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Pre-feasibility Study for Coal Mine
Methane Recovery and Utilization at
Mopanshan Mine, Guizhou Province,
China
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Pre-feasibility Study for Coal Mine
Methane Recovery and Utilization at
Mopanshan Mine, Guizhou Province,
China
Sponsored by:
U.S. Environmental Protection Agency, Washington, DC USA
Prepared by:
Raven Ridge Resources, Incorporated
December 2014
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Disclaimer
This report was prepared for the U.S. Environmental Protection Agency (USEPA). This analysis uses
publicly available information in combination with information obtained through direct contact with
mine personnel. 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; or
(c) imply endorsement of any technology supplier, product, or process mentioned in this report.
ii
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Executive Summary
With funding from the United States Environmental Protection Agency (USEPA), under the auspices of
the Global Methane Initiative (GMI), this pre-feasibility study evaluates the utilization of coal mine
methane (CMM) produced from a proposed degasification system comprising pre-mine drainage and
gob wells, for use as fuel to generate electricity for the Mopanshan Coal Mine in Guizhou Province,
China.
Presently, there are no mining activities occurring at Mopanshan Coal Mine (Mopanshan), but mine
planning and development are underway. In October of 2005, the Guizhou Qianxi Energy Development
Co. Ltd. (GQEDC) obtained the exploration rights to conduct the coal resource assessment at
Mopanshan. The "Coal Exploration and Geological Report" conducted by the Shandong Coal Geological
Engineering Investigation Institute (SCGEII) provided the basis for the geologic review presented herein,
as well as the coal exploration and resource data. An additional study, "Mopanshan Mine Feasibility
Report," completed in November of 2013 by the Nanjing Design Institute of Coal Science and Industrial
Group (NDICSIG), assessed the feasibility to site a coal mine in the Mopanshan coalfield and laid out a
preliminary mine plan. With the completion of NDISCSIG's feasibility report, initial mine development
planned to commence in the near future, but is dependent on China's coal markets which have been
depressed during the last two years.
Mopanshan will be an underground coal mine aiming to produce 900 thousand tonnes of coal per year
when full design capacity is reached. Owned and operated by GQEDC, the mine has targeted two
primary coal seams, the 5 and 9 seam. The calculated economically recoverable coal reserves within the
mining area are estimated to be 60.75 million tonnes, providing an expected mine service life of over 66
years.
Gas content test data provided by mine management along with results of a methane adsorption
isotherm test, were used to provide a frame of reference within which the potential gas volume of each
coal seam could be estimated. Gas resources were estimated for each of the coal seams by multiplying
the volume of coal resources within the designated mining area to a probability distribution
representing the range of gas content values. The p50 total methane resource for the mineable coal
seams at the Mopanshan mine is estimated to be 2,921.6 million cubic meters.
Production modeling performed for this study included the potential gas produced from a proposed
series of 22 pre-mine drainage wells positioned vertically throughout the mining area and three gob
drainage wells drilled annually over a ten year period. The total estimated p50 CMM production over
the project life is 165.9 million cubic meters of methane, available for use by the mine.
The Permian age stratigraphic sequence that contains the mineable coal seams is directly overlain by
thick Triassic and Permian limestone beds. In the Mopanshan region, the relentless dissolution of
calcium carbonate from the limestone beds gives rise to a specific type of geologic terrain known as
karst topography characterized by sinkholes, caves and underground drainage systems. The water
contained in these aquifers can pose safety concerns for miners and require that design of pre-mine and
gob wells accommodate the need to hold back the water while drilling, and preserve the integrity of the
well as it passes through karstic cavities.
The energy market in the Guizhou region was assessed to determine end-uses for the Mopanshan
mine's CMM. China's electricity consumption grew at a robust average rate of 11.1 percent from 2005 -
2011. Electricity consumption within Guizhou is also on the rise, reporting a growth of 7.3 percent in
2013, and it is reasonable to assume that Guizhou's economy and its electricity consumption will grow
within the projected eight to ten percent range for the country as a whole in the medium term. Never-
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the-less, virtually all power generated by Guizhou CMM plants is being distributed through the mining
companies' grids for their own consumption, and some mining companies with the capability to
generate excess power have been forced to idle capacity due to their inability to reach interconnection
and sales agreements.
End-use options for the CMM drained from the Mopanshan mine are limited as there is no existing
infrastructure in the region that would enable the mine to transport produced gas to market. This
feasibility study proposes the mine consider on-site power generation using CMM fueled internal
combustion engines. The proposed power generation project operating 8,000 hours annually would
generate 13.5 MW of electricity once the project reaches peak gas production. The capital costs are
estimated to be $27.47 million USD yielding an IRR of 45 percent and a payback period of 3.8 years. The
proposed power generation project is estimated to reduce CMM emissions by 397.4 thousand tonnes of
C02e over the project's 10 year life.
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Contents
Disclaimer ii
Executive Summary iii
Figures vii
Plates vii
Tables viii
Acronyms and Abbreviations ix
Acknowledgments x
1. Background 1
2. Introduction 1
2.1. History 2
3. Geologic Setting 2
3.1. Location 2
3.2. Regional Geology 3
3.3. Mining Geology 4
3.3.1. Stratigraphy and Hydrogeology 4
3.3.2. Structural Geology 6
3.3.3. Coal Bearing Strata 7
3.3.4. Thickness and Physical Properties 7
4. Coal Resources 8
5. Coal Mining 9
5.1. Projected Coal Production and Mining Plan 9
6. Gas Resources 11
7. Potential Gas Production 15
7.1. Drilling Design and Basis for Production Forecasts 15
7.2. Gas and Water Production Forecast 20
7.2.1. Approach to Forecasting Pre-mine Drainage Gas and Water Production 20
7.2.2. Pre-mine Drainage Gas and Water Production Forecast Results 23
7.2.3. Approach to Forecasting Gob Gas Drainage Production 24
7.2.4. Gob Gas Drainage Production Forecast Results 25
7.3. Total Gas Production Forecast Results 25
8. Energy Markets 26
8.1. Coal Market 26
8.1.1. China's Coal Market 26
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8.1.2. Guizhou's Coal Market 27
8.2. Electricity and/or Gas Market 27
8.2.1. China Electricity Market 27
8.2.2. Regional Electricity Market 28
9. Proposed End-use Option and Economic Performance 29
9.1. Power Generation 29
9.1.1. Technology and Deployment 29
9.1.2. Risk Factors and Mitigants 30
9.2. Economic Analysis 31
9.2.1. Inputs and Assumptions 31
9.2.2. Probabilistic Economic Forecast Results 33
9.2.3. Sensitivity Analysis of Power Generation 34
10. Conclusions and Recommended Next Steps 35
11. References 37
vi
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Figures
Figure 1: Overview Area Map 3
Figure 2: Mopanshan Regional Geologic Map 4
Figure 3: Stratigraphic Section of Coal and Water Bearing Strata 6
Figure 4: Example Cross-sections within the Mining Area 7
Figure 5: Seam 5 and Seam 9 Coal Resources 9
Figure 6: Mopanshan Mining Panels Map 10
Figure 7: Adsorption Isotherm Curves and Gas Content Points 11
Figure 8: Coal Seam 5 Forecasted Gas Resources 13
Figure 9: Coal Seam 9 Forecasted Gas Resources 13
Figure 10: Forecasted Gas Resources - Typical Mining Panel and Area Drained by Pre-mine Well 14
Figure 11: Layout of Proposed Pre-Mine Wells 17
Figure 12: Example Proposed Pre-mine Well 17
Figure 13: Pre-mine Well Diagram 18
Figure 15: Layout of Proposed Gob Drainage Wells 19
Figure 16: Example Proposed Gob Well 19
Figure 17: Gas Production Forecast Analogy Location Map 20
Figure 18: Forecasted Gas and Water Production - Comparing Mopanshan to Producing CBM Field 22
Figure 19: Water/Gas Ratio of Shouyang Production (cubic meters/cubic meters) 23
Figure 20: Forecasted Gas and Water Production 23
Figure 21: China's Energy Mix 2011. Source: EIA (2014a) 26
Figure 22: China's Raw Coal Supply. Source: EIA (2014b) 27
Figure 23: Gas Production, Expenditures and Revenues of the Proposed Methane Mitigation Plan 33
Plates
Plate 1: Mopanshan Coal Mine Proposed Drilling Map
Plate 2: Mopanshan Coal Mine Stratigraphic Column
vii
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Tables
Table 1: Coal Seam 5 and Coal Seam 9 Physical Properties 8
Table 2: Coal Resources within the Mining Property 9
Table 3: Projected Coal Production 10
Table 4: Probabilistic Gas Resource Forecasts of Coal Seams 5 and 9 within the area Drained by a Typical
Pre-Mine Drainage Well 14
Table 5: Probabilistic Gas Resource Forecasts of Coal Seams 5 and 9 within a Typical Mining Panel 15
Table 6: Comparison Table of Mopanshan and Shouyang Geologic Properties 21
Table 7: Pre-mine Drainage Gas and Water Production Forecast Results 24
Table 8: Gob Gas Production p50 Forecast Results 25
Table 9: Total Gas Production p50 Forecast Results 25
Table 10: Annual Project Costs 30
Table 11: Risk Factors and Mitigants: Power Generation and Use Options 31
Table 12: Inputs and Assumptions Used in Economic Model 32
Table 13: Power Generation Option Base Case Forecast Results 34
Table 14: Comparison Table of Economic Indicators with Varying Gas Production Forecast 34
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Acronyms and Abbreviations
CBM coalbed methane
CMM coal mine methane
CAPEX Capital expenditures
CNY Chinese yuan (currency)
C02e carbon dioxide equivalent
CSPGC China Southern Power Grid Company
GMI Global Methane Initiative
GQEDC Guizhou Qianxi Energy Development Company Limited
GZICCEP Guizhou International Cooperation Center for Environmental Protection
IRR internal rate of return
km kilometers
kV kilovolt
kWh kilowatt hour
m meters
m3 cubic meters
mD millidarcies
mm millimeter
MW megawatt
MWh megawatt hour
NDICSIG Nanjing Design Institute of Coal Science and Industrial Group
NPV net present value
OGIP original gas-in-place
OPEX operating expenditures
plO Indicates a 10% chance that forecast will be > to the plO amount
p50 Indicates a 50% chance that forecast will be > to the p50 amount
p90 Indicates a 90% chance that forecast will be > to the p90 amount
PSC production sharing contract
RRR Raven Ridge Resources, Incorporated
SCGEII Shandong Coal Geological Engineering Investigation Institute
US United States
USD United States dollar
USEPA United States Environmental Protection Agency
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Acknowledgments
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), Raven Ridge Resources, Incorporated team members Candice L. M. Tellio,
Raymond C. Pilcher, James S. Marshall, and Charlee A. Boger authored this report based on information
obtained from the coal mine partner, Guizhou Qianxi Energy Development Company.
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1. Background
This pre-feasibility study was sponsored by the United States Environmental Protection Agency (USEPA)
under the auspices of the Global Methane Initiative (GMI), of which both the United States (US) and
China are members. The study was conducted by Raven Ridge Resources, Incorporated (RRR), with
support from the Guizhou International Cooperation Center for Environmental Protection (GZICCEP) and
Cenergy Corporation.
