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HomeMy WebLinkAboutLandfill Stabilization Proposal Technical Memorandum To: Timm Schimke, Deschutes County From: Michael Greenberg P.E., HDR Project: Review of WTEG Proposal for Steam Injection at Deschutes Landfill Copy: Joel Miller P.E., HDR Date: June 3, 2013 Job No: 00102.0000195546 Re: Final Technical Memorandum Executive Summary HDR Engineering, Inc. (HDR) was retained by Deschutes County (County) to provide an independent review analyzing the Waste to Energy Group, LLC’s (WTEG) proposal to inject steam into the Deschutes County’s Knott Landfill (KLF) in order to increase the production of landfill gas and subsequently refine the gas into pipeline quality methane (the “Project”). This Technical Memorandum (TM) represents HDR’s review of the Project. HDR understands that WTEG’s project description includes the following: • A Piezo-Penetrometer Test (PPT) survey will be conducted by WTEG initially to determine where to install gas collectors. • A steam injection system including a landfill gas (LFG) collection system will be engineered by WTEG based on the results of the PPT survey. • WTEG will provide and use a Biogas Purification and Compression System manufactured by Generon IGS, Inc., to process the raw LFG to product gas. Product gas will be sold by WTEG to a buyer and injected into a natural gas pipeline adjacent to the KLF facility. • WTEG intends to enter into a binding agreement with the County to perform the project as described. This TM is organized with sections reviewing technical, permitting/regulatory, financial, and contractual aspects of the Project, including an overview comparison to Non-Steam Bioreactors. HDR’s findings are summarized as follows: • Financial – It is HDR’s opinion that LFG generation and collection may be lower than WTEG predicts, even if above typical bioreactor output. This may adversely affect the financial pro-forma, resulting in potentially lower or negative results for the project as depicted in sensitivit y cases modeled by HDR. This increases the importance of contractual protections to the County. Based on the draft in-progress contract reviewed by HDR and discussions with the County and WTEG we understand that WTEG intends to finance the total capital and operations costs of the project, without any financial obligation to the County. HDR recommends that the County only enter into the agreement with WTEG if appropriate terms are negotiated protecting the County from any financial responsibilities or liabilities should the project fail. This TM contains a section (last section, Contractual Risks) with comments and recommendation regarding WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 2 of 33 the in-progress draft agreement reviewed by HDR and discussed with the County during this project. Although HDR has reviewed and analyzed all available WTEG economic information, for this report we have removed all of these economic figures as they are proprietary to WTEG and their development efforts. • Environmental – Based on the description of WTEG’s proposed processes, the environmental risk to County appears to be relatively low. WTEG confirms that they will install all LFG wells well above the landfill liner base grades. However, WTEG should enhance its proposal to provide backup flare capability for all LFG collected. The County should also confirm that WTEG assigns staff experienced in operating LFG systems and monitoring in order to maintain air quality compliance. The WTEG expectation and planning for a level of 99% LFG removal appears unrealistic, which relates both to financial and environmental compliance aspects of the project. However, given that the Oregon Department of Environmental Quality (DEQ) must apply monitoring requirements to assure public health and safety under RD&D rules and the project will involve limited sequential area in the injection operations, it is not expected to pose an environmental risk 1 different than other landfills. This opinion is based on the expectation that WTEG will apply appropriately experienced staff to the project such that all applicable regulatory air quality compliance measures are met and attained over the time of the project. • Permitting – The Oregon DEQ was interviewed during preparation of this TM and appears receptive to the project. There do not appear to be fatal flaws in the permitting scheme given the RD&D authority held by the state. As holder of the permits the County needs to be provided with accurate continual operational data from WTEG during all periods of operations to be able to check that the gas generation is being properly controlled and to provide for future control of the LFG. The County should reserve the right to be supplied with information in addition that required by regulatory agencies. This is recommended in the event if the project was to fail from financial, compliance or other reasons the County could be forced to address any remaining compliance or liability issues. • Operational – Based on the information provided to HDR regarding the proposed project, it appears that WTEG did not propose to provide the County with a working gas collection system after WTEG leaves each 4-acre tract. The County will be relying upon WTEG’s assertion that all or effectively most gas has been extracted from each 4-acre tract. However, there remains the possibility that once WTEG leaves an area, fugitive gas emissions could be higher than prior to the project (due to the effects of the steam injection). Similar to a conventional bioreactor, the WTEG process will be injecting liquid (steam) into the waste mass. Typical bioreactors require that operations are carefully controlled to avert the potential for overloading of the leachate collection system and/or the possibility of slope stability and side-slope leachate outbreaks, which generally increase over a typical dry cell landfill. WTEG has reported that the proposed steam 1 HDR’s scope of services and review did not include any health risk assessment or detailed environmental modeling of the proposed project. It is assumed that applicable regulations would protect public health and safety to appropriate levels. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 3 of 33 injection process will use less liquid, however, the information WTEG provided to HDR regarding the proposed project report liquid requirements similar to bioreactor operations2. Therefore, WTEG’s process could potentially carry the same operational risks as a conventional bioreactor operation. Given that the Knott Landfill has a Leachate Collection and Removal System (LCRS) with greater slopes and design than are typically required,3 it is likely that the LCRS should be able to handle the proposed steam injection. However, some care will still need to be exercised in adding stream to avoid leachate outbreak or slope stability issues that potentially can occur with typical bioreactors. These risks are known in the industry and can be readily mitigated by conscientious operation according to permit conditions. • Risks – Potential risks to the proposed WTEG project appear to be relatively low from an environmental and permitting aspect provided that WTEG assigns operational staff experienced in landfill gas control and compliance and provides adequately designed equipment to maintain air quality compliance as discussed in the environmental, permitting, and operational sections of this TM. If the steam injection functions with similar efficacy to a bioreactor, an environmental benefit of early stabilization of the waste could be realized. However, HDR believes that the LFG production and financial projections by WTEG may be optimistic, which raises the importance of the County contractually protecting itself from risks, should the project fail to meet expectations. This TM includes a section (See Contractual Risks in the last section) with detailed comments and recommendation regarding an in-progress contact reviewed and discussed by HDR and the County. We recommend that, in the case that the County decides to implement the project, protections (possibly additional ones covering subsequent negotiations) are included as the agreement is finalized in order to limit the County’s risk and protect its financial interests. Given that this project is experimental (the first of its kind proposed for full scale) and contains what HDR notes may represent overly optimistic plans and assumptions by WTEG for the project; HDR recommends that the risk should the project fail should be contractually solely borne by WTEG. • Benefits to the County - This TM also discusses potential benefits of the project to the County that would involve potential early stabilization of the landfill waste and payments to the County for LFG produced for sale. Early stabilization of the waste, a stated goal of the project, would be an environmental benefit mainly from reducing the time that the waste would pose a threat to groundwater quality. The contract that the County is negotiating with WTEG is assumed to provide royalty payments to the County. In the development of this TM, HDR has relied on information provided by WTEG and the County. We are assuming that the information is the most recent available as of the date of this memorandum and that the information represents the best available information from WTEG and the County. HDR has used our experience with landfill gas to energy projects as well as general industry standards and information available from other sources as noted in this TM. 2 For basis of liquid requirements and additional discussion, refer to Liquid Sourcing in Landfill Gas Generation section and Liquid Requirements in Overview Comparison to Non-Steam Bioreactors section. 3 Based on HDR discussions with Oregon DEQ (Joe Gingerich) and the County (Timm Schimke). WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 4 of 33 Background and Understanding Deschutes County has been approached to consider the implementation of a WTEG proprietary technology, which essentially consists of injecting steam into the KLF for the enhanced production of landfill gas. HDR understands that WTEG’s project description includes the following: • A Piezo-Penetrometer Test (PPT) survey will be conducted by WTEG initially to determine where to install gas collectors. Data from the survey will be used to create a model of the waste to show what the characteristics of the waste are and where the gas pockets are located and where perched leachate exists. • A steam injection system including a landfill gas (LFG) collection system will be engineered by WTEG based on the results of the PPT survey. LFG collection wells will be installed. Steam injection points will be placed strategically to enhance the gas production capabilities and collection wells will be installed to affect distribution of the steam and collection of the LFG. • WTEG will provide and use a Biogas Purification and Compression System manufactured by Generon IGS, Inc., to process the raw LFG to product gas. Product gas will be sold by WTEG to a buyer and injected into a natural gas pipeline adjacent to the KLF facility. • WTEG intends to enter into a binding agreement with the County to perform the project as described. This TM includes HDR comments and recommendation on a draft agreement that were discussed with the County during performance of this project. In the development of this TM, HDR has relied on information provided by WTEG and the County. We are assuming that the information is the most recent available as of the date of this memorandum and that the information represents the best available information from WTEG and the County. HDR has used our technical, regulatory, financial and contractual experience with landfill gas to energy projects as well as general industry standards and information available from other sources as noted in the report. Given that the basic concept of steam injection into a landfill and some of the individual elements of the process and technology proposed by WTEG is new and experimental, HDR could not compare WTEG’s proposed technology and project based on information to other similar operating projects as we are not aware of any others that exist. This TM includes a review of the technical, permitting/regulatory, financial, and contractual aspects of the Project, including an overview comparison to Non-Steam Bioreactors. Each component of HDR’s review is included by section below. Technical Review HDR initiated the analysis by requesting that technical information from WTEG be provided. We discussed the information provided to HDR with WTEG and requested and received follow-up information to assist in our review. This included review of the following technical aspects of the project (in general process flow order): • Initial site profiling using the WTEG Piezo-Penetrometer Test (PPT) WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 5 of 33 • Landfill gas generation • Landfill gas collection and control • Landfill gas high-Btu processing and pipeline injection PPT Testing WTEG has proposed that the project begin with WTEG’s PPT testing procedure to develop a three-dimensional profile of the waste mass for future use in detailed design and operation of the steam injection process. According to WTEG, the PPT and also the Cone Penetrometer Test (CPT) can be utilized to detect and profile internal gas pressures, perched liquids, vacuum zones, dense soil layers, and other pertinent information. HDR is familiar with the PPT and CPT equipment, but the use of the equipment to develop three-dimensional models and interpretation to enhance steam injection are proprietary to WTEG and their consultant, STI Engineering, Inc. As such, HDR cannot judge the efficacy of STI’s proprietary interpretation of these results. Based on the review of the information provided by WTEG, HDR’s opinion of the PPT Testing process is that it should not be detrimental or cause harm to the KLF. The greatest risk is penetration of the cell liner, but this can be mitigated similar to installation of conventional landfill gas wells by allowing adequate separation to the liner using accurate as-built liner information and recent survey elevations. Landfill Gas Generation WTEG has provided the following estimate of landfill gas generation for the proposed project (from Executive Summary dated 2-7-13): “WTEG will treat 4 acres of the landfill at a time and we will be converting 354 tons of organic waste per day producing 2,549 mmBtu. Another 7 mmBtu will be produced naturally. Full the flow rate [sic] is controlled by the amount of steam injected.” This provides a basic landfill gas generation estimate by WTEG of 2,556 mmBtu/day from a 4- acre parcel of the landfill undergoing the WTEG steam injection process. WTEG predicts a minimum of 60% methane in the landfill gas generated by this method. Conversion using the nominal heating value of methane at approximately 1,000 Btu/cubic foot yields an estimated raw landfill gas flow rate of 