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HomeMy WebLinkAboutCoalbed Methane Recovery 1995FAX Date 10/02/95 Number ofpages including cover sheet 10 TO:Bert Tarrant FROM:Joanne Griggs State of Alaska, DCRA/Division of Energy PO Box 112100 Juneau,AK 99811-2100 Phone 907/269-4649 Fax Phone 907/269-4645 Phone 907/465-5530 Fax Phone 907/465-2948 CC: REMARKS: [(]Urgent Foryourreview (]ReplyASAP []Please Comment Please bring a copy to Dick.Thanks Draft Letter Dear Representative Ogen: The division is very interested in the potential for coal-bed methane. Small coal deposits are widespread and abundant across Alaska.Past efforts indicate that many of these deposits are too expensive to mine as a fuel for nearby communities.It has been suggested that a potential may exist to economically draw methane gas from the coal seams,and use this gas to make electricity and heat homes.The Division would like to develop a comprehensive evaluation of potential rural host sites for coal-bed methane and small natural gas,and determine if in these communities coal-bed methane or natural gas represent cost-effective alternatives to diesel fuel.Preliminary results by the division indicate,however,that coal bed methane potential is limited to a small number of sites, and that the development risks are high. Through our own efforts and through a Cooperative Research and Development Agreement (CRADA)with the Morgantown Energy Technology Center in Morgantown West Virginia initial investigations have begun to identify potential host sites. These investigations involve accumulating data through a variety of methods.The division is seeking additional funds to complete a careful evaluation of maps,logs,drilling records, core data,and other existing information. A completed study would provide: a presentation of the geological and engineering data indicating gas potential. a methodology to identify and rank potential host sites background on the benefits of the technology and the reliability of the fuel source. discussion of applicability to Alaska and market potential. Development of project plans to include exploration and production cost estimates. Because of the costs associated with bringing a well,or wells into production,and the costs of collecting and distributing the gas,when compared to the long-term costs of continuing to use diesel fuel,it appears that the potential for this technology may be limited. Much of the initial work on coal-bed methane deposits in Alaska was performed by Tom Smith at the Division of Oil and Gas,Department of Natural Resources in Anchorage. Tom has been interested in coal-bed methane for at least the last five years,and is responsible for the a successful demonstration project in Houston.Although the Houston site provided essential information and demonstrated that the gas could be produced,this discovery was made in the competitive energy environment of the Railbelt,where electricity,coal and natural gas compete with low priced diesel fuel for home heating. Proposals from qualified engineering firms to determine the cost of producing a natural gas or coal-bed methane well under ideal conditions are expected the second week of March.I have enclosed a copy of the proposed scope of work. I believe that a report from the Morgantown Energy Technology Center may be available in the near future.If you have comments,or additional thoughts and would like to discuss them,I would be interested in talking with you. Respectfully, Dennis Meiners NOU-2@-1995 15!@1 FROM EERC =Energy &Environmental»Research Center é TO 69919874652948470554 P.@1 FAX TRANSMISSION EERC Fax Number (701)777-5181 EERC Fax Operator (701)777-5274 University of North Dakota,P.O,Box 9018,Grand Forks,ND 58202-9018;{701)777-5000 TO: Mr.Dennis Meiners Senior Development Specialist Department of Community &Regional Attairs Division of Energy PO Box 112100 Juneau,AK 99811-2100 FROM: Dr.Michael Jones Energy &Environmental Research Center 15 North 23rd Street Grand Forks,ND 58203 PHONE #:701-777-5152 FAX #:{907)465-2948 COUNTRY:USA #OF PAGES:3 DATE:November 20,1995 FUND NUMBER:2469 SUBJECT: See tha attached for your review.Please feel free to call me at (701)777-5152 with any questions. IF YOU EXPERIENCE PROBLEMS WITH THIS TRANSMISSION,PLEASE CONTACT THE FAX OPERATOR AT (701)777-5274. ne netsas These sections are to be completed by the person who transmits the fax. INDIVIDUAL FAXING TIME OF FAX 3/OO €ERC 9/93 Outline Report on the Siting and Strategy for Coaibed Methane Recovery Project at Remote Sites in Alaska Objectives of the Report: 0 To define and implement the methodology to select a demonstration site for a Native Alaskan remote site demonstration coalbed methane recovery and utilization project in Alaska; °To provide the geologic and other information negded to rationalize #coalbedmethanerecoveryandutilizationprojectatthesiteselected;and re)To provide the information needed to support a budget estimate for the project. Audience for the Report: The audience for the Report includes:the State of Alaska Department of Community and Regional Affairs;Alaska Native Corporations;the Borough in which the project is proposedtobelocated;the Alaskan village at which the project is proposed to be lucated;EERC;METC;the Secretary of Energy;the U.S.Congress.Each of these organizations will haveaneedfortheReport. For some,the need will be to obtain State and local support for the project;for others,theReportwillbeusedtoobtainthefinancialresourcesfartheproject;others will use it for political reasons,As a result,the report should be written so that this broad audience canunderstanditandfeelconfidentwithitsconclusions. Report Outline/Content: To mect the objectives stated and to be sufficient for the audiences noted,the followingoutline/content for the Report is suggested: 1 Executive Summary.This section should succinctly address the objectives oftheReport;the market potential for coalbed methune in Alaska and