BILLINGS, Mont. (AP) — A mining company plans to start exploratory work this spring on an estimated 400 million tons of coal beneath Montana's Crow Indian Reservation, adding to a spate of recent interest in the region's huge coal reserves despite flagging domestic demand for the fuel.
Signal Peak Energy is eying a future mine on private property within the reservation's boundaries known as the Hope Ranch.
The exploration area covers more than 7,000 acres and is just a few miles from the neighboring Northern Cheyenne Reservation, according to an analysis of the project by federal officials. The site is about 30 miles north of the Wyoming border.
Signal Peak operates the Bull Mountain mine north of Billings and exports much of its coal to customers in Asia.
Its pursuit of coal on the reservation follows a January deal signed by Crow leaders including tribal Chairman Darrin Old Coyote that gave another company rights to lease an estimated 1.4 billion tons of coal. Wyoming-based Cloud Peak Energy agreed to pay the tribe $2.25 million up front and additional payments in coming years could add up to $10 million.
Before any decision is made on a mine at Hope Ranch, Signal Peak President John DeMichiei said the company will need to analyze drilling samples. Those will be collected in coming months to gauge the coal's quality and more accurately define how much is there.
The 400-million-ton figure is only an initial estimate, he said.
"Obviously there's a lot of potential in Montana," DeMichiei said. "We've developed a world-class operation in Signal Peak, and we have the opportunity to do that elsewhere in Montana on a similar level."
The only coal mine now on the reservation is Westmoreland Resources' Absaloka mine, which opened in 1974 and produces about 6 million tons annually.
Crow Tribe attorney Bill Watt said there have been preliminary discussions with Signal Peak, but offered no further comment.
Hope Ranch is among several sites Signal Peak is investigating, DeMichiei said. He declined to reveal details on the others and said they were not as far along.
The tribe's 2.2-million-acre reservation sits atop an estimated 9 billion coal reserve. It's located at the north end of the Powder River Basin, an arid region along the Montana-Wyoming border that produces more coal than any other part of the country.
The tribe's reserves would be enough to satisfy U.S. power plant needs for almost a decade based on current consumption rates. Yet domestic demand for the fuel has fallen off sharply over the last several years, primarily due to competition from cheap natural gas.