Coal Reserves of the Matewan
Quadrangle, Kentucky -A Coal Recoverability Study
U.S. Bureau of Mines Circular 9355
This report presents a U.S. Bureau of Mines study that incorporates coal mining factors, coal recovery factors, and economic factors into the definition of an economically recoverable coal resource. The relationship between these factors to the Energy Information Administration's estimate of U.S. coal resources-the "Demonstrated Reserve Base"-is discussed. The Matewan 7-1/2 minute quadrangle in eastern Kentucky was selected as the initial study area. Results indicate that of the original 1,193 million tons of resource in the quadrangle, only 89 million tons (7.5%) are economically recoverable at a cost of $25 per ton or less. At the current production rate of 5.3 million tons per year, this represents only16.8 years of remaining reserves.
The availability and amount of coal resources in the United States has been debated for years. Past estimates were based on gross estimates of coal in the ground and did not address the amount that might realistically be available for production after environmental and technological restraints were considered. Many technological, economic, and social changes have taken place that have impacted the coal industry since the last Bureau of Mines' comprehensive coal resource base was published in 1975 (1)3 . The Clean Air Act Amendments of 1990 to control sulfur dioxide and nitrous oxide emissions from coal-fired powerplants will significantly change the mining and marketing of coal. Legislation and regulations on mine reclamation have increased the complexity and costs of coal mining. Also, new safety and health standards, with the associated taxes, have increased the cost of mining operations. Advancements in mining technology in underground and surface operations have changed the economic competitiveness of certain coal fields (2-9).
Concerns about securing environmentally acceptable and reliable energy sources have continually surfaced during the past 15 years and have resulted in many revised estimates of the coal reserves in the United States (1, 10-14). The Energy Information Administration (EIA) regularly updates the "reserve base" (established by the Bureau in 1974) with new information from the State geological surveys, the United States Geologic Survey (USGS), and coal industry production information. At the present time, the Demonstrated Reserve Base (DRB) of coal for the United States is estimated to be about 475 billion short tons (14). Even at consumption rates of 1.0 billion tons per year and a previously accepted recovery rate of 50%, there would appear to be ample available coal resources for several centuries. However, if the effects of mined-out prime reserves, environmental, industrial, economic, and social considerations are assessed and the technical aspects of the minability and washability of the individual seams are considered, the amount of coal that would be available and economically recoverable would be far less than that stated in the literature (1-3, 14).
In 1986, the USGS and the Kentucky Geological Survey (KGS) began a coal availability study (15-16) of an area within the central Appalachian coal region-the Matewan 7-1/2-minute quadrangle-in order to determine the resources available for mining after environmental and technological restrictions were considered. The success of the Matewan pilot study in determining available resources gave motivation for an expanded program. Coal Availability Studies were undertaken in West Virginia, Virginia, and Kentucky in cooperation with the USGS. Preliminary results from these studies indicate only about 50% of the original resources are available for mining. The question of how much of the available resources were economically recoverable was still unanswered.
The Bureau's expertise in coal mining technology and economics, together with the data collected for the Coal Availability Studies, combined with experience gained in completing more than 70 detailed coal mine technical and economic assessments, and its active research role in the coal industry, could answer this important question. Therefore, the Bureau devised a program to determine the recoverable resources and associated mining costs for quadrangles where the available resources had already been determined. The Matewan quadrangle, located on the Kentucky - West Virginia border, (fig. 1) was chosen as the prototype area. Only the Kentucky portion of the quadrangle (approximately 90% of the land area) was evaluated. Twenty-one coal seams were identified by the KGS to contain minable resources (fig. 2). A discussion of the basic assumptions and methodologies used during the analysis is provided in appendices B and C.
31talic numbers in parentheses refer to items in the list of references preceding the appendixes at the end Minable coal was defined by the KGS-USGS Coal
KGS-USGS COAL AVAILABILITY CONCEPT
Three pertinent steps were defined in the KGS-USGS Coal Availability Study (16):
Minable coal was defined by the KGS-USGS Coal Availability study as follows:
ORIGINAL COAL RESOURCES
COAL MINED AND COAL ABANDONED
REMAINING COAL RESOURCES
COAL RESTRICTED BY LAND-USE
COAL RESTRICTED BY TECHNOLOGICAL
COAL AVAILABLE FOR MINING.
