U.S. EPA
Coalbed Methane
OUTREACH PROGRAM
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U.S. Environmental Protection Ag
September 2019
Pre-Feasibility Study for Methane
Drainage and Utilization at the Casa
Blanca Coal Mine, Cundinamarca
Department, Colombia
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Pre-Feasibility Study for Methane Drainage and Utilization at the
Casa Blanca Mine
Cundinamarca Department
Colombia
U.S. Environmental Protection Agency, Washington, DC USA
EPA 430-R-19-014
September 2019
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This publication was developed at the request of the United States Environmental Protection Agency
(USEPA), in support of the Global Methane Initiative (GMI). In collaboration with the Coalbed Methane
Outreach Program (CMOP), Advanced Resources International, Inc. (ARI) authored this report under RTI
International contract EP-BPA-18-H-0010. Information included in the report is based on data obtained
from the coal mine partner, UniMinas S.A.S (Casa Blanca Mine), a subsidiary of C.I. Milpa S.A.
Acknowledgements
This report was prepared for the USEPA. This analysis uses publicly available information in combination
with information obtained through direct contact with mine personnel, equipment vendors, and project
developers. USEPA does not:
a) make any warranty or representation, expressed or implied, with respect to the accuracy,
completeness, or usefulness of the information contained in this report, or that the use of any
apparatus, method, or process disclosed in this report may not infringe upon privately owned
rights;
b) assume any liability with respect to the use of, or damages resulting from the use of, any
information, apparatus, method, or process disclosed in this report; nor
c) imply endorsement of any technology supplier, product, or process mentioned in this report.
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Table of Contents
Disclaimer
Acknowledgements
Figures
Tables
Acronyms/Abbreviations
Executive Summary
1. Introduction
2. Background
2.1 Colombian Coal Industry
2.2 CMM/CBM in Colombia
2.3 Guacheta Mining Area
3. Summary of Casa Blanca Mine Characteristics
3.1 Overview of Current Gas Management and Gas Resources
3.2 Mine Geology and Operations
3.2.1 Mine Geology
3.2.2 Mine Operations
4. Recommended Methane Drainage Approach and Future Methane Drainage Projections
4.1 Recommended Methane Drainage Approach Using Long, Directionally Drilled Horizontal
Boreholes for Pre-Mine Drainage
4.2 Future Methane Drainage Projections
4.2.1 Reservoir Modeling to Derive Borehole Spacing as a Function of Gas Content Reduction
4.2.2 Mine Methane Drainage System Production Rates
5. Market Information
5.1 CMM and CBM Market
5.2 Natural Gas Market
5.3 Electricity Market
6. Gas Use Opportunities for the Casa Blanca Mine
6.1 CMM Utilization Options for Consideration
6.1.1 Power Generation
6.1.2 Pipeline Sales
6.1.3 Industrial Use
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27
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35
36
36
38
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39
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40
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6.1.4 Boiler Fuel 40
6.1.5 Compressed Natural Gas (CNG) 40
6.1.6 Flaring 41
6.2 Recommendation for CMM Utilization 41
7. Economic Analysis 41
7.1 Economic Assessment Methodology 41
7.2 Economic Assumptions 41
7.2.1 Physical and Financial Factors 42
7.2.2 Capital Expenditures 43
7.2.3 Operating Expenses 44
7.3.3 Economic Results 44
8 Conclusions, Recommendations and Next Steps 45
Works Cited 47
Figures
Figure 1: Chart Depicting the Relationship Between Various Mining and Hydrocarbon-Relate Regulatory
Agencies in Colombia (USEPA, 2017) 6
Figure 2: Overhead View of the Guacheta Mining Area: Mining Contracts 2505 UniMinas and 867T
Promincarg 10
Figure 3: Map of Colombia's Active and Inactive Railway Routes (Railroads, 2010) (UPTC, 2015) 11
Figure 4: The Altiplano Cundiboyacense Region of Colombia, and the Approximate Location of the Mine
(Quora, 2018) 12
Figure 5: Depositional Environment of Guaduas Formation, Guacheta Block (UPTC, 2017) 15
Figure 6: Comparison Between Samples and their Relation Between Volatile Matter and the Random
Reflectance of Vitrinite, which is Trending In an Inversely Linear Fashion (UPTC, 2017) 15
Figure 7: Geologic Map of Guacheta Mining Area with Red Points Indicating Where Samples were Taken
(UPTC, 2017) 17
Figure 8: Stratigraphic Column of Guacheta Block in the Study Area (Bedoya, 2019) 18
Figure 9: The Altiplano Cundiboyacense Region of Colombia, and the Approximate Location of the Mine
(Quora, 2018) 21
Figure 10: Gas Content versus Depth for 4 Wells Drilled in the Cundinamarca Area (Bedoya, 2019) 22
Figure 11: Desorption Curve with Gas Content Intervals on Lost, Measured and Residual Gas Over Time
in the Cundinamarca-Boyaca Region (Libertad, 2013) 22
Figure 12: Cross-sectional view of the current and proposed drilling plan 24
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Figure 13: Rock Cutting Machine, Named Rozadoratipo EMRP-2-400-2-22, Used to Create the Casa
Blanca Tunnel (UPTC, 2015) 25
Figure 14: One of the 7, T-80 Engines Used to Power the Transport of Coal within the Mine (UPTC, 2015).
25
Figure 15: One of the 2, T-50 Engines Used to Power the Transport of Coal within the Mine (UPTC, 2015).
25
Figure 16: Photos Near the Entrance to the Tunnel at Casa Blanca Mine (UNECE, 2018) 26
Figure 17: Plan View of Mining Plan for the 2505 Concession (UNECE, 2018) 27
Figure 18: Mine Plan Elevation View (Looking NE) 28
Figure 19: Elevation View (Looking NE) Showing Horizontal Borehole Placement Below Level -1 28
Figure 20: Plan View Showing Example Placement of Long, Directionally Drilled Horizontal Pre-Drainage
Boreholes 29
Figure 21: Methane Isotherm Used in Pre-Drainage Borehole Simulations 31
Figure 22: Relative Permeability Curve Used in Simulation 32
Figure 23: Borehole Simulation Results for the 1 md Permeability Case Showing Optimal Borehole
Spacing of 17 m 34
Figure 24: Borehole Simulation Results for the 5 md Permeability Case Showing Optimal Borehole
Spacing of 130 m 35
Figure 25: Mine Methane Drainage Forecast for 1 md Development Scenario 36
Figure 26: Mine Methane Drainage Forecast for 5 md Development Scenario 36
Figure 27: Main Power Generating Agents (GWh) in 2014. ISAGEN's Construction of the Hidrosogamoso
Hydroelectric Plant (820 MW) Made it the Country's Second Largest Producer in 2015 (ProColombia,
2015) 39
T1 1
ables
Table ES 1: Summary of Simulation Results and Borehole Production Rates 2
Table ES 2: Summary of Economic Results for Power Plant (Only) (pre-tax) 3
Table 1: Coal Production in 2017 (Megatonnes (Mt)) By Major Operators in Different Colombian
Departments (ANM, 2018) 5
Table 2: Mineable Coal in Place (Billion Metric Tons (Bmt)) No Deeper Than 300 m and Potential Total
Gas in Place (Tcf) (ANH, 2011) 7
Table 3: A Global Warming Potential (GWP) (100-Year) of 25 is Used for Mtco2e Calculation. *Data for
2015 is Projected (GMI, 2015) 8
Table 4: Mines Grouped into General Zones Based on Location. Gassiest Mines Found in North Zone of
UniMinas and South and Central Zones of Prominicarg (UNECE, 2018) 13
Table 5: Mines in Different Operators' Concessions. Yearly Production is Based on Hourly Measurements
and the Tons Emitted is a Function of Coal Production and Methane Content in the Coals (UNECE, 2018).
14
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Table 6: Proximate Analyses of the Guacheta Block Coals (UPTC, 2017) 19
Table 7: Classification of Coals with the ASTM and ISO Norms (Guacheta Block) (UPTC, 2017) 19
Table 8: Depth Versus Gas Content in the Gauduas Formation in Altiplano Cundiboyacense (Martinez,
2015) 20
Table 9: Laboratory Analyses of the Coal Found in the Cundi-Boyaca Basin Based on Conducted Sampling
(Martinez, 2015) 21
Table 10: Reservoir Parameters for Pre-Drainage Borehole Simulation 31
Table 11: Summary of Coal Seam Thickness and Longitudinal Distance Along the Horizontal Borehole.. 33
Table 12: Summary of Simulation Results and Borehole Production Rates 35
Table 13: Summary of Borehole Drilling and Gathering Pipeline Requirements 35
Table 14: Summary of Economic Input Parameters and Assumptions 42
Table 15: Summary of Economic Results for Power Plant (Only) (pre-tax) 45
Table 16: Summary of Economic Results for Power Plant and Gas Drainage System (pre-tax) 45
Aero ny ms / Abbreviatio ns
ACM Asociacion Colombiana de Minerfa (Colombian Mining Association)
ANH Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency)
ANM Agencia Nacional de Minerfa (National Mining Agency)
ARI Advanced Resources International
ASTM American Society for Testing and Materials
Bbl Barrel
Bcf Billion cubic feet
Bmt Billion metric tons
BTU British thermal units
C Celsius
CH4 Methane
CMM/CBM Coal Mine Methane/Coal Bed Methane
CMOP US EPA Coalbed Methane Outreach Program
CNG Compressed Natural Gas
FEED Front End Engineering & Design
GECELCA Generadora y Commercializadora de Energfa del Caribe (Generation and
Commercialization of Caribbean Energy in South America)
GHG Greenhouse Gas
GMI Global Methane Initiative
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Ha Hectares
hp Horsepower
in Inch
IRR Internal Rate of Return
ISO International Organization for Standardization
km Kilometer
kW Kilowatt
kWh Kilowatt hour
lb Pound
m Meter
m3 Meter cubed
mbgs Meters below ground surface
md Millidarcy
mm Millimeter
Mscfd Thousand standard cubic feet per day
MiniMinas Minesterio de Minas y Energfa (Ministry of Mines and Energy)
MW Megawatt
NDP National Development Plan
NPV Net Present Value
psi/ft Pounds per square inch per foot
psia Pounds per square inch absolute
RETIE Reglamento Tecnico de Instalaciones Electricas (Technical Regulation of Electrical
Installations)
scf Standard cubic feet
SIN Sistema Interconectado Nacional (National Interconnected System)
tpy Tons per year
Tcf Trillion cubic feet
USEPA United States Environmental Protection Agency
USTDA United States Trade and Development Agency
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Executiv timary
The U.S. Environmental Protection Agency's (USEPA) Coalbed Methane Outreach Program (CMOP)
works with coal mines in the United States to encourage the economic use of coal mine methane (CMM)
gas that is otherwise vented to the atmosphere. Methane is both the primary constituent of natural gas
and a potent greenhouse gas (GHG) when released to the atmosphere. Reducing emissions can yield
substantial economic and environmental benefits, and the implementation of available, cost-effective
methane emission reduction opportunities in the coal industry can lead to improved mine safety,
greater mine productivity, and increased revenues.
The work of USEPA also directly supports the goals and objectives of the Global Methane Initiative
(GMI), an international partnership of 45-member countries and the European Commission that focuses
on cost-effective, near-term methane recovery and use as a clean energy source. These studies identify
cost-effective project development opportunities through a high-level review of gas availability, end-use
options, and emission reduction potential. This study assists mine operators in evaluating options for
CMM capture and use while also presenting a preliminary financial analysis and laying the foundation
for a more detailed feasibility study that will ultimately lead to CMM project development and GHG
emission reductions.
UniMinas S.A.S, a commercial and industrial subsidiary of C.I. Milpa S.A., was selected as the recipient
for a pre-feasibility study for CMM drainage at their Casa Blanca Mine located in the Cundinamarca
Department of central Colombia. The mine was selected for this pre-feasibility study because it is a part
of one of the largest mining complexes in the country consisting of 37 small mine operations producing
nearly 500,000 tons of metallurgical coal per year. Multiple mine explosions in the area in recent years
have heightened the region's desire to create a safer working environment for coal miners. The Casa
Blanca Mine management views the implementation of modern degasification methods and methane
abatement technology as a crucial element to the safety of its workers and the future of its mining
operations.
