United States
Environmental Protection
Agency
Air and Radiation
(6202J)
EPA430-R98-003
December 1998
Making Coal Mine Methane
Work For You
A Guide to Coal Mine/
Greenhouse Projects
Draft Report
-------
-------
v>EPA Making Coal Mine Methane
Work For You
U.S. Environmental
Protection Agency
Atmospheric
Pollution
Prevention
Division
A Guide to Coal
Mine/Greenhouse Projects
Draft Report
Prepared by:
ICF Incorporated
Washington, DC
Prepared for:
Roger Fernandez
U.S. EPA
Office of Air and Radiation
Atmospheric Pollution Prevention Division
Washington, DC
December 1998
-------
Acknowledgements
This report was prepared under work assignments 3-03, 2-40, and 4-01 of U.S.
Environmental Protection Agency Contracts 68-D4-0088, 68-W5-0068, and 68-W5-
0018, respectively by ICF Incorporated. The principal authors were Mary DePasquale
and Brian Pollard. The authors wish to thank Roger Fernandez, Karl Schultz and Dina
Kruger of the U.S. Environmental Protection Agency for guidance and comment during
the preparation of this report.
-------
Glossary of Frequently Used Terms
Coalbed methane: Methane that resides within coal seams.
Coal mine methane: As coal mining proceeds, methane contained in the coal and
surrounding strata may be released. This methane is referred to as coal mine methane
since its liberation resulted from mining activity. In some instances, methane that
continues to be released from the coal bearing strata once a mine is closed and sealed
may also be referred to as coal mine methane because the liberated methane is
associated with a coal mine.
Degasification system: A system that extracts methane from a mine. Technically, the
term degasification refers to removal of methane by ventilation and/or drainage.
However, the term is most commonly used to refer to removal of methane by drainage
technology. These systems include vertical pre-mine wells, gob wells and in-mine
boreholes.
Ventilation system: A system that is used to control the concentration of methane
within mine working areas. Ventilation systems consist of powerful fans that pump large
amounts of air into mine working areas to dilute methane concentrations.
British Thermal Unit (BTU): An accepted standard for comparing the heating values of
fuels. Specifically, the quantity of heat required to raise the temperature of one pound of
water one degree Fahrenheit.
Kilowatt Hours (kWh): A measurement of power over a period of one hour. A watt is
defined as one joule (i.e., a unit of energy) per second.
-------
-------
Table of Contents
Acknowledgements
Glossary of Frequently Used Terms
Executive Summary 1
Coal Mine Resources and Greenhouse Project Opportunities 1
Using Coal Mine Methane for Greenhouse Heating 1
Using Coal Mine Methane to Generate Electricity and Thermal Heat for
Greenhouses 2
Using Coal Mine Water for Greenhouse Irrigation 2
Benefits of Coal Mine/Greenhouse Projects 3
Promising Locations for Coal Mine/Greenhouse Projects 4
Next Steps: Looking Into Project Opportunities 4
Introduction 6
Section 1: Coal Mine Resources and Greenhouse Project Opportunities 7
Using Coal Mine Methane for Greenhouse Heating 7
What Is Coal Mine Methane? 7
How Can Coal Mine Methane Be Used for Greenhouse Heating? 8
Can Coal Mine Methane Meet All of the Heating Needs of a Greenhouse
For Many Years? 9
Using Coal Mine Methane to Generate Electricity and Thermal Heat for
Greenhouses 11
How Would a Coal Mine Methane/Greenhouse Electricity Project Work? 11
Can Coal Mine Methane Meet All of the Electricity Needs of a
Greenhouse? 11
Using Coal Mine Water to Meet Greenhouse Irrigation and Humidity Needs 13
What Is Coal Mine Water? 13
How Would a Coal Mine/Greenhouse Water Project Work? 14
Can a Coal Mine Meet All of the Water Requirements of a Greenhouse? 14
-------
Section 2: Economic Evaluation of Project Opportunities 16
Economic Analysis of Using Coal Mine Methane for Heating 16
Project Costs 17
Project Benefits 19
Project Advantages and Risks 20
Economic Assessment of Using Coal Mine Methane for Greenhouse Electricity Needs 23
Project Costs 23
Project Benefits 24
Project Advantages and Risks 25
Economic Assessment of Using Coal Mine Water for Greenhouse Irrigation Needs 26
Project Costs 26
Project Benefits ' 27
Advantages and Risks 27
Section 3: Information on Candidate Coal Mines 29
Conclusions 32
Next Steps: Looking into Project Opportunities 32
Appendix A: Case Studies A-1
Case Study A A-1
Case Study B A-6
Case Study C A-9
Case Study D A-11
Summary of Case Studies A-13
Appendix B: County Profile B-1
Appendix C: References C-1
-------
Paqe#
List of Figures
Figure 1: Map of the United States Showing Location of Candidate Underground Mines 5
List of Tables
Table 1: Typical Heating Needs of U.S. Greenhouses 9
Table 2: Annual Energy Available from Methane Recovered from Degasification
Systems 10
Table 3: Typical Annual Electricity Requirements at Greenhouses of Different Sizes 12
Table 4: Estimated Potential Electricity Generation at Selected U.S. Underground Coal
Mines 13
Table 5: Typical Water Requirements of U.S. Greenhouses 14
Table 6: Typical Water Production Rates of U.S. Underground Coal Mines 15
Table 7: Potential Annual Savings to Greenhouse Operators 19
Table 8: Net Present Value of Annual Savings to Greenhouse Operators in Million $ 20
Table 9: Potential Annual Savings to Greenhouse Operators 25
Table 10: U.S. Underground Mines with Degasification Systems 30
Table 11: U.S. Underground Mines with Degasification Systems Contact List 31
-------
-------
A Guide to Coal Mine/Greenhouse Projects
Executive Summary
Greenhouse operators that are considering constructing a new facility should investigate the
possibility of locating a greenhouse near an active underground coal mine. Although
greenhouses and coal mines seemingly have nothing in common, underground coal mines may
provide several resources, including coal mine methane (CMM) and coal mine water (CMW),
that greenhouse operators could use as a low-cost fuel and as an irrigator, respectively. Thus,
both greenhouse operators and coal mine operators could realize financial benefits from the
development of coal mine/greenhouse projects. For example, greenhouse operators with a 500
billion Btu/year heating requirement could save up to $500,000 in fuel costs annually if they were
able to buy CMM at a $1.00/million Btu (mmBtu) savings relative to what they would pay for
natural gas.
The United States Environmental Protection Agency (U.S. EPA) prepared this report primarily for
greenhouse operators who are evaluating possible sites for the construction of new, large
greenhouses. Other groups, however, including coal mine operators and economic development
groups in mining communities, should also find this report useful.
Coal Mine Resources and Greenhouse Project Opportunities
This report identifies three different ways in which greenhouse operations can take advantage of
various underground coal mine resources in order to lower costs and increase revenues. The
coal mine resources and their potential uses are:
• using coal mine methane for greenhouse heating;
• using coal mine methane to generate electricity for greenhouses; and
• using coal mine water for greenhouse irrigation and humidity.
Reduced heating costs are the main benefit of locating a greenhouse near a coal mine;
CMM/greenhouse projects should be profitable based on the annual savings from reduced
heating costs alone. The additional possible savings on electricity and water may make projects
even more attractive.
\ \ \
"VAX
m
Using Coal Mine Methane for Greenhouse Heating
Coal mine methane is natural gas released from coal seams during mining that a
greenhouse operator can use to meet the heating needs of a greenhouse
operation. All underground mines use ventilation systems to remove methane
from mine workings to ensure that the concentration of methane remains within safe tolerances.
Additionally, some particularly gassy underground coal mines employ degasification systems to
remove methane from the mine. These degasification systems, which consist of either wells
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
drilled from the surface or boreholes drilled inside the mine, recover methane in high
concentrations. In many situations, energy projects can use the methane recovered from
degasification systems in place of conventional natural gas.
Both greenhouse operators and coal mine operators can benefit from developing a
CMM/greenhouse heating project. A greenhouse operator would negotiate with a coal mine
operator to purchase CMM under terms that are more favorable to the greenhouse operator than
purchasing natural gas from a local gas company. The coal mine operator would profit from
selling CMM that would otherwise have been wasted.
The economics of CMM/greenhouse projects will be most favorable for very large greenhouses
located in close proximity to a coal mine, but large greenhouses located several miles from the
coal mine also may be able to benefit from purchasing CMM. Finally, small CMM/greenhouse
projects may also be financially feasible in some circumstances.
v. Using Coal Mine Methane to Generate Electricity and Thermal
Heat for Greenhouses
Coal mine methane can be used to generate electricity to meet the power needs of
greenhouses. Previous U.S. EPA studies have shown that it would be profitable for
coal mines to use CMM to generate electricity to meet on-site electricity needs. Very gassy coal
mines with degasification systems should be able to generate electricity at a cost that is well
below retail industrial electricity prices. Accordingly, coal mines should be able to realize
significant savings by self-generating as opposed to purchasing electricity. These savings could
be transferred to greenhouse operators who purchase power from the coal mine. Adding the
power needs of a greenhouse to those of a coal mine would make the CMM-fueled electricity
generation project even more profitable (see Case Study D).
In addition, CMM-fueled electricity generation produces thermal heat. The developer could
configure the project so as to be able to pipe this waste heat to a greenhouse for heating
purposes.
Using Coal Mine Water for Greenhouse Irrigation
Underground coal mines produce large volumes of water as part of mining
operations. Federal regulations require that coal mines treat this water prior to
disposing of it. Since greenhouses are large consumers of water, it is possible
that greenhouses could use some of the CMW. The primary factor impacting the economics of
using CMW in a greenhouse would be whether the water would require additional treatment prior
to use in a greenhouse, and the cost apportionment agreed to by both parties. For example, it is
assumed that a coal mine might incur the costs necessary to treat the CMW so that it meets
governmental standards, and that a greenhouse would incur the costs of any additional
treatment needed as well as any transportation costs. Provided that the costs incurred by the
greenhouse are less than the costs of buying conventional water, then the use of CMW would be
feasible. Other arrangements, such as the payment of transportation costs by the coal mine
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
operator, may also be possible. The coal mine operator may agree to this latter proposal if
he/she thinks that the cost of treatment and transportation is less than the cost of treatment and
disposal.
Benefits of Coal Mine/Greenhouse Projects
Coal mine methane/greenhouse projects yield a wide range of benefits to many different parties.
Specifically, these projects provide financial benefits to greenhouse operators, coal mine
operators, and gas and power project developers. Additionally, such projects create significant
economic development benefits for local mining communities. Finally, coal mine/greenhouse
projects produce important environmental benefits.
• Financial Benefits to Greenhouse Operators. Coal mine methane/greenhouse projects
could enable greenhouse operators to reduce their energy costs significantly, primarily by
purchasing CMM for heating. As mentioned before, a greenhouse with a 500 billion Btu per
year heating requirement could save $500,000 annually if they were able to buy CMM at a
$1.00/mmBtu savings relative to what they would pay for natural gas. Additionally,
purchasing electricity and/or waste heat generated by a CMM power project can also lead to
significant decreases in energy expenditures. Finally, recycled CMW may provide a readily
available and economical source for greenhouse irrigation.
• Financial Benefits to Coal Mine Operators. Coal mine operators will benefit from selling
otherwise wasted resources to greenhouse operators. In particular, selling recovered CMM
that would otherwise have been vented is a proven method for coal mines to generate
additional income. Furthermore, supplying electricity and thermal heat to greenhouses could
both generate income and enhance the cost-effectiveness of a coal mine's power generation
project.
• Economic Benefits for Localities. A greenhouse collocated with a coal mine will produce
economic development benefits for the coal mine's community, particularly with respect to
job creation. A greenhouse project would also produce additional corporate and personal tax
revenues for the local jurisdiction.
• Environmental Benefits. Using CMM for greenhouse operations, either directly or through
electricity generation, will produce significant global and local environmental benefits.
Because methane is a potent greenhouse gas (21 times more potent than carbon dioxide
over a 100-year time period), using methane that coal mines would have otherwise vented
will help reduce the potential for global warming. In addition, greenhouse use of CMM averts
the need for utilities or other power suppliers to generate energy for greenhouse use.
Finally, greenhouse use of recycled CMW will help to preserve the local water supply.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Promising Locations for Coal Mine/Greenhouse Projects
The U.S. EPA has identified 21 coal mines that may be especially promising candidates for the
development of CMM/greenhouse projects. All 21 of these coal mines already have
degasification systems in place. The coal mines are located in the states of Alabama, Colorado,
Pennsylvania, Virginia, and West Virginia as shown in Figure 1. In addition to providing
greenhouses with a low-cost source of fuel and other potentially valuable resources, many of
these 21 coal mines offer other locational benefits, such as access to good transportation and to
regional markets.
Next Steps: Looking Into Project Opportunities
This report provides an introduction to coal mine resources and greenhouse project
opportunities. For further information, readers should contact the U.S. Environmental Protection
Agency's Coalbed Methane Outreach Program (CMOP). Contact information for CMOP is
provided at the end of this report.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Figure 1: Map of the United States Showing Location of Candidate Underground Mines
Legend: 1. Rio Blanco County, Colorado: Deserado Mine; 2,3,4. Tuscaloosa County, Alabama: Blue Creek
Nos. 4, 5, and 7 Mines; 5,6,7. Jefferson County, Alabama: Blue Creek No. 3, Oak Grove, and Shoal Creek
Mines; 8,9,10. Buchanan County, Virginia: Buchanan No. 1, VP No. 3, and VP No. 8 Mines;
11,12,13,14,15. Greene County, Pennsylvania: Enlow Fork, Emerald No. 1, Bailey, Robinson Run No. 95
and Dilworth Mines; 16. Wyoming County, West Virginia: Pinnacle No. 50 Mine; 17. Harrison County, West
Virginia: Robinson Run No. 95; 18. Marion County, West Virginia: Loveridge No. 22 Mine; 19,20,21.
