Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Donlin Creek Propane 2004
Karl Reiche From:Mike Harper Sent:Tuesday,November 16,2004 6:02 PM To:Karl Reiche Subject:FW:Biogenic Methane Production fyi From:Jim Dodson [mailto:jdodson@lucatechnologies.com] Sent:Tuesday,.November 16,2004 9:17 AM To:Mike Harper Subject:Biogenic Methane Production Mr.Harper:I believe we met briefly about a year ago in a meeting regarding Doyon's efforts to supply propane to the proposed Donlin Creek Mine.Our company,Luca Technologies,has been working on the generation of methane from coal seams and carbonaceous shales through the microbial breakdown and degradation of those coals and shales.The results we are seeing in our laboratory have caused us to focus solely on the efforts of Luca Technologies,which had been a subsidiary of our former parent company, Clearflame Resources,which is the company name I was affiliated with when we met. Although I understand that things are moving forward on Donlin Creek,our company has withdrawn from that effort to focus on biogenic methane production.I will be sending you a copy of a brochure we are sending out regarding the generation of new methane via microbial action on coals.Because of the vast soft (sub-bituminous)coal deposits located in Alaska,and the very daunting challenges of providing rural fuel and power in Alaska,I thought you might be interested in our results in maintaining and augmenting microbial methane production in soft coal in the Powder River Basin of Wyoming.Please feel free to call with any questions.Thank you. Jim Dodson Vice-President Luca Technologies LLC 1625 Broadway,Suite 2700 _ Denver,CO 80202 CLEAR LAKE (303)534-4344 Ree ° Fax (303)534-1446 JamesB.Dodson 1625 Broadway Suite 1800 Denver,CO 80202 ph 303-534-4344 fx 303-534-1446 jdodsoneclearflame.com Doyon,Limited _on Building 201 -1st Avenue,Ste 300 Fairbanks,Alaska 99701 Tet:(907)459-2000 | Fax:(907)459-2060 James Mery Senior Vice President Lands and Natural Resources (907)459-2039 meryj@doyon.com Glacier Page 1 of 1 Karl Reiche Ce: Mike Harper Monday,October 20,2003 4:18 PM Ron Miller;Karl Reiche Bernie Smith Subject:Doyon-Meeting @LPG with Denali Comm.Lt.Governor,Comm.Blatchford The purpose of this is to inform you about one of the Donlin Creek power alternatives and then solicit your help or suggestion. Late last week Doyon's senior staff on Oct 16,Jim Mery,visited with Denali Commission about theprojecthebroughttoouattentionlastmonth;I.e.;Propane/butane as a possible fuel source for power at potential gold mine site at Donlin Creek. Greg Bush ,Place Dome representative was in attendance at an earlier meeting held that same day between Doyon and Calista .This can be called the same kind of meeting that Jim held with AIDEA/AEA here in our conference room. Later At the Denali Commission Jim said that while he anticipated Jeff Staser and Billy Bob Allen to attend,actually Lt.Governor Lehman and Commissioner Edgar Blatchford were there as well. Doyon feels strongly that they have as good approach to bringing the most competitive priced energy to the Donlin Project with use of Propane/butane from Asia..Apparently Lt.Gov.expressed support for the idea but said that what was needed was a way to assist Westward Alaska villages and not just a gold mine project (my sense of what went on).If there could be a way to find a way to assist Rural Villages with the high cost of energy,apparently Lt.Governor mentioned this was something the state could get behind .From the sounds of this,|suppose the Murkowski /Lehman |suspect this is one project that would answer more than one objective. Normally Jim is in the business of putting deals together that result in further mineral exploration on Doyon's 11 Million acres of land.He admits to not knowing much about how a social agenda might fit together in a fashion suggested by Lt.Gov Lehman.Jim Mery is seeking our ideas ,suggestions that might advance their case .|had earlier told Karl that |thoughtthe Doyon group was seeking DenaliCommissionmoneytoassistinadrillingprogram.But that is not correct.If you deem it appropriate,we might havea little set to about this.Karl and |are set up to meet with an engineering firm CH2 later this week about similar matters . 