04-22556. Notice of Competitive Coal Lease Sale, Wyoming

AGENCY:

Bureau of Land Management, Interior.

ACTION:

Notice of competitive coal lease sale.

SUMMARY:

Notice is hereby given that certain coal resources in the West Hay Creek Tract described below in Campbell County, WY, will be offered for competitive lease by sealed bid in accordance with the provisions of the Mineral Leasing Act of 1920, as amended (30 U.S.C. 181 et seq.).

DATES:

The lease sale will be held at 10 a.m., on Wednesday, November 17, 2004. Sealed bids must be submitted on or before 4 p.m., on Tuesday, November 16, 2004.

ADDRESSES:

The lease sale will be held in the First Floor Conference Room (Room 107), of the BLM Wyoming State Office, 5353 Yellowstone Road, P.O. Box 1828, Cheyenne, WY 82003. Sealed bids must be submitted to the Cashier, BLM Wyoming State Office, at the address given above.

FOR FURTHER INFORMATION CONTACT:

Julie Weaver, Land Law Examiner, or Robert Janssen, Coal Coordinator, at 307-775-6260, and 307-775-6206, respectively.

SUPPLEMENTARY INFORMATION:

This coal lease sale is being held in response to a lease by application (LBA) filed by Triton Coal Company, LLC. The Federal coal tract being considered for sale is adjacent to the Buckskin Mine operated by Triton Coal Company, LLC. Triton Coal Company, LLC, is a wholly owned subsidiary of Vulcan Intermediary, LLC. The coal resources to be offered consist of all reserves recoverable by surface mining methods in the following-described lands located 11 miles north of Gillette, Wyoming, in north-central Campbell County approximately two miles east of U.S. Highway 14/16, four miles west of State Highway 59 and crossed by Hay Creek. The BLM has increased the size of the LBA by approximately 83.06 acres along the northern and southeastern boundary in order to maximize economic recovery and to avoid a potential bypass of federal coal. The legal description for the property is as follows:

T. 52 N., R. 72 W., 6th P.M., Wyoming;

Sec. 17: Lots 5 (S1/2), 6 (S1/2), 7 (S1/2), 8 (S1/2), 9-14;

Sec. 18: Lots 12 (SE1/4), 13 (E1/2), 20 (E1/2);

Sec. 19: Lots 5 (E1/2), 12 (E1/2), 13 (E1/2), 20 (E1/2);

Sec. 20: Lots 2 (W1/2, W1/2E1/2), 3-6, 7 (W1/2, W1/2E1/2), 10 (W1/2, W1/2E1/2), 11-14, 15 (W1/2, W1/2E1/2).

Containing 921.1575 acres, more or less.

The tract is adjacent to Federal coal leases to the south and east, to a State of Wyoming coal lease to the northeast, and to an imbedded private lot all controlled by the Buckskin Mine. It is also adjacent to additional unleased Federal coal to the north and west.

All of the acreage offered has been determined to be suitable for mining. Hay Creek is not expected to qualify as an alluvial valley floor and so can be diverted, mined out, and restored. Other features such as pipelines can be moved to permit coal recovery. Finally, numerous oil and/or gas wells have been drilled on the tract. The estimate of the bonus value of the coal lease will include consideration of the future production from these wells. An economic analysis of this future income stream will determine whether a well is bought out and plugged prior to mining or re-established after mining is completed. All of the surface estate is controlled by the Buckskin Mine.

The tract contains surface mineable coal reserves in the Wyodak seam currently being recovered in the adjacent, existing mines. On the tract, the Wyodak seam is divided into numerous seams and splits. The primary seam is the Canyon seam which varies from about 54-68 feet thick on the LBA. A shallower secondary seam, the Anderson, varies from about 16-19 feet thick on the LBA. A thin split above the Anderson reaches 5 feet thick in places on the LBA. A thin seam between the Anderson and Canyon varies between 5-10 feet thick on the LBA. Three additional seam/splits below the Canyon occur over limited areas on the LBA and range from 0-9 feet thick. The overburden depths range from about 32-275 feet thick. The interburden between the upper split and the Anderson ranges from 4-6 feet thick, between the Anderson and the middle seam from 14-20 feet thick, between the middle seam and the Canyon seam from 6-37 feet thick, and between the lower three split/seams from 0-40 feet thick where they occur on the LBA.

The tract contains an estimated 142,698,000 tons of mineable coal. This estimate of mineable reserves includes the Canyon and Anderson seams as well as the other seams/splits mentioned above, but does not include any tonnage from localized seams or splits containing less than 5 feet of coal. The total mineable stripping ratio (BCY/Ton) of the coal is about 2.0:1. Potential bidders for the LBA should consider the recovery rate expected from thick seam and multiple seam mining.

The West Hay Creek LBA coal is ranked as subbituminous C. The overall average quality on an as-received basis is 8346 BTU/lb with about 0.28 percent sulfur and 1.75 percent sodium in the ash. These quality averages place the coal reserves near the low end of the range of coal quality currently being mined in the Wyoming portion of the Powder River Basin.

The tract will be leased to the qualified bidder of the highest cash amount provided that the high bid equals or exceeds the BLM's estimate of the fair market value of the tract. The minimum bid for the tract is $100 per acre or fraction thereof. No bid that is less than $100 per acre, or fraction thereof, will be considered. The bids should be sent by certified mail, return receipt requested, or be hand delivered. The Cashier will issue a receipt for each hand-delivered bid. Bids received after 4 p.m., on Tuesday, November 16, 2004, will not be considered. The minimum bid is not intended to represent fair market value. The fair market value of the tract will be determined by the Authorized Officer after the sale. The lease issued as a result of this offering will provide for payment of an annual rental of $3.00 per acre, or fraction thereof, and of a royalty payment to the United States of 12.5 percent of the value of coal produced by strip or auger mining methods and 8 percent of the value of the coal produced by underground mining methods. The value of the coal will be determined in accordance with 30 CFR 206.250.

Bidding instructions for the tract offered and the terms and conditions of the proposed coal lease are available from the BLM Wyoming State Office at the addresses above. Case file documents, WYW151634, are available for inspection at the BLM Wyoming State Office.

Dated: August 12, 2004.

Alan Rabinoff,

Deputy State Director, Minerals and Lands.