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HomeMy WebLinkAboutEnergy policy of Taiwan 2005a .bGe,'Bureau of Energy,MOEASYoFft The Energy Policy ofTaiwan Bureau of Energy .- Ministry of Economic Affairs Taiwan September 99s 2005 osa7)Bureau of Energy,MOEA - oo Contents ' I.Taiwan's Energy Situation .Energy Issues in Post-Kyoto Era | TEL.Energy Policies and Measures IV.Energy Supply and Demand Projections V.Closing Remarks , , mfhiy EA\<=2 Bureau of Energy,MO. (is '\a:eeied'Bureau of Energy,MOEA© >Due to the shortageof indigenous energy,morethan 97.9%of total energy supply -is imported>Imported crude oilis the major portion of energy supply,and 76.7%of crude oilisfromtheMiddleEast Nuclear Power LI Hydropower Ht LNG C Natural Gas 0 Oil Ei Coal 38.1 Million KLOE 16.0% ie i >3.9 =|2.9 159.2 418.0, 1984 Dependence of imported energy :88.8% 134.06 Million KLOE 7.3% 1.2 7.4 0.6 73.03 Million °KLOE ot_U 51.0 4.4 P 1.2 52.8 26.7 32.5 1994 95.3%© 2004 >97.9%3. (syDy Bureau of Energy,MOEASS,"ay or 2.Energy Consumption (by Energyforms) >During 1984 2004,average annual srowth rate of energy consumption is 5.9%, while the average annual growth rate of GDP is 6.2%, >Electricity's share increases,oil decreases 107.79 -MKLOE_ ©Electricity ae DO Natural Gas 48.4% Oil O Coal 2.2 33.97 39 5MKLOE, 10.2 1984 1994 2004 *Electricity includes coal-fired,oil-fired,gas-fired and nuclear power generations &co-generation. * -#- .>; /CaN } ||| 2g Bureau of Energy,MOEA"Su of 8 a 3.Energy Consumption (by Sector) >The shares of energy consumption in commercial and residential sectors | increase -107.79 Non-Energy Use MKLOE 3% Others Use |7 C1Commercial Sector 6 Residential Sector rr C]Agricultural Sector 2 Industrial Sector L)Transportation Sector Energy Sector |2%52 ,2 33.97 49 18 4.Installed Capacity of Electricity CGeneration >During 1994-2004 Average Annual Growth Rate: Total Installed Capacity:3.1%,Peak Load:1% za Nuclear CO Gas-fired E)Oil-fir=OMied 20,980 MWCICoal-fired a er .-1994 Ratio of reserved capacity*:4.8 % Peak Load(MW)*:18,610 %of IPP :0 % %of Cogeneration =8 % *N.B.Co-generation is not included 34,820MW 15% 13 30 10 32 2004 20.2 % 23,530 17 % 17.7 % /_Soy!Bureau of Energy,MOEASS.Energy Consumption and Electricity Consumption Per Capita 1984-2004 me Average annual growth rate of energy consumption per capita:5.0%: ™Average annual growth rate of electricity consumption per capita:6.5% Per Capita Electricity Consumption Per Capita Energy Consumption (kWh/Capita) | (LOE /Capita) 10000 44744597 4775)5000 9000 +| oe 4098 4259 1 4500 .3880 let8000[.|.3379 ...,3709 d3h3 ,7+4000 7000 fF og99 «31407 _f Lipo |+]|3500 a 2695 2950 |7120 :|6000 |-Ferett THE LL LL EL |fy 30005000Fspare'A |2 7 2500 4000 fisoo | ||| |14 |}2000 3000 -_yaks ||LLPeT dT |TETRA TEA fH 15003b45byP55: Tet 2000 |SPP |TAP TE LTE LE EET EP EERE EP [4 2000 1000 }THLE ERED |||1]|}500 0 EE198419851986198719881989190019911992199319941995199619971998199920002001 2002 20032004 ["]Per Capita Electricity Consumption --Per Capita Energy Consumption (kWh/Capita)(LOE/Capita)-7- fi aNOy,Bureau of Energy,MOEA -i Rost;KyotoEraEwes "TSEnerg¥Issuesa SS.oh ae Spe had&i2 jf wane oe:AS,|tt)WitawVAAL /a Ty Bureau of Energy,MOEA ¢Kyoto Protocolin Effect1.The pressure of GHG emission reduction IS going to impose upon global energy and industry structure. 2.To fulfill the reduction obligation,Annex 1 countries mightsetrelevantenergyefficiencystandards,which wouldimpactoninternationaltrade.*3.Since Taiwan is not a contracting party of Kyoto Protocol pact,the future reduction obiligation required for Taiwan is still uncertain. ¢Tendency of High Energy Price 1.Lacking indigenous energy resources,97.9%of total - _energy supplyis imported. | , 2.Moreover,energy prices in Taiwan do not fully reveal the }cost,which weakens the effectiveness of price signaling and reduces the incentive forimproving energy efficiency. (\|We!Bureau of Energy,MOEASete¢Scarcity of Conventional Energy and Search forAlternativeEnergy©1.Global energy resources areboth :scarce>and unevenlydistributed. 2.The use of the alternative energy is still limited presently due to technical constraint,high unit cost,and comparative instability. ¢Importance of Supply Security.and1 Regional -Cooperation1.Global competition over energy production,trade,and transportation has gone far beyond pure business interests, and has resulted in increasing risk of insufficient supply. 2.Regional linkage has becomea significant factor regarding energy supply.Many countries work through regional cooperation scheme to secure their energy supplies. 3.To secure energy supply via regional cooperation scheme, Taiwan still has to overcome many difficulties.tg. ;, (weap¢<2 g/Bureau of Energy,MOEANuopoO” Hil.Energy Policies and Measures tea :Conclusion of the2005 NationalentConferenceanil Energy -11- he,}'Bureau of Energy,MOEAore I.New Prospects in Energy Policy ¢Balance the - . development of --e Enhance regional economy,environment ts,>cooperation and energy.._©Increasing indigenous ¢Insist on no regret energy resources Policy.oo .e Expand technology*Enhance price capabilitymechanism.