The principal objective of this study is to determine the feasibility of a CMM capture and utilization
project at the Casa Blanca Mine. Specifically, this study aims to evaluate the technical and economic
viability of methane pre-drainage utilizing long, directionally-drilled horizontal boreholes drilled from
within the mine workings, and to identify end-use options.
While several potential options exist for the use of CMM at the Casa Blanca Mine, onsite power
generation is the most viable option based on comparable operations and preliminary market data
provided by the mine. Given the relatively small CMM production volume, as well as the mountainous
terrain, constructing a pipeline to transport the gas to demand centers would be impractical. While
there has been interest in compressed natural gas (CNG) for vehicle fuel, CNG at this time is not
economically feasible as it requires significant capital costs to upgrade gas quality and compress the gas.
Based on gas supply forecasts performed in association with this pre-feasibility study, the mine could be
capable of producing as much as 4.0 megawatts (MW) of electricity capacity.
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CMM gas production profiles were generated and reservoir models were developed for two
permeability cases - 1 millidarcy (md) and 5 md - since actual permeability is unknown in the study
area. The models predicted borehole gas flow rate and gas content reduction as a function of time for a
6-year period, which is the time it will take for mining to reach a depth of approximately 300 m based on
current mining activity. The borehole spacing required to reduce the residual gas content by 60 percent
and the gas and water production for each permeability case were derived from the numerical models
and presented in Table ES 1, which highlights the results for a single borehole. The reservoir size for the
two permeability cases are 17 meters (m) x 130 m and 130 m x 130 m for the 1 md and 5 md cases,
respectively. This explains the differing gas and water production and the equivalent gas content
reduction values for the two scenarios.
Permeability
(md)
Time
(years)
Gas
Content
Reduction
(%)
Borehole
Spacing
(m)
Total Gas
Production
(MMcf)
Average Gas
Production
Rate
(Mcf/d)
Total
Water
Production
(MBbls)
1
6
60
17
4.0
1.8
1.7
5
6
60
130
30.9
14.1
12.8
Table ES 1: Summary of Simulation Results and Borehole Production Rates.
For the purpose of forecasting CMM production at the mine, it is assumed that long, directionally drilled
horizontal boreholes are drilled in 2019 with the pre-drainage period running from 2020 through 2025.
Individual borehole laterals are assumed to extend through all 12 coal seams with a longitudinal
borehole distance ranging between 194 m to 220 m. To accomplish these tasks among others, it is
assumed the mine will contract an underground directional drilling service with the ability to support
the initial phase of the project.
Two economic scenarios were evaluated in this study and are described in more detail in Section 7. One
scenario's gas drainage system involves in-mine directional drilling of horizontal pre-drainage boreholes,
which adds to the cost of the project and decreases returns. This scenario will not be the focus of this
study because it results in unfavorable economics, due to the mine not absorbing operational drilling
costs. In the second scenario, referred to as the power plant only scenario, the costs of the gas drainage
system will be absorbed by the mining operation as operational costs. Both scenarios use the same
permeability scenarios but differ regarding project operational costs. For the power plant only scenario,
the economic results in Table ES 2 show the 5 md development scenario as the more favorable outcome
in terms of net present value (NPV), internal rate of return (IRR), payback, and net C02e reductions.
Wells are spaced more closely in the 1 md development scenario, which results in higher drainage
system costs associated with the project. In these development scenarios, the costs of the gas drainage
system are absorbed by the mining operation as operational costs. Higher NPV and IRR values are
present in the power plant only scenario because of this cost absorption. It is also important to note that
in the power plant only scenario, the cost of gas purchased is not included. There is a net reduction
potential between 340,585 and 347,607 tons of carbon dioxide equivalent (tC02e) in the development
scenarios in Table ES 2. These reductions are derived from the estimated combustion of roughly 15,137
to 15,449 tons of methane during the life of the 6-year project.
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Development
Scenario
Borehole
Spacing
(m)
Max Power
Plant Capacity
(MW)
NPV-10
($,000)
IRR (%)
Payback
(years)
Net C02e
Reductions
(tCChe)
lmd
17
4.0
45
10.3%
3.5
340,585
5 md
130
4.0
408
13.0%
3.0
347,607
Table ES 2 Summary of Economic Results for Power Plant (Only) (pre-tax).
As a pre-feasibility study, this report is intended to provide an initial assessment of project feasibility.
Further site-specific analysis is necessary to develop a "bankable" feasibility study acceptable to project
investors, banks, and other sources of finance. Section 8 provides further guidance for UniMinas S.A.S.
to aid in their assessment of a CMM capture and use project. Foremost among these recommendations
is the need to clearly define the geology, gas production forecasts, ventilation system, and gas utilization
opportunities for the Casa Blanca Mine.
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1. Introduction
The U.S. Environmental Protection Agency's (USEPA) Coalbed Methane Outreach Program (CMOP)
works with coal mines in the U.S. and internationally to encourage the economic use of coal mine
methane (CMM) gas that is otherwise vented to the atmosphere. Methane is both the primary
constituent of natural gas and a potent greenhouse gas when released to the atmosphere. Reducing
emissions can yield substantial economic and environmental benefits, and the implementation of
available, cost-effective methane emissions reduction opportunities in the coal industry can lead to
improved mine safety, greater mine productivity, and increased revenues. The work of USEPA also
directly supports the goals and objectives of the Global Methane Initiative (GMI), an international
partnership of 45-member countries and the European Commission that focuses on cost-effective, near-
term methane recovery and use as a clean energy source.
An integral element of the USEPA's international activities in support of the GMI is the development of
CMM pre-feasibility studies. These studies identify cost-effective project development opportunities
through a high-level review of gas availability, end-use options, and emission reduction potential. In
recent years, the USEPA has sponsored feasibility and pre-feasibility studies in such countries as China,
India, Kazakhstan, Mexico, Mongolia, Poland, Russia, Turkey, and Ukraine.
The Casa Blanca Mine was selected for this pre-feasibility study because it is a part of one of the largest
mining complexes in the country that has been operational for over 30 years. Consisting of 37 small
mine operations producing nearly 500,000 tons of metallurgical coal per year (tpy) the selected area
emits approximately 1,846 tons of methane gas into the atmosphere annually. Limited infrastructure
and technical knowledge have thus far prevented the mines from installing a methane drainage system,
which would provide an environmental and safety benefit for the mines.
Multiple mine explosions occurring in recent years, including one nearby Casa Blanca, have heightened
the region's desire to create a safer working environment for coal miners. Although the mine's
ventilation system has been generally effective at reducing the methane concentration in the air
throughout the mine workings to date, there is still a high risk of methane related accidents occurring,
especially as mining activity moves to deeper levels. The Casa Blanca Mine management views the
implementation of modern degasification methods and methane abatement technology as being crucial
to the safety of its workers and the future of its mining operations.
The principal objective of this study is to determine the feasibility of a CMM capture and utilization
project at the Casa Blanca Mine. Specifically, this study aims to evaluate the technical and economic
viability of methane pre-drainage utilizing long, directionally drilled horizontal boreholes drilled from
within mine workings, and to identify end-use options. This pre-feasibility study is intended to provide
an initial assessment of project viability. A Final Investment Decision (FID) should only be made after
completion of a full feasibility study based on more refined data and detailed cost estimates, completion
of a detailed site investigation, implementation of well tests, and possibly completion of a Front-End
Engineering & Design (FEED).
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2. Background
2,1 Colombian Coal Industry
In 2017, Colombia was South America's largest coal producer and largest reserve holder with its 5.4
billion short tons of proven coal reserves. It is the fourth-largest coal exporter in the world, following
Australia, Indonesia, and Russia. The country exported 113 million tons of coal in 2017, with 6.1 million
tons exported to the United States, which accounted for 78% of total U.S. coal imports. Colombia's coal
is highly sought after because it is relatively clean-burning, low sulfur content coal (EIA, 2019). The high-
quality thermal coal has a calorific value of about 13.068 British thermal units per pound (BTU/lb),
making it one of the higher calorific values in the world. Roughly 94% of all produced coal was exported
in 2016 with major destinations for thermal coal in Turkey (17.8%), Netherlands (17.3%), Chile (7.5%),
and Mexico (6.8%) among others. With such large export values, Colombia represents approximately
10% of the total seaborne coal trade worldwide. Coal accounted for 67.5% of Colombia's mining GDP,
1.36% of total GDP, and 87.7% of the total mining royalties collected in 2017 (ANM, 2018).
Roughly 90% of the mining occurs in the northern departments of Guajira and Cesar, with remaining
production occurring in the interior departments of Boyaca, Cundinamarca, Norte de Santander, and
Santander (EIA, 2019). 92.75% of coal production is extracted from open-pit mining areas in the Cesar
and La Guajira, while the remaining 7.25% is extracted from underground mines in the interior
departments (ANM, 2018). Over 92% of coal production is carried out by three companies: Cerrejon,
Drummond, and Prodeco. Table 1 identifies major coal production areas and owners throughout
Colombia's coal-producing departments.
Mine
Type
Department
Mine Owner
2017 Production
(Mt)
Zona Norte
Surface
La Guajira
Cerrejon Coal Company
16.98
Oreganal
Surface
La Guajira
Cerrejon Coal Company
6.15
Carbones del
Cerrejon
Surface
La Guajira
Cerrejon Coal Company
5.2
Patilla
Surface
La Guajira
Cerrejon Coal Company
3.83
La Loma
Surface
Cesar
Drummond
13.66
El Descanso
Surface
Cesar
Drummond
18.82
El Hatillo
Surface
Cesar
Murray Energy Corporation
0.63
Calenturitas
Surface
Cesar
Glencore/Prodeco
9.85
La Francia
Surface
Cesar
Murray Energy Corporation
2.97
N/A
Underground
Cundinamarca
UniMinas
0.22
N/A
Underground
Boyaca
Sanoha
0.07
Table 1: Coal Production in 2017 (Megotonr.es (Mt)) By Major Operators in Different Colombian Departments (ANM, 2018).
The country's coal mines are exclusively owned and operated by private companies, but there are
important regulatory bodies that interact with the coal industry in various capacities (GMI, 2015). In
general, regulations and policies tend to be favorable to the mining industry because of its economic
significance to the country. The Ministry of Mines and Energy (MinMinas) is Colombia's original national
mining authority with the capacity to regulate mining activities in accordance with Congressional laws
(Latin Lawyer, 2016). In 2010, the National Mining Agency (ANM) was created to work in coordination
5
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with the MinMinas to better administer Colombia's mineral resources, grant new mining titles and help
the private sector with public relations (Latin Lawyer, 2016; Norton Rose Fuibright, 2011). Figure 1
illustrates the relationship between Colombia's relevant regulatory bodies.
MINISTERIO DE MINAS Y ENERG1A
(MINISTRY OF MINES &ENERGY)
MINMINAS
This Ministry is an upper level executive office, whose responsibility rs to manage the
country's non-renewable natural resources; provide guidance on their use, regulation,
supply and environmental protection and conservation for a sustainable development
MINISTERIO DE AMBIENTE Y DESARROLLO SOSTENIBLE
(MINISTRY OF ENVORNMENT AND SUSTAINABLE DEVELOPMENT)
(») MINAMBIENTE
This Ministry defines National Environmental policy and promotes the recovery,
conservation, protection, management, and use of renewable natural resources, in
order to ensure sustainable development and guarantee the right of all citizens to
enjoy a healthy environment.
1'uidad cle Plane.iciou Minero
Energetic a
^lining Ptatuiiug Dtfaidtaa)
% upme
planning for devetopment and exploitation of the
energy resources, through studies, analyses and
projections, providing information of high added
value to decision makers of public policies and
other interested groups, with the criteria of
economic, social and environmental sustainability
SERVICIO GEOLOGICO
COLOMBIANO
(Colombian Geological Service)
Through basic research and applied subsoS
geosciences, obtain information and
knowledge of the potential resources,
evaluate and monitor potential threats of
geological origin, integral management of
geoscientlftc knowledge, research and
control of Nuclear and radioactive, attending
to the priorities of National policies.
