Westmoreland Coal confirmed it will be converting its Jewett lignite operation in Texas to a reclamation phase after utility NRG Texas Power opted to cancel its supply agreement with the mine two years early. Multiyear reclamation at the 35,000-acre surface operation southeast of Dallas will commence once the deal terminates on December 31. NRG officials told Bloomberg they will be moving to a cleaner burning coal from the Powder River Basin (PRB) in Wyoming.
“As NRG has decided to fuel its plant differently in response to current energy market conditions, we are shifting our focus to providing multiyear reclamation services. We have an outstanding track record of operating the Jewett mine safely and cost efficiently and plan to build on this performance during the reclamation phase,” Westmoreland CEO Kevin Paprzycki said.
The producer said it will maintain positive cash flow generation from the Jewett operation over “the next several years” with the cost plus arrangement continuing through reclamation; NRG is responsible for the reclamation liability.
NRG spokesman David Knox said that the change of supply, which was for its Limestone Electric Generation Station, was important for competitiveness. While the price tag on the conversion of Limestone to gas would cost millions, Knox told Bloomberg switching to PRB coal would have “no significant costs involved.”