|¢Support clean¢|mprove energy industriesefficiency. -12- (ayLiatioA Bureau of Energy,MOEA dia anieeee sabsiennaessaiesoaliHisdialosil -2.F uture»Energy Policies and Strategies -Stabilize Energy Supply:enhancing energy cooperation and increasing indigenous energy supply 1.Enhance energy supply security scheme and international cooperation., 2.Increase indigenous energy supply. Aggressively promote non-carbon renewable energy. >2010 :5,130MW. .>2020:7,000 8,000MW. >To accelerate the enactment of "Renewable Energy Development ,Law”. -13- : ; we EL PREIGD ose,ot aternig rr ere eeeO:O ,KH)Bureau of Energy,MOEA2.Future Energy Policies and Strategies inte Promotion Targets Biomass Waste-to-energy generation:741 MW by 2010. Bio-diesel:100,000 KLOE by 2010. Wind Power 2,159 MW by 2010. Photovoltaics 800 MW by 2025. Geothermal,ocean energy,hydrogen and fuel cell are promoted |with various programmes. 44. oe : 2.Future Energy Policies and Strategies continued) Er ee cereoe eee 3.Energy Diversity (1)Expanding the usage of low-carbon energy (i.e.natural gas).>Natural gas consumption is expected to be 13 million tons by 2010,16 20 million tons by 2020,20 22million tons by 2025. >Increasing the the capacity factor for gas turbines and constructing new gas-fired power plants.- >Planning the extending construction of infrastructures,such as natural gas tanks,pipelines and receiving terminals., (2)Applying clean coal technology.}| (3)Completing the fourth nuclear power plant project (2700,MW)and maintaining the previous nuclear power plants in operation _(5140MW). -15- i estaes:Aé|Bureau of Energy,MOEA é guia oeseaanenad al0 ae buealodausacau2.Future Energy Policies and Strategies conined) Improve Energy Efficiency:introducing price mechanism and strengthening efficiency management 1.Energy efficiency and energy productivity will increase over 2%per annum.|, 2.Straighten the energy efficiency standards of electrical appliances and conduct the mandated energy efficiency labeling system.7 3.Assist the Development in Green Energy Industries,such as renewable energy,energy conservation,and fuel cell industries. - - 4.Introduce market mechanism and rationalize energy prices. ; | :-16-- /YoBaethae'2<¢'Bureau of EEnergy,MOEA"au on &,ee oe ee eer eee2.Future Energy Policies and Strategies(conined 5.Improve energy transformation efficiency. | (1)Applying high efficiency power generating equipment.Enhancing efficiency of new coal-fired power plants from 35%to 40%,new gas-fired power generating plants from 45%to 53%. (2)Developing clean coal technology. (3)Enhancing transmission and distribution efficiency.Reducing line” loss under 5%in the long-term . 6.Continuing promotion of co-generation system The capacity of co-generation is expected to be 8GW by 2010,and 10GW by 2025. : -17- teal(ee y |ie:a Bureau of Energy,MOEA oe -ee eee ou2.Future Energy Policies and Strategies continued | _©Open Energy Market:liberalizing energy market. 1.Remove the market entry barriers from petroleum market.- 2.Continue licensing the establishment of IPPs. 3.Revise "Electricity:Law”and legislate "Natural Gas Administration Law.”| ¢Emphasize on Environment and Security:balancing the development of economy,environment and energy 1.Energy assessment shall be considered in industrial, environmental,and social-economic projects.| 2.Capacity building to cope with GHG emission reduction. -18- ad @/Bureau of Energy,MOEAoF el:4:A|eae edaela ORaiseoe ee ee eeeea |2.Future Energy Policies and Strategies continued °Increase R&D:expanding technology capability. 1.Expand the budget allocated to energy technology researchandincreaseitsbudgetshareannually.2.Create National Energy Technology Development Program_to promote progress of energy R&Din all aspects. 3.Emphasize on energy efficiency improvement,renewable energy technology,and innovative utilization of traditional energy. _e Educate the public:enlarging public participation. Encourage households and local governments to participate in energy saving and CO2 emission.reduction. -19- /i.Es Po)Bureau of Energy,MOEA%p"tyFortwe poeeeee ra racer ot estessoe ecto angIV.Energy Supply and:Demand_-{(i)S---(Projections-, { ,woe aeEFa] a"euor3%é/BureauofEnergy,MOEA -me ae "S oe ee mommy ae 1.Energy Supply_ >Renewable energy's share increases,Oil decreases 'f Renewable Energy &]Pumped Storage Hydro Nuclear O Natural Gas B Oil 0 Coal 138.38 - 34.0 2005 2010 2015 2020 -21. /-€Ty!e /Bureau of Energy,MOEA2.Energy Consumption (by Enerey forms ) >During 2005 2020,average annual growth rate of energy consumption is 1.8%, _while the average annual growth rate of GDP is 3.8%.) >Electricity and renewable energy's share increase,.Oil decreases. G Renewable Energy , . OElectricity 139.29 146.27 ONatural Gas -'MKLOE O0i1 -MKLOE 2005 2010 2015 2020 -*Electricity includes coal-fired,oil-fired,gas-fired and nuclear