2,958 cubic feet per minute (cfm) at 60% methane 4. WTEG justifies this predicted generation rate as follows: “The Steam Injection Process is designed based on the amount of waste currently in place and the amount of refuse that is imported per day. We may assume that a total for both cells is 4,456,000 tons in place based on the data provided. It is also assumed that 50% of the refuse is organic material or 2,228,000 tons. Since the annual rainfall is only 8 inches it is assumed that 3 tons per acre per day was converted into landfill gas (LFG) for the half-life of the landfill or 875,675 organic tons. 4 2,556 mmBtu/day * 1,000,000 Btu/mmBtu * 1 cubic foot/600 Btu * 1 day/1,440 minutes = 2,958 cubic feet per minute WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 6 of 33 The landfill imports 315 tons of refuse per day. It is typically assumed that 50% of the refuse is organic or 158 tons. If 5 acres are treated at a time and convert 450 – 158 tons of import = 292 organic tons to LFG then the gas field will last 8.5 years. It requires about 56 gallons converted to steam per ton or 25,000 gallons per 5 acres per day. With 5 acres treated, 200 barrels of crude can be produced per day.” Modeling and Estimation The WTEG calculation methodology outlined in the paragraphs above is unconventional and HDR is not able to agree on the assumptions made in WTEG’s calculations. It is generally unclear to HDR how the historical waste in place is taken into account. In addition, HDR’s independent analysis and information received from the County arrives at differing values for waste in place, waste receipt volumes, and organic content. Rather than debate individual values and methodology, Figure 1 provides a comparison of the WTEG estimated landfill gas generation rate in comparison with a spectrum of generation models. This spectrum provides independent estimates of landfill gas generation from conventional landfill operation to ideal laboratory conditions (maximum theoretical gas generation). HDR utilized the EPA LandGEM landfill gas emissions model version 3.02 to estimate the LFG generation rates. The model was manually adjusted to have waste capacity comparable to WTEG’s planned 4-acre tracts. The model LFG generation variables (k and Lo) were also manually adjusted to create five “scenarios” providing a spectrum of LFG generation rates. Scenarios 1, 2, and 3 are utilize variables to model “field” LFG generation rates for dry tomb and bioreactor conditions. Scenarios 4 and 5 utilize variables to model “laboratory” LFG generation rates that have not been replicated in the field. The calculated assumptions and EPA LandGEM models for each scenario are included in Attachment A. The following should be considered when reviewing this Figure: • Waste values and characterization are per County provided information • The waste volumes have been manually adjusted to model a 4-acre by 100-foot deep “cube” of waste for comparison with WTEG planned methodology for a roving 4-acre tract. This results in a conservatively high assumption of waste design capacity at 609,840 tons. • Flow rate shown is for landfill gas with 60% methane (for comparison to WTEG claim) Figure 1 illustrates that WTEG predicts (Proposed) that their steam injection process will effectively increase landfill gas generation rates to greater than double the published rates typical of bioreactor landfills in the industry (Scenarios 2 and 3) and up to 90% of the theoretical maximum potential predicted by laboratory-derived thermodynamic properties of the waste materials (Scenario 5). WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 7 of 33 Figure 1 – Proposed LFG Generation Curves Miramar Pilot Study Comparison HDR understands that the basis for these claims is derived from the 10-month pilot study performed at the Miramar Landfill in 2005-2006. From WTEG text: “In 2005 and 2006 STI Engineering performed a 10 month long Steam Injection Pilot Study at the Miramar Landfill in San Diego, California. Two acres were selected for the study, one as a control with no steam injected and one with steam injection. This test acre was instrumented with 12 thermocouples and 2 static piezometers to monitor the effects of the steam migration through the landfill as well as settlement monuments. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 L F G G e n e r a t i o n ( s c f m ) Year Proposed LFG Generation from 4-Acre Tract at KLF LFG Generation Spectrum Scenario 1 -Typical AP-42 parameters K (methane degradation rate) & Lo (methane generation potential). No recirculation of liquids. Scenario 2 -Recirculation of liquids. Published field bioreactor parameters K and Lo Scenario 3 -Recirculation of liquids. Maximum field bioreactor LandGEM values for parameters K and Lo Scenario 4 -Maximum lab values for parameters K and Lo. Optimum lab conditions for site-specific KLF waste. Scenario 5 -Absolute maximum values of Scenarios 1 through 4 for parameters K and Lo. Optimum lab conditions for generic MSW. Proposed -Proposed value of 2,958 scfm based on WTEG estimate of 2,556 mmBtu/day at 60% methane. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 8 of 33 With steam injection the gas production was increased by 5.7 times. If 5,000 gallons per day were used instead of just 1,500 gals, then the gas production would have been increased 27 times.” To compare the results of this pilot study, Figure 2 shows a similar landfill generation spectrum for a 1-acre by 50-foot deep cube of waste to emulate the Miramar Pilot Study. HDR again utilized the LandGEM model to estimate the LFG generation rates. The model was manually adjusted to have waste capacity comparable to Miramar Pilot Study 1-acre by 50’ deep tract. The model LFG generation variables (k and Lo) were also manually adjusted to create five “scenarios” providing a spectrum of LFG generation rates. Scenarios 1, 2, and 3 are utilize variables to model “field” LFG generation rates for dry tomb and bioreactor conditions. Scenarios 4 and 5 utilize variables to model “laboratory” LFG generation rates that have not been replicated in the field. The calculated assumptions and EPA LandGEM models for each scenario are included in Attachment B Figure 2 – Miramar Pilot Study LFG Generation Curves 0 500 1,000 1,500 2,000 2,500 LF G G e n e r a t i o n ( s c f m ) Year Miramar Pilot Study LFG Generation from 1-Acre Tract LFG Generation Spectrum Scenario 1 -Typical AP -42 parameters K (methane degradation rate) & Lo (methane generation potential). No recirculation of liquids. Scenario 2 -Recirculation of liquids. Published field bioreactor parameters K and Lo Scenario 3 -Recirculation of liquids. Maximum field bioreactor LandGEM values for parameters K and Lo Scenario 4 -Maximum lab values for parameters K and Lo. Optimum lab conditions for site-specific KLF waste. Scenario 5 -Absolute maximum values of Scenarios 1 through 4 for parameters K and Lo. Optimum lab conditions for generic MSW. Observed -Observed flow of 228 scfm at Miramar Pilot Study reported by WTEG after adding 1,500 gal/day steam injection. Claimed -Claimed possible flow of 1,080 scfm at Miramar Pilot Study. Theoretical addition of 5,000 gal/day steam injection. Not actually realized. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 9 of 33 The Figure illustrates that the actually observed landfill gas generation rate at Miramar with the available leachate (Observed line) used in the steam injection process matches the maximum rate modeled using published industry field bioreactor data (Scenario 2). However, the claimed landfill gas generation rate (Claimed line - not proven or achieved in the pilot study) theorized by WTEG if more liquids were available would again fall in the spectrum of laboratory only conditions. Steam Injection Process In order to achieve the estimated landfill gas generation rates advertised, WTEG intends to employ the injection of steam in a proprietary process. This process is described in detail in the provided documents and generally consists of injection of steam in the middle of each one-acre tract with four landfill gas collectors at each corner of the square tract providing vacuum to move the steam laterally through the waste mass. In general, HDR views this as a process wherein the general goal is to increase the availability of moisture to the methanogenic bacteria in the waste mass to enhance their decomposition activity on the organic matter and subsequently increase landfill gas production. That the methanogenic bacteria require moisture and ideal conditions for decomposition activity (biostabilization of waste) is well known. The waste stabilization bacteria primarily operate in three different groups 5: 1. One set of bacteria is responsible for hydrolyzing organic polymers and lipids to basic structural building blocks such as amino acids; 2. A second set of bacteria called “acidogens” is responsible for fermenting the breakdown products (such as amino acids) to simple organic acids; and 3. A third set of bacteria called “methanogens” are responsible for converting the acids into methane and carbon dioxide. Therefore, the methanogens – a type of mesophilic bacteria – plays the final and most critical role in methane generation. The optimum temperature range for mesophilic bacteria is generally reported as 80o to 120o Fahrenheit, with limits for landfill gas well temperatures in regulated landfills restricted to less than 131o Fahrenheit. Steam injection, at greater than 212o Fahrenheit may provide an inhospitable environment for the methanogenic bacteria – although it is conceded that this temperature is restricted to the few feet directly adjacent to the steam injectors. Since this is the case, it is assumed that the process serves to move water vapor in ever-decreasing temperature (and thus moisture loading) laterally through the waste mass. Therefore, HDR views the steam injection process as a variation of pressurized moisture addition into the waste – with a risk of impacting methanogen growth near the injection point with excess temperatures. 5 Summarized from: Integrated Solid Waste Management: Engineering Principles and Management Issues; Tchobanoglous, George, Hilary Theisen, Samuel Vigil; Irwin/McGraw-Hill; 1993. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 10 of 33 The concept of pressurized moisture addition is not a new practice in the solid waste industry. The WTEG proposed steam injection closely resembles these projects but with the added technical and financial burden of heating the liquid to make steam and the aforementioned temperature risk to methanogenic bacteria. The quantitative advantages that steam injection are purported to provide (versus liquid injection) are not fully proven in field testing. It is assumed that the decrease in temperature will cause the steam to condense into a liquid water state at some point between the steam injector and the collection wells. At that temperature point, the remaining water vapor may be influenced by the vacuum exerted by the gas collection wells, but the liquid water will be governed by liquid properties of movement within the waste mass. HDR is not aware of information that verifies that the injected steam will travel the distance (greater than 100 linear feet) from the injection points to the collection wells prior to condensing. As stated in the previous section, WTEG’s predicted outcomes for KLF are based on the Miramar 1-acre pilot project. Notice in Figure 2 that after steam injection, the reported results (Observed line) came close to the landfill gas generation modeled by LandGEM utilizing published bioreactor data (Scenario 2). This indicates that the steam injection did distribute moisture effectively and pushed the landfill condition towards a bioreactor system – an expected phenomenon. However, the claim that landfill gas generation could have been 27-times greater than the pre-study flow rate (Claimed line) if the added water was 5,000 gallons per day was not proven. The observed data would suggest that the steam injection did increase the moisture content, and that the waste mass may have already reached an optimum condition with the 1,500 gallons/day addition – a possibility endorsed by the reported flow rate being consistent with a LandGEM modeled bioreactor system (Scenario 2). Waste has certain inherent methane generation potential or energy content (see Lo calculations in Attachments A and B). This potential will not increase regardless of how much moisture is added into the waste mass. It is expected that moisture delivery is the key to optimization of the waste’s landfill gas generation potential; however, WTEG’s maximum claims have not been supported by published field data, and may not be valid if a waste mass has already reached optimum moisture conditions. Liquid Sourcing As discussed in previous sections, WTEG proposes optimization of landfill gas generation by means of steam injection. This is similar in concept to a bioreactor operation. Specific to the KLF project, WTEG proposes an optimal liquid requirement of approximately 5,000 gallons/acre/day6. The issue of note for the proposed WTEG project at the KLF has to do with the sourcing of this quantity of liquid. KLF currently has approximately 38 acres of lined cells 6 Liquid quantity based on information provided in WTEG proposal dated February 7, 2013, “Executive Summary – Green Environmental Solutions for the Deschutes County Landfill Stabilization Projects”, page 6: “It requires about 56 gallons converted to steam per ton or 25,000 gallons per 5 acres per day.” Statement is consistent with WTEG stated liquid requirements at Miramar Pilot Study at 5,000 gallons/acre/day. