A Shortfall in Leasing Coal From Federal Lands:

What Effect on National Energy Goals?

EMD-80-87: Published: Aug 22, 1980. Publicly Released: Aug 22, 1980.

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Serious problems which involve not leasing enough coal, not selecting the best coal areas for lease, and not having needed coal data are indicated in the Department of the Interior's lease sale in the Green River-Hams Fork region of Colorado and Wyoming. Unless these problems are corrected early, Federal lands may not contribute significantly to meeting the Nation's need for more coal. Because much of the Nation's most accessible and economically minable coal lies on Federal or interspersed non-Federal lands in the West, leasing policies hold an important key to whether this gap can and will be filled. Interior establishes coal leasing targets by considering the difference between its mine production estimates and the Department of Energy's (DOE) demand estimates to determine the amount of coal production that must be generated from new Federal leasing. Factors such as mine life, Federal/non-Federal coal ownership ratio, coal recovery ratio, and the level of uncertainty are all taken into consideration.

For the 1981 Green River-Hams Fork sale, at least three times more coal needs to be leased than is presently called for in the leasing target. Interior will not be able to make available sufficient amounts of additional coal to make up for the 1981 leasing shortfall. Immediate action is necessary to assure that enough coal is made available to meet the region's projected coal demand. Exclusion of formal expressions of leasing interest during land use planning may unnecessarily restrict coal development and force it to less economically and possibly even less environmentally suitable locations. Selection of low-quality coal areas not only could result in leasing less economically suitable coal, but also could limit the amount of higher quality coal that could be leased in the future. Industry is currently interested in mining some areas that may not be considered for leasing until 1987 or later. The request for and use of industry input would give better focus on where land use planning should be done. The U.S. Geological Survey (USGS) does not have sufficient information to identify and evaluate tracts to meet the Bureau of Land Management's (BLM) planning schedules. Their condensed timeframe for coal data acquisition may severely restrict the number of tracts that could be delineated and considered for leasing and may limit competition. The private sector could do more pre-lease drilling if encouraged. A decision by Interior at the time licenses are granted would give industry added incentive to invest in exploration activity.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: Interior should initiate immediate plans for a follow-on sale to meet the region's projected coal demand and, with DOE, review leasing targets. Interior should require BLM to: (1) request expressions of interest in possible lease tracts for all land use planning areas that contain Federal coal; (2) ensure that land use planning for coal is not limited to known recoverable coal resource areas when development interest is indicated by industry and coal data are available elsewhere; (3) decide whether or how threshold development levels will be used; and (4) coordinate with USGS before determining the time to be allotted for USGS work in activity planning, allowing at least one drilling season for the tract delineation process. Interior should require USGS to develop long-range plans for coal exploration activities in direct support of tract delineation and obtain formal public input; appoint permanent tract delineation team leaders; and clarify procedures for making reserve estimates and establish formal quality control procedures in the reserve estimate computation process. Interior should develop explicit procedures under which land exchange applicants could drill candidate exchange tracts and inform those who obtain an exploration license whether they will or will not be allowed to bid on the tract if it is offered for lease. The Secretary of Agriculture should require the Chief of the Forest Service to direct his staff to rely on USGS standards for coal reserve estimates for land-use planning and to coordinate with USGS concerning proposed drilling sites so that USGS can plan drilling and other exploration activities to prepare for future leasing and the preparation of land use plans.

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