Montana coal production ranks fifth in the United States and hovered under 40 million tons annually for about 15 years beginning in 1988. During Governor Schweitzer’s term production has topped 43 million tons annually. Expanded and new mine development will drive production increases in the coming years. Upon completion of the Signal Peak mine (see below) Montana could achieve an estimated 35% increase in production.

 

Otter Creek

The State Land Board voted in March 2010 to approve the leasing of 570 million tons of state-owned coal located in the Otter Creek Valley of southeastern Montana. The lease provides Arch Coal with the right to develop coal located on state owned land which is interspersed among Arch’s leases of privately owned land containing another 730 million tons of coal. Arch provided the state with an $85.8 million “bonus bid” for the rights to develop the mine. Revenues for the state over the lifetime of the mine are estimated at close to $5 billion.

 

Spring Creek

The Spring Creek Mine, recently purchased by Cloud Peak from a Rio Tinto subsidiary, located near Decker in Big Horn County has increased production from 13.1 million tons to 17.6 million tons per year between 2005 and 2009. The company has been aggressively investing in mine expansion including construction of a state-of-the-art 8,000 ton per hour load out, expanded rail loop, replacement of its secondary coal crushers, and doubling the capacity of its conveyor to the new load-out.

 

Absaloka

Westmoreland Resources Incorporated (WRI) operates the 15,000-acre Absaloka Mine in Big Horn County. WRI estimates that 77 million of these tons are recoverable and marketable. The Absaloka Mine has produced up to 7.5 million tons of coal annually.

Signal Peak (Bull Mountain)

This new mining operation was announced in July 2008. Signal Peak, located near Roundup, is Montana's only underground mine and is one of the most significant contiguous coal reserves in the United States. The new mine is poised to be the most productive single long-wall mining operation in the nation, with an estimated 12-15 million tons of coal to be produced per year, 10 million of which is committed to First Energy, one of the partner companies in the project with Boich Companies. According to the companies, the estimated cost to fully develop the mine is $450 million, including a new coal preparation plant, and the construction of a 35-mile rail spur to the Burlington Northern Santa Fe railway line near Broadview. Signal Peak has transitioned from development phase into production and currently employees approximately 230 full-time employees.

 

Nelson Creek

Great Northern Properties, the nation’s largest coal owner, owns 400 million tons of potential recoverable reserves of lignite at Nelson Creek. Over the years the company has considered a number of options for developing the site including mine mouth electrical generation plants or coal gasification plants that would produce pipeline quality natural gas. The company continues to explore these options.

 

Carpenter Creek

This 250 million ton reserve contains high BTU coal (10,800 - 11,000) located between Musselshell and Melstone. The 70,000 acre area including licenses was purchased by Atlantic Coal in December of 2009. Estimated proven coal reserves are 91.3 million tons (Mt), indicated reserves stand at 145.2 Mt and inferred reserves are 144.3 Mt. Production is targeted for 2012 with modeling calling for a mine with a potential of 30 years of production at 6 million tons per year.

 

Bridger-Fromberg

An established coal developer behind Signal Peak is currently working on developing another mine, this one located in Carbon County. The Bridger-Fromberg field spans more than 40,000 acres, and developers estimate it contains up to 700 million tons of recoverable coal reserves with an estimated production level of 5 million tons a year. This project is slated to be an underground mine and contains very high quality coal.

 

Rail Shipping of Coal

Several major rail projects are under construction or in the permitting process. Construction of the Signal Peak spur was completed in 2009. This 35 mile line connects to the BNSF mainline near Broadview. The Tongue River Railroad which will serve as an access point to Otter Creek coal is now federally permitted. Construction of this line will begin with the development of the Otter Creek coal tracts. Another anticipated line is the Carpenter Creek Spur which will run from Carpenter Creek to the BNSF mainline near Huntley.