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

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

$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.

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.

Oxbow Mining LLC, Vessels Coal Gas, Gunnison Energy Corporation, Aspen Skiing Company and Holy Cross Energy Announce First Waste Mine Methane to Energy Facility in Colorado


SOMERSET, CO. , November 9, 2012— Today, five major companies from different backgrounds unveiled the first waste-methane-to-energy power plant west of the Mississippi River.

Oxbow Mining LLC., owner and operator of the Elk Creek Coal Mine, has joined forces with Vessels Coal Gas, Gunnison Energy, Aspen Skiing Company and Holy Cross Energy to build a $6 million power plant that will produce enough electricity to meet the needs of 2000 homes, or the entire operations of Aspen Skiing Company, including four ski mountains, three hotels and 17 restaurants.

The three-Megawatt power plant at Oxbow’s Elk Creek Mine will generate electricity by capturing and combusting waste methane gas emitted from the mine. Of the active underground coal mines in the United States, Elk Creek will be the second to generate electricity from waste methane.

“The partners in this project represent a diverse cross section of America,” said Auden Schendler, Vice President of Sustainability for Aspen Skiing Company, which operates Aspen Highlands, Buttermilk and Snowmass Mountains. “We work in different industries and live in different communities. But we’re proud to come together to do something good for western Colorado. Using an otherwise wasted resource we can make electricity for homes, schools and businesses and in the process possibly spark a new American industry.”

Tom Vessels, Chief Executive Officer of Vessels Coal Gas and one of the major architects behind this project, believes Colorado’s mine methane resource could generate as much as 150 MW of electricity.

Mike Ludlow, Executive Vice President, Oxbow Mining, LLC said he was pleased that such a diverse group of businesses could join forces to utilize innovation and technology to generate electricity from an unused resource, which will generate revenues for the Federal, State and County . The Elk Creek Mine currently employs 340 miners.

“This project is useful and rational. It recovers natural gas from a working coal mine that would otherwise be lost to the atmosphere and converts it to electricity for a customer who needs it. The project is a result of Vessels’, Oxbow’s, Holy Cross’ and Aspen Skiing Company’s cooperation and teamwork – two qualities that are essential for people with different backgrounds and objectives to successfully create a product that benefits everybody,” said Bill Koch, Chief Executive Officer of Oxbow Carbon LLC.

GELLC and WSERC Reach Agreement in Leon Lake Well

April 2, 2004

DENVER, CO – Gunnison Energy LLC (“GELLC”), working in conjunction with the Western Slope Environmental Resource Council (“WSERC”), has agreed to refrain from re-completing the Leon Lake No. 2 natural gas well into the coal layers of the Mesaverde Formation.

Two years ago, the U.S. Forest Service (“USFS”) and the U.S. Bureau of Land Management (“BLM”) approved a sundry notice allowing GELLC to re-complete an existing gas well called Leon Lake No. 2, east of Highway 65 in Delta County. WSERC along with the High Country Citizens Alliance and the Western Colorado Congress filed suit against the USFS and the BLM in an attempt to block re-completion of the well into the coal layer. To settle this dispute, GELLC agreed that for a period of at least nine months, it would not seek to explore for coal bed methane gas at the Leon Lake No. 2 well. GELLC also agreed to advise the USFS and BLM that if required, GELLC would prepare and fund an environmental assessment if the company sought to drill into the coal seams. The environmental groups agreed that GELLC’s concessions were limited to the proposed re-completion of the Leon Lake well and would not bind the Company with regard to future actions. The agreement allows GELLC to directionally drill from the existing Leon Lakes No. 2 well into the sand layers at Leon Lakes.

“We saw this agreement as a means to work more constructively with WSERC,” said GELLC Executive Vice President Brad Robinson.

The U.S.F.S. and B.L.M. conducted an environmental assessment on eight natural gas wells on GELLC’s federal leases in Delta and Gunnison County. Two of those wells are near the Leon Lake No. 2 well. WSERC has appealed the decision to an administrative law judge.

Gunnison Energy LLC Agrees to Drop Damage Claims

DENVER, CO – Gunnison Energy LLC (“GELLC”), a division of Oxbow Corporation, has announced that it has decided to voluntarily dismiss its pending damage claim against Delta County. It is the first step in an effort to resolve pending litigation between GELLC and Delta County.

Delta County and a number of citizens originally appealed the decision of the Colorado Oil and Gas Conservation Commission (“COGCC”), in the summer of 2002, to issue to GELLC state permits for natural gas exploration in Delta County. GELLC filed a countersuit in Denver District Court, claiming the County’s actions in denying local land use permits for GELLC’s proposed gas wells were preempted by the COGCC’s authority. A state district court judge concurred in part with GELLC, and the extent to which the County’s oil and gas regulations are preempted by State law is still being litigated. GELLC also claimed that the County’s denial of GELLC’s application violated GELLC’s constitutional rights, entitling GELLC to damages. GELLC has estimated those damages at $2 million. Delta County has denied that GELLC is entitled to any damages from the County.

In deciding to dismiss the damage claims, Brad Robinson, Executive Vice President of GELLC, stated that “GELLC’s and Oxbow’s long-term desire to work cooperatively and in a spirit of good will with the County and its citizens was more important than pursuing a claim for damages. Had we prevailed in Court, the damages would have come out of the County taxpayers’ pockets,” Robinson said.

“Our purpose in filing these claims was to defend our rights to conduct business on fair terms, not to impose financial hardships on or alienate the local community,” Robinson added. “Remember, we are a part of the community, with nearly 300 GELLC and Oxbow employees who live and work in the North Fork Valley.”

Robinson said Oxbow and GELLC have always considered themselves good corporate citizens. Oxbow contributes millions to the local economy and donates tens of thousands of dollars to the public schools in Delta County, and its employees volunteer valuable time to youth organizations.

“We look forward to resolving the remaining parts of the litigation between Delta County and GELLC,” Robinson said.