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Wednesday, January 09, 2008 9:40 AM ET
Cline's Deer Run coal mine to produce up to 8 million tons per year
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Industry Document: Application for Surface Coal Mining and Reclamation Operation... 12/20/2007

The Deer Run longwall mine of Hillsboro Energy LLC, which is controlled by coal operator Chris Cline, will produce up to 8 million tons per year of coal over an initial mine life stretching through 2016.

Those are among the facts in a September 2007 mine permit application that the Illinois Office of Mines and Minerals recently posted on its Web site. Such a posting means the application has gone through an initial review, been corrected to make it conform to state requirements, and is now ready for full review, which will take several additional months to complete.

The initial coal reserve for Deer Run, to be located in Montgomery County, Ill., will last through 2016, but more reserves are accessible and could be permitted at a later date to further extend the mine's life. The application calls for a start of surface construction on the 800-acre site in April 2008, with a mining start in April 2009, though that schedule is likely to change depending on various issues, such as how long it takes for OMM to issue this mine permit

Deer Run would work the Herrin No. 6 coal seam, which is the same seam worked by Cline's new Pond Creek No. 1 mine in the same state. Illinois has vast reserves of high-sulfur coal, which has become desirable lately as more power plants add SO2 scrubbers and as coal gasification and coal-to-liquids plants are put on the drawing boards. There are lab analysis sample sheets for the coal reserves attached to the Hillsboro filing, with one of them from early 2007 showing this coal as having a total sulfur level of around 4.3%.

The coal seam in this reserve ranges from less than 7 feet thick in some areas of the reserve to more than 9 feet in other areas. The overburden above the coal seam ranges from 460 to 540 feet of rock and soil. The seam would be accessed through an incline slope and two vertical shafts.

A prep plant would be built at the site that includes heavy media washers, heavy media cyclones, spiral circuits and froth flotation. There would also be a rail loop and a truck loader built for shipment of this coal.

This is the fourth longwall mine project for Cline in Illinois. His new Pond Creek No. 1 (also called Mach No. 1 mine) in Williamson County is in development production and due for a longwall start early this year. This mine is targeted for production of 7 million tons per year. The U.S. Mine Safety and Health Administration database shows the mine produced 94,171 tons of coal in the fourth quarter of 2006, its first quarter of production, and turned out 799,418 tons in the first three quarters of 2007.

The Sugar Camp Energy LLC mine in Franklin County has been in permitting since December 2005, is still in permitting and is targeted for 14 million tons per year.

An application that is still well short of final approval was filed at the OMM in April 2007 by Locust Grove Energy LLC for a 7 million-ton-per-year longwall job in Williamson and Franklin counties.

All of these mines are or will be in the high-sulfur No. 6 coal seam. Some critics say Cline is bringing on too much production capacity for the market, too fast. And there is a problem with high chlorine-chloride content in some No. 6 seam coals, which could limit the market for the coal. As matter of fact, Pond Creek No. 1 last year lost a major customer — Duke Energy Corp.'s East Bend plant — after a test burn showed its coal had too high a chloride content for the plant's scrubber systems to handle. But Cline representatives have said the market will be there for all of this coal and that Cline has plans to develop up to 60 million tons per year of coal production out of Illinois in the next few years.

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