MEMORANDUM

DATE: August 1 9 , 2010

SUBJECT: Cost Effectiveness and Impacts of Lean Oil Absorption for Control of Hazardous

Air Pollutants from Gasoline Loading

Residual Risk and Technology Review for the Marine Tank Vessel Loading Operations Source Cate gory EPA Contract No.: EPD06118 EPA Project No.: 4

- 15 RTI Project No.: 0210426.004.015

FROM: David Green and Karen Schaffner, RTI International

TO: Stephen Shedd and Brenda Shine , EPA

I

. B ackground

The purpose of this memorandum is to docume nt the methods used to estimate capital and annualized costs for reducing hazardous air pollutant (HAP) emissions and volatile organic compounds (VOC) from marine tank vessel loading operations (MTVLO) for gasoline. All cost estimates are based on the app lication of an add

- on control device to reduce emissions. Potential control options and nationwide impacts for add

- on controls for MTVLO facilities are presented.

II

. Capital and Annual Costs

Based on information obtained from one vendor , lean oil absorpti on systems are available for control of hazardous air pollutants (HAP) and volatile organic compounds (VOC) emitted during loading of gasoline to marine vessels. 1 The assumptions for the cost estimates are shown

in Table 1. The vendor equipment cost was estimated to be $650,000 for a lean oil absorption system would be adequate for the throughput associated with any major source that is presently uncontrolled. The total capital investment (TCI) required was estimated using EPA standard costing procedures . First the purchase equipment cost (PEC) was estimated by multiplying the vendor equipment costs by a factor of 1.18. The PEC includes costs for auxiliary equipment, instrumentation, sales, freight, etc. The TCI was then estimated by multiplying the PE C by a factor of 1.61 to cover the installation costs (i.e., foundation, piping, electrical, engineering, startup, and performance tests). Thus, the TCI was estimated to be 1.90 times the vendor equipment costs. Lean oil absorption s ystems would have a T CI of $807,000.

C apital costs for lean oil absorption systems were roughly comparable to costs estimated for refrigerated gasoline vapor recovery systems of similar capacity. Costs for refrigerated

1 Telecon with B. Shine , EPA/OAQPS/SPPD, with J. Rex Hewitt , Petrogas. July 8 and 15 , 2010.gasoline vapor recovery systems were based on the OAQPS Control Cost Manual 2 , escalated to

2010. The total installed capital cost of a refrigerated gasoline vapor recovery system with a capacity of 5000 gallons/min was estimated at $918,000 (2009$) , which was within about 14% of the total installed capital cos t of a similarly sized lean oil absorption system

.

Annualized costs for the lean oil absorption system were developed based on information provided by the vendor and EPA standard costing procedures

. The annualized capital cost is $114,900 based on ca pital recovery factor (CFR) of 0.1424 (interest rate of 7 percent for an equipment life of 10 years). The lean oil absorption system from Petrogas i s estimated to have a variable operating cost of $0.006 per gallon loaded ; the vendor indicated that essent ially all of which is attributable to electricity . The labor costs for running/maintaining the control device system were estimated based on an estimated labor requirement of 1.5 hr/day and an assumed labor rate of $ 25.76 /hr and an estimated maintenance l abor requirement of 1.5 hr/day and an assumed labor rate of $ 26.48 /hr. The maintenance parts cost was estimated to be 1.0 times the

maintenance labor costs. A variable operating cost was estimated to be $123,000/year.

Because the lean oil absorption sys tem recovers gasoline product, a product recovery credit was included in the cost analysis. The value of the recovered product was assumed to be $560/ton , which partially offsets the operating cost.

Table 1. Assumptions for Lean Oil Absorption Systems
Capital cost for lean oil absorber 650,000 $
Installed capital cost for lean oil absorber 807,300 $

Interest rate 7.0%

Useful life 10
Capital Recovery Factor 0.1424

Variable Operating Cost 0.006 $ per gallon loaded
Operating Labor @1.5 hr/day 29,618 $/yr
Maintenance Labor @1.5 hr/day 30,445 $/yr

Maintenance Parts 30,445 $/yr

Indirect Annual Cost: Admin, tax, insurance 32,292 $/yr

Recovery Credit 560 $ per ton gasoline

VOC emission Rate 3.4 lb/1000 gallons loaded

HAP emission rate 0.2482 lb/1000 gallons loaded
VOC recovery rate 99.0%

HAP content of VOC 7.3% by wt

III

. Model MTVLO for Gasoline Loading

2 OAQPS Control Cost Manual, Fourth Edition, EPA

- 450/3

- 90

- 006, January 1990.C ontrol options were developed based on annual gasoline throughput cutoffs, with a

control efficiency requirement (or total organic carbon concentration limit) for MTVLO that

exceed the threshold. Model MTVLO were c onsidered for MTVLO with gasoline throughputs of 500,000 bbl/yr and 1,000,000 bbl/yr.