AGENCIA NACIONAL DE
HIDROCARBOROS
(National Hydrocarbon Agency)
ANHg
Th« anh is the authority in charge of promoting
the optimal and sustainable use of the
hydrocarbon resources of die country,
administering them integrally and harmoniring
the interests of die society. State and Industry
AGENCIA NACIONAL DE MINERIA
(National Mining Agency)
MINERIA
To manage the mineral resources of the Country in
an efficient and transparent manner through
promotion, concessions, monitoring and control cf
mining exploration and exploitation, in order to
maximize the contribution of the sector to the
integral and sustainable development of the country
AUTORIDAD NACIONAL DE
LICENCIAS AMBIENTALES
ANU5?"
The AN LA is responsible of issuing environmental
licenses when projects, construction or other
activities are subject to environmental licensing or
permits required by environmental regulations, in a
manner that will contribute to the sustainable
development of the Country
Figure 1: Chart Depicting the Relationship Between Various Mining and Hydrocarbon-Relate Regulatory Agencies in Colombia
(USEPA, 2017).
2.2 CMM/CBM in Colombia
Colombia's large coal reserves are thought to contain significant coal mine and coalbed methane
resources (CMM and CBM). National studies currently estimate its methane resources to be between 11
and 35 trillion cubic feet (Tcf), although not all of the gas is considered economically recoverable (ANH,
2011) (Table 2). The first Colombian CBM test wells were drilled by GeoMet Operating Company on two
coal leases near El Cerrejon. The test well in the northeastern Cerrejon block was drilled to 910 meters
and intersected about 60 m of net coal. The southwestern block (or La Loma/La Jagua) core encountered
27 m of net coal at depths between 300 and 550 m, with additional coal in sections below the bottom of
the well (Schwochow, 1997).
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Region
Mineable Coal in Place (Bmt)
Potential Gas in Place (Tcf)
Cesar
6.6
2.3-6.3
Guajira
4.5
2.5 -10
Boyaca
1.7
2.1-5
Cundinamarca
1.5
2-5
Valle del Santander
0.2
0.1-6.2
Norte de Santander
0.8
0.9 - 1.2
Cordoba
0.7
o
O
Ln
Antioquia
0.5
0.3-0.4
Santander
0.8
o
Ln
O
Total Recovery Potential
17.3
11-35.3
Table 2: Mineable Coal in Place (Billion Metric Tons (Bmt)) No Deeper Than 300 m and Potential Total Gas in Place (Tcf) (ANH,
2011).
More recently, there has been significant activity related to CMM and CBM. U.S.-based Drummond
Company started CMM/CBM exploration programs on two operating lease blocks, one in Guajira and
one in Cesar. In 2017, the U.S. Trade and Development Agency (USTDA) published the results of a
CMM/CBM feasibility project in Cordoba (USTDA, 2015). The study's objective was to inform the
Generadora y Commercializadora de Energfa del Caribe S.A. (GECELCA) of the project's potential before
the company makes a drilling decision. GECELCA hopes the project will increase regional methane
utilization, help supply the Colombian natural gas market, and reduce the area's overall greenhouse gas
(GHG) emissions (USTDA, 2015).
A pre-feasibility study was conducted in 2017 through the USEPA's Coalbed Methane Outreach Program
(CMOP) and the Global Methane Initiative (GMI) at the San Juaquin Mine in Antioquia Department. The
site was selected as it is one of the largest longwall mines in the country and one that experienced a
large explosion in 2010 that took the lives of 73 miners. Colombia wants to develop and enhance safety
in the mines, as the coal mining industry has reported 1,129 emergency situations and 1,332 deaths in
the country since 2005. If adjusted to include accidents associated with illegal coal extraction activities,
which are prevalent in Colombia, the total would be substantially higher. Explosions account for over
25% of all the deadly accidents and are largely preventable issues that are caused by low awareness of
methane-related risks, insufficient technical expertise with ventilation, incomplete regulation, and
inadequate adherence to existing rules on mining safety.
While the majority of coal production is currently surface-mined, it is expected that mining will move
underground as coal demand remains strong. This anticipated trend provides opportunities for
CMM/CBM development (UNECE, 2017). Because there are no commercial scale CMM/CBM utilization
projects in Colombia, coal mines continue to produce significant annual emissions, which have been
rising at a rate of 40 to 50 percent per year over the last two decades (Table 3). The potential for
commercial CMM/CBM utilization to reduce greenhouse gas emissions (GHG) remains one of the
industry's most significant potential benefits alongside increased mine safety. As a Non-Annex I Party to
the Kyoto Protocol, Colombia is eligible to host mitigation projects under the Clean Development
Mechanism and can secure project revenues from the sale of GHG emissions reduction credits (GMI,
2015).
7
-------
2000
2005
2010
*2015-
Mm3
231
357
511
651
MtC02e
3.9
6.1
8.7
11.1
Table 3: A Global Warming Potential (GWP) (100-Year) of 25 is Used for Mtco.
-------
Multiple mine explosions occurring in recent years, including one nearby the town of Guacheta, have
heightened the region's desire to create a safer working environment for coal miners. The Casa Blanca
Mine, operated by UniMinas, is one of the largest mining operations in the area working to increase
efficiency, production and safety at their mine complex by studying the potential of pre-mine drainage.
The mines are located within the Checua-Lenguazaque Syncline in the Ubate province of the
Department of Cundinamarca (Sarmiento, 2008). The rocks along the western flank of the syncline are
characterized by steep dips of more than 45 degrees SE, which remain constant for long distances.
Guacheta is in the Altiplano Cundiboyacense 118 kilometers (km) northeast of the country's capital,
Bogota. The coal seams are found in the Guaduas formation within the larger 600-km-long coal belt of
Colombia's East Cordillera (Hiltmann, 1988).
The area selected for this study covers 1,707 hectares, of which 1,100 hectares correspond to mining
contracts 2505 (UniMinas) and 867T (Promincarg) as shown in Figure 2. Topographic relief in the mine
area varies between approximately +8,795 ft. in the west to +10,015 ft in the east. Guacheta lies west at
the base of the mountain range and has paved and unpaved roads that allow access between the mines,
the town and other cities in the region. There is also a railway system located near Guacheta (Figure 3).
In 2011, China proposed a rail system through Colombia that would serve as an alternative to the
Panama Canal, but sentiments surrounding project execution were largely pessimistic due to the
mountainous terrain of central Colombia and the high expenses involved with operating a new railway
(Railway Technology, 2011). Companies can access the mines from different cities nearby: from Bogota
the distance is approximately 112 km to the northwest, from Tunja 64 km to the west, and from Ubate
30 km to the east (UPTC, 2017).
9
-------
JSoachetS
Figure 2: Overhead View of the Guacheta Mining Area: Mining Contracts 2505 UniMinas and 867T Promincarg.
-------
As part of a larger effort to understand the CBM resources available in the municipalities of Samaca and
Guacheta, a study conducted near Guacheta found an estimated potential of 0.91 billion cubic feet (Bcf)
of gas resources distributed throughout 3,970 acres (Libertad, 2013). The study zone, named El
Santuario, is the highlighted section furthest southwest on the map in Figure 4. This area coincides with
the Casa Blanca Mine nearby the municipality of Guacheta.
t(XAl«fflOMCWTBATP
CONCESION 2505
Figure 3: Map of Colombia's Active and Inactive Railway Routes (Railroads, 2010)
(UPTC, 2015).
El Santuario was identified as one of the more promising sites for the testing and advancement of CBM
drilling based on relevant considerations that included access roads, water availability, information on
the presence of methane, and favorable geological conditions. Samples obtained from the El Santuario
and the Loma Redonda sectors included 55 different samples of material both from mine faces and from
11
-------
core samples taken from the Samaca-2 and Raquira-1 wells. Gas desorption measurements that
incorporated lost gas and residual gas were carried out in accordance with standards of the U.S. Bureau
of Mines to determine gas content in the area.
Figure 4: The Altiplano Cundiboyacense Region of Colombia, and the Approximate Location of the Mine (Quora, 2018).
According to measurements, the highest methane gas concentrations are located in the northern
section of mine concession 2505, operated by UniMinas, and the southern and central sections of mine
concession 867T, operated by Promincarg. It is estimated that concession 867T had methane emissions
of approximately 7,850 tC02e. Extraction operations at concession 2505 involves 750 people and
operations at concession 867T involves 420 people. Table 4 lists most of the mines by the different
zones for UniMinas and Prominicarg. Table 5 presents the methane emissions from these mines, as well
as the actual hourly measurements of ventilation air. The estimated emissions are based on coal
production multiplied by an emission factor (m3CH4/Ton coal). Overall, higher CH4 production is seen
near the adjoining areas of the UniMinas and Prominicarg lease blocks, which marks the most promising
areas for CMM/CBM development. Some of the highest potential areas based on measurements of
hourly CH4 production are the Yacimiento - San Miguel, El Curubo, Bocatoma and El Volcan -El Mortino
mines.
12
-------
Zone
UniMinas S.A.S.
Promincarg S.A.S.
North Zone
Carbones GyD
Bocamina la Joya
La Ceci
El Roble
El Robie
Bocamina Forigua Cisquera 2
La Virgen (BM1& BM2)
Bocamina Cisquera de a 66
Futuro 2
Bocamina El Roble Pidero 2
San Miguel
Bocamina Vidriosa
Esperaza 6
Bocamina El Zuncho
Jabonera 1 & 2
Bocaminia Buenavista
El Rubi Callejon
Bocamina Bellavista 2
Rinconcito
Bocamina La Tapias
Central Zone
El Porvenir
Tierra Alta
El Manzano
Los Pinos
Siete Bancos- Nelson (closed)
Carboquality Ltd.
El Volcan
El Mortino
Sociedad Gonzalez
South Zone
Diamante 7
BM Zuncho 2 Cisquera 2
La Esperanza 3
La Mana
BM Siete Bancos
Esperaza 2
Bocatoma
Tunel Casa Blanca
La Mejia
Table 4: Mines Grouped into General Zones Based on Location* Gassiest Mines Found in North Zone of UniMinas and South and
Central Zones of Prominicarg (UNECE, 2018).
13
-------
Operator
Mine Name
CH4%
Q
(outflow)
(m3/hour)
CH4
Production
(m3/hour)
ch4
Production
(m3/year)
Coal
Production
(tpy)
Tons Emitted
(tCChe /year)
Bocatoma
0
3,240
0.0
1,175,731
10,284
19,693
Mina El Volcan
-El Mortino
0.7
13,392
92.5
503,845
1,644
8,440
Promincarg
La Mana
0.25
16,020
49.7
423,263
14,400
7,090
Canales
0.35
3,339
11.6
190,356
1,236
3,188
Piedro y Bolas
0.3
4,860
14.4
Yacimiento San
Miguel
0.57
1,872
106.5
932,663
14,592
15,622
Inversiones
Siatoba
0.6
3,140
62.8
-
-
-
Mina La Ceci
0.4
16,133
59.9
427,991
11,520
7,169
La Virgen
0.7
5,371
36.9
322,922
4,080
5,409
Rinconcito
S.A.S.
0.2
1,494
29.5
258,163
28,080
4,324
Futuro Dos
0.4
5,616
22.2
194,089
4,488
3,251
UniMinas
El Curubo
0.15
7,643
22.1
637,976
3,600
10.686.1
Rubi El Callejon
0.25
2,918
10.1
88,071
7,920
1,475
Tierra Alta
0.2
4,363
8.6
-
-
-
Esperanza 3
0.05
10,764
5.3
-
-
-
Los Pinos
0.05
7,128
1.6
119,367
2,400
1,999
Jabonera 1
0.6
11,189
0.6
405,985
4,728
6,800
Jabonera 2
0
6,350
0.0
Esperanza 2
0
3,733
0.0
-
-
-
Carbones GyD
-
-
-
549,888
10,560
9,211
Table 5: Mines in Different Operators' Concessions* Yearly Production is Based on Hourly Measurements and the Tons Emitted is
a Function of Coal Production and Methane Content in the Coals (UNECE, 2018).
