Great Northern Properties

Great Northern Properties (GNP) was formed in 1992 to acquire the coal-related assets of Burlington Railroad. GNP is privately held. The Montana properties are part of Natural Resource Partners (NRP), and contributed to approximately 14% of NRP's reserves in 2001. The company is based in Houston, Texas, with an office in Huntington, West Virginia.

GNP controls fee mineral rights to more than 1.5 billion tons of sub-bituminous coal reserves in the last major unmined portion of the Powder River Basin coal fields — the Otter Creek Area, which GNP plans to develop over the next decade.

On November 12, 2009 Arch Coal (ACI) announced that they are leasing 9,600 acres in southeastern Montana's Powder River Basin. It is estimated that the property holds 731 million tons of coal reserves. The company will pay Great Northern Properties five annual installments of $73.1 million.

According to the U.S. National Mining Association, GNP, with an estimated 20 billion short tons of coal reserves, is the largest private owner of coal reserves in the U.S. and is second only to the U.S. government in the size of its holdings.

The company's website states: "The partnership does not actively engage in the mining of any of its minerals or natural resources, but rather leases its properties to various operators in exchange for royalty payments."

State of Montana Sides with Arch Coal in Court Challenge

The State of Montana and Arch Coal Inc. sided against environmental groups in September 2011 when the groups attempted to stop the company's plan to mine 1.3 billion ton Otter Creek research near the Northern Cheyenne Reservation. Arch paid $159 million to both Montana and Great Northern Properties for the Otter Creek lease. The deal was backed from Montana Gov. Brian Schweitzer.

The Sierra Club and other groups asked District Judge Joe Hegel to cancel the 10-year lease. The groups wanted more studies of the environmental impacts of the mine, including the greenhouse gas emissions that will come from the burning of coal. State officials and Arch Coal said studies will come later but that the permit should not be revoked.

Congressional Deal Would Transfer Coal Tracts to Texas Company

On March 23, 2011, the federal government stated that it would give an estimated 145 million tons of publicly owned coal to Great Northern Properties based in Houston, Texas under an exchange backed by members of Congress that calls for future royalties and other coal reserves to go to the Northern Cheyenne Tribe. Supporters stated that the deal would likely accelerate mining in Montana and deliver "tens of millions" in revenue to the impoverished tribe.

In June, 2011 a top Interior Department official questioned the proposal to transfer 232 million tons of publicly owned coal to a private company under an exchange touted as benefiting Montana's Northern Cheyenne tribe. Great Northern Properties stands to get almost twice as much coal as it would give the tribe in the proposed deal, although not all the fuel the company received could be mined. The company and tribe also would share tens of millions of dollars in future coal royalties. Interior Department Deputy Assistant Secretary Jodi Gillette said an appraisal is needed to ensure the two sides get equal value out of the swap. Even if it's done fairly, the state and federal government stand to lose any royalties, Gillette said.

The deal is backed by leaders of the impoverished tribe, Montana's congressional delegation and Signal Peak Energy, a 2-year-old underground mine near Roundup owned by Ohio-based Boich Group and power company FirstEnergy Corp.. Montana Rep. Denny Rehberg warned Wednesday that opposition from Interior "could blow up the deal" and threaten the future of Signal Peak. Great Northern acquired rights to the coal beneath the reservation from Burlington Northern Railroad in 1992. Tribal leaders say those rights should have been turned over to the Northern Cheyenne in 1900, when the reservation was expanded to include the land above the underground reserves but not the coal itself.

South Heart Coal

South Heart Coal (SHC), sponsor of the South Heart Power Project is a subsidiary of Great Northern Power Development (GNPD), which is affiliated with Great Northern Properties. SHC filed for a North Dakota air permit on August 18, 2005. In August 2007, GNPD withdrew its air quality permit application; however, SHC also considered submitting a proposal to build an IGCC plant in the same location. The project would be 30 miles west of the Theodore Roosevelt National Park, and the Class I air status of the park make this location problematic.

In January 2008, Great Northern Power Development and South Heart Coal announced their intent to move forward with a $1.4 billion proposal for a coal-to-gas plant and coal mine at the same site. If the new proposal is approved, construction should begin in December 2009, and the plant will be operational in 2012.

On April 1, 2008, Stark County gave Great Northern Power Development (GNPD) a mining permit April 1 based on a two line application. In response, Dakota Resource Council and Plains Justice submitted the notice of appeal to Stark County District Court on April 28. The appeal argued that the county decision did not reference Stark County's Comprehensive Plan and therefore was arbitrary and capricious.

In April, 2008, GTL Energy of Australia announced that it intended to build a coal drying plant at the South Heart location. The North Dakota Public Service Commission denied that they had jurisdiction over permitting the plant even though both state and federal code refer to drying plants as "coal preparation plants," which must be permitted under the Surface Mining Control and Reclamation Act (SMCRA).

On September 30, 2008, local landowners and Dakota Resource Council filed a second appeal of the Stark County Commission’s attempt to amend the Stark County Zoning Ordinance and allow Australia-based GTL Energy to zone industrial for a coal beneficiation plant.

