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ENERGY, INC. <br />July 28, 2005 <br />A Subsidiary of <br />Deseret Generation & <br />Transmission Cooperative <br />Mr. Jim Burnell <br />Division of Mineral and Geology <br />1313 Sherman Street, Room 215 <br />Denver, CO 80203 <br />RE: Future groundwater monitoring needs <br />Dear Jim: <br />RECEIVED <br />auG 012005 <br />Owision of Minerals an0 GeotopY <br />In the next several years Blue Mountain Energy anticipates expanding our permit <br />area to include additional underground development to the northeast. In <br />preparation for the permitting process, we intend to install several down gradient <br />monitoring wells concurrent with our exploration program. The following <br />discusses the existing and proposed groundwater monitoring scenarios. Please <br />review and provide comments concerning our proposed plan. <br />Current Status: <br />A more detailed discussion of the mine facilities, history, and past and present <br />monitoring programs can be found in BME's Annual Hydrology Reports. <br />Blue Mountain Energy, Inc. operates the Deserado Mine in western Rio Blanco <br />County, Colorado northeast of Rangely. The Deserado Mine is an underground <br />coal mine that utilizes a longwall as its primary means of coal extraction. As coal <br />resources are utilized additional leases and permit expansions are needed to <br />continue operations at present levels. <br />The area is semi-arid to grid with an annual precipitation of approximately 10.5". <br />Geology is comprised of tight geologic strata that yield very little water. With <br />approximately 870 acres of ground subsided in our B-seam portion of the mine <br />we are generating only about 8 gpm of groundwater. While this may be <br />respectable for a single domestic well it fully demonstrates the extremely low <br />yield and spec'rfic storage when one considers the contributing area. Both the <br />Annual Hydrology Reports (Section 2.2.1.3) and the Mining Permit (Sections <br />II.C.5.a and II.C.5.b) refer to the bedrock water bearing zones as "aquitards", an <br />underground, saturated zone of low permeable rock, sand, or gravel that will not <br />provide significant quantities of water to a well or spring. <br />3607 County RD #6$ <br />Rangely. CO 81648 <br />970.675-430D <br />Fax 970-675-0399 <br />