Alliance Coal, LLC Webster COUNTY

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1 Alliance Coal, LLC Webster COUNTY ENERGY PROJECT SITE SUITABILITY 2009 Department of Energy Development and Independence Energy and Environment Cabinet Commonwealth of Kentucky

2 FOREWORD Alliance Coal, LLC submitted this site for evaluation for potential development as an alternative energy facility. The site was evaluated against preliminary criteria which identifies characteristics beneficial for development of a wind, solar, biomass, nuclear, or coal-to liquid (CTL) / coal-to-gas (CTG) facility. This site benefits from its access by rail or road to an abundance of coal, available biomass, and its location within an excellent labor market. Cover photo (2006) - Proposed development site

Alliance Coal, LLC (Alliance) offers approximately 2,500 acres just north of Providence, KY and west of State Route 293 and U.S. Highway 41 Alternate for evaluation as a potential energy facility.

3 Alliance Coal, LLC (Alliance) offers approximately 2,500 acres just north of Providence, KY and west of State Route 293 and U.S. Highway 41 Alternate for evaluation as a potential energy facility. The development of an energy facility, whether for CTL/CTG, wind, nuclear, solar or biomass, must consider basic common factors which include assets like access to transportation, general topography, proximity to public access areas, and available utilities. GENERAL SITE CONSIDERATIONS Ownership This site is controlled by Alliance, which owns surface, and Mr. Clyde Brown, who owns mineral. The site sponsor stated that Alliance can obtain additional surface. Page 1 Aerial photograph of site

4 Size The available site area is approximately 2,500 acres. The site includes existing surface facilities associated with a former surface mine operation and is currently utilized for coarse refuse and coal fine disposal from a large underground operation located further north of the plant. Portions of development site Topography The rolling topography is due to prior mining and spoil placement. Excluding excavated mine pits, site elevations range from approximately 375 to 475 above mean seal level (AMSL). Some leveling has occurred on site; however, groundwork would be required prior construction. Floodplain and Wetlands Based upon site topography, ESRI-Federal Emergency Management Agency (FEMA) Mapping, and information provided by FirstSearch Technology Corporation (FirstSearch), the site does not appear to lie within a 100-year floodplain. No FEMA Flood Insurance Rate Map was available for unincorporated areas of Webster County. Page 2

5 A wetlands map obtained from the United States Fish and Wildlife Service depicts several impounded freshwater ponds located on site that may need to be surveyed to confirm whether wetlands would be impacted. Site Hazards Environmental databases were reviewed to determine if there is a public record that the site or nearby sites have been impacted by environmental issues. According to a 2006 FirstSearch Environmental Database Report, the site property is not listed and there are no NPL, CERCLIS, CORRACTS, STATE or LUST sites within the designated search radius. Although not identified in the database report, the sponsor reported that a portion of the site is the location of a former LWD site. A site investigation performed in the past reportedly did not indicate site impact from the operation of this former facility. Former LWD location The property has historically been used for mining and associated purposes. A permitted ash landfill was located at the site. Due to these historical activities, the site contains remnants of former mine buildings with possible fuel tanks or other hazardous material use, refuse water treatment near the tipple, utility fly ash and scrubber sludge Page 3

buried on site, and unreclaimed coarse refuse. Further investigation of these areas to determine potential site impact would be required prior to development.

6 buried on site, and unreclaimed coarse refuse. Further investigation of these areas to determine potential site impact would be required prior to development. Former mining operation structures Oil and Gas Wells The Kentucky Geologic Survey (KGS) did not identify any oil or gas wells onsite. The site is several miles north of a Texas Gas Midland storage field. Sensitive Areas The proximity of non-attainment areas and Class I Visibility Areas to the site was examined for potential impacts to air quality or limitations on a required air permit for a CTL/CTG or biomass facility. The site is greater than 100 miles northwest of Mammoth Cave, a Class I Visibility Area. The site is approximately 50 miles south of the Evansville, Indiana non-attainment area and north of the Christian County, Kentucky non-attainment area. The location of these areas may impact air quality permit conditions. Page 4

