Economic Parameters Factors and Reference

Equipment Life (n), year Term of Anadarko lease [1] 5

Annual Interest Rate (I) Estimation [2] 7%

Consumer Price Index, CPI CPI to convert 2009 USD to 2013 USD [3] 1.09

Consumer Price Index, CPI CPI to convert 1998 USD to 2013 USD [3] 1.43

Total Direct Costs (TDC) Factor and reference Cost

Purchased Equipment Cost

SCR Equipment Cost (A) Equipment for 8 SCRs [4] $2,580,000

Instrumentation (Instr) 0.1A [5] $258,000

Sales Tax (ST) 0.03A [5] $77,400

Freight (Fr) 0.05A [5] $129,000.00

B= A + Instr + ST + Fr $3,044,400

Direct Installation Cost (DI)

Foundations and Support (F&S) 0.08 B [6] $243,552

Total Purchased Equipment Installation (Install)

[4] Per phone call with vendor, up to 15% discount in unit installation cost is applied for 

installation of eight units. $310,000 per unit installation. Hence, total installation for 8 units = 

(1-0.15)*310,000*8 $2,108,000

Installation Cost at Dock $495,000/day for 25 days [7],[4] $12,375,000

Daily Spread Rate Above Rig Cost (spr) $136,753/day for 25 days and 9% increase to adjust 2009 rate to 2013 [8] $3,726,519

Electrical (Electric) 0.04B [6] $121,776

Piping (Pipe) 0.02B [6] $60,888

Insulation for Ductwork (Insul) 0.01B [6] $30,444

Painting (Paint) 0.01B [6] $30,444

DI = F&S + Install + Dock +spr+ electric + Pipe + Insul + Paint $18,696,623

Total Direct Cost (TDC) = B + DI $21,741,023

Indirect Costs (IC)

Construction Expenses (CE) 0.05 B [6] $152,220

Engineering and Supervision (E&S) 0.1 B [6] $304,440

Contractor Fee (Contract) 0.1 B [6] $304,440

Startup (SU) 0.02 B [6] $60,888

Total Indirect Costs (TIC) = CE + E&S + Contract + SU $821,988

Total Capital Investment (TCI) TCI = TDC + TIC $22,563,011

Direct Annual Costs (DAC) Factor and reference Cost

Operating Labor (L) 0.5 hr/8 hr shift * $12.95/hr * 200 days *3 shift/day *CPI for 1998 [9] $5,556

Supervisory Labor (S) 0.15L [9] $833

Maintenance (M) 0.015 * TCI [10] $338,445

Urea cost (U) 20 g/KW-hr of Urea @ $(0.85*3)/gal urea [11] $881,840

Catalyst Replacement (Cat) Assumed one replacement over 5-year duration. Assumed catalyst cost is 50% of equipment cost. $1,290,000

Utility (electricity cost, E) 0.059 $/kW-hr * engine rating (kW) * engine load % * Operating hours * 0.5% [9] $25,488

DAC= L + S+ M + U+ Cat + E $2,542,162

Indirect Annual Costs (IAC)

Overhead (O) 0.6 (L+S + M) [9] $206,900

Administrative Charges (A) 2% of TCI [9] $451,260

Property Taxes (P) 1% of TCI [9] $225,630

insurance (Ins) 1% of TCI [9] $225,630

Capital Recovery Factor, CRF (i * (1 + i)^n) / ((1 + i)^n - 1) [12] 0.24389

Capital recovery (CR) CRF * [TCI -1.08(cat.cost)] [9] $5,163,120

IAC = O + A + P + Ins + CR $6,272,541

Total Annual Cost (TAC) TAC = DAC + IAC $8,814,702

NOx factor before SCR, g/kW-hr IMO Tier II (NOx) 9.7

NOx factor after SCR, g/kW-hr [13] 2

SCR NOx Removal Efficiency, eff% 100 - (post control EF / pre control EF*100) [14] 79%

