NADB RGVSG Project ReviewNADB RGVSG Project Review

Summary Presentation

San Antonio, Texas

January 27, 2003

Introducing Pollutech’s TeamIntroducing Pollutech’s Team

Richard Laughton– Project Director– NADB Compliance– BECC Step II– Compliance Issues– Risk Assessment– Reporting

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

Project Project DescriptionDescription

The project is a clean energy and air quality improvement project as defined under the BECC/NADB mandate expansion.

The project sponsor is the sugar cooperative identified as the “Rio Grande Valley Sugar Growers, Inc.” (RGVSG).

FOR MORE INFO...

http://www.pollutechinternational.com/jobs/nadb/

RGVSG FacilityRGVSG Facility

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

Project GoalsProject Goals

Review proposed system improvements in terms of capacity and operative compatibility with existing facility and expected performance, primarily focussing on equipment related to the co-generation from bagasse, air quality improvements, water and energy savings, and potential waste reduction.

Review and validate proposed technical, financial, operational, and environmental claims, costs associated with system improvements, and electricity sales.

Technical ViabilityTechnical Viability

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

Project Project TechnologyTechnology

Upgrades to bagasse handling system;

New higher efficiency boiler; andNew (rebuilt) turbine generator.

Project Project ResourcesResources

NADB Project ManagerRGVSG Management TeamTCEQ Industry and Approvals StaffSchaffer & Associates, LLPTurner Collie & Braden Inc.Pollutech International Limited

Review Review ProceduresProcedures

Background document review;Site inspection and interviews;Consultants reports and inquires;Regulatory analysis; andTechnical and financial analysis.

FOR MORE INFO...

1) Pollutech Technical Review Report

2) Executive Summary Report

Project TimelineProject Timeline

Pollutech completed January 23, 2003TCB BECC Step II February 3, 2003BECC Approval March 20, 2003NADB Approval June 2003Bagasse upgrades September 2004Boiler and GenSet upgrades April 2005

Key ConcernsKey Concerns

Reduction in air emissionsChange to net power exporterCompliance with BECC Step IITechnically viable and sustainableFits in with RGVSG long term plans

Key FactorsKey Factors

Sugar Policy (WTO and Farm Bill)Weather ConditionsSupply of Irrigation WaterEnvironmental Limits (air permits)Grower co-operation and educationPlant Production Capabilities

Comment Slide to be RemovedComment Slide to be Removed

Greg takes us through the process and what is proposed.

Process FlowsheetProcess Flowsheet

Proposed Plant UpgradesProposed Plant Upgrades

Schaffer Stage 1– Production plant upgrades– Plant increase to 20,000 tcd

Schaffer Stage 2– Bagasse handling upgrades– Power plant upgrade (boiler & turbine)

Proposed OperationProposed Operation

Plant Operation Old Boilers

(% capacity)

New Boilers

(% capacity)

10,000 tcd 29 100

13,500 tcd 57 100

15,000 tcd 69 100

Proposed Power CapacitiesProposed Power Capacities

Power Analysis

MW Produced

MW Purchased

MW

Sold

MW

Used

Current 4.3 1.7 0.0 6.0

10,000 tcd 9.6 0.0 5.0 4.6

13,500 tcd 11.8 0.0 4.2 7.6

15,000 tcd 14.0 0.0 9.0 5.0

Air EmissionsAir Emissions

Projected Air EmissionsProjected Air Emissions

Emission Analysis

CO tons/day

NOx tons/day

PMT tons/day

VOC tons/day

Current 16.4 3.2 2.5 1

10,000 tcd 7.9 2.9 1.2 0.5

13,000 tcd ? ? ? ?

15,000 tcd 16.2 4.5 2.5 1

Allowable v. Actual EmissionsAllowable v. Actual Emissions

0

500

1000

1500

2000

2500

3000

3500

4000

Allowable Emissions Actual 2001 - 2002Emissions

Air

Em

issi

on

s (T

on

s p

er

Ye

ar)

CO

SO2

TSP

NOx

VOC

Projected Air EmissionsProjected Air Emissions

0

500

1000

1500

2000

2500

3000

3500

4000

Actual 2001 -2002 Emissions

ProjectedEmissions at

10,000 tcd

ProjectedEmissions at

15,000 tcd

Air

Em

iss

ion

s (

To

ns

pe

r Y

ea

r)

CO

SO2

TSP

NOx

VOC

Financial AnalysisFinancial Analysis

Greg Inserts all his slides!Greg Inserts all his slides!

Comment Slide to be RemovedComment Slide to be Removed

Richard takes us through the NADB and BECC Issues.

Plant Environmental ProgramsPlant Environmental Programs

TCEQ Site Assistance Visit (P2SAV)Emerald Consultants Compliance AuditEPA Pilot EMS ProgramRoutine Regulatory Compliance

Air Quality ImprovementsAir Quality Improvements

Water Quality IssuesWater Quality Issues

100% RecycleStormwater PlanOn-Site WWTP

Other Environmental IssuesOther Environmental Issues

Solid WasteChemical WasteTRIEMS

Emission Reduction CreditsEmission Reduction Credits

ERCs– describe

DERCs– Describe

PPA Options– describe

General Project ValidationGeneral Project Validation

Is the plant proposing to use production and power generation technology that would be used by a prudent owner of a similar facility?

