A Babcock Power Company Inc.

Vogt Power International, Inc.

4000 Dupont Circle

Louisville, Kentucky 40207 USA

Vogt Power International, Inc. proposes to furnish to:

Barr Engineering Company

Minneapolis, MN

For the Project:

Minnesota Steel

BACT Study

Proposal Ref. Number: V75033

the equipment and services as described in the following pages.

Customer: Barr Engineering Company

Plant ID: Minnesota Steel

VPI Ref. No.: V75033

Project: BACT Study

Date: October 28, 2005

Validity Date: November 28, 2005
Table of Contents

1 INTRODUCTION.....................................................................................................................1

2 RSCR TECHNOLOGY ............................................................................................................1

3 SCR PROCESS DESCRIPTION..............................................................................................2

3.1 DESIGN BASIS ............................................................................................................................... 3

3.2 REGENERATIVE HEATER PROCESS DESCRIPTION ......................................................................... 3

3.3 AMMONIA INJECTION CONTROL ................................................................................................... 3

3.3.3 UTILITY CONSUMPTION ............................................................................................................ 4

3.4 ELECTRICAL POWER ..................................................................................................................... 4

4 SCOPE OF SUPPLY ................................................................................................................5

4.1 GENERAL SCOPE TO BE PROVIDED................................................................................................ 5

4.2 SCOPE TABLE ................................................................................................................................ 5

4.3 SYSTEM DESIGN DETAILS ............................................................................................................. 8

4.4 DOCUMENTS TO BE PROVIDED FOR REVIEW AND INFORMATION............................................... 10

4.5 PROVIDED BY OTHERS:................................................................................................................ 11

5 RSCR PERFORMANCE GUARANTEES ............................................................................11

5.1 GUARANTEES .............................................................................................................................. 11

5.2 SYSTEM WARRANTY................................................................................................................... 11

6 COMMERCIAL......................................................................................................................12

6.1 PRICING BREAKDOWN (INCLUDING OPTIONS) ............................................................................ 12
NOTICE: This document contains sensitive proprietary information, not intended for release to the general public and exempt from disclosure under

applicable laws. Anyone in possession of the document other than the named recipient should immediately destroy the document..

Vogt Power International Inc. - Louisville, Kentucky, USA

Document Title: RSCR Budget Estimate Vogt Power Ref. No.: V75033

Customer: Barr Engineering Company Page No.: 1

Proposal: BACT Study Date: October 28, 2005

1 INTRODUCTION

Vogt-Power International (VPI), a member of Babcock Power Inc. (BPI), an ISO 9001 certified, full service

OEM for complete environmental systems and boiler technologies, is pleased to provide this Budget estimate

to Barr Engineering Company for two RSCR systems.

BPI has supplied more than 48 operating SCR totaling over 61,000 MW, and over 100 operating FGD

systems of all types totaling over 59,000 MW. This extensive experience and knowledge, developed over 25

years, has lead to the development of our RSCR technology. BPI has built two RSCR facilities and has

proven that the technology exceeds the guaranteed performance for NOx reduction.

We believe our RSCR technology offers you the optimum solution for your facility. We provide:

• Emissions guarantee, either percent removal or fixed rate

• Low energy consumption (> 95% recovery)

• Self-contained tail-end unit

• Includes fans, controls, burners

• Install/Start up with minimum outage

• Bypass capabilities for maintenance

We look forward to working with Barr Engineering on this innovative project at your Client’s facility.

2 RSCR TECHNOLOGY

Babcock Power Inc. has developed an innovative, advanced, high-efficiency NOx reduction technology that

has been specifically designed to greatly reduce the NOx emissions from boilers and other gas sources at

relatively low cost. The new technology is called Regenerative Selective Catalytic Reduction or “RSCR”. It

is guaranteed to achieve NOx emissions required by the application. The system is a “tail-end” SCR, located

after the particulate removal device, where the gas temperatures are ~300°F, which is below the operating

temperatures for conventional SCR catalysts. It can easily be retrofit just before the existing stack, enabling

the facility to continue operating with only a minimum outage for tie-in. A patent on this technology has been

applied for meaning that once it is issued, the technology will exclusively be available from VPI as a Babcock

Power Inc. subsidiary.

Based on the feedback we have received from a number of potential customers, the total cost of this system is

less than the cost to install a conventional SCR system which is positioned downstream of the economizer or

alternative tail-end SCR technologies.

Features of the system include:

• High NOX removal efficiency in compact design

• Minimal energy costs because of the unit’s high thermal efficiency

• Modular, standard design to minimize installation cost

• Self-contained tail-end unit

• Includes booster fan, controls

• Install/start up without prolonged outage

• Bypass capabilities for maintenance
NOTICE: This document contains sensitive proprietary information, not intended for release to the general public and exempt from disclosure under

applicable laws. Anyone in possession of the document other than the named recipient should immediately destroy the document..

Vogt Power International Inc. - Louisville, Kentucky, USA

Document Title: RSCR Budget Estimate Vogt Power Ref. No.: V75033

Customer: Barr Engineering Company Page No.: 2

Proposal: BACT Study Date: October 28, 2005

The RSCR is a system that removes NOx from flue gas using a catalytic reduction process. The process uses

a reagent added to the flue gas stream to reduce NOx to harmless products, typically N2 and H2O. The RSCR

is designed to operate at the end of the plant before the flue gas is discharged to the stack. Because the gas is

significantly below the temperature required for NOx SCR catalyst to operate, it is required to elevate the flue

gas temperature for the system to perform. This takes place in the RSCR with >95% thermal efficiency which

far exceeds other tail-end SCR technologies that use plate/tubular/rotary heat exchangers for energy recovery

where only 50 -70% of the input energy is recoverable.