Monongalia County, West Virginia: Blacksville No. 2, Federal No. 2, and Humphrey No. 7 Mines.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Introduction
The notion of locating a greenhouse near to an underground coal mine so as to take advantage
of a coal mine's resources may seem strange. However, underground coal mines have several
wasted resources that could be used as low-cost resources in a greenhouse operation, including
coal mine methane (CMM) and coal mine water (CMW). Both greenhouse operators and coal
mine operators can realize financial benefits from the development of coal mine/greenhouse
projects.
This report is written primarily for greenhouse operators who are evaluating possible sites for the
construction of new, large greenhouses. Other groups, however, including coal mine operators
and economic development groups in mining communities, should also find this report useful.
The report includes three main sections and three appendices:
• Section 1 describes different coal mine resources and outlines how these resources can be
used in a coal mine/greenhouse project.
• Section 2 discusses the costs and benefits to greenhouse operators associated with each of
the different project options discussed in Section 1. Section 2 also discusses advantages
and risks to a greenhouse operator of using CMM and CMW compared with using
conventional resources. Finally, Section 2 discusses benefits to other parties, such as the
coal mine operator and local mining communities.
• Section 3 provides detailed information on 21 underground coal mines that may provide
especially promising locations for CMM/greenhouse projects. These 21 coal mines are
located in the states of Alabama, Colorado, Pennsylvania, Virginia, and West Virginia.
• Appendix A provides an analysis of the economics of CMM/greenhouse projects using
several hypothetical coal mines and greenhouses. The case studies illustrate that, while the
project economics are highly site specific, there are a wide range of conditions under which a
CMM/greenhouse project will be profitable both to greenhouse operators and to coal mine
operators.
• Appendix B provides information on Greene County, Pennsylvania, since several of the 21
candidate coal mines are located in Greene County. Appendix B provides information on the
suitability of the region for a CMM/greenhouse project, including information on climate,
water supply, access to transportation, taxes, and other issues.
• Appendix C lists the references used in preparing this report.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Section 1: Coal Mine Resources and Greenhouse
Project Opportunities
This section provides an overview of coal mine resources and how they can be used in a
greenhouse, including:
• using coal mine methane (CMM) for greenhouse heating;
• using coal mine methane to generate electricity for greenhouses; and
• using coal mine water (CMW) for greenhouse irrigation and humidity.
In addition to providing an overview of coal mine resources and project opportunities, this section
discusses technical issues associated with each of the different types of projects.
Using Coal Mine Methane for Greenhouse Heating
Evaluating the potential for greenhouses to use CMM for heating is the main focus
of this report. Greenhouses can use CMM in place of conventional natural gas
resources as the primary heating fuel.
What Is Coal Mine Methane?
Methane is produced as a by-product of the coalification process, a process in which peat moss
or other vegetation is converted into coal through geological and biological processes over time.
The methane contained in coal seams and in the surrounding strata is released during mining or
through natural erosion and faulting.
All underground mines use ventilation systems to ensure that methane concentrations remain
within safe tolerances (methane is explosive in concentrations of 5 to 15 percent in air).
Ventilation systems pump large volumes of air through the mine to dilute the in-mine methane
concentrations; the ventilation systems then extract and exhaust the diluted methane to the
atmosphere (methane in ventilation air is typically less than one percent).
In addition to using ventilation systems, between 20 and 25 of the gassiest U.S. coal mines
employ degasification systems as a supplement to ventilation systems in order to control
methane. These degasification systems, which are wells drilled from the surface or boreholes
drilled inside the mine, remove methane before or after mining of the seam. Unlike ventilation
systems, degasification systems recover methane in high concentrations. Degasification
systems that recover methane in advance of mining recover nearly pure methane (>97%
methane). These pre-mining degasification systems include vertical wells and horizontal
boreholes. Degasification systems that recover methane post-mining also recover methane with
a high concentration, though the methane may sometimes be mixed with mine air. In the U.S.,
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
gob wells are the primary method used to recover methane post-mining. Gas recovered from
gob wells ("gob gas") may have methane concentrations ranging from 40 percent to over 90
percent, which is of sufficient quality for most greenhouse applications. Because degasification
systems recover methane in high concentrations, the gas may be used as a source of energy.
In fact, methane is the principal component of natural gas. Accordingly, CMM generally can be
used in place of conventional natural gas.
Fourteen active U.S. coal mines that recovered methane from degasification systems in 1996
used or sold the gas for its energy value. Most of these mines sold the recovered gas to a
pipeline. One coal mine used the recovered gas to generate electricity, and another one sold
recovered gas to a pipeline and also used some of the gas as a fuel in their coal drying process.
The use of recovered gas to heat, bathhouses or other mine facilities also has been proven
feasible. In the early 1990s, CMM also was used as a fuel at a glass factory in West Virginia.
Those active coal mines not using all or a portion of the methane recovered from their
degasification systems simply release the methane to the atmosphere. A number of these
mines are exploring possible ways of using the gas, but have not yet identified the best options.
Many of the mines recover methane using gob wells. As mentioned previously, "gob gas" may
contain air mixed with the methane. Since this air must be removed before the gas can be sold
to a pipeline, pipeline sales may not be an economic option for some of these mines.
Accordingly, these mines may be interested in other types of methane projects that can use gob
gas, such as greenhouse projects. Since varying qualities of CMM can be used in greenhouses,
this report focuses on the potential to use gob gas as gob gas varies in quality and is often
uneconomic for other uses and thus is simply wasted.
How Can Coal Mine Methane Be Used for Greenhouse Heating?
Greenhouses typically have substantial heating needs and CMM can be used as a heating fuel
instead of natural gas. A coal mine operator or gas project developer can recover methane from
degasification systems and transport that gas to the greenhouse for use in a gas-fired heating
system.
Depending on the fuel needs of the greenhouse, the project might require gas production from
just one well or borehole, or from several wells. A wellhead compressor and gathering line
would be placed at each well or borehole. For a small greenhouse project, the gas flow rate
from just one gob well may be sufficient to meet all of the greenhouse's heating fuel needs. A
single gob well can produce gas for a few weeks, several months, or a few years. If the
greenhouse just required gas from one well, a gathering line would run from the well directly to
the greenhouse. Accordingly, as an individual gob well ceases production, the wellhead
compressor and gathering line equipment would need to be moved from one well to the next.
For larger greenhouse projects, gas from several wells or boreholes may be required to meet
the heating needs. If more than one well or borehole was required at a time, the design of the
gas delivery system may involve transporting gas from several wells to a central compressor
before the gas is delivered to the greenhouse.
Making Coal Mine Methane Work For You: 8
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Greenhouse gas-fired heaters or boilers would require only limited retrofitting to operate on gob
gas (medium-quality CMM) rather than natural gas. Retrofitting of the equipment may be
required given that the gob gas will contain some amount of air, and, thus, would have a lower
heating value than does conventional natural gas. The only gas processing that would be
required is de-watering of the gas.
The coal mine operator might be responsible for designing, building, and managing the gas
supply system. More likely, however, the coal mine operator would contract with a gas project
developer to develop and maintain the gas supply system. This gas project developer would
work closely with both the coal mine operator and the greenhouse operator to ensure that the
project met the needs of both parties. This report assumes that the greenhouse operator would
not be responsible for developing and managing a CMM gas supply system.
Can Coal Mine Methane Meet All of the Heating Needs of a Greenhouse For
Many Years?
The amount of fuel needed to heat a greenhouse depends on several factors, including the
surface area of the greenhouse, the temperature, wind, sunlight and other weather conditions in
the area, and the construction materials used in the greenhouse. The number of days or months
during which a greenhouse requires at least some heating varies significantly from state to state
(and within states). A coal mine would need to be able to supply enough gas to meet the
maximum fuel needs of a greenhouse on a cold winter day, or the greenhouse would need
access to back-up fuel sources. Table 1 provides sample ranges of heating needs for different
sizes and types of large greenhouses.
Table 1: Typical Heating Needs of U.S. Greenhouses
Size (Million Square Feet)
0.5
1.0
1.5
2.0
Heating Demand (billion Btu per year)
Glass
56-124
111-247
175-387
223-493
PE (Plastic)
30-68
61-136
96-213
122-271
Each of the coal mines that currently use degasification systems, but that have not developed
uses for the recovered gas, liberates more than enough methane to heat the largest U.S.
greenhouses as described in Table 1. Table 2 shows the estimated annual amount of energy
that could be supplied by CMM recovered from degasification systems at 18 of the top 21
candidate mines identified in this report. (Section 3 provides further detail on the complete list of
candidate mines.)
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Table 2: Annual Energy Available from Methane Recovered from Degasification Systems
Mine Name
Bailey
Blacksville No. 21
Blue Creek No. 3^
Blue Creek No. 4^
Blue Creek No. 5^
Blue Creek No. Y
Cumberland
Deserado
Dilworth
Emerald No. 1
Enlow Fork
Federal No. 2"
Humphrey No. T
Loveridge No. 221
Oak GroveJ
Pinnacle No. 50"
Robinson Run No. 95
Shoal Creek"
Estimated Annual Energy Available
from Degas Systems
(billion Btu per year)
1,205
1,460
—
—
-
—
584
110
621
1,424
2,081
1,898
1,132
1,059
550
3,398
657
398
nln 1996 a recovery system was installed at these mines. Enrichment and use
of the recovered gas began in 1997. Thus, the estimates assume that no use
was taking place since the estimates are based on 1996 data.
2These mines sell to pipeline practically all of the methane that is recovered.
The operator, however, shuts-in gob wells once the quality of the gas falls
below pipeline grade. A greenhouse operator may still want to approach this
operator as the potential quantity of gob gas that could be produced is
tremendous.
3 This mine sells approximately 85% of the recovered methane to pipeline. The
remaining gob gas is not used.
4This estimate accounts for gas that is sold to pipeline. The use
options/amount of gas used may have expanded at this site since 1996.
Source: U.S. EPA, Identifying Opportunities for Methane Recovery at U.S.
Coal Mines: Draft Profiles of Selected Gassy Underground Mines, September
1997.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
10
-------
A Guide to Coal Mine/Greenhouse Projects
The amount of methane that a coal mine recovers from degasification systems each day (and
ultimately each year) will fluctuate somewhat, depending on the number of wells in operation,
coal mining rates, and other factors. However, given that the estimated average daily methane
recovery from degasification systems significantly exceeds the typical energy needs of large
greenhouses, some fluctuations in daily methane recovery would not impact the coal mine's
overall ability to supply gas to meet heating needs, even during peak times. The overall gas
quality (methane concentration and heating value) may also vary somewhat from day to day.
However, a gas project developer can manage the quality of the gas flow to ensure that
variations remain within the tolerances allowed in the greenhouse heating system.
A final consideration for greenhouse operators evaluating CMM project opportunities is the
projected productive lifetime of the coal mine. All of the top candidate coaJ mines identified in
this report have projected productive lifetimes of more than five years. Additionally, a majority
have projected productive lifetimes of more than ten years. However, even if the coal mine were
to cease operation sooner than expected, the coal mine operator or gas project developer would
likely still be able to supply all or most of the greenhouse's energy requirements by recovering
gas from abandoned mine workings. In fact, a CMM/greenhouse project in Illinois already uses
methane from abandoned mine workings as heating fuel for several small greenhouses.
Using Coal Mine Methane to Generate Electricity and
Thermal Heat for Greenhouses
How Would a Coal Mine Me thane /Greenhouse Electricity Project Work?
In addition to being used directly for heating, CMM also can be used to generate electricity.
Both gas turbines and internal combustion engines can operate on CMM. Similar to using CMM
for heating, the only processing of the gas required before using it to generate electricity is de-
watering. Coal mine methane-generated electricity can be used to meet the electricity
requirements of a greenhouse. Furthermore, the thermal heat generated from the electricity
generation process can be used to supply additional heat for a greenhouse.
Similar to a greenhouse heating project, a greenhouse electricity project would likely involve
three parties - the greenhouse operator, the coal mine operator, and a gas project developer.
Additionally, for a power generation project, a separate power project developer might also be
involved. The gas project developer and/or power project developer would be responsible for
supplying electricity to the greenhouse.
Can Coal Mine Methane Meet All of the Electricity Needs of a Greenhouse?
Greenhouses can have significant electricity needs stemming from lighting requirements, cooling
needs, and advanced automated features. A typical greenhouse might require from 2 kWh per
square foot per year to 8 kWh per square foot per year. Table 3 shows the estimated annual
electricity requirements for different sizes of greenhouses.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
11
-------
A Guide to Coal Mine/Greenhouse Projects
Table 3: Typical Annual Electricity Requirements at Greenhouses of Different Sizes
(MWh per year)
Greenhouse Size
(million square feet)
0.5
1.0
1.5
2.0
2 kWh/square foot/year
1,000
2,000
3,000
4,000
5 kWh/square foot/year
2,500
5,000
7,500
10,000
8 kWh/square foot/year
4,000
8,000
12,000
16,000
Table 4 shows the annual electricity that could be generated from methane recovered from
degasification systems for a few of the coal mines identified as the top candidate mines for
greenhouse projects. Table 4 shows that the electricity requirements of typical U.S. greenhouses
are considerably lower than the potential electricity that could be generated using CMM.
Coal mines are also large consumers of electricity. Accordingly, a coal mine considering
supplying electricity to a greenhouse would likely develop a project that involved supplying
electricity to both the mine and the greenhouse. Even though coal mines are large consumers
of electricity themselves, there are a number of reasons why coal mine operators would be
willing to consider selling electricity and heat generated by turbines or internal combustion
engines to a greenhouse. These reasons are discussed in Section 2 of the report and in
Appendix A (Case Studies).
