UFO-Managed Federal Coal Leases

The UFO manages six active federal coal leases located below the mesas surrounding the North Fork Valley of the Gunnison River stretching from Paonia to Somerset, Colorado.  Approximately 85 million recoverable tons are under lease, with potential for additional reserves to be proven.  While a variety of factors affect how long mining can continue, it is estimated that mineable coal will be available in the area through at least 2022.

Three underground longwall mines operate in the North Fork Valley.  The table below shows the related mining companies, mines, and typical yearly coal production for each mine.






Annual Coal Productions

(in Tons)

Bowie Resources, LLC

Bowie No. 2


Mountain Coal Company

West Elk


Oxbow Mining, LLC

Elk Creek


While each mine controls coal reserves with a mixture of federal coal and fee coal, about 90% of the production is federal.  As time goes by, the fee coal will be depleted, leaving only federal coal available in the reserve base.

The North Fork Branch of the Union Pacific Railroad operates exclusively to serve these coal mines.  This line branches from the main line in Grand Junction, Colorado and passes through Delta, Hotchkiss, Paonia, and Somerset, Colorado.


Federal coal leases incur an 8% royalty for underground mining operations, as well as a $3.00 per acre yearly rental fee for each lease.  The resulting revenue from federal coal production royalties paid to the federal treasury is about $2.50 per ton.  Half of that revenue is returned to the State of Colorado.


For more information, visit the national BLM coal webpage: http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy.html 


Teresa Pfifer, Acting Field Manager


Phone: (970) 240-5300  |  TDD: (970) 240-5366  |  FAX: (970) 240-5367

2465 S. Townsend Ave, Montrose, CO  81401

Office Hours: 8:00 am - 4:30 pm

Click on the address above for a map showing the location of

BLM Uncompahgre Field Office administrative headquarters


Federal Coal Lease in North Fork Valley, CO