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 11 of 33 which generate a normalized annual average of 287,000 gallons/month (9,500 gallons/day)7. This quantity is short of the required amount of 20,000 gallons/day for a 4-acre tract by 10,500 gallons per day. A magnitude of 10,500 gallons per day would equate to a residential usage rate for approximately 26 homes 8. This issue was also encountered at the Miramar pilot study. The one acre pilot study required 5,000 gallons/day, but City of San Diego staff report that the entire Miramar site produces only approximately 15,000 gallons/month (500 gallons/day) in winter and 200,000 gallons/month (6,667 gallons/day) of leachate in summer. The Miramar larger lined area was unable to support the liquid needs of a smaller pilot study. Landfill Gas Generation Conclusions In summary, this section provides perspective as to how the WTEG proposed landfill gas generation projections compare to the generally recognized spectrum of landfill gas modeling using a variety of published field and laboratory variables. The modeling efforts have been adjusted to provide a range of comparison. In each case, WTEG’s projected landfill gas generation estimates greatly exceed those published from actual field data, and fall into the realm of laboratory and theoretical output. It is known that waste has certain inherent methane generation potential or energy content (based on the available organic substrate for methanogenic bacteria). This potential will have a limit regardless of how much moisture is added into the waste mass. Therefore, the increase in liquid/steam injection will not necessarily result in a commensurate increase in LFG generation. The ability to distribute the moisture effectively within the organic waste mass will have the greatest effect. This is understood as WTEG’s goal with the steam injection process. However, due to liquid sourcing constraints, WTEG was able to match published peak bioreactor gas generation levels, but was unable to prove higher gas generation rates in the Miramar field pilot study. Based on the documents provided, it seems that the WTEG projected KLF landfill gas generation rates are estimated largely on the basis of WTEG theorized Miramar generation rates that were not actually achieved. In the absence of actual field or laboratory data from steam injection to the contrary HDR can only speculate an opinion that the generation rates from the proposed steam injection would fall somewhere between the bioreactor curves for the published and maximum field based LandGEM values shown by Scenarios 2 and 3 9. Based on the review of the information provided by WTEG, HDR’s opinion is that gas generation at the KLF will not match the estimated quantities proposed by WTEG. However, the steam injection and collection process should not be detrimental or cause harm to the KLF 7 Based on County-provided leachate data for 2012. 8 Based on an assumed 400 gallons per day for a typical household family of four; source: http://www.epa.gov/WaterSense/pubs/indoor.html 9 Attachment A provides detailed description of Scenario LandGEM models for KLF. Attachment B provides detailed description of Scenario LandGEM models for Miramar Pilot Study. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 12 of 33 provided that the leachate collection system is installed and operated conscientiously by the County. The greatest technical risk is penetration of the cell liner, but this can be mitigated similar to installation of conventional landfill gas wells by staying a conservative distance from the landfill liner by means of accurate as-built information and recent survey elevations. WTEG has indicated that it understands this risk and has stated that the intent is to stay well above landfill liner elevations. Landfill Gas Collection and Control WTEG proposes to operate steam injection and landfill gas collection operations on roving 4- acre tracts on the lined area of KLF. It is important to note that WTEG does not propose expanding the County’s existing gas collection system to all areas of the landfill, and does not propose operating a gas collection system that would comply with any future regulatory requirement for KLF to provide collection coverage for their landfill (if this is required in the future). This is discussed in more detail in the Permitting section of this memorandum. Collection System Efficiency WTEG proposes to collect landfill gas from roving 4-acre tracts at the KLF in conjunction with steam injection. WTEG has not distinguished between landfill gas generation and landfill gas collection estimates for the KLF project. WTEG has stated to HDR that it expects that 99% of generated gas will be collected. It is assumed that WTEG takes this position due to the small scale of the project (4-acre tracts). However, it must be noted that industry standard gas collection efficiency for landfills without final cover in place is approximately 75%. HDR is of the opinion that WTEG may not achieve 99% collection efficiency. This discrepancy may serve to decrease the expected LFG collection by up to 25%. This is discussed in more detail in the financial section of this memorandum. Flaring Capacity The County has indicated to HDR that WTEG has stated that they will provide a backup flare for the Knott Landfill. However, the information provided to HDR by WTEG does not appear to provide for the installation of a backup flare station with capacity to destroy the collected gas. This is contrary to industry standard practice, and preliminary discussions with regulators (see Permitting Section) suggested that they would require this flare capacity. This is important since the steam injection process will cause the increased generation of landfill gas. Projected availability (up-time) of any processing facility is approximately 92% to 95% annually (in best- case operation), which does not equate to industry and regulatory backup requirements. Due to recent odor issues10 with neighbors at the KLF site, the lack of a back -up flare to handle the combustion of gas during processing down times appears problematic. The addition of a flare station with capacity for WTEG-estimated LFG flow rates would add approximately $500,000 to the initial capital cost of the project. 10 Based on discussions with the County and Oregon DEQ. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 13 of 33 Landfill Gas Collection and Control Conclusions Although the previous section disagreed with the magnitude of WTEG estimates of landfill gas generation at KLF, it is agreed that the steam injection process could increase landfill gas production. As such, this increased gas production must be collected and controlled to prevent odor and other issues (migration). The County should consider its goals from an agreement with WTEG. Specifically, the following issues: • The proposed project does not provide the County with a working gas collection system after WTEG leaves each 4-acre tract. The County will be relying upon WTEG’s assertion that “all” gas has been extracted from each 4-acre tract. However, there remains the possibility that once WTEG leaves an area, fugitive gas emissions could be higher than prior to the project (due to the effects of the steam injection). The County should consider how this gas will be collected and controlled. • The proposed project does not provide for increasing flaring capacity at the site to handle the increased gas production. General industry practice includes a backup control device with sufficient capacity to handle all LFG collected. • Discussion with regulatory agencies (see Permitting Section) have left open the possibility of triggering enhanced surface monitoring (at a minimum) and/or adjustment of New Source Performance Standards (NSPS) Tier 2 reporting. • The County may want to compile or establish baseline compliance data (perimeter probe date, surface emissions, landfill gas collection, etc.) and tie this baseline into the proposed agreement such that quantifiable increases can trigger specific action or resolution by WTEG. Landfill Gas Processing and Pipeline Injection WTEG proposes to process the collected LFG into a high-Btu product gas for sale to a buyer by means of injection into the local Pacific Gas Transmission pipeline that is stated to run adjacent to the KLF. This is a feasible use of the gas, assuming that WTEG can collect the flow rates proposed (discussed in detail previously) and the proposed pipeline is able to accept the product gas. As a general rule, financial feasibility decreases drastically with decreasing flow rates, as historically, high-Btu processing has been feasible for larger landfills with projected LFG flow rates in excess of 2,500 cfm. However, these technologies have been making advances in recent years to achieve financial feasibility for landfills with ever-lower flow rates. The product gas, which is approximately 99 percent methane (and will have various restrictions on other contaminants), can be injected into existing natural gas pipelines as proposed by WTEG. Processing the LFG to this high Btu product requires complex processes – e.g., membrane filtration, pressure swing adsorption, or amine scrubbing. Technical WTEG proposes a turnkey-style containerized processing facility provided by Generon IGS. The proposed process will operate on the principle of pressure swing adsorption to separate carbon dioxide (and some other constituents) from the landfill gas. This unit also has the ability to remove hydrogen sulfide with packed media beds. These are generally industry-standard WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 14 of 33 processes that are successful in removing these compounds. The technology is filtering down in recent years to package units of this type. Based on the vendor specification provided by WTEG the proposed facility is sized for 3,000 cfm at 60% methane feed gas. WTEG’s sales contract with the ultimate buyer of the product gas will govern if more processing is needed for other constituents. Operational WTEG’s proposal calls for WTEG to be solely responsible for operation of the 4-acre gas collection tracts and the processing of the gas with the Generon unit. However, the following are important considerations that should be taken into account. These may have impacts on County revenue or operations. • Flaring capacity should be installed for full gas flow (as discussed in the previous section), since the Generon unit or pipeline injection point could be shut down unexpectedly. • An important operational issue for high-Btu processing is that these units do not easily remove oxygen. The receiving pipelines impose a strict limit on the oxygen content of the injected gas. As a result, WTEG might only be able to accept and utilize “rich” landfill gas and might not be able to accept landfill gas collected from any existing county collection systems or systems pulling gas for odor or migration control. These “extra” sources could contain too much oxygen. This criterion must be controlled from the collection system and may preclude WTEG accepting gas from (some) County extraction wells. Overview Comparison to Non-Steam Bioreactors Based in part on the technical analysis in Task 1, HDR reviewed WTEG’s assumptions and compared the performance expectations to those of other liquids recirculation/injection landfills. Although HDR recognizes that WTEG asserts a patented technology, HDR views this process as a variant of a bioreactor process, wherein the general goal is to increase the availability of moisture to the methanogenic bacteria in the waste mass to enhance their decomposition activity on the available organic matter and subsequently increase landfill gas production. That the methanogenic bacteria require moisture and ideal conditions for decomposition activity (biostabilization of waste) is not disputed. Landfill Gas Generation HDR asserts that the baseline of comparing their expected performance to the published data of other liquids recirculation processes (non-steam recirculation or bioreactor) to be an appropriate comparison. As such Figure A and Figure B (and related discussion) in the previous Technical Review section compare landfill gas generation rates across this spectrum. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 15 of 33 Liquid Requirements Specific to the KLF project, WTEG proposes an optimal liquid requirement of approximately 5,000 gallons/acre/day. Although not clear on the conversion of this value, WTEG states that this is based on a factor of 56 gallons/ton of waste. 56 gallons/ton of waste is a quantity of liquid that is generally consistent with published data. For example, the volume of liquid required for waste with an initial moisture content of 25% to achieve a target moisture content of 40% is approximately 60 gallons/ton of waste 11. However, the challenge is creating conditions for uniform distribution of the added liquids so that the moisture can be utilized in the biodegradation of the waste. This is the aspect that WTEG proposes to address with steam injection. Enhanced Waste Stabilization One of the advantages of bioreactor landfills and the proposed steam injection process is the potential for earlier stabilization of the waste mass. This is a stated goal of the project 12 and a typical goal of landfill bioreactor projects as earlier stabilization of waste is an environmental benefit of bioreactors and the proposed steam injection project compared to “dry tomb” landfills, where the addition of outside moisture is not practiced. Bioreactor research has shown that municipal solid waste can be more rapidly degraded and made less hazardous in a shorter period 13. This provides a potential decrease in long-term environmental costs and risks. The leachate quality in a bioreactor landfill more rapidly improves, which reduces the period that the landfill poses a threat to groundwater quality. The WTEG proposed process for the Knott Landfill will likely have this benefit similar to bioreactor landfills. Operations Similar to a conventional bioreactor, the WTEG process will be injecting steam (liquid) into the waste mass. As such, the possibility for overloading of the leachate collection system and/or slope stability and side-slope leachate outbreaks increases. WTEG has reported that the steam injection process will use less liquid than a typical bioreactor, this reducing or removing this concern. However, the WTEG reported KLF liquid requirements are similar to bioreactor operation. Therefore, WTEG’s process would seem to carry the same risk as conventional bioreactor operation in these respects. These risks are known in the industry and can be mitigated by conscientious operation according to permit conditions. Permitting/Regulatory Review HDR reviewed the permitting/regulatory aspects of the project, including: • Allowable recirculation of liquid/steam on lined or unlined areas of Knott Landfill. • Allowable use of leachate to generate steam at landfill. 11 Source: Townsend, T., Kumar, D. Ko, J. Bioreactor Landfill Operation: A Guide for Development, Implementation and Monitoring: Version 1.0 (July 1, 2008). 12 Draft DEQ RD&D Permit Application letter document file (letter date 3/27/12) provided by the County to HDR. 13 USEPA website, Waste-Non-hazardous Waste Municipal Solid Waste; http://www.epa.gov/osw/nonhaz/municipal/landfill/bioreactors.htm. