NADB RGVSG Project Review

1
NADB RGVSG Project Review

• Summary Presentation
• San Antonio, Texas
• January 27, 2003

2
Introducing Pollutechs Team

• Richard Laughton
• Project Director
• NADB Compliance
• BECC Step 2
• Compliance Issues
• Risk Assessment
• Reporting

• Greg Brown
• Project Manager
• Technical Analysis
• Financial Review
• Regulatory Permits
• Project Feasibility
• Reporting

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Project Description

• The project is a clean energy and air quality
  improvement project as defined under the
  BECC/NADB mandate expansion.
• The project sponsor is the sugar cooperative
  identified as the Rio Grande Valley Sugar
  Growers, Inc. (RGVSG).

FOR MORE INFO...
http//www.pollutechinternational.com/jobs/nadb/

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RGVSG Facility
The project is located 2½ miles west of Santa
Rosa, Texas (Hidalgo County) in the Lower Rio
Grande Valley on Highway 107.
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Project Goals

• Review proposed system improvements in terms of
  capacity and operative compatibility with
  existing facility and expected performance,
  primarily focussing on equipment related to the
  co-generation from bagasse, air quality
  improvements, water and energy savings, and
  potential waste reduction.
• Review and validate proposed technical,
  financial, operational, and environmental claims,
  costs associated with system improvements, and
  electricity sales.

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Technical Viability

• basic systems processes and technologies
• OM experience and requirements
• technical specifications and design
• energy production and sales estimates
• proposed environmental efficiencies
• cost savings, emissions credits, and
• environmental improvement-related credits

7
Project Technology

• Upgrades to bagasse handling system
• New higher efficiency boiler and
• New (rebuilt) turbine generator.

8
Project Resources

• NADB Project Manager
• RGVSG Management Team
• TCEQ Industry and Approvals Staff
• Schaffer Associates, LLP
• Turner Collie Braden Inc.
• Pollutech International Limited

9
Review Procedures

• Background document review
• Site inspection and interviews
• Consultants reports and inquires
• Regulatory analysis and
• Technical and financial analysis.

FOR MORE INFO...
1) Pollutech Technical Review Report 2)
Executive Summary Report
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Project Timeline

• Pollutech Report January 23, 2003
• TCB BECC Step 2 February 3, 2003
• BECC Approval March 20, 2003
• NADB Approval June 2003
• Bagasse upgrade September 2004
• Boiler and GenSet April 2005

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Key Concerns

• Reduction in air emissions
• Change to net power exporter
• Compliance with BECC Step II
• Technically viable and sustainable
• Fits in with RGVSG long term plans

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The Detailed Analysis

• Review Existing Process
• Analyze Proposed Upgrade
• Projected Power Capacities
• Project Air Emissions
• The Financial Analysis

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Key Factors

• Sugar Policy (WTO and Farm Bill)
• Weather Conditions
• Supply of Irrigation Water
• Environmental Limits (air permits)
• Grower co-operation and education
• Plant Production Capabilities

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Process Flowsheet
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Proposed Plant Upgrades

• Schaffer Stage 1
• Production plant upgrades
• Plant increase to 20,000 tcd
• Schaffer Stage 2
• Bagasse handling upgrades
• Power plant upgrade (boiler turbine)

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Proposed Plant Upgrades

• As a result of other restrictions on the plant
  capacity increase (i.e. production quotas,
  growers capabilities, financing capabilities)
  there is no immediate plan to increase the
  production capabilities through the Phase 1
  expansion.
• However, the positive economic and environmental
  benefits of the proposed Phase 2 expansion do
  warrant those tasks being undertaken at this time.

