San Juan Mine among assets planned for auction

Hannah Grover
Farmington Daily Times
A dump truck moves along a service road at the San Juan Mine, Wednesday, Jan. 13, 2018 in Waterflow
  • Some impacted utilities have objected to the auction.

FARMINGTON — The Westmoreland Coal Company is looking at selling assets, including the San Juan Mine, during a January “stalking horse auction,” according to court documents.

A hearing regarding Westmoreland’s motion to have a “stalking horse auction” is scheduled for 1 p.m. Central Time Nov. 13 in the U.S. Bankruptcy Court Southern District of Texas’ Houston Division located in Houston.

A stalking horse auction allows Westmoreland to choose a third-party bidder to make the initial bid on the assets, which will help Westmoreland avoid receiving low bids.

According to court documents, the sale would preserve operations and save more than a thousand jobs. These jobs pay more than $80,000 on average, according to the American Coal Council and a study done by Four Corners Economic Development.

The November hearing will allow the court to approve bidding procedures and set dates and deadlines.

San Juan Mine's owner files for bankruptcy

Westmoreland is the sixth-largest coal company in North America and owns 19 coal mines, including the San Juan Mine.

MORE:San Juan Mine's owner files for Chapter 11 bankruptcy

The core assets listed for sale in the “stalking horse auction” include substantially all of the San Juan Mine assets as well as Colstrip, Montana, and Canadian assets.

According to court documents, the third-party bidder will have obtained the regulatory approvals required to operate the coal mines.

If approved, the bid deadline would be set for 4 p.m. Central Time Jan. 15, and the auction would occur 10 a.m. Eastern Time on Jan. 22 in New York. A confirmation hearing would follow on Feb. 13.

Northwest utilities file objection to “stalking horse auction” sale of Colstrip assets

Several electric utilities that own 70 percent of the Colstrip Power Plant have filed a limited objection to the stalking horse auction. Those owners include Puget Sound Energy, Portland General Electric, PacifiCorp and Avista Corp.

The objection claims there are not enough safeguards in place to ensure coal from the Rosebud Mine would continue to supply the Colstrip Power Plant. The Colstrip Power Plant relies solely on the Rosebud Mine, which is owned by Westmoreland subsidiary the Western Energy Company, for coal to generate electricity. This electricity is then transmitted to millions of customers in the northwest United States.

History, future of San Juan Generating Station

The limited objection was filed Tuesday.

The Colstrip Power Plant may close as early as 2027. The utilities allege the bankruptcy proceedings have interrupted negotiations for a coal supply purchase contract, and Westmoreland has failed to address the impact that closing the Rosebud Mine would have on the utilities and their customers.

The owners of the San Juan Generating Station and power plants associated with the assets in Canada have not filed objections.

MORE:How San Juan Generating Station went from powerhouse to possible closure

American Coal Council: Bankruptcy does not reflect on industry profitability

While Westmoreland has entered bankruptcy proceedings and other coal companies have gone through similar processes in recent years, the American Coal Council does not view those bankruptcies as harbingers of the end of the coal industry.

In an email from American Coal Council CEO Betsy Monseu to The Daily Times, the council stated consolidation and rationalization has provided coal companies the opportunity to improve productivity, reduce costs and be more competitive.

Local residents offer their views

“The U.S. recession and the slow recovery from it impacted the entire energy sector for many years, so the oil and natural gas sectors have also experienced restructuring and rationalization,” the email states.

According to the American Coal Council, the coal industry is more profitable now than it has been in years.

A coal miner holds chunks of coal in this undated file photo.

Coal has uses other than electrical generation

While the two San Juan County coal mines — the San Juan Mine and the Navajo Mine — are used to supply power plants, the American Coal Council states coal has other uses as well, including steel manufacturing and production of chemicals, cement and paper.

The nearby King Coal Mine in Hesperus, Colorado, currently ships coal to Mexico for the production of cement.

The American Coal Council states new technology and applications can be developed, such as carbon sequestration.

Coal also could be used to manufacture products like graphite and graphene, as well as resins for 3D printers, according to the American Coal Council.

MORE:Reduction in coal use tied to improved air quality

A new research campus known as iCAM, or Carbon Advanced Materials Center, is currently planned to work with a new, neighboring coal mine to manufacture carbon products at an industrial park called iPark in Wyoming. The developer, Ramaco Carbon, is currently undergoing a permitting process for the Brook Mine.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at