Press the mine should begin production early next year and it will be moving quickly with the remainder of Brook mine’s permitting. “We’re very pleased that the EQC agreed with our conclusion there were not any substantial damages to the surface owners,” he said.
The planned operation has met some pushback from landowners as well as nearby mining company Big Horn Mining, which owns 1,100 acres of surface land in the area. Big Horn attorneys told regulators earlier this year that the Brook mine would restrict rail and bridge access and use should they mine at some point in the future. Council members ultimately did not agree. “I do not believe there will be an impact, substantial or otherwise, to Big Horn Coal,” one council member, Tim Flitner, told the AP.
In all, Ramaco owns 14,500 acres in the area with about 1.1 billion tons of recoverable reserves. Brook will reportedly begin production at about 500,000 tons annually, but ramp up in the long term to 8 million tons per year. Atkins deferred immediate comment to Coal Age on ramp-up timelines, staffing and equipment plans for the mine until all of it’s permits are finalized.
Last month, Ramaco announced plans for the development of the Elk Creek and Berwind mines in West Virginia and Virginia, thanks to a $90 million private equity investment with Energy Capital Partners Mezzanine and Yorktown Energy Partners. Ramaco, which was founded in 2011 with a focus on metallurgical opportunities in the eastern U.S, currently has about 200 million tons of recoverable coal reserves in its portfolio.
Numerous Mines Set to Close This Fall
Several underground steam coal mines owned by Murray Energy Corp., Alliance Resource Partners and Alpha Natural Resources in the Illinois Basin (ILB), Northern Appalachia and Central Appalachia are scheduled to close this fall, mainly, though not entirely, because of poor market conditions. The largest of the mines, Powhatan No. 6 in Ohio and New Era in Illinois, are owned by St. Clairsville, Ohio-based Murray Energy, a privately owned company headed by its veteran founder and CEO, Robert E. Murray. Powhatan No. 6, whose miners are members of the United Mine Workers of America, and New Era, a non-union operation, each produced in excess of 5 million tons of high-sulfur coal in recent years. But Powhatan is running out of economically recoverable reserves while New Era is closing at least partly because it is a higher-cost mine than the nearby New Future deep mine, both part of the company’s Galatia underground mining complex in Saline County, Illinois. Powhatan, in Belmont County, Ohio, is expected to mine its last coal mine in November, New Era in October. When they close, Murray Energy will be left with one underground mine each in Ohio and Illinois: Century and New Future. Ohio Valley Coal and American Coal, both Murray Energy subsidiaries, operate Powhatan and New Era/New Future, respectively. American Energy Corp., another Murray Energy subsidiary, operates the Century mine.
Across the Wabash River in White County, Illinois, Alliance’s Pattiki underground mine also will close this fall, because of difficult market conditions. Pattiki dates back to 1980 when it was opened by the former Mapco Coal. Though never as large a producer as Powhatan and New Era, Pattiki consistently turned out more than 2 million tons annually for many years. According to the Illinois Office of Mines and Minerals, the mine, operated by Tulsa, Oklahoma-based Alliance’s White County Coal subsidiary, still has in excess of 20 million tons of recoverable coal. During the past year, Alliance also has shuttered two other high-sulfur underground steam coal mines in the ILB: Gibson North in Gibson County, Indiana, and Onton, or Sebree, in Hopkins County, Kentucky. Gibson North was operated by Alliance’s Gibson County Coal subsidiary.
Meanwhile, Kingsport, Tennessee-based Alpha plans to idle its Process Energy underground steam coal mine in Pike County, Kentucky, in early November — its last active mine in Kentucky. Process is operated by Alpha’s Sidney Coal subsidiary. Alpha and its affiliates, which emerged in late July from Chapter 11 federal bankruptcy reorganization as a smaller, privately held company, blamed Process Energy’s demise on a “depressed coal market,” in the words of company spokesman Steve Hawkins. The mine began operating in 2007 and produced more than 700,000 tons in 2015. Hawkins said he did not know if the idling is temporary or permanent. Alpha, once one of the largest coal producers in the United States, still has 18 mines in West Virginia.
BB Mining to Open New ILB Mine
BB Mining’s proposed new underground steam coal mine in Pike County, Indiana, could help reverse a recent disturbing trend of deep mines ceasing or reducing production in the high-sulfur Illinois Basin (ILB) state. The mining subsidiary of Blankenberger Brothers Inc. of Cynthiana, Indiana, was issued a final permit in early September from the Indiana Department of Natural Resources’ Division of Reclamation for the new continuous miner operation that could produce up to 3 million tons of coal annually once it goes into operation in 2018.
