# Reciprocating Internal Combustion Engine

National Emission Standard for Hazardous Air Pollutants (RICE NESHAP) Proposed Revisions – Emission Control Cost Analysis Background for “Above the Floor” Emission Controls for

Natural Gas-Fired RICE

Technical Report

Prepared for:

Interstate Natural Gas Association of America American Petroleum Institute 10 G Street NE, Suite 700 1220 L Street, NW Washington, DC 20002 Washington, DC 20005

Prepared by:

Innovative Environmental Solutions, Inc.

P.O. Box 177 Cary, IL 60013

October 2009Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### i TABLE OF CONTENTS Executive Summary ....................................................................................................................1 1. Introduction...........................................................................................................................3 2. Background on Cost Effectiveness Inputs and Computations.................................................5 3. Summary of “Above the Floor” Cost effectiveness Data and Analyses ..................................8 4. Implications of Cost Effectiveness Estimates.......................................................................16 5. References...........................................................................................................................18

ATTACHMENTS The attachments present detailed tables of cost effectiveness calculations and document assumptions: Attachment A: Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/PostCombustion Controls: Proposed Rule Values ..............................................................................21 Attachment B: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Proposed Rule Values with Adjustments for Best Estimates forUseful Equipment Life (10 years) & AP-42 HAP Emission Factor (2.43E-04 lb HAP/hp-hr). Control efficiency = 90%. ............................................................................................................27 Attachment C: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Revised EPA Proposed Rule data. Cost Effectiveness approach from docket was revised. Adjustments were made to best estimates foruseful equipment life (10 years) and AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC and power source), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost) and a fuel penalty associated with engine operation at a less efficient AFR for NSCR is considered. Control Efficiency = 90%..................................32 Attachment D: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%)...............................................................................................................38 Attachment E: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB, 4SLB, and 2SLB Engines Post-Combustion Controls: Original RICE NESHAP cost effectiveness data with adjustments for inflation, annual operating hours, andbest estimate values for

### HAP emission factor, and HAP control efficiency ...............................................................................................42 Attachment F: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB & 4SLB Engines Post-Combustion Controls: Estimated costs from cost data presented in “Engine Classification Matrix Control Options and Costs” prepared by Argonne National Laboratory and the State of New Mexico Department of Environmental Quality andusing best estimate values for useful equipment life (10 years), HAP emission factor, and HAP control efficiency (90%)