power generations &co-generation.99 f P. f or,|wera \+'Bureau of Energy,MOEA " - - = = = = = = = = = = = =opeue'"esecnatsegsRagidOEeEESEPFE®oareno Ee Biioadne OS -23- f BSCee)'¢,=¢/Bureau of Energy,MOEASayor” Coordinating with the construction of a Green Silicon Island,balancing thedevelopmentofeconomy, environment and energy, enhancingthe energy technology development,promoting the energy efficiency and legislation to build an environment for everlasting operation of | .renewable energy are the priority of energy policy in the future., ,| .24. LULL __- BT ARCTIC RAN gsoHrs 'ofny ti te i : LONGOLIA SOLT, au .f ";; 7 Ne . KORE Wf -_a gk ..CHINA They Shanghai '7yewoatbienTeo Ac Jee :4 OCEAN ow "..oN a '[oF \Noce! . _y 28h no j . y J 3500 're y y TAIWAN ,A a ti,f ,2 're v EXECUTIVE SUMMARY 05-04 CHUITNA TABLE OF CONTENTS ¢SUMMARY °INTRODUCTION ¢-CHUITNA OVERVIEW,OWNERSHIP AND DEVELOPMENT MANAGEMENT ©-CHUITNA GRouP,PUBLIC &THIRD PARTY PROPERTY INTERESTS ¢BASE CASE DEVELOPMENT PLAN ¢COAL LEASE AREA MINING UNITS,STRATIGRAPHY AND RESERVES ©-CHUITNA COAL MINE PLAN &FACILITIES LOCATIONS ¢NORTH FORELAND COAL EXPORT TERMINAL ¢-MARINE TRANSPORT ¢CHUITNA COAL DETAILED COAL QUALITY SPECIFICATIONS SUMMARY This Executive Summary provides overview information related to:development of the CHUITNA PROJECT;and the quality,utilization characteristics,performance and economics of CHUITNA COAL.The technical information presented herein is extracted from comprehensive and detailed engineering and economic evaluations prepared by either third party contractors or parties with no equity interest in the CHUITNA PROJECT. Detailed information and data,including listings of supporting technical documents and information,are available upon request by qualified interested parties. For more information contact PACRIM COAL Attention:R.B.Stiles 711 "H”Street,Suite 600 Anchorage,AK 99501 USA Phone (907)276-6868 Fax (907)276-2395 Email:rbstiles@gci.net INTRODUCTION The CHUITNA Group,doing business as PACRIM COAL,intends to develop the CHUITNA PROJECT and market and export CHUITNA COAL to utilities and Independent Power Producers in the Northern Pacific Rim of Asia;the west coast of Mexico;and the western US states of Hawaii and Washington. This Executive Summary provides potential customers and other interested party's summary information regarding: ¢Market and Project development goals and objectives; ¢The Owners/Developers of the CHUITNA PROJECT; *The extensive proven coal reserves of the CHUITNA PROJECT; *The scope,timing and estimated investment costs of a Base Case Development Plan, ¢The CuuitNA COAL MINE and other elements of the CHUITNA PROJECT. Market and Project development goals and objectives are presented in this section;all other information is presented in subsequent sections of this Executive Summary. NEAR-TERM GOALS &OBJECTIVES MARKET:Secure commitments for adequate tonnage's to justify implementing the Base Case Development Plan. PROJECT:Develop a coal export project,the scope of which is consistent with the characteristics and practices of the market and the required investment and operating cost are such that the CHUITNA PROJECT yields an acceptable rate of return when CHUITNA COAL is competitively priced in export markets. LONG-TERM GOALS &OBJECTIVES MARKET:Capture a 5%or greater market share of the incremental growth in steam coal demand in the Northern Pacific Rim of Asia;a share of the expanding markets in Mexico and Hawaii;and a share of the existing market in Washington State. PROJECT:Expansion of coal production and exports to the optimum production potential (10-12 MMtpy)of the CHUITNA COAL reserve. EXECUTIVE SUMMARY CHUITNA CHUITNA PROJECT OVERVIEW,OWNERSHIP &DEVELOPMENT MANAGEMENT CHUITNA PROJECT The CHUITNA PROJECT is a greenfield coal export development located in the Beluga Coal Field of Southcentral Alaska,approximately 80 kilometers west of Anchorage. The Project is based on the exploitation of a !,000,000,000 tonne,ultra low sulfur,subbituminous coal resource,the center of which is less than 20 km from the coast of the Cook Inlet. The scope of the CHUITNA PROJECT includes four (4)distinct but related developments: e =Chuitna Coal Mine ¢ Chuitna Development Road System e =North Foreland Coal Export Terminal e =Personnel Housing &Transport System and two (2)operations:a coal transport operation and a road maintenance operation Shown in Chuitna Project General Location are: e Chuitna Group Area of Interest and the location of the Chuitna Group Coal Lease Area (8,200 hectares); e Chuitna Group Ladd Landing Lease Area (360 hectares); ¢Chuitna Development Road System (approximately 20 km); e Chuit River Road (approximately 10 km); e =North Foreland Industrial Development Area site of the prospective North Foreland Coal Export Terminal. CHUITNA OWNERSHIP AND DEVELOPMENT MANAGEMENT The Chuitna Group owns the Chuitna Project.The Chuitna Group is a combination of the Bass interests and the Hunt interests,both of Dallas,Texas. A