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Section • 2.05.3 <br />P. Elk Creek Generator and Thermal Oxidation Facility — Utilizing the methane from the above <br />noted underground network of rrune methane collection pipe and the exhauster facility, North Fork <br />Energy, LCC (NFELLC) has located (2012) and operates an approximate '/2 acre facility NE of the <br />Elk Creek mine ventilation fan. A Colorado Oil and Gas Conservation Commission ( COGCC) <br />permit for the dual use borehole has also been obtained. The facility consists of multiple methane <br />fueled lmw electric generator sets capable of utilizing the mine methane to produce electricity at 4160 <br />volts. The facility includes an adjacent substation designed to step -up the generator voltage to the <br />46kv powerline voltage compatible with the connection to the primary side of the Delta- Montrose <br />Electric Association (DMEA) power line located at the nearby Elk Creek Mine facility substation. As <br />Oxbow is obligated to obtain all of it's electric power needs from DMEA, the amount of generated <br />power will be in accordance with the demands of the purchase power contracts. The facility is located <br />on OMLLC private surface. The methane gas resource obtained from the mine in -seam drainage <br />system is a combination of linuted fee and predominately Federal gas resources. The lease for the <br />Federal gas resource is held by OMLLC sister company Gunnison Energy Corporation (GEC). <br />OMLLC and Vessels Coal Gas jointly own the fee gas. All three companies jointly own NFELLC. <br />Oxbow will "T" off of the current vertical vent stack(s) with control apparatus leading to the Methane <br />Utilization facility. CDRIVIS jurisdiction will end at this connection. A surface pipeline connected to <br />the T on the vertical stack of the exhauster facility will cross Elk Creek and connect with the <br />NFELLC facility. The system will contain control system redundancies where the methane not used <br />for the methane utilization facility can always be vented to maintain the safety of the mine. The facility <br />will also contain a thermal oxidizer capable of oxidizing or "flaring" the mine methane to the <br />atmosphere. The facility will also contain various hardware and systems capable of controlling, <br />conditioning, measuring, monitoring, recording gas flows and exhaust in order to satisfy various <br />regulatory requirements. The facility will have multiple regulatory authorities monitoring the site <br />activities: CDRMS and COGCC for the gas well, BLM for the Federal gas leases, Office Of Natural <br />Resources Revenue (ONRR) for Federal Royalty purposes, CDPHE, APCD for the Colorado Air <br />Emission Permits, EPA for Federal Emission Permits and OSHA for worker safety. <br />The status of this facility is intended to be separate from the Elk Creek Mine facility. NFELLC <br />intends for the facility to remain in place after the Elk Creek Mine is sealed and reclaimed. Extended <br />testing of the methane resource over time will be necessary to determine the potential longevity of the <br />facility. If the facility is to remain after mining and reclamation activities are concluded, the Elk Creek <br />Mine reclamation plan will be modified as necessary to accommodate the continued use of the <br />NFELLC facility. The present reclamation plan does, however, provide for an access road via the <br />currently approved post mining access road remaining after mining to access the upper reaches of Elk <br />Creek where the facility is located. <br />See Map 2.05 -M1, Sheet 3 of 6, General Facilities, and Map 2.04 -M4, Sheet 3 of 4, Drainage and Sediment <br />Control Plan for the location of the facility. <br />Q. Sanborn Creek Generator Facility — In TR -70 Oxbow described a project to convert the <br />former Sanborn Creek fansite pad into a mine methane electrical generator station in a continuing <br />partnership with NFELLC. The source of methane would come from the abandoned Sanborn Creek <br />mine workings. NFELLC has obtained a COGCC Permit 430107 for the Permit to Drill a new <br />borehole to intersect the abandoned mine workings. As of Fall, 2012, construction of the project is <br />delayed until the electrical power can be economically marketed. The project has the potential to <br />produce 1 -3 mw of electrical power generation that would be wheeled out by the nearby DMEA <br />power lines. <br />AIR- 101 2.05 -23c Rev. Dec. 2012 <br />