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
12
-------
A Guide to Coal Mine/Greenhouse Projects
Table 4: Estimated Potential Electricity Generation at Selected U.S. Underground Coal Mines
Mine
Bailey
Cumberland
Deserado
Dilworth
Emerald No. 1
Enlow Fork
Federal No. 2
Humphrey No. 71
Loveridge No. 22 1
Robinson Run No. 95
Potential Electricity
Generated (MWh/yr)
109,545
53,091
10,000
56,454
129,454
189,181
172,545
102,909
96,273
59,727
Potential Electric
Generating Capacity (MW)
12.5
6.1
1.1
6.4
14.8
21.6
19.7
11.7
11.0
6.8
nln 1996 a recovery system was installed at these mines. Enrichment and use of
the recovered gas began in 1997. Thus, the estimates in the above table assume
that no use was taking place since the estimates are based in 1996.
Note: Calculations assume a heat rate of 11,000 Btus/kWh.
Source: U.S. EPA, Identifying Opportunities for Methane Recovery at U.S. Coal
Mines: Draft Profiles of Selected Gassy Underground Mines, September 1997.
Using Coal Mine Water to Meet Greenhouse Irrigation
and Humidity Needs
What is Coal Mine Water (CMW)?
Coal seams and the strata surrounding them contain water. The amount of water contained in
coal seams varies significantly from one mine to the next. In order to mine the coal, coal mine
operators must pump the water to the surface, where it is treated in settling ponds or through
other methods. Once the water has been treated, it can be land applied or released into nearby
rivers. Prior to mining, coal mine operators must file a National Pollutant Discharge Elimination
System (NPDES) permit, which describes the water treatment method and type of disposal to
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
13
-------
A Guide to Coal Mine/Greenhouse Projects
be used at the site. In some cases, the coal mine would be discharging water into a stream or
river (i.e., open discharge), and would have to meet stringent federal and state water quality
requirements.
How Would a Coal Mine/Greenhouse Water Project Work?
Depending on the quality and treatment processes required, CMW could potentially be used in a
greenhouse. The CMW could be transported to a greenhouse where it would be used for
irrigation or for increasing humidity levels, which is required for certain types of crops. Using
CMW could potentially be more economic than purchasing water from local sources or drilling a
well to supply the greenhouse. The principal concern would be the quality of the water and its
suitability for different greenhouse water needs.
In cases in which the quality of the CMW is suitable for crop irrigation and/or for increasing
humidity, the greenhouse owner or mine operator would need to install pipelines and pumps
capable of transporting the water to the greenhouse. Both pipelines and pumps are readily
available.
Can a Coal Mine Meet All of The Water Requirements of a Greenhouse?
Not surprisingly, greenhouses are great users of water. For example, a 1-acre greenhouse
might require 10,000 gallons of water per day (Langhans 1990, Nelson 1993, Boodley 1996).
Table 5 provides estimated water requirements for different sizes of greenhouses. Water
requirements for similar sized greenhouses, however, can vary significantly, depending on crop
type and other factors.
Table 5: Typical Water Requirements of U.S. Greenhouses
Greenhouse Size
(million square feet)
0.5
1.0
1.5
2.0
Estimated Water
Demand (gallons/day)
115,000
230,000
345,000
460,000
In comparison, underground coal mines may produce as much as one to three barrels of water
(31.5 to 94.5 gallons of water) for every ton of coal mined. The candidate coal mines identified
in this report produce from one million tons to over five million tons of coal every year.
Accordingly, most of the coal mines would be able to meet all or a very large portion of the
annual water needs of a greenhouse. Table 6 provides estimated water production rates for
different sizes of coal mines.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
14
-------
A Guide to Coal Mine/Greenhouse Projects
Table 6: Typical Water Production Rates of U.S. Underground Coal Mines
Mine Production (million
tons coal per year)
2
4
6
8
Estimated Water
Production Rate at Coal
Mines (gallons/day)
172,603-517,808
345,205-1,035,616
517,808-1,553,425
690,411 -2,071,233
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
15
-------
A Guide to Coal Mine/Greenhouse Projects
Section 2: Economic Evaluation of Project Opportunities
This section evaluates the economics of coal mine/greenhouse project opportunities from the
perspective of a greenhouse operator. As mentioned earlier, greenhouse operators may be able
to achieve significant savings on their annual energy costs and water costs. Reduced heating
costs are the main benefit of locating near a coal mine; CMM/greenhouse projects can be
profitable based on the annual savings from reduced heating costs alone. The additional
possible savings on electricity and water may make projects even more attractive. For each
project option, the section discusses project costs, project benefits, and the advantages and
risks of the project. While project costs and benefits are addressed from the perspective of a
greenhouse operator, the section also shows that projects would be beneficial to coal mine
operators and other groups.
Economic Analysis of Using Coal Mine Methane for
Heating
w
By locating a greenhouse near a coal mine, greenhouse operators may be able to significantly
reduce their heating costs. This section examines the costs and benefits of a CMM/greenhouse
heating project from the perspective of the greenhouse operator. The report assumes that the
coal mine operator and/or a gas project developer would be responsible for designing,
constructing, and operating a gas supply system. In other words, the greenhouse operator
would purchase gas from the coal mine operator or gas project developer, but would not be
responsible for the costs of building and maintaining the system.
The basic assumptions of this analysis are that:
1) Coal mine operators and/or gas project developers will only be interested in selling gas to a
greenhouse if such a project will be profitable and if the economics of the project are better
than the economics of the next best alternative for using or selling the gas (normally, selling
the gas directly to a natural gas pipeline); and
2) Greenhouse operators will only be interested in purchasing gas from coal mines if they can
purchase the gas at a price that is lower than typical commercial or industrial end-user gas
prices, thus achieving significant annual savings on their heating costs.
As described in this section, for many coal mines, the cost of supplying CMM to a greenhouse
will be significantly lower than the typical commercial or industrial end-user gas prices.
Accordingly, the coal mine and/or gas project developer may be able to negotiate a price with
the greenhouse operator that leads to financial benefits for both parties.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
16
-------
A Guide to Coal Mine/Greenhouse Projects
Project Costs
The major capital costs associated with supplying gas to a greenhouse are costs for
compressors and pipelines to move the CMM to the greenhouse. Additional costs include safety
and monitoring equipment, and a dehydrator to remove water from the CMM. The major
operating costs for the project would be those associated with moving gathering lines, and
operating and maintaining the gas gathering system. This report assumes that the coal mine
operator and/or a gas project developer would be responsible for designing, constructing, and
operating a gas supply system. The greenhouse operator would purchase CMM from the coal
mine operator or gas project developer, but would not be responsible for the costs of building
and maintaining the system. This report further assumes that the greenhouse operator would
only be responsible for the cost of modifying a gas-fired heater or boiler so that the equipment
would operate on CMM. The greenhouse operator would need to modify the equipment if the
Btu value of the CMM were lower than that of conventional natural gas. The average cost for
retrofitting gas-fired heating equipment would be only about $500 as minimal retrofits would be
required (Frece 1997).
Because this report assumes that the greenhouse operator will not be responsible for the costs
of constructing and maintaining a gas supply system, this section does not present detailed
information on capital and operating costs for different pieces of gas gathering equipment.
(Appendix A provides further information for readers interested in learning more about the
subject.) Instead, the discussion on project costs presented here focuses on the overall cost per
unit of energy supplied ($/million Btus (mmBtu)) and on the conditions under which
CMM/greenhouse projects will likely be feasible. Detailed information supporting the
conclusions described here is shown in Appendix A, where several case studies examine the
economics of CMM/greenhouse projects.
The $/mmBtu cost of supplying CMM to a greenhouse (and, ultimately, the price at which CMM
could be sold to a greenhouse) will vary depending on conditions at the coal mine and the
characteristics of the planned greenhouse. The specific conditions and characteristics impacting
CMM supply costs are discussed in further detail below. The overall cost of supplying coal mine
gas can range from as low as $0.50/mmBtu to well over $6/mmBtu, but generally is in the range
of $2/mmBtu. In addition to covering capital and operating costs for the project, however, the
coal mine operator or gas project developer also will want to make a profit from the project and
attain a certain desired rate of return. Accordingly, the coal mine operator or gas project
developer will need to set a gas sales price that is higher than the CMM supply cost. At most of
the candidate mines identified in this report, the cost of supplying CMM to a greenhouse would
probably be well below typical end-user prices for natural gas since the greenhouse would be
located near the coal mine (see Appendix A for further information on gas supply costs). When
the CMM supply costs are significantly lower than typical end-user prices for natural gas there is
a potential for both coal mine operators and greenhouse operators to benefit.
Making Coal Mine Methane Work For You: 17
A Guide to Coal Mine/ Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
The overall $/mmBtu cost of supplying gas to a greenhouse will vary significantly depending on
site-specific conditions at the coal mine and on characteristics of the planned greenhouse.
Following is a summary of the major factors impacting gas supply costs.
• In general, the cost of supplying gas (CMM or conventional natural gas) to a large
greenhouse (with high energy needs) is significantly lower than the cost of supplying gas to a
smaller greenhouse (with low energy needs). The cost of supplying gas to a larger
greenhouse is lower because there are significant fixed costs involved in establishing and
maintaining a gas supply system and these costs must be paid regardless of whether the
greenhouse is large or small. As shown in the case studies, the cost of supplying gas to a
very large greenhouse may be lower than $1.00/mmBtu at some mine sites under certain
conditions. While large CMM/greenhouse projects will likely have the lowest supply costs,
small CMM/greenhouse projects can still be feasible. For example, some coal mines have
found it economic to collect and use the methane emitted from a single gob well for hot water
heating at the mine bathhouse. Likewise, a small CMM/greenhouse project might have gas
supply costs similar to that of a small hot-water heating project.
• The distance between the coal mine and the greenhouse is a major factor determining the
overall $/mmBtu cost of supplying gas to a greenhouse. Small CMM/greenhouse projects
would have to be located near (or on the premises of) the coal mine in order to be economic.
Larger CMM/greenhouse projects could be located several miles away. In fact, as shown in
Appendix A, CMM supply costs could potentially still be below $2.00/mmBtu for very large
greenhouses located nearly ten miles from the coal mine.
• Greenhouses typically may only have a large demand for natural gas during the winter
months when they require gas for heating. A gas supply system would likely be designed to
handle gas flow rates compatible with peak needs during winter months. Accordingly, during
the summer months, the gas supply system may not be used at all, or may only carry a
limited amount of gas compared to the capacity of the system. The fact that greenhouses
would have a seasonal demand for gas tends to increase the $/mmBtu cost of supplying gas
(compared to selling gas to a pipeline on a year-round basis). However, as shown in
Appendix A, CMM/greenhouse projects still may be economic even though gas purchases
would likely vary significantly on a seasonal basis.
• Coal mines that have degasification systems in place are the best candidates for supplying
CMM to greenhouses. Because these coal mines already recover methane, the cost of
drilling a well or borehole would not be an incremental cost associated with a
CMM/greenhouse project. Section 3 of this report identifies 21 gassy underground coal
mines that already employ degasification systems.
• Other site-specific conditions at a coal mine also will impact the cost of supplying gas. For
example, an especially gassy coal mine may be able to meet the energy needs of a
greenhouse by recovering methane from just one gob well. A less gassy mine, however,
might need to use three gob wells to meet the same energy needs. The cost for the coal
mine that is able to supply gas from just one well would likely be lower, since the project
Making Coal Mine Methane Work For You: 18
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
would require fewer wellhead compressors and less total footage of gathering lines. Further,
a site that has a flat topography also will be advantageous since the cost of laying gathering
lines will be less.
While the overall cost of supplying gas to a greenhouse will vary based on the factors described
above, there are a wide range of conditions under which a CMM/greenhouse project will be
profitable to greenhouse operators, coal mine operators, and gas project developers. Appendix
A provides specific examples of different situations in which CMM/greenhouse projects would be
profitable ventures for all parties involved. Appendix A also provides further detail on the
assumptions used in the analysis.
Project Benefits
As described above, coal mine operators may be able to supply CMM to greenhouses at prices
that are below typical end-user natural gas rates, which translates into energy cost savings for
greenhouse operators. Because the cost of supplying gas to a greenhouse would vary
significantly for different mines, the gas purchase price would need to be determined on a site-
specific basis, through negotiations between the greenhouse operator and the coal mine
operator or gas project developer. Potential savings could range from as low as $0.107mmBtu to
over $1.00/mmBtu.
Given that heating costs account for a large portion of greenhouse annual operating costs,
significant reductions in these costs would mean greatly increased profits for a
CMM/greenhouse project. Table 7 shows estimated potential annual savings to greenhouse
operators for different sizes of greenhouses with different annual energy needs.
Table 7: Potential Annual Savings to Greenhouse Operators
$/mmBtu
Savings
$0.25
$0.50
$0.75
$1.00
Greenhouse Energy Needs (billion Btu/yr)
30
$7,500
$15,000
$22,500
$30,000
200
$50,000
$100,000
$150,000
$200,000
350
$87,500
$175,000
$262,500
$350,000
500
$125,000
$250,000
$375,000
$500,000
Table 8 shows the estimated net present value of these savings for a project lasting ten years.
For greenhouses with energy needs in the range of 30 billion Btus per year, the estimated
annual savings would likely exceed several thousand dollars per year. The net present value of
these savings for a ten-year project could range from $46,000 to over $180,000. For the largest
greenhouses, which have energy needs in the range of 500 billion Btus per year, annual savings
would likely exceed several hundred thousand dollars per year. The net present value of these
annual savings during a ten-year project could exceed $3 million.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
19
-------
A Guide to Coal Mine/Greenhouse Projects
Table 8: Net Present Value of Annual Savings to Greenhouse Operators in Million $
$/mmBtu
Savings
$0.25
$0.50
$0.75
$1.00
Greenhouse Energy Needs (billion Btu/yr)
30
$0.046
$0.092
$0.138
$0.184
200
$0.307
$0.614
$0.922
$1.229
350
$0.538
$1.075
$1.613
$2.151
500
$0.768
$1.536
$2.304
$3.072"
The net present value was calculated assuming a ten year project
lifetime and a nominal discount rate of approximately ten percent.