Is the pollution abatement equipment that is proposed BACT-EA?

Will the upgraded facility be able to produce more power?

General Project ValidationGeneral Project Validation

Will the total air emissions from the upgraded facility be significantly less than the existing?

Will the project result in a reduction in the environmental impacts related to water supply and discharge?

Has it been demonstrated that there are no adverse environmental impacts on the neighbouring community?

Air Emission SummaryAir Emission Summary

Immediate and significant (46%) decrease in component and total air emissions at 10,000 tcd.

Marginal increase (4%)in air emissions at planned capacity of 15,000 tcd.

Reduced air emissions from outside power producers.

Power Production SummaryPower Production Summary

Compliance with BECC Step IICompliance with BECC Step II

general;human health and environment;technical feasibility;financial feasibility and project

management;community participation; andsustainable development.

BECC Guiding PrinciplesBECC Guiding Principles

• Principle 1. The project is centered on energy conservation and the economic needs of the region.

• Principle 2. The rights of the cooperative members and surrounding communities to adequately raise their standard of living and develop their properties are recognized and underlie the reasons for undertaking the project.

BECC Guiding PrinciplesBECC Guiding Principles

• Principle 3. Environmental protection is integral to the project with the promotion of renewable energy sources and the significant reduction in air pollutant loadings during operation.

• Principle 4. Stakeholders have been involved and have had the opportunity to participate in the decision-making process. This not only includes the cooperative members and surrounding residents, but also local, regional, state and federal agencies with statutory interest and standing in the issues at hand.

BECC II – Community ImpactBECC II – Community Impact

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

BECC II – Project AlternativesBECC II – Project Alternatives

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

BECC II – Financial FeasibilityBECC II – Financial Feasibility

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

Risk AnalysisRisk Analysis

Can this project achieve what is projected in terms of current and future plant operation, or are there some undermining limitations that may increase the risk?

If the plant can go ahead with the upgrade to the operation with a manageable level of risk in operations, are we sure that the project they are proposing is technically sound?

Risk AnalysisRisk Analysis

can we confirm that all the local, state and federal environmental regulations will be met? What are the risks and impacts of occasional infractions?

Does the plant have the capability to operate and maintain the upgraded facility, so as to minimize or eliminate any risk of plant upsets that could affect either plant profitability or environmental emissions?

Risk AnalysisRisk Analysis

Does the project result in long term sustainability for the local area, giving due consideration to all of the issues required in the BECC Step II evaluation?

RISK = [Likelihood x Impact]

Cane ProductionCane Production

Sugar PoliciesSugar Policies

Production ExpansionProduction Expansion

Plant ProfitabilityPlant Profitability

Technology EvaluationTechnology Evaluation

Regulatory IssuesRegulatory Issues

Operation & MaintenanceOperation & Maintenance

Environmental SustainabilityEnvironmental Sustainability

Summary Analysis (fix)Summary Analysis (fix)

Component Stage 1: 10,000 tcd Stage 2: 15,000 tcd Requirements

Water Balance No loss of water fromthe plant and noadditional water needs.

Irrigation water needswill increase due toplant expansion.

Monitor water balanceduring upgrades anddetermine impacts.

Solid Waste No concerns identifiedand all bagasse isconverted to power. Other waste streamsidentified and properlymanaged.

Additional bagasse willallow plant to becomea net exporter ofpower. No anticipatedimpact from other solidwastes.

Ensure that all otherpermits (air) allow forthe use of all bagasseas fuel. Continue withEMS to manage allother solid wastes.

Plant Air Emissions Beneficial reduction inboth individual andtotal air emissions adirect benefit to area.No changes to permitsrequired.

Marginal increases intotal air emissions andsignificant increases inNOx emissions. Airpermit may beamended to suit.

Monitor new processand determine if NOxemissions can behandled by offset or ifadditional abatement isrequired.

Field Air Emissions No immediate plans tolimit burning of caneand/or trash, howevertesting to continue onboth aspects.

Future plans to limitburning of cane and/ortrash to be developedand annual reports tobe submitted to TCEQ.

Determine suitability ofgreen harvesting andimpact on regional airquality. Adjust openburning policies to suit.

Total Impact Marked improvementin environmentalimpact from plantupgrades. Reliance onexternal powersignificantly reduced.

Marginal increases inimpact may be offsetby reduced externalpower, increasedproductivity or changesto air permits.

Continue to monitor the“balance” to determinethe sustainability of theproject over the longerterm. Report tocommunity and TCEQ.

Summary Analysis (alternate)Summary Analysis (alternate)

Component Stage 1: 10,000 tcd Stage 2: 15,000 tcd Requirements

Water Balance

Solid Waste

Plant Air Emissions

Field Air Emissions

Total Impact Marked improvement in environmental impact from plant upgrades. Reliance on external power significantly reduced.

Marginal increases in impact may be offset by reduced external power, increased productivity or

changes to air permits.

Continue to monitor the “balance” to determine the sustainability of the project over the longer term. Report to community and TCEQ.