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Proposed Stage 2 Plant Upgrades

• Bagasse Handling Upgrades
• conversion of all bagasse conveyors to fully
  automated (PLC controlled) belt conveyors (for an
  increased capacity to handle 20,000 tcd)
• expansion and upgrade of the bagasse storage
  building
• conversion of the boiler building (height and
  length) to handle the modified bagasse conveyor
  system and to allow for the new boiler 5

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Proposed Stage 2 Plant Upgrades

• Power Plant Upgrade (Boiler Turbine)
• installation of a new high efficiency boiler (5)
  with corresponding reduction in the use of the
  existing boilers (s 1,2,3,4)
• new condensate storage tank
• rebuilt 6,000 KW turbine generator to replace one
  of existing 2,500 KW turbine generators

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Power Production
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Proposed Operation
Plant Operation Old Boilers ( capacity) New Boilers ( capacity)
10,000 tcd 34 90
13,500 tcd 67 90
15,000 tcd 85 90
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Proposed Power Capacities
Power Analysis MW Produced MW Purchased MW Sold MW Used
Current 4.3 1.7 0.0 6.0
10,000 tcd 9.6 0.0 5.0 4.6
13,500 tcd 11.8 0.0 4.2 7.6
15,000 tcd 14.0 0.0 9.0 5.0
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Air Emissions
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Projected Air Emissions
Emission Analysis CO tons/year NOx tons/year PM tons/year VOC tons/year
Current 2,458 482 385 157
10,000 tcd 1,320 439 198 79
13,000 tcd 2,191 609 335 134
15,000 tcd 2,564 682 393 158
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Allowable v. Actual Emissions
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Projected Air Emissions
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Financial Analysis - Project Costs
Financial Analysis Bagasse Handling Boiler Turbine Generator TOTAL PROJECT
Project Cost (10 contingency) 6,422,532 13,986,117 3,986,117 23,826,937
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Financial Analysis - Cost Savings
Component Bagasse Handling Boiler Turbine
Conveyor Operation 112,478
Bagasse Storage 135,000
Boiler Maintenance 841,000
Electricity 312,120
Natural Gas 250,000
Excess Power ________ 450,000
TOTAL 247,478 1,853,120
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Financial Analysis - Payback Period
Cost Component Bagasse Handling Boiler Turbine Total Project
Total Cost 6,422,532 17,384,405 23,826,937
Annual Cost Savings 247,478 1,853,120 2,100,598
Payback Period 26.0 Years 9.4 Years 11.3 Years
29
Plant Environmental Programs

• TCEQ Site Assistance Visit (P2SAV)
• Emerald Consultants Compliance Audit
• EPA Pilot EMS Program
• Routine Regulatory Compliance

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Air Quality Improvements

• - 42 at 10,000 tcd
• - 0.6 at 13,500 tcd
• 9.0 at 15,000 tcd

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Water Quality Issues

• 100 Recycle
• High Evaporation
• Stormwater Plan
• On-Site WWTP

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Other Environmental Issues

• Solid Waste
• Chemical Waste
• TRI (no reports)
• EMS (in process)

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Emission Reduction Credits

• ERC
• DERCs
• PPA Options

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General Project Validation

• Is the plant proposing to use production and
  power generation technology that would be used by
  a prudent owner of a similar facility?
• Is the pollution abatement equipment that is
  proposed BACT-EA?

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General Project Validation

• Will the upgraded facility be able to produce
  more power?
• Will the total air emissions from the upgraded
  facility be significantly less than the existing?

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General Project Validation

• Will the project result in a reduction in the
  environmental impacts related to water supply and
  discharge?
• Has it been demonstrated that there are no
  adverse environmental impacts on the neighbouring
  community?

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Air Emission Summary

• Immediate and significant 42 decrease in
  component and total air emissions at 10,000 tcd.
• Reduced air emissions from outside power
  producers.

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Power Production Summary

• Currently a net importer of power at
  approximately 1.7 MW
• Will become a net exporter of power at 5 MW (plus
  1.7 MW benefit)

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Compliance with BECC Step 2

• general
• human health and environment
• technical feasibility
• financial feasibility
• project management
• community participation and
• sustainable development.