Project Advantages and Risks
The primary reason that greenhouse operators should consider using CMM for heating is that
the coal mine operator (or a gas project developer) may be able to offer a gas purchase
arrangement with terms that are more favorable than purchasing gas from a local gas company.
The economic benefits would likely be large enough to warrant constructing a new greenhouse
in close proximity to a coal mine.
A possible disadvantage of using CMM as opposed to purchasing natural gas from a gas
company is the additional time and effort required to work with a coal mine operator or gas
project developer on developing specific terms of the gas purchase agreement. Additionally,
purchasing gas from a coal mine would expose the greenhouse operator to some possible
project risks, though many of these risks can be minimized by ensuring that the greenhouse
would have access to an alternate source of fuel. For example, the greenhouse might need to
be able to purchase backup gas from the local gas company if problems arose.
Possible specific project risks include:
• Technology Risks. Technology risks for a CMM/greenhouse project would likely be minimal.
The technologies for recovering methane using degasification systems, for de-watering the
gas, and for transporting the methane are proven and have been in use for nnany years at
coal mine operations and conventional natural gas operations. Additionally, retrofitting of
standard gas-fired heating equipment to operate on lower heating value gas is a proven
technology. For example, many industrial and commercial operations (including
greenhouses) currently purchase landfill gas for heating (landfill gas has a heating value in
the range of 450 to 550 Btu per cubic foot). While the technologies for recovering,
transporting, and using CMM in a gas-fired heating system are proven, there still may be
occasions when the gas project developer needs to shut down the system for unexpected
repairs or for routine maintenance. In order to minimize the risk of system shut-downs, the
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
20
-------
A Guide to Coal Mine/Greenhouse Projects
greenhouse operator would also need to have a connection to a local gas company pipeline
in order to purchase back-up fuel or arrange another alternate source of fuel.
Risks Associated With the Mining Operation. Gas flow rates are linked to coal production
rates. Accordingly, if the mine reduces coal production, or idles or closes the mine earlier
than planned, gas flow rates would be affected. Some of the risk related to the mining
operation may be mitigated for three reasons. First, since CMM production at many of the
21 candidate mines exceeds the maximum amount of gas production needed at a
greenhouse on a daily basis, variations in gas flow rates at the mine will likely not impact the
gas supply for the greenhouse. Second, even if the mine completely ceases operations, it
would still be possible to supply gas from abandoned mine workings. Third, the risks related
to mining operations could also be mitigated by ensuring that the greenhouse is still able to
purchase back-up fuel from the local gas company or from an alternative supplier.
Risks Related to Gas Project Developer. An additional risk is related to entering into a gas
purchase agreement with a gas project developer. While there is little risk associated with
purchasing gas from a local gas utility, there may be some limited additional risk related to
the underlying financial solvency of the gas project developer's company.
Making Coal Mine Methane Work For You: 21
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Evaluating a Coal Mine Methane/Greenhouse Project Opportunity
(The Coal Mine Operator or Gas Project Developer's Perspective)
The project developer (coal mine operator or third party) will evaluate the benefits of selling CMM to a
greenhouse against other possible uses for the CMM, such as selling the CMM directly to a natural gas
pipeline (an established practice at several U.S. coal mines) or using the CMM for power generation. In
certain circumstances the project developer may find it advantageous to sell CMM to greenhouses for
several reasons. First, methane recovered from degasification systems may be mixed with ventilation air
from the mine. If the coal mine were to try to sell this gas directly to a natural gas pipeline, the air would
need to be stripped from the gas, which can be costly, and is unnecessary when selling methane directly
to a greenhouse. Many gassy mines do, however, sell their recovered, high-quality methane to pipelines.
This gas is recovered from vertical wells and in-mine boreholes, and to a lesser extent from new gob
wells. For many mines with older gob wells the recovered CMM is contaminated with air making it
unsuitable for pipeline injection. Thus, the gas is often vented. Greenhouses could use this gob gas
directly as fuel for a boiler or heater. Second, a developer may be interested in selling gas to a
greenhouse operator since the developer could sell the gas at a price that is higher than the typical
wellhead gas price (though still lower than the typical end-user gas price). Given that wellhead gas prices
are in the $2/mmBtu range in many coal mining areas while the typical end-user gas prices are in the
S4/mmBtu range in most areas, there is a significant margin between the price that the coal mine could
receive for selling gas to a greenhouse versus the price a greenhouse would typically have to pay for
conventional natural gas.
From the developer's perspective, however, there may be a few disadvantages to selling gas to a
greenhouse rather than directly to a gas pipeline. First, a greenhouse may not be able to purchase all of
the gas that is recovered from the coal mine. When selling gas to a pipeline company, the developer is
usually able to sell all of the gas that is recovered from the mine. Since methane recovery projects
involve high fixed costs, developers must sell large volumes of gas in order for the recovery and use
project to be profitable. Examples of fixed costs for the project include the capital cost of purchasing
compressors and gathering lines. Additionally, developers would incur significant annual operating and
administrative costs regardless of the amount of gas sales. Second, another potential disadvantage of
selling gas to a greenhouse is that most coal mines are located within close proximity to existing natural
gas lines. Many coal mines even have gas lines crossing their mine property. Thus, the length of lines
needed to transport the CMM to the gas pipelines may be minimal.
While there are some disadvantages to coal mine/greenhouse projects compared with pipeline projects,
greenhouse projects typically have the potential to be more profitable than other projects. This is
because the developer and greenhouse operator can negotiate a price that is beneficial to both parties,
especially if there is a wide margin between the cost of supplying gas and the typical end-user gas prices.
Accordingly, coal mine operators and greenhouse operators may be able to negotiate a price that leads
to large financial benefits for both parties.
Overall, using CMM for heating is likely to be profitable for greenhouse operators. The potential
to achieve significant savings on heating costs should significantly outweigh the limited
additional project risks. Furthermore, in addition to realizing significant energy savings, a
greenhouse operator may also be able to reduce other costs by constructing a greenhouse near
a coal mine. Finally, another benefit of using CMM for greenhouse heating is that such a project
reduces methane emissions to the atmosphere, thereby achieving global environmental benefits.
Making Coal Mine Methane Work For You: 22
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Economic Assessment of Using Coal Mine Methane for
Greenhouse Electricity Needs
In addition to using CMM directly for heating, it may be used to generate electricity to meet the
power needs of a greenhouse. This report assumes that there are two situations under which a
CMM/greenhouse electricity project would be feasible:
• A greenhouse electricity project would likely be feasible at coal mines that already are
generating electricity to meet all or a portion of their own on-site electricity needs, or are
considering such a project. Currently, there are two power generation projects using CMM at
U.S. coal mine sites; or
• A greenhouse electricity project might also be feasible if a coal mine and greenhouse had
already developed a greenhouse heating project. Most gassy underground coal mines
recover enough methane to be able to sustain a greenhouse heating project and a
greenhouse electricity project, as well as an electricity project that supplies the baseload
electricity needs of the mine.
This report assumes that a CMM/greenhouse electricity project by itself would likely not be
feasible. Greenhouse electricity needs alone are not high enough to warrant the development
costs inherent in installing an electricity project. In conjunction with an existing coal mine power
generation project or a greenhouse heating project, however, a greenhouse electricity project
may be economic. The potential for the greenhouse to use waste heat created by the electricity
generation process may make the project even more economic.
Appendix A provides a specific example of how the economics of a CMM/greenhouse power
generation project might work. The results of the analysis show that even though coal mines
have their own large on-site electricity needs, coal operators should still be interested in and
could profit from selling electricity to greenhouses. In particular, CMM/greenhouse electricity
generation projects will be most economic at large greenhouses with high baseload electricity
needs.
Project Costs
This analysis assumes that a greenhouse owner will incur no additional capital or operational
costs from buying its electricity from a coal mine generation facility. The power generation
facility would be operated by the coal mine or another management entity, such as an
independent power project developer. Therefore, the greenhouse operator would be negotiating
with a power project developer for the purchase of CMM-derived electricity.
Making Coal Mine Methane Work For You: 23
A Guide to Coal Mine/ Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Electricity Generation from Coalbed
Methane in Australia
The Appin and Tower Coal Mines, New South
Wales (Australia) use CMM to generate
electricity. Between the two mines, 94
generator sets, each having a 1 MW capacity,
are used to produce electricity. The electricity
produced is used on-site and sold to a local
utility. The project uses recovered methane
as the main fuel and ventilation air released
from the Appin coal mine as combustion air
for the engines. In addition to being an
economic success story, the project also has
accounted for important global environmental
benefits by reducing greenhouse gas
(methane) emissions.
Previous U.S. EPA studies have shown that
the cost of generating electricity using
CMM is likely to be significantly below
industrial retail electricity rates (for
example, U.S. EPA 1993). These previous
reports, which focused on the potential for
coal mines to generate electricity to meet
their own on-site needs, indicated that coal
mines could profit substantially by
developing these projects. Installing
capacity to meet the baseload capacity
needs of the mine would yield the highest
returns for the coal mine. Installing
capacity to meet baseload needs is
especially profitable because the full
capacity of the generator could be used at
all times. Installing capacity to supply
electricity beyond baseload needs might
also be economic. At times when the mine
is not in full operation, however, coal mines
would need to sell electricity generated in excess of on-site needs to a local utility or another
electricity purchaser. In some cases, the buyback rates offered by local electric utilities might
not be high enough to warrant the installation of additional capacity. Accordingly, selling
electricity to a nearby facility, such as a greenhouse, would be more economic because the coal
mine could sell electricity at a price higher than the utility buy-back price (though still lower than
typical retail industrial prices).
In cases in which the coal mine already uses methane to meet its own on-site electricity needs,
the power project developer would need to determine whether the electricity needs of the
greenhouse could be serviced by using the existing capacity of the on-site generator, or whether
additional capacity is required. If a coal mine power generation project relied on several
individual generating units, adding additional capacity would likely not be a problem. For
example, the Appin and Tower coal mine power project in Australia relies on several 1 MW
internal combustion engines for power generation. For projects not using this modular
approach, however, adding additional capacity might not be feasible. Depending on whether the
coal mine uses an internal combustion engine or gas turbine, the cost of adding additional
capacity is likely to be in the range of $800 per kW.
Project Benefits
An electricity generator at a coal mine may be able to supply electricity to a greenhouse at a
price that is lower than typical industrial or commercial retail electricity prices. By purchasing
electricity at rates lower than typical industrial or commercial retail electricity prices, the
greenhouse operator will realize substantial savings on their electricity costs. The greenhouse
operator and the manager of the power project would need to decide upon a rate that would lead
to financial benefits for both parties. The $/kWh savings would likely vary from project to project,
depending on a number of factors relating to generating costs of the project and electricity prices
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
24
-------
A Guide to Coal Mine/Greenhouse Projects
in the region. Table 9 presents potential annual savings to the greenhouse operator based on
different greenhouse sizes and different possible $/kWh savings. The financial benefits shown
in Table 9 only reflect savings based on reduced electricity costs. The potential to use waste
heat from the power generation project for greenhouse heating is not factored into the
calculation of the benefits.
Table 9: Potential Annual Savings to Greenhouse Operators
$/kWh Savings
$0.0025
$0.0050
$0.010
$0.015
Greenhouse Electricity Needs
(million kWh/yr)
30
$75,000
$150,000
$300,000
$450,000
200
$500,000
$1,000,000
$2,000,000
$3,000,000
350
$875,000
$1,750,000
$3,500,000
$5,250,000
500
$1,250,000
$2,500,000
$5,000,000
$7,500,000
Depending on several factors, CMM/greenhouse electricity projects should be profitable for all
parties involved. These factors include the total electric generating capacity of the mine, the
electricity demand pattern of the greenhouse (daily and seasonal), the electricity demand pattern
of the mine, the price the coal mine pays for electricity, the price the greenhouse would pay for
electricity, and the price the local utility charges for electricity. Appendix A provides a specific
example of conditions under which a CMM/greenhouse project would be profitable for both the
greenhouse operator and the coal mine operator.
Project Advantages and Risks
The primary reason that greenhouse operators should consider purchasing CMM-derived
electricity is that a project developer may be able to offer an electricity purchase arrangement
with terms that are more favorable than purchasing electricity from a local electric utility.
Currently, the major drawback of such a potential project is the limited commercial experience in
the U.S.-only two CMM power generation projects are underway. However, CMM-derived
power has been demonstrated elsewhere, including in Australia, Germany, the United Kingdom,
Poland and China, and is under serious investigation at several mines in the U.S. Further, in
some cases the greenhouse operator can be the driver of the implementation of a CMM-fueled
power project. If a greenhouse operator were interested in locating near a coal mine in order to
purchase gas and electricity from the mine, a coal mine operator might be encouraged to
investigate the possibility of developing a power project.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
25
-------
A Guide to Coal Mine/Greenhouse Projects
Project risks are similar to the risks for greenhouse heating projects. Specifically, these risks
include:
• Technology Risks. Several projects are underway in the U.S. and other countries that use
CMM to generate electricity. These projects rely on internal combustion engines to generate
electricity. Using medium-Btu gas in internal combustion engines (and also in turbines) is a
proven technology. While the technology underlying the project is proven, a power
generation project will face the same technology risks as a CMM/greenhouse heating project
in terms of the risks associated with equipment down-times for gas gathering, gas collection,
and gas dehydration equipment. Additionally, there is also the risk of unplanned down-times
for the power generation equipment. A greenhouse operator can mitigate these project risks
by having access to back-up. power from the local electric utility in the event of an
emergency. Sometimes, however, electric utilities may charge higher than normal industrial
or commercial rates for purchasing back-up power.
• Coal Mine Operator and Gas and/or Power Project Developer Risks. These risks are similar
to the risks associated with CMM/greenhouse heating projects.
In summary, the risks of a CMM power generation project are similar to those for a
CMM/greenhouse heating project. Most of the risks may be mitigated by ensuring that
greenhouses have access to back-up power. Overall, purchasing CMM-derived electricity will
likely be very economic for a large greenhouse facility.