The Mopanshan Coal Mine (Mopanshan) is a new property being developed by Guizhou Qianxi Energy
Development Co., Ltd. (GQEDC) in Qianxi County, Guizhou Province with design capacity of 900
thousand tonnes of anthracite coal per year. Coal from Mopanshan will be used to meet the demands
of the nearby Qianxi Power Plant, as well as other power plants in the area such as the Dafang Power
Plant. The site is located near the Qinglong Mine, also operated by GQEDC. Mopanshan has
economically recoverable coal resources estimated at 60.75 million tonnes from the Permian Longtan
Formation seams 5, 9, 12, 14 and 15, and an anticipated mining life of over 66 years. A gas content
sampling program was conducted at Mopanshan during which 33 coal samples were measured for gas
content. Gas content results ranged from 5.24 - 23.74 cubic meters/tonne, indicating that the mine will
be classified as a high-gas coal mine. Initial geologic investigations show the mineable coal seams are
overlain by several water-bearing limestone aquifers. Consideration of these aquifers needs to be taken
into account during the mine's development stage and the pre-mine and post-mine drilling activities
proposed in this report. GQEDC recognizes the importance of implementing a methane drainage
program in order to manage emissions and have been progressive partners in a previous USEPA-funded
pre-feasibility study at Qinglong Mine with GZICCEP. Understanding the benefits of assessing coal mine
methane (CMM) resources and determining an appropriate approach to recovery and utilization,
Mopanshan and its owners were identified as the host mine to perform this pre-feasibility study.
Demand for natural gas in Guizhou is currently triple the supply, so extraction of gas for self-supply of
electricity is attractive to the mine. Applicability of other end-use options for the CMM drained from the
Mopanshan mine is limited as there is no existing infrastructure in the region that would enable the
mine to transport produced gas to market. At least until the gas resource is proven to be economically
producible, the option with the lowest technical and economic risk available is on-site use of the gas to
fuel electricity generation for the mine's consumption.
Currently Mopanshan is 100 percent owned by GQEDC. The mine will be an underground mine using a
single longwall system to extract coal. The mine managers believe the construction and operation of the
Mopanshan coal mine will help to promote local economic development and social stability of the area.
As stated by the Nanjing Design Institute of Coal Science and Industrial Group (NDICSIG) in a study
commission by GQEDC, "Mine construction and production will raise the local tax base, increase
employment and promote the development of related industries, so that local people [will rise] out of
poverty" (NDI, 2013).
2. Introduction
The objective of this pre-feasibility study is to examine the potential for employing pre-mine and post-
mine drainage wells, to reduce global methane emissions, to increase mine safety and to capture
methane gas for use as fuel to generate power at the Mopanshan coal mine.
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This report is the result of investigations that entail:
Field visits to the mine;
Translation and review of technical documents;
Estimates of the in situ methane resources and forecasts of production based on statistical
analysis of the gas that may be contained by the coal resources and the potential for pre-mine
methane drainage via surface drilled wells; and,
Analysis of the economic performance of a proposed gas-to-electricity pilot project based on
current energy markets and quotes from vendors.
Results of this pre-feasibility study are intended to provide a foundation for a full-scale feasibility study.
The approach taken is designed to develop a program that attracts the attention of investors or other
stakeholders such that a full-scale feasibility study and eventually a drainage and utilization project are
funded and executed.
2.1. History
Presently, there are no mining activities occurring at Mopanshan, but mine planning and development is
underway. In October of 2005, the GQEDC obtained the exploration rights to conduct the coal resource
assessment at Mopanshan. The "Coal Exploration and Geological Report" conducted by the Shandong
Coal Geological Engineering Investigation Institute (SCGEII) provided the basis for the geologic review
presented, as well as the coal exploration and resource data. An additional study, "Mopanshan Mine
Feasibility Report" completed in November of 2013 by the NDICSIG assessed the feasibility to site a coal
mine in the Mopanshan coalfield as well as laid out a preliminary mine plan. With the completion of the
NDICSIG report, initial mine development is planned to commence in the near future, but is dependent
on China's coal markets which have been depressed during the last two years. These reports are the
basis for the geologic assessment discussed in this document.
3. Geologic Setting
3.1. Location
The Mopanshan coalfield, located in the north east portion of Qianxi County and within Guizhou
Province, covers an area just over 30 square kilometers. The coalfield property is centered at 106ฐ 21'
34" E longitude and 27ฐ 06' 34" N latitude, and is approximately 68.5 kilometers northwest of Guiyang.
Figure 1 shows the location of the Mopanshan coalfield within Guizhou Province.
2
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Chongqing
Hanyuan
Wutongqiao
Qianjianฃ ,
Longchang
Qijiang
Sujjmng
Tongren
Huitong
Gujyang
Majiang
Dongchuan
Huishui
Qingtong
Zhanyi
Longsheng
Kunming
Rongan
Luliang
Jiuzhou
People's Republic of China
Guizhou
Province
Sources: USGS..ESRI, TANA:
AND
Figure 1: Overview Area Map
The Mopanshan mining area lies atop the Yangzi Plateau, and is situated on a plateau of undulating
karstic terrain which is bounded on the east by a dammed portion of the Wu River known as Yachi Lake,
and on the north by an unnamed tributary to the Wu. The property elevation ranges from the low point
near the river, at 703 meters, to the region's highest point, referred to as the Eagle's Nest, at 1,409
meters above sea level. The average elevation over the mining property is between 1,100 and 1,200
meters.
3.2. Regional Geology
As a part of the Yangzi Plateau, the tectonic structure of the Mopanshan coalfield consists of northeast-
southwest trending gently dipping asymmetrical anticlines and synclines, bisected by a number of
normal and reverse faults and bounded on the east by a series of folded and faulted horst and graben
blocks. Figure 2 shows the anticline and syncline axes in green, with the fault traces shown in red.
Generally, the folding precedes the faulting, suggesting the initial elastic deformation occurred during a
period of northwest to southeast compressional stresses, or squeezing, which later evolved into
tensional stresses. Under the tensional stress regime, normal faulting and slip along those faults
allowed for the creation of the horst and graben structures to the east and south.
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3.3. Mining Geology
3.3.1= Stratigraphy and Hydrogeology
The following discussion regarding the stratigraphy of the Mopanshan area is focused on those
characteristics that directly impact mining, and the drilling of pre-mine gas drainage and gob vent
boreholes proposed in Section 7.1, of this report. The Permian age stratigraphic sequence that contains
mineable coal seams is directly overlain by thick Triassic and Permian limestone beds that were
deposited in a shallow marine environment. Subsequent to deposition these limestone strata have
undergone significant chemical and structural alteration, principally as a result of groundwater moving
through the strata and dissolving calcium carbonate, the main constituent of the limestone. In the
Mopanshan region, the relentless dissolution of calcium carbonate from the limestone beds gives rise to
a specific type of geologic terrain known as karst topography characterized by sinkholes, caves and
underground drainage systems. In strata where mechanical and chemical removal of limestone has
taken place, pore spaces are enlarged and permeability develops, forming reservoirs and conduits
through which huge volumes of water may flow. The water contained in these aquifers can pose safety
concerns for miners and require that the design of pre-mine and gob vent wells protect the wellbore
while drilling through karstic cavities.
Plate 2 is a graphic representation of the stratigraphic sequence that will be penetrated by boreholes
drilled at Mopanshan. With the exception of the uppermost Quaternary formation, each of the geologic
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formations present at the site, contain aquifers whose effects must be taken into account when the final
layout of the mine is being developed or a degasification drilling program is undertaken.
Maocaopu Limestone
Five boreholes drilled during the coal exploration program discovered a fractured karstic aquifer in the
Maocaopu Formation. The largest karstic feature encountered during drilling was a cave measuring 11
meters in diameter. Pump tests, which are used to determine water flow and permeability, were
unsuccessful because the formation is highly fractured. Consequently, these important parameters
could be measured in subsequent drilling programs by simply producing water from the formation and
monitoring rate and volume. While this aquifer is unlikely to interfere with mining as the zone lies far
above the mineable seams and is separated by impermeable mudstone strata, it could pose issues with
drilling pre-mine and gob vent wells.
Yelang Limestone
Eight coal exploratory boreholes identified fractured karst aquifers in the Yelang Limestone. The largest
cave structure encountered by these boreholes was 5.4 meters in diameter. However, void spaces were
frequently encountered and all were water-filled. Mining operations would be separated by
impermeable mudstone and siltstone barriers; therefore the water within this aquifer does not pose
imminent danger to mining in the underlying strata. Again, however, if these aquifers are not given
proper consideration, they could become a significant challenge during drilling of the proposed
degasification program.
Changxing and Dalong Formations
These two formations comprise a conformable stratigraphic sequence of limestone and silicic limestone
directly overlying the coal bearing Longtan formation. Figure 3 provides a more detailed view of the
stratigraphy of the rocks directly overlying the Changxing Formation. These formations contain a
fractured karst aquifer that was identified in 25 of the 34 exploratory boreholes drilled in the
Mopanshan area. Values of greater than 73 percent porosity were measured in some boreholes. This
aquifer, which lies only about 40 meters above coal seam 5, poses the most immediate threat to mining
in the Longtan formation. This distance is well within the zone of strata relaxation and fracturing that
will take place as longwall mining extracts coal from seam 5 and the underlying coal seam 9. Pre-mine
drainage boreholes will have to be designed in such a way as to accommodate potential unwanted
water flows.
Longtan Formation
Four limestone beds occurring in the upper part of the Longtan Formation are water bearing; these beds
numbered sequentially from uppermost to lowermost are the: LI - 10.3 meters thick; L2 - 0.8 meters
thick; L4 - 1.4 meters thick; and, L5 - 1.8 meters thick. However, there is no recognizable impermeable
layer separating the LI and L2 aquifers, suggesting that the two beds will act as one aquifer. Porosity
was measured for the LI and L2 limestone beds, resulting in measured values of 58.8 percent and 32.4
percent porosity, respectively. The average distance between the base of the LI and coal seam 5 is 28.9
meters, which is well within the collapse and strata relaxation zone that will develop as coal is extracted
from coal seams 5 and 9, potentially posing a mining hazard.
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Figure 3: Stratigraphic Section of Coal and Water Bearing Strata
3.3.2. Structural Geology
Digital image files of the cross-sections developed during the coal exploration process were used to
construct a simple three-dimensional model of the mining area. This model was used as a basis for
understanding the geologic and structural history within the mining area. Within the immediate mining
area, shown by the Mopanshan Coal Mine outline in Figure 2, the degree of structural complexity is
moderate. The moderately undulating structure contains small localized folds, with little change in dip
within the initial mining and development area, ranging between 6 and 10 degrees and dipping to the
northwest. Over the entire mining area, however, the dip ranges between 4-22 degrees. Steeply
pitched normal and reverse faulting was discovered in the eastern and southern portions of the mining
area, with vertical displacement ranging up to as much as 24 meters. Figure 4 shows two example cross-
sections, one looking toward the northeast and one looking toward the northwest. The extensive
faulting shown on Cross-section 6 is located along the eastern boundary of mining, while the area of
extensive faulting is shown along the southern boundary of mining in Cross-section L2.
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Cross-Section L2 - Looking Northwest
Faulted area on thi
southern boundan
Cross-Section 6 -
Looking Northeast
Figure 4: Example Cross-sections within the Mining Area
3.3.3. Coal Bearing Strata
The Permian Longtan Formation contains 18 coal seams, of which coal seam 5 and coal seam 9 are
considered by GQEDC as the two primary mineable coal seams within the Mopanshan Coal Mine lease
block. The range in thickness of the Longtan Formation is between 142.3 and 177.7 meters, with an
average thickness of 160.6 meters. Coal seams 1 through 11 lie within the Upper Longtan, while seams
12 through 15 and a few unnamed coal seams lie within the Lower Longtan.