Hunt interest is the designated operator of the property and DRven Corporation is the contract development manager. CHUITNA PROJECT GENERAL LOCATION CHUITNA GROUP AREA OF INTEREST bop Seva7:*.im-=fc]S|-aA-&awMS?I;=>.eee-oa).mm.4\[syY24 , .)Cnurvna Groupie?Coal Lease Area \ ?' am yoyyiposf| eiwfe eoif vAba,wf} SF LonIG>.rout S Lott \Wy bg . fot t i Re\PES '\/c >a MAPS Oey mutiogre=al x2)eo ' '!' ' :liesLegweCaoreRivar Roao ' \. \.Poy.LL pm LL '\4S ae mS na ;waJf\{ fs -ser PTET as S,a Noats PoxrasaeInfuseagaroa y 7 Fleaurvr Aroe.D> .cow!pe we y - . CEE Tr North-a Fordand }a 7 o aa oy nD EXECUTIVE SUMMARY CHUITNA CHUITNA GROUP,PUBLIC &THIRD PARTY PROPERTY INTERESTS CHUITNA GROUP PROPERTY INTERESTS The CHUITNA Group holds five (5)contiguous coal leases (approximately 20,600 acres)in the Beluga Coal Field of Southcentral Alaska.These State of Alaska leases grant to the CHUITNA GROUP,for an indeterminate term,the exclusive right to extract the coal from the Coal Lease Area.In addition to annual rentals,the State assesses a production royalty equal to 5%of the Adjusted Gross Value!of the coal sold and a Mining License Tax equal to 7%of the net profits at the Mine. The CHUITNA GRrovP also holds a multi year option to lease approximately 800 acres at Ladd Landing.The Ladd Landing Lease Area provides direct access to both the Public Beach Access area and to the State owned tidelands. The PAN AM RoabD,constructed within a public right-of- way,provides access between the Ladd Landing Lease Area and Coal Lease Area and connects with the CHUITNA RIVER ROAD. The CHUITNA GRouP has had numerous discussions with the Tyonek Native Corporation (TNC)regarding obtaining: @ Rights to use of the CHUIT RIVER RoaD, e Rights to a site for an uplands coal terminal within the North Foreland Industrial Development Arca, e An easement/right-of-way for an overland conveyor across TNC lands. The CHUITNA GROUP and the TNC are in general agreement,that when appropriate,a reasonable arrangement will be reached providing the CHUITNA GROUP the use,lease and easement rights needed to develop and operate the coal export terminal at North Foreland. "E AND MIN N HI Shown in the adjoining figure are the various owners of the surface and mineral estates within and adjacent to the CHUITNA PROJECT area.CHUITNA GROUP coal leases and Ladd Landing lease area are shown in yellow. SURFACE AND MINERAL OWNERSHIP Cucrena GroupLs we $ StateCoalLease ,ADL_36911 | Pal (BAN ac71531 bay” State Coal LeaseADL36913(5,120 0¢/2,048 ba),"ts.a fl. v \aTaam StateCoatLehde™ZN \'ADL_37002121)WEAw 15058 weJ2A23 by 1 Stute Coal Lease ADE.36914 : (3,520 ac/1,408 ha} \ Ty Chuit SAS Public Road/R-O-W '{ Land Status Legend +”.Mental Health Trust (Surface &Mineral) Tyonck Native Corporation (Surface Only}\Kenai Peninsula Borough (Surface Only)-, 4 Private (Surface &Mineral) 4 State of Alaska (Surface &Mineral) na Group Property Private Road/R-O-W State Coal Lease 'ADL_39502a0scAzighay.1aN iN 'eat},;km 4mi cs an aaeAyAN& & EXECUTIVE SUMMARY CHUITNA DEVELOPMENT BASE CASE DEVELOPMENT PLAN BASE CASE DEVELOPMENT SCOPE The overall scope of the Base Case Plan entails the development of a 3 MMTon/yr coal production and export project consisting ofthe following facilities: ©CHUITNA COAL MINE (¢CCM):A 3 MMTon/yr installed capacity surface coalmine with associated Surface Facility Complex,Mine Access Road,and Air Strip Facility. CHUITNA DEVELOPMENT ROAD SYSTEM (*CDRS):1!)Upgrade of the existing +11 mi/18 km.PAN AM ROAD between Ladd Landing and the CHUITNA GROUP Coal Lease Area boundary;2)Upgrade of the existing +6.8 mi /11.3 km.CHU/TNA RIVER ROAD between THE PAN AM RoaD and a coal terminal at North Foreland;and 3) Development of a barge landing and equipment and material storage area at Ladd Landing (LADD LANDING FACILITIES). COAL_TRANSPORT CONVEYOR SYSTEM (*CTCS):A 60,020 ft./18.3 km long by 48- inch/1.2 m wide covered overland conveyor with associated service road. PERSONNEL HOUSING &TRANSPORT SYSTEM (*PHTS):A Construction Camp and a 100 person single status-housing complex for the permanent workforce with temporary housing facilities for an additional 25 personnel. Nortu_FORELAND COAL_EXPORT TERMINAL (*(NFCXT):Upland facilities and equipment associated with receiving,open storage,and reclaiming coal and marine facilities and equipment associated with coal conveying and ship loading at rates of 2,500 to 3,000 Tons/hr.Minimum offshore usable draft 15 to 18 meters.This element would be developed as either a stand-alone project or as part of an integrated dry bulk shipping and receiving facility.Estimated investment costs for this project are not included in the table of Estimated Investment &Working Capital cost.Total development,construction and equipping cost for this project are estimated to be +$50,000,000. In addition to the facilities listed,the scope of the Base Case Plan includes the following operations,one or more of which may be contracted to third parties: ¢Personnel Transport &Personnel Housing Operations; *CHUITNA DEVELOPMENT ROAD SYSTEM Maintenance; As shown in the Base Case Development Schedule,first exports shipments are projected to begin approximately 36 months after a GO DECISION is made.This is a conservative schedule estimate and can probably be shortened to 30 months or less. BASE CASE DEVELOPMENT SCHEDULE Final Engineering &Permitting Go DECISION Contracting & Procurement Development *CHUITNA COAL MINE Draghinne Procure &Erect eC'DRS Development *CTCS Development ¢PLHITS Development eNECNT Development Production &Export 900,000 Tons 1,800,000 Tons 3,000,000 Tons YEAR 1 2 3 4 6 7 fig.ae|ry Li-_|| Lf (| PC i j BASE CASE DEVELOPMENT INVESTMENT The investment and working capital required to develop the Base Case Scope Project,net of any investment in the NORTH FORELAND COAL TERMINAL,are shown in the following table. ESTIMATED INVESTMENT &WORKING CAPITAL ($1,000's) Through Ist Yr.|Through Ist Yr. Investment or Expenditure of Production @ 3.0 MMTpy CHUITNA GROUP DEVELOPMENT OVERHEAD 3,400 3,400 CHUITNA COAL MINE 87,200 127,300 CHUITNA DEVELOPMENT ROAD SYSTEM 7,700 7,700 COAL TRANSPORT CONVEYOR SYSTEM 42,300 42,300 PERSONNEL HOUSING 10,800 10,800 Total Investment 151,400 191,500 Working Capital 7,500 14,000 Total Investment &Working Capital 158,900 205,500 Note:All estimates are as of late 2004 EXECUTIVE SUMMARY CHUITNA CHUITNA COAL LEASE AREA EXPLORATION,GEOLOGY &RESERVES The geologic structure of the Chuitna Coal Lease Area is divisible into three (3)mine development areas or Logical Mining Units (LMU).Except for use of common surface facilities,each Logical Mining Unit can be independently developed.Mine planning has focused on initial development of LMU_1I. The boundaries and general stratigraphy of each LMU along with the location of 483 boring sites (representing 510 coal borings)are shown below. LEASE AREA LOGICAL MINING UNITS,GENERAL STRATIGRAPHY &BORING SITES "Curis os raeayonMisiveList "22 -EAE| EXPLORATION &RESERVES Approximately 510 coal borings have been drilled,logged,mapped within,and adjacent to the Chuitna Coal Lease Area with eight coal horizons being identified and assigned names (brown,yellow,green,blue,red &purple).The eight (8)feasibility phase and two (2)development phase drilling programs focused on LMU_1!and LMU_2,with less intensive drilling in LMU_3.Analysis and interpretation of data collected during these drilling campaigns form the basis for comprehensive geologic computer modeling and seam correlation for that portion of the lease area lying north of the Chuit River.Average drill hole spacing within LMU_1I and LMU_2 is sufficiently close (300 m centers or less) to allow characterization of these reserves as "proven”,whereas reserves within LMU_3 are characterized as "indicated”. In-Situ Coal Reserve Summary N Ft «, em ""Coat Lease AREAS we. 2 ': .p- st Tr ™rhoM3BikSavers.-ARKO Mining Area Reserves in1,000,000 tonnes Unit Acres Hectares Proven Indicated Total LMU_1 9,650 3,860 655 655 LMU_2 2,500 1,000 154 154 LMU_3 8,350 3,340 254 254 Total |20,500 8,200 809 254 1,063 uN".*7TTtyoneesea | EE Hiue Sean Red 3 Sean Red_2 Sean Red_{Seam asaliLMU_1!MINEABLE &RECOVERABLE RESERVES Mine planning efforts,focused on initial mine development within LMU_I,have produced the projected mining limit shown in the adjacent figure.LMU_1I represents approximately 47%of the Coal Lease Area and contains approximately 81%of the proven reserves within the Chuitna Coal Lease Area. Coal production within the LMU_1 would come from the five (5)uppermost seams (Green,Blue,Red_3,Red_2 and Red_1)and,as shown in the following table,would result in the recovery of approximately 300,000,000 tonnes or approximately 46%of the in-place reserves within LMU_1. \ nan '' 'ly 0 i 2'if ,kmai a' --ot aw a -most lw ft.CL.era ds4,f|:1 - :%a _Paar a n 'a 4aeBs|='we «%, Koren Se hd po pingnee '.-_sree Seam a)vy 3 .}N '. . |My e ud . i sat rr ,LZ Stratigraphic columns not to scale A LY_3 Logical Mining Unit}Was 2 of 4 ; |LMU Boundary TY +Pre-)98t Cont Boring @ 1998 Coal Boring @ 4082 &Nb Rotary Coat Boring @ HIN?A&M Con Core @ S182 Geotech'Coal Boring LMU_1 Mining Limit Economic Reserves MINEABLE RECOVERABLE COAL Waste Coal Waste Coal %of Total SEAM (10°m*)(106 tonnes)(10°m')(10°tonnes)|Recoverable Green 21 §21 5 1.7% Blue 257 50 260 47 15.7% Red_3 357 71 360 68 22.7% Red_2 437 119 442 114 38.0% Red_1 98 70 102 66 22.0% Total 1,170 315 1,185 300 100.1% EXECUTIVE SUMMARY CHUITNA CHUITNA COAL MINE PLAN &FACILITIES LOCATIONS Mine planning efforts have focused on initial mine development within LMU_!.LMU_I represents approximately 47%of the Coal Lease Area and contains approximately 81%of the proven reserves within the Coal Lease Area.The general layout of the CHUITNA COAL MINE and the location of on lease and adjacent facilities are shown in the following figure. MINE GENERAL LAYOUT &MAJOR FACILITIES tse . CHUITNA »COAL Lease AREA LMU_1 * MINING Limit , Bor Cut "oy ares seo Haul Road mi Uo e, Vay Dovicak