7 State water data was searched to determine if designated impaired streams in the area might affect discharge requirements for an energy facility. The site is located approximately 1.75 miles south of Slover Creek, which is part of the Craborchard Creek Watershed and the Tradewater River Basin. Although several unnamed tributaries flowing to Slover Creek are listed as impaired, Slover Creek does not appear on the (d) List of Surface Waters as an impaired water. Reportedly, the site currently has a Kentucky Pollutant Discharge Elimination System (KPDES) and water withdrawal permit associated with mining, processing, and transportation of coal. Siting considerations for any energy facility include the presence of Threatened and Endangered (T&E) species in the area, the presence of significant cultural or historical resources in and around the project area, and proximity to public access areas and airports. No federal T&E species were identified on the Providence, Kentucky 7.5- Minute Topographic Quadrangle. State species identified include the Great Blue Heron (special concern), the Northern Harrier (threatened) and the Pied-billed Grebe (endangered). Further investigation would be required prior to further development of the site, although due to the site s history of mining, it is unlikely that critical habitat exists on site. National Register Properties, National Register Districts, and Inventoried (potentially eligible) Sites data was researched. Some previously recorded sites were identified at or within 2 kilometers of the project area although no eligible or potentially eligible properties were identified within this search radius. It is not likely that a cultural or archaeologically significant site could be undisturbed at the property due to the extensive mining activity that has taken place. However, further investigation may be required prior to development of the site. Distance from public access areas and airports is critical for successful CTL/CTG or alternative energy sites to minimize environmental impact, hazards to air traffic, and to mitigate potential risks and costs associated with development. From available Page 5

8 mapping and research it appears that the closest public access areas are the Henry Higginson Wildlife Management Area, which is approximately 13 miles northwest (near Morganfield, KY), and the Shawnee National Forest which is approximately 16.5 miles west/northwest of the site in Illinois. The Providence-Webster County, KY Airport is located just east of SR 293 on the eastern boundary of the site. The presence of the airport adjacent to the property should be carefully evaluated. The equipment and processes at an alternative energy facility may create a safety hazard for small aviation. Geological Assets Siting considerations for a biomass or CTL/CTG process must take into account available geological assets for potential sequestration. Analysis by the KGS ranked the geologic assets of the proposed site as good. Both shallow and deep oil fields underlie the site and there are possible strata beneath or near to the site with sequestration potential. Gas production fields are also within the area and water flooding has been used to increase yield. The site is also located within the Western Kentucky Coal Fields. The graphic on the following page was prepared by the KGS to illustrate some of the geologic assets at the site, which is identified as B on the map. The proximity of faults to a site may impact the development of a nuclear, biomass, or CTL/CTG facility. The property is in a low risk area for seismic activity. Also according to KGS mapping, the Shady Grove Fault is located 3.5 miles south of the site. Page 6

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Utilities The site sponsor reported that access to Providence water may be available. It was also reported that access to municipal wastewater (Providence) is available.

10 Utilities The site sponsor reported that access to Providence water may be available. It was also reported that access to municipal wastewater (Providence) is available. One overhead power line runs north/south across the site and was reported to be a 69 kv maintained by Kenergy. The availability of natural gas at the site is unknown and no evidence of a gas transmission line was observed or reported by the site sponsor. It was reported that broadband internet access is available by a T-1 currently in use at the site. Transportation Road access is essential for any large industrial facility and particularly so for an energy facility that brings in its fuel or trucks out its product. An asphalt paved, 2-lane road (State Route 670) runs along the south side of the property and connects to US 41A within 2 miles to the east. Another asphalt paved, 2-lane road (State Route 293) runs along the east side of the property, connecting with State Route 670. An asphalt paved, 2-lane county road to the north also connects with State Route 293. A rail spur from the CSX line located in Providence to the former tipple remains on site; ownership or control of the spur was not confirmed. Page 8 Rail load out

11 The site is about 4 miles away from the nearest river (Tradewater to the west) and barge transportation is not available. Although not a significant siting consideration for a solar, nuclear or wind facility, a biomass or CTL/CTG facility will require several transportation options due to the substantial feedstock required for these technologies. This site lacks barge availability, leaving rail and truck transport as the existing means of transport. Transmission Any energy facility will require access to electric transmission points. A 69kV line should be an adequate capacity to carry generated power from a solar facility in Kentucky. A nuclear, biomass, wind or CTL/CTG facility would require access to larger electric transmission points. One overhead power line runs north/south across the site and is reported to be a 69 kv line operated by Kenergy. Based upon a review of a transmission map provided by the Big Rivers Electric Corporation, an adequate line (> 69 kv) does appear to be available within a five mile radius. Page 9 Transmission line at site

