EIA Report of Proposed World Bank-funded Shanxi Coalbed Methane Development and Utilization Project of Shanxi Energy CBM Investment Holding Co., Ltd.

(Part II4×25×104Nm3/dCoalbed Methane (CBM) Liquefaction Project

ChinaE1886 v.3

Shanxi Coalbed Methane Development and Utilization Project

Environmental Impact Assessment Report

(Part II 4×25×104Nm3/d CBM Liquefaction Project)

Shanxi Energy CBM Investment Holding Co., Ltd.

(Part II 4×25×104Nm3/d CBM Liquefaction Project)

Environmental Impact Assessment Report

President: Li Hongda

Chief Engineer: Geng Jianping (concurrent post)

Principal of Assessment Organization: Zhao Min

Project Leader: Yang Hailiang

Coal Industry Taiyuan Design & Research Institute

SEPA Document No.1303

April 10, 2008

Table of Contents

Summary

1.Policy, Law and Regulatory Framework

1.1 Environmental Protection Laws and Regulations

1.2 Relevant Regulations of the World Bank

1.3 Environmental Quality Standards

1.4 Emission Standard

2.Project Analysis

2.1 Project Overview

2.2 Plant Layout

2.3 CBM purification and dehydration

2.4 CBM Liquefaction

2.5 Storage System

2.6 Transportation System

2.7 Torch System

2.8 Public Project

2.9 Raw Materials, Fuel and Energy Consumption

2.10 Major economic and technical indicators

3. Environmental Status Quo

3.1 Geographic Location

3.2 Physical Landforms

3.3 Geological Structure

3.4 Climate and Weather

3.5 Hydrography

3.6 Air Quality

3.7 Noise Environment Quality

3.8 Soil

3.9 Biodiversity

3.10 Socioeconomic Conditions

3.11 Environmental Protection Objectives

4. Environmental Impact Assessment and Mitigation Measures

4.1 Environmental Impact Assessment and Mitigation Measures during Construction

4.2 Environmental Impact Assessment during Operation Period

4.3 Environmental Impact Assessment during the Repair/Maintenance period

4.4 Environmental protection measures

5. Alternative Analysis

5.1 Overview of the liquefaction plant sites

5.2 Comparison of plant sites

5.3 Feasibility analysis of the plant site

5.4 Conclusion

6.Environmental Management Plan

6.1 Environmental Management Organization Structure

6.2 Evaluations on the Environmental Management Capability of Management Organizations

6.3 Environmental Management Training Plan

6.4 Environmental Management Plan

7. Public Consultation

7.1 The First Round Public Consultation

7.2 The Second Round Public Consultation

7.3 Recommendations and Replies of Public Participation

7.4 Summary

8. Safety Evaluation

8.1 Identification Analysis for Dangerous and Hazardous Factors

8.2 Choice of Evaluation Units’ Classification and Evaluation Methods

8.3 Qualitative and Quantitative Evaluations

8.4 Safety Countermeasures and Recommendations

8.5 Evaluation Conclusion

9. Conclusions

9.1 Project Overview

9.2 Environmental status quo

9.3 Environmental Impact and Mitigation Measures

9.4 Comparison of Plant sites

9.5Environmental Management Plan

9.6Public Participating

9.7 Safety Evaluation

9.8 General Conclusions

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Coal Industry Taiyuan Design & Research Institute SEPA Document No.1303

EIA Report of Proposed World Bank-funded Shanxi Coalbed Methane Development and Utilization Project of Shanxi Energy CBM Investment Holding Co., Ltd.

(Part II4×25×104Nm3/dCoalbed Methane (CBM) Liquefaction Project

Summary

Shanxi Energy CBM Investment Holding Co., Ltd.’s World Bank-funded Shanxi Coalbed Methane Development and Utilization Project(4×25×104Nm3/d Coalbed Methane Liquefaction Project) is scheduled to complete the first set of 25×104Nm3/dLNG device and put it into production in 2008. The remaining three sets of 25×104Nm3/d LNG devices are to be completed in 2009. The construction site is located in the west of GuxianRiver and the south of DongshanVillage, NanguTownship, DuanshiTown, Qinshui County of Jincheng Municipality. The total project investment is 479.6 million RMB.