USBM COAL RECOVERABILITY CONCEPT
Following review meetings in Denver, CO, and Reston, VA, and preparation of a project outline, the authors conducted a preliminary recoverability and costing study of three Upper Elkhorn coal seams in the Matewan quadrangle. That preliminary evaluation showed excellent correlation with the USGS computer model for minable resources (98% agreement). Perhaps more importantly, however, the preliminary evaluation resulted in the establishment of an outline for the Bureau's program methodology, as well as the development of recovery and costing models. The Bureau's study incorporated the KGS-USGS methodology, reviewed the restrictions and modified the resources accordingly, addressed mining and recovery losses, and finally applied the mine operating economics. The following integrated pathway that resulted established a uniform, consistent methodology to be applied throughout the study:
COAL AVAILABLE FOR MINING
MINE OPERATING COSTS
ECONOMICALLY RECOVERABLE RESOURCES
Realistic coal resource assessments are important for the consideration of legislation and regulations affecting coal production and for the direction and implementation of research aimed at maximizing recovery and ensuring environmental protection. Major national concerns that prompted the KGS-USGS Coal Availability program and the Bureau's Coal Recoverability program are:
The objective of the Bureau's Coal Recoverability program is to address the following concerns:
This report is the culmination of efforts by several State and Federal agencies working toward the common goal of determining the economically recoverable resources within a specific area of the central Appalachian coal region. Anne Allen, mining engineer, (USBM, AFOC, Anchorage, AK) provided the graphics used with this report, as well as assistance with the calculation of coal reserves. Matt Plis, mining engineer, (USBM, IFOC, Denver, CO) developed the "COALVAL' program used extensively during the study to facilitate the interactive data sheets, and assisted with the determination of coal reserves. The KGS and USGS provided the geological modeling and data files from which resources were calculated. James C. Cobb, assistant state geologist (KGS), and his staff provided detailed geological information, a tour of the Matewan quadrangle - area, and a review of the final report manuscript. M. Devereux Carter, Nancy K. Gardner, and Margaret F. Johnson (USGS, Reston, VA) contributed countless hours of training, resource calculations, computer guidance, and assistance in coordinating the Coal Availability program with the Bureau's Recoverability program. William G. Miller, manager of the USGS's National Coal Resources Data System(NCRDS), Reston, VA guided the Bureau acquisitions of hardware and software to insure compatibility with NCRDS. Carol L. Molnia and Vicky L. Clark (USGS, Denver, CO) provided computer assistance. The authors also thank the following technical editors in the coal industry for their critical reviews of the program methodology: Gregg R. Bierei and Peter Wyckoff, Arch Mineral Corporation; Jon E. Kelly, Kelly Engineering; and Robert H. Tuck, Tuck Engineering.
After examination of the KGS and USGS Availability project in early 1989, a preliminary recoverability methodology was developed, as were map needs and formats, preliminary work schedules, and mining restriction criteria. Geological and geographic information was provided by the KGS, Lexington, KY. This information included: coal correlations, coal croplines, coal thickness and parting data, coal quality data, digitized restrictions to mining, mined-out areas, oil and gas wells, cemeteries, etc. Locations of all mining, wash plant, and waste disposal permits in the Matewan and surrounding quadrangles were obtained from the regional office of the Kentucky Department of Surface Mine Reclamation Enforcement, in Pikeville, KY. The Matewan quadrangle area was toured so that the locations of wash plants, railroads, highways, haulage roads, streams, and rivers could be verified, and other pertinent mining infrastructure could be noted, such as trends in the terrain and haulage routes. Several mines in and around the Matewan quadrangle were evaluated for operational details. An indepth literature and industry search for state-of-the-art mining methods and equipment and current production rates was undertaken, and recovery rates from practical mine design and mine surveys were investigated in other localities with similar mining configurations. Normal planning variables, such as seam thickness, floor and roof quality, seam hardness, seam quality, parting and coal content within a seam, and depth of seams, were collected. Industry and Government sources were used for equipment costs and cost indexes, productivity, transportation costs, coal quality verses coal realization, taxation, etc.