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 16 of 33 • Limitations of operational permit requirements. • Future New Source Performance Standards (NSPS) and Title V requirements for landfill gas collection and how WTEG process would have to fulfill these during the contract period. • General – identify potential permitting hurdles or fatal flaws. • Discussions with regulators regarding permitting issues and the viability of the project related to the bulleted items above. Regulation and Project Permitting Background Major Applicable Regulations Solid waste permitting and compliance of landfills in Oregon are governed under Oregon Administrative Rules (OAR) enforced by the Department of Environmental Quality (DEQ) under solid waste provisions contained in 340-93. Oregon is an approved state under Federal rules contained in 40 Code of Federal Regulations (CFR) Part 258. This means that the DEQ enforces landfill regulations under OAR 340-93 that meeting minimum standards in 40 CFR Part 258. The 40 CFR Part 258 allows Oregon as an approved state to issue research, development, and demonstration (RD&D) permits. This rule allows the Director of Oregon Department of Environmental Quality (DEQ) to issue permits waiving specific requirements of the MSWLF criteria in order to promote innovative and new landfill technologies and operating processes, provided that landfill operators demonstrate there will be no increased risk to human health and the environment. During compilation of this TM, HDR contacted Joe Gingerich of DEQ, who would be responsible for solid waste permitting under the main solid waste permit (Title V would be under DEQ, Mark Fisher). Mr. Gingerich indicated that DEQ would take the lead on permitting the project under the DEQ Guidance for obtaining a DEQ RD&D permit (June 8, 2012). Based on other information provided by Mr. Gingerich we understand that the August 24, 2012 certification letter from DEQ to the USEPA states that the draft RD&D rules were intended to be effective of that date. Further emails provided to HDR by DEQ indicate that the final process for adoption including a noticing and public review process will involve that after the Federal Register (FR) review notice is reviewed by USEPA attorneys (in progress December 12, 2012) there will be a 30 day public comment period and become effective 60 days after the (FR) review assuming no adverse comments. Major Permits Related to the Proposed Project The Knott Landfill DEQ permit is Number 6, which was issued on August 10, 2001, lists an expiration date of September 1, 2010. However, HDR understands that this permit is in the process of being reviewed and renewed by DEQ. This permit covers most aspects of design, operations and environmental compliance. In addition to the solid waste permit issued by DEQ the Knott Landfill also has a Title V permit No. 09-0040-TV-01 (expiration 8/1/2016) that governs compliance with air quality and emissions that would be related to the proposed project for WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 17 of 33 steam injection of the landfill. Based on information provided by WTEG we also understand that a Land Use Permit (LUP) is issued to the landfill from the County. Under the proposed project the LUP would need to be updated based on required permit and approvals conditions by DEQ and any additional requirements that the County would wish to require. HDR reviewed in cursory level selected information provided by WTEG or the County regarding the proposed project that included draft permit documents in various state of progress. These included a draft DEQ RD&D Permit Application 14, the DEQ permit, the Title V permit, and a draft notice of intent to construct the proposed project intended for DEQ review under the Title V permit. Discussion of Permitting Issues The discussion of permitting issues which follows begins with discussions with regulators regarding the proposed project and then includes their or HDR interpretation of the viability of the proposed project and how the project might be expected to be controlled by permitting requirements. This is followed by discussion of the particular regulatory issues listed at the top of this major section. Regulatory Input to HDR regarding the proposal project Solid Waste Permit under DEQ 340-93 Based on a telephone conversation with Mr. Joe Gingerich and HDR (Attachment C), Mr. Gingerich provided the following information and opinions: • The unlined phases of the project he would expect would be difficult if not impossible to permit under RD&D. RD&D would cover recirculation and potentially injection into lined landfill, only. • Oregon is an “approved” state under Federal regulations and can issue permits under RD&D. Mr. Gingerich indicated there might be only be limited USEPA involvement he thought that DEQ has authority to issue RD&D permit without USEPA oversight. • Mr. Gingerich indicated that from what he is familiar with about this project to date it sounds like it may be a good idea if it makes the landfill decompose and become less of a threat to environment sooner, as long is it protects the environment according to permits. • Mr. Gingerich indicated that he would be the staff overseeing the general solid waste permit. Increased emission and controls would be permitted under the DEQ Title V permit process, overseen by Mark Fisher (of the Bend, OR DEQ office). • Mr. Gingerich he envisions the process as an “iterative” process where the project would start small and then if demonstrated successful could be continued. 14 Microsoft Word document with March 27, 2012 date. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 18 of 33 • Mr. Gingerich noted that neighbors of the landfill have expressed concern about potential health impacts. He noted that air emissions compliance aspects would have to be addressed. • Mr. Gingerich indicated he is comfortable about doing a project such as this at the Knott Landfill because it is well designed. It has “overkill” in a liner drainage system with large rock and drainage net and good LCRS and liner slopes. He would expect very little hydraulic head on the liner, in compliance with regulations. • Mr. Gingerich indicated that the permit renewal for this site (needed for approval of permit changes such as this proposed project) has been in the process for a while and his thinking may be to wait until the proposed WTEG project would get bundled in to process the renewal. He said that it would be possible to hold one hearing for the permit renewal covering both air quality and solid waste issues. He indicated that timing to write the permit may be 60 to 90 days but if the project were controversial via the public hearing it is hard to gauge the timing. Air Quality Permitting under Current Title V Permit HDR spoke with Mark Fisher of the Oregon DEQ about the proposed WTEG project, specifically focused on the steam injection and the emissions units anticipated by WTEG. Attachment D provides a written log of the conversation, and a summary of the feedback and discussions is provided below: • Mr. Fisher stated that there have been recent odor complaints from KLF neighbors. He attributes this to the inability of the site to collect all of the LFG being generated because the existing flare capacity is too small. He also stated that the landfill is a pro-active permittee and that no enforcement actions have been taken for this odor complaint. • Mr. Fisher agreed that the RD&D application will be the preferred permitting mechanism. He stated that all RD&D permitting is handled from the Solid Waste Group (Joe Gingerich), but that certain conditions might be introduced from the air group (mentioned additional surface emission monitoring requirement possible). • Mr. Fisher stated that the preferred method for permitting these activities through the air group is by means of a Notice of Intent to Construct (Form ND-901). This should be completed in conjunction with RD&D application. Title V permit would not be modified until the next renewal cycle. The Notice of Intent to Construct would be reviewed by DEQ against established emission limits for the site (as set by the existing Title V permit). • An important issue/question is whether the enhanced generation of LFG in controllable areas of the landfill (4-acre tracts) might affect the New Source Performance Standard (NSPS) 50 Mg/yr non-methane organic compound (NMOC) limit for the entire landfill. Specifically, this could then affect the requirement for WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 19 of 33 installation of a GCCS on the entire landfill (as governed by the Tier 1 and Tier 2 reporting). Mr. Fisher stated that, at a minimum, the existing NSPS Tier 2 Report would require modification or the new Tier 2 Report (due in 2013) would need to take LFG samples from the steam injection areas. Discussion was not conclusive on how the NMOC value would affect the Tier 2 Report or if additional modifications to the report would be required based on the proposed LFG generation rates in these areas. The Tier 2 Report relies on NMOC concentration in the LFG (unclear how this will be affected by steam injection) and the estimated quantity of LFG to estimate a yearly NMOC emission rates. The Tier 2 report also governs the requirement for a landfill to install a LFG collection and control system (on the whole landfill). • An important issue/question regards the RD&D permit application (WTEG draft) that proposes surface emission monitoring in initial stages. This is another aspect of LFG operations that is customarily governed for the entire landfill by the NSPS Tier 1 and Tier 2 reporting. Mr. Fisher stated that, at a minimum, DEQ would likely require surface emission monitoring on the current 4-acre steam injection area as well as the previous 4-acres as WTEG moves its process across the landfill. This would likely be a condition of approval. • Mr. Fisher stated that the de-minimis carbon dioxide emissions are 2,766 tons/year at this site. If WTEG would like to install a processing unit that emits carbon dioxide (the Generon unit as proposed), the emission rate may be an issue that would require review by DEQ. • Mr. Fisher clearly stated that upgrade of a flare system would be required to have capacity for all collected LFG (even if flare is only used as backup). This would need to be addressed in the Notice of Intent to Construct and would likely be a condition of DEQ approval. Allowable recirculation of liquid/steam on lined or unlined areas of Knott Landfill Based on the above input from DEQ it appears that the DEQ does not see fatal flaws with the project from a regulatory perspective provided that the project meets all particular regulations that will include adequate recovery of leachate to minimize the head on the liner in compliance with regulations and control of air emissions in compliance with regulations. Mr. Gingerich believes that if the project also meets intended goals of decomposing the landfill sooner it would be beneficial. Further he feels that the Knott Landfill would be a good site to attempt an RD&D project as proposed because the liner system is more robust than required by regulations and has “good” liner slopes which should minimize the head on the liner system. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 20 of 33 HDR notes that bioreactor landfills have been successfully implemented throughout the US and have been able to control the head on the liner to meeting CFR Part 258 and state regulations adequately. Given that WTEG asserts in concept that its steam injection project will inject much less water than a typical bioreactor it appears feasible that the proposed project would be able to meeting regulations and not introduce significant additional threat to groundwater from liner leakage. Landfill liner temperatures have been studied for years and more recently for bioreactors, as liner temperatures up to 50 degrees C (122 degrees F) in the laboratory show only negligible degradation effects. This has not been an issue to date with bioreactors that HDR is aware of. For example, maximum temperatures on the landfill liner in the Yolo County full scale bioreactor were a maximum of 34 degrees C (93 degrees F)15 and bioreactors generally produce temperatures below concern for liners. We would expect that the proposed project liner temperatures would be similar to a full scale bioreactor as WTEG indicates that steam injection would not be extended to deeper portions of the landfill. Because steam injection has not been performed and related to liner temperatures this is an unknown but we believe the probability of the liner temperature being much different than a full scale bioreactor and an area of concern is low and should therefore also not be a regulatory concern. Allowable use of leachate to generate steam injection at the landfill The 40 CFR part 258 regulations allow recirculation of leachate to a liner landfill which recirculation to the originating cells. The RD&D regulations also allow recirculation of leachate as well as outside liquids into lined landfills, and in that sense are less restrictive, provided that the RD&D applicant shows than the environment will be protected commensurate with the 40 CFR part 258 regulations. This should allow WTEG to use leachate to generate steam for the proposed project. In addition, there are allowances in the regulations to allow the recirculation of LFG condensate into the landfill; therefore, it is probable that regulators would also allow the use of LFG to generate steam for recirculation if desired by WTEG. We understand that WTEG intends to create and inject the steam in a closed system thereby eliminating emissions from steam into the atmosphere, and eliminating atmospheric intrusion and the injection of air into the waste mass. This should allow permitting by DEQ. The DEQ may require contingency plans (by WTEG as the applicant) be provided with the permit application in case there would be any unforeseen above grade ruptures or failures of the system as steam produced from leachate could produce a release that poses a potential threat to the environment and/or exceeds permit requirements for the solid waste or air quality permit, or both. Similarly, contingency plans or monitoring procedures may be required to ensure that the system remains closed to atmospheric intrusion, as injection of air into the waste mass could contribute to subsurface combustion/oxidation if not promptly discovered. 15 Data from January 2001 to June 2003; based on email Ramin Yazdani, Yolo County, November 24, 2004. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 21 of 33 Future New Source Performance Standards (NSPS) and Title V requirements, Federal NSPS regulations (40 CFR Subpart WWW) are applicable for landfills with a design capacity greater than or equal to 2.5 million megagrams (Mg) and 2.5 million cubic meters. The KLF exceeds the capacity threshold for applicability of the NSPS regulations and has been reporting estimated emissions of NMOCs. In the past, the County has chosen to determine the site- specific NMOC value at the KLF by performing Tier 2 sampling and analysis as specified in 40 CFR 60.754(a)(2)(ii). The requirement for collection and control of all LFG generated at a site is governed by the results of this report. If the Tier 2 calculations show estimated NMOC emissions below 50 Mg/year, then a LFG collection and control system is not required by NSPS. In 2009, the County submitted a Tier 2 report to the DEQ with an average site-specific NMOC content of 729 ppmv (as hexane) and calculated a peak NMOC emission rate of 45.6 Mg/yr in 2012 (based on assumed future waste receipt estimates). An updated Tier 2 report is required to be submitted by October 27, 2013. As stated above, DEQ will require (at a minimum) some LFG sampling in the WTEG steam injection areas. It is unclear if this will increase the site- specific NMOC concentration average. HDR has performed a desktop LandGEM model using the same site-specific rate (729 ppmv) and adjusted future waste receipt based on current estimates. In HDR’s calculation, the KLF site might exceed the 50 Mg/yr NMOC threshold by 2023. This later date is due to the drop-off in waste receipt tonnages in recent years (and estimated growth rate). This result is highly contingent on gas sampling and future waste receipts, however, the County should consider the implications of this “unofficial” result since it points to the possible requirement of LFG collection and control over the entire KLF within the contract period with WTEG. Previous sections have already outlined the fact that WTEG will not be providing the County with a permanent collection system that would meet this potential requirement. The County should also be aware that this assumes that the requirement for LFG collection and control will continue to be governed by the NSPS Tier 2 reporting. It is within DEQ’s purview to accelerate the LFG collection and control requirements for the whole site based on the proposed LFG generation rates expected by WTEG. Discussions with Mr. Fisher at DEQ were non-committal in regard to this. Limitations of operational permit requirements Based on discussions with DEQ staff it appears that the DEQ would intend to permit the project on a small scale until demonstration that the project meets the permitting requirements under the RD&D approval and compliance permit process. This seems consistent with HDR discussions with the County and WTEG indicating that WTEG intends to start on a limited area of 4 acres for the first segment of Phase 1 of the project until the system is set up and calibrated to function successfully prior to moving to subsequent segments of Phase 1. We would expect that the DEQ will require monitoring data be provided to DEQ for DEQ approval to continue to additional segments on the lined area of the landfill. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 22 of 33 Aspects of the RD&D rules include the requirement that the proposed project must have an identified environmental benefit, based on sound theory supported by valid empirical evidence that project goals will be achieved, and demonstrate no additional threat to the environment. A portion of the RD&D guidance is below. “For an innovative technology to be eligible for consideration and permitting in Oregon, the proposed RD&D project must be an allowed variance under the Federal Rule and should: (1) have an identified potential environmental benefit over and above any environmental protection or benefit realized by implementing already approved plans and operations; (2) be based on sound technical theory that is supported by valid empirical evidence to confirm that the project goal(s) will likely be achieved by the proposed technology; and (3) demonstrate that it will pose no additional risk to human health and the environment beyond that which would result from a landfill operating under the criteria contained in the existing MSWLF permit and related plan approvals”. The purpose of the project as stated in the WTEG draft RD&D permit application letter is restated, below: The purpose of this demonstration is to provide the County and DEQ with sufficient data to implement a new approach to landfill gas management. The demonstration is designed provide the following information: • That the Subtitle D required depth of leachate over the primary liner not be exceeded, during or after steam injection; • That the use of steam injection will result in earlier waste stabilization; • That steam injection enhances waste stabilization and gas removal; • That the LFG can be scrubbed and sold as a by-product. The above listed purpose includes regulatory compliance and project benefits. We would expect that in addition to continued monitoring of leachate depth on the liner DEQ will also require monitoring for continued compliance with Title V permitting requirements. Based on discussions with Mr. Fisher at DEQ, this will at a minimum require surface emission monitoring in the WTEG operating areas and an approved sampling procedure for the 2013 NSPS Tier 2 reporting. The results of this Tier 2 reporting affect the requirement for LFG collection over the whole landfill – see discussion in previous NSPS section. In general, DEQ will require that emissions stay below regulatory limits even with the WTEG expected large increase in LFG generation. Given the RD&D (both Oregon and Federal) goals we will expect that DEQ will at a minimum require monitoring of waste as a means to demonstrate the environmental benefit of the project. We would expect this will be required through monitored of increased settlement, leachate quality monitoring, gas monitoring, etc. This may require compilation of baseline settlement rates, leachate quality information and trends, and gas removal rates Demonstrating sound technical theory supported by valid empirical evidence to confirm the project goals will likely be achieved would by definition require that the empirical evidence be acquired by means of observation or experimentation. It would appear that the bioreactor WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 23 of 33 research to date shows that addition of liquids to landfills increases LFG production and waste stabilization and is therefore similar to the theory of steam injection proposed. General potential permitting hurdles or fatal flaws Based on HDR review of provided information and discussions with WTEG, the County, and regulatory staff noted above it does not appear that there is a fatal flaw that would prevent WTEG proceeding with the project in a demonstration mode under the current regulations in- place. Likewise, if the initial segment of the project is approved by DEQ and others requiring permits and proves successful in meeting and demonstrating the RD&D goals, one would expect that it would be allowed to continue. However, we expect that there will be hurdles in permitting and compliance that should be considered by the County. These include the monitoring and compliance requirements and potentially public or environmental opposition. We have included reference to expected minimum monitoring requirements from DEQ to demonstrate project goals. Those items are not an exhaustive list and DEQ may also require more monitoring parameters to demonstrate meeting of project goals and benefits in addition to the compliance monitoring that will need to be continued for the landfill as well as expanded for the proposed project. Many of the early bioreactor projects required significant monitoring of many waste parameters (temperature, moisture, etc.) as data was compiled by the USEPA. We do not expect the same level of those older projects; however, we expect the monitoring will be a significant increase over the current monitoring projects. HDR understands from discussions with the County and DEQ that there has been opposition to the project at public meetings including that from neighbors and other outside groups. We would expect that this opposition will continue to be a hurdle if the County and WTEG proceed with the permitting process. We understand that the land use permitting also will include local policy maker input. The scope of this TM does not include a discussion or evaluation of public input as it related to permitting and we assume that the County is best suited to assess those conditions. Financial Review HDR performed a review of the financial aspects of the project as proposed by WTEG. The review was conducted on the financial information provided in WTEG’s Executive Summary dated February 7, 2013 and supplemental information provided by WTEG from follow-up questions. This information included: • Revenue projections; • Staff and personnel breakdown and estimated costs; • Capital and Project costs including: - Estimated total organics; WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 24 of 33 - Plant and machinery; - Service equipment; - Operating costs; and • Cash flow Year 1 to12. WTEG’s information was provided based on the steam injection project described in their February 7, 2013 document and discuss in the Technical Review Section of this Technical Memorandum. Although HDR has reviewed and analyzed all available WTEG economic information, for this report we have removed all of these economic figures as they are proprietary to WTEG and their development efforts. HDR has provided review below by section of the financial information WTEG provided. Revenue Projections In calculating revenues, WTEG assume that 355 tons of organics per day would be available over a four (4) acre area. They assumed injecting steam into this four (4) acre parcel using 19,880 gallons of water per day. WTEG calculated that the production potential using these assumptions was to produce 2,556 mmBtu per day of CH4 pipeline quality gas. WTEG also assumed that they could operate 355 days per year (97.2% availability factor) and garner a long-term contract starting in Year 1 at $7.00 per mmBtu. This translates into $17,892 per day or $6,351,660 per year in revenues as shown by WTEG and Table 1. In future years the $7.00 per mmBtu was escalated at 2% per year. Table 1 - WTEG’s Revenue Projections As discussed in the Technical Review Section of this Technical Memorandum HDR ran several landfill gas generating scenarios and arrived at much lower landfill gas generation amounts. HDR’s opinion is that gas generation at the KLF will not match the estimated quantities purported by WTEG. However, the steam injection and collection process should not be detrimental or cause undo harm to the KLF. The greatest technical risk is penetration of the cell liner, but this can be mitigated similar to installation of conventional landfill gas wells by means of accurate as-built information and recent survey elevations. The greatest financial risk is the effect that decreased gas production will have on the WTEG’s published financial information. HDR has run sensitivities No. 1 and No. 2 below representing lower gas generation figures and Knott Landfill Potential Purchase Product Price Quantity Units Per Day Annually * CH4 Pipeline Gas 7.00$ 2,556 mmBtu 17,892$ 6,351,660$ 355 * Days of Continuous Operation 355 Landfill Organics (tons per day) 19,880 Gal of water/day required 4 Acres Steamed Injected Revenue Projections WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 25 of 33 how that affects the revenues and overall economics of the project. All sensitivity runs are discussed below in the section entitled Economic Sensitivities. WTEG also assumed that the project would operate at a 97.2% availability factor (355 days per year). We believe for a project of this type, using somewhat new technology a 90% availability factor might be more appropriate. This represents about 328 days per year of operation and allows for 2 to 3 weeks of planned downtime for maintenance and 2 to 3 weeks for unplanned downtime. HDR has run Sensitivity No. 3 to show the how the lower availability affects the overall economics. WTEG has assumed garnering a long-term contract for CH4 pipeline quality gas starting in Year 1 at $7.00 per mmBtu. At the time of this report, WTEG has only provided a list of three potential buyers including: 1) the Northern California Power Agency (NCPA), 2) Noble Americas Energy Solutions and 3) Direct Biogas. A letter of interest was provided to WTEG by Noble located in San Diego, California. In addition, a draft gas purchase agreement between NCPA and WTEG was presented. WTEG indicated that as part of the funding process, WTEG and the investment group will select the buyer based on credit worthiness and rates. WTEG indicated that in recent discussions, they have markets for green gas for their fuel cell and LNG customers t hat will pay $7.00 - $8.00 per mmBtu, however as there is not yet a signed contract for the purchase of the gas produced at the KLF, the price could fluctuate. HDR has run Sensitivity No. 4 below to show the affect of the price lowered to $5.00 per mmBtu. In WTEG’s financial model they have assumed an inflation escalator of 2% per year for revenues starting in Year 3 of their 12 year projected model and a 3% per year inflation escalator for expenses starting in Year 3 (some line items were escalated in Year 2 as well). As no one can accurately predict the future price of CH4 pipeline quality gas, the assumption of a 2% per year escalation cannot be commented upon. However, we believe it is good economic conservatism to show a lower escalation rate of 2% per year for revenues as compared to a 3% per year escalation rate for expenses as WTEG has allowed in their projections. Staff and Personnel Estimates WTEG has included certain plant staff and administration personnel to operate and manage the Project. The plant staff includes three general laborers, one each available for all three shifts during a 24 hour period as well as one Site Engineer available for one shift per day. In addition, WTEG included one full time General Manger and a half-time IT Specialist and a half-time Accounting/Payroll Clerk. Capital and Project Costs This section contains information on the Plant and Machinery, Service Equipment, Operating Costs and a Summary as shown below. Plant and Machinery WTEG has proposed the following Plant and Machinery items in their financial model. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 26 of 33 • Building; • PPT Profiling, Steam Injection System, & Gas Collection Installation; • Biogas Purification and Scrubbers Systems; and • Inter-Connect and Compression Systems. WTEG has also included Engineering and Permits costs, Project Development costs and a 10% contingency of all of the items listed above. Building WTEG has included a building in their financial estimate. No details were included to the size, location or purpose of this building. HDR believes it is reasonable to include a building for the Project but does not understand the need for a building which appears to be too large and/or using costly construction. We believe it would be reasonable to build a smaller less expensive building to house the equipment and some small office space. PPT Profiling, Steam Injection System, & Gas Collection Installation WTEG included a detailed breakdown for the cost of PPT Profiling in their February 7, 2013 Executive Summary document. This estimate for PPT Profiling appears reasonable as a contingency was added to it of 10 percent. There were no costs provided for review for the Steam Injection System or the Gas Collection System Installation. HDR was only provided a total for all three cost items; not detailed by item. HDR did not receive any detailed information on these two system components to comment on the assumed cost of installation. However, it would appear that this cost may be reasonable, although HDR would have liked to reviewed the details to the overall cost assumption to verify this. Biogas Purification and Scrubbers Systems WTEG provided a detailed cost proposal from Generon IGS, Inc. for providing a Containerized Membrane System for Biogas Purification & Compression for a Design Product Capacity of about 2.35 MMSCFD (1,630 SCFM). We have seen other similar systems cost almost 2 to 3 times as much as WTEG’s estimate. However, since this technology is ever evolving and prices tend to drop as technology evolves and a detailed cost proposal was provided to back up the cost from Generon IGS, Inc. we assume that this cost is reasonable for this item. However, the County and WTEG should keep close on the cost of this item as it is installed. Inter-Connect and Compression Systems WTEG did not include any details regarding assumptions to the make-up of this total cost. It would appear that this cost would be reasonable, however HDR would have liked to review the details to the overall cost assumption to verify that indeed it was reasonable. Other This category includes Engineering and Permits, Project Development and a 10 percent Contingency. Engineering and Permits appears to be reasonable at about 7 percent of the WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 27 of 33 capital costs for engineering, however although permitting for this first phase at the KLT appears to be straight forward, WTEG will not know for sure until permitting is initiated. Project Development appears reasonable and WTEG’s use of 10% as a contingency is comparable to other projects at this stage and size. Service Equipment Although WTEG included this line item for Service Equipment in their financial model, no actual cost was included for this item in WTEG’s financial information. Operating Costs WTEG included in their financial information regarding annual operating costs for staff and personnel as well as operation costs including insurance, legal, utilities, technology license fees, maintenance, service contracts, and a 10 percent contingency. These annual costs are not recognized in full in the Cash Flow Year 1 to 12 model until Year 2 when the Project is first shown to operate full time. It should be noted that the cost for technology license fees are not included in the annual model. HDR is assuming that this is a one time fee for the Project and will be included in the Capital Costs for financing. As discussed above, the staff and personnel costs appear reasonable. So do the insurance, legal costs, service contracts, and a 10 percent contingency. However, we believe the maintenance and utilities costs may be on the low side of similar projects we have reviewed previously. Although this is the case, we believe it is potentially reasonable that the maintenance cost of this Project could be as low as projected. WTE will need to continuously monitor these costs to keep them within budget. In addition, the Generon system specifications provide for feed gas compression for the PSA system, as well as product gas compression to pipeline pressures. This is stated to require 2,000 horsepower compression capacity. Basic order of magnitude calculations with generous power-factor assumptions and electricity rates yield electricity costs on the order of $500,000 per year to run this process. We believe this figure is reasonable; however WTEG needs to monitor their power and water usage. Cash flow Year 1 to12 WTEG included a cash flow model for Years 1 to 12. WTEG’s model shows that the Project would be only operating at about 50 percent availability during Year 1. Escalation for inflation appears for Revenues starting in Year 3, while escalation for inflation for the Operating costs begins in Year 2 and 3, depending on the line item. Also as discussed above, the technology license fees are not included in the annual model. Neither is any representation of the capital costs for this Project in the form of a debt service or other financial obligation. Although we understand that the County will not be charged for any capital costs to develop, construct or finance the infrastructure for the Project, the Project will incur these costs and they need to be accounted for in the cash flow to show a true representation of the revenues and expenses (including debt service representing the capitalized items that should be reflected in an annual amortized amount). HDR has run WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 28 of 33 Sensitivity No. 5 below to show the affect of adding the expenses for capital to the cash flow model. Economic Sensitivities As discussed above, five (5) sensitivities to WTEG’s base case financial model were run by HDR to determine how they would affect the overall economics. The actual WTEG model was used running the different assumptions described below. The output for each sensitivity will be shown using the Year 1 to 12 Cash Flow Model. The scenarios include: • Sensitivities No. 1 and No. 2 representing two separate reasonable lower gas generation figures and how these affect the revenues and overall economics of the project; • Sensitivity No. 3 representing how a lower but reasonable availability of 90% affects the overall economics; • Sensitivity No. 4 representing the affect if the contract price of pipeline CH4 were reduced from $7.00 per mmBtu to $5.00 per mmBtu; and • Sensitivity No. 5 representing the affect of adding the expenses for capital (which are real costs that need to be account for) to the cash flow model. Sensitivity No. 1 As discussed in the Technical Review Section, WTEG estimated approximately 2,556 mmBtu/day of pipeline quality gas from a 4-acre parcel of the KFL using their steam injection process. WTEG also predicts a minimum of 60% methane in the landfill gas generated. Conversion using the nominal heating value of methane at approximately 1,000 Btu/cubic foot yields an estimated raw landfill gas flow rate of 2,958 cubic feet per minute (cfm) at 60% methane. For Sensitivity No. 1 HDR utilized Scenario 3 as shown in the Figure 1 graph in the Technical Review Section. This Scenario represents recirculation of liquids and the maximum LandGEM field bioreactor modeling values possible for K and Lo 16. Modeling of this scenario shows that the peak landfill generation would be in 2013 with 1,994 scfm at 60% methane. This translates to approximately 1,723 mmBtu/day of pipeline quality gas being generated.17 Although this is the maximum value modeled by LandGEM for a field bioreactor condition, it is still less than the 2,556 mmBtu/day WTEG has used in modeling their gas revenues. This sensitivity will only affect the base case by lowering the amount of gas produced and the revenues generated. Sensitivity No. 2 As discussed for Sensitivity No. 1, using the information provided by WTEG and the nominal heating value of methane at approximately 1,000 Btu/cubic foot yields an estimated raw landfill gas flow rate of 2,958 cubic feet per minute (cfm) at 60% methane. For Sensitivity No. 2 HDR utilized Scenario 2 as shown in the Figure 1 graph in the Technical Review Section. This Scenario represents recirculation of liquids and the industry-published bioreactor parameters for 16 Note that this is roughly 3 times the Miramar pilot study field results and Scenario 2 of Figure 2. 17 1,994 scfm * 600 Btu/scf * 1 Btu/1,000,000 mmBtu * 1,440 min/day = 1,723 mmBtu/day WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 29 of 33 K and Lo. Modeling of this scenario shows that the peak landfill generation would be in 2013 with 1,021 scfm. This translates to approximately 882 mmBtu/day of pipeline quality gas being generated.18 This is the flow rate using industry published values for field bioreactors; however this amount is much less than the 2,556 mmBtu/day WTEG has used in modeling their gas revenues. This sensitivity will only affect the base case by lowering the amount of gas produced and the revenues generated. Sensitivity No. 3 WTEG assumed that the project would operate at a 97.2% availability factor (355 days per year). We believe for a project of this type, using somewhat new technology a 90% availability factor is more appropriate. Running this sensitivity would mean that the facility would be less available and produce less pipeline gas for sales than WTEG originally assumed. All other costs such as personnel, insurance, legal, etc. would remain the same except for utilities. For this sensitivity HDR assumed reducing both the product pipeline gas and the utilities usage from 97.2% availability to 90% availability. The “Net Revenues” remains positive in this sensitivity. Sensitivity No. 4 WTEG assumes that they will be able to garner a long-term contract for pipeline CH4 at starting in Year 1 at $7.00 per mmBtu. There are currently no contracts signed at this price. This sensitivity shows the affect on the revenues and the overall economics by using a figure of $5.00 per mmBtu for the pipeline gas sold. Only the rate of cost for the sales of gas is modified for this sensitivity. The amount of gas assumed to be produced by WTEG is used in this sensitivity. The “Net Revenues” remains positive in this sensitivity. Sensitivity No. 5 HDR modeled Capital costs by amortizing them to an average annual payment through amortization of the costs using a 5 percent interest rate and a 12 year term. This would decrease the net cash flow each year by almost half. HDR has added this amount to the sensitivity. The amount of gas assumed to be produced by WTEG is used in this sensitivity. HDR believes this amount should be added to all sensitivities. This reduces all “Net Revenues”. Financial Review Summary In summary, HDR believes that all sensitivities and the Base Case should include the required cost for the Capital equipment and support costs. These need to be taken into account in most 18 1021 scfm * 600 Btu/scf * 1 Btu/1000000 mmBtu * 1440 min/day = 882 mmBtu/day WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 30 of 33 any cash flow to get an accurate reading of the overall economics. Although as we understand, the County will not be paying for any of these Capital costs, the cost will still be a part of the overall economics and the Project must be looked at with a full accounting of costs and revenues. Accounting for these Capital costs shows that the Base Case and all other sensitivities should be lowered. Sensitivities using lower gas generation rates have the most impact on the overall economics. If the Project does not generate the amount of product gas for sale as WTEG has proposed, the Project will have a difficult time being economic feasible. One other issue that can cause an issue with the Project being economically feasible is the price that WTEG contracts for the pipeline gas sales price. The combination of price per mmBtu and the amount of mmBtu’s produced drives the economic feasibility. Risk Allocation Review HDR has included potential risks below area of review including technological, permitting/regulator financial as well as contractual risks. Technical Risks Technical risks were assessed by reviewing WTEG’s technical considerations for the Project and all available supporting documentation and assumptions. HDR concludes that the following potential risk should be taken into account by the County when considering this project. • HDR’s opinion is that gas generation at the KLF will not match the estimated quantities purported by WTEG. However, the steam injection and collection process should not be detrimental or cause undo harm to the KLF. The greatest technical risk is penetration of the cell liner, but this can be mitigated similar to installation of conventional landfill gas wells by means of accurate as-built information and recent survey elevations. • WTEG proposes an optimal liquid requirement of approximately 5,000 gallons/acre/day. The issue of note for the proposed WTEG project at the KLF has to do with the sourcing of this quantity of liquid. KLF currently has approximately 38 acres of lined cells which generate a normalized annual average of approximately 287,000 gallons/month (9,500 gallons/day). This quantity is far short of the 20,000 gallons per day for a 4-acre steam injection tract • The proposed project does not provide the County with a working gas collection system after WTEG leaves each 4-acre tract. The County will be relying upon WTEG’s assertion that “all” gas has been extracted from each 4-acre tract. However, once WTEG leaves an area, fugitive gas emissions could be higher than prior to the project (due to the effects of the steam injection). The County should consider how this gas will be collected and controlled. • The proposed project does not provide for increasing flaring capacity at the site to handle the increased gas production. Industry standard practice is that the back-up control device has sufficient capacity to handle all LFG collected. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 31 of 33 Permitting/Regulatory Risks Discussion with regulatory agencies (see Permitting Section) have left open the possibility of triggering enhanced surface monitoring (at a minimum) and/or adjustment of New Source Performance Standards (NSPS) Tier 2 reporting. Although regulatory agencies seem receptive to the process there are still compliance risks to the County as the permit holder if WTEG does not operate the LFG collection system adequately to maintain compliance. Financial Risks Financial risks were assessed by reviewing WTEG’s financial modeling for the Project and all available supporting documentation and assumptions. HDR concludes that the following potential risk should be taken into account by the County when considering this project. • We understand that WTEG intends to obtain private financing for this project. WTEG did not provide any financial or financing information for review 19. As such, the County should require WTEG to provide a letter from their financial institution representing their support for this project. The ability to finance this project will be a direct factor affecting the viability of the project, and therefore a relative potential risk to the County. • HDR has reviewed the amount of gas WTEG estimates will be produced in the Project. From our analysis and detailed modeling we do not agree with the amounts being estimated by WTEG, we believe the amount generated will be between approximately 35 and 65 percent of the 2,556 mmBtu/day estimated by WTEG. This may leave the Project economically unfeasible. • Although WTEG has indicated that they have been in discussions and negotiating for a sales price of the pipeline gas, not contract has been signed to date. WTEG has used a price of $7.00 per mmBtu which may be reasonable in the current market, however if the contract is signed for much less than this amount, such as $5.00 per mmBtu, the Project may have difficulties being financially feasible. • WTEG should have included the required cost for the Capital equipment and support costs in their Cash Flow Model. These need to be taken into account in most any cash flow to get an accurate reading of the overall economics. Although as we understand, the County will not be paying for any of the Capital costs, the cost will still be a part of the overall economics and the Project must