Coalbed methane liquefaction device is composed of two parts: coalbed methane purification and liquefaction. CBM purification utilizes activated charcoal bed with impregnated sulfur for mercury removal, MDEA chemical absorption technique for CO2 removal and molecular sieve for the dehydration and purification process. The coalbed gas liquefaction utilizes the expansion refrigeration process. The liquefied coalbed methane produces 722 tons of LNG daily, which can be stored in the two 5000 m3 liquefied CBM cryogenic storage tanks for up to 5.3 days. The storage tanks are made with accumulation of powder insulation that maintains common pressure and low temperature.

The LNG plant is located in the west of GuxianRiver and the south of DongshanVillage, NanguTownship, DuanshiTown, Qinshui County of Jincheng Municipality. The work area is surrounded by mountains with hilly topography. The site is situated in the lower bank of GuxianRiver. The local weather is characteristic of a temperate monsoon climate. Part of the YellowRiver Basin and the QinheRiver system, the main rivers in the area are the tributary of QinheRiver and GuxianRiver. The environmental qualities of air, surface water, groundwater in the local area are good. The site location complies with Jincheng Urban System Planning, the overall planning requirements of DongshanVillage, the Basic Farmland Protection Regulations, along with other laws and regulations regarding land-use policies. The site location also complies with environmental function zoning requirements and has passed the environmental impact analysis. The project site would not fundamentally alter the region’s environmental quality. The environmental status quo can be maintained. From the point of view of environmental protection, the site of Dongshan plant has met the environmental requirements.

The construction of the LNG plant in the Coalbed Methane Development Demonstration Project funded by the World Bank Loan will inevitably exert adverse impact on the ecological environment, surface water environment, the groundwater environment, and air and sound environment in the local area. On the other hand, the construction project will also play a positive role in promoting local socio-economic development and improving the quality of life of local residents. As long as the principle of “three simultaneous” and the ecological restoration and pollution prevention measures proposed in the assessment are implemented in the construction and the production process of the project, we can not only achieve cleaner production and meet the volume control objectives, but also minimize the negative impact of the project to combine economic, social and environmental benefits and achieve social and environmental sustainable development.

From the point of view of environmental protection, the construction of the LNG plant in Shanxi Energy CBM Investment Holding Co., Ltd.’s World Bank-funded Shanxi Coalbed Methane Development and Utilization Projectis feasible.

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Coal Industry Taiyuan Design & Research Institute SEPA Document No.1303

EIA Report of Proposed World Bank-funded Shanxi Coalbed Methane Development and Utilization Project of Shanxi Energy CBM Investment Holding Co., Ltd.

(Part II4×25×104Nm3/dCoalbed Methane (CBM) Liquefaction Project

1.Policy, Law and Regulatory Framework

1.1 Environmental Protection Laws and Regulations

1. People’s Republic of China Law on Environmental Protection, Water Pollution Prevention Law, Air Pollution Prevention Law, Noise Pollution Control Act, Solid Waste Pollution Prevention Law, the People’s Republic of China Cleaner Production Promotion Law, People’s Republic of China Environmental Impact Assessment Law and other national environmental protection laws and regulations;

2.People’s Republic of China Cultural Relics Protection Law, People’s Republic of China Law on Urban Planning, People’s Republic of China Land Management Law, People’s Republic of China Water and Soil Conservation Law and other relevant state laws and regulations;

3. People’s Republic of China State Council Order No. 253, Environmental Protection Regulations on Construction Projects, 1998.11.29;

4. State Environmental Protection Administration Order No. 14, Construction Project Management Environmental Protection Category and Roster, 2002.10;

5. State Environmental Protection Administration, State Development and Reform Commission, No. [2004] 164, Notice on the Strengthening of Environmental Impact Assessment Classification Approval for Construction Project, 2004.12.6;

6. State Environmental Protection Administration, No. [1993] 324, Notice on the Strengthening of the Environmental Impact Assessment of Construction Projects funded by Loans from International Financial Organizations, 1993;

7. Shanxi Environmental Protection Regulation, Regulations on Atmospheric Pollution in Shanxi Province, Shanxi Provincial People’s Government’s implementation of State Council Decision on Several Issues of Environmental Protection, Shanxi Province’s implementation of the Law of Water and Soil Conservation, Shanxi Province Water Environmental Management and Zoning Programme as well as other relevant provicinal laws and regulations;

8. Interim Procedures Regarding Public Participation in Environmental Impact Assessment (State Environmental Protection Administration on February 14, 2006, No. [2006] 28);

