Beatrix Natural Gas Project

1
Beatrix Natural Gas Project
Presented by Jan du Plessis

• 18 October 2007

2
BackgroundKYOTO PROTOCOL

• The Kyoto Protocol was signed in 1997.
• It was implemented in February 2005.
• The object is to curb climate change by reducing
  Greenhouse Gas (GHG) emissions

3
CLEAN DEVELOPMENT MECHANISM (CDM)

• Emission reductions will be achieved by
  implementing a Cap-and-Trade system in developed
  countries (Annex 1 Countries)
• GHG emissions in developing countries (Non-Annex
  1 countries) is not capped, as this would limit
  economic development
• Such countries may however implement GHG
  reduction projects, and trade the credits
  generated with Annex 1 countries
• This process is regulated by the CDM Executive
  Board (CDM EB)

4
CARBON MARKET
Carbon Price per ton CO2e
100
Penalty 2005 2008 40/tCO2e
Current market price16/tCO2e
40
20
8
2007
2010
2008
2009
Year
5
Agenda

• Methane capture and destruction
• Beatrix project background and progress
• Other opportunities
• Electric drills
• Waste packing
• Hydropower
• Other
• DSM Projects

6
Background to the project
Methane has been venting from mining operations
at Beatrix since mining started decades ago.
There are two sources

• Old exploration boreholes
• Underground workings

7
Methane Emission SourceExploration Borehole 1400
14,000ton CO2e per year
Situated in the middle of nowhere
8
Methane Emission SourceExploration Borehole EX1
32,000 ton CO2e per year
There is a farmhouse close by and a national road
between the hole and the mine
9
Methane Emission SourceExploration Borehole ST23
54,000 ton CO2e per year
Close to Beatrix West Complex (3km)
10
Methane Emission Sourcefrom underground workings
285,000 ton CO2e per year
11
Methane is a major safety risk
12
Extracting the methane from the underground
workings

• Dilute methane in ventilation air
• the current practice.

• Isolate at source and pipe to surface will
  become feasible with this project due to the
  contribution of carbon credits. This enhances
  the safety underground

13
Objectives for the project
The project have four objectives

• Increased mine safety
• Mitigation of anthropogenic greenhouse gas
  emissions mining environmental impact
• Utilisation of energy for sustainable development
• Possibly extending the Life of Mine through
  additional revenue from carbon credits

14
Technologies that can be used to destroy methane
(1)
Flaring destroys methane. It is cheap to
implement and earns CERs but it is not
encouraged by the DNA
Flaring
15
Technologies that can be used to destroy methane
(2)
Electricity generation also destroys methane. It
also earns CERs but it is very capital intensive
(R84 million)

• The DNA encourages electricity generation
• Gold Fields has to be sure that there is a
  sustainable source of methane before committing
  the capital
• The MPRDA is prescriptive ito production rights
  and procedures to be followed prior to the
  economic extraction of a mineral

16
Regulatory framework for the project
MPRDA
KYOTO PROTOCOL
Exploration right Gold Fields
Project validationPricewaterhouseCoopers
Sustainable development criteria DNA of the
Republic of South Africa
Production right to be applied for
Executive Board Approval
Utilisation of gas energy content
17
How we want to implement the project
Some exploration boreholes will be flared not
viable to generate electricity due to distance,
safety, terrain and geography
Flaring
The bulk of the gas will be used for electricity
generation once we are sure that there is a
sustainable methane source and we are in
compliance with the MPRDA
Electricity generation
18
Progress to date

• Methane flows measured and 5 boreholes selected
  for further actions
• Significant underground methane at main complex
  (800 l/s).
• Underground methane at Beisa too
• Technical designs finalised taking into account
  flows, distances, infrastructure, the MPRDA, the
  DNAs non-flaring requirements, Molopos
  gas-aspirations, etc.
• Plan was to flare until we have a Production
  Right for the gas.
• Electricity generation thereafter
• Potential for Absorption Chillers

19
Beatrix Technical Configuration
Chilled water dams
Absorption Chillers
Auxiliary Fuel (HFO)
Waste heat
Gas station (cleaning metering
Generation plant
Enough power to Eskom Yard to serve as emergency
back-up (12.5MW plus)
Methane
20
Safety Systems
Grid Connection
X
X
X
X
Blower Station
Combined Heat and Power Plant
Transformer
Maximising value from mine gas
20
21
Example of Control Monitoring System
Maximising value from mine gas
21
22
Central Control Room Houston, Germany

