Feasibility Study of CMM Utilization for Guizhou Nengfa Power Fuel Development Co., Ltd. Linhua Mine Located in Guizhou Province, People's Republic of China U.S. Environmental Protection Agency December 2010 Feasibility Study of CMM Utilization for Guizhou Nengfa Power � Fuel Development Co., Ltd. Linhua Mine Located � in Guizhou Province, � People’s Republic of China � Conducted by Raven Ridge Resources, Incorporated � For U.S. EPA � Contract No. EP-W-05-063 TO 19 � December 2010 � Acknowledgements This publication was developed at the request of the United States Environmental Protection Agency. Through the Coalbed Methane Outreach Program, Raven Ridge Resources, Incorporated team members: Raymond C. Pilcher, James S. Marshall, Candice L. M. Tellio, Charlee A. Boger, Martin Weil and Boni Jiang authored this report. Raven Ridge Resources, Incorporated wishes to thank Guizhou Nengfa Power Fuel Development Co., Ltd., Linhua Mine and Tom Weller for their assistance in development of this report. 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, equipment vendors, and project developers. USEPA does not: (a) make any warranty or representation, expressed or implied, with respect to the accuracy, completeness, or usefulness of the information contained in this report, or that the use of any apparatus, method, or process disclosed in this report may not infringe upon privately owned rights; (b) assume any liability with respect to the use of, or damages resulting from the use of, any information, apparatus, method, or process disclosed in this report; or (c) imply endorsement of any technology supplier, product, or process mentioned in this report. Contents Acknowledgements ........................................................................................................................ iii � Disclaimer ......................................................................................................................................... iii � Contents .............................................................................................................................................. ii � List of Figures ..................................................................................................................................... v � Acronyms and Abbreviations ..................................................................................................... vii � 1.0 Executive Summary ............................................................................................................. 9 � Geologic Setting ......................................................................................................................................................................... 10 � Coal Market ..................................................................................................................................... 12 � Gas Market ....................................................................................................................................... 13 � Electricity Market .......................................................................................................................... 15 � CMM End-use Options and Analysis .......................................................................................... 18 � Conclusions, Recommendations, and next Steps .................................................................. 19 � 2.0 Background .......................................................................................................................... 21 � 3.0 Introduction ......................................................................................................................... 23 � 3.1 Objective.......................................................................................................................................................................... 23 � 3.2 Location ........................................................................................................................................................................... 23 � 4.0 Geology, Coal, and Gas Resources Nengfa Coal Mining Properties ....................... 25 � 4.1 Geologic Setting ........................................................................................................................................................... 25 � 4.1.1 Geologic Structures .............................................................................................................................................. 25 � 4.1.2 Folding ........................................................................................................................................................................ 26 � 4.1.3 Faulting ....................................................................................................................................................................... 26 � 4.1.4 Kinematic Analysis ............................................................................................................................................... 27 � 4.1.5 Impact of the Orientation of Geologic Structures on Mining at the Linhua Mine ................ 28 � 4.2 Stratigraphy................................................................................................................................................................... 29 � 4.2.1 Lower Triassic ......................................................................................................................................................... 29 � 4.2.2 Permian Sediments .............................................................................................................................................. 30 � 4.3 Coal Resources ............................................................................................................................................................. 31 � 4.3.1 Thickness and Distribution .............................................................................................................................. 31 � ii 4.4 Coal Quality .................................................................................................................................................................... 36 � 4.5 Coal Reserves ................................................................................................................................................................ 37 � 4.6 Hydrology ....................................................................................................................................................................... 38 � 4.7 Coal Mine Development in Jinsha County ...................................................................................................... 39 � 4.8 Coal Mine Methane .................................................................................................................................................... 40 � 4.9 Linhua Mine ................................................................................................................................................................... 40 � 4.9.1 Mine Ventilation and Methane Emissions ................................................................................................ 42 � 4.9.2 Methane Drainage ................................................................................................................................................. 42 � 5.0 Proposed Modifications to Gas Drainage, Production and Recovery .................. 44 � 5.1 Background.................................................................................................................................................................... 44 � 5.2 Basis for Costs Inputs for Proposed Horizontal Drilling Program .................................................... 45 � 5.2.1 Logistics and Costing Assumptions.............................................................................................................. 46 � 5.3 Proposed Drilling Program Implementation Issues ................................................................................. 47 � 6.0 Coal Market .......................................................................................................................... 49 � 6.1 Demand for Coal from Linhua Mine .................................................................................................................. 49 � 7.0 Gas Market ........................................................................................................................... 51 � 7.1 Recent Trends in China’s Natural Gas Market ............................................................................................. 51 � 7.1.1 National Demand ................................................................................................................................................... 51 � 7.1.2 Domestic Conventional Natural Gas Production and Transmission ......................................... 52 � 7.1.3 Coalbed and Coal Mine Methane ................................................................................................................... 53 � 7.1.4 LNG and Pipeline Gas Import Markets ....................................................................................................... 54 � 7.2 Guizhou Regional Market for Natural