: ^ Economic Assessment of Using Coal Mine Water for
Greenhouse Irrigation Needs
This section presents a qualitative discussion of the economic costs and benefits of a
CMW/greenhouse project. This project option is not quantitatively discussed due to the site
variations related to water quality, water quantity, water discharge permit conditions, local water
prices, and potential for drilling a well. The discussion of a CMW/greenhouse project presented
below assumes that the greenhouse owner or operator would consider using CMW only if the
water discharged from the coal mine were suitable for greenhouse use without significant
additional treatment. There may be instances in which CMW would need to undergo significant
further treatment to meet the water quality demands of the greenhouse, but the decision as to
whether to further treat the CMW would ultimately depend on the cost of the additional treatment
relative to the cost of local water. Note that other agreements between the coal mine operator
and the greenhouse operator can be reached, and that this report only discusses one such
agreement.
Project Costs
This analysis assumes that coal mine operators would not charge a greenhouse operator to use
CMW as the coal mine operator will ultimately save on disposal and transportation costs. A
greenhouse operator would pay for the costs of transporting the CMW to the greenhouse and for
Making Coal Mine Methane Work For You: 26
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
any additional treatment and costs above the standard treatment costs that a coal mine would
incur. Accordingly, a CMW/greenhouse project would involve two major project costs.
• Water Treatment. The quality of CMW available from site to site may vary significantly. In
some cases, CMW would require additional treatment before it could be used in a
greenhouse. The cost of treating CMW may range from $0.01/barrel for settling ponds to
$3.00/barrel for more advanced processes such as reverse osmosis (Lee-Ryan et al. 1991).
This report assumes that if significant additional water treatment were required (i.e.
treatment beyond what is normally required by law), such a project might not be economic
for a greenhouse operator. Depending on the treatment required, the cost of either
purchasing water from local sources or of drilling a well to supply water may be less than
treating mine water.
• Water Transport. Greenhouse operators would be responsible for the infrastructure needed
to carry water to the greenhouse. The capital cost of this infrastructure is highly site specific,
depending on the volume of water needed, the distance between the coal mine and
greenhouse, and the topography at the site.
• Distance. More piping is needed as the distance between a CMW treatment site and
a greenhouse increases. Additionally, the distance between the coal mine and the
greenhouse will determine the number and size of pumps required to transport the
water from the coal mine to the greenhouse.
• Topography. Costs associated with carrying water from the coal mine treatment site
to the greenhouse will depend in part on the topography of the site. For example,
fitting pipes and installing pumps to push water up hill or to avoid obstacles (e.g.,
roads or streams) will increase the capital costs of the water supply system.
Project Benefits
A greenhouse operator may be able to save money by using CMW, rather than purchasing
water from local sources or drilling a well to supply water. Municipal water prices vary
significantly depending on the state, county, and the volume of water that a facility requires.
Depending on the quantity of water consumed, water prices could vary from $0.30 to $2.75 per
thousand gallons of water, based on reported costs for major coal producing counties in
Alabama, Illinois, Pennsylvania, West Virginia, and Virginia. Municipalities also typically charge
a fee for a commercial facility to connect to a water line. This one-time connection cost is
extremely variable (e.g., $45 to $475). In areas where municipal water prices are low,
greenhouses may choose to purchase water from the local government instead of paying to
install a CMW supply system.
Advantages and Risks
Greenhouse operators may find that using CMW for their irrigation or other water needs is
economic if all of the following statements are found to be true:
Making Coal Mine Methane Work For You: 27
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
• The composition of the CMW is suitable for the greenhouse's water needs without requiring
significant additional treatment;
• The coal mine supplies enough water to meet all of the greenhouse irrigation demands; and
• The cost of a CMW treatment and supply system is less than the cost of other local water
sources.
Due to significant fixed costs associated with a CMW/greenhouse project, the potential cost
savings achievable through the use of CMW will be highest for greenhouse operations requiring
large volumes of water.
An additional consideration regarding the use of CMW is that municipalities in some rural areas
may have limited conventional water capacity flowing into the area and much of the available
capacity may be dedicated to the existing coal mining operations. Therefore, if a greenhouse
were to locate near a coal mine in order to take advantage of CMM for heating, water supply
possibly might become a limiting factor unless the greenhouse were able to use CMW.
Perhaps the most significant risk associated with supplying CMW to a greenhouse is that such a
project has not yet been demonstrated on a commercial basis. A greenhouse operator would
likely need to invest significant resources to determine whether a CMW supply project would be
feasible at a specific mine site. In particular, the greenhouse operator would need to evaluate
the quality of the CMW to determine whether the water was suitable for irrigation or other
greenhouse water needs and evaluate the best technical option for transporting the water.
Finally, while there are a number of proven technologies available for treating CMW so that the
water can be land applied or injected into streams, the costs of using these technologies might
be prohibitive.
Making Coal Mine Methane Work For You: 28
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
\ \ \
Section 3: Information on Candidate Coal Mines
The U.S. EPA has identified a minimum of 21 gassy underground coal mines that may be
suitable for the development of a CMM/greenhouse project. All 21 coal mines already use
degasification systems to recover methane from mine workings, thus the cost of installing a
recovery system would not be part of the project costs. Some of the coal mines are venting all
of the recovered methane to the atmosphere because they have not yet identified economic
uses for the gas. The candidate coal mines are located in five different states - Alabama,
Colorado, Pennsylvania, Virginia, and West Virginia. Tables 10 and 11 provide further summary
statistics about each of the 21 mines, including volume of recovered methane, location, and
contact information.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
29
-------
A Guide to Coal Mine/Greenhouse Projects
Table 10: U.S. Underground Mines with Degasification Systems
Mine
Enlow Fork
Emerald No. 1
Bailey
Robinson Run No. 95
Dilworth
Oak Grove
Deserado
Shoal Creek
Pinnacle No. 50
Blacksville No. 2
Cumberland
Federal No. 2
Humphrey No. 7
Loveridge No. 22
Blue Creek No. 3
Blue Creek No. 4
Blue Creek No. 5
Blue Creek No. 7
Buchanan No. 11
VP No. 31
VP No. 8*'
Company
CONSOL
Cyprus Amax
CONSOL
CONSOL
CONSOL
U.S. Steel
Western Fuels
Drummond Coal
U.S. Steel
CONSOL
Cyprus Amax
Eastern Assoc.
CONSOL
CONSOL
JWR
JWR
JWR
JWR
CONSOL
CONSOL
CONSOL
Location (County,
State)
Greene County,
Pennsylvania
Greene County,
Pennsylvania
Greene County,
Pennsylvania
Harrison County,
West Virginia
Greene County,
Pennsylvania
Jefferson County,
Alabama
Rio Blanco County,
Colorado
Jefferson County,
Alabama
Wyoming County,
West Virginia
Monongalia County,
West Virginia
Greene County,
Pennsylvania
Monongalia County,
West Virginia
Monongalia County,
West Virginia
Marion County, West
Virginia
Jefferson County,
Alabama
Tuscaloosa County,
Alabama
Tuscaloosa County,
Alabama
Tuscaloosa County,
Alabama
Buchanan County,
Virginia
Buchanan County,
Virginia
Buchanan County,
Virginia
1996 Estimated
Emissions from
Degasification
System (mmcf/day)
5.7
3.9
3.3
1.8
1.7
9.3
0.3
3.3
10.7
4.0
1.6
5.7
3.1
2.9
11.0
9.8
4.6
14.1
NA
NA
NA
1996 Estimated
Methane Used
(mmcf/day)
0
0
0
0
0
7.3
0
9.7
1.39
NA
0
0.5
NA
NA
40 mmcf/day total
for all 4 mines.
73 mmcf/day total
for all 3 mines.
Source: U.S. EPA, Identifying Opportunities for Methane Recovery at U.S. Coal Mines: Draft Profiles of Selected Gassy
Underground Mines, September 1997.
NA means not available.
1 Although estimated emissions from degasification systems in 1 996 are not available, estimates are that these 3 mines
used approximately 73 mmcf/day of recovered methane in 1996.
* This mine is currently closed.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
30
-------
A Guide to Coal Mine/Greenhouse Projects
Table 11: U.S. Underground Mines with Degasification Systems Contact List
Mine
Enlow Fork
Emerald No. 1
Bailey
Robinson Run No. 95
Dilworth
Oak Grove
Deserado
Shoal Creek
Pinnacle No. 50
Blacksville No. 2
Cumberland
Federal No. 2
Humphrey No. 7
Loveridge No. 22
Blue Creek No. 3
Blue Creek No. 4
Blue Creek No. 5
Blue Creek No. 7
Buchanan No. 1
VP No. 3
VP No. 8*
Contact Name/ Title
Paul Kvederis,
Manager, Public Relations
D.P. Brown
Vice President
D.M. Voders,
Superintendent
Thomas Simpson
General Superintendent
L. Barietta
General Superintendent
Paul Hafera
General Superintendent
Mike Weingand
Mine Manager
Don Hendrickson,
Longwall Superintendent
J.R. Vilseck, Jr.
Division Manager
W.G. Devine
Mine Superintendent
C.E. Zabrosky
Mine Superintendent
N.D. Gallagher
Mine Manager
John Higgins
General Superintendent
John Straface
Mine Superintendent
G. Richmond
Mine Manager
J. E. Cooley
Mine Manager
J. Beasley
Mine Manager
Rich Donnelly
Mine Manager
Douglas LaForce
Mine Foreman
Paul Kvederis
Manager Public Relations
Paul Kvederis
Manager Public Relations
Mailing Address
322 Enon Church Road,
WestFinley, PA 15377
P.O. Box 371,
Waynesburg, PA 15370
P.O. Box 138,
Greysville, PA 15337
P.O. Box 326,
Shinnston, WV 26582
450 Racetrack Road,
Washington, PA 15301
8800 Oak Grove Mine
Road, Adger, AL 35006
P.O. Box1067,
Rangely, CO 81645
8488 Nancy Ann Bend
Road, Adger, AL 35006
P.O. Box 338,
Pineville, VW 24874
P.O. Box 24,
Wana, WV 26590
P.O. Box 711,
Waynesburg, PA 15370
Route 1, Box 144, Fairview,
WV 26570
P.O. Box 100
Osage, WV 26543
P.O. Box 40
Fairview, WV 26570
5290 Mud Creek Road,
Adger, AL 35006
14730 Lock 17 Road,
Brookwood, AL 35444
12792 Lock 17 Road,
Brookwood, AL 35444
18069 Hannah Creek
Road, Brookwood, AL
35444
P.O. Box 230, Route 632,
Mavisdale, VA 24627
322 Enon Church Road,
WestFinley, PA 15377
322 Enon Church Road,
WestFinley, PA 15377
Phone/ Fax
Numbers
41 2-663-7501 /
412-663-7502
412-627-7500
412-428-1100
304-795-4421
412-966-5065
205-497-0180
970-675-8431 /
970-675-5229
205-491-6200
304-732-5200
304-662-6121
412-223-5400
304-449-1911
304-879-5912
304-662-6107
205-554-6350
205-554-6450
205-554-6550
205-481-6706
703-498-4564
41 2-663-7501 /
412-663-7502
412-663-75017
412-663-7502
Source: U.S. EPA, Identifying Opportunities for Methane Recovery at U.S. Coal Mines: Draft Profiles of Selected
Gassy Underground Mines, September 1997.
* This mine is currently closed.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
31
-------
A Guide to Coal Mine/Greenhouse Projects
Conclusions
This report has shown that a greenhouse company could realize substantial financial benefits by
locating a new greenhouse facility near a coal mine. Specifically, several coal mining by-
products that would otherwise not be used, including coal mine methane (CMM) and coal mine
water (CMW), could be used as low-cost resources in a greenhouse operation. Both
greenhouse operators and coal mine operators could realize financial benefits from the
development of coal mine/greenhouse projects.
This report identified several different possible coal mine/greenhouse project opportunities,
including:
• using coal mine methane for greenhouse heating;
• using coal mine methane to meet greenhouse electricity needs; and
• using coal mine water to meet greenhouse water needs.
Using CMM for greenhouse heating can yield substantial savings for greenhouse operators.
Additionally, the potential to reduce energy and water costs and to increase crop yields by using
CMM-derived electricity and/or CMW may make coal mine/greenhouse projects even more
economic for greenhouse operators.
While coal mine/greenhouse projects should lead to large financial benefits for greenhouse
operators and coal mine operators, these projects also lead to economic benefits for local
communities in mining regions. The addition of a new commercial facility in the area creates
more jobs and increases tax revenues. Coal mine/greenhouse projects also achieve global and
local environmental benefits. The use of methane for heating or for electricity generation
reduces methane emissions to the atmosphere. Since methane is a potent greenhouse gas (21
times more potent than carbon dioxide over a 100-year time period), even small reductions in
methane emissions lead to very large global environmental benefits.