otherremotesitesIntheWorldthatcouldresultfromthedemo(this should be done in "big picture”terms toqualitatively (but where possible,quantitatively)discuss the energy problem in Alaska,the potential of coalbed methane toaddresstheproblem,the benefits success would bring,and the implications ofsuccessfortransferringthetechnologydemonstratedforotherremoteJocationsthroughouttheWorld(the basis fur this plece could be "The AlaskanInitiative"and the presentation made by Jack Siegel at the Seattle Workshop);the methodology used;the findings (ic.site,project,costs);and the plan ofaction.This section should be 2 to 4 pages In length.'eeaeS Il. Il. IV, V1 b:\outline.doe Methodology for Site Selection.The methodology used to select a site shouldbedescribed.Most importantly,the criteria used,and the weighing of the criteria,should be staicd and rationalized. Site Selection Results.A summary of the results of applying the methodologytositesthroughoutAlaskashouldboprovided.An Appendix should includethedetailedresultsofthesiteanalyses. Proposed Project,For the site selected,summarize the project proposed andsummarizetheinformationneededtorationalizetheproject.The project description can be drawn from the Fact Sheet on the Chignik Lagoon project.The supporting information should include the geologic information on thesiteandhowthatinformationsupportsthenumberofwells,gas flow and gasqualityprojections,and cost estimates for the project.This section of theReportshouldalsolayouttheplanforcarryingouttheprojectincluding- obtaining state,borough,Native Alaskan,and local support;milestones;risks; and other elements that clearly describe what needs to be done and how it willbedonetocarryouttheproject.This section should address the many questions that have arisen about the project to date, Market Potential.This section should describe,in whatever detail is available, the implications of the Alaska demu on transfer of the technology to other remote regions of Alaska and other parts of the World.(ERI can provide this section of the report as a part of their existing contract). Conclusions and Recommendations,This section should briefly summarize the conclusions (i.that the project selected makes sense)and the nextt steps toimplementtheproject, TOTAL P.@3 Petroleum Exploration Plays and Resource Estimates,1989,Onshore United States- Region 1,Alaska;Region 2,Pacific Coast RICHARD B.POWERS,Editor U.S.GEOLOGICAL SURVEY BULLETIN 2034-A UNITED STATES GOVERNMENT PRINTING OFFICE,WASHINGTON :1993 L PETROLEUM EXPLORATION PLAYS AND RESOURCE ESTIMATES,1989,UNITED STATES TERTIARY BASINS PLAY (020) The Tertiary Basins play is characterized by speculative gas accumulations in structural (mainly domal)traps in sandstone reservoirs of Tertiary age.The Beluga- Sterling play in the Cook Inlet province (067)is considered to be an analog for the play,in that expected gas would be primarily microbial in origin,but would include minor amounts of thermally generated gas.The Tertiary Basins play includes those basins in the four provinces that are filled with Tertiary sediments (fig.22).Expected source rocks are coal,or rocks containing closely associated humic kerogen (Type IID. Shale and siltstone that overlie the sandstone reservoirs would provide adequate seals. Reservoirs include nonmarine fluvial channel sandstones similar to those known in the analog Tertiary Beluga and Sterling Formations.Sandstone reservoirs in these for- mations have water saturations that range from 35 to 50 percent,porosities that range from 10 to 37 percent,and permeabilities that range from 3.5 to 4,400 millidarcies. Thickness of net pay ranges from 20 to 213 ft. Because overburden is not required to create microbial gas from source rocks, undiscovered gas accumulations may be found wherever a thin but adequate seal rock in a trapping situation exists.Additional thermogenic gas may be present in basins with sedimentary fill greater than 10,000 ft thick.The future gas potential,at least for local usage,is estimated to be fair to good. 166°162°158° T 66°|- Bethel basin Kuskokwirm Bay 58°1 2 < Norton -, ', 3-mile ' T T T T Kobuk basin ALASKA oN ae'.VokesINTERIORyurhore -PROVINCE basin (062)KANDIKiGarenaAAPROVINCE(061) g=1=©)y COPPER|Minchurina RIVER BASIN PROVINCE (066) INTERIOR LOWLANDS PROVINCE (063) o Dillingham 2BristolBay vaya//WLSGayJ,ifv i} 50 100 MILES | re| Figure 22.Map of Tertiary Basins play (020)in provinces 061,062,063,and 066. A44 PROJECT BLUE FLAME A PROJECT TO LOCATE AND EXTRACT COALBED METHANE GAS FOR USE AS AN ENERGY RESOURCE FOR ALASKA SUBMITTED TO: THE DOYAN CORPORATION SUBMITTEDBY THE COLLEGE OF WEST VIRGINIA BECKLEY,WEST VIRGINIA OCTOBRE 1993 |CienaPROJECT BLUE FLAME Background In 1989,The College of West Virginia (CWV)entered into a contract (Contract #DE-AC21- 89MC26026)with the United States Department of Energy (DOE)to develop the means to locate and to extract,by a drilling process,coalbed methane gas for commercial use.The study resulted in the installation of three (3)wells,which at their peak produce 82 mcf per day of useable product. The Department of Energy asked that the College,in cooperation with the State of Alaska and Native Alaskan organizations investigate the use of coalbed methane gas as an alternative energy resource.After initial studies,the College decided to develop a test well(s) in the Chignik coalfield in the Alaska Peninsula Province.The intent of the project is to develop a reliable source of energy for the isolated villages of the state.Given the extreme winters of the region,the opportunity to "gasify"the villages located in the Alaskan coalfields has major economic development possibilities and will contribute to the protection and enhancement of local environments. The project is in keeping with the recommendations of the Alaskan RAVEN Commission (Rural Alaska Village Economies and Needs).This evaluation of village needs commissioned by Governor Walter J.Hickel was completed in July 1994.One of its key recommendations was for the state