Magere Enid {fy omenweemoewoe VNU Rodidary Mining progression is essentially across dip and results in year-to-year mining ratios of approximately 4:1 (m*/tonne)average mining ratio for the entire LMU_!Mine Plan Area. ECONOMIC RESERVE SUMMARY LMU_1 MINE PLAN AREA MINEABLE RECOVERABLE COAL Waste Coal Waste Coal SEAM (10°m')(10°tonne)(10°m')(10°tonne) Green 21 5 21 5 Blue 257 50 260 47 Red_3 357 71 360 68 Red_2 437 119 442 114 Red_!98 70 102 66 Total 1,170 315 1,185 300 MINING OPERATION The initial boxcut development and the first two years of overburden and coal mining will employ a truck and shovel mining method. Erection of a large dragline will begin during the first year of production with the dragline being placed in operation by the end of the second year of production.Once in operation, the dragline will be the primary overburden-mining machine.Coal will continue to be mined using a combination of a shovel and excavators and hauled by truck to a primary crusher/breaker located close the active mining area. The sized coal will be conveyed from the primary crusher to a secondary crusher and stockpile area located within the Surface Facilities Complex in the Shop Office Area. MINE FACILITIES The scope of the CHUITNA COAL MINE Base Case Development includes development and construction of several major facilities in addition to development of the initial Mining Area and Overburden Stockpile.These facilities (locations shown on the adjacent figure)include: @ Mine Access Road Mine Conveyor Mine &Overburden Haul Roads Surface Facilities Complex Airstrip Facility The site of the main Construction Camp Facility 'Work Force Housing Facility (elements of the PERSONNEL HOUSING &TRANSPORT SYSTEM)along with the general alignment of the coal transport conveyor and the realigned and upgraded Pan Am Road are also shown. EXECUTIVE SUMMARY CHUITNA NORTH FORELAND COAL EXPORT TERMINAL EXPORT TERMINAL SITING NORTH FORELAND COAL EXPORT TERMINAL GENERAL LAYOUT Three areas (Granite Point,Ladd Landing and North Foreland), ""\i". ; :war all approximately the same straight-line distance from the t oes 'ea {fe&?{ef.|center of the Chuitna Coal Lease Area,have been evaluated as'ef.i potential sites for a coal export terminal.Only the Ladd.r »,Me "-: aa 3 ale *Overland Conveyor t yu""a,eo.poy.Landing and North Foreland areas have an existing roadNORTHFORELANDKoo™y ae connection with the Chuitna Coal Lease Area;and the NorthINDUSTRIALDEVELOPMEN]'.er Foreland area offers the additional advantage of an existingAREABOUNDARY'ono mee ped i trestle extending +1,500 ft.off shore and the shortest offshoreee0ERTS.toa <a distance to deep water.General layouts,preliminary designs id .."*:and engineering economics associated with a 10,000,000 a a "-:tonne/yr coal export terminal have been developed for all three ag "-y sites,the general layout for an coal export terminal at North.:ade NORTH FORELAND COAL TERMINAL Foreland is shown on the adjoining figure.*7?/2”.PHASE]UPLANDS FACILITIES74m=77 *Bounpary COAL TRANSPORT MINE TO NORTH FORELAND a Coal will be transported from the Mine to the North Foreland1 aiCcaneee|Coal Export Terminal via a 12-mile long,48”wide overland conveyor.Coal could also be truck hauled (approximately 18 miles)using upgraded existing roads.wei#?.EXPORT TERMINAL DESCRIPTION A The boundary of the upland area encompasses approximately 340 acres (140 hectares).As shown on the adjoining figure the .upland facilities will consist of: N e -1,000,000 tonne capacity Coal Storage Area Yard Conveyor &Stacker /Reclaimer Lay down &Temporary storage Area Shop &Office structures Bulk Fuel Storage &Distribution Heliport Truck Coal Dump &Reclaim System Surface Water Management SystemSeee,SPsTywoeloneeeExisting Berth Cape Class Berth Location "4 Off shore,the existing 1,500 ft.approach trestle will be extended 1,500 ft for a Panamax Class or 3,000 to 3,500 ft.for04aCapeClassdraftberth.The coal will be conveyed to a 3,000 c 'HH ft 5 .|one- '-4 tonnes/hr.shiploader.The 3,000 tonnes/hr shiploader is Note:The red background of the onshore area and deep blue background of the off shore area is a false color infrared capable of loading a Panamax Class (60,000 DWT)vessel in aerial photo superimposed on a USGS map.approximately 24 hours and would provide for an annual throughput capacity of 10,000,000 tonnes. EXECUTIVE SUMMARY CHUITNA MARINE TRANSPORT The approximate marine transport distances from the proposed NORTH FORELAND COAL TERMINAL to various CHUITNA COAL markets are shown in the following figure.Also shown are the locations of major Southcentral Alaska marine terminals and ports. SOUTHCENTRAL ALASKA PORTS &MARINE TRANSPORT ROUTES "N rm CHULENAGROLP Port ofAreaofInterest.Anchorage ae oe -(ooArf fe Valdez daaaae ©Anchorage 4 Vv f -NORTHFORELAND + -Se Pa 6 MSbe Lom Coat TERMINAL Z ra Qe,vos Pie ash __AlyeskaOfNikishkaMurine*253,CS"Prince "eve berminal Drift River ”Terminals OF Oi Terminal Japan 3500 n.mieyKorea,"3 5700 n,-mi.L roNi »|taiwan'4,450 nmi,"Ot