### ...............................43Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### ii Attachment G: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/ Post-Combustion Controls: Proposed Rule Values were adjusted for useful equipment life (10 years), HAP emission factor (2.43E-04 lb HAP/hp-hr), and annual operating hours (6,500) .........44 Attachment H: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Revised EPA Proposed Rule data. Cost Effectiveness approach from docket document EPA-HQ-OAR-2008-0708-0017 was revised. Adjustments were made to useful equipment life (10 years), HAP emission factor (2.43E-04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC & power source), annual operating hours (6,500), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost). Includes a fuel penalty associated with engine operation at a less efficient AFR for NSCR...........49 Attachment I: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, 6,500 annual operating hours, and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%) .......................................................................55Attachment J: Cost Effectiveness Calculations for Gas-Fired 4SLB and 2SLB Engines PostCombustion Controls: Proposed Rule Values ..............................................................................59Attachment K: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB Engines PostCombustion Controls: Proposed Rule Values with Adjustments Using Best Estimates for Useful Equipment Life (10 years) & HAP Emission Factor (4.78E-4 lb HAP/hp-hr) ...............................63Attachment L: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB Engines PostCombustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (90%) ....67 Attachment M: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB and 2SLB Engines Post-Combustion Controls: Proposed Rule Values. Adjustments were made using best estimate values to useful equipment life (10 years) and HAP emission factor (4.78E-4 lb HAP/hp-hr), and to annual operating hours (6,500) .....................................................................69Attachment N: “Baseline” Cost Effectiveness Calculations for Gas-Fired 2SLB Engines PostCombustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, 2,800 annual operating hours, and best estimate values for useful equipment life (10 years), HAP emission factor (4.78E-03 lb HAP/hp-hr), and HAP control efficiency (73%)...............................................................................................................73Attachment O: “Baseline” Cost Effectiveness Calculations for Gas-Fired 2SLB Engines PostCombustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (73%), and 6,500 annual operating hours .................................................................................................77 Attachment P: Vendor Quote for Gas-Fired 2SLB Engine Oxidation Catalyst .............................81 Attachment Q: Text of email from Bruce Chrisman of Cameron to Melanie King of EPA Discussing Control Efficiencies for 2SLB Oxidation Catalysts.....................................................82Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 1 Executive Summary Proposed revisions to the National Emission Standards for Hazardous Air Pollutants (NESHAPs) for Reciprocating Internal Combustion (IC) Engines (40 CFR 63 Subpart ZZZZ) were published in the Federal Register on March 5, 2009 at 74 FR 9698 (hereafter referred to as the Proposed Rule). The Interstate Natural Gas Association of America (INGAA) and the American Petroleum Institute (API) provided comments on the proposed rule. In establishing 40 CFR Part 63 emission standards for existing sources, EPA is required to determine “the average emission limitation achieved by the best performing 12 percent”, which iscalled the “MACT floor”. Then, EPA considers more stringent standards that are “above the floor” based on costs and benefits associated with “above the floor” controls. EPA’s analysis approach considers cost effectiveness (i.e., control costs in dollars per ton of HAP) and related costs and benefits from application of above the floor controls. For theProposed Rule, EPA concluded that above the floor controls are warranted and requires postcombustion catalytic controls for many subcategories of natural gas-fired RICE. INGAA comments and API comments in June 2009 indicated that the EPA cost effectiveness analysis was based on limited and erroneous data and assumptions. This resulted in flawed “cost effectiveness” values and incorrect conclusions on whether above the floor controls are warranted. INGAA and API provided cost effectiveness estimates based on more realistic cost assumptions and more complete capital, and operating & maintenance (O&M) cost data. After comments were submitted, EPA requested additional detail on the cost effectiveness analyses from INGAA and API. This report provides the requested information in a single response. This report tabulates, analyzes, and compares cost effectiveness estimates based on five different sources of capital and operating cost data. These comparative cost cases include: (1)the EPA analysis from the Proposed Rule; (2)revisions to the Proposed Rule costs based on EPA cost documentation that fills data gaps in the Proposed Rule analysis; (3)costs based on vendor quotes and operating companies experience and historical costs; (4)similar cost analysis from the original 2004 RICE MACT; and (5)third party/independent cost information developed by Argonne National Labs and the New Mexico Department of Environmental Quality (NMDEQ). Tables 3 - 5 in Section 3 show the cost effectiveness values for operating hour scenarios and baseline cases by 2SLB, 4SLB, and 4SRB engines, respectively. Computations and references for cost data and other assumptions are detailed in the Attachments. Costs based on the vendor and operating company quotes (case 3) and/or revisions to the Proposed Rule costs (case 2 – relevant only for four-stroke rich burn (4SRB) engines) are recommended as the most appropriate data for evaluating cost-effectiveness for this rulemaking. The EPA cost effectiveness estimates (i.e., dollars per ton for control) presented in the Proposed Rule are significantly lower than estimates based on other cost data sources, including analysis that reviewed the “sensitivity” to key assumptions. For all the engine types and size ranges, the cost effectiveness results from the other four cases areat least a factor of four, and typically a factorTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 2 of ten or more, higherthan the Proposed Rule cost estimate. In addition, the costs are higher than cost effectiveness thresholds EPA has identified as too costly for above the floor controls in other NESHAP documents for reciprocating IC engines. Therefore, both INGAA and API have concluded that the June 2009 comments related to above the floor cost effectiveness are validated andabove the floor controls for affected gas-fired engines are not warranted

. Additional key summary points regarding the cost effectiveness estimates include:

• 

### The primary reason for the significantly lower costs from the EPA Proposed Rule is erroneous cost data. For example, capital equipment costs are not consistent with standard vendor estimates or do not include significant components, and operating and maintenance costs are based on faulty assumptions. Detailed documentation is provided in this report and examples include:

- 

### For 4SRB engine estimates, the Proposed Rule capital costs omitted major required equipment elements including the air/fuel ratio controller (AFRC) and a power source/battery for remote engine applications;

