Once methane becomes mixed with other gases in ventilation systems, it becomes difficult to use as fuel because the mixture won’t burn and methane is tricky to filter out.
Due in part to these challenges, methane-laced ventilated air is typically released to the atmosphere, as it is at Elk Creek. Only about 20 of the more than 500 active underground coal mines nationwide have installed any type of system for capturing methane or converting it to electricity. And of those 20 mines, most are simply taking methane collected in drainage holes and injecting it into nearby natural gas pipelines for use by homes and businesses.
Partners for a New Approach
In western states like Colorado, coal mines are often located far from natural gas pipelines, so harnessing even high-quality methane from these sites demands a different approach. Elk Creek is unusual among U.S. coal mines in that it is burning methane to generate electricity on-site and sending that electricity to the local power grid.
Similar methane-to-energy technology has been installed at mines in Europe, Australia, China and other countries for decades. But those projects have benefited from tax incentives and other forms of public support, as well as costlier natural gas and electricity—which allows them to sell methane competitively at higher prices. Elk Creek offers a model for harnessing this waste through private partnerships in a time and place where electricity from natural gas is relatively cheap.
Tom Vessels, president of Denver, Colorado-based energy developer Vessels Coal and Gas, began seeking partners and financiers for a coal mine methane-to-energy project in 2005 after touring a number of mines using the technology in Germany. Most U.S. companies he approached were unfamiliar with the technology, Vessels says, and reluctant to invest as a result. True, it had not been done in the U.S., he says. "But we're checking that box now.”
In 2012, Vessels secured $5.4 million in funding from Aspen Skiing Company, a high-end resort corporation aiming to generate cleaner energy and counterbalance the emissions associated with its own electricity use. Holy Cross Energy, a rural electricity cooperative, signed on to pay slightly above market rates for electricity from the project in exchange for a 15-year contract and a new, cleaner source of electricity.
Finally, Elk Creek owner Oxbow Mining, led by energy magnate William Koch, agreed to let Vessels install equipment at its mine in exchange for a small cut of annual power sales. Most of the revenue from Holy Cross—about $650,000 per year, or about 12 percent of ASC’s original investment—will go to the resort company.
Policies on the Horizon
The project began feeding electricity to the power grid last year for distribution throughout western Colorado. Several months later, Colorado passed a new law that requires large rural electric co-ops, and the utilities that serve them, to get 20 percent of their energy from renewable sources by 2020—doubling a requirement set in 2004.