The Longtan Formation comprises interfingered marine and continental sediments. Coal seams are
found within the continental clastic sediments deposited during nine depositional cycles, which
occurred as sea level changed over time. Clastic sediments including grey mudstones, siltstones, fine-
grained sandstones, limestones and carbonaceous shales are interbedded with the coal throughout.
The marine environment formed along the continental margin in which 18 limestone beds were
deposited, principally in the upper portions of the Longtan. A number of these beds are recognizable
throughout the area and serve as marker beds to provide control for coal resource exploration activities.
The Longtan Formation is also rich in animal and plant fossils. Figure 3 depicts a stratigraphic section of
the Upper Longtan Formation, showing the focused resistivity, density, natural gamma and neutron
geophysical log curves and the identified coal and limestone layers. A description of the strata occurring
within the local stratigraphic sequence is included in Plate 2: Mopanshan Coal Mine Stratigraphic
Column.
Coal seam 5 lies between 35.2 - 51.9 meters below the bottom of the Permian Changxing Limestone,
where limestone and siltstones are the primary interbedded layers separating the two. The adjacent
overlying and underlying strata of coal seam 5 are predominantly mudstones. Coal seam 9 lies between
18.5 27.4 meters below coal seam 5, and the primary interbedded layers are siltstones, coals, fine-
grained sandstones and sandy mudstones. The adjacent strata overlying seam 9 is a sandy mudstone
whereas the underlying strata is predominantly mudstone.
3.3.4. Thickness and Physical Properties
Coal seam 5 ranges in thickness from 0.65 to 3.28 meters, with an average thickness of 1.82 meters and
a mineable seam thickness ranging between 0.8 to 3.28 meters. In some locations, the seam contains a
carbonaceous mudstone parting, and according to the initial mine design, the mine is expecting to
recover 82 percent of the coal. Coal seam 9 ranges in thickness from 1.42 to 3.80 meters, with an
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average thickness of 3.01 meters. This seam is continuous, and the mine expects to achieve 100 percent
recovery (NDI, 2013).
Both coal seams 5 and 9 are anthracite and exhibit a semi-bright luster. Table 1 shows the key coal
properties that were collected in the coal exploration campaign conducted in 2005 by SCGEII.
Table 1: Coal Seam 5 and Coal Seam 9 Physical Properties
Physical
Properties
(float coal)
Moisture
Mad (%)
Ash Ad (%)
Volatiles
Vdaf (%)
Total Sulfur
St,d (%)
Phosphorus
Pd (%)
Heat
Qgr,d
(MJ/kg)
Seam 5
Range
Average (#
of samples)
0.56-2.54
6.87-12.75
6.60-8.06
0.39-1.63
0.002-
0.010
30.97-
33.88
1.53 (31)
9.17 (30)
7.25 (31)
1.06 (31)
0.006 (12)
32.46 (21)
Seam 9
Range
Average (#
of samples)
0.34-2.85
5.24-11.25
6.38-7.75
0.38-1.06
0.002-
0.012
31.63-
33.90
1.65 (29)
9.11 (29)
7.00 (29)
0.58(29)
0.007 (13)
32.64 (20)
4. Coal Resources
According to the findings of the 2013 NDICSIG report, the best estimates of coal resources at
Mopanshan were collected during the exploration program carried out by SCGEII. The exploration
activities, conducted in 2005, consisted of:
Identification of the stratigraphic sequence and its age;
Detailed analysis of the coal and coal-bearing strata;
Identification of the major structural features within the mine area;
Map of the basal structural contours of the mineable coal seams;
Detailed identification of the mineable coal thickness variation and continuity of the coal layers;
Basic hydrogeological conditions and potential water flow within the mine;
Coal and coal dust spontaneous combustion and explosion hazards;
Roof and floor characteristics that affect ground temperature changes and other mining
conditions; and,
Coal reserves estimates based on reasonable and reliable parameters.
According to SCGEII, the mine area contains a total of 215.8 million tonnes of coal resources from the
targeted 5 and 9 coal seams (Table 2). If the mine operates at its design capacity of 900,000
tonnes/year, the service life of the mine will be approximately 66 years. Below, Figure 5 shows the coal
resources presented by coal seam and coal resource classification. Based on the China Solid Mineral
Resource/Reserve Classification document (2009), GQEDC's exploratory drilling campaign on portions of
the mine property delineated four categories of reserves: 331, 332, 333 and 334. According to this
classification system, reserves designated in the 331 class are measured reserves; 332 are indicated
reserves; 333 are inferred reserves; and the 334 class are hypothetical reserves. Table 2 shows the
reserves estimated by SCGEII.
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331 332 333
Coal Resource Classification
Figure 5: Seam 5 and Seam 9 Coal Resources
Table 2: Coal Resources within the Mining Property
Coal Reserves
Coal 5 Mass
Coal 9 Mass
Total Coal
Resources
(10,000 tonnes)
Classification
(10,000 tonnes)
(10,000 tonnes)
331
787.2
1,697.8
2,485.0
332
1,208.7
2,019.0
3,227.7
333
1,973.4
2,370.0
4,343.4
334
5,335.6
6,193.1
11,528.7
TOTAL
9,304.9
12,279.9
21,584.8
5. Coal Mining
5.1. Projected Coal Production and Mining Plan
Mine maps provided by GQEDC's managers were used to assess the potential design layout of the mine
and as a basis for gas resource and drainage analysis. At the time of this study, a detailed mine plan was
not yet completed; however, a map showing the location of the first panel with an initial skeletal plan
was available. Using the initial mine layout and for the purposes of this investigation, Figure 6 depicts
9
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the plan used to estimate gas resources and propose the pre-mine drainage and gob well drainage
layouts proposed in Section 7.1. Table 3 shows the assumed initial coal production and timing to ramp
up to the mine's goal design capacity.
Figure 6: Mopanshan Mining Panels Map
Table 3: Projected Coal Production
Production
YEAR
Assumptions
1
2
3
4
5
6
7
8
9
10
Annual Coal
(thousand tonnes)
300
600
900
900
900
900
900
900
900
900
10
-------
6. Gas Resources
The coal resource values obtained from the mine's resource and planning reports served as the basis for
calculating the overall original gas-in-place (OGIP) at the Mopanshan mine. A widely accepted method
of coarsely estimating the gas resource associated with the coal resource is to multiply mass of the coal
by the gas content of the coal, The mine furnished gas content data collected during their exploration
phase for coal seams 5, 8, 9, 12, 13, 14 and 15. In order to avoid calculating an estimate that was based
on a single point value, gas content values were used to generate a Mopanshan coalfield isotherm
model, which mathematically describes the variations of gas content values across the coal seams within
the immediate mining area. A seam 9 coal sample was obtained from the Yan Jiao Mine, 5 kilometers to
the south, which was submitted for adsorption isotherm testing. Results from this testing were used as
a reference for the gas storage capacity that may be present in coal seam 9. Results, presented on a
dry-ash free basis, for the calculated Mopanshan coalfield isotherm model curve, the Mopanshan gas
content points, and the seam 9 adsorption isotherm test are shown in Figure 7.
Pressure (Mpa)
Explanation
Coal 5 Gas Content d.a.f.
Coal 8 Gas Content d.a.f.
Coal 9 Gas Content d.a.f.
ฉ Coal 12 Gas Content d.a.f.
O Coal 13 Gas Content d.a.f.
Depth (m)
Figure 7: Adsorption Isotherm Curves and Gas Content Points
Methane adsorption isotherm testing was conducted to provide a broader frame of reference that was
used to estimate the total gas saturation in the coals and the potential OGIP associated with
Mopanshan's coal resources. An adsorption isotherm mathematically describes the relationship
between pressure and gas capacity under equilibrium conditions at a stable temperature, usually chosen
to represent the reservoir conditions of the coal seam occurring at the depth from which the sample
was taken. This adsorption isotherm indicates the gas capacity of one sample taken from coal near the
mine and may not depict the situation for all coal seams; however, the mine's gas content data values
resulting from gas desorption testing, provide a near in-situ representation of the potential gas present
11
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in the mineable coal seams. The estimated gas resources at Mopanshan represent the amount of gas
that may be released during mining if not recovered before coal extraction begins.
The calculated isotherm constants (Langmuir pressure and Langmuir volume) derived from the
Mopanshan coalfield isotherm model curve were utilized to perform statistical analysis of the potential
gas resources. The Langmuir equation below was used to calculate the gas content of coal at a given
depth.
V = VL* P/(PL + P); where:
V = gas content (cubic meters/tonne)
VL = Langmuir volume constant (cubic meters/tonne)
P = reservoir pressure (MPa)
PL = Langmuir pressure constant (MPa)
Pressure was converted into depth of burial by assuming a normal hydrostatic gradient1. The curves
shown on Figure 7 relate gas content of the coal sample to the expected content at a given mining
depth. The brown and red curves have been adjusted to reflect the gas capacity for the coal on a dry,
ash free basis, allowing the results of this test to be compared to any isotherm conducted on a coal
sample from anywhere in the world. The red curve is considered to best represent the Mopanshan coal
seams even though it predicts lower gas content values as it mathematically models actual gas content
values acquired throughout the mining area.
In order to estimate OGIP, the previously described coal resources were multiplied by a probability
distribution representing the range of gas content values. The probabilistic approach to estimating the
OGIP takes into account the uncertainty of the coal density, thickness, and the gas content values of the
mineable coal. Gas resource forecasts were calculated for each of three probability thresholds, plO, p50
and p90. The gas resource forecasted at each threshold has the probability of being the actual value
that will be measured equal to or greater than the stated probability. The total OGIP resource forecast
over the entire mining property of coal seam 5 (Figure 8) ranges from 619.4 up to 1,772.6 million cubic
meters (p90 through plO). The total estimated p50 OGIP resource for seam 5 within the mine lease area
is 1,057.8 million cubic meters. The total OGIP gas resource forecast over the entire mining property of
coal seam 9 (Figure 9) ranges from 1,204.1 up to 2,883.5 million cubic meters (p90 through plO). The
total estimated p50 GIP resource for seam 9 within the mine lease area is 1,863.8 million cubic meters.
Therefore, there is a 50 percent probability that the recoverable gas resources for both coal seam 5 and
9 will be equal to or greater than 2,921.6 million cubic meters.
1 The hydrostatic gradient is the change in hydrostatic pressure per unit of depth. It is assumed that this area is
under normal hydrostatic gradient, which is 9.8 kPa/m of water column.
12
-------
1000
900
Explanation
Coal 5 Forecasted plO Gas Resources
Coal 5 Forecasted p50 Gas Resources
Coal 5 Forecasted p90 Gas Resources
800
,2 700
600
500
<2 400
300
200
100
T
331 332 333 334
Coal Reserves Classification
Figure 8: Coal Seam 5 Forecasted Gas Resources
1600
1400
1200
i 1000
1/1
0)
3
O
!/)
GJ
CC
800
<3 600
400
200
Explanation
Coal 9 Forecasted plO Gas Resources
Coal 9 Forecasted p50 Gas Resources
Coal 9 Forecasted p90 Gas Resources
1504.4
331 332 333 334
Coal Reserves Classification
Figure 9: Coal Seam 9 Forecasted Gas Resources
This study proposes drilling 22 vertical wells in order to recover CMM prior to coal extraction (described
in detail in Section 7.1). The OGIP was also calculated for the coal resource that may be present within
the area drained by each proposed pre-mine well as well as a typical coal mining panel. The appropriate
gas content was chosen using the average depth of the bottom of coal seam 5 and coal seam 9 recorded
13
-------
for the intercept of the exploratory boreholes. Depth was converted to hydrostatic pressure and the gas
content was calculated using the red curve shown in Figure 7. As shown in Figure 10, the total estimated
p50 OGIP of the drainage area for a single proposed pre-mine drainage well is 15.7 million cubic meters,
of which coal seam 5 is 5.77 million cubic meters and coal seam 9 is 9.96 million cubic meters (Table 4).