- 

### The O&M costs presented in the EPA analysis for oxidation catalysts and NSCR catalysts assume annual maintenance costs are the same as required for catalytic diesel particulate filters. This simplistic assumption is incorrect, and additional O&M costs are included for gas-fired engine controls based on available data. In addition, for 4SRB engines, a significant fuel penalty can be incurred due to NSCR operating requirements;

- 

### Two-stroke lean burn (2SLB) engines typically have backpressure limitations and high excess air levels that result in low engine exhaust temperatures. Thus, oxidation catalyst retrofits incur additional costs for premium catalysts and engineering, and engine performance suffers. 2SLB engines have comparatively higher cost effectiveness values.

• 

### For the 4SRB engine estimates, the Revised EPA Model (i.e., using data from EPA dockets to fill data gaps) and Industry Data estimates generally agree within about 25% over the range of engine sizes. This agreement is well within the uncertainty of EPA Control Cost Manual cost effectiveness estimates that are “nominally accurate to within ± 30%.” These costs are also similar to the cost effectiveness estimates from the Argonne / NMDEQ data, indicating good agreement across three different cost sources;

• 

### The range of cost effectiveness estimates for analyses other than the Proposed Rule are:

- 

### $25,000 to $207,000 per ton for 2SLB engines;

- 

### $9,000 to $36,000 per ton for 4SLB engines; and

- 

### $25,000 to $269,000 per ton for 4SRB engines.

• 

### Based on comparison of these costs to above the floor control feasibility criteria from EPA background documents in the dockets for this rulemaking and the original 2004 RICE MACT, the assertions from the June 2009 INGAA comments and API comments are affirmed: Above the floor catalytic controls for natural gas-fired engines are not warranted.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 3 1.0 Introduction Proposed revisions to the National Emission Standards for Hazardous Air Pollutants (NESHAPs) for Reciprocating Internal Combustion Engines (40 CFR 63 Subpart ZZZZ) were published in the Federal Register on March 5, 2009 at 74 FR 9698 (hereafter referred to as the Proposed Rule). The Interstate Natural Gas Association of America (INGAA) and the American Petroleum Institute (API) provided comments on the proposed rule. The INGAA comments were entered into the rule docket as Docket Document EPA-HQ-OAR-2008-0708-0155 (hereafter referred to as “INGAAComments”) and the API comments were entered into the rule docket as Docket Document EPAHQ-OAR-2008-0708-0242 (hereafter referred to as “API Comments”). In establishing 40 CFR Part 63 emission standards for existing sources, EPA is required to determine “the average emission limitation achieved by the best performing 12 percent”, which is called the “MACT floor”. Then, EPA considers more stringent standards that are “above the floor” based on costs and benefits associated with “above the floor” controls. EPA’s analysis approach considers cost effectiveness (i.e., control costs in dollars per ton) and related costs and benefits from application of above the floor controls. For the Proposed Rule, EPA concluded that catalytic controls are warranted as above the floor controls for many subcategories of natural gas-fired RICE. INGAA Comment No. 13 and API Comment No. 7 addressed EPA’s “above-the-floor” cost effectiveness analysis for post-combustion emission controls for gas-fired reciprocating internal combustion (IC) engines. Review and analysis presented in those comments indicated that the EPA cost effectiveness analysis was based on limited and erroneous data and assumptions. This flawed cost data resulted in erroneous conclusions regarding “cost effectiveness” values and whether above the floor controls are warranted. Innovative Environmental Solutions, Incorporated (IES) supported comment development for both INGAA and API, and similar cost data based on actual vendor quotes and company documented costs were used in both cases. INGAA and API provided cost effectiveness estimates based on more realistic cost assumptions and more complete capital, and operating and maintenance (O&M) cost data. These analyses lead to the conclusion that post-combustion, above the floor controls are not cost effective and thus not warranted for existing natural gas-fired engines addressed by the Proposed Rule. The comments submitted were relatively lengthy, but did not provide complete documentation of the cost basis and stepwise analysis to determine the cost effectiveness values presented in the comments. Such detail was beyond the scope of a comment document. After INGAA and API submitted comments, EPA contacted both INGAA and API and requested additional detail on the cost effectiveness analyses. Since similar analysis was completed by IES for each of the trade associations, this document provides the requested information in a single response. Cost information is provided and summarized from five different sources in this document. The EPA dollars per ton conclusions presented in the proposed rule are significantly lower than the other four sources discussed below. The various control and cost scenarios analyzed for “sensitivity” consistently demonstrate much higher costs - including cost “corrections” based on EPA’s own data. The resulting cost effectiveness values (see Tables 3-5 below) are higher than thresholds EPA has identified as too costly in other NESHAP documents. Therefore, both INGAA and API haveTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 4 concluded that above the floor controls are not warranted and the June 2009 comments related to above the floor cost effectiveness are validated. For a summary of the INGAA or API conclusions and recommendations, refer to the commentsidentified above, which are available in the docket for the rulemaking. API comments are in the online docket at:http://www.regulations.gov/search/Regs/home.html#documentDetail?R=09000064809ccebe 