BB told the state agency that the mine, named Opportunity, will draw upon an estimated reserve base of 35 million tons of coal with a calorific value that averages 11,300 to 11,500 Btu/lb and 6 lb-SO2/MMBtu. The average seam thickness is about 7 feet. The reserve formerly was owned by IPALCO Resources, once the parent company of Indianapolis Power & Light, one of the state’s largest electric utilities. The utility now is owned by AES Corp. of Arlington, Virginia.
Donnie Blankenberger, president of Blankenberger Brothers, said construction on the mine could begin this winter or next spring and probably will take about a year to complete. Opportunity is likely to start out with a lower production level, then gradually ramp up as more sales are secured. Blankenberger is optimistic those sales are out there, particularly in the local electric utility market. Like others, he believes the moribund steam coal market in the ILB is showing signs of life. A hot summer helped to burn down stockpiles at some utilities and a cold winter, which is forecast for the region, would keep the momentum going in the right direction. Natural gas prices also have showed some upward movement in recent months.
While Blankenberger Brothers currently operates no coal mines, the company is no stranger to the industry. It has operated mines in Indiana over the years and constructed the Oaktown underground mines in nearby Knox County for Vectren Fuels several years ago. Sunrise Coal, a subsidiary of Hallador Energy Co., acquired Vectren Fuels three years ago. It is possible, Blankenberger said, that his company will enter into a joint venture arrangement to develop Opportunity. Blankenberger Brothers is in discussions with unidentified parties that could lead to the joint venture, he said.
Opportunity would be a welcome addition to an Indiana underground mining roster that is being depleted. Of the state’s nine underground mines, only four could be in production by the end of 2016 if Triad Mining idles its Log Creek mine in Pike County this fall, as expected. ERC Mining Indiana recently shuttered its Gold Star deep mine in Greene County. The mine, formerly known as Landree under different ownership, has struggled to operate consistently over the past several years. Meanwhile, two of Indiana’s largest underground mines — Alliance Resource Partners’ Gibson North mine in Gibson County and Sunrise’s Carlisle mine in Sullivan County — are idled, although Hallador CEO Brent Bilsland said he hopes to resume production at Carlisle in 2017. Triad’s Freelandville mine in Knox County also has closed.
AEP Will Sell its Biggest Plant in Ohio
American Electric Power Co. (AEP), one of the largest electric utilities in the United States, is selling its largest coal-burning power plant in Ohio, the 2,665-megawatt (MW) General James M. Gavin station along the Ohio River near Cheshire, along with three natural gas plants to a newly formed joint venture of Blackstone Group and ArcLight Capital Partners LLC. The purchase price is $2.17 billion and the deal, announced in mid-September, is expected to close in the first quarter of 2017 if it receives a number of regulatory approvals, including from the Federal Energy Regulatory Commission, Indiana Utility Regulatory Commission and federal clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
AEP, based in Columbus, Ohio, expects to record an after-tax gain of approximately $140 million from the transaction, subject to inventory true-ups, income tax and other adjustments.
In addition to Gavin, whose two units went into commercial operation in 1974 and 1975, the sale includes AEP’s 1,186-MW Lawrenceburg gas plant in Lawrenceburg, Indiana; the 840-MW Waterford gas plant in Waterford, Ohio; and the 507-MW Darby gas plant in Mount Sterling, Ohio. All four plants are merchant facilities, meaning they sell their power into the PJM Interconnection market. PJM is a Pennsylvania-based regional grid operator that includes 13 states plus the District of Columbia.
AEP concluded the four plants no longer fit its long-term strategy of transitioning into a fully regulated energy company “focused on investment in infrastructure and the energy innovations that our customers want and need,” said Nicholas Akins, AEP chairman, president and CEO. “This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets.”
Gavin burns in excess of 7 million tons of steam coal annually. Over the years, it has consumed coal from all regions of the country but currently is using all Northern Appalachian coal, according to AEP spokeswoman Melissa McHenry.
An ArcLight spokesman said the joint venture partners plan to continue operating all four plants once the deal closes.
Until the sale is final, Akins said AEP “will continue to operate the plants safely in the coming months while working closely with the Blackstone and ArcLight teams to obtain the regulatory approvals necessary to complete the sale. We also will be working with employees and community leaders to ensure a smooth transition.”
AEP most likely will wait until the first few months of 2017 before it decides to keep or sell 2,677 MW of additional competitive generation in Ohio. That includes its full or partial ownership in the Conesville, Cardinal, Stuart and Zimmer coal plants.