Also shown in Figure 10, the total estimated p50 OGIP of a typical mining panel is 20.1 million cubic
meters, where coal seam 5 comprises 7.36 million cubic meters of the total gas, and coal seam 9
comprises 12.76 million cubic meters (Table 5).
Explanation
] Coal 5 Forecasted Gas Resources Area Drained by Typical Pre-mine Well
| Coal 5 Forecasted Gas Resources Area within Typical Mining Panel
Coal 9 Forecasted Gas Resources - Area Drained by Typical Pre-mine Well
_J Coal 9 Forecasted Gas Resources - Area within Typical Mining Panel
Cumulative Gas Resources (Coals 5 and 9) - Area Drained by Typical Pre-mine Well
Cumulative Gas Resources (Coals 5 and 9) - Area within Typical Mining Panel
34
33
32
31
30 \
29 o
28 =
27
in
26 0)
25 g
2" S
23 *
22 ซ
21 u
20 g
19 S
15 |
17 E
16 3
15 -c
dj
14 ts
13 a
12 2!
n ฐ
10
9
8
p90 p50 plO
Percentile Class
Figure 10: Forecasted Gas Resources - Typical Mining Panel and Area Drained by Pre-mine Well
Table 4 and Table 5 present the gas resource forecasts of the plO, p50 and p90 percentile classes,
estimated for a typical pre-mine drainage well by coal seam and a typical mining panel.
Table 4: Probabilistic Gas Resource Forecasts of Coal Seams 5 and 9 within the area Drained by a Typical Pre-
Mine Drainage Well
Percentile
Class
Coal Seam 5 Forecasted Gas
Resource (cubic meters)
Coal Seam 9 Forecasted Gas
Resource (cubic meters)
Total Forecasted Gas
Resource (cubic meters)
plO
9,668,302
15,409,306
25,077,608
p50
5,769,752
9,957,098
15,726,850
p90
3,378,312
6,434,139
9,812,451
14
-------
Table 5: Probabilistic Gas Resource Forecasts of Coal Seams 5 and 9 within a Typical Mining Panel
plO
13,000,972
20,575,111
33,576,082
p50
7,363,399
12,757,549
20,120,947
p90
4,142,216
7,766,243
11,908,459
7. Potential Gas Production
The potential gas resources at Mopanshan mine are estimated range from 619.4 to 2,883.5 million cubic
meters, which includes gas contained in coal seams 5 and 9 that lie within the Mopanshan mining area
(Figure 8 and Figure 9). It is possible to capture CMM before and after mining, using pre- and post-
mining drainage techniques. The following proposed drilling plan utilizes both techniques, and provides
suggested resources for selecting the most safe and effective solutions.
7.1. Drilling Design and Basis for Production Forecasts
Pre-mine drainage of gas from mineable coal seams is a best practice option for capturing and using gas
that would otherwise be released during mining, and is the only means of reducing methane flow
directly from the targeted mining seams (UNECE, 2010). Moreover, gas produced from pre-mine
drainage boreholes, if handled properly, can contain greater than 90 percent methane by volume, thus
giving the mine operator the greatest range in potential options for gas utilization. A pre-mine drainage
program may comprise one or a combination of several options for draining the coal prior to mining,
using boreholes that are drilled from either the surface or from underground sites located in a mine's
workings. Cost-effective means of pre-mine drainage, aimed at lowering the emission of methane into
the mine workings and ultimately the atmosphere, must account for operational considerations such as
access to drilling sites that may be dictated by topography, surface water drainages, surface rights
ownership and other social and environmental issues. It is assumed that surface conditions and land
ownership are issues which can be addressed and satisfactorily resolved. If the technical and economic
effectiveness of surface drilled boreholes can be proven, there are many advantages to utilizing this
method, including less competition for space in the underground portion of the mine.
The efficiency of draining gas from coal seams at Mopanshan will be impacted by geologic conditions
such as gas content, permeability, and the occurrence of water bearing zones overlying the targeted
coal seams. These conditions should be understood and addressed appropriately prior to mining. The
gas content of the target coal seams is understood well enough to conclude that there is sufficient gas
present to warrant concern for mine safety and indicate that there is an opportunity to develop this
resource in parallel with the coal resource.
Permeability, in simple terms, is a measure of the connectivity of open pathways, through which gas can
move from the seam to the well bore or mining face. Utilizing permeability as a basis of determining the
most suitable pre-mine drainage option, and assuming the mineable coal seams at Mopanshan have
permeability values ranging between 3 and 20 mD, the most effective pre-mine drainage wells should be
drilled vertically and stimulated using hydraulic fracturing techniques to open and prop fractures within
the coalbeds (Palmer, 2010). Issues relative to the occurrence of water-bearing strata overlying the
target coal seams are addressed later in this section.
15
-------
A conceptual design of a drilling program to drain gas from coal seams 5 and 9 using 22 vertical wells is
presented below. The proposed wells are laid out in an array on 640 meter spaced centers creating a
drainage area of approximately 32.4 hectares per well. In order to capture CMM prior to its release by
future mining activities, wells are located on the up-dip side of Mining Areas 1, 2 and 4. Proposed
locations for these wells are shown on Figure 11. Figure 12 is an example cross section showing the
proposed placement of borehole BH 4; the location of section, A-A', is delineated on Figure 11.
A simplified well construction design was used to examine the technical and economic feasibility of
draining gas from coal seams prior to mining. The design used in this document is based on one that is
commonly employed in North America, but it should be noted that drilling these wells should not be
undertaken without using the services of a qualified drilling engineer that has experience drilling and
completing wells in similar geologic conditions. As a basis for examining the technical and economic
feasibility, a design for a surface-drilled pre-mine drainage well is provided. Each well is forecast to
produce CMM for 10 years, with individual well gas production peaking in year two as the reservoir is
de-watered. The pre-mine drainage wells could be constructed as follows:
A 200 millimeter diameter borehole drilled to a total depth reaching 2 meters below the basal
target, coal seam 9 (approximately 530 meters depth).
140 millimeter diameter production casing is then set and to total depth of the borehole and
cemented to the surface, covering both the 5 and 9 seams. Subsequently the casing is
perforated at the depth of the coal seams and hydraulically fractured.
For water production purposes, 73 millimeter diameter tubing is run in the cased hole from the
surface to the bottom of the hole, and a surface pump jack will be used to remove water from
the coal seam and lower the water level in the wellbore.
Produced gas will flow through perforations in the casing into the well bore and up the annulus space
between the casing and the tubing. Formation water will be pumped up the tubing and would be
available for onsite use or could be discharged at a local disposal site. Figure 13 is an example
representing the proposed well design.
16
-------
Figure 11: Layout of Proposed Pre-Mine Wells
" Proposec
BH 4
1
rf
A'
5-3
5
/I
4 279.4 mm JSjj
^ surface borehole
ซr ^
/ y
1
/
219.1 mm surface casing
Tw*
1 '!"
W
200 mm borehole ^
to toe of Well,
brTiv.
-
P3C Perforated casing &-
hydraulically fractured
coal seam
h- ' ^
-
rnrnStmS.
' P
T
Proposed y
33
.9
5
r 0
1u:53Z m
12 73.0 mm tubinejfr-- ""
CIP Estimated Diameter of Drained Area (642 m)=iis?i
P2m
Figure 12: Example Proposed Pre-mine Well
17
-------
Gas
139.7 mm production ,
casing
Watei Pumped
to Surface
219.1 mm surface casing
279.4 mm surface hole
y
73.0 mm tubing
Coal Seam 5 Lies 35,2 51 9
(40.7 m average) below
Changing aquifer
Coal Seam 6
Coal Seam 8
Coal Seam 9
Figure 13: Pre-mine Well Diagram
A proposed layout schematic for annual gob well drilling is shown in Figure 14, This analysis assumes
that three gob wells would be placed prior to mining, approximately 500 meters apart along the long
axis of each longwall panel and slightly off the center line toward the return airway. Construction of a
gob well could be constructed as follows:
A 444.5 millimeter borehole drilled to 25 meters depth and 339.73 millimeter surface casing is
run in the hole and cemented to surface.
A 311.2 millimeter diameter borehole is drilled out from surface casing and down to a depth 2
meters below the L2 aquifer into what will become the relaxed zone above seam 5.
In order to protect the borehole from water incursion, 244.48 millimeter production casing will
be run in the hole to total depth and cemented back to surface. (Figure 15).
18
-------
Figure 14: Layout of Proposed Gob Drainage Wells
244.48 mm 33973 mm surface casing
""444.5 mm surface hole
Figure 15: Example Proposed Gob Well
311.15 mm hole drilled
to 2 m below L2
216 mm open hole drilled
to top of #5 coal seam
19
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7.2. Gas and Water Production Forecast
7.2.1= Approach to Forecasting Pre-mine Drainage Gas and Water Production
Future gas production can be predicted using several approaches, the most common of which are:
basing future production on actual past production of wells in the field being studied; reservoir
simulation modeling using early production and/or geologic and engineering data acquired through field
testing; and using production profiles from wells that were drilled in areas exhibiting similar geologic
and reservoir conditions. A similar coalfield to the Mopanshan mine property with developed coalbed
methane (CBM) production was identified and used for production profile modeling. The nearest
actively producing CBM field in China is the Shouyang CBM Field, located in Qinshui Basin in Shanxi
Province. Figure 16 shows that the Shouyang CBM field lies just over 1,300 kilometers to the northeast
of Mopanshan. The Taiyuan coals of the Upper Carboniferous Taiyuan Formation along the eastern
edge of the Qinshui Basin are similar in rank and gas content, and have comparable burial depths and
total coal thickness to the coals found at Mopanshan.
Shanxi I
'rovincej
iuizhou Province
People's Republic of China
I Shanxi I
|Pfovince\
Guizhou
Province^
Sources: USGS,E3RI, TANA,
AND
^Shouyang CBM Field,\
Qinshui Basin
iMonpanshan [N,
1 Coalfield
fO 50100 200 300 400
I KilometersB
Figure 16: Gas Production Forecast Analogy Location Map
Table 6 shows a comparison between some of the geologic properties of the two coal fields (Operations-
Shouyang Block, n.d.). While both were deposited during the Upper Paleozoic Era, Mopanshan coals
were deposited during Permian time and Shouyang coals were deposited during Carboniferous time.
The variation in depth of burial between the two coal fields has been accounted for with the Mopanshan
field adsorption isotherm, discussed above in Section 6, which predicts the gas content at varying
depths of burial. Permeability data at Mopanshan is unavailable, therefore further field testing should
be conducted to refine and more accurately forecast the potential gas and water production. However,
gas production data at Shouyang is the basis for the gas and water production forecasts presented for
Mopanshan.