### INGAA comments:http://www.regulations.gov/search/Regs/home.html#documentDetail?R=09000064809c460a 

### This report provides additional detail requested by EPA to better document the basis for the cost effectiveness results discussed in the INGAA comments and API comments. Section 2 presents background information including a discussion of parameters that impact cost effectiveness estimates. Section 3 then tabulates, analyzes, and compares cost effectiveness estimates based on different sources of capital and operating cost data. These comparisons include the EPA analysis from the Proposed Rule, revised costs based on the EPA documentation, costs based on vendor quotes and experiences of operating companies, cost analysis from the original 2004 RICE MACT, and other similar cost information from the literature. Section 4 discusses implications and references related EPA determinations regarding cost effectiveness thresholds – i.e. cost effectiveness values above which post-combustion controls are not warranted. Detailed tables that document the cost effectiveness calculations, assumptions, and references are provided as Attachments. The specific cases and cost references are defined in Section 3. Tables 3 - 5 in Section 3 show the actual cost effectiveness values for the different cases. These comparisons reinforce the original conclusion in the June 2009 INGAA comments and API comments that EPA’s analysis significantly under-estimated the cost effectiveness for “above the floor” controls. The more realistic cases shown in Tables 3 – 5 consistently document significantly higher costs considering multiple sources and case studies. Costs based on the vendor and operating company quotes and/or revisions to the Proposed Rule costs are recommended as the most appropriate data for evaluating costs effectiveness for this rulemaking. When compared to EPA referenced cost effectiveness thresholds, these cost effectiveness values support the conclusion that above the floor controls are not cost effective and thus not warranted for existing natural gas-fired engines. The section 3 tables summarize cost information and provide references for the basis for the cost inputs for the cost effectiveness calculations. Detailed calculations and documentation of the cost effectiveness estimates for each of the cases are provided in Attachments to this report. This report has been prepared with the understanding that the reader is familiar with the information provided in INGAA Comment 13 and API Comment 7. If not, the reader should read those comments in the documents referenced above to ensure an understanding of the issues. Detailed information provided in those comments is not repeated here; rather the reader is referred to the original text. The cost effectiveness estimates presented in the tables in the comments often differ from the values in this report. The differences are due to minor corrections that were completed during the more comprehensive review and analysis presented in this report, as well as refined assumptions for key inputs as discussed in this report.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 5 2.0 Background on Cost Effectiveness Inputs and Computations Cost effectiveness is defined as the annualized cost to install and operate emission controls dividedby the annual hazardous air pollutant (HAP) emission reduction ($/ton HAP removed). For twostroke lean burn (2SLB) and four-stroke lean burn (4SLB) engines, the post combustion control isoxidation catalyst and for four-stoke rich burn (4SRB) engines, the post combustion control is nonselective catalytic reduction (NSCR). Equation 1 shows the cost effectiveness calculation.