to act to develop all regionally available energy sources including natural gas.Of course,the Chignik region is not the only area of the state for which this process would be effective. The Alaska Department of Natural Resources has estimated that the state's known coal reserves are 5.5 billion short tons or about one-half of the nation's total.Most of the identified coalbeds have high methane gas potential.Incorporating the methods for methane gas extraction developed by The College of West Virginia to produce commercially useful volumes of gas will provide a local energy source to the villages and will reduce their dependence on more expensive imported energy sources. These tasks will develop a series of producing coalbed methane gas wells which will be sources for commercially useful fuel.If present,brine flow will be disposed of in an environmentally sound manner.The benefits of the tasks are wide-ranging and would represent a major step forward in the problems of reducing losses to the economy and environment from venting methane and potential brine disposal problems. The College of West Virginia PROJECT BLUE FLAME Project Need Finding a secure,economical and environmentally sound energy source for the rural villages of Alaska is a major concern of the government of that state and of its Native Alaskan Corporations and Councils.Public health and safety,particularly during the long and severe winters of the region,demand that a reliable,on-site energy source for heat and power be made available.The State of Alaska and DOE have already ascertained that there are abundant gas reserves in the coalbeds surrounding many of the rural villages which,if tapped,can be that reliable local energy source. Villages,like Chignik Lagoon,need to import fuel oil for use during the winter months.In some cases,in excess of 250,000 gallons of oil are required to provide heat and power for a village.In most cases,the power is available for a limited period (10-12 hours)each day.The costs for the village run in the area of 55 cents per gallon.If a village were "gasified",the energy for heating and electricity would be available 24 hours per day and at a much cheaper per unit cost of approximately 8 cents.Additionally,fuel oil or diesel is a relatively dirty fuel creating significant environmental problems with its use.Natural gas is a much cleaner resource and has less potential adverse impact on the local environment. The continuing potential for environmental degradation,loss to the economy and reduction of other energy resources is a serious concern.The College of West Virginia's Project Blue Flame provides the energy resources needed to make Alaskan communities more self- sufficient,while at the same time it will ameliorate environmental damage and loss while enhancing the local economy.In an era of declining non-renewable energy resources,the failure to provide for the safe and economical extraction of a new and under-utilized resource such as coalbed methane gas is inexcusable. The College of West Virginia,the proposed prime contractor,possesses an extensive network of contacts,high technology tools and the requisite expertise to complete this task successfully and expeditiously.CWV has a proven record of performance with the DOE as a result of the progress made under the current contract.It possesses the qualified personnel with proven experience in mapping and data analysis for coal,gas,lease management and other areas. The on-site experience of the College,as demonstrated by the Beckley,WV and Chignik wells,indicates that CWV can identify,analyze,drill and manage multiple strata coalbed methane gas wells.The College has the expertise and background to work with state and local officials to secure all permits,hire local on-site sub-contractors and lease drilling and The College of West Virginia - other needed equipment. The College of West Virginia ---@[|ital8PROJECT BLUE FLAME Project Benefit CWV has already developed the basic research and implementation strategies needed to develop the means to efficiently extract coalbed methane gas and to do so using an environmentally and economically productive method.The result of the project will represent an opportunity to save the participating government(s),Native Alaskan organizations and impacted industries time and expense.The development of methodologies to extract the gas fueled fires will take pressures off of existing energy supplies.The project may also provide commercially useful byproducts (potable water,salt)which have the potential for improving local economies.The ability to locate and efficiently extract gases that are otherwise vented into the atmosphere will also serve to reduce the adverse effects on local environments. The U.S.Department of Energy has identified and is aware of the effect of venting methane gas as an environmental hazard.All that is lacking to eliminate that hazard and create a productive resource is the application of the technology provided by The College of West Virginia to safely and efficiently extract the gas.The College of West Virginia firmly believes that the time has come to undertake these tasks.The introduction of the extraction technology developed by the College will provide a comprehensive project design which will give a sufficiently sized sample of activity on which to draw relevant conclusions. The Alaska project will involve the identification of suitable coalbed sites to determine drilling locations.A well(s),using The College of West Virginia approach,will be drilled and methane gases extracted.Use of the coalbed methane gases presents an especially good opportunity to develop an alternative energy resource.Once in production,the methane gas can be used to reduce the reliance on imported diesel or other fuel oils now in heavy use.The environmental,economic and social benefits flowing from this project are considerable.The development of a native,full-time energy resource may be a factor to allow Native Alaskan organizations to further stimulate controlled job growth and encourage business development and/or retention. The College of West Virginia .