The VOC emissions from gasoline loading are assumed to be 3.4 lb VOC/1,000 gallons loaded (lb VOC/1,000 gal) and the HAP content of the VOC is assumed to be 7.3

wt%

. The overall recovery rate for the lean oil absorption system is assumed to be 99

percent. The assumptions are shown in Table 1.

Table 2 provides the TCI, TAC, the HAP and VOC emission reductions, and the gasoline recovery credit for each gasoline throug hput threshold

.

Table 2 . Cost s for M odel MTVLO for Sources with G asoline L oading.

Gasoline Loading Threshold (million bbl/yr) Total Capital

Investment ($) Total

annualized cost ($) Recovery

Credit ($) Net annualized

cost ($) HAP emission

reduction (TPY) VOC emission

reduction (TPY)
5,000,000 0 0 0 0 0 0

1,000,000 807,000 490 ,000 39

, 60 0 450

, 0 00 5.2 70.7

500,000 807,000 364 ,000 19

, 80 0 344

, 0 00 2.61 35.3

The number of nationwide MTVLO facilities that would be covered under each control option was based on information from the Waterborne Commerce Statistics Center (WCSC) database. As shown in Table 3 , t here are 34 facilities with annual gasoline throughput of 500,000 to 1,000,000 bbl; 44 facilities with 1,000,000 to 3,000,000 bbl throughput; and 10 faci lities with 3,000,000 to 5,000,000 bbl throughput. Because State and

local V OC emission limits are presently in place in some areas, it is estimated that approximately 50 percent of MTVLO at these sources are already operating emission control equipment

, would have no additional capital or operating costs, and would achieve no additional emission reductions if they were subject to the MACT standard.

Table 3 . Facilities by Gasoline Loading Rate.
Gasoline Loading
Rate (million bbl/yr) Total Number of

Facilities Facilities Required

to Install Controls

3 to 5 10 5

1 to 3 44 22

0.5 to 1 34 17

The nationwide cost and cost effectiveness estimates in Table 4 are based on applying controls to 5 facilities loading 3 million bbl/yr, 22 facilities loading 1 million bbl/yr and 17 facilities loading 0.5 million bbl/yr.Table 4 . Cost Effectiveness and Nationwide Impacts for Vapor Collection and Recovery

C ontrols for Sources with G asoline L oading.

Gasoline Loading

Threshold (bbl/yr) Total

Capital

Investment (million $) Total

annualized

cost (million $) Recovery

Credit (million $) Net

annualized cost (million $) HAP

emission

reduction (TPY) HAP cost

effect iveness ($/ton) VOC

emission

reduction (TPY) VOC cost

-

effectiveness ($/ton)

5 ,000,000 0 0 0 0 0

--- 0

---

1 ,000,000 a 22 16 1 14 190 74,000 2,600 5,500

500,000 36 22 2 20 240 85,000 3,200 6,300

a A total of 27 facilities are affected by the control option for gasoline loading throughput of 1,000,000 bbl/yr; the impacts for this option are based on 22 facilities with gasoline throughput of 1,000,000 bbl/yr and 5 facilities with gasoline throughput of 3,000,000 bbl/yr.

VI

. Secondary Impacts Estimates f or Controlling MTVLO for Gasoline Loading

The operation of lean oil absorption systems has an impact on electrical consumption. It is estimated, based on information from the vendor , that the lean oil absorption s ystems consume approximately 0.1 kWhr/gal lon of gasoline loaded. Thus, electrical consumption associated with a 1,000,000 bbl/yr applicability threshold would be approximately 155 million kWhr/yr. The

i ncremental electrical consumption associated with a 500,000 bbl/yr applicability threshold

wo uld be 191 million kWhr/yr. These impacts and secondary emissions associated with this electrical consumption are given in Table 5

.

Table 5 . Secondary Impacts of Operating Light Oil Absorption Systems.

Gasoline Loading
Threshold(million bbl/yr) 1 0.5
Electrical Consumption
(kWhr/yr) 1.55E+08 1.91E+08

SO 2 Emissions (ton/yr) 295 363

NO x Emission (ton/yr) 117 143

CO 2 Emissions (ton/yr) 1.02E+05 1.25E+05