1.2 Relevant Regulations of the World Bank

1.The World Bank Operational Policy: Environmental Assessment, OP/BP4.01;

2.The World Bank Policy on Disclosure of Information;

3. The World Bank Operations Policy: Natural Habitat (OP4.04);

1.3 Environmental Quality Standards

According to Shanxi Jincheng Municipal Environmental Protection Bureau Notice No. 144 [2007] “Official Replay Regarding the Environmental Impact Assessment Standards of Shanxi Energy CBM Investment Holding Co., Ltd.’s World Bank-funded Shanxi Coalbed Methane Development and Utilization Project ”, the environmental quality standards are as follows:

(1)Air quality standards: Since the site is located in the rural areas, Class II standard of Ambient Air Quality Standard (GB3095-1996) will be implemented;

(2) Water quality standards:

Surface water: Quality Standard of Surface Water Environment (GB3838-2002) Class III standard;

Ground water: Quality Standard of Ground Water Environmen (GB/T48443-93) Class III standards.

(3) Environmental noise: Class 2 Standard in Ambient NoiseStandard in Urban Area (GB3096-93) will be implemented for industrial site; Class 1 Standard will be implemented in rural residential area; Class 4 Standard will be implemented in the regions on both sides of major roads;

Refer to Table 1.3-1--1.3-4 for details.

Table 1.3-1 Ambient Air Quality Standard(GB3095-1996)Class II Standard

Pollutant / Time of Measurement / Concentration Limit / Unit
TSP / Annual average
Daily average / 0.20
0.30 / mg/Nm3
PM10 / Annual average
Daily average / 0.10
0.15
SO2 / Annual average
Daily average
Hourly average / 0.06
0.15
0.50
NO2 / Annual average
Daily average
Hourly average / 0.04
0.08
0.12

Table 1.3-2 Quality Standard of Surface Water Environment Surface (GB3838-2002) Unit: mg/L

Number / Item / Standard Value(Type Ⅲ)
1 / pH / 6~9
2 / COD / ≤20
3 / BOD5 / ≤4
4 / NH3-N / ≤1.0
5 / SS / 70
6 / Fluoride / ≤1.0
7 / Arsenic / ≤0.05
8 / Mercury / ≤0.0001
9 / Oil / ≤0.05
10 / Sulfide / ≤0.2
11 / Iron / 0.3
12 / Manganese / 0.1
Note: the level of iron uses the supplementary standards for surface water source of drinking water; the level of SS uses the class I standard of “integrated sewage discharge standards”

Table 1.3-3 Quality Standard of Ground Water Environment (GB/T14848-93) Type Ⅲ

Number / Pollutant / Standard Value(TypeⅢ)
1 / PH / 6.5-8.5
2 / Total hardness (measured as CaCO3)(mg/L) / ≤450
3 / Sulfide(mg/L) / ≤250
4 / Chloride(mg/L) / ≤250
5 / Iron(mg/L) / ≤0.3
6 / Manganese(mg/L) / ≤0.1
7 / Volatile phenol(mg/L) / ≤0.002
8 / Nitrate(mg/L) / ≤20
9 / Nitrite nitrogen(mg/L) / ≤0.02
10 / Ammonia(mg/L) / ≤0.2
11 / Fluoride(mg/L) / ≤1.0
12 / Mercury(mg/L) / ≤0.001
13 / Arsenic(mg/L) / ≤0.05
14 / Hexavalent chromium(mg/L) / ≤0.05
15 / Total coliforms(per L) / ≤3.0
16 / Total number of bacteria (per mL) / ≤100

Table 1.3-4 Ambient Noise Standard in Urban Area (GB3096-93) Unit Laeq:dB

Class / Daytime / Nighttime
1 / 55 / 45
2 / 60 / 50
4 / 70 / 55

1.4 Emission Standard

According to Shanxi Jincheng Municipal Environmental Protection Bureau Notice No. 144 [2007] “Official Reply Regarding the Environmental Impact Assessment Standards of Shanxi Energy CBM Investment Holding Co., Ltd.’s World Bank-funded Shanxi Coalbed Methane Development and Utilization Project”, the pollutant emission standards are as follows:

(1)Boiler smoke: Emission Standard of Air Pollutants for Coal-burning, Oil-burning and Gas-fired Boiler (GB13271-2001) Class II category 2 Gas Boiler Standards;