Next Steps: Looking into Project Opportunities
Greenhouse operators interested in particular coal mines may either contact the mine operator
directly or the U.S. EPA's Coalbed Methane Outreach Program (CMOP) for assistance. CMOP
supports efforts around the globe to recover and use CMM. In addition to supporting technical
assessments, CMOP disseminates information and provides advisory services. For example,
CMOP maintains an extensive database of contacts at major coal mines in the United States
and can broker local community and industry assistance as requested. To find out more about
CMOP and the opportunity to use coal mine resources, please contact:
Making Coal Mine Methane Work For You: 32
A Guide to Coal Mine/Greenhouse Projects
-------
A Guide to Coal Mine/Greenhouse Projects
Coalbed Methane Program Manager
U.S. Environmental Protection Agency
Atmospheric Pollution Prevention Division
401 M Street, SW (6202-J)
Washington, DC 20460
Document Orders:
Facsimile:
Internet:
Homepage:
1-888-STAR-YES
202-565-2077
fernandez.roger@epa.gov
schultz.karl@epa.gov
http://www.epa.gov/coalbed
Greenhouse operators seeking additional background information on the candidate coal mines
can refer to "Identifying Opportunities for Methane Recovery at U.S. Coal Mines: Draft Profiles of
Selected Gassy Underground Coal Mines," September 1997, EPA 430-R-97-020. (This
publication can be ordered by calling the document orders hotline at 1-888-STAR-YES.) For the
most recent listing of mines with degasification systems, please contact the relevant district Mine
Safety and Health Administration (MSHA) office in the area where the greenhouse will be
located. A listing of district MSHA offices can be found at http://www.msha.gov.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
33
-------
-------
Appendix A: Case Studies
This appendix provides further information on the financial analysis referred to in Section
2 of the report. Specifically, this appendix uses several case studies to illustrate the
conditions under which coal mine methane (CMM)/greenhouse projects will be
economically viable. These case studies are based on hypothetical coal mines and
greenhouses. The potential energy production and project costs assumed for the
hypothetical coal mines described in the case studies, however, are based on real
energy data and costs at the candidate coal mines identified in this report. Furthermore,
the information presented on energy needs for the hypothetical greenhouses are typical
of large greenhouses in the U.S. The case studies in this appendix demonstrate that the
economics of a CMM/greenhouse project are highly dependent upon site-specific
conditions at the coal mine and on the energy needs, location and other aspects of the
greenhouse. While the project economics are highly site-specific, this appendix shows
that there are a range of conditions under which a CMM/greenhouse project will be
profitable both to greenhouse operators and to coal mine operators.
This appendix presents information on the cost to coal mine operators of supplying gas
and/or electricity to greenhouses. The coal mine operator/gas developer project cost
information presented in this appendix is useful for greenhouse operators because it will
help them understand the circumstances under which these projects are viable. The
appendix shows that if the cost of supplying gas and/or electricity to a greenhouse is
less than typical end-user prices for energy, then there is potential for a coal mine
operator or gas project developer and a greenhouse operator to negotiate a sales price
that is beneficial to both parties. The analysis assumes that the greenhouse operator
will only be interested in purchasing energy from a coal mine if the energy price is less
than what the greenhouse typically would have to pay for purchasing energy from a gas
company or electric utility. The analysis also assumes that the coal mine operator will
only be interested in selling energy to a greenhouse if the economics of such a project
are more profitable than the next best alternative for using or selling the gas.
Case Study A
The first case study involves a hypothetical mine located in southwestern Pennsylvania.
The mine produces two million tons of coal per year and liberates 1.2 billion cubic feet of
methane a year (600 cubic feet per ton of coal mined). The coal mine already uses a
methane drainage system (vertical gob wells). The mine drills approximately ten gob
wells every year and total methane recovery from all wells is approximately 300 million
cubic feet of methane annually. The heating value of the gas is roughly 850 Btu/cf, as
the recovered methane is mixed with mine air. Exhibit A-1 provides more information
about the coal mine.
Making Coal Mine Methane Work For You: A-1
A Guide to Coal Mine/Greenhouse Projects
-------
Appendix A: Case Studies
Exhibit A-1: Characteristics of Coal Mine A
Location
Annual Coal Production
Specific Emissions
Annual Methane Recovered
Type of Degasification System
Number of Wells Drilled Per
Year
Gas Production Per Well
Gas Quality
Mine Lifetime
Southwestern Pennsylvania
2 million tons
600 cubic feet of methane per ton of coal mined
Methane Recovered from Degasification Systems: 300
million cf of methane/year (roughly 300 billion Btu/yr) (25% of
total methane liberated)
Gob Wells Only
10
30 million cubic feet of methane
On average, recovered gas is 85 percent methane, 15
percent air
Expected Lifetime: 20 years
A greenhouse company is evaluating the possibility of constructing a new, very large
greenhouse near the mine to take advantage of the CMM for heating. The company
estimates that their new greenhouse would require heating seven months a year (from
October through April). Since the immediate vicinity around the mine is hilly and would
only be suitable for a very small greenhouse project, the greenhouse company
evaluating this opportunity considers two other sites for the location of the facility.
The first site consists of flat farm land that could accommodate a greenhouse of about
0.5 million square feet. The farm land is located four miles from the coal mine. This
greenhouse would have heating needs of 15 billion Btu per month (roughly 15 million
cubic feet of methane) for seven months a year (105 billion Btu per year). Another,
much larger piece of flat land is located eight miles from the mine. This property could
accommodate a greenhouse with a size of 1.5 million square feet. The second property
would have monthly heating requirements of 25 billion Btu per month for seven months a
year (175 billion Btu per year). Both sites are located in close proximity to a major
highway. Aside from the distance to the coal mine and the maximum potential size of
the greenhouse, the two sites have similar conditions (e.g., availability and cost of labor,
taxes, access to markets, weather conditions). The economic development authority in
the county has offered to assist the greenhouse operator regardless of the site selected.
Exhibit A-2 provides summary information regarding the two potential sites.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-2
-------
Appendix A: Case Studies
Exhibit A-2: Comparison of Characteristics for Two Potential Greenhouse Sites
Distance from mine
Size (million square feet)
Monthly Fuel Use (Billion Btu)
Months of Heating Required
Annual Fuel Use (Billion Btu)
Location 1
4 miles
0.5
15
7
105
Location 2
8 miles
1.5
25
7
175
Meanwhile, the coal mine operator is working with a gas project developer to find a
profitable use for the methane that is currently being emitted from gob wells at the mine.
The gas project developer is evaluating two project opportunities: 1) selling methane to a
greenhouse operator, and 2) selling methane to a pipeline company that owns several
transport pipelines in the area. The coal mine does not have any major on-site uses for
the gas and a power generation project does not appear to be economically feasible due
to the low electricity prices in the area.
The gas project developer plans to handle all aspects of the methane use project,
including purchasing and installing all the equipment and managing and maintaining the
system. The project developer would pay the coal mine operator a 13 percent royalty on
all proceeds from the gas sales. If the greenhouse operator purchases gas from the
coal mine, he/she would not be responsible for any of the project costs or maintenance
associated with the project. The greenhouse operator would only be responsible for
retrofitting a standard gas-fired boiler so that the boiler would operate on coal mine
methane (estimated cost of approximately $500).
The major costs to the gas project developer of selling gas to a greenhouse include the
costs of compressors, of gathering and main pipelines and of a gas dehydrator. No gas
enrichment (removal of air from gas to increase the quality of the gas) or blending of the
coal mine methane with a higher quality gas to increase overall gas quality is necessary.
Based on these supply costs and the royalty payments to the coal mine operator, the
gas project developer calculates the ($/mmBtu) cost of supplying gas to a greenhouse
that would purchase gas seven months per year. These costs vary substantially based
on the amount of gas purchased by the greenhouse and the proximity of the facility to
the coal mine. Exhibit A-3 shows the costs of supplying gas to a greenhouse facility
(assuming different distances between the greenhouse and the coal mine) for this
particular mine. (The costs for other mines could vary significantly.)
As shown in Exhibit A-3 the cost of supplying gas declines substantially depending on
the amount of fuel that the greenhouse would purchase. The $/mmBtu cost declines
because there are significant fixed costs that the gas project developer will incur
regardless of the amount of gas the facility purchases. Additionally, Exhibit A-3 shows
that the proximity of the facility to the coal mine also has a large impact on the cost. The
cost of installing a pipeline (including materials, labor, and right of way) can be very high.
For this sample hypothetical mine, estimated costs are $15 per foot.
While Exhibit A-3 shows the costs of supplying gas to a greenhouse, the gas project
developer will need to sell the gas at a higher price in order to make a profit on the
project. Accordingly, the supply costs shown in Exhibit A-3 do not reflect the price at
Making Coal Mine Methane Work For You: A-3
A Guide to Coal Mine/ Greenhouse Projects
-------
Appendix A: Case Studies
which the gas project developer and/or coal mine operator would be willing to sell gas to
the greenhouse. The gas sales price would need to be high enough to ensure that the
gas project developer attains a certain rate of return on the project. Additionally, the
project must be more profitable than other possible uses for the gas.
Exhibit A-3: Cost of Supplying Gas to Greenhouses for Coal Mine A
$6.00
S5.00
$4.00
$3.00
$2.00
$1.00
CneMle
~ Four Mies
5.000 10.000 15,000 20,030
Monthly Fuel Demand (rrmBtu)
25,000
30,000
The gas project developer believes, however, that selling gas to a pipeline may be more
profitable, because gas transport pipelines are already located on the mine property, and
because the gas pipeline company would be able to purchase the maximum amount of
gas available twelve months a year (as opposed to seven months a year for the
greenhouse project). However, pipeline companies require that the gas content be over
97 percent methane. Because the gob gas is mixed with coal mine air, the gas project
developer would either need to enrich the gob gas or blend the gas with pure methane.
To determine whether selling gas to a pipeline or selling gas to a greenhouse is the
more feasible option, the gas project developer performs an analysis. Exhibit A-4
outlines the major project costs for both the greenhouse project and the pipeline project.
If the pipeline project did not require gas enrichment, the break-even cost would only be
$0.75/mmBtu. However, the project would require gas enrichment if the gob gas were to
be injected directly into the pipeline. Gas enrichment costs would increase the cost of
the project by at least $1.50/mmBtu, for a total cost of at least $2.25/mmBtu. This is
significantly higher than the wellhead gas price that is offered by the pipeline company.
Thus, the gas project developer determines that gas enrichment is not feasible.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-4
-------
Appendix A: Case Studies
Exhibit A-4: Comparison of Costs for Pipeline and Greenhouse Projects
(Comparison of Costs to Coal Mine or Gas Project Developer of Supplying Gas)
Energy Demand Per Month (Billion
Btu)
Months of Gas Sales Per Year
Number of Wells Used to Produce
Gas for Project
Capital Costs
Wellhead Compressors ($5,000
each)
Satellite Compressor
Sales Compressor
Main Gathering Line
Dehydrator
Safety and Other Equipment
Contingency (at 15%)
Total Capital Costs
Annual Costs
Installation & Moving of Wellhead
Gathering Lines
Other Operations & Maintenance
Salaries
Total Annual Cost
Project Cost Not Including
Enrichment (S/mmBtu)1
Project Cost Including Gas
Enrichment ($/mmBtu)
Pipeline
Sales
25
12
10
$50,000
$100,000
$100,000
$39,600
$40,000
$60,000
$58,440
$448,040
$50,000
$20,000
$50,000
$120,000
$0.75
>$2.25
Greenhouse
Sitel
15
7
6
$30,000
$60,000
NA
$316,800
$40,000
$60,000
$76,020
$582,820
$30,000
$12,000
$30,000
$72,000
$1.79
$1.79
Greenhouse
Site 2
25
7
10
$50,000
$100,000
NA
$633,600
$40,000
$60,000
$132,540
$1,016,140
$50,000
$20,000
$50,000
$120,000
$1.84
$1.84
Notes
Greenhouse at Site 1
does not require full
amount of gas recovered
by mine.
Compressor costs
dependent upon gas flow
rate.
Needed for pipeline
project to boost gas to
high pressure.
$15/foot; Greenhouse
Site 1 is four miles.
Greenhouse Site 2 is 8
miles. Pipeline is 0.5
miles.
Dehydration is the only
processing required for
greenhouse project.
Number of Wells x 500
feet per well x $1 0 per
foot.
Estimated minimum gas
enrichment costs are
$1.50/mmBtu.
Enrichment not required
for greenhouse projects.
'Project costs assume 40% tax rate, 15% nominal discount rate.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-5
-------
Appendix A: Case Studies
Case Study B
The next case study involves a hypothetical coal mine located in West Virginia. The coal
mine produces one million tons of coal per year and liberates a total of 1.2 billion cubic
feet of methane per year (1,200 cubic feet per ton of coal mined). Of the total amount
liberated, gob wells account for 300 million cubic feet (or 25%). Accordingly, Coal Mine
B recovers the same amount of methane from its gob wells as does Coal Mine A
(described in Case Study A). However, as described in further detail later in this section,
Coal Mine B has significantly lower project costs than does Coal Mine A. Because of
gassier seams and different mining conditions, Coal Mine B is able to use fewer wells to
recover the same amount of methane (Coal Mine B drills five wells per year, compared
to Coal Mine A, which drills ten wells per year). Exhibit A-5 provides details about Coal
Mine B.
Exhibit A-5: Characteristics of Coal Mine B
Location
Annual Coal Production
Specific Emissions
Annual Methane Recovered
Type of Degasification System
Number of Wells Drilled Per
Year
Gas Production Per Gob Well
Gas Quality
Mine Lifetime
West Virginia
1 million tons
1200 cubic feet of methane per ton of coal mined
Methane Recovered from Degasification Systems: 300
million cf of methane/year (roughly 300 billion Btu/year)
Gob Wells Only
5
60 million cubic feet of methane
On average, recovered gas is 80 percent methane, 20
percent air
Expected Lifetime: 20 years
The operator of Coal Mine B has contracted with a gas project developer who is trying to
identify the most profitable way in which to use the gas liberated from gob wells. The
gas project developer is especially interested in selling the gas to a large industrial or
commercial facility with high demand for natural gas. The average energy value of the
gas liberated from the gob wells is about 800 Btu per standard cubic foot (because the
gas contains some mine air). Due to the lower energy value of the gas, the gas project
developer does not believe that selling methane to a pipeline would be a feasible option
(because the gas would either need to be enriched, spiked, or blended). Furthermore,
the gas project developer is not interested in developing a power generation project, due
to the low electricity prices in the area.
The gas project developer has been working with the local economic development
council. The economic development council also wants to encourage a new industrial or
commercial facility to locate in the area, and has identified some available land.
Located four miles from the coal mine, the land could accommodate a large facility. The
economic development council has put together a brochure describing the favorable tax
rates, available labor, and good access to northeastern markets that the area offers.
Making Coal Mine Methane Work For You: A-6
A Guide to Coal Mine/ Greenhouse Projects
-------
Appendix A: Case Studies
The economic development council has asked the gas project developer to put together
some estimates on gas supply and prices that could be used to attract a large facility.
