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 Antelope II 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, May 11, 2011. Sealed bids must be submitted on or before 4 p.m., on Tuesday, May 10, 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 Antelope Coal LLC, Gillette, Wyoming. The coal resource to be offered consists of all reserves recoverable by surface mining methods in the following described lands located north of the Campbell/Converse county line approximately 2-5 miles east of State Highway 59 and adjacent to the western and northern lease boundary of the Antelope Mine.

T. 41 N., R. 71 W., 6th Principal Meridian,

Sec. 9, lots 9 through 16 inclusive;

Sec. 10, lots 11 through 16 inclusive;

Sec. 11, lot 13;

Sec. 14, lots 3 and 4;

Sec. 15, lots 1 through 5 inclusive, and lots 12 and 13;

Sec. 20, lots 14 through 16 inclusive;

Sec. 21, lots 1 through 16 inclusive;

Sec. 22, lots 2, 7, 8, and lots 14 through 16 inclusive;

Sec. 27, lots 6 through 11 inclusive;

Sec. 28, lots 1 through 8 inclusive; and

Sec. 29, lots 1 through 3 inclusive, and lots 6 through 8 inclusive.

Containing 2,837.63 acres, more or less in Campbell County, Wyoming.

The tract is adjacent to Federal leases to the east and south and surrounds a State of Wyoming lease, all controlled by the Antelope Mine. It is adjacent to additional unleased Federal coal to the west and north.

All of the acreage offered has been determined to be suitable for mining except for the mainline railroad right-of-way in the far northeast portion of the tract. Features such as utilities and pipelines can be moved to permit coal recovery. A possible alluvial valley floor crosses the tract along Horse Creek, but is unlikely to be significant for farming and so will be available for mining with appropriate reclamation. In addition, numerous producing coal bed natural gas wells have been drilled on the LBA 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 coal mining will consider reasonable compensation for lost production of coal bed natural gas when the wells are bought out by the coal lessee. Mining will eliminate the gas reservoir. The surface estate of the tract is owned by Antelope Coal Company or private individuals and other entities.

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 Anderson and the deeper Canyon. On the LBA tract, both seams are generally continuous although a thin split off the bottom of the Anderson occasionally occurs. This split can usually be recovered with the main Anderson seam. The Anderson seam varies from 35 to 42 feet thick while the Canyon seam varies from 32 to 36 feet thick. The interburden varies significantly and can be as thin as 12 feet to as thick as 95 feet but is usually in the 65 to 75 foot thick range. Overburden depths to the Anderson seam range from about 250 to 440 feet thick on the LBA tract.

The tract contains an estimated 350,263,000 tons of mineable coal. This estimate of mineable reserves includes both of the main seams and the thin split mentioned above, but does not include any tonnage from localized seams or splits where the coal is less than 5 feet thick. It does not include the coal in the State of Wyoming coal lease, although these reserves are expected to be recovered in conjunction with the LBA tract. It also excludes coal within and along the railroad right-of-way since this coal cannot be recovered using typical mining practices. The total mineable stripping ratio of the coal in bank cubic yards per ton is approximately 4.6:1. Potential bidders for the LBA tract should consider the recovery rate expected from thick seam and multiple seam mining. The West Antelope II North LBA coal is ranked as subbituminous C. The overall average quality on an as-received basis is 8,967 British Thermal Units per pound containing approximately 0.23 percent sulfur. The average quality of these coal reserves are equal to some of the best quality coal currently being mined in the Wyoming portion of the Powder River Basin.

The tract in this lease offering contains split estate lands. There are qualified surface owners as defined in the regulations at 43 CFR 3400.0-5. Consent granted by the qualified surface owners has been filed with and verified by the BLM. The LBA tract lands included in the consent documents are:

T. 41 N., R. 71 W., 6th P.M.,

Sec. 9, lots 9 through 16 inclusive;

Sec. 10, lots 11 through 16 inclusive;

Sec. 14, lots 3 and 4;

Sec. 15, lots 1 through 4 inclusive; and

Sec. 21, lots 1through 8 inclusive.

Containing 1147.43 acres, more or less, in Campbell County, Wyoming.

The purchase price of the consent is $10,097,500.

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, May 10, 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 $3.00 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 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, WYW163340, are available for inspection at the BLM Wyoming State Office.