- Summary Plan of Work PROJECT BLUE FLAME The State of Alaska and The Department of Energy established a generalized scope of work for use in the Chignik project which is compatible with other sites.This process involves the preparation of a test plan to site,permit,drill,complete,test and produce a well using the procedures developed by The College of West Virginia at its sites in Beckley,WV and Chignik Lagoon Alaska.The College will apply the geologic evaluation and site selection criteria developed for southern West Virginia and the Chignik pennisula region to a site to be selected by the Corporation. The process is to be conducted in 5 elements as follows: Element I Element II Element Hil Element IV Element V Element I. Element 2. Resource Assessment Resource Verification Economic Assessment Project Evaluation and Final Report Installation of a Producing Well Site The College shall in consultation with the Doyan Corporation select a well site(s)in the areas specified by the Corporation in an identified coal basin.The site(s)will have the greatest potential for gas production from below shallow coalbeds and conventional gas sands from the same wellbore. The College shall drill at least one coring borehole at one of the five sites selected.A second borehole may be required if funding permits.Analysis will be performed on selected coal cores,gas samples,water samples and other items as appropriate.The College shall also run gamma ray and density logs.Data gathered will be used to project areal extent,thickness and quality of gas bearing zones at selected sites. The College of West Virginia PROJECT BLUE FLAME Sommary Plan of Work (continued) Element 3. Element 4. Element 5. The College shall assess the economics of production in the area around the site(s)based upon the acquired drill site data.Projected gas production from coal seam and conventional gas formations will be charted to demonstrate the economic limits of conventional recovery methods.The costs for water/brine production,treatment and disposal shall be charted and included for each case.Options for water/brine usage and/or disposal will be evaluated to determine additional benefits that can be obtained while eliminating potential environmental concerns. The College shall evaluate factors influencing natural gas production from the multiple strata of the selected sites.A topical report will be prepared which will describe the field effort(s),well drilling process and results and will include an environmental analysis of the strata encountered.The report shall include an assessment of the potential for producing gas from coal and sands in the Alaskan boreholes as well as the economic impact and cost projections. The College,in cooperation with the Doyan Corporation (a Native Alaskan organization)will install any additional on-site equipment or facilities that the Corporation may deem as necessary. The College of West Virginia PROJECT BLUE FLAME Project Cost The total cost of the project,as determined by the College,based upon its experience in the Chignik Lagoon project for the required investigation,research,equipment and drilling costs for the development of a single well site is: $1,500,000 The College will provide to the Doyan Corporation a complete "turnkey"well site for the agreed contract price.Of course,costs may be affected by the nature,type or amount of equipment,materials or personnel that the Corporation may elect to provide to the project from its existing resources. The College of West Virginia PROJECT BLUE FLAME Project Request The College of West Virginia asks that the Doyan Corporation become a partner in this important effort to develop alternative energy sources for Alaska with an immediate grant of $1,500,000 to identify an appropriate site and drill a methane gas extraction well in the properties under the control of the Corporation. The College of West Virginia PROJECT BLUE FLAME Project Budget Personnel 112,056 Benefits (@ 23%)25,772 Travel (CWV)7,900 Direct Costs 14,600* Indirect Costs (@ 45%)72,147 Subtotal 232,475 Well Site Costs 1,255,125** Total 1,487,600 *Includes:Postage,supplies,equipment,legal and accounting fees, insurance and bonding,permits,maps/charts,leases,telephone/fax,printing and publications. **x Includes:Site preperation,drilling,casing/tubing,surface equipment, plugging,reclamation,analysis/evaluation,mobilization,housing and consultant costs for well site supervision/inspection/evaluation. The College of West Virginia PROJECT BLUE FLAME OCTOBER 1995 SUBMITTED BY: THE COLLEGE OF WEST VIRGINIA P.O.BOX AG BECKLEY,WEST VIRGINIA 25802-2830 FOR FURTHER INFORMATION CONTACT: Dr.John R.Maestas,Vice President Office of Institutional Advancement The College of West Virginia (304)253-7351 or 1-800 766-6067 Fax (304)253-3463 Rye Div Of€Ga,200 C Ste)Sut 19F0 focorY 98 [02-60 fie F S62-GLO ALASKA MULTIPLE STRATA EXPLORATION AND PRODUCTION STUDY A PROJECT TO LOCATE AND EXTRACT COALBED METHANE GASES FOR USE AS AN ENERGY RESOURCE FOR RURAL ALASKAN VILLAGES SUBMITTED TO: THE STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES SUBMITTED BY: THE COLLEGE OF WEST VIRGINIA APRIL 1995 ALASKA MULTIPLE STRATA EXPLORATION AND PRODUCTION STUDY APRIL 1995 This proposal includes data that shall not be disclosed outside the Government and shall not be duplicated,used,or disclosed--in whole or in part--for any purpose(s)other than to evaluate this proposal.If however,a contract is awarded to this offeror as a result of --or in connection with-- the submission of these data,the Government shall have the right to duplicate,use,or disclose the data to the extent provided in the resulting contract.This restriction does not limit the Government's right to use information contained in these data if it is obtained from another source without restriction.The data subject to