The available coal resources, as determined by the USGS and cooperating State geological surveys, are the original resources minus the mined-out resources, resources restricted from mining by environmental factors, and resources restricted from mining by technological factors. Only coals 14 in or more in thickness and less than 1000 ft below the surface are considered. All coal croplines and restrictions are digitized for area and volume/tonnage calculations. Environmental restrictions include towns, highways, streams, cemeteries, and major gas and electrical lines. Technological restrictions include coal less than 28 in thick for underground mining, barrier pillars between mines, oil and gas wells penetrating mines, and coal quality.
These coal availability estimates give the resource in coal-only thickness, reliability, and depth (surface minable or underground minable) classes. The restrictions to mining are estimated individually so that the magnitude of resources made unavailable because of cemeteries, oil and gas wells, protected lands and streams, and other factors is known.
The USGS and State availability program defines coal resources in terms of coal-only tonnages, (any parting greater than 3/8 in is deleted from the seam thickness). This methodology was then modified and expanded, the results of which include a different definition of coal resource availability, and herein lies a major difference between the KGS-USGS program and Bureau program methodologies. The difference between the KGS-USGS Coal Availability program and the Bureau's Coal Recoverability program is the Bureau's use of total coal seam thickness in determining mining methods, resource recovery, and applicable mining costs. The Bureau assumptions and methodology reflect recovery of some coal in the mining of full seams that would have been excluded in a coal-only scenario (i.e., seam parting of up to 50% of the total seam thickness is included in the minable resource number). Also, the Bureau did not limit the mining of the coal if the coal had high-sulfur or high-ash content; instead, operating costs became the limiting factor for the reserve. Thus, high-sulfer coal is limited in reserve by its lower sales price. Ash content, denoting in-seam parting and out-of-seam dilution, is accounted for by (1) the additional cost of washing the run-of-mine (ROM) product, and (2) the percentage of ROM product washed out during cleaning, thereby effectively lowering the clean or salable tonnage recovered and raising the cost per ton to produce the coal. The Bureau's recoverability program defines coal resources in terms of total seam (coal plus partings) tonnages. Table 1 compares the two programs with respect to this and other significant definition differences.
As a result of the redefinition of coal resource availability, the Bureau's estimation of the total original, in-place, resource for the Matewan quadrangle is 21% more than the KGS-USGS estimate; however, due to significant differences in estimated resource losses determined for previously mined resources and restrictions to future mining, the Bureau's estimate of the remainingminable resource is less than the KGS-USGS estimate by 14%. In any event, this revised minable tonnage, derived from USGS and KGS coal availability data, formed the foundation upon which the Bureau's recoverability program fully developed. Table 2 shows the different resource tonnage estimates of the KGS-USGS and the Bureau.
The Bureau's recoverability methodology, which consists of removing the resources lost during mining and washing, results in recoverable resources. Mining economics are then applied to the recoverable resources to determine the amount of coal that can be mined at a profit. To determine the resource recovery, mining assumptions were made and preliminary mine plans were developed for each seam. Coal mining and washing recovery models were developed and applied to the resource data (appendix B). The recoverable resources were then incorporated into the mine cost models (appendix C) to calculate the economically recoverable resources (i.e., reserves) at different levels of the coal market. This easily acknowledges the fact that the reserve base, or "economically recoverable coal base" will change with changes in energy prices.
Many elements influence the cost of mining a ton of coal. Major factors to be considered are (1) geology of the resource to be mined; (2) Federal, State, and local taxes; (3) royalties; (4) payroll; (5) productivity; (6) transportation; and (7) preparation costs. The geology of the resource includes engineering properties of the roof and floor of the seam (which directly effect the mine recovery possible from a resource and may add external dilution to the seam), thickness and continuity of the seam, thickness and continuity of in-seam noncoal partings, and coal quality. These factors often dictate the mining methods to be used and directly affect the wash plant recovery which, in turn, affects the cost per ton of clean or salable coal. Federal, State and local taxes often have little correlation to efficiency or productivity, but can be a large cost consideration. Royalties can often become a very large part of the total cost. Royalties frequently do not vary with the price of coal, and usually have minimum payments required; therefore, as the coal price (or realization) or productivity decrease, the royalties become a larger percentage of the overall costs. Payroll, and the related burden rates, is usually the single largest contributor to coal mine costs. Productivity (tons of clean coal per employee shift) is sometimes the deciding factor between profit and loss. Transportation of the coal from the mine to the preparation facility and/or the train or barge loadout facility may account for 10% to 20% of the total operating cost. Preparation costs can have a significant impact on the cost per ton of clean coal produced, and although the Bureau has used a cost per raw ton figure in the cost models, the models allow analysis of the ROM product recovery from the plant and establish the preparation costs per clean ton of salable coal (e.g., $2 per ton for a ROM coal preparation cost, coupled with a 50% recovery in the preparation plant, equals $4 per ton for a clean coal preparation cost).