"According to the North Dakota Century Code, § 11-33-03, zoning decisions must be made in accordance with the objectives in the Stark County comprehensive plan," said Derrick Braaten, attorney for DRC. A specific policy in the Plan is to promote "the ideal of the family farm and support establishment and continuation of adequate farm programs." The plan also states that the county should "strive to protect the agricultural integrity of the rural areas," to "avoid conflicts between land uses," and to maintain the county’s "clean and favorable environment."

On October 3, 2008, DRC asked the federal government to stop construction of a coal drying plant near South Heart until the plant is incorporated into a mining permit. The complaint to the Office of Surface Mining (OSM) states, "DRC believes the findings of the PSC are in error and contrary to plainly stated law and OSM regulations." It further states that, "this warrants immediate OSM review and intervention," and asks for immediate action by the OSM to halt imminent construction of the GTL Energy facility.

GTL Energy began construction of the coal drying plant the week of October 6, 2008.

Houston-based Great Northern Power Development submitted its coal mining permit application to the N.D. Public Service Commission earlier this fall. Great Northern is asking permission from the PSC to open a 300 acre mine near the GTL Energy coal beneficiation facility. The permit application was deemed incomplete in mid-November.

An initial review of the application shows that Great Northern had many items that it needed to address. Some of these items are the inability to access surface use and lease agreements and hydrological testing files.

In January 2009, Dakota Resource Council and local landowners filed a complaint with the North Dakota PSC challenging the South Heart Power Project. The complaint requested that the Dakota PSC require a surface mining permit for the plant, require operating and reclamation standards, and hold a public hearing. Oral arguments in the lawsuit were scheduled for July 13, 2009.

In late April 2009, the state Department of Health conducted a public hearing to discuss the proposed construction permit for South Heart's coal prep plant. The majority of those who attended were opposed to the plant. South Heart had already begun building the plant, even without a final construction permit.

On July 22, Judge Zane Anderson ruled in favor of Dakota Resource Council and five area landowners who appealed Stark County's approval of a land use change from agricultural to industrial use. This change would have allowed the area directly southwest of South Heart, N.D. to become an industrial area hence allowing a mine and for coal gasification and beneficiation plants.

The decision by Judge Anderson states: "The requirement of written findings upon which the decision is based, is no doubt, intended to be an idle exercise," referring to the fact that the county's zoning ordinance is clear that zoning changes such as these must have a preparation of written findings, something that the Stark County Commission and its zoning board failed to do.

It also states that: "The question is whether the owners of all properties within 200 feet of the property that is the subject of the request for a zoning change must approve before any amendment to the ordinance can be granted. The county commission argues that if necessary consents were not obtained, that such an omission does not prevent approval of a zoning amendment. The county commission suggests that requirement is intended to insure that adequate notice is given and provide a straw poll of how affected landowners view the proposal."

Judge Anderson's ruling reverses and vacates the commissions zoning change because the applicant failed to get the permission of the area landowners within 200 feet of the boundary of the project.

Rushing to the rescue of the coal projects interests a zoning hearing to change the ordinance was held on August 17 with both coalies and its opponents speaking on the change. The change would eliminate the need to get permission from nearby landowners prior to changing an agricultural area to an industrial area.

The zoning board refused to allow an amendment to the proposed change offered by Dakota Resource Council and its allies that would allow a zoning change to occur if 60% of the landowners within 200 feet agree. The board allowed the change to the ordinance language setting up a September 1, 2009 Stark County Commission meeting for final approval.

On August 1, 2009, The Dickinson Press reported that South Heart had altered its proposal, changing its plan for a coal gasification plant back to electrical generation. Developers hope to begin construction on the plant, estimated to cost $1 billion, in 2011. Great Northern is applying for funding from the U.S. Department of Energy.

Before the echos from the September Stark County Commission's aye votes had dispersed from the halls of the court house, GTL Energy applied for a new zoning change using the new ordinance that does not require the signatures of adjoining landowners. The commission voted for the change to the ordinance and before the resolution was published in the paper the zoning change application was given to the zoning director. An October 5 hearing is set regarding the zoning change. At this time there is no pending application for Great Northern's mine and coal plant zoning change.

There is still a case pending with the North Dakota Public Service Commission regarding GTL's lack of a mining permit as required by the Surface Mining Control and Reclamation Act (SMCRA). The attorney's involved in this case are still in the process of filing briefs. Attorney's for Dakota Resource Council are opposing GTL's motion to dismiss. No decision has been made by the PSC on these motions.

Contact Details

Partnership Headquarters Natural Resource Partners L.P. 601 Jefferson Street Suite 3600 Houston, Texas 77002 713-751-7507 info@nrplp.com

References

Related GEM.wiki articles

• Existing U.S. Coal Plants
• Global warming
• Mining industry
• Mountaintop removal
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• United States and coal
• Coal reserves
• Powder River Basin
• North Dakota and coal
• Texas and coal
• West Virginia and coal