in NewMexico
cycles
of coalproduction
Theeconomics
NM87801
Resources,
Socorro,
andMineral
oJMines
NewMexico
Bureau
L. Wolberg,
andDonald
byjrin J. Anderson
Introduction
in territorial days, the
its
beginning
Since
New Mexico coal mining industry has experiencednearly three production cycles.If
we have read all signals correctly, New Mexico is at or near the apex of the third such
cycle. This report attempts to identify the
economicand political factorsthat impact coal
production and lead to these production
cycles.
Coal has held a specialstatusin the Western World since even before the beginning
of the Industrial Age. Development and
growth of an industrial economyand the advent of railroad and steamship transportation systemswere the impetus for large-scale
coal production, but coal had been previously used as a residential fuel, for minor
smelting, metal-smithing operations, and
simple forging. To a great extent, the Industrial Age was spawned and fueled by coal as
a basic processfuel. IndustrY 81ve birth-to
world iommerce, enriched cultures, the
and services increased several fold, New
Mexico coal production declined overall.
Discussion
New Mexicocoal production history, with
the peaks of each cycle numbered, is summarized in Fig. 1. Production peaks L and 2
correspondwith wartime economies.New
Mexicoparticipatedin the national effort by
supplying anthracitefrom the Cerrillos coal
22
Alsoin thisissue
Peok3-
zl
age,and rates
Stratigraphy,
DatilGrouP
of deposition,
CrosssectionacrossJornada
Engle,and
delMuerto,
Basins
Palomas
northern
of the
outcroPs
Southernmost
MorrisonFormation
roundupin New
Exploration
Mexicoduring1986
Listof ongoinggeologic
prolectsin NewMexico
Service/News
Staffnoles
20
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1900
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L
FIGUREl-New
.E
-t
field to the U.S. Navy during World War I
and bituminous coal to the Los Alamos Laboratories during World War Il. By 192080Vo
of the nation's energy needs were supplied
by coal, and New Mexico had just experienced its first coal boom. Nationwide production peakedagainin 1947,in New Mexico
in 1943.ihe earfidrpeak and onsetof decline
in New Mexico has been attributed to a reduced labor pool-a result of the manpower
demandsof the war effort.
Production peak 3 is actually the culmination of a two-phase period of sustained
qrowth. The first phase,initiated int952,was
due to developmentof large strip mines by
utility companies.The utility industry realZed ihat natural gas and fuel oil prices would
probably undergo a sharp upturn and consequentlytook the initiative of establishing
itself in the coal-mining industry at a time
1980
Mexicocoalproduction history (modifiedfrom KeystoneCoalIndustry Manual, 1981).
collapseat Kilbourne
Caldera-like
HoleMaar
and
structure,
Mineralparagenesis,
"ore-shoot"
geometryat the U.S.
Treasurymine
HarryMcAdamsStatePark
of the Cutoff
Sedimentology
Mountains
GuadaluPe
Formation,
wells,1986
Oil andgasdiscovery
TABLE l-Fossil-fuel costs for electricity genera- plummeted; the low was reached in New
tion in the United States,1965-1986(centsper mil- Mexico in 1958-59when annual nroduction
lion Btu);* secondquarteronly (source:DOE/EIA,
dropped to 85,000tons (New M-exicoState
1985a).
1965
1,970
7977
7972
1973
1974
7975
1976
1977
7978
1979
1980
1981
1982
1983
19u
1985
1986
Coal
Fuel oil
Gas
1A
33
48
56
60
80
793
203
200
226
279
308
437
539
485
459
4U
25
27
29
JI
36
37
47
77
81
85
95
772
722
135
153
165
166
766
165
162*
+JZ
1aA*
JI
34
48
75
103
129
743
775
227
282
340
J+/
358
343
237r
efficient. Thus, 20-22 tons of coal are ultimatelv reouired to manufacture each automobil-e.And it follows that the loss of 4 million
Inspectorof Mines, 1958).Nationally the low vehicles a year to the import market transcame somewhat later, during the 1972-73 lates into a reduction in coal demand of 88
period, and by this time the nation was re- million tons (if all the electrical energy relying on coal for only 1,8Vo
of its energy needs quired was generated with coal). Moreover,
(Lindbergh and Provorse,97n. As the 1950's this represents 4 million days of labor if we
came to a close,petroleum imports had be- use the productivity figure of 20 tons per
gun a steepclimb. The stagewas set for coal man dav, which in tum translatesinto 12.000production in the western U.S. to enter a 13,000jobs in the coal industry alone.
