Arcelormittal Coal Mines Karaganda Coal Basin, Kazakhstan
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ArcelorMittal Coal Mines Karaganda Coal Basin, Kazakhstan Pre-feasibility Study for Coal Mine Methane Drainage and Utilization April 2013 ArcelorMittal Coal Mines Karaganda Coal Basin, Kazakhstan Pre-feasibility Study for Coal Mine Methane Drainage and Utilization Sponsored by: US Environmental Protection Agency, Washington, DC USA Prepared by: HEL-East Ltd Ruby Canyon Engineering Inc. Eastern Research Group, Inc. April 2013 CONTENTS ACRONYM LIST .............................................................................................................................. V ACKNOWLEDGEMENTS ................................................................................................................. VI DISCLAIMER .................................................................................................................................. VI EXECUTIVE SUMMARY ................................................................................................................. VII 1.0 PROJECT OVERVIEW .......................................................................................................... 1 1.1 Background ............................................................................................................................. 1 1.2 ArcelorMittal Overview ........................................................................................................... 1 1.3 Production Summary .............................................................................................................. 1 1.4 Location ................................................................................................................................... 2 1.5 Geological Summary ............................................................................................................... 3 1.6 Lenina Electric Project ............................................................................................................. 4 2.0 GAS RESOURCE ASSESSMENT............................................................................................. 5 2.1 Calculation of Gas Resource Profile ........................................................................................ 5 2.2 CMM Utilization Project Sizing ................................................................................................ 6 3.0 OPTIONS FOR CMM UTILIZATION ...................................................................................... 7 3.1 Enrichment to Pipeline Gas, LNG, or Compressed Natural Gas (CNG) ................................... 7 3.2 District Heating ....................................................................................................................... 7 3.3 CMM-fueled Reciprocating Engine Generating Sets with Waste Heat Recovery ................... 7 3.4 CMM-fueled Reciprocating Engine Generating Sets Without Waste Heat Recovery ............. 8 3.5 Gas Turbines ............................................................................................................................ 8 3.6 Use in Industrial Applications ................................................................................................. 8 3.7 Use on Colliery Site for Hot Water or Steam Generation ....................................................... 9 3.8 Use On-site for Slurry Drying .................................................................................................. 9 3.9 Domestic Gas Distribution in Raw State ................................................................................. 9 3.10 Flaring and Oxidation .............................................................................................................. 9 3.11 Recommendations on a CMM Utilization Project .................................................................. 9 3.12 Introduction to the AM Electrical Power System.................................................................. 10 4.0 AM DRAINAGE SYSTEM DESIGN AND SUITABILITY FOR ELECTRIC POWER GENERATION ... 11 4.1 Gas Drainage Techniques Employed by AM ......................................................................... 11 4.2 Methane Extraction Stations ................................................................................................ 13 4.2.1 Liquid ring vacuum pumps ............................................................................................ 13 4.2.2 Positive displacement blowers ..................................................................................... 14 4.3 Distribution of High Concentration Gas Sources .................................................................. 16 4.4 Future Projection of Utilization Project Size ......................................................................... 17 4.5 Phasing of Power Generation ............................................................................................... 18 5.0 COST BASIS FOR THE ECONOMIC ASSESSMENT OF A POWER GENERATION PROJECT ....... 20 5.1 Capital Costs .......................................................................................................................... 20 5.2 Gas Transportation Pipeline .................................................................................................. 20 5.3 Gas Compression System ...................................................................................................... 20 CONTENTS (Continued) 5.4 Gas Holder Acting as Manifold for CMM Collection and Concentration Blending ............... 21 5.5 Gas Treatment System .......................................................................................................... 21 5.6 Engine Generator Set ............................................................................................................ 21 5.7 Electrical Connection ............................................................................................................ 21 5.8 Waste Heat Recovery ............................................................................................................ 21 5.9 Summary of Economic/Engineering Inputs into a Cash Flow Model .................................... 22 6.0 PRELIMINARY ECONOMIC FEASIBILITY ANALYSIS ............................................................. 24 6.1 Results of Economic Analysis ................................................................................................ 24 6.2 Sensitivity Analysis ................................................................................................................ 24 6.3 Inclusion of Carbon Credits within Analysis .......................................................................... 27 7.0 CONCLUSIONS ................................................................................................................. 30 APPENDICES A PROJECTED CMM AND VAM DATA ...................................................................................... A-1 B AM VENTILATION AIR METHANE PROJECT ASSESSMENT ......................................................B-1 C GEOLOGICAL AND PRODUCTION DATA FOR AM MINES ....................................................... C-1 D METHANE DRAINAGE AND UTILIZATION BLOCK DIAGRAMS FOR EACH MINE ...................... D-1 iii TABLES AND FIGURES Table 1. Historical Coal Production ............................................................................................................... 2 Table 2. Summary of Mine and Coal Seam Characteristics ......................................................................... 3 Table 3. Characteristics of drainage techniques employed by AM ............................................................. 12 Table 4. Comparison of LRVP and PD methane extraction stations .......................................................... 15 Table 5. Summary of Individual Mine Gas Resource Availability ............................................................... 17 Table 6. Phasing of power generation ........................................................................................................ 19 Table 7. Contribution of each mine to Phases 1 and 2 ............................................................................... 19 Table 8. Input parameters for the discounted cash flow model .................................................................. 22 Table 9. Project capital costs ...................................................................................................................... 23 Table 10. Discounted cash flow analysis .................................................................................................... 24 Table 11. Financial summary ...................................................................................................................... 24 Table 12. Parameters for sensitivity analysis .............................................................................................. 24 Table 13. Results of the sensitivity analysis on NPV ($k USD) .................................................................. 25 Table 14. Results of the sensitivity analysis on IRR (%) ............................................................................ 25 Table 15. Monte Carlo simulation probability distributions ......................................................................... 26 Table 16. Input parameters for carbon credit analysis with the discounted cash flow model ..................... 28 Table 17. Financial summary .....................................................................................................................