20
-------
Table 6: Comparison Table of Mopanshan and Shouyang Geologic Properties
Mopanshan Shouyang
Coal Age/Formation
Permian Shanxi Formation and
Permian Longtan Formation
Carboniferous Taiyuan Formation
Rank
Anthracite Anthracite
Average Coal Gas Content
(cubic meters/tonne)
Coal 5 -14.5
15.5
Coal 9-15.8
Methane Saturation of Coal (%)
71 75
Coal Thickness (meters)
Coal 5-1.8
3.5-5
Coal 9-3.0
Coal Depth (meters)
500 900
Permeability (mD)
N/A 80 -120
Recovery Efficiency (%)
~ 47 ~ 60
The CBM production history of the Shouyang Block, controlled and operated by Far East Energy Corp.,
provided sufficient historical gas production data to perform a reservoir simulation analysis (Reeves,
2008). The simulation included reservoir conditions and well production history data of coal seam 15 of
the Taiyuan Formation, and the probability-based forecasted results for the plO, p50 and p90 gas
production from a vertical well, spaced at 642 meter centers (Reeves, 2008). These forecasts were used
as the basis for forecasting gas production at Mopanshan. In order to scale these forecasts to simulate
potential production of pre-mine drainage wells at the mine, it was necessary to adjust the forecasts for
the differences in reservoir conditions between the two locations. A comparison of the estimated OGIP
at each location showed that Mopanshan contains approximately 43.2 percent of the total gas resource
at Shouyang. Therefore, it is reasonable to expect the potential gas production is also 43.2 percent of
the total forecast from Shouyang. The lower portion of the graph shown in Figure 17 illustrates the p50
gas decline curves from Shouyang and the scaled p50 decline curve that represents the potential gas
production at Mopanshan.
21
-------
According to the p50 production forecast, 118.3 million cubic meters of methane could be drained by
the proposed pre-mine drainage wells. In order to determine the volumes of water that would be
produced in association with the forecasted gas production, a water/gas ratio plot was first generated
based on Shouyang Field historical production (Figure 18). An exponential decline curve was fit to the
data, and the resultant formula defining the curve was used to calculate the ratio at which the water
production should decline relative to gas production. This declining ratio was then applied to the
modeled gas production to determine the volume of annual water production associated with the
forecasted annual gas production at Mopanshan. The associated water production estimates are
considered high; however, actual associated water production should be considerably less as the coal
permeability at Mopanshan is likely to be less than that of the Shouyang Field. The upper portion of the
graph shown in Figure 17 illustrates both forecasted water production curves.
22
-------
~ ~
~ Water/Gas ratio
Expon. (Water/Gas ratio)
y = 0.026ea258x
R2 = 0.6564
Figure 18: Water/Gas Ratio of Shouyang Production (cubic meters/cubic meters)
Figure 19 depicts the relationship of the gas and water production forecasts. As water reaches peak
production, estimated in the first year of production, the gas production ramps up to peak around year
two. This is typical of gas production from coal seams; as water in the coal is produced, the relative
permeability to gas increases, allowing for an increase of gas production.
25,000
20,000
15,000 ฃ
10,000 2
5,000
4 5 6 7
Time (Years)
Figure 19: Forecasted Gas and Water Production
7.2.2. Pre-mine Drainage Gas and Water Production Forecast Results
Relying on the comparisons between the Mopanshan coalfield to the Shouyang CBM field, gas and
water production forecasts were generated. These production forecasts are different than the OGIP
calculations, because the OGIP estimates represent the total amount of gas present within the mineable
coal seams, whereas the gas and water production forecasts represent only that percentage of the OGIP
23
-------
and associated water that may be drained by the proposed pre-mine wells. Based on the proposed
boreholes and their drilling schedule, Table 7 shows the forecasted annual gas and water production.
Table 7: Pre-mine Drainage Gas and Water Production Forecast Results
Production
YEAR
Forecasts
1
2
3
4
5
6
7
8
9
10
TOTAL
Annual Gas
(million cubic
meters)
3.71
10.76
12.36
12.40
13.50
12.97
13.14
12.92
13.34
12.19
118.28
Annual
Water
(thousand
cubic
meters)
120.97
170.16
100.77
156.39
95.75
129.83
80.34
121.26
75.12
118.11
1,168.68
Number of
Pre-mine
Drainage
Wells
Operating
5
9
9
13
13
16
16
19
19
22
22
The total forecasted p50 gas production for the proposed 22 pre-mine well gas capture system is 118.3
million cubic meters of methane. Forecasted p50 water production totals 1,168.8 thousand cubic
meters. Given the estimated p50 OGIP and the p50 forecasted gas production, the recovery efficiency
of the pre-mine drainage wells over the 10 year project life is 47 percent, which is acceptable by industry
standards.
The forecasted average volume of potential water production of the proposed pre-mine drainage wells
is approximately 116.9 thousand cubic meters annually. In China, water disposal practices currently
employed are mainly surface impounds and evaporation. To date, the environmental effects of
produced water discharge have been overlooked and there are currently no relevant regulations or
environmental impact assessment guidelines in place (Meng et al, 2014). Evaluation of technologies to
handle produced water from pre-mine drainage wells at Mopanshan should employ best practices to
account for local water use needs.
7.2.3. Approach to Forecasting Gob Gas Drainage Production
The gob gas drainage production forecast assumes that each well would be placed into service only after
the longwall passes underneath and the strata overlying seam 5 begins to relax; and for each year, a gas
drainage efficiency of 50 percent of the total amount of gas liberated is achieved collectively from all
operating gob wells. Total gas liberated is calculated by multiplying the average specific emissions value
for the 5 seam of 12 cubic meters per tonne (NDI, 2013) by the annual coal production, ramping up to
the mine's design capacity of 900,000 tonnes per year in year three. The 50 percent drainage system
efficiency factor is then applied, resulting in total annual gob gas drained. Production from gob drainage
boreholes is also included into the total gas production forecast based on the assumption that this
volume would then be combined with gas produced from pre-mine drainage wells to provide fuel for
24
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the gensets. All costs associated with both the gas and water production are incorporated into the
economic analysis; however, water disposal costs are not included.
7.2.4. Gob Gas Drainage Production Forecast Results
Based on the proposed boreholes and their drilling schedule, Table 8 shows the forecasted p50 annual
gas production. The total p50 forecasted gas production for the proposed gob well gas capture system
is 47.63 million cubic meters of methane.
Table 8: Gob Gas Production p50 Forecast Results
Production
YEAR
Forecasts
1
2
3
4
5
6
7
8
9
10
TOTAL
Annual Gob
Gas (million
cubic meters)
1.09
2.91
5.45
5.45
5.45
5.45
5.45
5.45
5.45
5.45
47.63
7.3. Total Gas Production Forecast Results
Table 9 summarizes the total gas production forecasted from pre-mine and gob drainage wells. This
volume represents the gas available for utilization by the mine.
Table 9: Total Gas Production p50 Forecast Results
Production
YEAR
Forecasts
1
2
3
4
5
6
7
8
9
10
TOTAL
Annual Pre-
mine
Drainage Gas
(million cubic
meters)
3.71
10.76
12.36
12.40
13.50
12.97
13.14
12.92
13.34
12.19
118.28
Annual Gob
Gas (million
cubic
meters)
1.09
2.91
5.45
5.45
5.45
5.45
5.45
5.45
5.45
5.45
47.63
TOTAL
4.80
13.67
17.81
17.86
18.95
18.42
18.59
18.38
18.79
18.65
165.91
The total forecasted p50 gas production for the proposed pre-mine drainage and gob well gas capture
system is 165.91 million cubic meters of methane over the course of the ten year project.
25
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8. Energy Markets
8.1. Coal Market
8.1.1. China's Coal Market
Coal dominates China's energy market with a 69 percent contribution to energy needs in 2011. The
Chinese government plans to cap coal use to below 65 percent of total primary energy production by
2017 to reduce air pollution. Coal's share of the total energy mix is expected to fall to 63 percent by
2020 due to anticipated increased efficiencies and China's goal to reduce its carbon intensity; however,
absolute coal consumption is expected to double over this period, reflecting the large growth in total
energy consumption. China plans to reduce carbon emissions per unit of GDP by at least 40 percent
from 2005 levels by 2020. China has also announced plans to reduce its energy intensity levels (energy
consumed per unit of GDP) by 16 percent between 2010 and 2015 and increase non-fossil fuel energy
consumption to 15 percent of the energy mix in the same time period (EIA, 2014a). Figure 20 shows
estimates of various components' contributions to China's energy mix.
Figure 20: China's Energy Mix 2011. Source: EIA (2014a)
Historically, a net coal exporter, China became a net coal importer in 2009 for the first time in over two
decades and has since become the world's largest importer, with net imports reaching 168 million
tonnes, or 4.8 percent of total consumption on a physical quantity basis, and over 5 percent on a heat
value basis in 2011 (EIA, 2014a). Imports are consumed primarily in the southern and eastern coastal
cities, the primary victims of coal transportation bottlenecks, and in steel mills. Thermal power
generation has been the most important driver for coal industry expansion, accounting for
approximately half of total consumption in recent years, followed by steel and cement, which have
accounted for about 25 percent of the total. Figure 21 shows China's coal production, exports, and
imports between 2000 and 2012.
26
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Figure 21: China's Raw Coal Supply. Source: EIA (2014b)
8.1.2. Guizhou's Coal Market
Guizhou has traditionally been a coal exporting province, shipping 25 - 30 million tonnes to outside
customers in recent years. The Guizhou Coal Bureau has projected in-province demand growth at 11.5
percent per year from 2010-2015 to approximately 170 million tonnes, driven largely by electric power
plant construction. Guizhou's coal quality also makes it relatively attractive to neighboring provinces
and Guizhou is virtually the only source of coking coal in south and southwest China.
8.2. Electricity and/or Gas Market
8.2.1. China Electricity Market
China's electricity consumption grew at a robust average rate of 11.1 percent from 2005-2011. With the
exception of 2008-2009, growth in electricity consumption surpassed overall economic growth by an
average margin of 19 percent. In an investment-centered economy, industry was the primary driver of
electricity, accounting for close to 70 percent of total consumption. Metals, building materials, and
chemicals alone accounted for 37 percent, with residential and commercial consumption accounting for
only 19 percent (USEPA, 2012).
As China is a zero importer/exporter of electricity, its growth has come entirely from domestic
generation, with output and generating capacity increasing by an average of 11.1 and 12.5 percent
annually from 2005-2011 to 4,700 Terawatt Hours, and 1,060 Gigawatts, respectively. Thermal power,
overwhelmingly coal-fired, dominates the generation mix.
27
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8.2.2. Regional Electricity Market
The Guizhou power grid is one of five interconnected provincial grids which are controlled by the state-
owned China Southern Power Grid Company (CSPGC). Although Guizhou is one of China's smallest,
poorest, and least urbanized provinces, its interconnections with the rest of the country have grown
stronger in recent years, and as is the case for most inland provinces, Guizhou's economy has continued
to grow at double digit rates throughout the second decade of the 21st century even as national
economic growth has moderated. In a sharp break with past patterns, however, electricity consumption
growth has trailed economic growth by increasing margins over the period, falling to 7.2 percent in
2013. Manufacturing remains the most important driver for economic growth in Guizhou, increasing at
well over 10 percent per year and accounting for approximately 75 percent of total electricity
consumption in the province. Guizhou's disproportionate economic dependence on energy-intensive
extraction and manufacture of commodities such as coal and aluminum, however, creates the potential
for some volatility in local electricity demand. In continuation of an electric power investment boom
initiated at the beginning of the 21st century in connection with a program to supply electricity to
Guangdong, Guizhou's power generation capacity increased by about 17,000 megawatts, or 63 percent
to almost 45,000 MW between 2009 and 2013. Guizhou has become an important electricity supplier to
nearby Guangdong and it is expected that Guangdong will continue to depend on significant volumes of
electricity purchase from Guizhou and other CSPGC provinces for the foreseeable future.
The expansion included major hydroelectric plants as well as a number of large thermal power plants
burning Guizhou's plentiful coal resources. As of the beginning of 2014, coal plants accounted for 54
percent of total capacity and hydro for 42.6 percent.
Power generation in Guizhou increased by an average of 5.4 percent annually between 2009 and 2012.
