Dolet Hills Shut Down Good For Some DeSoto Mineral Owners
SWEPCO, Cleco eye 2021 retirement of Dolet Hills coal plant in Louisiana
Cleco Power LLC and Southwestern Electric Power Co. could shut down the 642.5-MW Dolet Hills lignite-fired coal plant in Louisiana before the end of 2021, or about five years ahead of a previous plan, the utilities wrote in recent federal filings.
In a May 6 Form 10-Q filing with the U.S. Securities and Exchange Commission, American Electric Power Co. Inc. subsidiary Southwestern Electric Power, or SWEPCO, indicated management has "revised the useful life of the Dolet Hills Power Station to September 2021 based on the remaining estimated fuel supply available for continued seasonal operation."
SWEPCO owns about a 40% stake in the De Soto County, La., coal plant and previously agreed to retire the power plant by the end of 2026 as part of a settlement agreement approved by the Arkansas Public Service Commission. SWEPCO reached the agreement with the Sierra Club and other intervenors in its electric rate case.
Cleco Power owns a 50% interest in Dolet Hills and operates the plant, which was brought online in April 1986, according to S&P Global Market Intelligence data. Cleco Power is a subsidiary of Cleco Partners LP and Cleco Corporate Holdings LLC.
In a Form 10-Q filed May 12, Cleco Power wrote that in April, the utility "announced its intent to seek regulatory approval to retire the Dolet Hills Power Station at the end of 2021, subject to recovery mechanisms."
"Cleco Power intends to seek regulatory approval to retire the Dolet Hills Power Station in Mansfield and the nearby mine that supplies the plant with coal," Cleco spokesperson Jennifer Cahill wrote in a May 13 email. "The closing dates for the power station and mine will be subject to discussions with stakeholders, including the Louisiana Public Service Commission and regional transmission organizations."
SWEPCO subsidiary Dolet Hills Lignite Co., or DHLC, "provides 100% of the fuel supply" to the power plant.
"In March 2020, it was determined that DHLC would not proceed developing additional mining areas for future lignite extraction and management notified a substantial portion of its workforce that employment will permanently end in June 2020," SWEPCO wrote. "Based on these actions, management has revised the estimated useful life of many of DHLC's assets to June 2020 to coincide with the date at which extraction is expected to be discontinued."
SWEPCO said its share of the net investment in the Dolet Hills Power Station is $151 million, which the utility expects to recover through its base rates.
Cleco Power, meanwhile, said it "has the ability to secure alternative fuel sources and expects to have sufficient lignite fuel available to continue seasonal operations of the Dolet Hills Power Station through at least the 2020 and 2021 seasonal operations periods."
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Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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LOL! I thought by now someone would have asked "why"? We must not have any members with minerals within the mine plan. Doesn't matter whether the ownership is "fee" or a "mineral servitude" but those who may have sold surface and reserved mineral rights should be asking "why".
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Permalink Reply by Skip Peel - Mineral Consultant on
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You are quick, Quattro. Lands encompassed within the mine boundary are off limits to drilling. The mine plan, like that of the Oxbow mine in Red River Parish, is amended from time to time. Areas that have been strip mined and reclaimed are deleted from the mine plan and then lie outside the mine boundary are eligible to be developed for Haynesville/Bossier shale. Good rock under both mines. The often overlooked fact is that land sales within the mine boundary that reserved the mineral rights were not subject to the ten year prescriptive period. Prescription is suspended while minerals are within the mine plan.
One long time GHS member sold and reserved minerals while the tract was contained in the mine plan. As soon as the tract was released, Petrohawk formed a unit and drilled a Haynesville well. The GHS member, who was active at the time and savvy concerning their mineral rights, contacted me. I provided an opinion that the servitude had not prescribed and they contacted Petrohawk. Upon some review, a Petrohawk landman contacted the member and admitted that they were correct and would place the member in pay for that unit. The landman was fairly incredulous that the mineral owner would know the servitude was maintained and asked how they knew. The mineral owner replied, GoHaynesvilleShale.com.