be looked at with a full accounting of costs and revenues. Contractual Risks HDR reviewed a draft contract between WTEG and the County that was provided by the County via email in October 2012. It contained many track changes comments, edits and clauses that were pending and need to be resolved between the parties. Upon review HDR identified potential risks and areas of concern and has the following recommendations to the County regarding the agreement reviewed: 19 The review of the viability of financing of the WTEG proposed project is not within HDR’s scope of services for the project involving developing this TM. WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 32 of 33 • Term of 15 years may be too long; needs to be consistent with term for payback of capitalized equipment • Clause for two automatic extensions should be just one extension based upon their performance over the original term of the agreement. • This agreement should only define Phase 1 as this project needs to be proven before Phases 2 or 3 are considered. • Definitions – specifically for locations, “commercial operations date”, “gas rights” (not a good term). • Since this is a “research and development” type project, the County should not allow delegation of this contract unless consent is granted by both parties. The language “such consent shall not be unreasonably withheld” from the contractor makes it open for delegation to be made to anyone the contractor chooses and not who the County approves of. • The cure period should be consistent and be not more than 30 days without the written approval of the County. • The contractual clause; “County reserves the right to suspend operation of the technology at any time should continued operation pose a significant threat to human health or the environment.” Should include the added words, “at any time”. • The 2 year suspension clause should be reduced to one year so the County is not tied to the Contractor and can seek other technologies to handle the landfill and its gas. During the one year suspension, the Contractor should be required to report progress towards regaining operations on a periodic basis. • County and Contractor cooperation should have County added to the clause so that the County is cooperated with as well. • Environmental attributes such as tax credits, grants, and rebates can be provided to the Contractor; however the County should still be able to collect carbon credits. If not , the County should use their potential collection of carbon credits when negotiating the final financial terms. • The contract should include a clause for a 3rd party review if parties do not agree on issues pertaining to the contract. • The WTEG requirement for 500 hours of the County’s employee is almost ¼ quarter time employment. If this is required by the Contractor and the County is amenable to this clause the County should include an additional clause that warrants that the employee or the County is not responsible for any damages created by the employee as directed by the Contractor. • Need to have protection in the contract that Contractor’s obligations in no way interfere with County’s responsibilities to operate and maintain the Landfill according to industrial standards and DEQ regulations. • Under County Obligations the following clause should be edited as shown. “Operate the landfill in a manner that that follows the County’s needs and protocols and does not hinder Contractor’s LFG enhancement activities and that does not interfere with the System, provided that such requests of Contractor do not cost the County additional monies, cause a violation of DEQ operational permits or deviate from the standards of good industry practices.” WTEG Technical Review HDR Engineering, Inc. 2365 Iron Point Road, Suite 300 Folsom, CA 95630 Phone (916) 817-4700 Fax (916) 817-4747 www.hdrinc.com Page 33 of 33 • This contract should be based upon what has been landfilled to date and does not include the use of any new materials that is provided to the Landfill. The County has the right to direct its waste and potential divertible materials as it wishes. • Access to the site should be limited to only the hours the County is permitted for operations. • Contractor should not violate any permit conditions through operation of their project. If Contractor triggers revision to the County’s Title 5 permit, the Contractor shall be responsible for all costs. • Financial terms should be negotiated to include a base payment figure by the Contractor as suggested at $20,000 per month. However if “net revenues” from the project increase above $200,000 per month, the County shall, in addition to the base payment of $20,000 per month, garner a royalty payment of 10% of the net revenues from the project. The term “net revenues” should be defined in the agreement addressing all costs to be reflected for reducing the “gross revenues” to “net revenues”. • Collection system requirements should be include, or clearly state what is not included. The collection system should be subject to County approval. • County should be aware that WTEG systems will not be in compliance with NSPS regulatory criteria if that should be become a requirement. • Need clear delineation of responsibility for monitoring and data collection that may be required to comply with RD&D permit (or other permitting). • Flare capacity – highly recommend the site have flare capacity for ALL collected gas. Best management practice and regulatory requirement in case all conversion technology goes down. • Need milestones tied to termination, so that project cannot sit undeveloped for too long waiting for WTEG funding or end-user power purchase agreement negotiations. • Not clear if County will allow WTEG to utilize/sell the LFG currently collected in the County system • Language that clearly denotes space for the Contractors operations. Usually denoted by a map, with a simple sublease for a nominal ($1/year) fee. • If for any reason, the collection system in that area becomes required by regulation (NSPS most likely), the County will need access to monitoring data. • Recommend County petition to keep all “subsurface” attributes upon termination of the contract. This will preserve a collection system in place if WTEG is displaced. • Recommend section on migration control and surface emissions and odors as primary goals of County and that WTEG may be required to modify operations to address (and these modifications could lead to less LFG conversion and sale). Language can be negotiated. ATTACHMENT A     Figure 1 LandGEM Model Summary and Assumptions                                                                                         Component1     Percent by Weight   Wet Faction per Kg MSW   Moisture Content (% by wt)2   Dry Faction 100 Kg Rate, (yr based   M × k × η (m3/dry   M × L   MC MSW-Food Waste 9.0% 70.0% 13.63 122.67 220 594 MSW-Paper 26.4% 5.5% 21.56 569.18 136 3393 MSW-Yard Waste 7.2% 60.0% 18.73 134.86 144 414 MSW-Wood 1.2% 20.0% 7.16 118 113 MSW-Misc 16.2% 5.0% 0.05 170 2616 C&D-Wood5 40.0% 20.0% 7.16 286.40 118 3776 Total 100.0% 78.88 10,906   Job No. No.     HDR Engineering, Inc.          Project Deschutes   Computed KS  Date 1/24/2012 Subject Calculation of site specific "Lo" & Lab "k"   Checked JM/CL  Date 2/15/2013 Task Sheet 1 Of 3       The efficiency of actual landfill compared to laboratory scale experiment (η)= 100% (assumed variable)       t,w lab t,d o                         C&D (Wood) fraction = 40 % MSW fraction = 60 % Bulk waste reaction rate = 11.23 yr-1 Bulk waste L0 = 138 m3/dry Mg Bulk waste L0 = 109 m3/wet Mg     Notes 1. Waste composition is based on Table 4-2 of the "Solid Waste Engineering Principles & Mgmt Issues" by Tchobanoglous et. al (1997) - Book Published by McGraw-Hill. 2. Moisture content is based on Table 4-3 of the "Solid Waste Engineering Principles & Mgmt Issues" by Tchobanoglous et. al (1997) - Book Published by McGraw-Hill. 3. Reaction rate (k) values are based on Lab scale experiments performed by Cruz et. al. (2010) and Owens et. al. (1993). 4. Methane generation potential (Lo) values are based on Cruz et. al. (2010), Eleazer et. al. (1997), Owens et. al. and Staley et. al. (2006). The average is used as applicable when reported. 5. Misc wastes consists of Textile, Leather, Plastics, Metals and residue. These components are not readily biodegradable but have high energy content. Therefore, k and Lo were picked based on LandGEM. 6. Per 12-27-12 email from Timm Shimke: "I estimate that we average about a 60% MSW and 40% C&D split although our C&D stream contains very little inert materials. Rock, dirt, asphalt and concrete have always been directed to other disposal sites." Therefore, C&D Waste is assumed as primarily wood.   References  1. F. De La Cruz, M. Barlaz, "Estimation of Waste Component-Specific Landfill Decay Rates Using Laboratory-Scale Decomposition data", Environmental Science and Technology, vol. 44, no. 12, 2010, pp. 4722-4728.   2. W. Eleazer, W. Odle ΙΙΙ, Y. Shengwang, M. Barlaz, "Biodegradability of Municipal Solid Waste Components in Laboratory-Scale Landfills", Environmental Science and Technology, 31, 911-917, 1997.   3. B. Staley, Fangxiangxu, S. Cowie, M. Barlaz, G. Hater, "Release of Trace Organic Compounds during the Decomposition of Municipal Solid Waste Components", Environmental Science and Technology, 40, 5984-5991, 2006.   4. J. Owens, D. Chynoweth, "Biochemical Methane Potential of Municipal Solid Waste (MSW) Components", Water Science and Technology , Vol.27, No. 2, pp. 1-14, 1993.   Job No. No.   HDR Engineering, Inc.   Project Deschutes Computed KS Date 1/24/2012   Subject Modeling Scenarios Checked JM/CL Date 2/15/2013   Task Sheet 2 Of 3   HDR Assumptions Heat Content of Methane = 1000 BTU/scf Percent Methane in Landfill Gas = 60%   Claimed Parameters by the Developer Claimed landfill gas flowrate = 2556 mmBTU/day COLLECTION FROM 4 ACRE AREA Landfill gas (LFG) flowrate = 2,958 scfm COLLECTION FROM 4 ACRE AREA   To evaluate the spectrum of landfill gas generation, five scenarios were considered for LandGEM modeling. The Methane Generation Rate (k) and Methane Generation Potential (Lo) for the five scenarios were developed as discussed below:   Scenario No. Description k (per yr) Lo (m3/Mg)   1 Scenario is based on typical landfill conditions used to model LFG flowrates anticipated to design initial LFG collection systems at landfill facilities (AP-42 Parameters). Assumes NO re-circulation of liquids. 0.04   100   2 1 Scenario is based on published landfill bioreactor conditions. k value is based on published data and Lo value is developed based on Deshutes site specific conditions2 (see k & L sheet) 0.30   109   3 Scenario is based on LandGEM maximum bioreactor values (wet conditions and high energy waste types) - a hypothetical high energy bioreactor 0.70   170   4   Scenario is based on lab maximum conditions specified on k & L Sheet 11.23   109   5 Scenario represents absolute maximum methane generation. k value developed based on lab data & Lo is based on LandGEM maximum 11.23   170   Notes: 1. k value is based on: Faour, Ayman A., Reinhart, Debra R., and You, Huaxin. (2007) “First‐order kinetic gas generation model parameters for wet landfills.” Waste Management 27 (2007), 946–953.   2. k & L Sheet calculates laboratory conditions. Note that Lo is inherent property of waste material (based on constituents) and will remain same for waste regardless of lab or field conditions.   0   Job No. No.   HDR Engineering, Inc.   Project Deschutes Computed KS Date 1/24/2013   Subject LandGEM Results Checked JM/CL Date 2/15/2013   Task Sheet 3 Of 3   Proposed LFG Generation from 4-Acre Tract at KLF LFG Generation Spectrum   4,500     4,000     3,500     3,000     2,500     2,000     1,500     1,000     500     0     Year   Scenario 1 - Typical AP-42 parameters K (methane degradation rate) & Lo (methane generation potential). No recirculation of liquids.   Scenario 2 - Recirculation of liquids. Published field bioreactor parameters K and Lo   Scenario 3 - Recirculation of liquids. Maximum field bioreactor LandGEM values for parameters K and Lo   Scenario 4 - Maximum lab values for parameters K and Lo. Optimum lab conditions for site-specific KLF waste.   Scenario 5 - Absolute maximum values of Scenarios 1 through 4 for parameters K and Lo. Optimum lab conditions for generic MSW.   Proposed - Proposed value of 2,958 scfm based on WTEG estimate of 2,556 mmBtu/day at 60% methane. ATTACHMENT B     Figure 2 LandGEM Model Summary and Assumptions                                                                                       Component1     Percent by Weight   Wet Faction per Kg MSW   Moisture Content (% by wt)2   Dry Faction 100 Kg Rate, (yr based   M × k × η (m3/dry   M × L   MC MSW-Food Waste 15.0% 70.0% 13.63 204.45 220 990 MSW-Paper 44.0% 5.5% 21.56 948.64 136 5655 MSW-Yard Waste 12.0% 60.0% 18.73 224.76 144 689 MSW-Wood 2.0% 20.0% 7.16 14.32 118 189 MSW-Misc5 27.0% 5.0% 0.05 170 4361 Total 100.0%  78.13 11,883   Job No. No.     HDR Engineering, Inc.          Project Miramar   Computed KS  Date 1/30/2013 Subject Calculation of site specific "Lo" & Lab "k"   Checked JM/CL  Date 2/15/2013 Task Sheet 1 Of 3     The efficiency of actual landfill compared to laboratory scale experiment (η)= 100% (assumed variable)       t,w lab t,d o                     Bulk waste reaction rate = 13.94 yr-1 Bulk waste L0 = 152 m3/dry Mg Bulk waste L0 = 119 m3/wet Mg     Notes 1. Waste composition is based on Table 4-2 of the "Solid Waste Engineering Principles & Mgmt Issues" by Tchobanoglous et. al (1997) - Book Published by McGraw-Hill. 2. Moisture content is based on Table 4-3 of the "Solid Waste Engineering Principles & Mgmt Issues" by Tchobanoglous et. al (1997) - Book Published by McGraw-Hill. 3. Reaction rate (k) values are based on Lab scale experiments performed by Cruz et. al. (2010) and Owens et. al. (1993). 4. Methane generation potential (Lo) values are based on Cruz et. al. (2010), Eleazer et. al. (1997), Owens et. al. and Staley et. al. (2006). The average is used as applicable when reported. 5. Misc wastes consists of Textile, Leather, Plastics, Metals and residue. These components are not readily biodegradable but have high energy content. Therefore, k and Lo were picked based on LandGEM.   References  1. F. De La Cruz, M. Barlaz, "Estimation of Waste Component-Specific Landfill Decay Rates Using Laboratory-Scale Decomposition data", Environmental Science and Technology, vol. 44, no. 12, 2010, pp. 4722-4728.   2. W. Eleazer, W. Odle ΙΙΙ, Y. Shengwang, M. Barlaz, "Biodegradability of Municipal Solid Waste Components in Laboratory-Scale Landfills", Environmental Science and Technology, 31, 911-917, 1997.   3. B. Staley, Fangxiangxu, S. Cowie, M. Barlaz, G. Hater, "Release of Trace Organic Compounds during the Decomposition of Municipal Solid Waste Components", Environmental Science and Technology, 40, 5984-5991, 2006.   4. J. Owens, D. Chynoweth, "Biochemical Methane Potential of Municipal Solid Waste (MSW) Components", Water Science and Technology , Vol.27, No. 2, pp. 1-14, 1993.   