The gas project developer realizes that some types of facilities would need gas on a
year-round basis, while other facilities might only need gas for heating during the late
fall, winter, and early spring. Due to the substantial fixed costs associated with
supplying gas to the site, the cost of supplying gas is significantly lower on a $/mmBtu
basis for facilities that would purchase larger volumes of gas. Supply costs are also
lower for a facility that would purchase gas on a year-round basis. Projects that
purchase gas only part of the year result in capacity that is not used for the remaining
months of the year. For example, Exhibit A-6 compares the costs of supplying gas to
two large industrial or commercial facilities that have the same annual energy needs.
One facility requires energy for only seven months a year; the other facility requires less
gas each month than does the first facility, but uses gas on a year-round basis. The
second facility has lower gas supply costs. This is because there are higher capital and
operating costs associated with setting up the gas gathering system for the first project
(more wellhead compressors, larger satellite compressors). In conjunction with the
higher costs, the system is not used for five months a year (and, thus, no revenues are
gained from sale of the gas). However, even for facilities that would purchase gas for
only seven months per year, the supply cost is significantly lower than the typical
industrial or commercial end-user price of purchasing gas (see Exhibit A-7).
Exhibit A-6: Cost of Supplying Gas for Mine B
10,000 15,000 20.000 J5.000 30.0C
Monthly Fuel Necdi (MMBTU)
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-7
-------
Appendix A: Case Studies
Exhibit A-7: Comparison of Project Costs for Facilities with Different Seasonal
Fuel Needs
Monthly Fuel Purchases
Number of Months Per Year Fuel
is Purchased
Annual Fuel Purchases
Cost of Supplying Gas
Facility 1
12 Billion Btu
7 months
84 Billion Btu
$1.61/mmBtu
Facility 2
7 Billion Btu
12 months
84 Billion Btu
$1.37/mmBtu
The gas project developer and economic development authority identify a greenhouse
operator that is planning on constructing a new, large greenhouse. The greenhouse
would be approximately 0.3 million square feet and would have monthly heating
requirements of approximately 10 billion Btu. The greenhouse would require heating
seven months per year. For Coal Mine B, the cost of supplying gas to this greenhouse
would be $1.80/mmBtu. However, the gas project developer would need to charge a
higher price in order to make a profit on the project and to achieve a target rate of return.
The gas project developer and greenhouse operator agree upon a gas sales price of
$3.00/mmBtu, which is $1.00 less than the typical commercial and industrial end-user
gas prices in the area. At this price, the greenhouse will achieve annual savings of
$70,000. The net present value of these savings over a twenty-year time period is
$586,000. At this price, the estimated net present value of the project to the gas project
developer is $0.4 million (with an internal rate of return of 25 percent and a payback
period of 5 years). Finally, the coal mine operator receives royalty payments from the
gas sales equaling $26,250 per year. The net present value of these proceeds is
$306,000.
Coal Mine B can supply gas to a greenhouse with monthly heating needs of 10 billion
Btu located four miles away at a cost of $1.81/mmBtu. In comparison, Coal Mine A's
cost of supplying gas to a greenhouse with the same heating requirements, located the
same distance from the coal mine is $2.20/mmBtu. As mentioned previously, Coal Mine
B is able to produce larger volumes of gas from individual wells than Coal Mine A.
Accordingly, Coal Mine B has lower per well costs (examples of per well costs include
costs of wellhead compressors and cost of gathering lines from individual wells). Exhibit
A-8 compares the costs of supplying gas to greenhouses for the two different mines.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-8
-------
Appendix A: Case Studies
Exhibit A-8: Comparison of Cost of Supplying Gas to Greenhouses
Greenhouse Energy Needs
(million Btu/month)
25,000
20,000
15,000
10,000
5,000
Coal Mine A
$ 1.46
$1.58
$1.79
$2.20
$3.45
Coal Mine B
$1.07
$1.19
$1.40
$1.81
$3.05
Notes: Assumes greenhouse requires heating seven months per year. For both
mines, greenhouses are located four miles from the mine site.
Case Study C
Case Study C involves a hypothetical coal mine located in Alabama. The coal mine
produces one million tons of coal every year and liberates 2,000 cubic feet of methane
for each ton of coal mined (or 2 billion cubic feet of methane per year). The coal mine is
already selling all of the methane recovered from vertical wells and horizontal boreholes
to a nearby pipeline company. Additionally, the mine is selling a very small amount of
gob gas to a pipeline company (the mine blends some of the higher quality gob gas with
the high heating value gas recovered from the vertical and horizontal wells). However,
the mine has not been able to find economic uses for the remaining large volumes of
methane liberated from the gob wells. Exhibit A-9 describes the characteristics of Coal
Mine C.
Exhibit A-9: Characteristics of Coal Mine C
Location
Annual Coal Production
Specific Emissions
Type of Degasification System
Annual Methane Recovered
Gas production per gob well
Mine Lifetime
Alabama
2 million tons
2,000 cubic feet of methane per ton of coal mined
Vertical pre-mine, horizontal borehole, vertical gob
Mine sells methane recovered in advance of mining from
vertical wells and horizontal boreholes to a pipeline company
83 million cubic feet per year
Expected Lifetime: 20 years
A greenhouse company has expressed interest in locating a new facility near the mine in
order to purchase gob gas for heating. The greenhouse company is planning on
constructing a moderate-sized greenhouse and is eager to find out whether such a
project would be economic. The size of the planned facility is 0.1 million square feet.
The greenhouse would have monthly heating requirements of 5 billion Btu per month
and would require heating only five months a year. The coal mine operator is willing to
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
A-9
-------
Appendix A: Case Studies
lease land to the greenhouse. The land is located less than one mile from several of the
mine's current active gob wells.
The gas project developer who handles the sale of the gas to the pipeline is interested in
the greenhouse project. The greenhouse project would involve setting up a separate set
of gathering lines to handle the lower Btu gob gas. However, the project developer
could use the existing wellhead compressors located at the gob wells for the greenhouse
project, which would help to lower project costs. Additionally, the gas project developer
does not believe that they will need to hire additional staff to handle the greenhouse
project. Finally, because of extensive experience at this site, the gas project developer
believes that planning costs for the greenhouse supply project should be minimal.
The gas project developer estimates the cost of supplying gas to greenhouses. In
estimating the $/mmBtu cost, the project developer takes into account the capital and
operating costs, and the royalty payment of 13 percent owed to the coal mine operator.
Exhibit A-10 shows the cost of supplying gas to greenhouses with varying energy needs
and locations. As shown in Exhibit A-10, the project developer's cost of supplying gas to
a greenhouse that has energy needs of 5 billion Btu per month, located half a mile from
the coal mine, is $1.64/mmBtu. The gas project developer will need to charge a higher
rate, however, in order to make a profit on the project.
Exhibit A-10: Cost of Supplying Gas to a Greenhouse for Mine C
S6.00
I
•0.5 Miles
-8 Miles
5,000
10.000 15,000 20.000
Monthly Fuel Needs (million Btu)
The gas project developer and greenhouse operator agree on a price of $2.75/mmBtu.
This price is about $1 less than the typical end-user rates for a large commercial facility
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/ Greenhouse Projects
A-10
-------
Appendix A: Case Studies
in the area. By participating in this project, the greenhouse operator will realize annual
savings of $25,000. The net present value of these savings is $200,000 for a 20-year
project. For the gas project developer, the project has a net present value of $141,000
and an internal rate of return of 27%. Finally, for the coal mine operator, the annual
royalty payments are $8,600 and the net present value of the payments is $100,000.
Exhibit A-10 shows that even though the greenhouse is significantly smaller than the
greenhouses discussed in Case Study A and Case Study B, the gas project developer
would still be able to supply gas at a price that is lower than typical end-user gas prices.
Coal Mine C has lower project costs compared to Coal Mine A and Coal Mine B. At
Coal Mine C, the greenhouse could be located very close to the mine and some of the
labor and equipment costs would already be covered as part of the existing pipeline
sales project.
Case Study D (Electricity and Heating)
Case Study D involves a hypothetical coal mine in Colorado that already is using
methane recovered from gob wells to generate electricity to meet the power needs of the
mine. The total level of electric capacity that could be generated from methane
recovered from gob wells is 8 MW. However, the mine currently is only using enough
gob gas to generate 6 MW, which is approximately 1 MW higher than the coal mine's
baseload capacity. When the mine is in full operation, the electric capacity demands can
reach up to 14 MW. For its remaining electricity needs, the coal mine purchases
electricity from the local electric utility. Exhibit A-11 summarizes the MW capacity
demands of the mine.
Exhibit A-11: Electric Capacity Demands at Coal Mine D
Level of Electric Capacity
At least 5 MW (Baseload)
Between 5 and 6 MW
Between 6 and 7 MW
Between 7 and 8 MW
Between 8 and 10 MW
Between 10 and 12 MW
Between 12 and 14 MW
Greater than 14 MW
Percentage of Time During Year
That Coal Mine Capacity Needs
Equal MW Level Shown at Left
100%
80%
50%
35%
25%
15%
5%
0%
Coal Mine D is considering possible uses for the remaining amounts of gob gas not used
in the current power generation project. One possibility would be to use the gob gas to
generate additional electricity to meet the additional operating needs of the mine (above
baseload needs). Coal Mine D currently uses several 1 MW internal combustion engine
units to generate the 6 MW of power used to meet the baseload and a portion of the
additional operating capacity of the mine. Coal Mine D is considering purchasing
another 1 MW unit to increase the level of electric capacity generated.
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-11
-------
Appendix A: Case Studies
Currently, the local electric utility charges five cents per kWh for very large industrial
facilities, such as the coal mine. Thus, the coal mine operator is avoiding paying five
cents per kWh to the utility for its baseload project. The mine has estimated that its cost
of generating electricity for the existing power project is less than 3 cents per kWh.
However, the coal mine operator realizes that the marginal cost of generating electricity
to meet the electric requirements of the coal mine will be more than 3 cents per kWh.
The capacity factor of the existing project is very high (nearly 100% for the baseload
portion, except for repair and maintenance, plus 80% for the next one MW of capacity
yields an overall capacity factor of nearly 90 percent). However, if the coal mine
installed an additional 1 MW of capacity to meet a portion of the incremental operating
needs of the mine, the capacity would not be fully utilized. In fact, the mine operator
estimates that the capacity factor (percentage of capacity used during the year) of
another 1 MW generator would only be 50% (see Exhibit A-11). The incremental capital
cost of adding another 1 MW unit is high - $800 per kW installed capacity. Accordingly,
the lower the capacity factor, the more difficult it is to be able to cover the initial capital
cost of the generator. Based on preliminary calculations, the mine operator has
concluded that it would not be economic to install another MW of capacity.
A greenhouse operator has approached the manager of Coal Mine D regarding
purchasing some of the electricity generated at the mine. The greenhouse operator is
trying to decide upon the best location for constructing a new large greenhouse. The
state-of-the art greenhouse will have numerous automated features, many of which
require electricity to operate. Accordingly, the greenhouse operator is interested in
finding a location where they can purchase electricity at low rates. The greenhouse will
have estimated baseload energy needs of 375 kW and total annual electricity needs of
3.3 million kWh per year. The local electric utility charges six cents per kWh for large
commercial facilities (such as the greenhouse).
The coal mine operator is interested in supplying electricity to meet the greenhouse's
electricity needs. Supplying power to meet the greenhouse's baseload and additional
electricity needs will greatly improve the mine's ability to use more of the installed
capacity if they add another 1 MW unit. The addition of the greenhouse project should
increase the capacity factor to 87% for the incremental 1 MW. Furthermore, the
greenhouse operator is willing to pay five cents per kWh for electricity purchased from
the coal mine (a savings of one cent per kWh over the price offered by the local utility).
Exhibit A-12 presents a comparison of the costs and benefits of selling electricity to the
greenhouse compared to using the additional capacity only for on-site electric needs at
the mine.
Making Coal Mine Methane Work For You: A-12
A Guide to Coal Mine/Greenhouse Projects
-------
Appendix A: Case Studies
Exhibit A-12: Comparison of Electricity Projects
(from Coal Mine Operator's Perspective)
Incremental Costs and Benefits of Adding a 1 MW Unit
Incremental Electricity Used at Mine and
Greenhouse (kWh/year)
Electricity Used at Greenhouse (kWh/year)
Value of Electricity Savings at Mine ($/kWh)
Value of Electricity Sold to Greenhouse ($/kWh)
Annual Value of Electricity Savings at Mine
Annual Value of Electricity Sold to Greenhouse
Total Annual Value of Electricity
Incremental Capital Cost for Additional 1 MW Unit
($800 per kW installed capacity)
Incremental Annual Operating Cost
NPV of Project to Coal Mine Operator
IRR of Project to Coal Mine Operator
Coal Mine Only
4.4 million
NA
5 cents
NA
$220,000
NA
$220,000
$800,000
$22,000
$-386,670
-2%
Coal Mine and Greenhouse
Combined Project
7.7 million
3.3 million
5 cents
Scents
$220,000
$165,000
$385,000
$800,000
$25,000
$37,524
16%
The NPV of the project that includes selling electricity to a greenhouse is significantly
higher than using the electricity only for on-site needs ($37,524 compared to $-386,670).
The greenhouse operator will realize annual electricity savings of $165,000. The net
present value of these savings over a ten-year time period is greater than $0.8 million.
Accordingly, the mine and greenhouse decide to proceed with the project.
In addition to purchasing electricity from the mine, the greenhouse is also interested in
purchasing gas for heating during the winter months. Even though the coal mine already
uses gob gas for the power project, the coal mine still has additional gob gas available.
Furthermore, because the coal mine has already invested in a gas gathering system, the
incremental costs of establishing a separate line to transport gas to the greenhouse are
relatively low. The gas heating project will yield additional financial benefits for both
parties.