Average Annual Power Requirement, kW Based on application [15] 86,400,000

NOx emissions without SCR, tpy Refer to Emission Calculations in Appendix B 923.81

NOx emissions with SCR, tpy emission without SCR * (1-eff%) 190.48

NOx reduced, tpy 733.33

Cost Effectiveness of SCR TAC/NOx reduced $12,020

Drillship Main Engines - HHI 9H32/40V and 18H32/40V 

DESIGN CONDITIONS

TOTAL CAPITAL INVESTMENT (TCI)

TOTAL ANNUAL COSTS

NOx REDUCTION EFFECTIVENESS

EPN: DR-ME-01 thru DR-ME-08

[15] Annual emissions were estimated based on the annual power output requirements for the drillship.

Control Cost Analysis for Selective Catalyst Reduction (SCR) Installation

[1] Anadarko holds the lease for five years for this drillship.

[2] Estimated using guidance from EPA AIR POLLUTION CONTROL COST MANUAL , Sixth Edition, EPA/452/B-02-001, January 2002..

[3] http://www.bls.gov/data/inflation_calculator.htm 

[13] Based on the vendor (Wartsila) guarantee for post-control emission factor of 2 g/kW-hr. The vendor guarantee is provided in Appendix E-2.

[4] Based on budgetary proposal provided by Wartsila, dated 8/27/2013. The amount quoted in the proposal was converted from Euros (€) to Dollars ($) using a factor of 1.29 (per exchange rate on 

8/22/2013). The proposal is provided in Appendix E. Installation time for one SCR is 14 to 25 days. Hence, it is conservatively assumed that 8 SCRs will be installed in 8 days.

[9] Based on example shown on page 2-45 of Section 3.2, Chapter 2 of EPA AIR POLLUTION CONTROL COST MANUAL, Sixth Edition, 

EPA/452/B-02-001 , January 2002.

[10] Based on equation 2.46 shown on page 2-45 of Section 4.2, Chapter 2 of EPA AIR POLLUTION CONTROL COST MANUAL, Sixth Edition, 

EPA/452/B-02-001 , January 2002.

[11] The cost of urea is based on example shown on page 1-39 of Section 4.2, Chapter 1 of EPA AIR POLLUTION CONTROL COST MANUAL, Sixth Edition, EPA/452/B-02-001, January 2002. 

The price of urea has more than tripled since 2002. Hence, the cost of urea provided in the air pollution cost manual is multiplied by 3. Source: 

http://www.indexmundi.com/commodities/?commodity=urea&months=180

[12] Based on equation 2.55 shown on page 2-49 of Section 4.2, Chapter 2 of EPA AIR POLLUTION CONTROL COST MANUAL, Sixth Edition, 

EPA/452/B-02-001 , January 2002 as shown below.

[5] Based on general cost ranges as presented on page 2-27 of Section 1, Chapter 2 of EPA AIR POLLUTION CONTROL COST MANUAL, Sixth Edition, EPA/452/B-02-001 , January 2002.

[6] Based on factors used on page 1-22 of Section 3.1, Chapter 1 of EPA AIR POLLUTION CONTROL COST MANUAL, Sixth Edition, EPA/452/B-02-001 , January 2002.

[7] Based on Personal Communication, E-mail from Ms. Sara Carlson (Anadarko) to Mr. Rahul Pendse (Trinity), 8/23/13.

[8] Based on budgetary proposal provided on 11/4/2009. However, "Rig Contingencies" and "Project Contingencies" costs are not included as part of "Daily Spread Rate Above Rig Cost" for control 

cost analysis purposes. The proposal is provided in Appendix E.

[14] The control efficiency is determined based on pre-control emission factor of 9.7 g/kW-hr and the vendor guarantee for post-control emission factor of 2 g/kW-hr. The vendor guarantee is provided 

in Appendix E-2.

Anadarko Petroleum Corporation

Diamond BlackHawk EGOM PSD/Title V Permit Application

August 2013 1 of 1

Trinity Consultants

131901.0020

SCR Cost Final