There are 12 lithofacies in the Guaduas formation that can be grouped in 4 depositional systems: 1)
interbedding sandstones, siltstones, claystones, and at times thin coal beds, which are believed to be
lagoon deposits based on lateral continuity and organic content; 2) interbedding of sandstone and
claystones with plant debris and coal, and a depositional environment interpreted as tidal flats based on
heterogeneous stratification and cross-bedding; 3) claystones, coal, and sandstones that make up a
great percentage of the stratigraphic record and are classified as an alluvial flooding flat; 4) sandstones
deposited in a meandering alluvial system based on sedimentary structures, specifically cross-bedding
(Jorge, 2016).
Figure 5 provides a visual representation of what the depositional setting may have looked like at one
point in time during deposition. As expected, plant matter is deposited into anoxic environments to
form peat mires before undergoing further changes depending on exposure to metamorphic processes.
These coals show an inverse linear trend where volatile matter decreases and the reflectance of vitrinite
14
-------
increases, indicating that coals during the coalification process release gases due to the gain of
temperature and lithostatic pressure (Figure 6).
Figure 5: Depositional Environment of Guaduas Formation, Guacheta Block (UPTC, 2017).
Volatile matter vs Vitrinite
reflectance
g" 1,60
O
q: 1,50
® 1,40
z
£ 1,30
>
0
O 1,10
d
IB
1,00
E 0,80
CQ
a)
E 0,70
~ Sutatausa
section
¦ Guacheta
section
~ Samaca
section
0,00
10,00 20,00 30,00
Volatile matter (Vm) %
40,00
Figure 6: Comparison Between Samples and their Relation Between Volatile Matter and the Random Reflectance of Vitrinite,
which is Trending In an Inversely Linear Fashion (UPTC, 2017).
15
-------
The high-quality coals prevalent in northern Colombia are also found in the central, mountainous region
of the country. In a study to determine the depositional environment of different coal seams in the
Guaduas formation, Milpa S.A. allowed the Universidad Pedagogica y Tecnologica de Colombia (UPTC) to
take 21 samples from 17 coal seams in the Guacheta mining area, marked in red in Figure 7 (UPTC,
2017). Researchers at UPTC then classified the coal based on the different coal features (Table 6),
including: thickness, moisture, total moisture, ash, volatile matter, fixed carbon, swelling index and
sulfur percentages.
The coals sample from the Guacheta mining area were higher rank in comparison with other blocks in
the region (Samaca and Sutatausa) and show a non-linear decrease in moisture and volatile matter with
an increase in coal rank. Coal rank is important, especially in central Colombia, because the coal's high
quality can justify further shipping distances to ports when compared to mines closer to major export
hubs along the northern coast. The coals generally show low moisture, ash and sulfur levels, which
contribute to higher overall calorific values.
UPTC used two different classification methods for the coal samples (Table 7): one in accordance with
the American Society for Testing and Materials (ASTM) and the other with the International
Organization for Standardization (ISO) (IEA, 2014). Similar to the general characterization of the coals of
Cundinamarca and Boyaca regions in Table 9, a majority of the coals sampled near Casa Blanca Mine are
of bituminous grade. In addition to these coal classifications, a study of the over 60 coal samples in the
Checua-Lenguazaque area revealed calorific values ranging from 2,415 Btu/lb to 15,759 Btu/lb with an
average heating value of 12,506 Btu/lb (Bedoya, 2019). The coal seams range in thickness from roughly
0.25 m to 2 m depending on the seam and are interbedded between thicker layers of clays, brown
limonites, and sandstones that are 0.5 m to 30 m thick (Figure 8).
16
-------
Figure 7: Geologic Map of Guacheta Mining Area with Red Points Indicating Where Samples
were Taken (UPTC, 2017).
17
-------
MJlNTO SCOTOMA
Zunctio da BccaJnrw
15.0
11.3
10.0
oz
1J35"
13-0
14.0
22.0
0-40 -
Secuaricb e s?.-all ^ alba r-Tfa'rnada pc» aicll-Jhas grbes^rTtBrllatiiuis
|rtts-«Jw3«3 oori nK-des y Ogrooa de arenlrcas cfe colcr r4anc.o an-arllcnrn
do gram t|nr» a madia ciwrnaciaB y nlvr^-s dn |h"f^0«r- =«lg" arc||nr.^a rnjtws
MANTO ELFUgi
I' |f. ;!• | • • : I • h ii ' I '
Arfinlavj do gram Inn a madlo r.uan-.j-|r-a do ar-oncln |a^r®o
VlfiHro -L HfcCHO 10.«C ¦ 0,4Lultei - aTQ
Ajr.lldhas dc ccilcr q-l:: Kona, corrDarrji cor esI-Blllfcadcir da^a
MANTQ SOLAS 10,1 bC .q,i^4rc||a1Cait»oraas -D,3SC)
•'-•j -||::||:as NAMOM nanf.ns con n|wa|os de flNflfntl do mine tjanoa arrafj|criD
y |h>cj|laa rr.- |zas nnrnpnntas hoda n| pfeso
MANTO _A TERDZF'A ,'C.4£ - 0.1 AreH&.Catjerosatf
MANTO la chart a (0/ AfcljojCaftooncwa - 0.5Q
Chta
MANTO LA QLINTA
Arcllolrs amBrllliMrlstoea cor. •gsnrartHcadGr larrlngr pr pequgftw ntata
Iniefcafcsda cm p^ixsnos rlvrjrc dn arcr|aca de cn\f% arraijlla do gram ijm
MANTO EL CONSUEL0
Arcllolre amarilla-grteioea. ooo dstraJlbaddn laminar er paqfuefes
capas irenanas de 1 y c4ar>o paratob
Cha itaaNto saH ANiCAllOj
Circa
~rta
MANTO ALISO
ZwchD dc A|^d
Ar::[|p|:i^ cjrb'rr, t{nrcc isrrKrllenias, |n|«ice)ac%s ccr> niwekss da
Clnca
MAHfQ P. AN IA ClF SODA ^Ar~||r:||ian Cartnnrsas malarias. cm cartrfn)
MANTO MLAGRO
MANTO TESORO
Clnla
Zurdio de Cbquera
MANTO CBQi>RA
UNIMINAS LTDA
L0N1RAT0 25CS
MLSNiCIPIO DE GUACHETA
DEPAR"AMENTQ 0E CUNDINAMARCA
C0LUMNA ESTRATIGRAFICA LOCAL
BL0QUE SUR
EK4IA It BOO
DIPtf TAIOTQ *Ct#CO LIWAS
*«0CT> CC 2.000
Figure 8: Stratigraphic Column of Guacheta Block in the Study Area (Bedoyo, 2019).
18
-------
BLOCK
CODE
GUACHETA
G13
GUACHETA
G01
guacheta
G02
guacheta
G04
guacheta
G18
GUACHETA
G16
guacheta
G20
GUACHETA
G15
GUACHETA
G12
guacheta
G08
guacheta
G11
guacheta
G10
GUACHETA
G14
guacheta
G07
guacheta
G03
guacheta
G09
guacheta
G06
GUACHETA
G19
guacheta
G05
guacheta
G17
guacheta
G21
SEAM
7 BANCOS
SUNCHO CISQUERA
CISQUERA NIVEL 80
CISQUERA NIVEL 180
CISQUERA (NIVEL300)
VETA GRANDE
MANTO 2
BOCATOMA NIVEL
220
PIEDRO
BOLAS
CONSUELO
SUPERIOR
CONSUELO
PLANTA DE SODA
GEMELAS
CUARTAS
MILAGROS
TESORO
TESORO
TESORITO
TESORITO
CISQUERA INFERIOR
THICKNESS
M
T.M
A
VM
FC
FSI
S (Db)
2,35
0,68
3,70
16.66
24,58
58,08
7,50
1,26
0,41
0,26
3,37
15,31
25,92
58,51
8,00
0,82
1,05
0,38
3,11
5,27
29,67
64,68
8,00
0,91
1,60
0,54
4,49
5,17
29,02
65,27
7,50
0,49
1,00
0,68
3,30
2,52
27,07
69,72
8,50
1,85
0,70
0,87
3,13
9,50
27,45
62,18
8,50
1,36
0,70
0,63
3,01
10,41
30,15
58,81
8,00
0,49
1,40
0,66
7,50
8,79
19,78
70,77
8,00
0,57
0,75
0,71
5,91
5,93
20,27
73,10
8,50
0,66
0,70
0,51
1,68
10,74
22,81
65,93
5,00
0,73
0,75
0,41
3,44
9,21
19,76
70,62
8,00
0,48
0,40
0,25
3,18
10,75
17,50
71,50
8,00
0,41
0,20
0,84
1,89
13.31
18,72
67,13
3,50
0,46
1,52
0,53
1,84
6,47
19,48
73,53
8,50
0,63
0,50
0,48
3,01
4,41
28,05
67,06
8,50
0,46
0,80
0,81
1,64
4,91
20,69
73,59
8,00
0,50
1,50
0,55
6,89
10.41
16,62
72,42
7,50
0,35
0,70
0,51
2,30
8,16
28,63
62,70
8,50
0,57
0,70
0,48
5,42
6,75
17,66
75,11
8,00
0,34
-
0,79
3,31
5,88
29,25
64,08
8,50
0,62
0,80
0,55
5,47
3,86
17,02
78,58
8,00
0,40
M: Moisture TM: Total moisture A: Ash VM: Volatile matter FC: Fixed carbon FSI: Swelling index S(Db): Sulfur
(dry basis)
Table 6: Proximate Analyses of the Guacheta Block Coals (UPTC, 2017).
CODE
Rom
FC (D, Mm-
free)
VM (D, Mm-
free)
ASTM
ISO
G13
1.01
71,79
28,21
M.V.B
B.B
G01
1,03
70,55
29,45
M.V.B
B.B
G02
1.06
69,08
30.92
M.V.B
B.B
G04
1.07
69,64
30.36
M.V.B
B.B
G18
1,08
72.65
27,35
M.V.B
B.B
G16
0.96
70.32
29.68
M.V.B
B.C
G20
0,94
66,85
33,15
H.V.A.B
B.C
G15
1.39
78,95
21,05
L.V.B
B.B
G12
1.25
78.89
21,11
L.V.B
B.B
G08
1.29
75,24
24,76
M.V.B
B.B
G11
1,38
78,93
21,07
L.V.B
B.B
G10
1,48
81,26
18,74
L.V.B
B.A
G14
1.40
79,33
20,67
L.V.B
B.A
G07
1.44
79.69
20,31
L.V.B
B.A
G03
1.03
70,88
29,12
M.V.B
B.B
G09
1,45
78,53
21,47
L.V.B
B.A
G06
1.52
82,22
17.78
L.V.B
B.A
G19
1,05
69.29
30,71
M.V.B
B.B
G05
1,53
81,54
18,46
L.V.B
B.A
G17
1,01
69,16
30,84
M.V.B
B.B
G21
1.60
82,59
17,41
L.V.B
B.A
ASTM D388-12
ISO 11760
LA: Lignite A
LB: Lignite B
SBA: Sub-Bituminous A
SBB: Sub-Bituminous B
SBC: Sub-Bituminous C
HVAB: High volatile A bituminous
HVBB: High volatile B bituminous
HVBC: High volatile C bituminous
MVB: Medium volatile bituminous
LVB: Low volatile bituminous
SA: Semi anthracite
A: Anthracite
MA: Meta anthracite
LB. Lignite B
LC: Lignite C
SA: Subbituminous A
BA: Bituminous type A
BB: Bituminous type B
BC: Bituminous type C
BD: Bituminous type D
AA: Anthracite A
AB: Anthracite B
AC: Anthracite C
Table 7: Classification of Coals with the ASTM and ISO Norms (Guacheta Block) (UPTC, 2017).
19
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3. Summ irv vit Casa Blanca Mine Characteristics
3,1 Overview of Current Gas Management and Gas Resources
UniMinas is one of the largest coal mining companies operating within the Guacheta mining area and
agreed to have this pre-feasibility study conducted at their Casa Blanca Mine. UniMinas is a title holder
of mining contract 2505 and was created in 1998 with the purpose of carrying out the extraction of
minerals in all its phases, especially the exploitation of coking quality coal. They are a subsidiary of C.I.