period of sustainedgrowth that would span
Although factors 2 and 3 are justifiable
more than 25 years.
concerns currently, surplus of crude oil and
moderationin electricalenergy demand can
be reversed quickly in times of prosperity,
Current market factors
bullish markets,and economicoptimism. In
addition, world crude oil surpluses can be
The four main factors that we believe will
collectively shapethe U.S. coal industry during the next 2-5 years are: 1) the declining o
c
U.S. industrial base as manifested by the
shrinking steel, base metals, and auto ino
dustries;2) the current world surplus of crude oo
oil and ample domestic supplies of natural
Pgas that allow fuel oil and gas to compete . Y O
o
with coal on a cost/Btubasis;3) the moder- 4 tor .
ation in the growth rate of U.S. electrical o
consumption-in both residentialand com- oo
mericalsectors;and 4) the recentcompletion
and coming on line of nucleargeneratingsta- U)
85
tions. A fifth factoris federalcoal-leasingpolYeor
87
iry and other regulatory demands, which will
probably have little effect in the short term, FIGURE3-Fuels used in generationof U.S. electrical energy since 1955 (hydroelectric share not
but may have greaterimpact in an extended shown; after DOE/EIA, 1985b,p. 4).
time frame.
Of these five factors, the declining U.S.
industrial base should cause the greatest
concernbecauseit has the greatestpbtential
for coalmarket devastation,influencingboth
the steam-coaland metallurgical-coalmarkets. Manufacturing of an automobile requiresabout 108Btu's-the energycontained
in about 5 tons of coal (Tien et aI., 1975).
Actually the coal is first converted to elec. Science
andSeruice
Volume 9, No. 3, August 1987
tricity, a conversion processthat is only 24%
L I
when nationally the fuel-costfactor weighed
in favor of naturalgas (Table1).
The second phase of growth leading to
production peak 3 was stimulated by the Arab
oil embargoin 1973and the "energy crisis"
that it produced. During and follo*ing that
crisis many oil- and gas-firedboiler operations were cutback or scheduled for shutdown, and eisting coal-firedplants operated
at-l,00Voof capacity while construction on
new coal-firedfacilities accelerated.During
1974the Federal Energy Administration wai
actually given the power to order existing
gas- and oil-fired electrical generating stations to revert to burning coal.
In the 1970's,as a result, 1) manv new coal
minesopenedin the Powder River Basinof
Wyoming, 2) the northeast Texaslignite fields
were developed, 3) North Dakota's lignite
reserves were developed, and 4) existing
mines in New Mexico and Arizona were expanded (Fig.2). Theremight have beeneven
more rapid growth in coal usageduring this
time had there not been concernfor the nation's air quality. It is important to note,
however,that despitethe growth in coalusage
during the late L970's,coalnever did capture
more than a 55%shareof the utility fuel market, the amount that it had in 1955(Fig.3).
Thus the production matma are fairly well
understood.Not so well understood are the
/ G r e e nR i v e r ; i
declinephasesand productionminima. Referring back to Fig. l, we note that production minimum 1 coincidedwith the collapse
leosin[-14?
--=of the stock market and the depressionthat
I
followed. The gradual decline leading to
Roton I
minimum 1 reflectsthe post-WWI cooling of
l4egg.-..the economy, widespread unemployment,
and the adventof natural gasusageon a local
,l
scale.
