~ Coal in Saskatchewan
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. ' . ' - ~ COAL IN SASKATCHEWAN - . '. I . ·ATechnical Report Prepared by . · · . Saskatchewan Energy and Mines ' ' I . - . - . SECURITY AND PROSPERITY December 1994 . , ' THROUGH RESPONSIBLE ''. ENERGY DEVELOPMENT . - , -. ' rs·· ,t:'·..(~· :,.. ... .. ,._.., ~ , • .. ~ ·II Saskatchewa~ . .;( : : • : :• · · : Energy and. Mines . ~ ----.....: ~ · 11t,. • _ .. ~ ........... '- • • ,r - .. Miscellaneous Report 95-1 O · t ..... ' .. ........... ·••. • , .. __ . .. ; , .. .. ;,---- -r~. / ·-. - .- ;,...,. ' / :, .•· ·. l ·~ --~ - -~-- .-::"-- -- -;-·_·_.__ :_/ :- ·.'\,~: . ,~ - - .·-.. ·, \ .. · .. ·::.7".,_ y.,,, - - ,_' :-_,..,.. - 4 ~ ,.. " · :-·.· ~--·._ .,._._-~- ... ~::'' ·. ./ ·- ··-~:__·~~-: _~_,: ··;-: ... -~ : ·.~ - '· .: -., t 'L-~ •• ·1-~: ~ · ;.. - - ,.·- '.;.. ·,:__.....-- · " . 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SaskatchewaQ · .,,.~·--~> Energy and Mines ~·-. 1 - . ,_.<1 Miscellan1:ous Bepor~ ·95.10 ~--:-- .. -'.·, - .~ ·-: J ~:·,..:. ~·· · ., ,,: _ ·.·--_':-; . ~-!. l ;.-,. r :1 :1 ,] COAL IN SASKATCHEWAN ] J J J j A TECHNICAL REPORT PREPARED BY J SASKATCHEWAN ENERGY AND MINES j J J December 1994 j J '_J .:~. r- 1 I I TABLE OF CONTENTS 1. 0 Introduction ................................................................................. 1 2.0 Coal Resources and Characteristics ...................................................... 3 2. 1 Lignite Characteristics .......................................................... 3 2. 2 Economic Resources ............................................................ 5 3. 0 Production ............................· ..................................................... 11 3 .1 Environmental Impacts of Mining .......................................... 14 4.0 Sales of Saskatchewan Lignite .......................................................... 17 4.1 Industry Structure ............................................................. 17 4.2 Sales of Saskatchewan Lignite ............................................... 17 4.2.1 The In-province Market .................................................... 18 4.2.2 The Out-of-province Market .............................................. 19 4. 3 Coal Transportation Costs .................................................... 24 4.4 Future Outlook ................................................................. 25 5. 0. Saskatchewan's Coal Royalty/Tax Regime ........................................... 27 6.0 Summary ................................................................................... 31 A. Coal in Saskatchewan .......................................................... 31 B. Coal Issues ....................................................................... 32 LIST OF TABLES 2.1 Average Coalfield Characteristics ........................................................ 3 2.2 Total In-Place Coal Resource ............................................................. 6 J 2.3 Resource Criteria for Saskatchewan Coalfields ........................................ 7 2.4 Economic Resources of Immediate Interest ......................... : ................... 8 2.5 Economic Resources of Future Interest ................................................. 9 J 2.6 Economic Resources in the &tevan Coalfield ....................................... 10 3 .1 Coal Production 1993 .................................................................... 12 3.2 Mine Productivity ........................................................................ 13 3. 3 &timated Coal Production Costs ...................................................... 14 j LIST OF FIGURES J 2.1 Saskatchewan Lignite Deposits ..................... .' ..................................... 4 j 3 .1 Saskatchewan Coal Sales by Destination .............................................. 11 4.1 Saskatchewan Prices ..................................................................... 18 4.2 Ontario Electric Generation ............................................................. 20 4.3 Ontario Hydro Coal Purchases ......................................................... 21 d 4.4 Saskatchewan and Wyoming Prices .................................................... 23 4.5 Manitoba Coal Purchases ................................................................ 