10/20/2003 715/eS Donlin Creek Fuel Comparison #2 Fuel Oil: 48,000,000 gallons x .141 MMBTU/gallon =6,768 BBTU/year 48,000,000 gallons x 7.1 Ibs/gallon =340,800,000 lbs/year 48,000,000 gallons x $1.38/gallon =$66,240,000/year (best possible #2 fuel oil cost) Propane: 6,768 BBTU/year @ .09169 MMBTU/gallon =73,814,000 gallons/year 73,814,000 gallons x 4.24 lbs/gallon =312,971,360 Ibs/year $66,240,000/73,814,000 gallons =$.897/gallon delivered price limit Butane: 6,768 BBTU/year @ .102032 MMBTU/gallon =66,332,000 gallons/year 66,332,000 gallons x 4.81 Ibs/gallon =319,056,920 Ibs/year $66,240,000/66,332,000 gallons =$1.00/gallon price limit Donlin Creek Fuel Comparison #2 Fuel Oil: 48,000,000 gallons x .141 MMBTU/gallon =6,768 BBTU/year 48,000,000 gallons x 7.1 Ibs/gallon =340,800,000 Ibs/year 48,000,000 gallons x $1.38/gallon =$66,240,000/year (best possible #2 fuel oil cost) Propane: 6,768 BBTU/year @ .09169 MMBTU/gallon =73,814,000 gallons/year 73,814,000 gallons x 4.24 lbs/gallon =312,971,360 Ibs/year $66,240,000/73,814,000 gallons =$.897/gallon delivered price limit Butane: 6,768 BBTU/year @ .102032 MMBTU/gallon =66,332,000 gallons/year 66,332,000 gallons x 4.81 Ibs/gallon =319,056,920 Ibs/year $66,240,000/66,332,000 gallons =$1.00/gallon price limit als lox Yukon River Project(D tal) Summary of Costs to Build,Fuel and Operate an 80 MW Power System for the Proposed Donlin Creek Mine Capital Cost Operating Cost Cost per kwh Information Source ($million)($million) Quotes from Lower 48 LPG sources for fuel Fuel $38 $0.054 delivered to mouth of Yukon River 5 barges @ $13 million,per STI prelim work; Barges $65 $6 opcost uses 70 days with 5 tugs @ $16K/day/tug Design by Denver mining engineer,installation per, quote from Saskatchewan contractor for "remote DeCoursey cavern $55 Alaska location" Pipeline;Holy Cross sphere;cavern plumbing Pipeline:Wyoming *350%;sphere:CBI quote; and delivery of LPG to power plant $30 $3 estimates on remainder and installation Subtotal A $150 $47 Recent P-W quote scaled-up to 80 MW; Power Plant $60 $2 estimated installation cost Subtotal B $210 $49 Amortization of capital: -commercial rates $33 -15%over 20 years -AIDEA-supported rates $21 -8%over 20 years TOTAL ANNUAL POWER COST: -Financing at commercial rates $82 $0.117 -Financing at AIDEA-supported rates $70 $0.100 reyYukon River 28 pgp Possible Port Location Holy Cross rape nope Legend ©Possible Storage Facility and Power Plant Possible Pipeline mums Possible Road Alignment [|Doyon Region |EEE]major Rivers _.|Map Scale 1:400,000 4.2.0 4 8 "42 Miles"AER NE RPE NT an SS Bastions petiole te "{Napaimiut®=ret ee ae” #™.Georget.ott -_ -{Crooked,Creek*#/ J Donlin Cre _4Existing Winter Trail and Proposed Road own...tO Be - Yukon River Fuel Delivery Project (Doyon et al.) Project Element Description Regional Development Potential Scale-ability for Regional Development Supply of LPG from 3rd party Bring volumes of LPG to Saint Michael from domestic or international sources via specialized LPG tanker. The massive scale of the Yukon River Project will make LPG available to the region at competitive global prices. Additional tanker loads could be contracted,limited only by regional infrastructure,and price. Riverborne movement of LPG (initial) LPG will be lightered from the tanker(s)into specially-designed shallow-draft LPG barges,and moved to Holy Cross via the Yukon River. An attractive fuel alternative will be available in bulk far inland from tidewater,and close to regional markets.Increase the size of the barge fleet. Receive and store LPG at Holy Cross LPG will be unloaded into a specialized storage vessel (pressurized sphere,or refrigerated tank)built as part of the proposed DOTPF Holy Cross barge port.Most LPG will be immediately pumped via pipeline to cavern storage at DeCoursey,but some could be kept at Holy Cross for local Yukon River markets. LPG will be stored at a new regional transportation hub,for potential use Yukon River markets:add storage capacity at Holy by a variety of evolving regional markets. Cross.Donlin area markets (LPG or power):increase pipeline pumping capacity at Holy Cross. Riverborne movement of LPG on the Yukon River (secondary expansion) LPG will be