U.S. coal producer
Cloud Peak Energy
) after a year long preparatory work is all set to drill
exploratory wells in Northern Powder River Basin at the Crow Indian
Reservation in southeast Montana. In Jun 2013, the company received
approval from the Bureau of Indian Affairs (BIA) to work in this
reservation. Please read,
Cloud Peak to Develop Mine in PRB
With necessary permits and agreements with Tribal regulators under
its belt and the onset of the warm summer weather, Cloud Peak is
now ready to drill 100 holes of 6-inch diameter and collect samples
to determine the quality and quantity of the coal reserves. These
two factors are essential for the commercial viability of coal.
Cloud Peak Energy has been taking necessary steps to preserve the
region's cultural heritage. Cloud Peak has to date made an option
payment of $5.25 million to the Tribe and will make additional
annual payments during the remainder of the initial five-year
option period taking the total payment to $10 million.
Cloud Peak Energy already has exposure in this region through its
Spring Creek mine and Youngs Creek Mining Company, LLC and CX Ranch
properties. The reserves which are being explored by Big Metal Coal
Co. LLC., a unit of Cloud Peak Energy, are located near the
aforesaid existing operations of the company.
Powder River Basin (PRB) is one of the prime coal producing regions
of the U.S. and supplies nearly 40% of the country's total coal
consumption. Per a report from the U.S. Energy Information
Administration (EIA), U.S. coal production will increase to 22.6
quadrillion Btu in 2040 from 20.6 quadrillion Btu in 2012. It goes
without saying that PRB coal will contribute substantially to total
We believe that the development of PRB reserves will help the
company to meet domestic requirements and cater to the ever
increasing demand from the coal hungry Asian countries.
Per a report from the U.S. Geological Survey, the states of Wyoming
and Montana in the PRB contain about 162 billion short tons of
recoverable coal. The report also says out of the total recoverable
coal, 25 BST is currently economically viable. As a result,
large coal producers of the likes of
Peabody Energy Corporation
Arch Coal Inc.
Alpha Natural Resources Inc.
) also have stakes in this basin.
Cloud Peak Energy currently has a Zacks Rank #3 (Hold).
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