this restriction are contained in this volume. SUBMITTED BY: THE COLLEGE OF WEST VIRGINIA P.O.BOX AG BECKLEY,WEST VIRGINIA 25802-2830 FOR FURTHER INFORMATION CONTACT: Dr.John R.Maestas,Vice President Office of Institutional Advancement The College of West Virginia (304)253-7351 or 1-800 766-6067 Fax (304)253-3463 Alaska Multistrata Exploration and Production Study Background The College of West Virginia (CWV)in 1989 entered into a contract (Contract #DE-AC21- 89MC26026)with the United States Department of Energy (DOE)to develop the means to locate and to extract,by a drilling process,coalbed methane gas for commercial use.The study resulted in the installation of three (3)wells,which at their peak produce 82 mcf per/day of useable product. The Department of Energy has now asked that the College,in cooperation with the State of Alaska and Native Alaskan organizations,develop a test well(s)in the Chignik coalfield in the Alaska Peninsula Province (see Map).The intent of the project is to develop a reliable source of energy for the isolated villages of the state. Given the extreme winters of the region,the opportunity to "gasify"the villages located in the Alaskan coalfields has major economic development possibilities and will contribute to the protection and enhancement of local environments. The project is in keeping with the recommendations of the Alaskan RAVEN Commission (Rural Alaska Village Economies and Needs).This evaluation of village needs commissioned by Governor Walter J.Hickel was completed in July 1994.One of its key recommendations was for the state to act to develop all regionally available energy sources including natural gas. The Alaska Department of Natural Resources has estimated that the state's known coal reserves are 5.5 billion short tons or about one-half of the nation's total.Most of the identified coalbeds have high methane gas potential.The estimated methane gas content of the coalbeds is 1000 TCF.,Incorporating the methods for methane gas extraction developed by The College of West Virginia to produce commercially useful volumes of gas will provide for a local energy source to the villages and will reduce their dependence on more expensive imported energy sources. These tasks will develop a series of producing coalbed methane gas wells which will be sources for commercially useful fuel.If present,brine flow will be disposed of in an environmentally sound manner.The benefits of the tasks are wide-ranging and would represent a major step forward in the problems of reducing losses to the economy and environment from venting methane and potential brine disposal problems. The College of West Virginia Alaska Multistrata Exploration and Production Study Project Need Finding a secure,economical and environmentally sound energy source for the rural villages of Alaska is a major concern of the government of that state and of its Native Alaskan Corporations and Councils.Public health and safety,particularly during the long and severe winters of the region,demand that a reliable,on-site energy source for heat and power be made available.The State of Alaska and DOE have already ascertained that there are abundant gas reserves in the coalbeds surrounding many of the rural villages which,if tapped,can be that reliable local energy source At present,the rural villages need to import fuel oil for use during the winter months.In some cases,in excess of 250,000 gallons of oil are required to provide heat and power for a village. In most cases the power is available for a limited period (10-12 hours)each day.The costs for the village run in the area of 55 cents per gallon.If the village were "gasified"the energy source would be available 24 hours per day and at a much cheaper per unit cost of approximately 8 cents.Additionally,fuel oil or diesel is a dirty fuel creating significant environmental problems with its use.Natural gas is a much cleaner resource and has less potential adverse impact on the local environment. The continuing potential for environmental degradation,loss to the economy and reduction of other energy resources is a serious concern.The College of West Virginia's Extraction and Production Study will help provide the energy resources needed to make the rural villages more self-sufficient while at the same time it will ameliorate environmental damage and loss while enhancing the local economy.In an era of declining non-renewable energy resources,the failure to provide for the safe and economical extraction of a new and under-utilized resource such as coalbed methane gas is inexcusable. The College of West Virginia,the proposed prime contractor,possesses an extensive network of contacts,high technology tools and the requisite expertise to complete this task successfully and expeditiously.CWV has a proven record of performance with the DOE as a result of the progress made under the current contract.It possess the qualified personnel with proven experience in mapping and data analysis for coal,gas,lease management and other areas. The on-site experience of the College,as demonstrated by the Beckley,WV wells,indicates that CWV can identify,analyze,drill and manage multiple strata coalbed methane gas wells.The College has the expertise and background to work with state and local officials for securing all permits,hiring of local on-site sub-contractors and leasing of drilling and other needed equipment. The College of West Virginia Alaska Multistrata Exploration and Production Study Project Benefit This project will provide the basic research and implementation strategies needed to develop the means to efficiently extract coalbed methane gas and to do so in an environmentally and economically productive method.The result of the project will represent an opportunity to save the participating government(s),Native Alaskan organizations and impacted industries time and expense.The development of methodologies to extract the gas fueled fires will take pressures off of existing