## ( ) ( )                      

−         

      

=      

lb ton 2,000 1 * in lb out lb

- in lb ǻHAP * hr hp HAP lb EF HAP * yr hrs OH * % Load * hp ER yr $ TAC Controlled HAP ton $ CE



### where: CE – Cost Effectiveness; TAC – Total Annual Costs = Total Annual Operating Costs + Capital Recovery where: Capital Recovery = Total Capital Costs * Capital Recovery Factor (function of equipment life (yrs)) ER – Engine Rating; Load – engine operating horsepower relative to engine rating (assumed to be 100%); OH – annual Operating Hours; HAP EF – Hazardous Air Pollutants Emission Factor; and ǻHAP = HAP control efficiency.
There are five primary sources of cost data (i.e., “case studies”) that serve as the basis for the cost effectiveness estimates presented in this report. These case studies are based on different cost data and methodologies, emission assumptions, and information sources. Additional cost effectiveness calculations were also completed using a common set of assumptions (e.g., operating hours, HAP emission factor) for these cases to provide a common basis to compare results from the different cases. The methodologies and assumptions for the five primary cases are described in detail in Section 3 and the Attachments. The five primary cases include:

• 

### “EPA Proposed Rule” – The EPA analysis from the 2009 rule proposal;

• 

### “Revised EPA Model” – The 2009 EPA analysis corrected to include significant costs for 4- stroke rich burn engines that were inappropriately excluded from the analysis (e.g., air-to-fuel ratio controller costs for NSCR);

• 

### “Industry Data” – The analyses are based on cost quotes for capital equipment, peripheral installation and startup costs, and annual operating costs based on actual operator data.

• 

### “2004 RICE NESHAP” – Similar analysis completed by EPA for its above the floor analysis referenced in the original RICE NESHAP rulemaking; and

• 

### “Argonne / NMDEQ” – Literature report of control costs that provides another independent reference for comparison purposes.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 6 These cases represent five sources of capital and operating costs. In the analysis below, these cases have also been combined with different emission and operating assumptions (e.g., emissions factor, control performance, operating hours) to determine cost effectiveness values and investigate sensitivity to key assumptions. For the last case from the literature, Argonne / NMDEQ provided cost data, and that data was used to calculate cost effectiveness for this case. Cost effectiveness calculations conducted by EPA and industry for the first four cases included a range of values for HAP EF,ǻHAP, equipment useful life, and annual operating hours. The values of these parameters found in the literature and used for the cost effectiveness calculations are discussed here. Because ranges of these parameters have been considered for the different cases, it is difficult to compare some cost effectiveness estimates because too many parameters vary from case to case. Thus, to facilitate comparison of cost effectiveness estimates, a “best estimate” value is identified and used in Section 3 to calculate cost effectiveness values for the different cases. These calculations allow a common basis or “baseline” for comparison of the different cost effectiveness calculations.

• 

### HAP EF.Table 1 lists HAP emission factors for gas-fired engines used for the EPA and INGAA or API cost effectiveness analyses and found in the literature. The emission factors for the Proposed Rule (i.e., “case 1”) do not differentiate between engine types – i.e., rich burn and lean burn emissions are not differentiated. The other emission factors and current understanding of natural gas-fired engine emissions indicate that HAP emissions from 4SRB engines are lower than from lean burn engines. For the 4SLB and 2SLB cost effectiveness methodologies comparison, the Proposed Rule emission factor for engines < 500 hp was selected as a “best estimate” because it is the most recent emission factor and based on data for engines in the range of interest (i.e. less than 500 hp). This emission factor is slightly lower that the AP-42 factors for lean burn engines; thus, it is expected to provide conservative cost effectiveness estimates. The AP-42 emission factor for 4SRB engines was selected as the best estimate based on current understanding of emissions and the fact that the AP-42 rich burn factor is marginally lower than for lean burn engines. The AP-42 factor is equivalent to about 10 ppmv HAP which is more typical of “on average” emissions for rich-burn engines than the other cited factors. The “All, < 500 hp” emission factor is too high on a ppm basis for typical rich-burn engine emissions and the 4SRB emission factor used in the original RICE NESHAP analysis is relatively low. Table 1. HAP Emission Factors for Gas-Fired Reciprocating Internal Combustion Engines. Emission Factor (lb/hp-hr) All EF Source 2SLB 4SLB 4SRB < 500 hp All hp Proposed RuleA 