Production minimum 2 occurred in the
B i l u m i n o u so n d
1950'sand is associatedwith a burgeoning
subbiluminouscool
\_
600 mi
petroleum industry, which supplied lbw-cost
natural gas through major regionalpipelines
Lignite
to the utility industriesand homes.and also
to the fact ihat diesel fuel displacedcoal as FIGURE2-Coal fields of the westem United States
a railroad locomotive fuel. Coal production (after U.S. GeologicalSurvey,1960).
i-J-'sT-l
'{;!i.ti
(,ff:'j-l
I
EI
August 1987 New MexicoGeology
ti:i:
I
New AAexuc@
GEOLOGV
Edlror;Deborah A. Shaw
D/4frdi Monte Brown
Published quarterly by
New Mexico Bureau of Mines and Mineral Resources
a division of New Mqi@ Institute of Mining & Ibchnology
BOARD OF REGENTS
Ex Officio
Carry Carruthers, Cooernorol New Mexico
Alan Morgan, Supdiatendentol Publrclnstrucfion
Appointed
Gilbert L. Cano, Pres.,1985-7989,Albuquerque
Lenton Malry, Sec.
lTreas.,7985-1991,Albuquerque
Robert O. Anderson, 1987-193, Roswell
Donald W. Moris, 1983-1989,Ins Alamos
Steve Torres, 1967-1997, Socoffo
New Mexico Institute of Mining & Technology
Laurence H. Lattman
Presidmt. .
New Mexico Bureau oi Mines & Mineral Resources
.......
FrankE.Kottlowski
D i f e c t o.r.
......
Georges.Austin
DeputyDirector
Mat August,
February,
SubTriptions:lssued quarterly,
November; subscription price $6.00/calendaryear.
Editorialmaftq: Articles submitted for publication should
be in the editor's hands a ninimum of five (5) months
before date of publication (February, May, AuSust, or
November) and should be no longer than 20 typewriF
ten, double-spacedpages. All scientific PaPerswill be
reviewed by at least two people in the apProPriatefield
of study. Address inquiries to Deborah A. Shaw, Editor
ol Nru Mexia Geology,New Mexico Bureau of Mines &
Mineral Resources,Socoto, NM 87801
without per'
as publicdomain,therelorereproducible
Published
mission.Sourcecredit requested.
Circulation:1,6N
Printer:Univercity of New Mexico Printin8 Plant
reversed easily by developments in the politically volatile Middle East. Howevet it is
likely that further development of African,
Asian, and Latin American oil fields, with or
without new Arctic American or Canadian
finds, will have a depressive effect on world
oil prices for at least the next decade. Factor
4, nuclear capacity, will produce a short-term
blip in the cycle, but does add to the down
cycle of coal at present. This factor is short
term because no new nuclear facilities are
being planned or sited, and when the current
inventory of stations under construction
comes on line it will then become a fixed
quantity in an expanding population, and
we hope, economy.
Iamation will cost nearly $9,500/acre at one
of New Mexico's active coal mines.
The coal research and data processing proSrams sponsored by the federal government,
almost entirely through the U.S. Geological
Survey, place a great deal of high quality information in the hands of industry and the
interested public. These efforts include detailed geologic mapping and coal resource
assessment work within the National Coal
Resource Evaluation Program, and the computerized coal National Coal Resource Data
System (NCRDS). However, basic research,
coal resource data, and coal quality information are not limiting factors in the coal
industry. Economics-market forces-determine and limit the rate of growth of this industry just as they do for all business
endeavors in a free society. So, despite their
ambitious data-gathering programs/ the federal government's regulatory policies relating to coal leasing, development, safety, and
reclamation will nonetheless add to the economic burden of the coal mining industry.
It is worth noting that some government
contractors are awarded contracts that specifv "a-cost-plus-fair-return." This guarantees
the contra&or a profit. In contrasi potential
developers of the raw materials of industry
from U.S. owned lands are not accorded the
same treatment.
craticallycollecteddata. Under the old (PRLA)
systemthe mining industry evaluatedits own
data. Under the new system, the resource
data that will be provided to prospective bidders is generatedby the federal government.
The old system wasn't all bad. Thomas
Kleppe, former Secretaryof Interior, recognized this in 1976when he stated:"The federal exploration program contemplatedin the
coal leasingammendment act of 1975could
be extremely costly (potentially billions of
dollars) and would unnecessarilyinvolve the
federalgovernmentin an activity that can be
better handled in the private sector" (Coal
Age Magazine, 1976).