Those four plants, plus AEP’s minority ownership in Ohio Valley Electric Corp.’s Kyger Creek and Clifty Creek coal plants in Ohio and Indiana, respectively, were “PPA” assets for which the company sought economic support earlier this year. In late March, the Ohio Public Utilities Commission unanimously approved the controversial power purchase agreement. However, it was blocked a month later by FERC.
AEP plans to push legislation in the Ohio General Assembly late this year and/or in early 2017 to re-regulate the state’s electric industry, a move other Ohio utilities including FirstEnergy Corp. are expected to support. Akins said he believes AEP should have an idea within a few months about the move’s chances for success.
If a re-regulation bill is passed, AEP would consider retaining the former PPA plants and placing them in rate base. If not, the plants could join Gavin on the selling block.
Altogether, AEP owns about 31,000 MW of generating capacity in the U.S. and serves nearly 5.4 million customers in 11 states.
DTE Restarts Unit at St. Clair Station
DTE Energy’s second-largest power plant, the 1,547-megawatt (MW) St. Clair coal-burning generating station in Michigan’s Lower Peninsula, has returned to partial service following a major fire in August. But it will be 2017 before the entire facility is back online. By the end of September, Michigan’s largest electric utility had restarted one of St. Clair’s smaller units representing only a fraction of the baseload plant’s total capacity. The plant’s largest unit, 450-MW Unit 7, also the most heavily damaged by the August 11 blaze, is not expected back in operation in 2016, according to company spokesman Brian Corbett. The company is still trying to determine what caused the massive fire whose billowing smoke could be seen for miles and was fought by dozens of first responders. There were no injuries.
Corbett did not indicate if DTE has declared a force majeure to St. Clair’s steam coal suppliers. He confirmed, however, that coal deliveries have continued to the company’s nearby 1,395-MW Belle River power plant. In all, DTE expects to burn nearly 17.5 million tons of coal in 2016. Almost half of that total will be consumed by the mammoth, 3,000-MW Monroe plant on the western shore of Lake Erie. Monroe not only is DTE’s largest power plant, it is one of the largest coal plants in the United States. Its four generating units were built between 1971 and 1974.
Despite the fire and extended outage, Corbett said DTE has no plans to move up the planned retirement date for St. Clair. In June, DTE announced it would shutter 11 generating units at St. Clair, about 40 miles southeast of Detroit, and at its River Rouge and Trenton coal plants representing 2,500 MW by 2023. That would leave DTE with two remaining coal plants, Belle River and Monroe. While no retirement dates have been announced for either plant, Monroe almost certainly will remain in operation longer than Belle River.
DTE has a huge financial investment in Monroe after spending about $2 billion on pollution controls there in recent years. In addition, the company in late September unveiled plans to spend up to $1.5 billion to develop one or more new natural gas-burning plants in Michigan by the early 2020s to offset the retiring coal plant generation. One of the sites for the proposed gas plants is at Belle River, although DTE has not confirmed a gas plant will be built there. The first gas plant is estimated to be in commercial operation between 2021 and 2023.
PSEG to Retire 2 Plants
Public Service Enterprise Group (PSEG) announced October 5 it will retire its Hudson and Mercer generation stations in New Jersey next June. Mercer Generation Station in Jersey City, which was opened in 1960, has a capacity of 632 megawatts (MW); Hudson Generation Station in Hamilton Township, with a capacity of 620 MW, opened in 1968. Combined, the plants employ about 200 individuals.
“The sustained low prices of natural gas have put economic pressure on these plants for some time,” said PSEG Power President and CEO Bill Levis. “In that context, we could not justify the significant investment required to upgrade these plants to meet the new reliability standards. The plants have been infrequently called on to run and neither plant cleared the last two PJM capacity auctions. The plants’ capacity payments have been critical to their profitability and PSEG’s ability to continue to invest in modernizing them.”
PSEG has largely turned its focus to gas and its nuclear facilities; it is currently investing more than $600 million in a new state-of-the-art combined-cycled gas plant in Sewaren, New Jersey, as well as new plants in Connecticut and Maryland. PSEG officials said all options are being evaluated regarding future use of the New Jersey sites.
Peabody Earns CORESafety Certification
Peabody Energy has become the first mining company to obtain independent certification under the CORESafety safety and health management program. Peabody, which alongside the National Mining Association (NMA) helped to develop the 20-element system to aid operators in emphasizing a leadership culture to engage employees to prevent accidents, was recognized for the achievement during the Sentinels of Safety luncheon and ceremony September 27 at MINExpo International in Las Vegas.