Milpa S.A., a producer of metallurgical coke in Colombia, and are seeking to aggregate some of the
area's smaller operators into one larger, more efficient operation within the Casa Blanca Mine.
UniMinas and Promincarg, the main miners in the area, do not have licenses for CMM/CBM projects, but
Safety Decree 1886, Article 59 establishes that mines with high concentrations of methane gas must
drain the gas if it is viable to use. To comply with the regulation, mines must conduct studies to measure
the gas characteristics in the coal seams. Significantly higher levels of methane are found in the northern
zone of mining contract 2505 and southern zone of mining contract 867T; over 66,000 m3 via ventilation
air in August of 2016 was produced north of the El Reposo fault in the San Miguel Mine (Moore, 2016).
The Casa Blanca mine has a professional engineer and a methane specialist who implement the
Occupational Health and Safety Management System for mining personnel. The mines have ventilation
plans, but most need a redesign. Too many auxiliary fans are used without complying with the required
safety specifications, as there is no continuous monitoring of the atmospheric conditions in the mine.
These fans also do not have auxiliary power generation plants that guarantee a continuous supply of
energy to the fans in the mines. No risk zones have been identified that are prone to sudden gas
outbursts because there has not been a comprehensive measurement of methane gas in the mine area.
Information on the gas content and coal characteristics of the Gauduas formation in the Altiplano
Cundiboyacense region, where the Casa Blanca mine complex is located (Figure 9), is shown in Table 8
and Table 9.
Depth (m)
Gas Content (ft3/ton)
5-25
5
25-50
N/A
50-100
5-30
100-200
60-80
200-30
10-100
300-400
10-150
400-500
50-150
500-600
50-300
600-700
100-300
Table 8: Depth Versus Gas Content in the Gauduas Formation in Altiplano Cundiboyacense (Martinez, 2015).
20
-------
Basin
Coal Rank
Calorific
Value
(Btu/ft)
Carbon
Content (%)
Volatile
Material {%)
Ash
(%)
Moisture (%)
Cundi-
Boyaca
Bituminous
8,112-13,914
56.6
31.1
10.5
4.2
Table 9: Laboratory Analyses of the Coal Found in the Cundi-Boyaca Basin Based on Conducted Sampling (Martinez, 2015).
CO
AVTOOLM
SAUTAVX.4
VCHft Jt
AANIANCXX
CA.OAS
AKAUCA
fL j OYACA
1 // ' CASASA-f.
r) Guacheta
1C UN DOAMAARCA
TCXftM
If ri
REOONOEL
AUIPIANO
CUNOBOYACENSe
Figure 9: The Altipiano Cundiboyacense Region of Colombia, and the
Approximate Location of the Mine (Quora, 2018).
In the Cundiriamarca area there are 4 wells that were drilled to a depth of 400 m deep to measure coal
seam gas contents. The highest methane volume measured was 221 ft3/ton as shown in Figure 10
(Bedoya, 2019), Two unrelated, additional wells in the region are the Samaca-2 and Raquira-1 wells. The
two wells, named after the municipalities in which they were drilled, are both located in the Department
of Boyaca. Samples from those two wells were used in the analysis to produce the gas content estimates
for two different sectors within the Cundinamarca-Boyaca region, including the gas desorption curve
shown in Figure 11 (Libertad, 2013). The gas measurements from the wells in Boyaca reach higher than
250 ft3/ton, not including residual gas, and help confirm the gas resource potential in the greater area.
21
-------
250
^200
OJ
^150
a
no
01
-a
o
jo
| 50
o
u
100
PERFORACIONES
CUNDINAMARCA
<
~
~
W
<
V
~
~
*
¦
X
X
X ^
r
0
100
200
300
400
500
Profundidad (m)
Cucunuba 1; Cucunuba 2; Cucunuba 3; Si
Figure 10: Gas Content versus Depth for 4 Wells Drilled in the Cundinamarca
Area (Bedoya, 2019).
450 -
Gas
Content
(scf/ton)
250 -
150 -
Measured Gas
Residual
Gas
-250 -
0.5
1'.0
1.5 2-0
Time (Hours)
2 5
30
40.0
40.5
Figure 11: Desorption Curve with Gas Content Intervals on Lost, Measured and Residual Gas Over Time in the Cundinamarca-
Boyaca Region (Libertad, 2013).
22
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3,2 Mine Geology and Operations
3.2.1 Mine Geology
There are 12 seams being mined within the Casa Blanca Mine coal block, of which all are thermal or
coking quality. The thermal coal is mined for domestic use in Colombia, while the metallurgical coal is
exported. The depths of the mines range from 100 m to 300 m and seam thickness ranges from 0.3 m to
2 m (Libertad, 2013). Some of the seams pinch out over a fault, and all seams of the Guaduas formation
were deposited throughout the upper Cretaceous and lower Tertiary period during the regression of the
Cretaceous seas.
3.2.2 Mine Operations
322.1 Mine Operator
C.I. Milpa S.A. is a Colombian producer and provider of metallurgical coke to companies in the steel,
cement, and smelting industries, among others. The roots of Milpa date back to the 1800's when
ancestors of the company's current partners mined metallurgical coal for Colombia's first iron and steel
company. Today, Milpa provides resources for Colombian industry and exports its high-quality
metallurgical coke to roughly 25 countries. UniMinas S.A.S., a subsidiary of Milpa, operates and extracts
coal from the Casa Blanca tunnel, which is the longest underground mining tunnel in Colombia at 5 km
in length (Semana, 2017). UniMinas is the main operator of mining contract 2505, which overlays the
Casa Blanca Mine. The subsidiary is a pioneer in mining mechanization in Colombia and has new
concession proposals in other mining areas that will allow it to expand operational capacity and provide
more metallurgical coal for Milpa's coking operations and exports.
3.2.2.2 Casa Blanca Mine
The largest mine in the Guacheta mining area, Casa Blanca, produces approximately 96,000 tpy while
the smaller mines produce between 6,000 tpy and 12,000 tpy. The Casa Blanca Mine has one tunnel
approximately 4-5 km long that acts as the main access road to the eastern side of the mine where it
connects with the different mined coal seams. The tunnel, named Casa Blanca by UniMinas, was
advanced through a combination of blasting and cutting by mining machinery (UPTC, 2015). Cuts are
initiated directly into the 12 coal layers found in the mining project at the end of the larger tunnel. The
tunnel entrance is situated 5 km east of the border of the municipality of Guacheta. This tunnel is
accessible from town by way of roads that are not paved in some areas but are all in good condition.
At present, smaller mining operations are originating from the surface and mine downwards over time
within coal seams. However, there is a limit to how deep these smaller operations can reach from the
surface. The proposed plan incorporates inclines below the Casa Blanca tunnel, which are incrementally
developed over time as resources become exhausted. The first level, Level Minus One, is planned to be
developed roughly 130 m below the Casa Blanca tunnel (Figure 12). Coal extraction will be carried out in
the 12 seams between the Casa Blanca tunnel and the Level Minus One incline 130 m below and will
require about 6 years. After the resources are exhausted between the tunnel and the Minus One Level,
a new level, roughly 260 m below the Casa Blanca tunnel, will be developed. The same process of
extraction is proposed for the deeper Minus Two Level. These inclines and levels below the Casa Blanca
23
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tunnel are expected to improve coal production and ventilation by aggregating the smaller mines into
one larger, more efficient mining operation.
Level i inf. {+2750mJ
A
Executed
Work
¦¦¦ -
3 !*?&40iYS5
...
...
Projected
Casablanca
Work
Casablanca Tunnel (4-5 km)_
Casablanca Level Resets
lewiol+liis
level -1. {+24?4m: 2S6mbgs)
Levef Msn
f>ro|««ed
Work.Lower
level
BV.
AV.
Figure 12: Cross-sectional view of the current and proposed drilling plan.
A rock cutter (Figure 13) is used in areas with higher amounts of coal reserves, while extraction of coal is
carried out manually in thinner coal seams with a jackhammer device. Coal is transported within the
Casa Blanca mine through the main galleries in minecarts that are powered to the mine mouth by one or
more of the mine's seven electric motors, 5 being 24.4 kWT-80 models in Figure 14 and 2 being 14 kW
T-50 models in Figure 15 (UPTC, 2015). In general, mines under operation by UniMinas carry out the
transportation of coal through a combination of manual pushing and locomotive power. The mine's
electrical circuit is in good condition and was built in compliance with the safety standards establish by
Colombia's regulating body of electrical installations, Reglamento Tecnico de Instalaciones Electricas
(RETIE). The required electrical load for the locomotives and ventilation system is 440 kW. Both natural
and mechanical ventilation systems are in place to keep mine air safe for the workers in the mines. The
mine has over 15 ventilation fans working to keep air levels safe alongside trained personnel who
monitor and measure the air quality in the mine.
24
-------
>'<
4'V.
+¦<4
y-h
*
ft -V"'
Figure 13: Rock Cutting Machine, Named Rozadoratipo EMRP-2-400-2-22, Used to Create the Casa Blanca Tunnel (UPTC, 2015).
Caracteristicas Tecnicas
IOCOMOTORA T-80
Modelo TSO
PiMfW Sa*vciO (Kflt
7500
E»'uwjd Iiacc4n 1K9) 4 25% da aitaianc*
1875
rncc&s iKgt * te% da «NWC4
N jmmro rratcmt da tncctn
1200
2
Palate*! Ovarii tqK«l (K»>
24,4
TamMbn at Maria fV)
108
Capactfad Q—cmv* an S* (Alt)
•75
N«nw da bat»< a
54
¦R«k) i*it nmo d* cwv at (p)]
8
Lonplud con pancfuquM (mn|
3750
Arc ho (mm I
985
Alio warn
1750
Veaxniad a otana ca«ga an horuonidl (kfMi)
10
Figure 14: One of the 7, T-80 Engines Used to Power the Transport of Coal within the Mine (UPTC, 2015).
Caracteristicas Tecnicas
I OCOMOTORA T-50
Modelo TSO
#r S
-------
Given the large number of mine operations ongoing in the area, the activities at the Casa Blanca Mine
may not fully represent the overall mine operations throughout the entirety of the aggregated mines.
Other mines in the interest area, in general, have U-type ventilation systems with only one intake shaft
and one exhaust shaft.
^
fJIrk
n
-
Figure 16: Photos Near the Entrance to the Tunnel at Casa Blanca Mine (UNECE, 2018).
26
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4. Recommended Methane Drainage Approach and Future Methane
Drainage Projections
The 2505 concession covers an area of 807 hectares (Ha) having a block width of 2.35 km (running
northwest to southeast) and a block length of 4.1 km (running southwest to northeast) that parallels the
bedding planes of the coal seams. The mining plan for the 2505 concession operated by UniMinas has
three phases, with the first two occurring on the southern section of the block, and the third phase
running all the way to the northeastern edge of the northern block (Figure 17). The mine is expected to
become gassier as operators move northward within the block.
4.1 Recommended Methane Drainage Approach Using Long, Directionally
Drilled Horizontal Boreholes for Pre-Mine Drainage
Based on a detailed review of data provided by the mine, the recommended methane drainage
approach for the Casa Blanca Mine area incorporates the use of long, directionally drilled horizontal
boreholes for pre-mine drainage. As shown in Figure 18, all coal faces dip to the southeast at 45-55
degrees and run parallel to the 4.1 km block length running from southwest to northeast. Long,
directionally drilled horizontal pre-drainage boreholes are assumed to be drilled from an in-mine drilling
room located at the bottom of the Level Minus One incline and drilled to a depth of 65 m below the
Minus One Level (350 m below ground level) (Figure 19). Individual borehole laterals are assumed to
extend through all 12 coal seams with a longitudinal borehole distance ranging between 194 m to 220
m.
Bloque Norte
Bloque Centro
Bloque Sur
Figure 17: Plan View of Mining Plan for the 2505 Concession (UNECE, 2018).
27
-------
Level iV) Operation
Casablanca Level Reserves
Projected
Work Lower
Level
Level Minus One Reserves
- Level 3 Casablanca (+2640m)
Projected
Casablanca
Work
Casablanca Tunnel (4-5 km)
Level 0 (+2566m; 194mbgs)
Level -1 (+2474m; 286mbgs)
Executed
Work
Level 1 inf. (+2750m)
— Level 2 lower auxiliary (+2710m)
Level 2 lower (+2690m)
Figure 18: Mine Plan Elevation View (Looking NE).
