2011-26744. 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 South Hilight Field Coal Tract described below in Campbell County, Wyoming, will be offered for competitive lease by sealed bid in accordance with the provisions of the Mineral Leasing Act of 1920, as amended.

DATES:

The lease sale will be held at 10 a.m. on Wednesday, December 14, 2011. Sealed bids must be submitted on or before 4 p.m. on Tuesday, December 13, 2011.

ADDRESSES:

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

FOR FURTHER INFORMATION CONTACT:

Mavis Love, Land Law Examiner, or Kathy Muller Ogle, Coal Coordinator, at 307-775-6258, and 307-775-6206, respectively.

SUPPLEMENTARY INFORMATION:

This coal lease sale is being held in response to a lease by application (LBA) filed by Ark Land Company, St. Louis, Missouri. The coal resource to be offered consists of all reserves recoverable by surface mining methods in the following described lands located 2 to 5 miles south of State Highway 450 and east of the Burlington Northern/Union Pacific main line railroad.

T. 43 N., R. 71 W., 6th Principal Meridian

Sec. 23, lots 1 through 16 inclusive;

Sec. 26, lots 1 through 16 inclusive;

Sec. 35, lots 1 through 16, inclusive.

Containing 1,976.69 acres, more or less, in Campbell County, Wyoming.

The tract is adjacent to the southern and western lease boundary of the Black Thunder Mine. The tract is adjacent to Federal leases to the east and north controlled by the Black Thunder mine as well as an adjacent State of Wyoming lease also controlled by the Black Thunder mine. It is adjacent to additional unleased Federal coal to the west and south.

Most of the acreage offered has been determined to be suitable for mining. The acreage coincident with the main line railroad right-of-way along the western boundary of the tract is not suitable for mining. Features such as utilities and pipelines can be moved to permit coal recovery. In addition, numerous producing coal bed natural 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 and the successful coal lessee's interaction with gas producers regarding any pre-existing rights of such producers. An economic analysis of this future income stream will consider reasonable compensation for lost production when the wells are bought out since mining will eliminate the gas reservoir. Some of the surface estate of the tract is owned by Thunder Basin Coal Company, but most of the surface is part of the Thunder Basin National Grassland managed by the United States Forest Service.

The tract contains surface mineable coal reserves in the Wyodak-Anderson coal zone currently being recovered in the adjacent, existing mine. On the LBA tract, there are generally two recoverable seams, the shallower Upper Wyodak and the deeper Middle Wyodak. The Upper Wyodak is found in the northern third of the LBA and averages about 13 feet thick. The Middle Wyodak is the primary coal seam and is continuous over the entire LBA. It varies from 67 feet to 75 feet thick. The interburden between the Upper and Middle Wyodak seams varies in thickness from 41 feet to 118 feet. There are up to three thin seams that split from the bottom of the Middle Wyodak which are generally mineable only when they are merged with the Middle Wyodak seam. Overburden depths to the top of the Upper Wyodak seam range from about 170 feet to 400 feet on the LBA.

The tract contains an estimated 222,676,000 tons of mineable coal. This estimate of mineable reserves includes both of the seams mentioned above but does not include any tonnage from localized seams or splits containing less than 5 feet of coal. The estimated reserve excludes coal within and along the railroad right-of-way as required by typical mining practices. The total mineable stripping ratio of the coal in bank cubic yards per ton is approximately 4.2:1. Potential bidders for the LBA should consider the recovery rate expected from thick seam and multiple seam mining.

The South Hilight Field LBA coal is ranked as subbituminous C. The overall average quality on an as-received basis is 9,011 British Thermal Units per pound containing approximately 0.27 percent sulfur. These quality averages place the coal reserves at the high 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 meets 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 BLM Wyoming State Office Cashier will issue a receipt for each hand-delivered bid. Bids received after 4 p.m. local time, on Tuesday, December 13, 2011, 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 per acre, or fraction thereof, and a royalty payment to the United States of 12.5 percent of the value of coal produced by surface mining methods. No coal is to be mined by underground methods since the only coal resources to be offered are those coal resources recoverable by surface mining methods. The value of the coal will be determined in accordance with 30 CFR 206.250.

This LBA was initiated before the case-by-case cost recovery fees at 43 CFR 3473.2(f) became effective. Therefore, case-by-case processing fees are not applicable to this lease sale. See 43 CFR 3000.10(d).

Bidding instructions for the LBA tract offered and the terms and conditions of the proposed coal lease are available from the BLM Wyoming State Office at the address above. Case file documents, WYW174596, are available for inspection at the BLM Wyoming State Office.

Donald A. Simpson,

State Director.