Certification was achieved following an independent audit of Peabody’s safety and health system and implementation across Peabody’s global platform.
Peabody President and CEO Glenn Kellow said safety is the company’s first value and core to its mission. “We are passionate about safety and have embraced best practices and management tools that advance safety within the lens of our longstanding Safety – A Way of Life system,” Kellow said. “By investing in our people, processes and equipment, we have changed the way in which we work, which is an important step on our journey of continuous safety improvement.”
“This is a significant accomplishment by Peabody,” added NMA President and CEO Hal Quinn. “The company not only embraced an approach to drive continuous performance improvement that went above and beyond what is required of it by regulations, but it analyzed where it could do better, developed a plan, recorded metrics and submitted the results to a third-party auditor.”
Peabody’s company-wide, global incidence rate in 2015 was a record 1.25.
Millennium Terminal EIS is Released
The Army Corps of Engineers (Corps) has released the draft environmental impact statement (EIS) for the Millennium Bulk Terminal facility in Longview, Cowlitz County, Washington. The Corps released the report September 30, and facility owners are now reviewing the 3,000-page document.
“Millennium is diligent about the environmental cleanup and redevelopment of the site into a vibrant, world-class port facility that will create family-wage jobs and meet strict environmental standards,” the company said.
The report is also now available for public viewing, review and comment. The input period is now open and will close November 29. Public hearings have been scheduled for October 24 and 25 in Longview and Ridgefield, Washington.
Terminal CEO Bill Chapman noted that the facility, designed to have a 44-million-ton-per-year capacity, is the “right project in the right location” to help meet Asian demand for American coal. “Our project has been subjected to an unprecedented and rigorous environmental review process, further assuring that our commitment to exemplary environmental performance will be kept,” he said. “Both state and county regulators made it clear in their draft environmental impact statement that we can meet Washington’s strict environmental standards. We’re confident the federal draft environmental impact statement by the Army Corp of Engineers will also deliver a favorable review.”
Southern to Upgrade Ops Under EPA Settlement
Southern Coal Corp., including 26 of its affiliated companies, will make $5 million in system-wide, comprehensive upgrades to its mining and processing facilities as part of a settlement with the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ). The deal resolves Clean Water Act violations by the operator in West Virginia, Virginia, Alabama, Tennessee and Kentucky. A $900,000 civil penalty will also be split among all of the states aside from West Virginia, as they were not part of the initial lawsuit. The establishment of a $4.5 million letter of credit and a standby trust is also required that will guarantee sufficient funding for, and a mechanism to accomplish, compliance with the Clean Water Act and the work the companies have agreed to perform under the settlement, should the companies fail to do so, according to the EPA.
Other elements of the deal include the implementation of a company-wide, EPA-approved environmental management system; the maintenance of a centralized data management system to track audit results, violations, water sampling data and compliance efforts; the construction of a public website for posting documents such as NPDES permits, discharge monitoring reports, water sampling data, effluent violation information, notices of violations and compliance orders; regular internal and independent third-party environmental audits and outlet inspections with any needed alterations or maintenance measures; and training for all employees whose responsibilities include environmental compliance and contractors hired to perform duties required by the consent decree.
Should violations continue to occur, the company will also be subject to escalating stipulated penalties.The EPA estimated the annual pollutant reduction will be about 5 million pounds.
Southern officials said the settlement was similar to others reached with the regulators by other coal companies. It has also worked to improve its compliance rate, according to spokesman Tom Lusk. “After two years of working closely with the EPA, we are pleased that an agreement has been reached, and Southern Coal will continue working with state and federal regulators to maintain our current 99.8% compliance rate and implement additional best practices in environmental management to reach 100% compliance,” he said. “When Southern Coal took over some of these struggling coal operations, we knew there were violations we would have to catch up on, and we are doing it. While the Obama administration has been tough on…our industry in these difficult times for coal, we are focused on striking a balance with full regulatory compliance and keeping our coal miners working.”
A proposed consent decree has been filed with the U.S. District Court for the Western District of Virginia and is now under a 30-day public comment period. It is also subject to approval by the federal court.
MSHA Awards Brookwood-Sago Grants
Six organizations, most of them educational institutions, have been given a total of $1 million in funding through the Mine Safety and Health Administration’s (MSHA) annual Brookwood-Sago grant program for the betterment of mine rescue training and mine emergency preparedness.
The 2016 recipients include the Colorado School of Mines, which will receive $240,024 for its training of mine rescue teams, especially enhancing knowledge and skills for crews and incident command staff in the areas of technical rescue, communications and decision making during mine emergencies.