3 SCR PROCESS DESCRIPTION

The Selective Catalytic Reduction process converts the NOx contained in the flue gas into nitrogen (N2) and

water (H2O) with the use of ammonia (NH3) as the reduction agent. The basic reactions are the following:

4NO + 4NH3 + O2 ---> 4N2 + 6H2O

2NO2 + 4NH3 + O2 ---> 3N2 + 6H2O

The following side reactions may occur on a small scale:

4NH3 + 3O2 ---> 2N2 + 6H2O

4NH3 + 5O2 ---> 4NO + 6H2O

To achieve sufficient reaction rate between 570oF and 650oF, specially formulated catalysts have to be

applied. The NOx reduction efficiency of the catalyst increases with rising temperature

Before the flue gas enters the SCR catalyst, ammonia is added and mixed in such a way that a homogeneous

distribution of ammonia and flue gas is achieved. In addition, the gas temperature, and gas velocity are also

made uniform. After mixing, the flue gas and ammonia mixture then flows through the catalyst where the

NOx is converted in accordance with the reaction equations described above.

The operating temperature, catalyst volume and SCR NOx removal efficiency are carefully adjusted, and the

mixing and distribution is designed appropriately, so that the non-reacted ammonia exiting the reactor, i.e.,

ammonia slip, is near zero. This is essential to high system performance.

Conventional “tail-end” SCR systems utilize heat exchangers to recover the heat present in the gas leaving the

catalyst bed, transferring it to the incoming gas. A burner or other means of elevating the gas temperature is

needed ahead of the catalyst to offset the inefficiencies in the heat exchanger. Plate, tubular, or regenerative

(rotating basket type) heat exchangers have been utilized. The initial costs of these devices plus their inherent

inefficiencies make them expensive to purchase and operate. The inefficiencies in the heat exchanger result

in auxiliary fuel consumption that is at least three times that of the RSCR. On a unit of this size, that

translates to a prohibitively high additional fuel costs for other tail end- units. Conventional systems are also

physically very large and require significant structural steel to support them.

The concept of the RSCR is to combine the heat recovery, temperature control, and catalyst elements of the

process into a single unit and to provide optimum NOx removal with the maximum heat recovery practical.
NOTICE: This document contains sensitive proprietary information, not intended for release to the general public and exempt from disclosure under

applicable laws. Anyone in possession of the document other than the named recipient should immediately destroy the document..

Vogt Power International Inc. - Louisville, Kentucky, USA

Document Title: RSCR Budget Estimate Vogt Power Ref. No.: V75033

Customer: Barr Engineering Company Page No.: 3

Proposal: BACT Study Date: October 28, 2005

3.1 Design Basis

The RSCR facility is to be designed to reduce nitrogen oxide (NOx) emissions from the flue gas generated

from the combustion of biomass/ wood fuels. The basis of this offering is a single nine canister RSCR unit for

the Induration Furnace Waste Gas and a single 7 canister RSCR unit for the DRI Reformer, taking flue gas

from the existing duct and discharging the treated gas back to the existing stack.

Table 3.1 Emissions Table

RSCR System

SV206 SV302

Flue Gas Flow, SCFM 290,562 161,216

Flue Gas Temperature,

o

F 284 495

NOx inlet, ppmvd 153 255

Particulate, grains/dscf max. inlet .02 .02

NOx outlet, ppmvd 47.43 79.05

NOx removal, % (basis of estimate) 69% 69%

3.2 Regenerative Heater Process Description

To achieve sufficient reaction rate the flue gas must be between 570oF and 650oF. The NOx reduction

efficiency of the catalyst increases with rising temperature. To bring the flue gas to this temperature, a

regenerative heater (RH) is used. The RH utilizes beds of ceramic media to achieve a very high level of

thermal efficiency. Flue gas passes through a preheated bed, picking up heat from it. The temperature rises

from 325 oF to 570 oF before it passes through the catalyst. The gas then passes through the open chamber

above the catalyst where burners raise the temperature to around 620oF. The heated gas then passes downward

through an adjacent canister where the heat is absorbed, and then passes to the outlet duct at a temperature of

about 15-20 oF higher than the inlet. Inlet and outlet flow is cycled between the canisters to alternately preheat

the media and recover heat from it.

3.3 Ammonia Injection Control

3.3.1 Ammonia Demand Signal

The goal of the ammonia control system in a RSCR installation is to accurately inject a correct stoichiometric

amount of ammonia into the flue gas upstream of the catalyst, to achieve the desired NOx removal without

exceeding the ammonia slip specification. To accomplish this, the existing CEMS NOx monitor in the stack is

used to measure the concentrations of NOx out of the RSCR. The injection of ammonia is controlled by

adjusting the speed of a variable speed injection pump in response to the NOx concentration in the stack. If

the NOx concentration exceeds the set point, the pump speeds up to inject more ammonia and bring the NOx

concentration down. Conversely, if the NOx concentration decreases, the injection pump slows down to inject

less ammonia.

3.3.2 Dual Fluid Nozzle Injection

A dual fluid nozzle uses the combination of fluid pressure drop and compressed air (atomizing air) to

mechanically atomize the aqueous ammonia directly into the flue gas stream. This technology avoids the use