Fuel cost comparisons
It is instructive to examine recent trends
The fifth factor, federal leasing and reguand compare costs of boiler fuels and eleclation policy, is a controversial issue, We districal-generation technologies. The fuels are
cuss only its economic impact and not the
fuel oil, natural gas, coal, and the alternative
relative merits and intent. Any regulatory
to these fossil fuels-isotopically enriched
policy has negative economic impacts, but
uranium. Table 2 lists the current delivered
current coal-leasing policy contains ecocoalpricesfor selectedsouthwestU.S. utility
nomic disincentives for an already moderateoperations. While this cost-per-ton data is
risk venture to the extent that federal coal
useful economic information for geologists
lands are now almost a priori removed from
and coal miners, cost-per-Btudata for fuel
consideration by the serious mining-indusoil, gas, and coal are necessaryfor compartry investor. A major factor, the moratorium
ison. Table 3 compares 1973-1986fuel data,
on leasing of federal coal, has been in effect
and note that while coal has held a considanyway since 1971 (it was lifted from January
erableprice advantage over both fuel oil and
1981 to September 1983, but has been reinnatural gas, the price differential between
The abolishment of preference-right leases coal and fuel oil narrowed significantly durstated).
The salient economic points of the new
The preference-right-lease application
ing 1985and 1986.Coqt of fuel oil had been
federal coal leasing policy are: a) minimum
(PRLA) system was abolished in 1977 in part
as much as 10times the cost of coalas a New
bonus bids in the competitive bidding sys- because it was said to encourage speculation.
Mexico electricutility fuel, but by mid-1986
tem, b) the diligent development and ad- Perhaps it did. However, obtaining a PRLA
it had dropped to approximately 1.6 times
v a n c e r o y a l t y c l a u s e , c ) s i t e s p e c i f i c required that some exploration work be done,
the cost of coal.
environmental impact statements required
and this preleasing exploration work was fiNatural gas prices have declined signififor each mine that is subsequent$ opened,
nanced by the private sector. Once the lease cantly also, especiallysince 1983(Table3),
d) the required posting of reclamation bonds,
to a proven coal tract was obtained it became although not to the extent that fuel oil prices
and e) changing federal policy that itself cre- income-producing property for the U.S. govhave dropped. New Mexico usesa relatively
ates corporate uncertainties about financial
ernment. Under the replacement system for
minor amount of nafural gas in electrical
undertakings involving federal land. An ad- PRLA's, the exploration work is financed by
generation,and far lessfuel oil. The naturalditional point-the abolishment of the prefthe taxpayer and leasing revenues are lost as gas-firedgenerating capacity is centered in
erence-right-lease system-is discussed under
the federal agency responsible goes about
the southeasternportion of the state,where
a separate heading. All of these factors have the business of detailed tract analysis so that
very little fuel-switchingcapabilityexists.In
the effect of increasing the front-end capital it can eventually set a minimum bonus bid.
the northwest, three maior utilities have
required for any proposed mining operafion.
The new system also places a prospective
constructedcoal-firedeleciric-generationfa"Front-end" is the capital required to bring
miner or developer at the mercy of bureaucilities, and two of these have natural gas
a mineral property to the point of produccapacity at older, separate,plant locations
tion.
that aremaintainednow as peakingstations.
Oulputper monper doy ot bituminous
coolmines This peaking capacity is about 1,07a
Other federal regulatory policies deal prior less of
marily with mine safety, mine drainage, and
the total generating capacity of the two util35
reclamation procedures such as timing, seities.Although the quantities involved in New
quence, and end result. High safety stanMexico are quite small, we see that fuel oil
dards are to be praised, but thev come at a Ea 3 0
and natural gas costs compare closely with
cost of reduced productivity 1Fig. +1. Passage b z s
the national average(Table1).
o
in 7969 of the Mining Safety Act ultimately
Becausewe are not presenting specific
5
z
o
was reflected in a 25% drop in productivity
plant-fuel costs,the tablesdo not show that
E
because more "unproductive" or "indirect"
some major utilities in the state were able to
o
personnel were required in the mine. This
purchasegasfor 185Cper million Btu by midCIU
had the effect of reducing our competiveness
1985.These are delivered costs of fuel and
in the world export market. With respect to
do not take into accountsuch post-combus5
coal surface mines, reclamation and revegetion factors as flue gas desulfurization, wet
tation work is widely viewed as necessary,
scmbbers,electrostaticprecipitators, and ash
but in New Mexico this adds approximately
removaUhaul-back,all requirements that ap1969
$0.50 to the cost of each ton of coal produced
FIGURE 4-Coal productivity in U.S., 7950-1977; ply to coal use only. Therefore, the cost of
(Tabet, 1977;Roybal and Eveleth, 1983). Roy- note that the Mine Safety Act was passed in 1969 delivered gas does not have to decline and
Federal coal leasing policy
bal and Eveleth (1983) determined that rec-
(after Lindbergh and Provorse, 1977).