While power consumption growth has exceeded the growth rate of power generation, some installed
capacity has not been commissioned and this has led to restrictions on power usage in Guizhou. If
demand within Guizhou and Guangdong continues as projected, supply and demand for electricity
within the larger region could be more closely balanced than in the past. There will continue to be
considerable variability on a year-to-year basis due to the unpredictability of water conditions; in bad
water years, the Guizhou grid will likely dispatch every unit that it can, whereas in good water years, it
may not fully dispatch the available coal-fired capacity. Given their lower wholesale prices, the
hydroelectric plants will always enjoy priority for dispatch. It would thus appear that the public grid
could potentially require all that distributed power producers such as CMM power plants could produce
in some years, but not all. Especially if they are unable to meet or beat the cost of coal-fired power to
the grid of approximately 0.38-0.39 yuan per kWh, distributed generators will need to rely on
enforcement of policy mandating favorable dispatch of their output. Guizhou regulatory authorities
have not yet taken concrete measures to enforce NDRC requirements2. Virtually all power generated by
Guizhou CMM plants, therefore, is being distributed through the mining companies' grids for their own
consumption. Some mining companies with the capability to generate excess power have been forced
to idle capacity due to their inability to reach interconnection and sales agreements.
2 NDRC April 2007 Opinions Regarding Use of Coalbed Methane and Coalmine Methane: public grid companies purchase all
power generated in excess of mining companies' own needs by CMM generation plants, pay the purchase price in a "timely
manner," and pay the CMM power generators the same prices as for power from biomass generation plants, equivalent to the
regulated wholesale purchase prices for power from new coal-fired plants, plus a 0.25 CNY per kwh surcharge.
28
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9. Proposed End-use Option and Economic Performance
End-use options for the CMM drained from the Mopanshan mine are very limited as there is no existing
infrastructure in the region that would enable the mine to transport produced gas to market.
Moreover, the CMM resources have not yet been proven at Mopanshan, so work to plan and build the
necessary infrastructure to move CMM is premature. Therefore, the best option available is on-site
use.
9.1. Power Generation
The most viable option for utilization of CMM produced in advance of mining and post mining is as fuel
for an internal combustion power generation facility located in close proximity to the mine's surface
facilities. The mine is still in the pre-development stage as of late-2014, and timing of mine construction
is dependent on China's coal markets which have been depressed during the last two years. Therefore
the mine's electricity consumption is not available. However, the magnitude of coal production of the
initial mine plan indicates that electricity generated by the proposed project could be consumed on-site,
and supplant electricity that would be purchased from other sources.
The following sections discuss basic background information of the project as well as all inputs and
assumptions used in the production analysis and the economic analysis, followed by a discussion on the
economic performance of the project.
9.1.1. Technology and Deployment
Power generating equipment from two western suppliers was evaluated based on price and
performance. The averaged costs and fuel requirements from the two systems (USD/kWh installed)
were used in the analysis. This equipment has a fuel consumption factor of 0.2475 cubic meters per kWh
installed. Operating 8,000 hours each year, once the project reaches peak production (year five),
108,000 MWh of electricity could be generated annually. This equates to an installed capacity of
approximately 13.5 MW of combined electrical and thermal generating capacity.
The unit costs for this equipment were derived from correspondence with a representative of a western
company with offices in Asia. Below, Table 10 shows the annual capital investments along with the
operating costs of the project's design. Included in the capital cost (CAPEX) estimates are equipment
purchase, installation and testing, gas gathering, as well as all drilling and completion costs. For this
study, operating costs are assumed to be 25 percent of capital expenditures, which is a common
industry practice when estimating project costs. Installation of the internal combustion power
generation facilities is scheduled in the first, second, third and fifth years. Operating costs for power
generation increase as additional capacity is added. Operating costs for gas production, however,
increase annually as new wells are drilled and brought online.
29
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Table 10: Annual Project Costs
Annual Project Costs (USD xl,000)
YEAR
1
2
3
4
5
6
7
8
9
10
Capital Expenditures (CAPEX)
Power
Generi
ation
i
2,199
3,665
1,924
0
458
0
0
0
0
0
2,568
2,088
768
2,088
768
1,758
1,758
1,758
1,758
1,758
Total cape:
X
4,767
5,753
2,692
2,088
1,226
1,758
1,758
1,758
1,758
1,758
Operating Costs (OPEX)
Power
Generi
ation
i
550
1,466
1,947
1,947
2,062
2,062
2,062
2,062
2,062
2,062
Gas
Production
105
153
153
201
201
237
273
309
345
381
Total OPEX
655
1,619
2,100
2,148
2,263
2,299
2,335
2,371
2,407
2,443
9.1.2. Risk Factors and Mitigants
As with any project, there are risks associated with developing a successful project. Table 11 lists the
risks that have been identified, an assessment of the level of risk, and possible mitigants to each
identified risk. Overall, the risks associated with technology and implementation are low to moderate,
but other than using the electricity generated on-site, the risks associated with market and policy issues
are high. Access to the electricity marked in the region is a large hurdle for the mine. In order to
overcome this hurdle, on-site use of any electricity generated by the drained CMM would serve to
eliminate the need for the mine to purchase power from the grid, and alleviate the necessary steps to
tie into the electricity grid and negotiate a power purchase agreement. The risk associated with
obtaining the rights to extract and utilize CMM relative to national and regional policy is also high;
however, taking the step to conduct careful planning with the right agencies in order to obtain the
hydrocarbon rights in conjunction with the coal rights can mitigate this risk.
30
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Table 11: Risk Factors and Mitigants: Power Generation and Use Options
Risk
Assessment
Mitigants
Market:
Access to and the ability to dispatch
all available generated power to the
grid
High
Use power on-site and avoid sale to national
grid.
Access to national electricity market
High
Use power on-site and avoid sale to national
grid.
Ability to get rational prices for
power sold to grid
High
Use power on-site and avoid sale to national
grid.
Policy:
Rights to CMM extraction and use
High
Careful planning, meetings with cognizant
agencies; obtain the hydrocarbon rights along
with rights to the coal.
Technology:
Reliability and dependability of
equipment
Low
Very dependable equipment; train local
technicians to monitor, maintain, and repair
engines and associated systems.
Fluctuations in gas concentrations
Low
The concentrations of gas drained in advance
of mining should not fluctuate significantly.
Implementation:
Fluctuation in pricing of equipment
and services
Moderate
Current trend for prices is downward; Procure
contracts that lock in favorable prices.
Procurement of permits and rights-
of-way
Low
Develop timeline that incorporates time
necessary to secure all necessary permits and
right-of-ways, allow for delays.
Delays in deliverability of equipment
Low
Detailed planning; incorporate necessary lead
time into orders.
Delays in installation
Low
Detailed planning.
9.2. Economic Analysis
The project was modeled to determine the economic performance of on-site power generation and use.
The subsections below list the assumptions and inputs used for the modeling, followed by a subsection
reporting the resulting estimates of economic performance.
9.2.1. Inputs and Assumptions
Inputs and assumptions used to model this option are listed in Table 12. When available, actual costs
and pricing are used in the model; otherwise, reasonable estimates based on industry standards were
used. The drilling costs used in the economic model were actual costs taken from a report on the
Shouyang CBM project (Barker, 2013), adjusted for depth and inflation.
The project evaluation period is for 10 years, where the drilling of pre-mine drainage wells is carried out
throughout the life of the project so as to optimize supply of fuel to the gensets. This production is
supplemented by drained gas from gob wells, whereas three wells are placed into service each year and
31
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achieve a gas drainage efficiency of 30 percent of the total amount of gas liberated as a result of mining
operations. Power generation equipment is scheduled for installation in years one, two, three and five.
According to the p50 production forecast, 165.9 million cubic meters of methane could be drained and
used to generate electricity. All electricity generated will be used by the mine, so the sales price of
electricity used in this analysis is 0.60 CNY/kWh (0.096 USD), which is the price that the mine would
otherwise have to pay to the grid. Annual project operating costs are assumed to be 25 percent of the
capital costs.
Table 12: Inputs and Assumptions Used in Economic Model
Project duration
10 years
Gas production available to
the project
Based on analogous p50 production forecast from the Shouyang
Field in the Qinshui Basin in Shanxi Province, adjusted for depth and
differences in original gas in place estimates.
Drilling & completion costs -
Pre-mine drainage wells
300,000 USD /well
Actual costs taken from
third-party assessment
report of Shouyang Field,
adjusted for depth.
Drilling & completion costs -
GOB wells
226,000 USD /well
Gathering & hook-up costs
30,000 USD / well for all wells
Production well operating
costs
1,000 USD / well / month
Drilling rig mob / demob
150,000 USD
Main gas transmission line
200,000 USD/km
Industry standard "rule of
thumb" costs
Water production handling
costs
0.67 USD per cubic meter produced and
transported
Industry average costs
Plant construction
Site construction and installation is conducted in the first year,
additional generator sets are installed in years two, three and five.
Capital Investment for p50
scenario
Power Stations & auxiliary facilities
includes drilling and completing 22
production wells: 5.41 million USD
Power station investment
based on unit costs
916.23 USD/kW
Annual power sales
Electricity generated available to mine: 108,000 MWh
Annual operating hours
8,000 per year
Gas consumption efficiency
0.2475 cubic meters per kWh generated
Utilizes 5.0 percent of gas stream as fuel
for compressors.
Based on manufacturer's
representatives.
Power sales price, avoided
cost
0.60 CNY per kWh (0.096 USD)
Avoided cost that mine
would have paid to grid.
Annual project operating and
maintenance costs
25 percent of capital costs for gensets
annually.
1,000 USD per well per month for all
producing wells (pre-mine drainage and
gob wells).
Based on information
provided by
manufacturer's
representative and
drilling contractor.
Federal tax rate
25 percent
32
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9.2.2. Probabilistic Economic Forecast Results
Using the p50 CMM production forecast, 165.9 million cubic meters of CMM could be available for use.
Figure 22 shows a chart of the forecasted annual gas production along with the annual modeled
expenditures and revenues. The number of active pre-mine drainage and gob wells, gas and water
production for the period is shown for each year of operation in the table below the graph.
12
11
10
1 ^
D
i/i
3
9
C
o
=
8
E
- ฆ -
QJ
3
7
C
a>
>
a;
6
en
"O
c
fO
5
i/>
CD
k_
3
4
~j
C
a;
3
a.
X
LU
2
1
Explanation
| Annual Revenues (million USD)
~~| Annual CAPEX (million USD)
Annual OPEX (million USD)
Gas Production (million m3)
Number of Gob
Wells
Number of Pre-
mine Drainage
Wells
Gob Drainage
Production
(million m3)
Pre-mine
Drainage
Production
(million m3)
Annual Water
(thousand m3)
1
2
3
4
5
6
7
8
9
10 1
3
3
3
3
3
3
3
3
3
3
5
9
9
13
13
16
16
19
19
22
1.09
2.91
5.45
5.45
5.45
5.45
5.45
5.45
5.45
5.45
3.71
10.76
12.36
12.40
13.50
12.97
13.14
12.92
13.34
12.19
120.97
170.16
100.77
156.39
95.75
129.83
80.34
121.26
75.12
118.11
24
22
20
18 E
c
o
" I
c
o
14 +:
u
3
ฆo
o
12 a.
ro
15
10
Figure 22: Gas Production, Expenditures and Revenues of the Proposed Methane Mitigation Plan
The initial two years of the project are considered investment years, as the project costs are expected to
exceed project revenues. During this same period, coal reservoir dewatering takes place and gas
production increases. As shown in Figure 22, gas production should begin to stabilize and project
revenues should exceed all project capital and operating costs around years three and four. With the
33
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forecasted gas production, a series of internal combustion engines could be installed at the mine,
totaling 13.5 MW, fueled by all available CMM. The CAPEX for the project is forecasted to be 27.5
million USD, and the OPEX for the proposed project are forecasted to be 20.6 million USD, for a total of
48.1 million USD for the ten year life of the project. Table 13 below summarizes the results of the
modeling performed to determine the economic performance of a power generation option. At the p50
production rate, the project returns a positive value for the NPV at 13.3 million USD, and an IRR of 45.0
percent with a payback period of 3.84 years.