Non-methane hydrocarbons: Integrated Emission Standards of Air Pollutant (GB16297-1996) Table 2 non-methane hydrocarbon emissions limits;

(2) Wastewater: Integrated Wastewater Discharge Standard (GB8978-1996), Class One discharge standards in Table 4;

(3) Noise: Noise Standard within the Area of Industrial Enterprise (GB12348-90). Class 2 standard will be implemented in industrial sites; Class 4 Standard will be implemented in the regions on both sides of main roads;

Noise at the construction site: Limits on Noise at Boundary of Construction Sites (GB12523-90);

(4) Solid waste: Pollution Control Standard for Storage and Disposal Site for General Industrial Solid Wastes (GB18599-2001).

Refer to Table 1.4-1 --1.4-5 for details.

Table 1.4-1 Emission Standard of Air Pollutants for Coal-burning, Oil-burning and Gas-fired Boiler (GB13271-2001) Class II category 2

Pollutant / Standard Class / Emission Standard(mg/m3)
SO2 / Class II Category 2 Gas Broiler / 100
Soot / 50
NOX / 400

Table 1.4-2 Integrated Emission Standards of Air Pollutant(GB16297-1996)

Pollutant / Maximum allowed emission levelmg/m3 / Maximum allowed emission rate,kg/h / Fugitive emission concentration limit
Height of emission tube / Class 2 / Point of monitor / Concentration mg/m3
Non-methane hydrocarbons / 120 / 15 / 10 / Highest concentration along the boundary / 4.0
20 / 17
30 / 53
40 / 100

Table 1.4-3 Integrated Wastewater Discharge Standard (GB8978-1996), Class One discharge standards in Table 4

No. / Pollutant / Standard Value(Class one) / Unit
1 / PH / 6~9 / Dimensionless
2 / SS / 70 / mg/L
3 / BOD5 / 20
4 / COD / 100
5 / Sulfide / 1.0
6 / Oil / 5
7 / Ammonia / 10

Table1.4-4 Noise Standard within the Area of Industrial Enterprise (GB12348-90) Unit: Leq[dB (A) ]

Class / Daytime / Nighttime
Ⅱ / 60 / 50
Ⅳ / 70 / 55

Table 1.4-5 Limits on Noise at Boundary of Construction Sites( GB12523-90) Unit: Leq[dB (A) ]

Construction stage / Noise Limit
Daytime / Nighttime
Earthwork / 75 / 55
Piling / 85 / Prohibited
Structure / 70 / 55
Fitting out / 65 / 55

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Coal Industry Taiyuan Design & Research Institute SEPA Document No.1303

EIA Report of Proposed World Bank-funded Shanxi Coalbed Methane Development and Utilization Project of Shanxi Energy CBM Investment Holding Co., Ltd.

(Part II4×25×104Nm3/dCoalbed Methane (CBM) Liquefaction Project

2.Project Analysis

2.1 Project Overview

Project Name: Shanxi Energy CBM Investment Holding Co., Ltd.’s World Bank-funded Shanxi Coalbed Methane Development and Utilization Project (Part 2 4×25×104Nm3/d Coalbed Methane Liquefaction Project)

Project Type: Greenfield

Scale: 4×25×104Nm3/d. First set of 25×104Nm3/d LNG device is scheduled to be completed and put into production in 2008. The remaining three sets of 25×104Nm3/d LNG devices are to be completed in 2009.

Project owner: Shanxi Energy CBM Investment Holding Co., Ltd.

Construction Site: West of Guxian River and south of Dongshan Village, Nangu Township, Duanshi Town, Qinshui County of Jincheng Municipality

Operation system: Annual operation time 8000h

Investment: Total project investment RMB 479.6 million Yuan

2.2 Plant Layout

The LNG plant site is located in the west of GuxianRiver and the south of DongshanVillage, NanguTownship, DuanshiTown , QinshuiCounty, with a total area of71775.3 m2. Total land area is about 180 acres, which is divided into four sections according to functional zoning requirements: production equipment section, auxiliary production section, living and office section, and LNG storage and transportation section. Main buildings include office buildings, refrigerant and compressor plants, transformer substations, circulating water pumps, fire stations, instrument station, power distribution station, lab, cooling towers, water reservoir for firefighting, carbon removal and dehydration devices, pipelines and other infrastructures.

Refer to Graphic 2-2-1 for the plant layout.