The quality of the coal being mined does not necessarily have a direct effect on the cost to mine or wash that coal; however, the quality does affect the price that can be received for the salable product. The 1990 Clean Air Act amendments effectively broaden the range of the definitions of compliance coal to include coals between 1.0 lb SO2 per MBtu and 1.5 lb SO2 per MBtu that will allow through blending and selective burning to meet the new compliance standards on a system wide basis. For this report, compliance coal meets the EPA standard for potential emissions from utilities burning the coal, when no sulfur dioxide (SO2) reduction processes are used (17); the current standard is dependent upon the minimum allowable total emissions within an affected area and is no more than 1.2 lb of S02 per MBtu of heat input.
Information concerning the quality of the coals within the Matewan quadrangle ranges from extensive to extremely limited. As may be expected, the most productive coal seams have the greatest available amount of coal quality information, whereas the nonproductive seams have little or no coal quality information specific to the quadrangle. Coal seam quality data for the seams of the Matewan quadrangle is presented in table 3. It should be noted that seams of high production, such as the Upper Elkhorn 1B and the Lower Elkhorn, have more statistically supportable averages than others of lower production.
Due to the variability of coal characteristics throughout central Appalachia, an attempt was made to use coal quality analyses specifically from the Matewan quadrangle to compile the table's information. In this regard, two publications (18-19) were indispensable as sources of coal quality data, as they include individual coal sample information from, adjacent to, or near the Matewan quadrangle for all but two of the coal seams. For those two coal seams, Powellton and Eagle B, a Bureau publication (1) was used, although this source only furnished coal quality data by seam on a county-average basis.
As can be seen in table 3, all the coals within the quadrangle are low- or medium-sulfur, high-volatile, bituminous varieties. On an as received basis, sulfur content ranges from a low of 0.4% (Lower Elkhorn and Powellton seams) to a high of 2.1% (Williamson B seam), and ash content ranges from a low of 2.7% (Upper Elkhorn No. 1B seam) to a high of 16.67% (Hamlin A seam) . Heating values range from a low of 10,643 Btu per lb (Upper Peach orchard A seam) to a high of 14,630 Btu per lb (Upper Elkhorn No. 1B seam). If the standard of 1.2 lb of SO2 per MBtu is considered, there are almost equal amounts of compliance coals and noncompliance coals within the Matewan quadrangle. Since coal quality data for all but two of the listed seams is very limited, the table data represents only a very restricted characterization of the coal within the Matewan quadrangle and is not statistically supported for precise quality portrayal.
In addition to coal quality characteristics, the table also indicates the sales price for each seam's coal. The sales prices, as listed in the table, are based on sulfur and ash contents and Btu heating values of the coals for central Appalachian 'District 8' coal prices (f.o.b., mine) for May 1990.
The quality of a coal is not considered a restriction to its minability; however, it can be a factor in the marketability of that coal. The Matewan quadrangle quality data is limited, but there is sufficient data to estimate sulfur trends for the area. Increasing concerns for the environment and increasing regulation of environmental pollutants require a better understanding of the coal qualities than is now available. A simple change in the S02 requirement from 1.2 lb per MBtu to 1.0 lb per MBtu reduces the compliance coal in the Matewan quadrangle by 37% of that available at 1.2 lb of S02 per MBtu for the $25 per ton cost (190 M tons to 119 M tons), and by 39% at $30 per ton (150 M tons to 91 M tons).