Nal Mexico Geology Augtst 1987
TABLE 2-Delivered coai prices for some selected utility operations in southwest U.S. in 1986; * major
participant in a consortium (from industry sources).
cost of operating the coal-fired plant and
transmission line losses.
A significant cause for the softening coal
Cost/ton
demand at electric utilities in New Mexico
(dollars)
Supplier
Purchaser
Point of delivery
during 1986-1987 was the commissioning of
units no. 1 and no. 2 of the Palo Verde NuArizona Public ServiceCo. Arizona Public Service Co
mine-mouth generating
77.00
Navajo mine (NM)
Four Corners Generating Plant plant
clear Generating Plant 30 mi west of Phoenix.
Unit no. L was authorized for full-power opService
Co.
Public
of NM* Public Service Co. of NM*
mine-mouth generating
24.00
eration in 1985;unit no. 2, inApril 1985. Each
San Juan mine (NM)
San Juan Generating Plant
plant
unit uses a pressurized-water reactor and can
Pittsburgh & Midway
Arizona Public Service Co
Cholla Generating Plant
31.00-32.00generate 1.,270megawatts. At present, total
McKinley mine (NM)
near Winslow, AZ
(recent range
installed capacity there is 2,540 megawatts.
29.00-52.00) A third L,270-megawatt unit has begun receiving fuel and is scheduled to go into opAlamito Coal Co. (NM)
Salt River Project
Springerville, AZ
40.00
eration during the third quarter of 1,987;
(recent range
t? 4n-45 I q\
Nuclear Regulatory Commission (NRC) authorization for full-power operation, barring
Spot market purchases
Salt River Proiect
St. Johns, AZ
43.00
any unforeseen circumstances, will be given
(recent ranSe
4 ? ? \ _ 4 6 R 5 \ by early 1988. The plant will at that time
become the largest nuclear-generating facilPeabody Coal Co.
Salt River Project
Navajo Generating Plant,
20.00
ity in the United States. PNM has a 1.0.2%
Black Mesa mines (AZ)
Page, AZ (Lake Powell)
(recent range
interest in the facility, but has opted for a
78.80-22.40)
sale-leaseback arrangement on units no. 1
and 2. However, it will begin accepting power
from unit no. 3 late in'1.987 and is entitled
crossthe coal price graph, it has only to ap- consequently,the nationwide consumption to 130 mesawatts. Under the sale leaseback,
proach,perhapswithin 760to 780%,the coal of natural gas by utilities IelI 8.3Vaduring PNM has the option of ultimately accepting
price in order to initiate somefuel switching. this time period (DOE/EIA, 1985).This in 390 megawatts from Palo Verde. Whether the
The switching is constrainedby the fuel ca- turn helped drive down the price of gas so company exercises this option for the addipabilitiesof the plants within a grid system. that in certain regions, such as the south- tional power depends on the economics of
The Departmentof Energy'sviewpoint on west, a slight increasein gasusagewas noted, coal vs. nuclear, not load on the system.
the industry's fuel-switching capability fol- initiating a trend oppositethat of the nation.
