August 22, 2017 Read More →

Peabody Angles to Keep Kayenta Mine in Arizona Open

Bloomberg BNA:

A group of business and government representatives are exploring the possibility of keeping alive a troubled coal mine in northern Arizona.

The Kayenta mine, operated by Peabody Energy, appears likely to shut down at the end of 2019, when the nearby Navajo Generating Station is also scheduled to close. The two are linked because the power plant is Kayenta’s only customer. No rail line exists to ship the Kayenta coal to the outside world.

But now, a group of stakeholders that includes Peabody, the Bureau of Reclamation, and Rep. Tom O’Halleran (D-Ariz.) have come together to study the cost of building a rail extension to a Burlington Northern Santa Fe line 115 miles to the south.

Peabody spokeswoman Beth Sutton declined to comment on the rail spur, but said the company continues working with stakeholders that would allow NGS to stay open “well beyond 2019.” That includes “engaging a globally recognized firm to identify a new ownership structure,” Sutton said.

O’Halleran also said the possibility of building a coal gasification plant to replace the Navajo Generating Station is on the table, corroborating statements made by Navajo Nation presidential spokesman Mihio Manus to Bloomberg BNA earlier this month.

Those comments have taken many industry watchers by surprise, in light of two recent high-profile stumbles in the coal gasification industry. Duke Energy’s Edwardsport coal gasification plant in Indiana cost $1.5 billion more than originally planned and still doesn’t run reliably, according to David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis (IEEFA).

More recently, Mississippi regulators concerned about the rising costs of Southern Co.’s Kemper plant ordered the company last month to transition the plant to natural gas.

On Aug. 11, the IEEFA said coal gasified power at Edwardsport costs $64.40 per megawatt hour, compared to $44.37 at the Navajo Generating Station.

More: Peabody Mine May Survive if Railroad Extension Built

Comments are closed.