12 Natural gas is used as a feedstock and fuel in CTL/CTG and for some biomass facilities, making access to a supply important. Additionally, if the facility makes synthetic natural gas, access to a transmission pipeline will be important in getting products to market. No evidence of a gas transmission line was observed or reported by the site sponsor. It is unknown if natural gas is available to the site. Review of the gas transmission mapping indicates that three large interstate lines maintained by Texas Gas Transmission lie to the east of the site between 5 and 10 miles distant. Water Supply Available water supply is a critical project component for the development of a CTL/CTG, biomass or nuclear facility. Typically, a CTL/CTG or biomass facility requires a minimum of 2,500 gallons per minute (gpm) or 3.6 million gallons per day (MGD) for process or cooling water needs, and a nuclear facility requires a minimum of 8,000 gpm or 11.5 MGD for cooling water needs. The site is not reported to have an abundance of water available on site. The site is located approximately 1.75 miles south of Slover Creek and approximately 5.0 miles east of the Tradewater River. Slover Creek is part of the Craborchard Creek Watershed and the Tradewater River Basin. The Hydrologic Unit Code (HUC) 11 listing for the Craborchard Creek Watershed is Mean annual stream flow of Slover Creek is 26.8 MGD. The low-flow 7Q2 and the low-flow 7Q10 are 0 MGD for this location. The low-flow 7Q 10 is the lowest mean flow during seven consecutive days over a ten-year period. The low-flow 7Q 2 is the lowest mean flow during seven consecutive days over a two year period. Mean annual stream flow of Tradewater River at mile point 32.0 is 329,890 gallons per minute (gpm) or 475 MGD. The nearest USGS gaging station is approximately 35 miles upstream from the site at Olney, KY. Lowest mean annual flow recorded at station is 87.6 MGD. Based upon low flow conditions of Slover Creek and because significant capital would be required to pipe adequate water from the Tradewater River Page 10

to the site and to construct surface water impoundments (for low flow conditions), it does not appear that adequate amounts of water are readily available to support an alternative energy facility at

13 to the site and to construct surface water impoundments (for low flow conditions), it does not appear that adequate amounts of water are readily available to support an alternative energy facility at this location. Workforce Availability Development of a CTL/CTG, biomass, or nuclear facility would require access to an adequate supply of construction and skilled labor. According to the Kentucky Cabinet for Economic Development in 2008 the Webster County labor market includes at least nine counties with more than 200,000 potential workers. The site has access to a large labor pool that should help it in staffing a highly complex facility. Webster County labor market Source: Page 11

14 Civilian Labor Force Webster County Labor Market Area 2007 Oct Oct Civilian Labor Force 6,683 6, , ,246 Employed 6,293 6, , ,909 Unemployed ,829 12,337 Unemployment Rate %) Source: U.S. Department of Labor, Bureau or Labor Statistics Other Site Characteristics The proximity to military sites was reviewed in order to consider the potential impact of an energy facility to military training routes or long range radar. Based upon information produced by the Federal Aviation Administration s Department of Defense Screening Tool, the proposed site is greater than 15 miles from any military site or long range radar. Atmospheric extremes, such as tornadoes, are capable of structurally damaging a facility and must be considered particularly during siting for a solar, nuclear, or wind facility. Based upon FEMA mapping, the site is at moderate risk for tornado activity. TECHNOLOGY SPECIFIC CONSIDERATIONS CTL/CTG In addition to the common factors described above for energy site development, unique factors specific to a particular technology must be considered. For a CTL/CTG facility, access to coal resources is important. As of 2005, Webster County had several mine operations including Webster County Coal, LLC s, Dotiki mine, which is the largest producing mine in the state and is adjacent to the proposed site. In 2005, the Dotiki mine reportedly produced 4.9 million tons of clean coal. It is also reported that the site is adjacent to a large coal reserve (>11,000 acres) currently being considered for development. Although the site has access by both rail and road, the site has, inadequate cooling water supply, and improvements to transmission capacity would be Page 12