PNM's excess capacity problem, in part due
lows (DOE/EIA,1985b):
Overall, falling petroleum prices have had to currently low oil and gas prices, which are
little impact on the fuel mix in the Four Cor- displacing part of the California market, is
. . . datasuggestthat the utility industry
ners and Rockv Mountain stateswhere oil- compounded by events in their own load
is, by and large, able to respond to shortfired plants aciount for less than 1% of inregion. The most important of these is the
ages of specific fuels by switching to alterstalledcapacitv.
virtual disappearance of uranium mining and
nate fuels, at least in the short run. The
In mid-tggO"U.S.electricalgeneratingca- milling in the Grants uranium region; the
options for switching, however, are pripacity
by fuel type was asfollows: coal,54.3%; uranium industry was one of their largest
marily availabie for responding to coal strikes
fuel oil, 5.2%; natural gas, 10.9%; nuclear consumers of electrical energy, and indeed
or natural gas shortages.
p o w e r / 7 5 . 6 % . H y d r o e l e c t r i c p o w e r a c - it appeared to be a thriving industry back in
Fuel-switchingcapabilitiesare unique to cer- counted for virtually all of the remaining the 1,973-1,975period when commitments
tain regions.The northeasternU.S., the mid- M.jqa (DOEIEIA,1986).
were made to the Palo Verde Generatine StaAtlantic states,and California have considtion. Also, the utility has some overcapacitv
erable fuel oil to natural gas switching cabecause of a slightly less than projected
New Mexico
pabilities. On the other hand, the electric
growth rate in demand in the private/resiutilities in the Southwestand Rocky MounInsulated as it is from the effects that dedential sector.
tain states,have only limited flexibility in clining petroleum prices can have on fuel mix
Faced with this overcapacitv PNM will be
switchingfrom coal to natural gas,not at the at electrical generating plants, why is coal forced to choose between co;tinued operasameboiler but in the form of standbv units demand in New Mexico moderating and likely
tion of all four coal-fired units at the San f uan
calledpeakingstations.An interestingnote to decrease during 79877 One reason is that Generating Station west of Farmington or to
on fuel options is that the Fuel Use Act of the major state utility (Public ServiceCom- accept their share of power from the Palo
1976would prohibit the use of natural gas panv
Verde Nuclear Plant. This decision will be an
w Mexico;
Mexico; PNM)
designed its
coalPNM) desiened
its coalPanyof New
as an electricutility fuel by 1990.However, fired
fired plant with export capacity and for 20 economic one, and it focuses our attention
the Oil and Gas Production Revitalization years has sold power into the Southwest grid,
on the importance of nuclear-fuel procureAct introduced in Congressin January 1987 including California. The southern Califomia
ment costs to New Mexico's coal mining in(H.R. 5596)containsa clausethat would re- system left some of its natural-gas- and fueldustry and employment figures.
peal the natural gas limitations set forth in oil-fired plants idle and purchased the cheaper
During late 1986 fuel costs for coal delivthe 1976act. If this revitalization act is not coal-generated electricity from New Mexico.
ered at the San Juan Generating Station were
passed,maximum flexibility in electricutility This occurred under the late 1970's fuel price
in the 1L9C to 128c per million Btu range.
fuel options may be curtailedby government structure; under current fuel-price structure,
Most recent cost estimates for nuclear fuel
regulation within 21Iz f ears.
fuel-oil- and natural-gas-fired plants are being
delivered to the Palo Verde plant are 79.84
Nationally, during the past 2 years, de- operated at capacity, and electric power from
per million Btu (Pers. comm./ Media Relaclining crude oil prices have made fuel oil coal generating plants in New Mexico is being
tions Department, PNM, 1987). While there
availableto utilities at much lower prices.As refused.
are additional operating costs at the plant
a result, fuel oil consumptionincieasedbv
The economics are this: although natural
that can moderate or increase this fuel cost
nearly48Vobetweenmid-i985and mid-l986, gas at the California plant may be-160-200Vo advantage, these costs are not available.
an increase confined largely to New Eng- of the cost of coal at the New Mexico plant,
Construction and financing costs, however,
land, the middle and south Atlantic states, the cost of electrical energy delivered io the far exceeded original estimates. Currently, it
and California.Fuel oil displacednatural gas California consumer from either plant will
appears that this fuel-cost differential is going
as an electric-utilityfuel in these areas,and be about the same. This is due to the higher
to be significant because plant-operating costs
August 1987 New MexicoGeology
TABLE 3-Fossil-fuei costs for electricity generation in New Mexico, 1973-7986; contract purchasesonly (in centsper million Btu);* month of
May only (source:DOEIEIA, 1986).
