Fact Sheet: 3MW LLC Coal Mine Methane Electricity Project, Elk Creek Mine, Somerset, Colorado

Partners:
Oxbow Mining LLC, Vessels Coal Gas, Inc., Gunnison Energy LLC, Aspen Skiing Company

Power Purchaser:
Holy Cross Energy

Opening Ceremony:
November 9th, 2012 11 a.m. – 2:00 p.m. (MST)

Project Components:
3 1500 hp gensets each capable of 1.0 MegaWatts at 4160 V
Electric substation 4.16 kV step up to 46 kV
Gas Conditioning Skid
HMI/PLC Measurement & Control
Piping, Instrumentation & Control Valves
Source Gas: Waste methane vented from active coalmine

Cost:
$6.0 million

Project Summary:
The $6 million, 3MW LLC project will capture waste methane vented from the coal mine to generate electricity. Holy Cross Energy, a rural electric utility serving 50,000 people in western Colorado, will purchase the power generated from the project. Annual output is expected to be 24,000,000 kilowatt-hours of electricity, enough to meet the needs of 2,000 average American homes, or the entire operations of Aspen Skiing Company, including four ski mountains, three hotels and 17 restaurants.

Because the project utilizes methane that would otherwise be vented into the atmosphere, analysis shows that it is among the most cost-effective investments Colorado has made in clean energy. Indeed, this project may provide as much theoretical climate protection as would the installation of $400 million of solar photovoltaics.

Waste methane is expected to be vented, and therefore electricity produced in the area of Oxbow’s Elk Creek Mine for 15 or more years.

Unlikely Partners
The partners in this project represent a diverse cross section of America, working in different industries and living in different communities, but are proud to come together to do something good for Western Colorado. Using an otherwise wasted resource, electricity can be made for homes, schools and businesses, and in the process possibly spark a new American industry.

Background
Mines that produce coal, trona and certain other minerals are required by federal law to vent methane to protect miners. Although methane from mines is both a valuable energy resource, little of it is currently captured for beneficial use, since the economics and practical logistics of doing so are unfavorable.

Of the active underground coal mines in the U.S, Elk Creek will be the only mine that is generating electricity west of the Mississippi (Vessels Coal Gas is producing electricity from venting waste methane at an inactive mine in Pennsylvania).

Electricity produced at the Elk Creek mine will be generated by a custom-engineered engine capable of burning gas with methane content as low as 20%. This technology is scalable across the state and could eventually result in hundreds of megawatts of generation nationwide along with the accompanying jobs, tax revenue, and emission reductions.

How Large is Colorado’s Mine Methane Resource?
Active, gassy coal mines are located in both southern and western Colorado, particularly near Paonia, and also throughout the U.S. in places like Wyoming, Illinois and Appalachia. In historic mining areas, an active mine will often have inactive, abandoned mines nearby, from which methane continues to escape to the atmosphere.

Statewide, the mine methane resource from active and inactive mines may ultimately prove to be large enough to support 75 to 150 MW of power generation, although only half of this is likely to be developed within the next ten years.

What are the Project’s Economic Impacts?
The total estimated economic benefits of the 3MWs Elk Creek project approach $2 million annually including taxes, royalties and payroll. “Our skilled team of professionals intend to utilize the experience they’ve gained to develop other coal mine methane projects in Colorado,” says Vessels.

What are the Project’s Environmental Benefits?
Putting waste mine methane to beneficial use is one of Colorado’s “greenest” and most cost-effective energy options. Because methane is such a potentially powerful greenhouse gas, 1 Megawatt-hour of CMM has benefits equal to 4 Megawatt-hours from a wind or solar project.

Waste mine methane also offers two benefits some other forms of renewable energy generally do not. First, it is baseload power, meaning electricity is generated around the clock. This type of power is coveted by utilities. Second, mine methane projects generate many more carbon offsets per unit of power produced due to the methane destruction.

How Much Power Could Be Produced?
The Elk Creek Mine vents enough methane to generate almost 20 megawatts of power. While future projects may tap this resource, in the interim, it makes sense to destroy the methane in devices called “enclosed thermal oxidizers.” These devices oxidize captured methane, converting it into CO2.

Vessels Coal Gas and the Elk Creek mine have installed a thermal oxidizer at the mine capable of destroying up to 3.7 million cubic-feet per day of methane. Until additional power plant capacity is installed, the methane destroyed here will generate Verified Emission Reductions (“VERs”) that can be sold to other parties eager to offset their carbon emissions. Xcel Energy has agreed to purchase the first tranche of VERs.