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BECC Guiding Principles

• Principle 1. The project is centered on energy
  conservation and the economic needs of the
  region.
• Principle 2. The rights of the cooperative
  members and surrounding communities to adequately
  raise their standard of living and develop their
  properties are recognized and underlie the
  reasons for undertaking the project.

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BECC Guiding Principles

• Principle 3. Environmental protection is integral
  to the project with the promotion of renewable
  energy sources and the significant reduction in
  air pollutant loadings during operation.
• Principle 4. Stakeholders have been involved and
  have had the opportunity to participate in the
  decision-making process. This not only includes
  the cooperative members and surrounding
  residents, but also local, regional, state and
  federal agencies with statutory interest and
  standing in the issues at hand.

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BECC II Community Impact

• Air emissions from the RGVSG will be reduced
  while allowing the mill to continue to compete in
  an aggressive international market, while at the
  same time allowing for increased energy
  production (electricity) from the waste biomass
  (bagasse).

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BECC II Project Alternatives

• The do nothing alternative means no improvement
  in air quality and a less competitive industrial
  operation.
• More advanced alternatives might provide
  additional environmental improvement (i.e. better
  emissions control technology, more efficient
  energy production methods) but are deemed not to
  be economically viable at this time.

44
BECC II Financial Feasibility

• The annual cost savings associated with reduced
  operating costs, reduced natural gas costs, and
  excess power sales are calculated to be
  approximately 2,100,000 per year. These cost
  savings account for 8.8 of the total project
  costs.

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Risk Analysis

• Can this project achieve what is projected in
  terms of current and future plant operation, or
  are there some undermining limitations that may
  increase the risk?
• If the plant can go ahead with the upgrade to the
  operation with a manageable level of risk in
  operations, are we sure that the project they are
  proposing is technically sound?

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Risk Analysis

• Can we confirm that all the local, state and
  federal environmental regulations will be met?
  What are the risks and impacts of occasional
  infractions?
• Does the plant have the capability to operate and
  maintain the upgraded facility, so as to minimize
  or eliminate any risk of plant upsets that could
  affect either plant profitability or
  environmental emissions?

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Risk Analysis

• Does the project result in long term
  sustainability for the local area, giving due
  consideration to all of the issues required in
  the BECC Step II evaluation?
• RISK Likelihood x Impact
• Likelihood could it happen?
• Impact what if it happens?

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Cane Production

• 43,000 acres in production
• Yields of 45 tons cane per acre
• Peak generation of 2,000,000 tons cane per year
• Weather and irrigation are critical
• MODERATE RISK

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Sugar Policies

• Current quota of 144,000 tons sugar
• Storage of shortfalls
• Current pricing in the 0.21 range
• Farm Bill expires in 2007-2008
• Mexican and Canadian Issues
• MODERATE RISK

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Production Expansion

• Satisfactory for the next 5 years
• Anticipate 10,000 tcd over 150 days
• Immediate cost savings in operation
• Future growth in Stage 2 upgrades
• LOW RISK

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Plant Profitability

• Reduction in power costs
• Reduction in labour equipment costs
• Payback period of 11.3 years
• EXTEMELY POSITIVE

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Technology Evaluation

• Experience of Schaffer Associates
• Relying on proven technologies
• Manufacturer guarantees
• Proven operation and maintenance
• LIMITED RISK

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Regulatory Issues

• Immediate reduction in air emissions
• Ongoing program for cane burning
• No concerns with water discharge
• Moving to EMS in 2003
• LIMITED RISK

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Environmental Sustainability

• Direct benefit to the local community
• Plant can remain competitive
• Truly a win win situation

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For Further Information

• Pollutech International Limited
• 768 Westgate Road
• Oakville, Ontario CANADA
• Tel [phone]
• E-mail laughton_at_pollutech.com
• Web http//www.pollutech.com