I would hope that all GHS members who have benefited from membership would consider a donation.
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Permalink Reply by Steve P on -
my understanding is that some company is trying to put together a block of formerly mined land for a solar project. I don't own any land that was part of the Dolet Hills mine, but if I did, I'd carefully look at this prospect. For starters, you have been without use of your land for more than 20 years; the land is, basically, a blank piece of canvas; and it has good HA drilling prospects. Assuming I haven't been patiently waiting all these years to re-gain possession of my land, this seems like a "win-win." I don't know what the business prospects are for the solar farm, but my assumption is that the solar farm would pay far more that timber growth (at least 25 years down the road), hunting leases, or other agricultural prospects. Plus you can lease the land for natural gas wells, and presumably collect royalties from the gas wells.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Once the land is released from the mine plan, it is available for development. If owned in fee, yes. Lease the minerals for HA/BO development and the surface for solar. Great double dip. If there is a mineral servitude, the mineral rights owner can lease their minerals. The mineral estate is superior to the surface estate. The surface owner can lease for solar and possibly for surface use tied to drilling and production (well site, road and pipeline rights-of-way, etc.). If I was an investor, I would be looking hard at what lands will be available once the mine closes down. If I was a land owner, I would want to recognize the value when offers started showing up.
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Permalink Reply by OLDDOG2020 on
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most of the land will not be released for another 10-15 years
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Permalink Reply by Skip Peel - Mineral Consultant on
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In case you missed it.
"SWEPCO, Cleco eye 2021 retirement of Dolet Hills coal plant in Louisiana"
Now if there is a logical reason for not releasing the lands in the mine plan for 10-15 years after the mine closes, I'd like to hear it.
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Permalink Reply by OLDDOG2020 on
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Retiring the Dolet Hills coal plant has nothing to do with when they release the land. I have 60 acres in the mine and I cant access it for another 10 years due to the reclamation process.
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Permalink Reply by OLDDOG2020 on
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They (solar companies) are also wanting land close to power substations and transmission lines and I dont know of any of those in the mine. Or at least thats the conversation I had with the solar land men.
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Permalink Reply by Skip Peel - Mineral Consultant on
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When the mining stops, how long do you think the reclamation process may take? Considering the time value of money, it would not make sense to delay reclamation. It only gets more expensive the longer the wait. There is land that has not yet been strip mined and therefore needs no reclamation. If the leases not mined are not released in a timely fashion, irregardless of the lease term, you can bet there will be litigation. Either by the mineral owners or by the operating companies that wish to unitize and drill the available land. Neither SWEPCO or CLECO benefit by fighting a legal battle to maintain the leases and land not yet reclaimed can still have Haynesville laterals drilled under it.
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Permalink Reply by OLDDOG2020 on
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I suspect that some lands that haven't been mined may be released early - conversations that I've had with other owners suggest that some may already have been released or soon to be released. The conversation I had with the mine just last year was 10 years before I could touch my land and it was known then that the power plant would be retired. I hope i'm wrong because I would love access to my 60 acres before 10 years. You are correct about the laterals since my land has one under it that was drilled from a section that was released 15-20 years ago.
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Permalink Reply by Two Dogs, Pirate on
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Skip, If I remember correctly from the work I did back in 2009 for Petrohawk, it does take years for them to release the land. They have to have it stabilized from erosion with trees growing on it. I found that there are clouds on some of the title from way back on parts of the land that was part of the Dolet land grant dating, I think in 1795. The Dolet heirs hired an attorney from Natchitoches named Safford to clear up the title in around 1850 the deal was he would do the work for half the land which was over 16,000 acres. The case was heard by the Supreme Court of the USA in the 1870's. I had made a deal with the great great granddaughter of Mr. Safford on about 80 acres and got bogged down in the title when things were going real fast in the Haynesville Shale play. I spent about a month working on the title and my boss told me that if I felt comfortable spending my on money for the lease then buy it, if not let it go. I dropped it.
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