barged from Holy Cross to Yukon River markets via tanker or barge. A new fuel alternative is made available to local regional markets: LPG that is cheaper,cleaner,and better suited to power and heating services in an arctic environment. An appropriate riverborne transport system must be created.Customers now using coal or diesel will have to convert their equipment if they elect to switch to LPG. Landborne movement of LPG from Holy Cross to DeCoursey storage LPG will be pumped to main storage near the Donlin power plant via buried steel pipeline. Fuel will be moved in bulk to storage near Donlin and nearby future mining projects between Donlin and Flat. These new markets might desire LPG,or power.The pipeline could utilize the same right-of-way as the proposed DOTPF road from Holy Cross to Donlin to minimize cost and environmental impact. Pipeline capacity can be increased by adding pumping horsepower at Holy Cross,or by over-sizing the pipeline to provide for future growth. Storage of LPG near the Donlin power plant,and associated LPG delivery facilities (pumps and A cavern storage facility will be built at DeCoursey Mountain,near Donlin Creek,to hold approximately one years'fuel requirement for the Donlin power plant and other mine markets This facility will concentrate very large volumes of LPG fuel near future market sites in the Donlin mining district,and near the Kuskokwim River.Excavated rock can be used as rip-rap and road base in the proposed DOTPF Holy Cross-Donlin Preferred alternative:the initial cavern is constructed road.The cavern will provide large- scale,cost-effective,environmentally- with capacity for future market expansion.Next alternative:more cavern capacity is built later,as a pipelines).in the Donlin-Flat area.enhanced storage of LPG.second phase of development. A power plant will be built near the =|The power plant can also provide Donlin Creek mine using modular waste heat to the Donlin Creek mine, simple-cycle turbines with and it can be expanded to serve combustion chambers designed for jother regional markets:industrial,Additional turbine modules can be added to the power Power plant LPG.commercial and residential.plant,if fuel supply infrastructure is sufficient. Donlin Creek area regional power grid Construct a power distribution system to serve other mines,and/or settlements. \f power transmission economics are favorable,it seems appropriate to expand the positive economics of an LPG-fueled Donlin power project to other power markets in the region, and maximize use of economies of scale to reduce power cost to consumers. Design an efficient,integrated system to deliver power to settlements,and to make power available to encourage post-Donlin mineral development. Riverborne movement of LPG on the Kuskokwim River (secondary expansion) Build a pipeline from DeCoursey cavern storage to a tank at Crooked Creek,and feed a tanker or barge system to distribute LPG to settlements along the Kuskokwim River. Clean,cost-effective LPG could also be made available to consumers along the Kuskokwim River. Sufficient storage capacity must be built at DeCoursey cavern storage,and a new tanker or barge system must be built for the Kuskokwim River markets.Customers now burning coal or diesel will have to convert their equipment if they wish to use LPG as fuel. Yukon River Fuel Delivery Project (Doyon et al.) Comparison of Characteristics of Alternative Fuels for Proposed Donlin Power Plant Propane Butane #2Diesel Physical Properties "Energy density"as liquid fuel (gross basis) -btu/gallon 91,065 102,989 140,000 -btu/lb 21,513 21,139 19,858 Boiling point,degrees F -44 31 163 Freezing point,degrees F -306 -217 approx.0 Vapor pressure @ 100 degrees F,psi:190 52 approx.0 Specific gravity @ 60 degrees F:0.51 0.58 0.86 (vs.water @ 1.0) Supply market and trends $0.67-$0.72,including barge transport |$0.73-$0.79,including barge on river (range relfects barge transport on river (range reflects Current dockside price at Holy Cross,$/gallon amortization variables)barge amortization variables)$1.58 Annual fuel volume to produce 80 mW 77 million gallons 68 million gallons 50 million gallons Near-term market forces Supply expected to increase,since propane is a by-product