2.3 CBM purification and dehydration

Table 2-3-1 lists the average composition of Shanxi Qinshui Coalfield CBM.

Table 2-3-1 CBM average composition

No. / 1 / 2 / 3 / 4 / 5 / Total
Name / CH4 / N2 / CO2 / C2H6 / Hg
Composition%(V) / 98.10 / 1.30 / 0.56 / 0.04 / 0.098mg/m3 / 100

The main hazardous components of CBM are H2O and acid gas(CO2, H2S), etc. H2O and CO2 will solidify in the subsequent low temperature liquefaction process and can affect normal production. They need to be removed. The control indicators for all kinds of impurity are listed in Table 2-3-2.

Table 2-3-2 Control Indicators in the Purification Process

Name of Impurity / Control Indicator
Mercury / <1ppm(V)
CO2 / <50ppm(V)
H2S / 4ppm(V)
COS / 0.5ppm(V)
Total Sulfide / 10-50ppm(V)
Aromatic Compounds / 1-101ppm(V)

From the raw gas composition in the liquefaction plant, we can see that impurities such as H2S and heavy hydrocarbons have met the purification requirements. But the level of CO2 and mercury do not meet the liquefaction requirements and hence must be removed from the device along with water.

2.3.1 Mercury and CO2 removal

Mercury is removed with highly effective activated carbon adsorption. The coalbed methane in the four sets contain a total of 32.7 kg of mercury.

CO2 is removed through chemical absorption and molecular sieve. The project uses the chemical absorption method – MDEA method.

The amount of CO2 in the raw gas of this device is 0.56%, with a very small amount of H2S. The MDEA (methyl ethanolamine) method is use. The 15-25% alcohol amine solution is used as amine remover. This is mainly a chemical absorption process with relatively small impact on the operating pressure. This method is also more economical when the acid gas is at low pressure. This method is well used, and is highly efficient in absorbing of CO2 and H2S, especially when the concentration of CO2 is higher than the concentration of H2S. This method can also be used to remove organic sulfur.

After absorbing CO2 and H2S, the rich MDEA liquid is drawn from the bottom of the absorption tower to lower its pressure, and then it will enter the flash tank. The resulting coalbed methane then enter into the fuel pipeline network to be used as fuel. The rich liquid after the flash tank then exchanges heat with the poor liquid from the regeneration tower. Finally it enters the amine regeneration tower to desorp the CO2 and H2S it absorbed. The CO2 and H2S will be released from the top of the amine regeneration tower through the chimney. The poor liquid from the regeneration tower exchanges heat once again with the rich liquid. After it is cooled with water, it will be pumped back to the absorption tower.

2.3.2 Dehydration(Desiccation)

The LNG device mainly utilizes molecular sieve for dehydration. This method has the advantage of strong adsorption capacity, high adsorption rate at low vapor pressure and simultaneous removal of residual acid gas.

In sum, in accordance with the composition of the raw gas materials and specifications (no sulfur and small amount of mercury), the Activated charcoal bed with impregnated sulfur is used for mercury removal ; MDEA chemical absorption technique is used for CO2 removal; and the molecular sieve is used for the dehydration and purification process.

2.4 CBM Liquefaction

The liquefaction part is the core of the LNG device, and is mainly composed of two parts: cold boxes and nitrogen cycle refrigeration system.

Liquefaction processes include mixed refrigerant liquefaction, cascade liquefaction process, and liquefaction with expansion machine. The expansion refrigeration process used in this device is simple, mature, with less investment and high energy consumption.
The expansion refrigeration process is simple and easy to install, but the disadvantage is high energy consumption. It is suitable for small and medium-scale production devices with higher gas pressure and high content of methane.
.

The comparison of various refrigeration processes are listed in Table 2-4-1.

Table 2-4-1 Comparison of Various Refrigeration Processes

Refrigeration process / Mixed refrigerant / Cascade refrigeration / Two level expansion refrigeration
Power of refrigerant system / 1.25 / 1 / 1.7
Number of heat exchanger / 3 / 6 / 2
Complexity / Medium / Very high / Low
Cost / Medium / Highest / Low
Others / Patent Technology / General Technology / General Technology

After dehydration and the removal of carbon dioxide, the purified CBM enters the cold box to exchange heat. After it is cooled and its pressure lowered, it is liquefied, separated, and enters the LNG cryogenic storage tanks. The liquefaction rate is more than 97%. The negative flash gas can be used as a fuel.