2011-11654. Notice of Competitive Coal Lease Sale, Wyoming

AGENCY:

Bureau of Land Management, Interior.

ACTION:

Notice.

SUMMARY:

Notice is hereby given that certain coal resources in the Belle Ayr North 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, July 13, 2011. Sealed bids must be submitted on or before 4 p.m., on Tuesday, July 12, 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 Tyson Sackett, Acting Coal Coordinator, at 307-775-6258, and 307-775-6487, respectively.

SUPPLEMENTARY INFORMATION:

This coal lease sale is being held in response to a lease by application (LBA) filed by Alpha Coal West, Inc. (formerly RAG Coal West, Inc.), Gillette, Wyoming. The coal resource to be offered consists of all reserves recoverable by surface mining methods in the following described lands located approximately 10 miles south-southeast of Gillette, Wyoming and east of State Highway 59.

T. 48 N., R. 71 W., 6th Principal Meridian

Sec. 17, lots 13 and 14;

Sec. 18, lots 17 through 19 inclusive;

Sec. 19, lots 5 through 19 inclusive;

Sec. 20, lots 3 through 7 inclusive and lots 9 through 16 inclusive;

Sec. 21, lots 13 and 14;

Sec. 28, lots 3 through 6 inclusive; and

Sec. 29, lots 1 and 6.

Containing 1,671.03 acres, more or less, in Campbell County, Wyoming.

The tract is adjacent to Federal and private leases along the northern lease boundary of the Belle Ayr mine, and to Federal leases along the southwestern lease boundary of the Caballo mine, and to the Caballo West LBA along the north. It is also adjacent to additional unleased Federal coal to the west and north. The tract is crossed by Bishop Road along its northeastern boundary.

All of the acreage offered has been determined to be suitable for mining. Features such as Bishop Road, 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. An economic analysis of the future income stream from the coal lease will consider reasonable compensation to the gas lessee for lost production of natural gas when the wells are bought out but by the coal lessee. The surface estate of the tract is owned by Alpha Coal West, Inc.

The tract contains surface mineable coal reserves in the Wyodak-Anderson coal zone currently being recovered in the adjacent, existing mines. On the LBA tract, there is one recoverable seam, the Wyodak, which ranges from about 72 to 78 feet thick. The Wyodak seam is continuous over the entire tract with no outcrops or subcrops. Overburden depths to this seam range from 278 to 317 feet thick on the LBA tract. The tract contains an estimated 221,734,800 tons of mineable coal. This estimate of mineable reserves includes the main seam mentioned above but does not include any tonnage from localized seams or splits containing coal less than 5 feet thick. Also, it does not include the adjacent private leases although these are expected to be mined in conjunction with the LBA tract. The total mineable stripping ratio of the coal in bank cubic yards per ton is about 4.2:1. Potential bidders for the LBA tract should consider the recovery rate expected from thick seam mining.

The Belle Ayr North LBA coal is ranked as subbituminous C. The overall average quality on an as-received basis is 8,542 British Thermal Units per pound containing about 0.34 percent sulfur. These quality averages place the coal reserves in the lower part 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, July 12, 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 that may be issued as a result of this coal lease sale 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 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 address above. Case file documents for case WYW161248 are available for inspection at the BLM Wyoming State Office.

Donald A. Simpson,

State Director.