24 J J Introduction Page 1 1. INTRODUCTION The province of Saskatchewan has an abundant supply of lignite, a low rank coal. The lignite reserves are located along the province's southern boundary in three coalfields: Estevan, Willow Bunch/Wood Mountain and Shaunavon. Production currently takes place in the Estevan and Willow Bunch basins in five strip mines. Four are located in the Estevan Coalfield (Shand, Bienfait, Boundary Dam, and Utility) and the fifth (Poplar River) is located in the Willow Bunch Coalfield near Coronach. A fifth Estevan area mine, Costello, suspended deliveries in September 1993. The purpose of this paper is to examine the coal industry in Saskatchewan, to provide background information on reserves, production, and sales trends, and to identify issues facing the lignite industry today. Section 2 details the key lignite characteristics and resources. Section 3 describes production trends in the province, and outlines the environmental impacts of coal mining and the steps taken to alleviate these effects. Section 4 presents the current markets for Saskatchewan lignite. Most lignite is sold to the Saskatchewan Power Corporation for mine-mouth power generation. The future outlook for coal production and the limits to expanded sales to non-power generation markets are discussed. Section 5 contains a description of the current coal royalty/tax regime in Saskatchewan. This section summarizes the findings of an earlier internal review of the royalty system and the decision to maintain the status quo. Section 6 summarizes the trends and issues presented in the report. I :I I I I I I I I I I ,1 I I :I I The Resource Page 3 2.0 COAL RESOURCES AND CHARACTERISTICS Saskatchewan lignite occurs in three geological fonnations: the Ravenscrag Fonnation of Paleocene age, the Swan River Group of Lower Cretaceous age, and the Judith River Fonnation of Upper Cretaceous age (Figure 2.1). Only the Ravenscrag Formation contains lignite deposits of current economic interest. The Swan River lignite is not economic because of an extended water table from La Ronge Lake. The Judith River Formation contains seams at deeper than 100 metres. t The economic deposits of coal are located in a strip along Saskatchewan's southern border. The Ravenscrag Fonnation is an extension of the lignite bearing strata of the Fort Union Group, which is distributed through North and South Dakota, Montana and Wyoming. In Saskatchewan, the coal bearing strata cover over 25 000 square kilometres, while the thicker, surface-mineable coal zones cover approximately 3 800 square kilometres. 2 These surface mineable zones are confined to three coal basins: Estevan, Willow Bunch/Wood Mountain and Shaunavon (Figure 2.1). The Shaunavon basin is sometimes referred to as the Cypress Hills basin. 2.1 LIGNITE CHARACTERISTICS All of the economic coal resources in Saskatchewan are lignite, which is a low rank (or relatively immature) thennal coal. The typical characteristics of lignite from each basin TABLE2.l TYPICAL CHARACTERISTICS OF IN-srru COAL Estevan Willow Bunch Shaunavon Wood Mountain Moisture ( %) 37.5 39.5 40.9 Ash content ( %) 9.1 13.7 17.5 Volatile Matter(%) 24.6 23.7 21.5 Fixed Carbon ( %) 24.8 23.1 20.1 Sulphur content ( %) 0.3 0.5 0.7 Energy content (GJ/tonne) 15.1 12.2 10.6 Estimated mean recoverable thickness 1.52 1.85 1.72 (m) (based on measured reserves of immediate interest) Source: Saskatchewan Power Corporation, Saskatchewan Lianite Resources, 1984; Geological Survey of Canada, 1993. l Saskatchewan Power Corporation, Saskatchewan Lianite Resources, March 1984. 2 Ibid. Pa1e 4 no Rc,ourc;e I FIGURE 2.1 I SASKATCHEWAN LJQNITE ~ •YOMTON SWl,.T • CUltltlHT · \ WN4•.... M-fel11 ...... ... hMft ' ............ IIAVINSClt.AGI ,oltMATIOH .IUOITH IIIVIII ,o,IMATIOH .I IWAH lttVllt ,ollM.AflON I- 1.IGHITC IIUOUIICC Altl.A The Resource Page S (Table 2.1) show these coals to have a relatively high moisture content, variable ash content and low sulphur content. In comparison to the higher rank sub-bituminous or bituminous coals typical of Alberta and British Columbia, lignites have higher moisture content and correspondingly lower volatile matter, fixed carbon and energy content. Certain properties of lignite increase its costs of utilization (handling,