Casablanca Lev^t, Reserves
linus Oni
Long Directionally Chilled Horizontal^orehole
130m
350mbgs
Drilling
Room
Figure 19: Elevation View (Looking NE) Showing Horizontal Borehole Placement Below Level -1.
Figure 20 illustrates a plan view of the mine block showing an example horizontal borehole with multiple
laterals branching from the main borehole and extending northwest to southeast through all 12 coal
seams. To determine the optimal borehole spacing to facilitate methane drainage, reservoir simulation
28
-------
was used to calculate the spacing required to achieve a 60 percent reduction in residual gas content
over a 6-year drainage period.
Drillin;
Room
r i
Borehole spacing to
be determined via
reservoir modeling.
Calculated for each
permeability case
based on a 60%
reduction in in-situ
methane content.
Figure 20: Plan View Showing Example Placement of Long, Directionally Drilled Horizontal Pre-Drainage Boreholes.
4.2 Future Methane Drainage Projections
Methane drainage engineers use reservoir simulations to optimize current drainage systems and assess
the relative benefits of degasification alternatives. Simulations of drainage systems can derive, with
relative confidence, the necessary borehole spacing and configurations based on time available for
methane drainage and/or residual gas content targets. As modern longwall mining operations
implement "just in time" management practices to balance costs incurred in gate road development
with income earned from longwall shearer passes, reservoir simulation has become an important tool to
aid in the optimization of methane drainage.
For the purposes of this pre-feasibility study, a reservoir model was constructed in COMET3, a
specialized simulator for CBM/CMM reservoirs, to simulate gas production volumes from horizontal pre-
drainage boreholes. The following sections of this report discuss the construction of the gas drainage
borehole model, the input parameters used to populate the reservoir simulation model, and the
simulation results.
4.2.1 Reservoir Modeling to Derive Borehole Spacing as a Function of Gas Content
Reduction
Multiple reservoir models were developed to simulate long, directionally drilled horizontal boreholes
extending through ali 12 coal seams placed at various spacing intervals. The intent of this exercise was
to determine the borehole spacing required to achieve the 60 percent residual gas content reduction
target over a 6-year pre-drainage period. Zero-flow boundaries were created along the flanks of the
borehole such that the width of the reservoir model was equal to the borehole spacing.
29
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4.2.1.1 Model Preparation and Runs
The input data used to populate the reservoir models were obtained primarily from the geologic and
reservoir data provided by the Casa Blanca Mine. Where appropriate, supplemental geological and
reservoir data from analogous projects were also used. The input parameters used in the reservoir
simulation study are presented in Table 10, followed by a brief discussion of the most important
reservoir parameters.
Reservoir Parameter
Value(s)
Source / Notes
Borehole Depth, ft
1150
Mine data
Borehole Diameter, in
3.0
Mine data
Coal Density, g/cc
1.3
Assumption; Clean coal
Pressure Gradient, psi/ft
0.433
Assumption; Hydrostatic
Initial Reservoir Pressure, psia
498
Calculated at borehole depth using pressure gradient
Initial Water Saturation, %
100
Assumption
Langmuir Volume, scf/ton
330
Curve fit to maximum desorption-based gas contents
using Langmuir equation
Langmuir Pressure, psia
275
Curve fit to maximum desorption-based gas contents
using Langmuir equation
In Situ Gas Content, scf/ton
213
Calculated from reservoir pressure and isotherm;
Assumes 100% gas saturation
Desorption Pressure, psia
498
Desorption pressure equal to initial reservoir
pressure
Sorption Times, days
0.167
Calculated from desorption-based gas content
measurement data (Libertad, 2013)
Fracture Spacing, in
2.56
Assumption
Dip Angle of Face, degrees
55
Mine data
Absolute Cleat Permeability, md
i; 5
Unknown; Two cases evaluated
Cleat Porosity, %
2
Assumption; Typical for coal rank
Relative Permeability
Curve
Assumption; See curve (Figure 22)
Pore Volume Compressibility, psi 1
4.00E-04
Assumption
Matrix Shrinkage Compressibility,
psi1
1.00E-06
Assumption
Gas Gravity
0.6
Assumption
Water Viscosity, centipoise (cP)
0.8
Assumption
Water Formation Volume Factor,
reservoir barrel per stock tank
barrel (RB/STB)
1.00
Calculation
Completion and Stimulation
Long, directionally drilled horizontal boreholes; Assume skin factor of 2
(formation damage)
Pressure Control
In-mine pipeline with surface vacuum station providing vacuum pressure
of 6 psia
30
-------
Borehole Spacing
Calculated for each permeability case based on a 60% reduction in in-situ
methane content over a 6-year drainage period
Table 10: Reservoir Parameters for Pre-Drainage Borehole Simulation.
Permeability
Coal bed permeability, as it applies to production of methane from coal seams, is a result of the natural
cleat (fracture) system of the coal and consists of face cleats and butt cleats. This natural cleat system is
sometimes enhanced by natural fracturing caused by tectonic forces in the basin. The permeability
resulting from the fracture systems in the coal is called "absolute permeability" and is a critical input
parameter for reservoir simulation studies. Absolute permeability data for the coal seams in the study
area were not available. For the current study, two cases were evaluated assuming permeability values
of 1 and 5 millidarcy (md), which is within the range of analogous coal seams of the same rank.
Langmuir Volume and Pressure
Reliable laboratory measured Langmuir volumes and pressures for the study area were not available. As
a result, an isotherm was constructed using the Langmuir equation where a curve was fit to match the
maximum values from desorption-based gas content measurements performed at four wells drilled in
the Cundinamarca area (Bedoya, 2018). The corresponding Langmuir volume used in the reservoir
simulation models for the project area is 330 scf/ton and the Langmuir pressure is 275 pounds per
square inch absolute (psia). Figure 21 depicts the methane isotherm utilized in the pre-drainage
borehole simulations.
CH4 Isotherm for Guachete Mine PFS
~v Desorption-Based Gas Content Measurements
200
tg ISO
c
5 ioo
50
/
0 100 200 300 400 500 600
Pressure fpsi)
Figure 21: Methane Isotherm Used in Pre-Drainage Borehole Simulations.
Gas Content
As noted above, desorption-based gas content measurements from four wells located in the interior
Department of Cundinamarca were available showing gas contents ranging from 10 to 221 scf/ton with
an average of 84 scf/ton. For the simulation study, in-situ gas content at the working depth of the mine
was estimated to be 213 scf/ton as calculated from the isotherm based on a reservoir pressure of 498
31
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psia. Reservoir pressure was calculated by multiplying reservoir depth by the normal hydrostatic
gradient of 0.433 pounds per square inch per foot (psi/ft) in the simulation.
Relative Permeability
The flow of gas and water through coal seams is governed by permeability, of which there are two
types, depending on the amount of water in the cleats and pore spaces. When only one fluid exists in
the pore space, the measured permeability is considered absolute permeability. Absolute permeability
represents the maximum permeability of the cleat and natural fracture space in coals and in the pore
space in coals. However, once production begins and the pressure in the cleat system starts to decline
due to the removal of water, gas is released from the coals into the cleat and natural fracture network.
The introduction of gas into the cleat system results in multiple fluid phases (gas and water) in the pore
space, and the transport of both fluids must be considered to accurately model production. To
accomplish this, relative permeability functions are used in conjunction with specific permeability to
determine the effective permeability of each fluid phase.
Relative permeability data for the coal of the project area was not available. Therefore, a relative
permeability data set was used, which is typical for coals of similar age and rank. Figure 22 is a graph of
the relative permeability curves used in the reservoir simulation of the study area.
1,0
0,9
0,8
0.7
0.6
0,5
0,4
0,3
0,2
0,1
0.0
0,2
<¦- KRW
-CI- KRG
0.4
SW
Figure 22: Relative Permeability Curve Used in Simulation.
Borehole and Coal Seam Characteristics
Twelve coal seams ranging in thickness from 0.98 ft to 4.92 ft are present in the Casa Blanca Mine area.
Based on mine data, all coal faces dip to the southeast by 55 degrees and run parallel to the 4.1 km
block length positioned in the southwest to northeast direction. Long, directionally drilled horizontal
pre-drainage boreholes are drilled from an in-mine drilling room at a depth of 1150 ft, or roughly 350
meters below ground surface (mbgs) and have a 3-inch (in) diameter. Individual borehole laterals extend
through all 12 coal seams with a longitudinal borehole distance ranging between 194 m to 220 m,
depending on the location throughout the block. Table 11 summarizes coal seam thickness and
longitudinal distance along the borehole as modeled.
32
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Model
Layer
Coal Seam
Thickness
(ft)
Distance
Longitudinal
to Borehole
(ft)
1
Manto Bocatoma
2.46
738
2
Manto El Rubi
0.98
680
3
Manto El Piedro
4.92
616
4
Manto Bolas
2.30
574
5
Manto La Tercera
1.64
539
6
Manto la Cuarta
1.97
527
7
Manto La Gemela
4.59
452
8
Manto Aliso
3.28
205
9
Manto Milagro
1.97
156
10
Manto Tesoro
1.97
142
11
Zuncho de Cisquera
1.97
118
12
Manto Cisquera
2.30
101
Table 11: Summary of Coal Seam Thickness and Longitudinal Distance Along the Horizontal Borehole*
Reservoir and Desorption Pressure
Initial reservoir pressure was computed using a hydrostatic pressure gradient of 0.433 psi/ft and a
borehole depth of 1,150 ft. The borehole depth was based on information from the mine and the
pressure gradient of 0.433 psi/ft is a common industry assumption in the absence of well test-derived
pressure gradients. Because the coal seams are assumed to be saturated with respect to gas, desorption
pressure is set equal to the initial reservoir pressure for the seam. The resulting initial and desorption
pressures used in the model is 498 psia.
Porosity and Initial Water Saturation
Porosity is a measure of the void spaces in a material. In this case, the material is coal, and the void
space is the cleat fracture system. Since porosity values for the coal seams in the mine area were not
available, a value of 2 percent was used in the simulations. Typical porosity values for coal range
between 1 percent and 3 percent. The cleat and natural fracture systems in the reservoir were assumed
to be 100 percent water saturated.
Sorption Time
Sorption time is defined as the length of time required for 63 percent of the gas in a sample to be
desorbed. A sorption time of four hours (0.167 days) was estimated from the available desorption-based
gas content measurement data (Libertad, 2013). Production rate and cumulative production forecasts
are typically relatively insensitive to sorption time.
Fracture Spacing
A fracture spacing of 2.56 in was assumed in the simulations based on analogous projects throughout
the Americas. In the model, fracture spacing is only used for calculation of diffusion coefficients for
different shapes of matrix elements and it does not materially affect the simulation results.
33
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Borehole Spacing
As discussed previously, multiple reservoir models were developed to simulate long, directionally drilled
in-mine horizontal boreholes with laterals extending northwest to southeast through all 12 coal seams
at various borehole spacings. The intent of this exercise was to determine the borehole spacing required
to achieve the 60 percent residual gas content reduction target over a 6-year drainage time.
Borehole Completion and Stimulation
Long, directionally drilled horizontal boreholes will be drilled to a depth of roughly 1,150 ft and intersect
all 12 coal seams. For modeling purposes, a skin factor of +2, representing formation damage, is
assumed for all horizontal boreholes.
Pressure Control
Horizontal boreholes were allowed to produce for 6 years using an in-mine pipeline with a surface
vacuum station providing a suction pressure of 6 psia. In CMM/CBM operations, low borehole pressure
is required to achieve maximum gas content reduction.
4,2.1.2 Model Results and Borehole Production Rates
Reservoir models were developed for the 1 md and 5 md permeability cases. The models predicted
borehole gas flow rate and gas content reduction for each case as a function of time for a 6-year period
(2190 days) as shown in Figure 23 and Figure 24. The borehole spacing required to reduce the residual
gas content by 60 percent and the gas and water production for each permeability case were derived
from the numerical models and presented in Table 12.
t
J
iorehole Spacing
»o
'° £
C
O
40 ~
T5
OJ
50 ££
£
365 730 1095 1460 1825 219i
Time (days)
-Gas Production Rate - lmd Gas Content Reduction - lmd
Figure 23: Borehole Simulation Results for the 1 md Permeability Case Showing Optimal Borehole Spacing of 17 m.