Table 13: Power Generation Option Base Case Forecast Results
Power Generation Scenario
Evaluation Scenario
Base Case
Annual Operating Hours
8,000
Gas Forecast-Project (million cubic meters)
165.9
Total CAPEX (million USD)
27.5
Tonnes of C02e (x thou.)
397.4
Carbon Sales Price (USD)
0.00
Plant Size (MW)
13.5
CAPEX/tonnes C02e
0.07
Electricity Sales Price (ฅ/kWhr)
0.600
NPV/tonnes C02e
33.48
NPV (Million USD)
13.3
IRR (%)
45.0
Return on Investment (%)
48.4
Payback Period (years)
3.84
9.2.3. Sensitivity Analysis of Power Generation
A sensitivity analysis was performed on the power generation option, utilizing the plO and p90 10 year
well production forecasts to determine the impact of varying methane production on project economics
(Table 14). For the plO scenario, while the total 10-year gas production summary is greater than that of
the p50 scenario, the NPV of 15.6 million USD, and IRR of 43.9 percent do not vary significantly due to
the additional costs associated with increased water production. The p90 scenario also shows favorable
results, indicating that the risk of economic failure is low for a gas recovery project based on the current
assumptions and inputs described in this report.
Table 14: Comparison Table of Economic Indicators with Varying Gas Production Forecast
Evaluation Scenario - Gas Forecast
p90
Base Case - p50
plO
Gas Forecast-Project (million cubic meters)
153.6
165.9
181.8
Water Production Forecast (thousand cubic meters)
1,056
1,169
1,369
Total CAPEX (million USD)
27.4
27.5
28.9
Tonnes of C02e (x thousand)
367.9
397.4
435.6
Plant Size (MW)
13.0
13.5
15.8
CAPEX/tonnes C02e
0.07
0.07
0.07
34
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Evaluation Scenario - Gas Forecast
p90
Base Case - p50
plO
NPV/tonnes C02e
31.43
33.48
35.77
NPV (Million USD)
11.6
13.3
15.6
IRR (%)
43.4
45.0
53.9
Return on Investment
42.2
48.4
54.0
Payback Period (years)
3.92
3.84
3.37
10. Conclusions and Recommended Next Steps
The Mopanshan coal mine, located in northeast Qianxi County, Guizhou Province, has a design capacity
of 900,000 tonnes per annum, and resources of 215.8 million tonnes of anthracite coal from coal seams
5 and 9.
Data and reports provided by the mine's technical staff were evaluated in order to better understand
the factors that controlled the distribution and size of CMM resources contained within the mine lease
boundary. After constructing a relatively simplistic three dimensional geologic model, it is estimated
that the gas resource contained within the coal measures has the potential to produce between 153.6
and 181.8 million cubic meters of gas from the proposed 22 pre-mine drainage wells and 30 gob
drainage wells over the examined life of the project. It is estimated that the proposed project could
produce enough gas to fuel a 13.5 MW power generation facility to be used by the mine. It is also
estimated that the project could produce 1,169 thousand cubic meters of water, available for the mine's
use. The capital costs are estimated to be $27.5 million USD with an IRR of 45.0 percent and a payback
period of 3.84 years. Carbon emissions would be reduced by 397.4 thousand tonnes of C02e over the
project's ten year life.
In order to minimize the geologic uncertainty which might affect the success of the coal mine methane
drilling and recovery campaign, such as the proposed drilling program, a comprehensive data collection
program should be carried out first. The different types of testing and sampling in this program should
include:
Gas desorption testing: currently, there are some gas content data points available; however, the
lateral extent of the distribution of gas content data over the entire license block is lacking. An
extensive campaign should be designed and carried out to collect gas content data for all coal seams
over the entire license block.
The desorbed gas from select desorption samples should be tested for gas composition.
Injection fall-off testing should be carried out in one or more test boreholes to better understand
the gas flow capacity (gas producibility) of the coal, average reservoir pressures, and the impacts
that drilling and completion-related stresses will have on the reservoir permeability.
All exploration boreholes planned should be rotary drilled, rather than cored, and a full suite of
geophysical logs should be run over the entire openhole section for each borehole.
A three dimensional seismic acquisition program should be designed and carried out over the entire
mine lease to identify and determine the extent and impact of faulting, fracturing, and overlying
aquifers on the coal-bearing strata.
Methane production from the proposed drilling program supplies sufficient gas to fuel a 13.5 MW plant,
a program which requires drilling new boreholes throughout the life of the project. Once this initial data
is collected and integrated into the existing geologic model and interpreted, the number and placement
of these scheduled boreholes can be optimized to ensure sustained gas delivery to the power
35
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generation station over the project life. The removal of methane gas from the targeted coal seams in
advance of mining will not only provide benefits in the form of electricity generated from the gas, but it
will also increase the safety of mining operations and reduce greenhouse gas emissions.
36
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11. References
Barker, G. (2013): Shouyang US SEC Reserves as at 31 December 2012 [Letter to Michael McElwrath],
Far East Energy Corp. March, 2013, from
http://www.fareastenergy.com/pdf/FEEC%20SEC%20YE%202012%20Reserves%20Letter%2014%20
Mar%202013.pdf
China Solid Mineral Resource/Reserve Classification (GB/T17766-1999) (2009), Ministry of Land
Reserves, Beijing, China, 2009, www.mlr.gov.cn
EIA (2014a): China Country Analysis Brief. U.S. Energy Information Administration, Washington, DC,
updated February 14, 2014, http://www.eia.gov/countries/cab.cfm?fips=CH
EIA (2014b): International Energy Statistics. U.S. Energy Information Administration, Washington, DC,
accessed April, 2014, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm
GQEDC (2006): Mopanshan Mine Qianxi County, Guizhou Province Coal Exploration and Geological
Reports. Guizhou Qianxi Energy Development Co., Ltd., Guizhou, CN: Author.
Investor Relations (n.d.): Far East Energy Corporation. Retrieved May 6, 2014, from
http://www.fareastenergy.com/presentations
Meng et al (2014): Coalbed Methane Produced Water in China: Status and Environmental Issues.
Environmental Science and Pollution Research International, pp 6964 - 6974. Meng Y., Tang D., Xu
H., Gao L., 2014.
Nakhwa (2013): Coiled Tubing Assisted Hydraulic Fracturing of CBM Wells in India, presented by Amit D.
Nakhwa, Boots & Coots and the GMI Methane Expo 2013, Vancouver, Canada, March 13 - 15, 2013.
NDI (2013): Guizhou Qianxi Energy Development Co., Ltd. Mopanshan Mine Feasibility Study Report.
Nanjing Design Institute, Guizhou, CN: Author.
Operations-Shouyang Block (n.d.): Far East Energy Corporation. Retrieved May 6, 2014, from
http://www.fareastenergy.com/shouyang
Palmer, I. (2010): Coalbed methane completions: A world view. International Journal of Coal
Geology, 82(3-4), 184-195.
Reeves, S. (2008): Summary of Reservoir Simulation Modeling Study Results, Shouyang Block, Qinshui
Basin, Shanxi Province, China [Letter to Garry Ward], Far East Energy Corp. March, 2008, from
http://www.fareastenergy.com/pdf/2008_March_ARI.pdf
SCGEII (2005): Guizhou Qianxi Energy Development Co., Ltd. Mopanshan Mine Coal Exploration and
Geological Report. Shandong Coal Geological Engineering Investigation Institute, Guizhou, CN:
Author.
UNECE (2010): Best Practice Guidance for Effective Methane Drainage and Use in Coal Mines. ECE
ENERGY SERIES No.31. United Nations Economic Commission for Europe and Methane to Markets.
New York and Geneva. February, 2010.
http://www.unece.org/fileadmin/DAM/energy/se/pdfs/cmm/pub/BestPractGuide_MethDrain_es31
.pdf
USEPA (2012): China's Energy Markets: Anhui, Chongqing, Henan, Inner Mongolia, and Guizhou
Provinces, United States Environmental Protection Agency, December 2012,
http://epa.gov/cmop/docs/2012ChinaEnergyMarket.pdf
37
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Proposed Power
+ Generation Location
DISCLAIMER: This map is designed to be an informational tool for
the purpose of displaying design schematics, and is not intended to
be used as a surveyed or engineered design plan. The information
presented was provided by source(s] listed below and is believed to
be accurate and suitable for modeling purposes, and is subject to
the limitations stated above.
RA VEN RIDGE RESOURCES
INCORPORATED
U.S. EPA
Ccalbed Methane
A
o
Global
Methane Initiative
ฎ Proposed Pre-Mine Wells Drilled Year 1
ฎ Proposed Pre-Mine Wells Drilled Year 2
ฎ Proposed Pre-Mine Wells Drilled Year 4
ฎ Proposed Pre-Mine Wells Drilled Year 6
ฎ Proposed Pre-Mine Wells Drilled Year 8
ฎ Proposed Pre-Mine Wells Drilled Year 10
-0- Proposed Gob Wells Showing Year of Operation
RtbpoEBthjaoto^ipatirFtodways
Proposed Gas Gathering Lines
Proposed Gas Transport Lines
Coal Lease Boundary
Mining District Boundaries
Potential Mining Longwall Panels
PLATE 1: Mopanshan Coal Mine
Proposed Drilling Map
1 cm = 150 meters
0.5
Xian 1980 3 Degree GK Zone 35;
False Easting 35500000.0, Latitude of Origin 0.0
~ Kilometers
-------
Coal Seam Layers
I ra 5p
<
Group Thickness
Range
Average
(m)
Range
Average
(m)
Nan-Coal
Coal 1:500
zT\y2'
-T.y2-
Mz T Tj xiy
Geophysical Logs
Lithology
Analysis
Sand Mud Water
Focused
Resistivity
Ohm
Density
g/cm2
1.00 1.67
Natural
Gamma
API
0.00 36.67
Neutron
%
0.00 20.00
Lithology, physical and hydrological characterization
ill
Qua ternary (Q)
_ LOESS: Deposited mainly near the river, along part of the hillsides, at the base of
- the mountains, and within other relatively low-lying valleys. The deposit
comprises mainly colluvium, alluvial material and residual material, from the
: of the Tly3-^5, p3c, and contains flint limestone or limestone of
yellow-gray, gray, gray and yellow, gray and purple and other colors of gravel;
boulders; sandy soil; powder soil and clay. Drilling revealed thickness ranges
between 0- 7.60m. The deposit lies uncomformably (angular) atop the underlying
Physical characteristics: The strata structure is relatively loose, showing lower
density than the underlying strata; low resistivity curve amplitude; higher neutron
porosity curve anomaly amplitude and low amplitude natural gamma curve.
Maocaopu (Tim)
LIMESTONE: The formation is widely distributed in the mining area, but occurs
mainly in the western portion. It ranges in thickness between 4.55 - 119.45m, and
averages 49.33m. Within the region, the Maocaopu is partially exposed. The
deposit comprises thick gray mud, layered with crystal structure of the light gray
Fenxie thin-bedded limestone at the bottom of 1.70m ฑ thickness. Yellow-gray
weathered strata appear before bedded micritic argillaceous limestone structure.