in the increasing worldwide production of LNG Supply expected to increase,since butane is also a by-product in the increasing worldwide production of LNG Tight markets,expected to move in step with high crude oil prices Long-term market forces Ample world supply Ample world supply MAJOR IMPACT FROM PENDING EPA REGS RE LOW- SULFUR DIESEL,NOW PLANNED FOR 2007 IMPLEMENTATION.Downward pressure on supply is expected,because some existing refining capacity will not be upgraded to new compliance for economic reasons.Hence, there will be upward pressure on prices of diesel fuel. Near-term source of supply Far East Far East Seaitle Long-term source of supply Far East,or Alaska after gas pipeline is built Far East,or Alaska after gas pipeline is built West Coast of U.S. Consistency of fuel specifications No variation in specs from season to season Consistent year-round specs Significant variation in specs from winter grade to summer grade.Will winter grade will be needed at Donlin for large part of year?Will it even be available during the summer shipment window? Environmental Toxicity Emergency Overview Propane is a colorless gas or liquid stenched with a foul sulfur smelling odorant.It is shipped as a liquefied gas under pressure.Propane is extremely flammable and explosive.At high concentrations this product is a simple asphyxiant,which displaces oxygen from the breathing atmosphere.Liquid contact with skin or eyes will cause frostbite.Large releases can create a flammable vapor cloud.[Marathon MSDS] Colorless,odorless gas.Extremely flammable.Dangerous fire and explosion hazard.Avoid heat, sparks,and flames.This product does not contain oxygen and may cause asphyxia if released ina confined area.Simple hydrocarbons can cause irritation and central nervous system depression at high concentrations.Contents under pressure.Use and store below 125 degrees F.[BOC Gases MSDS] OHSA/NFPA combustible liquid-slight to moderate irritant-affects central nervous system-harmful or fatal if swallowed.Moderate fire hazard.Avoid breathing vapors or mists.May cause dizziness and drowsiness.May cause moderate eye irritation and skin irritation (rash).Long-term,repeated exposure may cause skin cancer.If ingested,do NOT induce vomiting,as this may cause chemical pneumonia (fluid in the lungs).[Amerada Hess MSDS} Persistence in the environment,if spilled "Very low".Propane has low solubility in water,thus it is unlikely to be injested by plants,invertibrates,fish,or animals. Propane is generally non-reactive (except for flammability),and is volatile even at low temperatures.Its simple molecular structure renders dissolved propane susceptible to microbial attack. "Very low";comments for "Propane” (to left)will generally also apply to butane.Compared to propane, butane's higher density and molecular weight make it less volatile. However,it is still much more volatile than diesel fuel,and it contains none of the carcinogens (especially aromatics)found in diesel fuel. "Medium"to "high".Constituent aromatic compounds (such as toluene,benzene and xylene)are soluble in water,and will enter the food chain of organisms,animals and fish if spilled into fresh or salt water.Heavier molecular weights and more-complex chemical structures of diesel components make them more resistant to microbial consumption,especially in an arctic environment.Some long-term studies of old diesel spills have -|noted that little progress in "digesting”spilled diese!has occurred even after three decades. Yukon River Fuel Delivery Project (Doyon et al.) Project Element Description Regional Development Potential Scale-ability for Regional Development Supply of LPG from 3rd party Bring volumes of LPG to Saint Michael from domestic or international sources via specialized LPG tanker. The massive scale of the Yukon River Project will make LPG available to the region at competitive global prices. Additional tanker loads could be contracted,limited only by regional infrastructure,and price. Riverborne movement of LPG (initial) LPG will be lightered from the tanker(s)into specially-designed shallow-draft LPG barges,and moved to Holy Cross via the Yukon River. An attractive fuel alternative will be available in bulk far inland from tidewater,and