Coal
t973
1974
1975
1976
1977
1978
t979
1980
1981
1982
1983
1984
1985
1986
15
79
LO
26
29
42
48
56
70
78.5
83-7
93.4
r09.2
102.8*
Residual
fuel oil
77
159
777
784
204
279
379
545
599
580
509
547
370.9
175.9*
Natural gas
42
58
73
q1
7M
164
207
247
283
,)LZ
363
349
359
374',
dition, but these stations have been baseloaded since their inception.
On the positive side for the mining industrv is the ultimate intention of the Salt
RiverProject(Arizona)to expanda pilot coalstripping operationin the SaltLake coalfield
(west-centralNew Mexico)into a commercial
stripping operation. The open-pit mine would
be develonedin the Moreno Hill Formation
(Upper Cietaceous),and the coal would be
transported by truck 70 miles to the Coronado Generating Plant near St. Johns, Arizona, while the feasibility of a railroad is
studied. Production at the new site could
more than offset the oroduction lossesdue
to the shut down of Cirbon Coal, but would
not compensatefor the potential scaleback
at the Sin Juan plant. However, the longterm cost effectivenessof this Salt Lake coal
mine is uncertain.
to open in the stateof New Mexicohave been
on privately owned land.
AcrNOwLeoGl"tENTS-Theauthors are particularly indebted to the New Mexico coal
industry for supplying coal production and
cost data and to the DOE-Energy Information Administration office in Albuquerque for
supplyrng comparativefuel-costdata. We also
wish to acknowledgeFrank Kottlowski, Director, New Mexico Bureau of Mines and
Mineral Resources,who encouraged the
study; Lynne McNeil, who typed the manuscripf and Cindie Salisbury,Irean Rae,Becky
Titus, and Monte Brown, who drafted the
illustrations.The manuscript was improved
by the following reviewers: Frank Kottlowski, GretchenRoybal, and Dave Love.
References
CoalAge Magazine, 1'976,Complexities burden new leasing 1aw,October, p. 23.
KeystoneCoal Industry Manual, 7987,p.574.
Lindbergh, Kristina, and Provorse, Bany,1977, Coal, a
contemporary energy story: Scribe Publishing Co. and
Coal Age-EMJ,207 PP.
New Mexico Stateinspector of Mines, 46th annual rePort,
1 9 5 8 o, . 2 0 .
Rovbal.b. H., and Eveleth,R. W., 1983,Reclamationof
surface-mining areas in New Mexico: New Mexico
Bureau of Mines and Mineral Resources,Annual Report 1981,-1982,pp. 41.-47.
Tabet,D. E., 197, Redamationof coal suface-minedlands
in New Mexico: New Mexico Bureau of Mines and MinAnnual Report, 1975-1977,pp. 81-85.
eral Resources,
Tien,J. K., Clark,R. W, and Malu, M.K.,"1975,Reducing
the energy investment in automobiles:Technology Review, February1975,p.39.
U.S. Department of Energy-Energy Information Agenry
1985a,Stateenergy price and expenditure rePort: DOE/
EIA-0376 (82), pp. 6-7.
U.S. Department of Energy-Energy Information Agenry
1985b,Fuel choice in steam electric generation: DOE/
E1A0472,p. XIX.
U.S. Department of Energy-Energy Information Agenry
1986,Electric power quarterly: DOE/EIA-0397 (862Q),
329 oo.
U.S. Geological Survey, 1950, Map of coal fields of the
United States,1 sheet.
Summary and outlook
at Palo Verde are not expectedto bring any
surprises.The NRC has written a favorable
Optimism on the part of the U.S. coalminreport on the constructionand operation of ing industry has to be tempered by 1) conthe plant.
tinuing decline of the U.S. industrial base
The transmissionsystem serving the Palo and 2) continuing low to low-moderate crude
Verdeplant has been completedunder budget oil and natural gas prices, which encourage
and is in operation. It was financed by and fuel-switching in the electric utility industry.
