Coastal States Energy Co., based in Houston, has won the right to mine the largest coal tract ever put up for competitive bidding in the state of Utah.
The Quitchupah Tract is adjacent to the company's Southern Utah Fuel Co. Mine in Sevier County, five miles west of Emery, Emery County."It will be a reserve for the existing SUFCO Mine," said Elaine Larsen, spokeswoman for the Bureau of Land Management's state office in Salt Lake City.
According to information gathered by the BLM from Coastal States, the existing mine produced more than 2.6 million tons of coal in 1988 and has been one of the most productive underground mines in the United States.
BLM state director James Parker said the company bid $16.2 million, or more than $1,635 an acre, for the 9,905-acre Quitchupah Tract. The parcel is on land administered by the BLM and the U.S. Forest Service.
The bid was offered on Monday. Now the Justice Department will be able to review the proposed lease for 30 days, checking for any antitrust violations. After the project is cleared, a lease will be issued.
The tract is believed to have 84 million tons of recoverable coal, enough to keep a large underground mine going for 30 years. It is high-energy, low-sulfur coal, valuable for power generation and other industrial uses.
In addition to the bonus bid that Coastal States submitted, royalty must be paid on all coal mined from the Quitchupah Tract - expected to amount to $134 million over the lease's lifetime.
Larsen said such a lease is extended indefinitely, as long as the tract is kept in production.
Half of the bonus money (the amount bid for the right to lease a tract) as well as half of all rental and royalty collected will be paid to the state of Utah. The state's share is expected to be more than $75 million.