close to regional markets.Increase the size of the barge fleet. Receive and store LPG at Holy Cross LPG will be unloaded into a specialized storage vessel (pressurized sphere,or refrigerated tank)built as part of the proposed DOTPF Holy Cross barge port.Most LPG will be immediately pumped via pipeline to cavern storage at DeCoursey,but some could be kept at Holy Cross for local Yukon River markets. LPG will be stored at a new regional transportation hub,for potential use by a variety of evolving regional markets. Yukon River markets:add storage capacity at Holy Cross.Donlin area markets (LPG or power):increase pipeline pumping capacity at Holy Cross. Riverborne movement of LPG on the Yukon River (secondary expansion) LPG will be barged from Holy Cross to Yukon River markets via tanker or barge. Anew fuel alternative is made available to local regional markets: LPG that is cheaper,cleaner,and better suited to power and heating services in an arctic environment. An appropriate riverborne transport system must be created.Customers now using coal or diesel will have to convert their equipment if they elect to switch to LPG. Landborne movement of LPG from Holy Cross to DeCoursey storage LPG will be pumped to main storage near the Donlin power plant via buried steel pipeline. Fuel will be moved in bulk to storage near Donlin and nearby future mining projects between Donlin and Flat. These new markets might desire LPG,or power.The pipeline could utilize the same right-of-way as the proposed DOTPF road from Holy Cross to Donlin to minimize cost and environmental impact. Pipeline capacity can be increased by adding pumping horsepower at Holy Cross,or by over-sizing the pipeline to provide for future growth. Storage of LPG near the Donlin power plant,and associated LPG delivery facilities (pumps and A cavern storage facility will be built at DeCoursey Mountain,near Donlin Creek,to hold approximately one years'fuel requirement for the Donlin power plant and other mine markets This facility will concentrate very large volumes of LPG fuel near future market sites in the Donlin mining district,and near the Kuskokwim River.Excavated rock can be used as rip-rap and road base in the proposed DOTPF Holy Cross-Donlin Preferred alternative:the initial cavern is constructed road.The cavern will provide large- scale,cost-effective,environmentally- with capacity for future market expansion.Next alternative:more cavern capacity is built later,as a pipelines).in the Donlin-Flat area.enhanced storage of LPG.second phase of development. A power plant will be built near the |The power plant can also provide Donlin Creek mine using modular waste heat to the Donlin Creek mine, simple-cycle turbines with and it can be expanded to serve combustion chambers designed for Jother regional markets:industrial,Additional turbine modules can be added to the power Power plant LPG.commercial and residential.plant,if fuel supply infrastructure is sufficient. Donlin Creek area regional power grid Construct a power distribution system to serve other mines,and/or settlements. If power transmission economics are favorable,it seems appropriate to expand the positive economics of an LPG-fueled Donlin power project to other power markets in the region, and maximize use of economies of scale to reduce power cost to consumers. Design an efficient,integrated system to deliver power to settlements,and to make power available to encourage post-Donlin mineral development. Riverborne movement of LPG on the Kuskokwim River (secondary expansion) Build a pipeline from DeCoursey cavern stcrage to a tank at Crooked Creek,and feed a tanker or barge system to distribute LPG to settlements along the Kuskokwim River. Clean,cost-effective LPG could also be made available to consumers along the Kuskokwim River. Sufficient storage capacity must be built at DeCoursey cavern storage,and a new tanker or barge system must be built for the Kuskokwim River markets.Customers now burning coal or diesel will have to convert their equipment if they wish to use LPG as fuel. Yukon River Fuel Delivery Project (Doyon et al.) Comparison of Characteristics of Alternative Fuels for Proposed Donlin Power Plant Propane Butane #2Diesel Physical Properties "Energy density”as liquid fuel (gross basis) -btu/galion 91,065 102,989 140,000 -btu/Ib 21,513 21,139 19,858 Boiling point,degrees F -44 31 163 Freezing point,degrees F -306 -217 approx.0 Vapor pressure @ 100 degrees F,psi:190 52 approx.0 Specific gravity @ 60 degrees F:0.51 0.58 0.86 (vs.water @ 1.0) Supply market and trends $0.67-$0.72,including barge transport |$0.73-$0.79,including barge on river (range relfects barge transport on river (range reflects Current dockside price at Holy Cross,$/gallon amortization variables)barge amortization variables)$1.58 Annual fuel volume to produce 80 mW 77 million gallons 68 million gallons 50 million gallons Near-term market forces Supply expected to increase,since propane is a by-product in the increasing worldwide production of LNG Supply expected to increase,since butane is also a by-product in the increasing worldwide production of LNG Tight markets,expected to move in step with high crude oil prices Long-term market forces Ample world supply Ample world supply MAJOR IMPACT FROM PENDING EPA REGS RE LOW- SULFUR DIESEL,NOW PLANNED FOR 2007 IMPLEMENTATION.Downward pressure on supply is expected,because some existing refining capacity will not be upgraded to new compliance for economic reasons.Hence, there will be upward pressure on prices of diesel fuel. Near-term source of supply Far East Far East Seaitie Long-term source of supply Far East,or Alaska after gas pipeline is built Far East,or Alaska after gas pipeline is built West Coast of U.S. Consistency of fuel specifications No variation in specs from season to season Consistent year-round specs Significant variation in specs from winter grade to summer grade.Will winter grade will be needed at Donlin for large part of year?Will it even be available during the summer shipment window? Environmental Toxicity Emergency Overview Propane is a ccloriess gas or liquid stenched with a foul sulfur smelling odorant.It is shipped as a liquefied gas under pressure.Propane is extremely flammable and explosive.At high concentrations this product is a simple asphyxiant,which displaces oxygen from the breathing atmosphere.Liquid contact with skin or eyes will cause frostbite.Large releases can create a flammable vapor cloud.[Marathon MSDS] Coloriess,cdorless gas.Extremely flammable.Dangerous fire and explosion hazard.Avoid heat, sparks,and flames.This product does not contain oxygen and may cause asphyxia if released in a confined area.Simple hydrocarbons can cause irritation and central nervous system depression at high concentrations.Contents under pressure.Use and store below 125 degrees F.[BOC Gases MSDS] OHSA/NFPA combustible liquid-slight to moderate irritant-affects central nervous system-harmful or fatal if swallowed.Moderate fire hazard.Avoid breathing vapors or mists.May cause dizziness and drowsiness.May cause moderate eye irritation and skin irritation (rash).Long-term,repeated exposure may cause skin cancer.If ingested,do NOT induce vomiting,as this may cause chemical pneumonia (fluid in the lungs).[Amerada Hess MSDS] Persistence in the environment,if spilled "Very low".Propane has low solubility in water,thus it is unlikely to be injested by plants,invertibrates,fish,or animals. Propane is generally non-reactive (except for flammability),and is volatile even at low temperatures.Its simple molecular structure renders dissolved propane susceptible to microbial attack. "Very low";comments for "Propane” (to left)will generally also apply to butane.Compared to propane, butane's higher density and molecular weight make it less volatile. However,it is still much more volatile than diesel fuel,and it contains none of the carcinogens (especially aromatics)found in diesel fuel. "Medium”to "high”.Constituent aromatic compounds (such as toluene,benzene and xylene)are soluble in water,and will enter the food chain of organisms,animals and fish if spilled into fresh or salt water.Heavier molecular weights and more-complex chemical structures of diesel components make them more resistant to microbial consumption,especially in an arctic environment.Some long-term studies of old diesel spilis have noted that little progress in "digesting”spilled diesel has occurred even after three decades.