2018-06-01_REVISION - C1980007 (3)

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Executive Summary Raven Ridge Resources, Incorporated was engaged by Earthjustice to analyze methane emissions data from the West Elk coal mine reported by Mountain Coal Company for adherence to EPA regulations subpart FF. The goal of this analysis was to understand the character of the emissions from the coal mine and develop a conceptual design for abatement of methane emissions to the atmosphere. Emissions data for the years 2011 through 2016 was collated, sorted and analyzed to determine the pattern of emissions, the concentration of methane in the ventilation air and from gas produced from boreholes drilled into mined out areas of the coal mine. These mined -out areas are gob and the boreholes are thus termed gob vent boreholes. Management of the West Elk coal mine utilize the mine's ventilation system and drainage boreholes to remove gas from the mine that may endanger miners. From 2011 through 2016 3.2 billion cubic feet of methane has been admitted to the atmosphere. This is enough methane to have generated 8.5 MW of electricity, which is equivalent to the amount of electricity typically used by 5500 homes on annual basis. Due to commercial and institutional issues that restrict sale of electricity generated by the mine to the electrical grid and overall low energy prices, a conceptual design was developed that envisions gathering and destroying gas that is emitted from gob vent boreholes; flaring was determined to be the most cost- effective and economic option. During the period from 2011 through 2016, the amount of gas emitted from gob vent boreholes amounted to 1.13 billion cubic feet cubic feet of methane gas. Presently the conceptual design envisions capturing the gas for newly drilled gob vent boreholes, but could be expanded to include gas that could be drained from existing boreholes. Gas captured and transported by the gathering system would be destroyed by an enclosed flare. Such flares are presently being used to destroy gas being drained from the Oxbow mine which is located nearby. A detailed economic model was constructed based on the conceptual project design using inputs supplied by consulting engineers and vendors. Our analysis used a project life of 10 years and demonstrates that it is technically and economically feasible to safely gather and destroy the drained gas by using an industry standard enclosed flare. Revenue from the project is derived solely from the creation and sale of carbon credits. A carbon market was created by the California Air Resources Board and allows carbon emission reduction projects to generate verifiable credits that can be used by industries included in the program. The predicted economic performance of the proposed project is favorable. Economic performance of the project was gaged by standard financial industry metrics such as, net present value, internal rate of return, return on investment and time to achieve investment pay back. The project will require a total of 12.54 million dollars of capital expenditures and 3.5 million dollars of operating expense over the project life. With a forecast of 6.7 billion cubic feet of gas produced through GVBs over a 10 -year period, net total emissions of 2.64 million tonnes of CO2e would be destroyed over that period, or about 720 thousand tonnes of carbon. The net present value of the project is $6.51 million USD, the internal rate of return is 121.5%, return on investment is 80.6%, with the project paying out before the end of the first year, meaning that revenue generated from the sale of carbon credits is greater than the sum of the initial investment and operating expenses in the initial year, and every year thereafter during the project life. 1