Koch’s sour words aside, Oxbow hopes to reopen Elk Creek
Despite recent comments by Elk Creek Mine owner Bill Koch that he’s “out of the coal business now,” his company continues to hope to revive operations at the North Fork Valley site.
But those hopes are contingent on an improvement in the coal market.
In an interview with Environment & Energy Publishing, the owner of Oxbow Carbon LLC said, “The coal business in the United States has kind of died, so we’re out of the coal business now.”
But Mike Ludlow, president of Oxbow Carbon affiliate Oxbow Mining LLC, which owns and operates the Elk Creek Mine, said the company continues to maintain the mine in an idle status so it can someday go back into production after a mine fire forced a shutdown last year.
“I think (Koch’s) comments were to the tone of the market right now both domestically and internationally. The prices are poor and the market is poor but Oxbow has not made a decision to be out of coal,” Ludlow said.
Koch told E&E that “a lot of the profit has gone out of the coal business,” and said U.S. use of coal has dropped chiefly due to competition from natural gas for electricity generation as a result of the shale drilling boom.
He also blamed President Obama for trying to “drive more nails into the coffin,” and added that while safety regulations are necessary, the Mine Safety and Health Administration has taken things so far that it has tremendously driven up the price of mining.
A mine fire in December 2012 left Oxbow’s longwall mine equipment stranded in a part of the mine that ended up proving too dangerous to re-enter, and Oxbow was forced to abandon the equipment, which costs tens of millions of dollars. The company laid off nearly 150 employees in early October and 115 more in December. Twenty-one people continue to work there to keep ventilation and water-pumping systems going and otherwise maintain the mine with the idea of reopening it someday. Ludlow said MSHA continues to inspect the mine every three months.
Ludlow said Oxbow has been getting quotes from manufacturers for new longwall equipment but hasn’t placed an order. Any deliveries would take about 12 months after that.
“We would not place an order for equipment until we see a turn in the market, so we would have to be looking forward at least 12 months,” he said.
However, it’s possible production could begin sooner with what are called continuous miners, which typically are used for mining smaller areas or developing areas in preparation for longwall mining.
As for what’s in store for coal, “The industry as a whole believes that there is going to be an improvement in the coal market. … Coal expansion internationally is not dead, additional power plants overseas are being built and coal still seems to be the fuel of choice for international markets,” Ludlow said.
While Oxbow’s currently out of the coal business now as far as producing at Elk Creek, it’s still exporting coal out of Long Beach, Calif., Ludlow said. It buys third-party coal produced in the western United States for that purpose.
For now, the export market is suffering from a worldwide oversupply of coal, probably thanks in greatest part to the global economic downturn, Ludlow said. But Oxbow is closely watching the market to determine when to start production again, he said.
The company’s first goal would be to revive the Elk Creek operation so the remaining reserves there could be mined. However, it also continues to eye an eventual new operation on Oak Mesa north of Hotchkiss. It has completed drilling 23 test holes to determine the coal reserves there under an original exploration license, and has applied for another permit to do more exploratory drilling farther north, Ludlow said.
The area contains federally owned minerals administered by the Bureau of Land Management.
Jeremy Nichols with the conservation group WildEarth Guardians said he found Koch’s comments to be “pretty pointed,” and they cause him to wonder what the real long-term prospects are for the Elk Creek Mine.
“When you have Bill Koch saying the coal market’s kind of dead in the U.S. right now, it doesn’t sound much like a ringing endorsement for investing in more coal,” he said.
He said WildEarth Guardians would like to see a transition away from coal completely at some point due to the environmental impacts, but also would like to see governments at all levels help provide a transition plan to help affected employees.
He’s also concerned about the idea of sending U.S. coal abroad.
“From our standpoint that’s very disturbing that we would just export our global warming pollution when we’re trying to rein it in domestically,” Nichols said.
For Delta County, the concern over Oxbow has centered on the loss of tax revenues and high-paying jobs. County administrator Robbie LeValley said the county remains in close contact with Oxbow and continues to be apprised of its progress.
“We have worked with Oxbow to ensure continued development of the energy resource in this area. Delta County is very concerned for all of the families involved in the mining and mining-related industries,” LeValley said.