energy supplies.The project may also provide commercially useful byproducts (potable water,salt)which have the potential for improving local economies.The ability to locate and efficiently extract gases that are otherwise vented into the atmosphere will also serve to reduce the adverse effects on local environments. The U.S.Department of Energy has identified and is aware of the effect of venting methane gas as an environmental hazard.All that is lacking to eliminate that hazard and create a productive resource is the application of the technology provided by The College of West Virginia to safely and efficiently extract the gas.The College of West Virginia firmly believes that the time has come to undertake these tasks.The introduction of the extraction technology developed by the College in another region of the country will provide a comprehensive project design which will give a sufficiently sized sample of activity on which to draw relevant conclusions. The Alaska project will involve the identification of suitable coalbed sites to determine drilling locations.Wells,using The College of West Virginia approach,will be drilled and methane gases extracted.Use of the coalbed methane gases presents an especially good opportunity to develop an alternative energy resource.Once in production the methane gas can be used to reduce the reliance on imported diesel or other fuel oils now in heavy use.The addition of a fuel cell to the well will provide for storage of gases for utilization to "gasify"a local village. The environmental,economic and social benefits flowing from this project are considerable.The development of a native,full-time energy resource may be a factor to allow Native Alaskan organizations to further stimulate controlled job growth and encourage business development and/or retention.Representatives of these organizations have met with CWV personnel to discuss this project's potential and have indicated that the need for developing gas reserves for the isolated rural villages is a priority need. The College of West Virginia Alaska Multistrata Exploration and Production Study Summary Plan of Work The current project is designed to proceed in two phases. Phase I will involve basic research to identify potential drilling sites,the selection of a site and the drilling of a test well.Phase II will,depending upon the result(s)of the initial phase,involve the drilling of a producing well. Scope of Work The State of Alaska and The Department of Energy have established a generalized scope of work for the College which requires the preparation of a test plan to site,permit,drill,complete,test and produce a well using the procedures developed by The College of West Virginia at its test sites in Beckley,WV.The College will apply the geologic evaluation and site selection criteria developed for southern West Virginia to a rural village location in Alaska. The Alaska task is to be conducted in 4 elements as follows: Element I Element II Element III Element IV WORK TASKS Element I. Resource Assessment Resource Verification Economic Assessment Project Evaluation and Final Report (work task numbers are consistent with previously approved work tasks for contract #DE-AC21-89MC26026) The College shall select up to five (5)potential well sites in an identified Alaskan coal basin which are adjacent to and/or under a rural village(s). The College shall identify sites with the greatest potential for gas production from below shallow coalbeds and conventional gas sands from the same wellbore.This element has been completed as a part of negotiations between the College,the State of Alaska and the Department of Energy the Chignik Field has been selected. The College of West Virginia Alaska Multistrata Exploration and Production Study Summary Plan of Work (continued) Element 2. Element 3. Element 4. The College shall drill at least one coring borehole at one of the five sites selected.A second borehole may be required if funding permits.Analysis will be performed on selected coal cores,gas samples,water samples and other items as appropriate.The College shall also run gamma ray and density logs.Data gathered will be used to project areal extent,thickness and quality of gas bearing zones at selected sites.Select and permit two The College shall assess the economics of production in the area around the rural village based upon the acquired drill site data.Projected gas production from coal seam and conventional gas formations will be charted to demonstrate the economic limits of conventional recovery methods.A second set of economic limits will be established for recovery methods which allow gas products to be directly used by Fuel Cell.The costs for water/brine production,treatment and disposal shall be charted and included for each case.Options for water/brine usage and/or disposal will be evaluated to determine additional benefits that can be obtained while eliminating potential environmental concerns. The College shall evaluate factors influencing natural gas production from the multiple strata of the selected sites.A topical report will be prepared which will describe the field effort(s),well drilling process and results and - will include an environmental analysis of the strata encountered.The report shall include an assessment of the potential for producing gas from coal and sands in the Alaskan boreholes as well as the economic impact and cost projections. Upon completion of the multiple strata project,The College of West Virginia will present a program summarizing the research and field activities.This program will serve as a basis for future seminars and classes outlining the key components of the multiple strata well project.Such seminars will prove valuable to government agencies,energy related industries,investors and others in the business community. The College of West Virginia Alaska Multistrata Exploration and Production Study Project Cost The total costs of the project as determined by The College,the State of Alaska and the Department of Energy is as follows:(see attached budget and line item breakdown) $1,133,883 The United States Department of Energy has set aside the amount of $400,000 for use on the project. The College of West Virginia asks that the State of Alaska,Department of Natural Resources join this important effort to develop alternative energy sources for rural Alaskan villages with an immediate grant of $100,000 to complete the Alaska Multistrata Methane Gas Project. The College of West Virginia 'p264X TASK 10 COST DOCUMENTA ON 3/2/95 -9/30/96 SALARIES 198326 A Proj Mgr-1lkh 1563 hrs x 23 @ S$35946 B Proj Assn't-Ron 329.72 hrs x 18 @ $§5935CcFiscalMgr-JS 225 hrs x 33 @ $§"7425 D Clerk 3120 hrs x 6 @ $18720 E Prin Invs-JM 1260 hrs x 33 @ S$41580 F P.E.Co-Ord.