Arch Signs Deal For Southeast Montana Coal Tracts

MATTHEW BROWN

BILLINGS, Mont. (AP) — Arch Coal Inc. has signed a lease agreement to mine the vast Otter Creek coal field in southeastern Montana — ramping up pressure on Gov. Brian Schweitzer and other state officials to lease adjacent coal tracts controlled by the state.

If developed, the 731 million tons of coal would serve power plants in the northern U.S. and provide new supplies for St. Louis-based Arch to expand into coal markets in the Pacific Rim, said Arch CEO Steven Leer.

Combined with Montana's tracts, the newly leased reserves in the Powder River Basin contain more coal than the entire United States burns annually.

Yet it would be difficult for Arch to move forward without cooperation from Montana.

The private and public tracts are arranged in a checkerboard fashion — meaning development would have to occur in tandem. And because the reserves are isolated from existing transportation routes, the long-stalled Tongue River Railroad would have to be built to get the fuel to customers.

The lease agreement with Great Northern Properties gives Arch rights to mine 9,600 acres of coal tracts near Ashland. The area is next to the Northern Cheyenne Indian Reservation near the Wyoming border.