me'y sh eee\A lan LNG 4a.4. -™ Seattle 1,400 n.mi. Mexico 2,900 n.mi. x Ree aie Hawaii 2400n.mi, 925__sonmi,.fo 0 50 100 ka Cook INLET NAVIGATION &OPERATIONS In addition to the major marine terminals and ports,several small boat harbors, commercial vessel terminals and barge landing sites are located within the Cook Inlet. All the major Cook Inlet marine terminals and ports operate on a year-round basis and, with the occasional exception of the Port of Anchorage,all berthing and unberthing operations are conducted without the assistance of tugs.Container vessels,oil and LNG tankers,dry bulk carriers,work boats and barges (tug towed)navigate the Cook Inlet year-round. Nippon Yusen Kaisha (NYK)and others have evaluated the feasibility of operating large coal carriers (Panamax &Cape Class )in the Cook Inlet.These various evaluations, conducted in the 1980's,reached the following general conclusions: ¢The Cook Inlet is navigable year-round and winter ice conditions are not considered severe enough to require Ice Class rated vessels. e Unassisted berthing and unberthing operations are considered practical;however,bow thrusters would be recommended for winter operations of Cape Class vessels. e Tides (+10 meters)and currents (6-8 knots)are a consideration but present no special problems given a properly designed and constructed berth and properly planned and implemented operating procedures. e _-Vessels for this service are available on the open charter market. EXECUTIVE SUMMARY CHUITNA COAL DETAILED COAL QUALITY SPECIFICATIONS &UTILIZATION PARAMETERS COAL QUALITY UTILIZATION &PERFORMANCE PARAMETERS The detailed coal quality specifications presented herein were compiled from the Heating Values (HV),Ash Fusion Temperatures (AFT)and Hardgrove Grindability laboratory analysis of approximately 81 coal core holes.Except for Ash Fusion Index (HGI)were determined by laboratory analysis of composite tonnage-weighted Temperatures (AFT)and Hardgrove Grindability Index (HGH),all specifications are samples.All other Utilization and Performance Parameters listed in the following tables tonnage-weighted averages for the recoverable coal within the LMU_I Mining Limit.were calculated using the tonnage weighted average quality. Each core hole intercepted at least three and as many as five of the recoverable coal seams.UTILIZATION PARAMETERS Dry ULTIMATE DRY PROXIMATE Parameter Metric English Parameter Units Value Parameter Units Value Heating Value @ Total Moisture 4,250 kcal/kg 7,650 Btu/lb Carbon %61.1 Ash %13.9 Heating Value @ Inherent Moisture 4,890 kcal/kg 8,800 Btu/Ib Noose x *ee Mater .toe SO,Emissions/Unit of Heat Input 0.58 mg/keal 0.34 Ib/MMBtu Chlorine %0.02 Heating Value BTUMb 10.485 Inherent NO,/Unit of Heat Input 5.91 mg/kcal 0.95 lb/MMBtu Oxygen %196 Heating Value keal/ke 5,825 Ash/Unit of Heat Input 23.9 mg/keal 13.5 Ib/MMBtu Sulfur %0.17 ASH MINERALS Total Moisture (%)27.1 27.1 -Fuel Ratio (Fixed Carbon/Volatile Matter)0.90 0.90 TRACE ELEMENTS (PPM)Parameter Units Value Element Average High Low SiO,%41 Antimony 0.35 0.50 0.30 Al,O,%20.2 PERFORMANCE PARAMETERS Arsenic 2.16 3.00 2.00 TiO,%13 Expected Performance CHUITNA COAL Beryllium 0.40 1.00 0.10 Fe,0,%8.9 Parameters Units Good |Poor Value Boron 8.13 11.00 7,00 CaO %13.4 SLAGGING INDICES Bromine 0.65 1.20 0.40 MgO %4 Base/Acid Ratio -below 0.25 0.25-0.80 0.47 Cadmium 266 1.0 050 x0 %i Iron/Calcium Ratio .below 0.30 0.30-3.00 0.66 Chromium 9,36 18.00 6.00 Na,O %1.6 FE,O,%below 12 above 25 8.9Copperxeoopeonin:oe Silica/Alumna Ratio -low value high value 2.03 Fluorine 162.50 240.00 180.00 Sr0 %0.3 %Dolomite %high value low value 60 Germanium 0.22 0.30 0.20 SO,%25 AFT-Hem:Red i Gy above 1,232 below 1,232 1,210 lodine 0.46 0.60 0.40 P.O,%1 Silica Ratio -high value low value 0.61 Lead 3.30 4.00 2.00 Undetermined %37 Slagging Factor °C above 1,343 below 1,150 1,151 Lithium 5.72 8,00 4.00 ASH FUSION TEMPERATURES FOULING INDICES Manganese 92.28 185.00 35.00 Reducing °C °F Na,O %below 2.0 1.6 Mercury 0.06 0.07 0.06 Initial 1,166 2,130 Na,O +K,0 %below 3.5 2.7 Molybdenum 1.72 2.00 2.00 H=W 1,182 2,160 Chlorine %below 0.2 0.02 Nickel 4.16 5.00 3.00 H=1/2W 1,210 2,210 AFT-Hem:Red °C above 1,232 below 1,232 1,210 Selenium 0.37 1.20 0.20 Fluid 1,243 2,270 ESP PERFORMANCE Silver 0.14 0.30 0.10 Oxidizing °C °F Basic %below 15 above 40 29.1Strontium153.00 200.00 160.00 Initial 1,232 2,250 Basic/Na,O Ratio -below 20 above 30 18.2Thorium2.58 3.00 3.00 H=W 1,249 2,280 K,O %below 1 1 Tin 0.56 1.10 0.50 H=1/2W 1,271 2,320 CaO +MgO %above 20 175 Tungsten 0.04 0.09 0.00 Fluid 1,304 2,380 OTHER INDICES Uranium 2.60 4.00 2.00 MOISTURE Abrasion Index -below 10 above 20 9.9 Vanadium 22.38 33.00 20.00 Total (Equilibrium)%27 Pulverizing HGI -above 50 below 50 32-35 Zinc 3.98 13.00 3.00 Air Dried (est.)