Table 4 shows that the total original, in-place, resource for all seams in the Matewan quadrangle is 1,193 M tons, of which 148 M tons have been mined out. Resource losses due to restrictions amount to another 345 M tons. Subtracting these, a minable resource of 700 M tons, or 59% of the original resource, remains (fig. 3). When this resource available for mining was theoretically "mined out," 231 M tons were left in the ground as barrier pillars, in seams located too close to other seams, etc. By comparing in-seam parting thickness and density, to coal thickness and density, it was possible to calculate the coal and parting losses due to the preparation process. This loss amounts to 106 M tons. When these two values are subtracted from the "minable resource" number, the resultant 363 M tons (30% of original in-place resource) remains as a "recoverable resource." The fact that only 30% of a natural resource is available for recovery is noteworthy. Figure 4 illustrates the various resource losses and availabilities.
The "recoverable resource" was then evaluated with the costing models to determine the amount of economically recoverable resource remaining. The results further reduce the amount of recoverable coal, depending upon the economics assumed at the time of the study. Finally, the amount of economically recoverable coal that met standards for S02 emissions (compliance coal) was determined.
At $25 per ton realization, only 7.5% (89 M tons) of the original resource was economically recoverable. Roughly half (44 M tons) has a potential S02 content less than 1.2 lb per MBtu. The remainder (46 M tons) has a potential S02 content greater than 1.2 lb per MBtu (or noncompliance). It was found that 75% of the 'recoverable resource," or 274 M tons, was uneconomic in the $25 per ton market.
The numbers improve when a realization of $30 per ton is used in the cost models. Then, 22.1% (264 M tons) of the original resource is economically available to mine, with 150 M tons having a potential S02 content less than 1.2 lb per MBtu and 114 tons having a potential S02 content greater than 1.2 lb per MBtu. At $30 per ton, 27% of the "recoverable resource," or 99 M tons, is uneconomical to mine.
If a more restrictive definition of compliance coal is used (e.g. no more than 1.0 lb of S02 per MBtu), the economically recoverable compliance coal is reduced to 25 M tons (7.7%), at $30 per ton realization. Table 5 summarizes this economic recoverability of the coal resource, at the two realization prices discussed above, by compliance and noncompliance categories.
Without accurate data regarding the amounts and quality of economically recoverable coal, it is not possible to make informed decisions regarding national, regional, or local energy policies. Traditional procedures and methodologies used to estimate the coal reserve base have utilized historical mining recovery factors and applied them throughout coal regions to obtain the estimated recoverable coal tonnage. Restrictions relative to the environment and social concerns, site specific geology, mining and preparation technology, and economics have not been considered previously. However, as this study shows, these restrictions significantly impact the amount of coal that is ultimately recoverable.
Results of this study indicate that of the original 1,193 M tons of coal resources in the Kentucky portion of the Matewan 7-1/2 minute quadrangle, 148 M tons have been mined out and another 345 M tons are restricted from mining for a variety of reasons, resulting in a minable resource of 700 M tons. Subtracting the mining and processing losses reduces this to a recoverable resource of 363 M tons, or 30% of the original in-place resource. The next step was to apply economic constraints to this "recoverable resource." At $25 per ton realization, only 89 M tons (7.5%) are economically recoverable. At $30 per ton realization, only 264 M tons (22.1%) are economically recoverable. Compliance constraints further reduce the amount of coal available.
The results of this study are for one quadrangle only, but suggest that the DRB is seriously overstated and that the DRB should be used with caution until further data are available. It is difficult to predict at this point of the study whether or not the Matewan results are representative of other quadrangles in the central Appalachian region. What is predictable is that at the current production rate of 5.3 M tons per year, if prices do not improve dramatically, the coal industry in the Matewan quadrangle has only 16.8 years until the economic reserves are depleted (fig. 5).
If similar results are found in subsequent investigations, a strong argument can be made that traditional coal producing regions may soon be experiencing resource depletion problems far greater and much sooner than previously thought. This will affect not only the coal industry, but the entire social and economic infrastructure of large areas. As production shifts from one region to another, so will jobs, people, and businesses. Entire government base structures will be directly affected by the industry migration. This migration may be brought about due to the need for additional national reserves, as demand increases, or for reserves that meet regulatory requirements.
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