Job No. No.   HDR Engineering, Inc.   Project Miramar Computed KS Date 1/30/2013   Subject Modeling Scenarios Checked JM/CL Date 2/15/2013   Task Sheet 2 Of 3   HDR Assumptions Waste volume based on 1 Acre Cubed Cell & 50 ft depth = 80,667 cy Density of landfilled waste = 1890 lb/cy Total Design Capacity of 1 Acre Cell = 76,230 tons Assumed Capacity of the Cell in Years = 1 Year (very conservative assumption)     Parameters Provided by the Developer Landfill gas flowrate with 1,500 Gal/day water = 228 scfm COLLECTION FROM 1 ACRE AREA Landfill gas flowrate with 5,000 Gal/day water = 1,080 scfm COLLECTION FROM 1 ACRE AREA Methane Content = 66 %     To evaluate the spectrum of landfill gas generation, five scenarios were considered for LandGEM modeling. The Methane Generation Rate (k) and Methane Generation Potential (Lo) for the five scenarios were developed as discussed below:   Scenario No. Description k (per yr) Lo (m3/Mg)   1 Scenario is based on typical landfill conditions used to model LFG flowrates anticipated to design initial LFG collection systems at landfill facilities (AP-42 Parameters). Assumes NO re-circulation of liquids. 0.04   100   2 1 Scenario is based on published landfill bioreactor conditions. k value is based on published data and Lo value is developed based on Deshutes site specific conditions2 (see k & L sheet) 0.30   119   3 Scenario is based on LandGEM maximum bioreactor values (wet conditions and high energy waste types) - a hypothetical high energy bioreactor 0.70   170   4   Scenario is based on lab maximum conditions specified on k & L Sheet 13.94   119   5 Scenario represents absolute maximum methane generation. k value developed based on lab data & Lo is based on LandGEM maximum 13.94   170   Notes: 1. k value is based on: Faour, Ayman A., Reinhart, Debra R., and You, Huaxin. (2007) “First‐order kinetic gas generation model parameters for wet landfills.” Waste Management 27 (2007), 946–953.   2. k & L Sheet calculates laboratory conditions. Note that Lo is inherent property of waste material (based on constituents) and will remain same for waste regardless of lab or field conditions. 1 ca pa ame e me degrada on a e &me a po en a No ec a o qu d   Job No. No.   HDR Engineering, Inc.   Project Miramar Computed KS Date 1/30/2013   Subject LandGEM Results Checked JM/CL Date 2/15/2013   Task Sheet 3 Of 3         2,500 Miramar Pilot Study LFG Generation from 1-Acre Tract LFG Generation Spectrum       2,000       1,500       1,000       500       0     Year   Scenario 1 - Typical AP-42 parameters K (methane degradation rate) & Lo (methane generation potential). No recirculation of liquids.   Scenario 2 - Recirculation of liquids. Published field bioreactor parameters K and Lo   Scenario 3 - Recirculation of liquids. Maximum field bioreactor LandGEM values for parameters K and Lo   Scenario 4 - Maximum lab values for parameters K and Lo. Optimum lab conditions for site-specific KLF waste.   Scenario 5 - Absolute maximum values of Scenarios 1 through 4 for parameters K and Lo. Optimum lab conditions for generic MSW.   Observed - Observed flow of 228 scfm at Miramar Pilot Study reported by WTEG after adding 1,500 gal/day steam injection.   Claimed - Claimed possible flow of 1,080 scfm at Miramar Pilot Study. Theoretical addition of 5,000 gal/day steam injection. Not actually realized. ATTACHMENT C     Telephone Conversation Record - Joe Gingerich, Oregon DEQ, 12/11/2012                                                                                     Project: Deschutes Co LFGTE Steam Injection Review Telephone Record   Project No: 000102.0000195546   Date: 12/11/12 Subject: County-WTEG steam injection proposal   Call to: Joe Gingerich, OR DEQ Phone No: 503-236-5563   Call from: Mark Urquhart, HDR Phone No: 916-817-4933     Discussion, Agreement and/or Action:   Called Joe after return call from telecommuting. I introduced myself and discussed that I wanted his thoughts on permitting requirements for project. Summary of feedback and discussions is below:       1.   The unlined phases of the project he would expect would be difficult if not impossible to permit  under RD&D. RD&D would cover recirculation and potentially injection into lined landfill.  2.   OR is an “approved” state under Federal regulations and can issue permits under RD&D. The  Columbia Landfill has an RD&D permitted project. When I asked if he thought there might be  some USEPA involvement he thought not, as DEQ has authority to issue RD&D permit without  USEPA oversight.  3.   Joe said from what he is familiar with about this project it sounds like it may be a good idea if it  makes the landfill decompose and become less of a threat to environment sooner.  He said he  may support “helping to make a good idea happen” as long is it protects the environment  according to permits.  4.   I asked about additional emission monitoring given increase in gas production and he said that  would be handled under the Title V permitting. That is all under DEQ but Mark Fisher of the  Bend office would handle the air permitting aspects.  5.   Joe said that he would see the process as an “iterative” process where the project would start  small and then if successful could be continued.  6.   Joe noted that “we have neighbors” that are concerned about health impacts. He that the air  emissions compliance aspects would have to be addressed.  7.   Joe said he is comfortable about doing a project such as this at the Knott Landfill because it is  well designed. It has “overkill” in a liner drainage system with large rock and a drainage net and  good LCRS and liner slopes. He would expect very little head on the liner.  8.   When I asked about timing he said that the permit renewal for this site (only needed when  changes) has been in the works for a while and the thinking may be to wait until the WTEG gets  bundled in to process the renewal. He said that it would be possible to hold one hearing for the  permit renewal covering both air quality and solid waste issues. Timing to write the permit may  be 60 to 90 days but if it gets controversial via public hearings that it is hard to gauge the timing.                            ATTACHMENT D     Telephone Conversation Record - Mark Fisher, Oregon DEQ, 1/30/2013                                                                                       Project: Deschutes Co LFGTE Steam Injection Review           Project No: Telephone Record   Date: 1-30-13 Subject: County-WTEG steam injection proposal   Call to: Mark Fisher, Oregon DEQ, Air Permitting Phone No: (541) 633-2022   Call from: Joel Miller and Mark Urquhart, HDR Phone No:     Discussion, Agreement and/or Action:   HDR (Mark Urquhart and Joel Miller) spoke with Mark Fisher of the Oregon DEQ about the proposed WTEG project. Specifically focused on the steam injection and the emissions units anticipated for “Phase 1” project defined by WTEG. Summary of feedback and discussions is below:     Agenda (and associated discussions):     1. Introductions 2. Clarification of current air permitting status a. Title V b. Tier 2 c. Notice of Intent to Construct d. Pending RD&D Application (not yet submitted) 3. Question: Are there any current compliance issues with KLF? If so what is the status and requirements. Might any affect the WTEG project?     Mark Fisher stated that there have been recent odor complaints from neighbors. Attributes this to the inability of the site to collect all of the LFG being generated because flare capacity is too small. Also stated that the landfill is a pro-active permittee and that no enforcement actions have been taken for this odor complaint.     4. Discussion of future WTEG initial startup period and “Phase 1” WTEG project (to be proposed under RD&D application)     Discussion of the role of the RD&D application and the preferred permitting mechanism. Mark stated that all RD&D permitting is handled from the Solid Waste Group (Joe Gingerich), but that certain conditions might be introduced from the air group (mentioned additional surface emissions).     Mark stated that the preferred method for permitting these activities through the air group is by means of a Notice of Intent to Construct (Form ND-901). This should be completed in conjunction with RD&D application. Title V permit would not be modified until next renewal. The Notice of Intent to Construct will be reviewed against established emission limits for the site (as set by the existing Title V permit).     5. Proposed potential additional emission sources/units for WTEG Phase 1 Project a. Gas-fired boiler (heating of leachate) b. Generon Scrubber – Carbon dioxide removal and emissions (assume not sequestered). Current estimate of up to 1,775 scfm carbon dioxide emissions. c. Front and back end compression will be electric – assume no emissions. d. Possible increase in flared LFG when processing units are down.   e. Possible IC engine generator (not clear if this is part of project) (may invoke Subpart ZZZZ regulations) 6. EPA GHG Reporting Rule – assume no change – must monitor collected and destroyed gas.     Mark noted that Oregon has their own GHG Reporting Rule in addition to the Federal rule.     7. Issue/Question: will the enhanced generation of LFG in controllable areas of the landfill (4-acre tracts) affect the NSPS 50 Mg/yr NMOC limit (for the entire landfill), or will the requirement for installation of a GCCS on the entire landfill still be governed by the Tier 1 and Tier 2 reporting (as normal).     Mark stated that, at a minimum, the existing Tier 2 Report would require modification or the new Tier 2 Report (due in 2013) would need to take LFG samples from the steam injection areas. Discussion was not conclusive on how the NMOC value would affect the Tier 2 Report or if additional modifications to the report would be required based on the proposed LFG generation rates in these areas. Tier 2 Report relies on NMOC concentration in the LFG (likely not affected by steam injection) and estimated quantity of LFG to estimate a yearly NMOC emission rate. Tier 2 report also governs the requirement for a landfill to install a landfill gas collection and control system (on the whole landfill).     8. Question: RD&D permit proposes surface emission monitoring in initial stages. Will this be required through build-out Phase 1 enhancement of LFG, or will this also continue to be governed (for the entire landfill) by the Tier 1 and Tier 2 reporting (as normal).     Mark stated that, at a minimum, likely requirement would be for surface emission monitoring on the current 4-acre steam injection area as well as the previous 4-acres. This would likely be a condition of approval.     Additional Discussion:     Mark stated that the de-minimis carbon dioxide emissions are 2,766 tons/year at this site. IF WTEG would like to install a scrubber that emits carbon dioxide, the emission rate may be an issue.     Mark stated that surface emissions monitoring on the steam injection areas would be a likely condition on approval     Mark stated that upgrade of a flare system would be required to have capacity for all collected LFG (even if flare is only used as backup). This would need to be addressed in the Notice of Intent to Construct.                                         WASIE to TO: MR. TIMM SCHIMKE DESCHUTES COUNTY DIRECTOR OF SOUD WASTE SUBJECT: RESPONSE TO HDR TECHNICAL REVIEW DATE: APRIL 18,2013 This memorandum is in response to the HDR Engineering, Inc. (HDR) Technical review of the proposed Landfill Stabilization Project (the "Project") at the Deschutes County Knott Landfill (KLF). WTEG understands HDR's concern about the possibility that gas generation rates may not be as high as WTEG expects. HDR's only source of comparison is a typical bioreactor approach to increased gas production. HDR and the County do not have experience with the proposed "steam injection" which generates the increased gas production predicted. Based on our prior experience, WTEG expects to perform as projected. WTEG has requested a RD&D permit status to record gas productions, monitor and assure public health and safety, as well as, compliance with all regulatory agencies. This will allow WTEG to demonstrate to the County and the DEQ the process, in a safe and environmentally responsible manner. WTEG is pleased that HDR has concluded that our proposal will not increase any environmental or health risks at the landfill. 8 Corporate Park. • SUite 300 • Irvine, California 92018 • (949) 274-9634 WASTE to WTEG has thoroughly vetted the "Steam Injection" process with its investment groups to obtain funding from several sources. It should be clear that the financial risk will be borne by the investment group and not by the County. Operationally, all areas of the landfill will maintain compliance at all times. WTEG will work closely with the County and DEQ to monitor the landfill during all phases of operation. In addition, WTEG will also continue to conduct Piezo-Penetrometer Tests (PPT) to monitor progress and check for gas migration as the landfill stabilizes, including those areas that have been treated. Existing wells that are not performing correctly in the gas collection system will be replaced as we monitor the system and oxygen levels. As described in the RD&D permit, the DEQ and County will determine the compliance data to be collected and monitored, pre and post project. WTEG agrees with HDR's assessment of flare capacity. Permitting requires a backup method with the capacity to destroy the collected gas. WTEG will increase the backup flare capacity to be compliant, or use the gas collected in another approved method. For example, WTEG has not determined whether the Project will generate its own power or purchase power from the grid. If WTEG elects to generate its own power, that same generator can be used in conjunction with the existing flare to consume collected gas during an emergency shut-down. WTEG agrees that no one can predict the future price of CH4 pipeline quality gas in today's market. It has never been our intent to rely solely upon this method to generate sustained revenue generation. WTEG and County are evaluating much stronger off-take products (not covered in HDR analysis) which will significantly increase revenue and mitigate risk. Some of this technology is currently being developed and funded by the same investment groups that have expressed interest in the KLF project. 8 Corporate Park. Suite 300 • Irvine, califomia 92018 • (949) 274-9634 WASIE to WTEG believes the risks identified by HDR can be mitigated through contract. WTEG and County will continue to work together to finalize a contract that will address these pOints and allow WTEG to move into a "funding" phase. WTEG appreCiates the due diligence done by the County and HDR as we move forward. Regards, Randy Lutz L. Randall Lutz Waste to Energy Group, LLC. Chief Executive Officer 949.274.9634 Office 949.293.9740 Mobile 8 Corporate Park. Suite 300 • Irvine, califomia 92018 • (949) 274-9634