15 required, all factors which may provide site constraints for the development of a CTL/CTG facility. Mining by dragline Solar Adequate solar radiation is critical to the successful generation of solar power. A successful site should be relatively free from land cover, and not within a mile of a corporate city boundary. Alliance has an average direct normal solar radiation of 4.23 KWh/m 2 /day and an annual solar radiation for two-axis flat plates of 6.51 KWh/m 2 /day. Based upon this average solar radiation, too much cloud cover and haze is present to be effective as a large scale facility. Also portions of the parcel would require significant groundwork for solar panel installation due to prior mine spoil and placement. Solar installations in large mass can be a visual distraction to local communities. The site is less than one mile north of the small community Providence, Kentucky. Thus, visual impacts to the neighboring properties would need to be assessed before development. Page 13

16 Solar Insolation Map Wind The most critical component for a successful wind facility is adequate and consistent wind speed. In order to generate enough power to be a utility class facility, a mean average wind speed at 60 meters of 5.6 meters per second (m/s) or greater is required. Information obtained from AWS Truewind, indicates that the average wind speed at 60 meters for the site is 4.81 m/s. Without adequate wind speed, other factors, such as foundational concerns, potential visual impacts, telecommunication interference, impacts to birds and bats, as well as operational concerns such as ice shedding, noise, blade drop and throw, and flicker are moot. Wind speed measurements to accurately assess the available resource at any potential development site would be required prior to final planning. Page 14

17 Mean Wind Speed 4.81 m/s Biomass An adequate feedstock supply environment includes available crop residues, animal manure, forest residues from former silviculture or clearing, primary and secondary mill residues, urban residues (i.e., wood scraps from local business such as lumberyards), landfill gas, domestic wastewater, or switchgrass. Information obtained from the National Renewable Energy Laboratory indicates that the total biomass available within Webster County is 159,485 tonnes/year. Biomass in Webster and its surrounding Counties is 927,971 tonnes/year. This biomass availability (> 500,000 tonnes/year) is expected to provide an adequate feedstock source, and ranks as some of the highest availability in the State. Page 15

18 Nuclear A limiting factor to the development of a nuclear facility is available water supply. A minimum of 8,000 gpm or 11.5 MGD of water is required to meet basic facility needs. Site location is approximately 1.75 miles south of Slover Creek and approximately 5.0 miles east of the Tradewater River. Based upon low flow conditions of Slover Creek and because significant capital would be required to pipe water from the Tradewater River to the site and to construct surface water impoundments (for low flow conditions), it does not appear that adequate amounts of water are readily available to support an alternative energy facility at this location. Without adequate water supply, other factors, such as safety issues, proximity to population centers and atmospheric conditions are moot. SUITABILITY In summary, the Webster County Alliance site, although located in an area with an abundance of coal and biomass, and accessible by both rail and road, is not well suited for a potential alternative energy facility. Inadequate water supply, limited infrastructure, including readily available high transmission lines, and proximity to public access areas provide site limitations. The site scored a total of 913 points, representing 76% of the total available points for a CTL/CTG facility, and a total of 1009 points, representing 80% of the total available points for a biomass facility. Due to a low average mean wind speed, this location is not a viable location for a utility scale wind facility. Similarly, a lack of water availability means this site is not a viable location for a nuclear facility. The site scored a total of 574 points, representing 62% of the total available points for a solar facility. Available solar radiation at the site is too low to produce a significant source of energy for a utility solar facility alone. Additionally, proximity to public access areas should be evaluated further. Prior to development of a solar facility, an economic feasibility study should be conducted to ensure the viability of such a development. Page 16

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20 Kentucky Department for Energy Development and Independence Metro Street 12 th Floor, Capital Plaza Tower Frankfort, KY (502) or (800) Smith Management Group Mercer Road Lexington, KY (859) Alliance Coal, LLC 771 Corporate Drive, Suite 1000 Lexington, KY (859)

PENN VIRGINIA LAND COMPANY AREA C HENDERSON COUNTY

PENN VIRGINIA LAND COMPANY AREA C HENDERSON COUNTY ENERGY PROJECT SITE SUITABILITY 2009 Department of Energy Development and Independence Energy and Environment Cabinet Commonwealth of Kentucky FOREWORD