-Pat 2184 hrs x 40 @ S$87360 G.Transport.Officer 80 hrs x 17 @ $1360 FRINGES 28765 (14.68%for A,C,D,E,F,G +8.8%for B) TRAVEL 9215 See attached OTHER DIRECT COSTS 15806 Postage/Publications $270 Office Supplies $360 Unusual Communications $900 Attorney $625 Charts/Integration $151 Permits/Bonds/Surveys §12500 Leases $1000 DIRECT MATERIALS 3300 Laptop/printer $3000 Portable Fax S$300 INDIRECTS ON ABOVE 45%114935 SUB-CONTRACTS 885375 Project Field Costs $859985 See Attached Spreadsheet Engineer Consultant 350.2 hrs @ 50 =S$17510 Indirects on lst $25k S$7880 TOTAL FUNDING 3/2/95 to 9/30/96 1255722 FUNDING REMAINING FROM INITIAL AWARD 121839 TOTAL REQUESTED INCREASE IN FUNDING 1133883 Ke _Cy.[-&refaclher a_ Date:February 28,1996 Re:Costs Associated with Natural Gas (Both Conventional and Coal Bed Methane) Development for Rural Alaska Applications Small Procurement (<$25,000) Request for Proposal Mr.Donald Scheve clo ARCO Alaska P.O.Box 100360 Anchorage,Alaska 99510-0360 Dear Mr.Scheve: Please consider responding to this Request for Proposal (RFP).Comments on this RFP received during the period January 19-31,1996,will be considered and an amendment may be issued.A list of contractors receiving this solicitation is attached. In order to obtain the best product possible,collaboration is encouraged.The maximum budget for this contract is $25,000. 1.Project Description: Estimate costs associated with Natural Gas (both conventional and coal bed methane) development for rural Alaska applications. 2.Scope of Work: The contractor will submit a written report that examines the costs associated with natural gas use in rural Alaska.The intent is to provide an economic screening too!that can be used to determine whether natural gas deposits might become attractive energy alternatives in specific rural Alaska locations. The report will begin with an overview of the processes involved in natural gas development.It will then provide and explain base cost estimates for each stage of natural gas development for a selection of field sizes and local markets:exploration,field development,power generation plant,and transmission costs.Estimates for various scenarios (i.e.access difficulties, technical difficulties,etc.)will be included so that development costs for natural gas deposits with unique characteristics can be estimated based on the table of incremental costs.By defining base cases for projects serving -1 of 8-RFP No.DOE-96-R-003 various demands,minimum thresholds for proposed natural gas projects can be established.As each situation increases in difficulty,the incremental associated costs given by this report can be added together for a specific proposed project. The contractor is to determine what combinations of distance from market, field size and characteristics,market size,and other major factors suggest an economically promising scenario for natural gas development serving local demands in rural Alaska. This report will be divided into several sections addressing major areas of investigation.Appendices will be needed for specific references.A preliminary Table of Contents is included below to summarize this scope of work.A final report outline is to be submitted to the issuing office Project Manager for approval prior to report preparation. The final report must be submitted in one camera ready original and 10 final copies to the Issuing Office.Also one complete copy of the file on 3.5 inch diskette(s).This computer file copy shall be in Microsoft Word version 6.0 format or some format that is compatible. TABLE OF CONTENTS 1.Executive Summary 2.Table of Contents 3.Introduction 4.Overview of Natural Gas Development 5.Cost Estimates --begin with best conditions (least expensive)and then add on cost factors for increased difficulty. a.Exploration Costs b.Field Development Costs (Drilling,Development,Production, Major Maintenance over the life of the weil(s)) c.Power Generation Plant Costs d.Conversion of Community and residences to Gas e.Transmission Costs --CNG,LNG,pipeline,electric interties, etc. Storage Costs g.Distribution Costso>-2 of 8-RFP No.DOE-96-R-003 11. 12. 13. 14. Environmental Considerations Resource Ownership Issues and Costs Associated with Purchasing Resource Project Risks Associated With Natural Gas Development (defined so that financial institutions can make investment decisions). Reliability issues;Redundancy of producing wells and need for back-up energy source Permitting and Licensing Requirements Conclusions Appendices Appendix A Sources of information Appendix B Recommended resources Appendix C Bibliography Appendix D Methods used Appendix E Applicable conversion tables Appendix F Acronyms Appendix G Glossary Appendix H_Etc. Tables e Cost information based on various size fields and end demand needs e Others as required Figures e Asrequired 3.Anticipated Schedule: Estimated timeline of contract Contract start date +1 day Initial Meeting +5 days Report outline submitted for approval +5 days Notice of approved report outline +5 days -3 of 8-RFP No.DOE-96-R-003 Draft report submitted,5 copies +60 days Comment period for draft report +20 days Final report due +20 days 4.Proposal Requirements: Your proposal should demonstrate comprehension of the objectives and scope of the proposed contract.Include an overview of what will be done.Address whether the scope of work provided is sufficiently explicit and whether the schedule is attainable. Define any assumptions you make in formulation of your proposal and the type of support expected from the Contracting Agency. Your proposal must name the key individuals who would perform the work and those who would be "in responsible charge'of the work.Include information for each of them which describes experience directly related to the work proposed for this contract. State the current and projected work load of these key individuals,and identify any unique qualifications or knowledge of the project. 