Will Montana become a coal colony?
With the heavy spring rains, the Otter Creek Valley, in southeastern Montana, glows green in early July, dotted with sage and bright patches of yellow clover and wild mustard. Ranchland rises gently toward rugged hills and buttes. Otter Creek twists a narrow channel through the middle, reflecting clouds. Otter Creek Road follows the creek. Few pickups pass between the unincorporated community of Otter to the south and the one-gas-station town of Ashland to the north.
A month before and about 6,000 miles away, in Beijing, a city of 20 million, where enveloping smog obscures the surrounding mountains, Montana Gov. Brian Schweitzer spoke of this Montana valley—or, rather, what's beneath it. The governor of the state with the greatest coal reserves keynoted a coal conference sponsored by Peabody Energy, the largest private coal company in the world, with massive operations in northeast Wyoming, just south of Otter. Schweitzer and coal companies such as Peabody see economic opportunity in exporting coal to China and other energy-hungry Asian markets. More than a billion tons of coal beneath the Otter Creek Valley could be shipped and burned there.
Schweitzer addressed a crowd of researchers and coal company reps at the coal gasification conference at the Great Wall Sheraton Hotel. "I talked a little bit about energy security in the U.S. and most of the countries that were represented there, and how we share a concern," Schweitzer told me, speaking recently in his office in Helena. "We've become so dependent on oil from just a few unstable regimes, and the sooner we get to a new energy source that's cleaner, greener, more sustainable, it's better for everybody. Coal can have a future if we have a solution to CO2"—that is, a way to burn coal and contain the greenhouse gas—"or it doesn't have a future if we don't."
But Arch Coal—and every other coal company in the business of making money—isn't waiting for a solution. Arch, the second-largest U.S. coal producer, has paid about $160 million to lease 18,000 Otter Creek acres containing 1.4 billion tons of coal from the state of Montana and Great Northern Properties.
HT: naked capitalismclick to enlargeMeanwhile, Arch is arranging a way to ship the coal to Asia. On July 1, Arch, Warren Buffet's BNSF Railway, and billionaire Forrest E. Mars Jr. purchased the Tongue River Railroad Company, which holds a valuable federal permit to build a 121-mile rail link between Miles City and Decker, with a spur connecting to the Otter Creek tracts, at an estimated cost of $550 million....MORE
- Photo by Chad Harder
- Missoula railyard