34
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5 md Simulation Results -130 m Borehole Spacing
40
35
30
25
on
80
7n
/ U -—v
Sv
- 60 c
o
- SO y
DU 3
"O
-------
Annual Methane Drainage Forecast -1 md
300
= 200
£ 100
(T3
50
fci
I ¦
2020 2021 2022 2023 2024 2025
Figure 25: Mine Methane Drainage Forecast for 1 md Development Scenario.
Annual Methane Drainage Forecast - 5 md
350
300
u
2 250
2
| 200
I 150
o
% 100
50
III!
2020 2021 2022 2023 2024 2025
Figure 26: Mine Methane Drainage Forecast for 5 md Development Scenario.
5. Market Information
5.1 CMM and CBM Market
While the departments of Cundinamarca and Boyaca have shown CBM potential, no licenses have been
awarded in these areas. Potential total gas in place in Cundinamarca is between 2 and 5 Tcf, but the
markets for both CMM and CBM are still in the development stages in Cundinamarca and in Colombia as
a whole. Recent political and economic developments affecting Cundinamarca may bode well for
CMM/CBM:
• Colombia's constitutional court recently ruled that local referendums that ban mining and oil
extraction cannot halt energy projects, which is expected to give life and future security to mine
development in the country, according to the Colombian Mining Association (ACM) (Reuters,
2018).
• Royalties established under law 756 of 2002 are subject to a sliding scale based on gross
production on an individual field basis (Gran Tierra, 2010). Smaller scale CBM development in
36
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central Colombia will no longer be required to pay a flat 20% royalty fee but will pay a fee based
on gross production. The royalty starts with a base rate of 8% for gross production of less than
5,000 barrels of oil per day and increases in a linear fashion from 8% to 20% for gross production
between 5,000 and 125,000 barrels of oil per day. To determine the royalties for gas fields,
conversion factor is applied to determine the production of gas in barrels of oil equivalent (BOE).
• Coal mines in the Cundinamarca area consumed roughly 23 million kWh in 2017 alone. Those
coal power plants operating within the department have an efficiency rate between 23 and 28%,
leading to higher overall electricity costs for mines. CBM/CMM presents an opportunity to
decrease operating costs at smaller mines, especially given mine operators' interest in using
methane gas for on-site power generation (Bedoya, 2019).
• The national target of a 20-30% reduction in GHG emissions by 2030 will require mitigation in
several key sectors, mining being one of them. The mountainous terrain in Cundinamarca is not
well suited for intermittent sources of wind and solar power generation. Additional hydro plants
will be brought online, but those plants have been less reliable during El Nino drought
conditions. In 2016, El Nino-induced droughts forced Colombians to ration their energy use
during peak hours, as the power source was operating at only 60% of its usual capacity during
one of the drought periods (UNECE, 2017); (NREL, 2018). As weather conditions continue to
threaten hydroelectric generators' production capabilities, which make up nearly 70% of the
country's total generating capacity, it can be expected that more reliable sources of energy like
thermal production via coal and natural gas will come online in the future.
• Act 1886 of 2015 describes how mine operators must include the use of methane for on-site
power or oxidation in their work plan if there are producible, high concentrations of methane
found within the mining project. If a mine exceeds its energy capacity on-site, it can sell surplus
energy to the grid.
While CMM/CBM development has seen promising regulatory, environmental, and economic advances
in Colombia, there are still several challenges that impede project development in Cundinamarca and
Colombia more broadly:
• There is inadequate information in Colombia about CMM/CBM reservoirs (e.g., gas content and
saturation, permeability, flow rate etc.), which prohibits concession certification on
international markets. This lack of knowledge extends to sufficiency of ventilation systems, as
some mines in Colombia lack enough ventilation and personnel to deal with associated
ventilation issues and measurements.
• Average mines in the Cundinamarca area are small (2,000-4,000 t/month) and are typically not
able to justify the large investments required in equipment and machinery for CBM projects.
Areas where multiple small coal mines are combined among a few well-known operators
present a better project economics for CBM opportunities, especially when higher contents of
methane are found at relatively shallow depths.
• Enriching through VAM is considered a mining activity and it thus regulated by ANM but
degassing from the surface is not considered a mining activity and thus falls within ANH's
37
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oversight. The two agencies tend to compete with one another, which has led to slower
development of projects.
• In cases where methane oxidation is the best solution, the price of carbon to break even would
need to reach $10.31 USD for 10 years and could drop to $4.36 USD after year 11. It is estimated
that the Cundinamarca area for coal extraction produced 160,179 tC02e in 2016 and 151,530
tC02e in 2017. However, there are currently no incentives for use or destruction of CMM/
ventilation air methane VAM) (Bedoya, 2019). Development is also tied to the price of coal; if
prices go roughly below $73 USD/ton, many small mine operations must stop production
because of the costs associated with transporting coal to the coast for export (UPME, 2017). The
success and development of CBM/CMM resources will ultimately depend on its ability to
compete with the cost of other major sources of power generation in Colombia, namely
hydropower, natural gas and coal.
5.2 Natural Gas Market
Colombia's natural gas production has substantially risen in recent years because of increased
international investment in exploration and development. Ecopetrol, the Colombian national oil
company, is the primary producer of gas resources and recently made its biggest discovery in three
decades with its partner Anadarko at offshore Gorgon-1 in May of 2017. Gas supplies are concentrated
amongst Ecopetrol, BP, and Chevron in the Cusiana-Cupiagua and Chuchupa fields. Colombia has
roughly 3,100 miles of natural gas pipelines that services major fields and demand centers (EIA, 2019).
As a result of uncertainty in hydroelectric sources of energy, thermal power generation grew roughly
9.4% between 2010 and 2014. Natural gas contributes significantly to thermal power generation and its
consumption is correlated with growth in thermal generation, as the production of natural gas grew
6.8% over a ten-year span (ProColombia, 2015). The government is seeking to add 3,841 megawatts
(MW) of natural gas fired capacity by 2028 to be a solution to the frequent brownouts that are triggered
by increasing electricity consumption in the country (Oil Price, 2018).
Due to the remote nature of many regions of Colombia, access to natural gas, whether subsidized or
not, can be expensive. Average market prices, consequently, remain significantly higher than those in
the United States. Average market prices for Colombian citizens purchasing natural gas at the end of
2014 were $8.2/MMBtu (NATURGAS, 2014). The highest two socioeconomic tiers, however, pay large
contributions to ensure affordable natural gas reaches the lowermost socioeconomic strata.
5.3 Electricity Market
Much like Colombia's general energy mix, Cundinamarca garners large sources of electric power from
hydro-powered plants and thermal plants. The region's mountainous terrain, combined with high levels
of rainfall, creates favorable conditions for dam construction for hydroelectric power. The Guavio and
Pagua hydro plants offer 1,200 and 600 MW of total effective capacity respectively to Cundinamarca
and surrounding demand regions. Cundinamarca is a part of the National Interconnect System (SIN),
which covers roughly 48% of the national territory and 96% of the country's population (Energy Net).
The planning, supervision and control of resource generation, interconnection and transmission on the
SIN is undertaken by various subsidies of XM, a public utility corporation regulated by the Energy and
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Gas Regulation Commission (CREG) (EIA, 2019). A few of the major power generating agents are shown
in Figure 27.
13,105 12,703
2,474 2,041 1 132 1078
Source: XM. "Data 2013.
86% of the total power
Figure 27: Main Power Generating Agents (GWh) in 2014. ISAGEN's Construction of the Hidrosogamoso Hydroelectric Plant (820
MW) Made it the Country's Second Largest Producer in 2015 (ProColombia, 2015).
Non-regulated users, or those that consume more than 55 MW hours (MWh)/month, can sign bilateral
contracts with energy dealers where prices and quantities are negotiated freely between the two
parties. Mining and quarrying make up roughly 20% of energy demand in the country's non-regulated
market (ProColombia, 2015). Those in the regulated category are subject to regulated rates subject to a
general pricing structure established by CREG, which was created in 1994 through Laws 142 and 143.
Law 143 established the plan that governs generation, transmission, distribution, and commercialization
of electricity as well as the guidelines that were instrumental to the beginning of the Wholesale
Electricity Market (MEM) in 1995 (EIA, 2019).
Alongside national electricity demand growth, Colombia will aim to meet the needs of increasing
electricity demands from surrounding countries. Its vast energy resources and regional network
connectedness have allowed it to become a net exporter of more than 700 GWh of electricity to
Ecuador, Peru, and Venezuela along with planned expansion of transmission lines to Panama (MaRS,
2015).
6. Gas Use Opportunities for the Casa Blanca Mine
Pre-drainage boreholes are the preferred recovery method for producing high-quality methane gas from
coal seams because the recovered methane is not contaminated with ventilation air from the working
areas of the mine (USEPA, 2013). The drained gas from the Casa Blanca Mine is expected to have a
methane concentration of 90-95 percent, which is considered medium- to high-quality gas for utilization
purposes. This section briefly explores each available option for CMM utilization.
6.1 CMM Utilization Options for Consideration
6.1.1 Power Generation
Mine management has stated its preference for on-site power generation using CMM for two reasons.
First, on site utilization of the gas is the only option allowed under current regulations. Second, the mine
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would like to use electricity generated on site to power their engines. There is a strong case to use the
CMM for power generation. CMM-to-power is the most widely used CMM technology worldwide, and
the knowledge, expertise, and experience are widely available to support cost-effective implementation,
operation, and maintenance of a CMM power plant. Industrial power prices are also attractive for CMM
to power projects. A generally accepted breakeven cost for CMM-based power projects is USD $0.04 to
0.06 per kWh. The electricity price paid by the average industrial user in Colombia USD $0,126 per kWh,
thus there is a potential margin of USD $0.07 to 0.09 per kWh.
There are several other advantages for power production at the mine. Suppliers deliver turn-key
solutions with the gas engine/generator/control system combinations in prefabricated containers. These
plants are modular and can be easily expanded if gas availability increases. The ability to offset high
power prices at mines has been another reason CMM-to-power projects are very attractive. The
technical challenges of wheeling excess power to the grid are easily overcome because mines are large
users of electricity with access to high voltage interconnects or even electricity substations at the mine.
6.1.2 Pipeline Sales
Although in-seam drainage should produce high-quality CMM, natural gas pipeline sales are infeasible
due to the lack of a well-developed natural gas pipeline infrastructure to transport CMM to natural gas
markets. Despite the relatively high market prices natural gas in Colombian ($8.2 per thousand cubic
feet on average in 2014), this may not be enough to offset the cost of laying a pipeline to demand
centers, especially given the challenging local terrain and the relatively small CMM production volumes
forecasted from the project.
6.1.3 Industrial Use
There are no industrial operations adjacent to the mine, and it would be very expensive to lay a pipeline
to an industrial user considering the terrain.
6.1.4 Boiler Fuel
Coal boilers are typically used at many mines for heating and hot water in mine buildings and for heating
mine shafts. However, there is currently no need for heating or process fuel at the mine.
6.1.5 Compressed Natural Gas (CNG)
There is growing interest in CNG as demonstrated by Colombia's existing fleet of 530,000 natural gas-
fueled vehicles, which includes vehicles ranging from garbage trucks to taxi cabs (AAPG, 2016). As of
2016, 32 percent of taxis in Bogota were fueled by CNG, and vehicle conversions to CNG throughout
Colombia increased at an average annual rate of 12 percent from 2010 to 2014 (AAPG, 2016). While use
of CMM as a vehicle fuel represents a potential market for Casa Blanca gas, CNG at this time is not
economically feasible as it requires significant capital costs to upgrade gas quality and compress the gas.
Capex to manage the residual gas flow at the mine could total USD $3 million for the necessary CNG
infrastructure, with an additional USD $1-2 million per year of Opex at the mine.