Rend Lake College in Illinois will use its $133,240 in funding to provide training to mine rescue officials and mine rescue teams, with a focus on mine fire brigade training and increased preparedness for those participating in mine emergencies.
Another Colorado group, the Colorado Department of Natural Resources, will provide advanced mine rescue skills training for all of the state’s underground mines and mine emergency prevention with its award of $217,877.
The University of Arizona, which will receive $187,054, will use the funds to improve self-escape skills in response to underground mine emergency events by use of virtual reality gaming.
A $50,000 funding award was given to the Virginia Department of Mines, Minerals and Energy. It will use the money to develop training materials and provide training on mine emergency preparedness and mine emergency prevention.
Finally, West Virginia University will be receiving $171,805 in funding; the school plans to utilize it for the development and implementation of enhanced and realistic mine rescue training exercises that combine the efforts and abilities of a mine rescue team and fire brigade responding to a simulated coal mine fire emergency and locating missing personnel. The Brookwood-Sago grant program was established under a provision of the Mine Improvement and New Emergency Response Act of 2006 (MINER Act).
Alpha Sells Kentucky Mine, Plant
Alpha Natural Resources (ANR) has sold the assets of its Enterprise Mining Corp. subsidiary in eastern Kentucky to Keystone-Kingdom Resources’ arm Kingdom Coal. Financial details have not been disclosed by either party. The assets include the EMC No. 9 mine and the Roxana preparation plant in Knott County and Letcher County, Kentucky. The mine, which was idled in July, produced 393,000 tons of thermal coal in the first half of this year. The complex will see a production restart with the Texas-based buyer, officials said.
“With the sale of the Enterprise mining complex to Kingdom Coal we have commenced the implementation of our strategy to divest non-strategic properties,” ANR CEO David Stetson said. “As we review divestitures of properties, identification of third parties that will retain our team members and resume operations is paramount. In this case, we were pleased that Kingdom Coal has indicated a desire to restart the Enterprise mines and retain many of our team members.” Stetson has not ruled out the potential for the divestiture of other non-strategic assets.
ANR, which moved its headquarters to Kingsport, Tennessee, earlier this year, now has 17 active mining operations.
Alliance to Reopen CR Machine Shop
Alliance Coal has purchased its own former supplier, CR Machine Shop, and is reopening the western Kentucky facility. CR Machine Shop, located in Madisonville, Hopkins County, closed when its former owner retired. Alliance acquired the assets of the company in August. Fourteen jobs will be created with the reopening, according to local media outlets.
“This venture will allow both Alliance and CR Machine Shop to continue a successful yearslong relationship and support both the mining and construction sectors,” Kentucky Gov. Matt Bevin said.
Kentucky Business Investment program earmark has given the shop up to $200,000 in tax incentives over a 10-year term.
Alliance Vice President of Operations Heath Lovell told local newspaper The Messenger that low-cost energy needs to be available in order to be competitive on a global stage. Coal will make that happen, he added. “As we’ve seen our revenue cut from utilities, we’ve had to find ways we can lower our production costs. One way to do that is by making more parts in-house. We rebuild an enormous amount of equipment. With this machine shop, we’re going to be able to start rebuilding more of our own equipment and making our own parts. We think that’s a cost savings that is going to let us remain competitive even as our revenue decreases.”
Kentucky-based Alliance currently has 10 mining facilities in five states.
Lighthouse Focusing Export Beacon on Asia
Powder River Basin (PRB) mine owner Lighthouse Resources has decided to cut its involvement with the Morrow Pacific Coal Terminal in Oregon and has begun shipping coal to Asia via the Westshore Terminals complex in Vancouver. Earlier this year, Lighthouse secured total ownership of Millennium Bulk Terminals-Longview in Washington. Until that 44-million-ton-per-year export complex is complete and online, however, its tonnage will run through Westshore. Officials said the deal with Morrow, which would have been the first facility to ship the company’s PRB coal to Asia, was terminated due to delays.
“We are very excited to commence supplying our South Korean customers with the coal they’ve sought,” Lighthouse President and CEO Everett King said. “South Korea has one of the cleanest, most efficient coal-fired electrical generation fleets on the planet. Our ability to now ship to our customers in Asia allows us to achieve our short-term goals while we continue to focus on further long-term growth at Millennium.” The company has not disclosed how much coal it will ship to its Asian customers, but noted that demand for export coal there remains high, about 1 billion tons annually according to federal data, with the U.S. supplying less than 2% of that total. Lighthouse, formerly known as Ambre Energy, operates the Decker mine in Montana and the Black Butte operation in Wyoming.