The formation lies conformably atop the underlying strata.
Physical characteristics: The limestone based formation, shows the
resistivity curve has a higher amplitude density than the underlying strata; the
magnitude of the natural gamma curve is lower, and the neutron porosity curve
amplitude is low. When the development of the apparent resistivity curve values
are lower and the density curve value increase, it suggests rock fissures and
values and density values are lower.
-jgf Upper YeUng(T,v,)
SANDY MUDSTONE - CALCAREOUS MUDSTONE: Gray mid yellow, gray
and purple, fuchsia thin-bedded silty muds tone, muddy siltstone, mudstone, with
Klinefelter clams, scallops and other animal fossils sandwiched in 4 to 6 layers of
light gray argillaceous limestone. Drilling has exposed the formation thickness to
range between 4.65 - 108.30m, with an average of 85.14m
Physical characteristics: There are five areas of developed marl, with higher
amplitude resistivity curves; spontaneous potential curve showing negative
anomalies reflect crenellations; the natural gamma curve clip showed low
amplitude with high amplitude reflection, characterized by obvious physical signs
are good layers. The bottom boundary of the formation where the apparent
resistivity curves and underburden show significant difference in the magnitude of
the natural gamma curve and where the neutron curve amplitude is higher than the
underlying strata, there are obvious and easily distinguishable steps.
f-S;
r
Middle Yelang ^
LIMESTONE - MARL: Exposure revealed through drilling showed a range of
thickness between 63.00 - 316.85m, with an average of 275.51m. Gray mud with
crystal structure to powder-like or layered with thin and thick-bedded
limestone; gray to light gray massive oolitic limestone; upper part is light gray,
gray, yellow-gray and weathered appears before the thick-bedded limestone; marl
sandwiched with thin-bedded gray and yellow, gray-green thinly-bedded
argillaceous siltstone and silty mudstone 1 to 2 layers 0.9 - 1.24m thick. The
central light gray, thick bedded gray limestone is argillaceous locally, with
biological clastic rocks containing raw limestone breccia and worms; the lower
part is gray, dark gray thinly-bedded, medium to thick-bedded mud limestone with
Physical Characteristics: The formation comprises mainly limestone and marl,
where the apparent resistivity curve showed a high impedance in the limestone
; and the marl resistivity curve showed lower resistance, reflected by
changes in amplitude. Depending on the density, the natural gamma and
porosity variation is small in the upper section, whereas the magnitude of those
curves within the marl section exhibits a significant step change. According to
physical characteristics, it can further be divided into distinct segments of the
upper and lower sub-sections:
Sub-segments:
(Tiya-2) within the upper sub-section of purer quality limestone, the focused
resistivity curve showed high amplitude changes where the density curve also
wed large variations in amplitude; the low amplitude of the gamma and neutron
porosity curves suggesting a calmer depositional setting.
(Tiyz-i) the limestone and shale content increased gradually from top to bottom,
the apparent resistivity curve shows less variation of the fine sharp jagged shape
and the amplitude decreases; the natural gamma curve shows more variation then
the upper sub-section and increases in the lower portion of the section, the neutron
porosity curves reflect abnormal spikes where the lithology changes to less dense
material. The curve amplitude gradually increases and is higher than the overlying
strata where the unit is closer to marl than limestone.
Lower Yelang (TirO
MUDSTONE: Pale yellow, yellow and gray, gray-green thinly-bedded silty
mudstone; muddy siltstone; light gray thinly-bedded argillaceous limestone;
calcareous shales with bivalve fossils and yellow-green mudstone containing
flakes montmarillonite. This section ranges in thickness between 6.60 - 12.70m,
with an average of 9.50m.
Physical characteristics: Within the mudstone segment, the apparent resistivity
curve is flat showing low resistivity; the natural gamma and neutron porosity curve
amplitudes are higher than the upper and lower strata, with the obvious physical
characteristics showing stable thickness of this unit
+ Dalong (P3d)
(LIMESTONE: The formation thickness ranges between 18.65 ~ 35.30m, with an
average of 24.55m It is composed mainly of ash-gray micritic thick-bedded
limestone \ with a layer of thickly-bedded limestone flint, containing local bands
of thin organic carbonaceous mudstone, rich in fossils and fossil debris. The
Dalong (Pjd) bed ranges in thickness of only 0.82 - 1.40m, with an average of
1,11m. It comprises dark gray thinly-bedded and thick bedded siliceous limestone.
Reflected only in the logs, visual identification is difficult to distinguish from the
Changxing limestone, therefore they are represented together. The formation lies
jnformably with the lower formation.
: Palaeo fusulina sp.;
" Reichelina sp.;
I Colaniella sp.;
; Oldhamina squamosa;
Wilkingia. komiensis;
Pernopecten sichuanensis.
Physical characteristics: The focused resistivity curve showed a high resistance,
the natural gamma and neutron porosity curves are lower than the amplitude of the
hump-shaped upper and lower strata. The formation shows stability throughout
. the unit
Long tan (PJ)
MUDSTONE, SILTSTONE, LIMESTONE and COAL: The group ranges in
j between 142.25 and 177.70 m, with an average of 160.58m. The
formation outcrops within a small portion of the eastern and southern mining area.
| The Longtan formation is the coal-bearing strata of the area. The group
interbedded and composed of coal-bearing strata deposited through nine
depositional cycles. The lithology comprises gray-dark gray, dark gray mudstone,
silty mudstone, muddy siltstone, gray-brown gray fine-grained sandstone,
gray-gray limestone, bioclastic limestone, gray and black carbonaceous shale and
coal seams. There are a total of 18 coal layers (on the first
1,2,3,4,5,6,7,8,9,10,11,12,13,13, the seams 14, 15), where the first 5 , 9,12,13,15
seams are more stable, the group contains limestone (marl) 18 layers (LI, L2, L3
on 2, L3 on 1, L3 down, L4, L5, L10 , the Lll, limestone, L12, L12, the upper
L14, the L14, the L15, L15 oฃ L15 next, L16), wherein, LI, L2, L3 combination,
L4, L5 composition, L12 combination, L14 combination, L15 combination of the
region's horizon shows obvious characteristics and can be used as a marker layer.
Coal from seams 5 and 9 is the main exploration purpose; the 12, 13 coals are used
for proper control. The Longtan lies atop the underlying strata along a parallel
unconformity. The group is rich in fossils in the mudstone, siltstone and limestone
(marl) layers.
Animal fossils:
Oldhamina grandis;
j- Derbyia disalata;
Dielasma acutangula var .minor;
Pernopecten guizhouensis;
Oldhai
<
>
5
It
"
Plant fossils:
Gigantopteris sp.;
Sphenophyllum cฃ;
Compsopteris cf;
Cladophlebis sp.;
Pecopteris sp.;
Lepidodendron sp.;
Annularia sp.; and
Gigantonoclea sp.
Physical characteristics: According to lithology, lithofacies, coal characteristics
and physical properties of coal-bearing strata of the group, the formation can be
divided into two sections.
("11P312:
This section comprises nine limestones (LI, L2, L3 on 2, L3 on 1, L3 down, L4,
L5, L10 and Lll) and eleven coal seams (1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11). These
interbedded layers mark the stable development of the sedimentary sequence
showing a good sign of markers which depict phase transition, allowing
8tratigraphic correlation and the ability to identify of five important coal intervals.
Limestone and marl layers are reflected by the increased magnitude of the
resistivity and decreased magnitude of the neutron porosity curves. Coal seams
5,6,8,9 are stable, while seams 1,2,3,4,7,10,11 are unstable; their thickness and
structural changes are larger and where multi-phase variations become
carbonaceous mudstone. Coal 5 contains a layer of coal partings, the 9 seam has a
single structure, as most of the coal layer or region. Coal seams 6 and 8 are single
layers with stable structure. Each seam in this section, has a marker be with
sufficient thickness showing stable spacing malrmg for easily distinguishable coal
stratigraphy. Top 10 coal seams, bottom of mudstone, shale contains more
radioactive elements, and therefore have a higher amplitude anomalies in the
natural gamma curve, showing a thickness of about 2.50m, due to its stable
deposition. L10 and Lll lithology shows larger changes, with multiple phases of
calcareous mudstone, but the layer is stable. The group of properties under this
section show a clear distinction based primarily on the segment division. Coal has
a high resistivity, low gamma ray, and high density and small physical changes of
the neutron porosity which make it easy to distinguish from other lithologies, the
seam curves reflect the significant parameters, reliable qualitative and thickness
due to the development of a more stable marker layer to determine the coal layers
bits and reliable.
(21P311:
This section is mainly developed on the upper L12, the lower L12, the upper L14,
the lower L14, the L15, L15 middle, LI 5 lower, L16 limestone, where the L14,
L14 lower, L15, middle L15, and lower LI5 the limestone layers thickness and
stability, is to determine the next 13, lower 13, 14, 15 coal seam important symbol
layer. This section is mainly developed under 12,13,13, 14,15 coal, which is more
stable seams 12, 13, in which the top three layers of coal, rock and bottom seams
contain high internal radioactivity, So has the physical characteristics of a high
amplitude anomalies in the natural gamma curve; 13 under unstable coal seams,
coal seam 14 into multiphase carbonaceous mudstone, due to its high content of
radioactive elements in the natural gamma curves high amplitude anomalies, and
14 on the upper coal seam development L14, L14 under limestone "peak forest
landform" curve characteristic properties. 15 roof and floor mudstone and
aluminum mudstone, shale and mudstone containing more aluminum radioactive
elements, and therefore have a higher amplitude anomalies in the natural gamma
curve, limestone, coal and shale low amplitude, aluminum Physical characteristics
of the combination of high amplitude mudstone, which features a combination of
physical characteristics obviously, is an important indicator to determine the
interval 15 coal seams and the bottom boundary of Longtan Formation and top of
the Maokou formation.
Coal has a high resistivity, low natural gamma, density and physical characteristics
of small high neutron porosity and other lithologic easy to distinguish.
3
I Maokou (Pzm)
LIMESTONE: This formation is not exposed at the surface in the mining area, but
the thickness of the zone is>100m. 61.30m of thickness was drilled and
recorded in borehole 10-1. The formation comprises a thick layer of
grayish-white, massive limestone, containing small quantities of dolomite,
dolomitic limestone, and chert containing a large mass in the upper zone.
Physical characteristics: The focused resistivity curves are jagged with variation in
amplitude and reflected impedance, the variation of the density, natural gamma,
neutron porosity is small, showing low amplitude curves. The group has a
weathered zone near the top 3 - 5 m, fissures and caverns are developed in die
sections showing lower curve amplitude on the resistivity curve, and high
gamma and neutron porosity curve amplitude.
EXPLANATION
RA VEN RIDGE RESOURCES
' INCORPORATED
A MM Vt=lV
Vc
Modified from Mopanshan Coal
Exploration and Geological Report,
Prepared for Guizhou Qianxi Energy
Development Co., Ltd.
SANDY
MUDSTONE
CARBONACEOUS
MUDSTONE
FINE-GRAINED
SILTSTONE
, CALCAREOUS
T SILTSTONE
FRACTURE
ZONE
CALCAREOUS
MUDSTONE
CALCAREOUS
FINE-GRAINED
SANDSTONE
ALUMINUM .
MUDSTONE
U.S. Environmental Protection Agency
PLATE 2: Mopanshan Coal Mine
Stratigraphic Column
U.S. ECA
Ccalbed Methane
Global
Metham* InrtUlrn
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