Summary of Case Studies
The four case studies above show that CMM/greenhouse projects can be beneficial for
greenhouse operators, coal mine operators, and gas project developers. In all four case
studies, the parties were able to establish a gas and/or electricity sales price that led to
economic benefits for all involved.
The case studies show that the energy needs of the greenhouse and distance from the
greenhouse to the coal mine have a large impact on the cost. The case studies show
that the ($/mmBtu) costs of supplying gas to very large greenhouses with high energy
needs will be significantly lower than the cost of supplying gas to smaller greenhouses.
Nevertheless, small greenhouse projects may still be economic. Additionally, the case
Making Coal Mine Methane Work For You:
A Guide to Coal Mine/Greenhouse Projects
A-13
-------
Appendix A: Case Studies
studies show that the distance between the coal mine and the greenhouse is also a
significant factor impacting the gas supply cost. Small greenhouses will need to be
located very close to the mine site. For larger greenhouses, the project may still be
economic even if the greenhouse is located several miles from the coal mine. However,
the supply cost (and, thus, the gas sales price) will increase with distance. The number
of months a year that the greenhouse will purchase energy also impacts price (as
explained in Case Study 2). Even greenhouse projects that would entail gas sales
purchases only five months a year, however, can still be profitable for all parties
involved.
The case studies also show that the cost of supplying gas to a greenhouse will vary
significantly from one coal mine to the next. For example, the cost of supplying gas to a
greenhouse was very different for Coal Mine A compared with Coal Mine B, even though
the distance to a greenhouse was the same for both mines. Examples of factors that
impact the cost of supplying gas include the number of wells needed to meet the gas
supply, needs of the greenhouse, the terrain surrounding the mine (impacts cost of
laying gathering lines), and whether the coal mine already has a gas gathering system in
place.
In conclusion, though the cost of supplying gas to a greenhouse will vary significantly
depending on the characteristics of both the coal mine and the greenhouse,
CMM/greenhouse projects are likely to be profitable ventures under a wide range of
conditions.
Making Coal Mine Methane Work For You: A-14
A Guide to Coal Mine/Greenhouse Projects
-------
Appendix B: County Profile
The following profile of Greene County, PA illustrates the various issues that determine
the feasibility of locating a greenhouse near a coal mine from the perspective of the
greenhouse operator.
Local Project Data
Candidate coal mines. Coal mines situated in the
county include Cumberland and Emerald (owned
by Cyprus/AMAX), and Dilworth, Bailey and Enlow
Fork (owned by CONSOL). Estimated methane
emissions from degasification systems in 1996
were as follows (in million cubic feet per day):
Cumberland, 1.6; Emerald, 3.9; Dilworth, 1.7;
Bailey, 3.3; and Enlow Fork, 5.7. As of 1996, none T°a™_
of these mines were using the drained methane, so
greenhouse operators may want to situate near
these mines so that they can take advantage of the
coal mine resources.
Fuel Cost and Availability. In 1997, Allegheny Power, the local electricity supplier,
charged industrial customers from 3.73 to 4.16 cents per kWh, and commercial
customers from 4.75 to 11.13 cents per kWh. These rates do not include peak demand
charges. Natural gas costs about $6 per thousand cubic feet (mcf) for commercial use
and $4 per mcf for industrial use.
Water Cost and Availability. Greene County has an adequate water supply.
Southwestern Water Authority is the major water supplier for the area. Local water
prices quoted by the water authority in 1997 are $4.11 per thousand gallons and $3.99
per thousand gallons above 5,000 gallons in any given month. In addition, a local
company, Higgins Hauling, can haul water within a ten-mile radius of Waynesburg, PA at
a cost of $50 per 2,000 gallons (Higgins 1995). Another possible source of water may
be the water produced by coal mines.
Land Ownership. The candidate coal mines above are all situated in the Waynesburg,
PA area. The land availability and property costs in the Waynesburg area differ widely.
Land prices close to the interstate highway can be as high as $175,000 per acre.
Moving away from the interstate, prices are much lower and generally range from $700
to $2,500 per acre. (Heritage 1995). Land that is not owned by the coal company is
mostly owned by businesses and industries. Depending on the agreement reached, it
may be possible to lease land from the coal mine.
Climate. The area has a reasonable climate for operating a greenhouse (Brown 1995).
The snow load in the area is between 5.4 and 10.8 pounds/square foot. The maximum
expected wind would not be above 80 mph, and, if situated in a valley, the greenhouse
would be protected from strong winds. There are about 6,000 heating degree days for
the area (Walker 1973A).
Access to Markets. The Emerald Mine is located near the main artery road in
Waynesburg and is within a few miles of Interstate 79. Cumberland is slightly farther
from the Interstate highway and the roads leading to the coal mine are narrow and
Making Coal Mine Methane Work For You: B-l
A Guide to Coal Mine/Greenhouse Projects
-------
Appendix B: County Profile
winding. Bailey and Enlow Fork are located about 10 miles from the Interstate.
Pittsburgh is 40 miles from the county, New York City is approximately 380 miles away,
Philadelphia 325 miles away, and Washington, D.C 222 miles away. These cities are
readily accessible via inter-state highways.
Tax Structure and Zoning Laws. Glass greenhouses are taxed as permanent
structures. Tax is based on greenhouse square footage, the age of the house, and the
type of construction. The tax structure considers plastic greenhouses to be temporary
structures and they are therefore not subject to property taxes.
Other Greenhouses in Greene County, PA. Most produce grown in Pennsylvania
greenhouses is sold in-state, since there are ample markets in Pittsburgh, Philadelphia,
and other large cities. If the greenhouse is close to the state border, products may also
be sold in neighboring states (e.g., Maryland, West Virginia). In the end, though, the
determination of whether produce is sold in-state or out-of-state is market-based.
Usually, out-of-state sales are restricted to the DC and NY corridor because a large and
relatively affluent population is in close proximity. Rarely are commodities shipped to
mid-western markets because many greenhouses are already thriving in those areas
(Dunn 1995).
Existing Greenhouse Industry Profile
Currently, there are at least seven greenhouses in Greene County. As in most of
western Pennsylvania, these are mostly small, family-owned greenhouses. They usually
are part of an operation that includes small outdoor growing facilities and a retail stand
or store in which to sell the produce or plants. In other parts of western Pennsylvania,
there are several larger greenhouses. However, the number of large greenhouses in
Pennsylvania is decreasing as buyers purchase many wholesale greenhouse products
from larger, automated greenhouses in Ohio.
The following points summarize data on the local greenhouse industry:
• Size. Sizes of greenhouses in western Pennsylvania range from one-tenth of an
acre, for a single house, to six acres, which usually includes several houses attached
together with gutters. In Greene County, most greenhouses are small (Walker
1995).
• Materials. Most greenhouses in the area are covered with two layers of plastic.
Construction and heating costs are both lower for plastic.
• Heating Systems. These smaller greenhouses most commonly use unit heaters
fueled by natural gas. Boilers are used less frequently (Survey 1993).
• Cooling Systems. Greenhouses in the area do not use refrigeration for cooling
purposes because costs are high. Usually, the climate conditions do not require this
type of cooling since most greenhouse growing occurs in the non-summer months
(Brown 1995).
• Business Structure. Most small greenhouses in Greene County are family-owned
and operated. They grow mostly bedding and potted plants, flower crops,
Making Coal Mine Methane Work For You: B-2
A Guide to Coal Mine/ Greenhouse Projects
-------
Appendix B: County Profile
vegetables, and seedlings for transplanting in fields, and sell their products at local
retail markets (Willmott 1995). None are currently using coal mine methane as a fuel
source.
Making Coal Mine Methane Work For You: B-3
A Guide to Coal Mine/Greenhouse Projects
-------
-------
Appendix C: References
Aldrich 1994. Aldrich, Robert. A., and Bartok Jr., John W. Greenhouse Engineering. North-
east Regional Agricultural Engineering Service (NRAES-33), Ithaca, NY. August 1994.
Bean 1997. Telephone conversation between Mr. Chris Bean, VanWingerden, NC, and Jeffrey
King, ICF Inc. February 1997.
Boodley 1996. James W. Boodley. The Commercial Greenhouse, 2nd Edition. Delmar Pub-
lishers.
Brown 1995. Telephone conversation between William Brown, Greene County Cooperative
Extension, Waynesburg, PA, and Sabrina Ricci, ICF Inc. June 1995.
Brunner 1997a. Fax received from Daniel Brunner, RE!, Salt Lake City, UT, by ICF Inc. July
18, 1995.
Brunner 1997b. Telephone conversation between Daniel Brunner, REI, Salt Lake City, UT, and
Vikram Bakshi and Anne Fahrig, ICF Inc. July 1997.
Buxton, J.W. et al. 1985. Buxton, J.W.; Walker, J.N.; and Cornelius, P.L. "Crop Response in a
Modified Mine-air Greenhouse Environment". HortScience, 20(2), April 1985.
Buxton, J.W. et al. 1979. Buxton, J.W; Walker, J.N.; Collins, L.; Knavel, D.; and Hartman,
J.R.; "Energy Conservation by Ventilating a Greenhouse with Deep-Mine Air." Scientia Hor-
ticulturae, 11, April 1985.
Dunn 1995. Telephone conversation between James Dunn, Penn State University, University
Park, PA, and Sabrina Ricci, ICF Inc. July 1995.
EPA 1993. "Opportunities to Reduce Anthropogenic Methane Emissions in the United States."
Report to Congress by US EPA, Office of Air and Radiation: Washington, D.C.
EPA 1994. "Identifying Opportunities for Methane Recovery at U.S. Coal Mines: Draft Profiles
of Selected Gassy Underground Coal Mines." United States Environmental Protection Agency,
Washington D.C.
EPA 1995. "Analysis of Potential to Use Coal Mine Methane for Greenhouse Heating: South-
western Pennsylvania as a Case Study." Prepared for US EPA Atmospheric Pollution Preven-
tion Division by ICF Incorporated.
EPA 1997. "Identifying Opportunities for Methane Recovery at U.S. Coal Mines: Draft Profiles
of Selected Gassy Underground Coal Mines." United States Environmental Protection Agency,
Washington D.C. September 1997.
Frece, J. 1997. Telephone conversation between Jeff Frece, Modine Manufacturing Company,
Racine, Wl, and Jeffrey King, ICF Inc. August 1997.
Making Coal Mine Methane Work For You: C-l
A Guide to Coal Mine /Greenhouse Projects
-------
Appendix C: References
Glickert, R. 1991. "Opportunities for the Utilization of Mine Ventilation Air," Prepared for U.S.
EPA's Global Change Division. January 1991.
Higgins 1995. Telephone conversation between sales representative at Higgins Hauling, Way-
nesburg, PA, and Sabrina Ricci, ICF Inc. June 1995.
HGI 1994. Hydro-Gardens, Inc. Supply catalogue for HGI, Colorado Springs, CO.
Langhans 1990. Dr. Robert Langhans. Greenhouse Management. Department of Floriculture
and Ornamental Horticulture, Cornell University. Halcyon Press of Ithaca, NY.
Lee-Ryan et al. 1991. Lee-Ryan, P.B.; Fillo, J.P.; Tallon, J.T; and Evans, J.M. "Evaluation of
Management Options for Coalbed Methane Produced Water." Presented at the 1991 Coalbed
Methane Symposium, the University of Alabama/Tuscaloosa, May 13-16, 1991.
Marsh 1994. Marsh, Lori S., and Singh, Sahdev. Economics of Greenhouse Heating with a
Mine Air-Assisted Heat Pump. American Society of Agricultural Engineers. V. 37, Novem-
ber/December 1994.
Nelson 1993. Paul V. Nelson. Greenhouse Operation and Management. Department of Horti-
cultural Sciences, North Carolina State University. Reston Publishing Company, Prentice Hall
Company, Reston, Virginia.
NGMA 1994a. "Standards: Design Loads in Greenhouse Structures." National Greenhouse
Manufacturer's Association.
NGMA 1994b. "United States Greenhouse Construction: Where Is It Headed?" Insight. Na-
tional Greenhouse Manufacturers Association. September/October 1994.
Powell 1995. Telephone conversation between Russel Powell, Bucks County Cooperative Ex-
tension, Doylestown, PA, and Sabrina Ricci, ICF, July/August 1995.
Shemp 1996. Personal communication with Chris Shemp, developer of Grayson Hill Farms co-
generation project. February 28, 1996.
Shemp 1997. Personal communication with Chris Shemp, developer of Grayson Hill Farms co-
generation project. February 5, 1997.
Stair 1995. Telephone conversation between Dale Stair, Bureau of Plant Industry, PA Depart-
ment of Agriculture, Harrisburg, PA, and Sabrina Ricci, ICF Inc., July 1995.
USDOC 1990. Census of the United States. U.S. Department of Commerce, Bureau of the
Census, Washington, DC.
Making Coal Mine Methane Work For You: C-2
A Guide to Coal Mine /Greenhouse Projects
-------
Appendix C: References
USDOC 1991. Census of Horticultural Specialties. U.S. Department of Commerce, Bureau of
the Census, Washington, DC. August 1991.
Walker 1973a. Walker, John N. and Duncan, George A. Estimating greenhouse heating re-
quirements and fuel costs. AEN-8. Department of Agricultural Engineering, University of Ken-
tucky, Lexington, KY.
Walker 1973b. Walker, John N. and Duncan, George A. Greenhouse Structures. AEN-12,
Department of Agricultural Engineering, University of Kentucky, Lexington, KY.
Walker 1995. Telephone conversation between P.N. Walker, Professor of Energy, Agricultural
and Biological Engineering, Penn State University, University Park, PA, and Sabrina Ricci, ICF
Inc. June 1995.
Willmott 1995. Telephone conversation between James Willmott, Butler County Cooperative
Extension, Butler, PA, and Sabrina Ricci, ICF Inc. June 1995.
Making Coal Mine Methane Work For You: C-3
A Guide to Coal Mine / Greenhouse Projects
------- |