This viewpoint is endorsed by Matt Levar, director, Origination & Structured Products at Kennecott Energy, who was responsible for negotiating the recent sales contract with GRE. A lifetime coal man, Levar has been in his current job for about five years, having previously worked in Customer Services on logistical and rail issues. Prior to that he was on the operations side of Drummond Coal in the Powder River Basin when it was acquired by Kennecott Energy.

“GRE did some test burns at the Stanton plant using our coal back in 1996 and although the outcome of those tests was pretty encouraging, unfortunately the two sides weren't able to reach agreement on prices,” Levar says. “GRE decided to renew the contract with its existing supplier for another five years.

“But we were convinced our PRB coal would offer them significant advantages over lignite, so when the contract came up for review, discussions began again. By then, lignite prices had firmed, making ours look increasingly competitive. On top of that, the rail links between Stanton and the PRB coalfields had improved, so the logistics of getting coal from the mine to the plant were more straightforward.

“Although GRE buys the coal at the mine gate, and so is responsible for the transportation costs, we worked closely with the railroad to get a good freight rate that would make the economics of the deal stand up from GRE's point of view.”

GRE's John Pelerine, a mechanical engineer by profession who has worked at Stanton Station since 1989 and has been manager there since 1994, says that Spring Creek coal scores over North Dakota lignite on several counts: one of the most important is its higher calorific value - 9,200 BTU/lb compared with lignite's 6,500.

“For other plants burning regular coal, a switch to Spring Creek coal, which has a particularly high energy content, would probably mean a relatively small adjustment,” he says. "But for us, the changeover has made it seem as if we're running on rocket fuel.