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6.1.6 Flaring
Should the Casa Blanca Mine move forward with a CMM project, a good strategy may be to incorporate
a flare into the project to reduce emissions when the primary utilization technology is unavailable, for
example when gas engines are down for maintenance. However, flaring should not be the only CMM
reduction strategy pursued at the mine. In addition, without a carbon price and available carbon trading
scheme there is no incentive to install flares.
6,2 Recommendation for CMM Utilization
After consideration of possible options for CMM utilization at the Casa Blanca Mine, power generation is
the most viable option, considering the priorities of mine management and the current legislation that
only allows on site usage of the gas. Therefore, for this pre-feasibility study, the Economic Analysis in
Section 7 focuses on CMM power generation. Based on gas supply forecasts, the mine could be capable
of operating as much as 4 MW of electricity capacity. The mine's current electrical capacity is roughly
440 kW, which would be satisfied by the additional power generation from the proposed project.
7. Economic Analysis
7.1 Economic Assessment Methodology
The economic and financial performance of the proposed CMM drainage and utilization project were
evaluated using key inputs discussed in the following sections of this report. A simple discounted cash
flow model of CMM drainage and power sales was constructed to evaluate project economics. Key
performance measures that were used for evaluating the project included net present value (NPV) and
internal rate of return (IRR). The results of the analyses are presented on a pre-tax basis.
7.2 Economic Assumptions
Cost estimates were developed for goods and services required for the development of a CMM project
at the Casa Blanca Mine. These estimates were based on a combination of known average development
costs of analogous projects in the Americas, and other publicly available sources. All economic results
are presented on a pre-tax basis. The input parameters and assumptions used in the economic analysis
are summarized in Table 14. A more detailed discussion of each input parameter is provided below.
PHYSICAL & FINANCIAL FACTORS
Units
Value
Royalty
%
4.8
Price Escalation
%
3
Cost Escalation
%
3
Heating Value of Drained Gas
Btu/cf
928
Electricity Price
$/kWh
0.126
Generator Efficiency
%
35
Run Time
%
85
Global Warming Potential of CH4
tCChe
25
CO2 from Combustion of 1 ton CH4
tco2
2.75
CAPITAL EXPENDITURES
Units
Value
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Drainage System
Borehole Drilling Cost
$/ft
40
Borehole Drilling Length
ft
185,714 (lmd)
57,990 (5md)
Surface Vacuum Station
$/hp
1000
Vacuum Pump Efficiency
hp/Mcfd
0.035
Gathering & Delivery System
Gathering Pipe Cost
$/ft
40
Gathering Pipe Length
ft
16,400
Contingency Fee (capex)
%
10
Power Plant
$/kW
1300
Development Fee
%
15
OPERATING EXPENSES
Units
Value
Field Fuel Use (gas)
%
5
Drainage System O&M
$/Mcf
0.1
Water Treatment/Disposal
$/Bbl
0.05
Power Plant O&M
$/kWh
0.03
Contingency Fee (opex)
%
10
Table 14: Summary of Economic Input Parameters and Assumptions.
7.2.1 Physical and Financial Factors
Royalty
In Colombia, oil and gas resources are owned by the national government. All companies engaged in the
exploration and extraction of oil and gas must pay the ANH a royalty at the production field, determined
by the Ministry of Mining. Per Law 756, issued in 2002, new oil and gas discoveries must pay a royalty of
8 percent for production up to 5,000 barrels of crude per day (monthly average), which is equivalent to
30,000 Mcf of natural gas per day based on a conversion factor of 6 Mcf of natural gas per barrel of oil
equivalent. Additionally, based on Decree 4923 of 26 December 2011, royalties on unconventional
hydrocarbons (including CMM/CBM) are equivalent to 60 percent of those on conventional oil, resulting
in an effective royalty rate of 4.8 percent for the CMM project at Casa Blanca Mine (EY, 2016).
Price and Cost Escalation
All prices and costs are assumed to increase by 3 percent per annum based on analogous projects in the
Americas.
Heating Value of Drained Gas
The drained gas is assumed to have a heating value of 928 Btu/cf. This is based on a heating value of
1,020 Btu/cf for pure methane adjusted to account for lower methane concentration of the CMM gas,
which is assumed to be 91 percent for drained gas.
Electricity Price
The effective electricity sales price received for the power produced is $0.126/kWh, which represents
the latest available average industrial electricity price in Colombia (MARS, 2015).
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Generator Efficiency and Run Time
Typical electrical power efficiency is between 30 percent and 44 percent and run time generally ranges
between 7,500 to 8,300 hours annually (USEPA, 2011). For the proposed power project an electrical
efficiency of 35 percent and an annual run time of 85 percent, or 7,446 hours, were assumed.
Global Warming Potential of Methane
A global warming potential of 25 is used. This value is from the Intergovernmental Panel on Climate
Change Fourth Assessment Report (IPCC, 2013).
Carbon Dioxide from Combustion of Methane
Combustion of methane generates carbon dioxide (C02). Estimating emission reductions from CMM
projects must account for the release of C02 from combustion when calculating net C02 emission
reductions. For each ton of CH4 combusted, 2.75 tC02 is emitted, resulting in a net emission reduction of
22.25 tC02e per ton of CH4 destroyed.
7.2.2 Capital Expenditures
Capital expenditures include the cost of horizontal pre-drainage boreholes, as well as surface facilities
and vacuum pumps used to bring the drainage gas to the surface. The drained methane can be used to
fuel internal combustion engines that drive generators to make electricity for use at the mine or for sale
to the local power grid. The major cost components for the power project are the cost of the engine and
generator, as well as costs for gas processing to remove solids and water, and the cost of equipment for
connecting to the power grid. The major input parameters and assumptions associated with the project
are as follows:
Borehole Cost
In-mine borehole costs are estimated at $40 per foot with a total of 185,714 ft drilled assuming a
permeability of 1 md and 57,995 ft drilled for the 5 md case.
Surface Vacuum Station
Vacuum pumps draw gas from the wells into the gathering system. Vacuum pump costs are a function of
the gas flow rate and efficiency of the pump. To estimate the capital costs for the vacuum station, a
pump cost of $1000 per horsepower (hp) and a pump efficiency of 0.035 hp per thousand standard
cubic feet per day (Mscfd) are assumed. Total capital cost for the surface vacuum station is estimated as
the product of pump cost, pump efficiency, and peak gas flow (i.e., $/hp x hp/Mscfd x Mscfd).
The gathering system consists of the piping and associated valves and meters necessary to get the gas
from within the mine to the satellite compressor station located on the surface. The major input
parameters and assumptions associated with the gathering system are as follows:
Gathering System Cost
The gathering system cost is a function of the piping length and cost per foot. For the proposed project,
we assume a piping cost of $40/ft and 16,400 ft of gathering lines.
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The delivery system consists of the satellite compressor and the pipeline that connects the compressor
to the sales system leading to the utilization project. We assume the power plant is located within the
mine area resulting in a delivery system cost of zero.
Power Plant Cost Factor
The power plant cost factor, which includes capital costs for gas pretreatment, power generation, and
electrical interconnection equipment, is assumed to be $1,300 per kilowatt (kW).
CAP EX Contingency Fee
A 10 percent contingency is fee is added for unforeseen additional costs.
Development Fee
A fee is included to account for the cost of project development including staff costs, equipment, office
space, transportation, and other resources necessary to plan and develop the project. The fee is
estimated at 15 percent of the cost of the power plant based on experience in the field.
7.2.3 Operating Expenses
Fuel Use
For the proposed project, it is assumed that CMM is used to power the vacuum pumps
in the gathering and delivery systems. Total fuel use is assumed to be 5 percent, which
the gas delivered to the end use.
Drainage System Operating and Maintenance Costs
Operating and maintenance costs for vacuum pumps and compressors associated with in-mine
horizontal pre-drainage boreholes are assumed to be $0.10/Mscf.
Water I reatment/Disposal
The cost associated with water treatment and disposal is $0.05/Bbl.
Power Plant Operating and Maintenance Cost
The operating and maintenance costs for the power plant are assumed to be $0.03/kWh.
OPEX Contingency Fee
A 10% contingency is fee is added for unforeseen additional costs.
7,3,3 Economic Results
There are two different economic scenarios evaluated in this study. The two are differentiated by
whether the mine will absorb the operational costs of the drainage system or not. The first scenario is
the power plant only scenario and the economic results are summarized in Table 15. In this project
scenario, the costs of the gas drainage system will be absorbed by the mining operation as operational
costs. Higher NPV and IRR values are present in the power plant only scenario because of this cost
absorption. It is also important to note that in the power plant only scenario, the cost of gas purchased
is not included. It is assumed that the mining operation will provide the CMM for free to the power
plant. Should the mining operation wish to internalize the price of gas as a revenue and charge a fee,
and compressors
is deducted from
44
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then the power project would need to show a cost of gas purchased as an operating cost, which would
likely reduce the IRR's.
The results for the scenario where the gas drainage system costs are not absorbed by the mine
operation are presented in Table 16. The gas drainage system involves in-mine directional drilling of
horizontal pre-drainage boreholes, which adds to the cost of the project and decreases returns. Max
power plant capacity and net C02e reductions are the same for both project scenarios because those
values are largely reliant on the quantity of gas production, which is the same for the different project
scenarios because the same two development scenarios are used to calculate results from the two
economic scenarios. The discount rate used for all NPV calculations in the results tables is 10%.
Development
Scenario
Borehole
Spacing
(m)
Max Power
Plant Capacity
(MW)
NPV-10
($,000)
IRR (%)
Payback
(years)
Net CChe
Reductions
(tCChe)
1 md
17
4.0
45
10.3%
3.5
340,585
5 md
130
4.0
408
13.0%
3.0
347,607
Table 15: Summary of Economic Results for Power Plant (Only) (pre-tax).
Development
Scenario
Borehole
Spacing
(m)
Max Power
Plant Capacity
(MW)
NPV-10
($,000)
IRR (%)
Payback
(years)
Net CChe
Reductions
(tCChe)
1 md
17
4.0
-9,020
-19.8%
na
340,585
5 md
130
4.0
-3,037
-5.2%
na
347,607
Table 16: Summary of Economic Results for Power Plant and Gas Drainage System (pre-tax).
8 Conclusions, Recommendations, and Next Steps
This pre-feasibility study proposes a methane pre-drainage approach for the Casa Blanca Mine. The
study further provides a high-level estimate of gas production using these methods and an economic
analysis of using the CMM to generate power. After consideration of possible options for CMM
utilization at the Casa Blanca Mine, power generation was selected as the best option for the mine given
current legislation and mine management priorities. As the analysis shows, pre-drainage using long,
directionally drilled horizontal boreholes can effectively lower the residual gas content of coal seams
prior to future mining. As proposed in this study, the CMM project at the Casa Blanca Mine is
anticipated to reduce emissions of methane by more than 340,000 tC02e over the 6-year life of the
project.
It is recommended that Casa Blanca Mine management pursue the development of a small (i.e., less
than 1-MW) power project using CMM from a pilot project focused on a single mining level. The power
plant could grow as gas availability increases as more boreholes are drilled prior to development of
additional mine levels. It is recommended that the following steps be undertaken for Casa Blanca Mine
management to move toward project development:
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Develop technical knowledge and in-house expertise through participation in international CMM
events and interaction with CMM experts.
Take core samples throughout the license area and conduct isotherm and gas desorption
analyses to obtain accurate measure of gas content, permeability, and porosity of the coals.
This will inform a more thorough gas production forecast.
Implement continuous monitoring of methane levels and atmospheric conditions of the mine to
optimize ventilation system operation and comply with required safety specifications.
Confirm the ability of the Casa Blanca Mine to sell excess electricity to the power grid and
establish a confirmed price for an interconnect to the grid.
Conduct pilot tests for in-mine drainage boreholes as proposed in this study to develop more
accurate forecasts for methane concentration and volumetric throughput.
Investigate and analyze more thoroughly all utilization options including power production to
confirm the economic and technical feasibility of CMM-to-power and the viability of alternatives
and their competitiveness with power generation.
Begin investigation of financing options to confirm available sources of project finance so that
the mine can determine the appropriate sources and mix of financing, including the mix of debt
and equity.
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