5.Method of Selection: This solicitation does not guarantee that a contract will be awarded.All proposals may be rejected.Our intent,however,is to select a contractor based on the following evaluation criteria. Evaluation Criteria: A numerical scoring system will be used to evaluate the written proposals,which will be based on the assignment of 100 total points allocated to evaluation categories as follows: 1.Project Concept and Work Plan (40 points):Summarize your understanding of the objectives of the contract and the manner and sequence in which you will meet those objectives.Discuss any major problems and uncertainties that are anticipated and summarize how these issues will be addressed. Also discuss in detail how the various responsibilities will be carried out and the proposed method of interaction and communication between the issuing office and the contractor.Electronic mail over the Internet is an option. 2.Personnel Experience/Qualifications (40 points):List the individuals by name,home address,and discipline that comprise your project team and discuss their technical capabilities to successfully complete the work in their area of expertise.The contractor's Project Manager is defined to be the individual who is directly responsible and engaged in performing the required -4 of 8-RFP No.DOE-96-R-003 services.The Project Manager is the most knowledgeable individual regarding all aspects of this project.Provide resumes of your Project Manager and key personnel for this project. 3.Cost (10 points). 4.Alaska Bidders Preference (10 points):See Attachment 1. 6.Method of Payment: This will be a "Fixed Price”contract. 7.Alaska Licenses: Offerors must have applicable,current Alaska business,occupational and corporate licenses for the services to be provided on the date submittals are due.Copies of selected Offeror's and any subcontractor's licenses may be requested.Failure to provide timely evidence of all licenses will preclude contract award.Contact the Alaska Department of Commerce and Economic Development at (907)465-2550,for help with licensing. 8.Insurance: Prior to award of a contract,the Offeror and any Subcontractors must provide evidence of insurance coverages for each of the following:Worker's Compensation -for each state in which contract work will be performed;General Business Liability;and Automobile Liability. 9.Submittal Deadline and Location: The submittal deadline for proposals is February 26,1996,4:00 p.m.prevailing time. Please submit 3 copies of your proposal.All inquiries related to this request should be submitted in writing. Mail or deliver your proposal to: Department of Community and Regional Affairs Division of Energy 333 West Fourth Avenue,Suite 220 Anchorage,Alaska 99501-2341 ATTN:Mary Judd -5 of 8-RFP No.DOE-96-R-003 (907)269-4691 PROPOSAL DEADLINES Date of Issue:January 19,1996 Comment Period:January 19-31,1996 If needed,based on comments received,an amendment may be issued. Proposal Submission Deadline:February 26,1996 Proposals received after the deadline will not be opened or evaluated. Your consideration of this RFP is appreciated. Sincerely, Penny L.Haldane Project Coordinator email:phaldane@comregaf.state.ak.us -6 of 8-RFP No.DOE-96-R-003 Attachment 1 Alaska Bidder Preferences:There are two applicable Alaska Bidder Preferences. The first is a 5%reduction (for evaluation purposes only)to the proposed cost and the second is an evaluation factor (criteria)which will count for 10%of the total possible score. The proposer must qualify under AS 36.30.170(b)and meet the requirements identified on the "Certificate of Qualification For The Alaska Bidder Preference”form included with this REP as attachment 2. It is the responsibility of the proposer to ensure compliance with the requirements and to complete,sign and include the Certificate in its proposal.The firm's name on the proposal MUST BE THE SAME as the name appearing on the firm's current Alaska Business License. -7 of 8-RFP No.DOE-96-R-003 Attachment 2 CERTIFICATE OF QUALIFICATION FOR THE ALASKA BIDDER PREFERENCE (AS 36.30.170(b)) In response to RFP Number DOE-96-R-003, |certify under penalty of perjury that (Business Name) qualifies for the Alaska Bidder Preference under the following conditions: 1.holds a current valid Alaska business license (a copy must be attached); 2.submits a bid for goods,services,or construction under the name as appearing on the person's current Alaska business license; 3.has maintained a place of business within the state staffed by the bidder or an employee of the bidder for a period of 6 months immediately preceding the date of the bid; 4.is incorporated or qualified to do business under the laws of the state; or is a sole proprietorship,and the proprietor is a resident of the state; or is a partnership,and all partners are residents of the state;and 5.if a joint venture,is composed entirely of ventures that qualify under (1)to (4)of this subsection. Authorized signature Date Printed Name Telephone Business Tax ID Number Note:This "Certificate of Qualification”must accompany your proposal or bid in order to ensure that the Alaska Bidder Preference is applied to your proposal or bid during the evaluation process. -8 of 8-RFP No.DOE-96-R-003