Montana Urged to Lease Coal Reserves

By Beacon Staff

HELENA – The president of a private company that owns vast tracts of coal reserves adjacent to Montana coal properties told the state it’s time to develop the reserves.

Chuck Kerr with Houston-based Great Northern Properties told top elected officials on Monday his company is willing to put its Otter Creek tracts up for lease first — as long as the state quickly follows suit.

The state and private coal holdings are held in a checkerboard ownership pattern and must be developed together.

The state has 610 million tons of coal spread over 9,500 acres near Ashland.

“As far as I’m concerned, I’m neutral. GNP could go first or the state could go first,” Kerr said at a meeting of the state Land Board.

The Northern Plains Resource Council argued that the environmental cost of tapping the coal reserves have not been fully analyzed and asked the board to wait before putting the coal out to competitive bid.

Another group, the Montana Environmental Information Center, said revenue appraisals are inflated and don’t take into account the declining demand for coal amid concerns about carbon emissions.

The board didn’t dwell on the environmental questions and instead focused on money.

Gov. Brian Schweitzer and other elected officials on the Land Board worry the state won’t get enough money if it leases the coal too soon.

Others pointed out that coal owned by others in the region — including Great Northern — will benefit greatly after the mining of state-leased coal fields at Otter Creek subsidizes a buildup of rail and other infrastructure needed to get mining started.

Willie Duffield, with the Montana Association of Oil, Gas and Coal Counties, said Otter Creek is the only potential development big enough to get the ball rolling in the region.

“I think if we wait too long and they don’t get developed, we are going to look like jackasses,” he told the board.

Schweitzer has argued that other coal owners in the area could go first and take less money. But he said everyone wants the state to do it.

“It’s very interesting that it is their position that it is this 600 million tons that is holding up all the coal development in Montana,” Schweitzer said.

Kerr said he thinks the technology is now available to make lower quality Montana coal competitive and help replace declining reserves in the eastern United States.

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