%19 Zirconium 15.28 21.00 15.00 Inherent %16 EXECUTIVE SUMMARY PETR {NEWS ®WEEK OF JUNE 29,2003 @ NORTHWEST,ALASKA E 15,Lan tit dal "Stranded coal needs transportation ASRC waits on state and Corps'transportation plans before developing mine in remote northwestern Alaska By PATRICIA JONES Petroleum News Contributing Writer he Arctic Slope Regional Corporation is awaitingTreleaseoftwotransportationstudiesthisyearbeforefurtheradvancingplanstobuildasurface- to-underground coal mine on its Kuchiak Mineral Block in the remote northwestern part of Alaska._ "It's really a lack of infrastructure that is the main challenge,”said Teresa Imm,director of resource devel- opment for ASRC,the for-profit Native corporation with land holdings in northern Alaska."We're not going to spend a lot of money for a project that is multiple years away from solving the transportation issue.” Similar to stranded North Slope natural gas,ASRC's coal resources located in northwest Alaska are vast,yet untapped due to lack of economical transportation. ASRC has focused efforts,on and off for the last 15 years,Imm said,on the Deadfall Syncline,a well-known geological formation of high quality coal.The corpora- tion has drilled to compile a 68-million ton mineable reserve within Kuchiak at a potential mine site located about five miles from the coast of the Chukchi Sea. "The coal crops out at the surface...it dips at an angle. It's not horizontal,”Imm said. Miners could initially extract surface coal,following the seam downward with eventual underground recov- ery,she said. In 1994,ASRC's subsidiary Arctic Slope Consulting Group started development of a demonstration,under- ground mine located about a mile from the proposed large mine site.Two portals were driven down to access and extract about 4,000 tons of coal using a continuous miner,according to a state mineral industry report.The project,which also involved Hobbs Industries and the U.S.Bureau of Mines,was designed to demonstrate the viability of coal mining in permafrost. Quality and quantity of coal is not holding up devel- opment,which the Native corporation would like to start mining by 2010.Rather,Imm said,it's providing an eco- nomical way to move coal out of the remote region. "We're trying to encourage development of infra- structure that will enhance our ability to develop the resource,”Imm _said."The big issue is infrastructure...the technical challenge of transporta- tion.” DOT,Corps plans expected Two separate governmental plans looking at trans- portation needs of the region are expected to be released sometime this year,Imm said.Alaska's Department of Transportation is working on its Northwest Transportation Plan,and the U.S.Army Corps of Engineers is considering expanding seasonal port facili- ties used by the Red Dog lead and zinc mine. ASRC will wait for those plans to be released before continuing with a full-fledged feasibility plan for a coal mine,Imm said. "It's really tied up in positive economics for trans- portation.Without that,we are not putting a lot of money into the project,until we have a better handle on trans- portation,”Imm said. Whether it's a road,rail or conveyor system,Imm said the best transportation option seems to involve Red Dog port facilities,located about 150 miles south of the planned coal mine site. Rail won't work ASRC does not support a 400-mile railroad route plan from the planned coal mine south to Nome,discussed by Alaska Miners Association executive director Steve Borell. "With a bulk commodity like coal,you want to get it to tidewater as soon as possible.You don't want a lot of overland movement or you lose the value of the coal,” Imm said."Our goal is to utilize Red Dog's port.” Part of Borell's plan includes connecting a rail line from the coal fields with the expanded Red Dog port facilities,which would also involve dredging a deep- water channel for ocean-going ships to be directly loaded by a new conveyor system. Coal resource enormous ASRC's mineable reserve of 68 million tons repre- sents a small fraction of the region's coal resource. State and federal geologists have estimated the Deadfali Syncline contains approximately two billion tons of high rank or bituminous coal,according to Jim Clough,energy section chief for the state Division of Geological and Geophysical Services. That resource estimate is based on past exploratory oil and gas drilling,as well as seismic work that includ- ed shallow drilling,Clough said.- "Those sesimic holes were 60 feet deep,and they hit a lot of coals in the shallow portions,”he said. The high rank western Arctic coal is of premium qual- ity,Clough added,with an average of .23 percent sulfur, three percent moisture and seven percent ash.Heat val- ues are in excess of 12,000 BTU/Ib. Across Alaska's entire North Slope,hypothetical resource estimates are greater than 3.7 trillion short tons, including both bituminous and subbituminous (lower rank)coal,Clough said. '"Every time it's been drilled,it proves to be equal to 'the hypothetical resource,sometimes in excess,”Clough said."We have an enormous resource of coal on the North Slope,and including the gas in it,it's even big- ger.”@ ;, "Cransn orton