will be mahaged by the Salt River Pioject. Both these factors have had a greater effect
Power will be distributed to the other utili- thus far on the nation at largethan they have
ties with part interest in PaIo Verde-Ari
had on New Mexico and the Four Corners
zona Public Service Company, Southern states. This is becauseof the very limited
CaliforniaEdison,Los Angeles-Department industrial/manufacturingbasein the Southof Water and Power, and El PasoElectricwest (excludingCalifornia),the very limited
severalof which are among those who have fuel-switching capacity of the electric utility
already been by-passing New Mexico coal- industry in this region, and almost nongeneratedpower. If Palo Verde turns out to existent fuel-oil-fired capacitv.
be a reliablesourcewith a high plant capacity
Impinging directly upon the New Mexico
(the percentageof time it is on line), its 3,800 coal industry and threateningto interrupt a
megawattsof power will obviously have an 27-yearperiod of continuousgrowth, are deimpact on the New Mexico coal industry.
velopmentsin the uranium and nuclear-fuel
PNM is currently evaluating the econom- industries.Theseare 1) the decline and virics of the situation and will have an an- tual demise of the uranium mining/milling
nouncement by or before mid-1987. One industrv in this state.which was a larse conalternativeis to shut down one or more units r.r-". 6f electricalenergy and 2) thE comat the San Juan plant, with a resulting re- pletion of units 1 and 2 of the Palo Verde
duction in capacity of 330-500 megawatts. Nuclear GeneratingPlant near Phoenix and
This would correspond with a decreasein the expectedcompletionin the third quarter
coal consumption of at least 1.7 million tons of 1987of unit no. 3. PNM has a 10.2% inper year. Depending on whether or not any terest in the plant and will begin accepting
onGeographic
Names
U.S.Board
new coal markets are developed,this scale- power from unit no. 3 following start-up later
back could changethe coal-mininggrowth in 1987.This interest reoresentsexcessca- Cieneguilla Creek-sheam,23.3 km (14.5rni) long,
heads on west slope of Agua Fria Peak at
curve New Mexico has enjoyed for 27 years. pacityfor PNM, and thus the companywill
36"21'51'N,105'13'18'W,flows west and north
Or, as we indicatedin Fig. 1, the production end up with some fuel-switching options.
to EagleNest Lake, 7.4 km (4.6mi) north-northfall off may be of such magnitude and du- Currentlv fuel-procurementcosts favor the
easto-fA6ua Fria; ColfaxCounty, NM 36"30'02'N,
ration that the peak of cycleno. 3 will emerge nuclear facility by a significant margin, but
705'75'42'\\'l; USGS map of Eagle Nest, scale
by the end of1987.The statehas alreadylost there are some plant operation costs yet to
1,:24,000.
one coal mining operation during the last be determined.
Comanche Pass-pass, in the Manzano Mounhalf of 1985:Carbon Coal Company at Galtains at the head of Comanche Canyon 9.7 km
Federalcoal-leasingpolicy does not have
(6 mi) west-northwest of Torreon; Torrance
lup, New Mexico. Their only customer,Ari- immediate, short-term implications for the
County, NM; 34'M' 20"N, 106'24'15"W.
zona ElectricPower Cooperative,shut down New Mexico coal industrv. The policv does
all the coal-fired generatorsat the Apache have long-term implications becauseiuch a TusasMountains-mountains, 80 km (50 mi) long
and 32 km (20 mi) across, extend north-northstation during August and September1986, significantpercentageof the state'sstrippawest from Ojo CalientebetweenTres Piedrason
and beganbuying power from the Southwest ble coal is on federal land, and interested
the east and Tierra Amarilla on the west to a
grid. The PaloVerde plant is, of course,part bidders will be forced to look at federal coal
point 12.9 km (8 mi) northeast of Chama; Rio
of this grid. Any scalebackin operationsat leaseseventually.The leasingpolicy contains
Arriba County, NM; 36'59'30"N, 106'29'00'W
the Arizona Public ServiceCompanv's Four many provisions that tend to increasefront( n o r t h w e s t e n d ) , 3 6 " 1 8 ' 0 0 ' N ,1 0 6 " 0 4 ' 0 0 " W
CornersGeneratingStation or ai thi: Cholla end capital requirementsand consequently
(southeast end); not: Brazos Mountain Range.
plant near Joseph City, Arizona, would, of become a disincentive to leasing. It is sigcourse,onlv exacerbatethe coal market con- nificant to note that the last three coal mines
Names
Geographic
New Mexico Geology August 7987