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Pre-feasibility Study for Fuhong Coal Mine, Guizhou Province

Pre-feasibility Study for Fuhong Coal Mine, Guizhou Province

Raven Ridge Resources, Incorporated performed a prefeasibility study at Fuhong Coal Mine, located in southwest China within Guizhou Province, to examine the potential for implementing a methane recovery and utilization project.  The proposed project consists of a cross-measure borehole drainage program, drilled from within the mine workings into the roof of the mineable coal seams to capture methane gas and reduce the potential for coal and gas outbursts.   Drained methane can be used in one of two ways: power generation for use at the mine or, combined power generation and on-site use in a coal dryer.

The mine plans to increase the present rate of mining from 140,000 metric tons annually to 300,000 metric tons per year in the near future, with the addition of a mechanized continuous miner.   Presently the mine has an operating gas drainage station producing at a rate of 140 cubic meters per minute with a maximum methane concentration of 20 percent; however, the current drainage and ventilation systems will be insufficient for maintaining safety with the increased production plans of the mine.  Three Permian age coals of the Longtan Formation are being targeted for mining, where the calculated coal reserves within the Fuhong mining lease block are estimated at 9.4 million metric tons.

A methane adsorption isotherm test, which provides an estimate of the maximum gas capacity of the coal at a given depth, was conducted to provide a frame of reference within which the potential gas content for the coal seams could be estimated.  The Raven Ridge Team estimated the gas resources for each of the coal seams by multiplying the volume of coal resources at 30 meter depth intervals to the equivalent gas content value indicated by the adsorption isotherm.  The methane resource for the Fuhong mine is estimated to be 122.7 million cubic meters.  Reservoir simulation was performed utilizing a Computational Fluid Dynamics simulator, GEM, to develop a typical production decline curve for a series of cross-measured boreholes proposed at the mine.  The reservoir simulation study indicates that the borehole array selected by RRR will be effective in draining the gas emitted from the roof and floor strata.

The energy market in the Guizhou region was assessed to determine the proper end-use options for the Fuhong mine’s CMM.  China’s electricity consumption grew at a robust average rate of 11.1 percent from 2005-2011.  Electricity consumption within Guizhou has likewise followed the national/regional pattern, 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.

RRR proposes that the mine consider two end use options: power generation by internal combustion engines for use at the mine; or combined power generation by internal combustion engines and on-site use for drying of low quality coal.  The optimal use will be decided by mine management as dictated by the energy needs of the mine.  In the power generation only option, 56,279 MWh of electricity will be generated annually; and it is assumed that all power generated will be used by the mine.  The capital costs are estimated to be $7.13 million USD with an IRR of 66.9 percent and a payback period of 2.5 years.  Carbon emissions would be reduced by 246.2 thousand tons of CO2e over the project’s 10 year life.  In the combined power generation and coal drying option, in addition to fueling the equipment to dry the low grade coal using 1.595 million cubic meters of the available gas, 46,798 MWh of electricity will be generated annually for use at the mine.  The capital costs are estimated to be $6.3 million USD with an IRR of 74.2 percent and payback period of 2.75 years.  Carbon emissions would be reduced by 504.0 thousand tons of CO2e over the project’s 10 year life.