• Remote control operation of over 200 plants
  all over Europe
• 80 units ( 110 MWel) running on Mine Gas
• Remote start/stop, changing system parameters,
  preventive interventions and optimising
  operations
• Monitoring - Interventions - Data Collection -
  Analysis - Reporting

Maximising value from mine gas
22
23
Upper Control Level Central Command

• Visualisation of all relevant operating data
• Remote start/stop, interventions and operations
  to achieve highest availabilities
• Remote diagnosis First Aid before arrival of
  a technician on site if at all necessary

CHP Modules 1-3
CHP Module 1
Maximising value from mine gas
23
24
Lower Control Level Engine Management

• Visualisation of all relevant engine parameters
• Possibility to change and modify parameters
  from the desk

Maximising value from mine gas
24
25
Progress to date (cont.)

• Received approval from the local DNA (DME) for
  the way in which the project will be developed
• Project Design Document (PDD) drafted and
  submitted to Executive Board
• Request for deviation from Approved Coal Mine
  Methane methodology requested from Executive
  Board of CDM
• Request for deviation not allowed EB concerned
  about drilling extra boreholes to find more
  methane (?!)

26
The way forward

• Split project into 5 boreholes and main complex
  underground methane
• Underground methane from Beisa removed from Gold
  Fields project
• Wrote new methodology (large scale) for
  underground methane.
• Modified PDD to match and submit for approval
• Wrote new small-scale methodology for boreholes
• Modified PDD to match (one per borehole)
• Submitted for approval
• Sell as VERs in the event of non-approval at the
  EB

27
Additional opportunitiesElectric drills

• Pneumatic drills very inefficient
• 100 MWhr to compressors
• 93 MWhr heat losses in cooling tower
• 5 MWhr system losses (pressure drops leaks)
• 2MWhr work done in drill
• Electric drills very efficient
• Full maintenance lease very expensive
• Significant risks (currency risk, new technology,
  single supplier, etc)
• Carbon credits make good contribution towards
  profitability (R5 R6 per ton of rock broken)
• Additional benefits include
• Drilling rates could be higher (depending on
  reticulation system and pressure in stope)
• Noise levels lower (NIHL)
• Infrastructure (compressors and reticulation)
  cost lower for new developments

28
Waste Packing

• A 1000m deep mine uses about 30 40 kWhr to
  hoist a ton of waste rock to surface.
• Packing this waste in old stopes can save about
  70 of this energy
• A mine hoisting 3 million tons per year with 15
  development waste can save 12,000 MWhr per year
  with potential carbon revenue of R1.8 million
• Additional benefits in a project like this
  include
• Freeing up shaft capacity for the hoisting of ore
• Reduced environmental impact and rehabilitation
  costs on rock dumps

29
Other potential projects

• Energy savings projects in
• ventilation systems
• water pumping systems
• processing plants
• Waste heat recovery from
• air compressors
• New technologies such as
• hydro-hoisting
• Underground concentration plants
• new mining methods that reduce energy consumption
• Biodiesel
• Return air energy recovery
• Sun Power (to expensive for SA potential
  internationally?)

30
DSM Projects

• Most DSM projects qualify as CDM projects, but
  CDM cannot compete with upfront cash flow of DSM.
  
• DSM projects that lost its additionality and
  therefore do not qualify for CDM may qualify for
  VERs with current price of 3- 5 per ton CO2e
  (R30 R50 per MWhr saved)
• This is a new opportunity worth investigating

31
Hydropower in shafts

• Large volumes of water going down the shafts can
  be used for power generation in turbines
• Competes with 3 chamber pump feed system DSM
• Possible to do both DSM and CDM in some cases
• Carbon revenue R150/MWhr at current carbon
  prices
• Carbon revenue can fund spare parts/maintenance
  to overcome problems experienced with turbines in
  the past
• Projects already implemented under DSM could
  qualify for Voluntary Emission Reduction (VER)
  credits at current price of 3- 5 per ton CO2e
  (R30 R50 per MWhr saved in these systems)

32
Conclusion

• Opportunity to use CDM to assist us to improve
  our sustainable development efforts
• More opportunities within Energy efficiency
  domain
• Perceived conflict between DSM and CDM

33
New Gas Technologies
RevolutionaryHONDAMotors.pps
34
Acknowledgements

• Promethium Carbon
• Green Gas
• Gold Fields Limited
• Beatrix Gold Mine Management

35
Discussion