### 4.78E-04 6.88E-04 Original RICE NESHAPB

### 4.7E-04 4.42E-04 8.30E-05 AP-42C 

### 5.96E-04 5.50E-04 2.43E-04 A. EPA docket documents EPA-HQ-OAR-2008-0708-0017; EPA-HQ-OAR-2005-0030-0009. B. EPA docket document OAR-2002-0059-0225 C. Sum of AP-42 HAP emission factors for gas-fired RICE. Lb/MMBtu emission factors converted to lb/hp-hr assuming engine efficiency of 0.34 per EPA-HQ-OAR-2005-0030-0009Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 7 • 

### ǻHAP EF.Table 2 summarizes the HAP control efficiencies for gas-fired engine postcombustion controls used for the EPA and INGAA or API cost effectiveness analyses and found in the literature. The Proposed Rule’s assumption of 90% control for 2SLB engines is not supported by vendor quotes or limited experience with catalytic control for 2SLB engines, which exhibit lower characteristic exhaust temperature. Cameron has provided correspondence regarding a developmental premium catalyst, which cites 73% reduction. Although that performance level may be optimistic for 2SLB engines, the control efficiency provided by Cameron/Ajax is assumed used as the best estimate. Note that Cameron is the primary company currently providing oxidation catalysts for small 2SLB engines (i.e., Ajax units) and Cameron provided equipment capital cost data used for the industry cost effectiveness estimates provided below. For 4SLB and 4SRB engines, 90% control from the Proposed Rule is used as the best estimate of typical field operation. Table 2. HAP Control Efficiencies for Gas-Fired Reciprocating Internal Combustion Engines Post-Combustion Controls.

Post-Combustion HAP Control Efficiency EF Source 2SLB 4SLB 4SRB Proposed RuleA 

### 90% 90% 90% Original RICE NESHAPB 

### 40% 65% 75% 40 CFR 63 Subpart ZZZZ 58% 93% 76% Cameron/AjaxC 

### 73% A. EPA docket document EPA-HQ-OAR-2008-0708-0017 B. EPA docket document OAR-2002-0059-0225. Control efficiency is for formaldehyde. C. email from

### Bruce Chrisman of Cameron Compression Systems to Melanie King of EPA. Control efficiency is one year guarantee level for formaldehyde. Refer to Attachment Q.

• 

### Equipment Useful Lifetime– the Proposed Rule based cost effectiveness analyses on an equipment lifetime of 20 years. However, post-combustion control equipment is exposed to hot, corrosive gases, thermal cycling, and environmental factors (precipitation, etc.). Industry experience is that a catalytic control system replacement schedule is typically on the order of 10 years. Vendors would not anticipate a 20 year life for catalytic systems. For example, for 4SRB NSCR systems, air-to-fuel ratio controllers typically must be replaced or rebuilt on the order of every 10 years. Thus, 10 years is believed to be a best estimate of equipment life.

• 

### Annual operating hours. Engine operating hours will depend on the application. Emergency engines can operate less than 100 hours per year. For the oil and gas industry, well-site engines used in production will typically operate periodically – that is, only when the well is producing – while engines employed for central compression will generally operate on a more continuous basis. EPA docket document EPA-HQ-OAR-2008-0708-0017 for the Proposed Rule assumed 2,800 annual operating hours for the cost effectiveness analyses. This value is used in theanalyses below as representative of periodic operation engines. EPA docket document OAR2002-0059-0225, which presented cost effectiveness estimates for the original RICE NESHAP, assumed 6,500 annual operating hours for cost effectiveness analyses. This value is used in the analyses below as representative of the operation of engines with higher utilization.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 8 For the cost effectiveness analyses summarized in Section 3 and detailed in the Attachments, best estimate/average capital and operating costs based on industry and literature data are used. The case studies are based on different capital and operating costs; thus, the “baseline” cost effectiveness estimates presented below – based on the best estimates for HAP EF,ǻHAP, equipment lifetime, and annual operating hours – provide a range of cost effectiveness for these controls. The analyses also include ranges for other costs. For example: capital costs are different depending upon the information source; and, annual operating and maintenance costs can vary – e.g., based on run time. 3.0 Summary of “Above the Floor” Cost effectiveness Data and Analyses This section summarizes and compares cost effectiveness estimates from the different cases identified above. In comparison to cost effectiveness values included in the June 2009 INGAA comments or API comments, refined analysis completed for this report results in marginally different cost effectiveness results. Those differences are not discussed in detail, but are due to refinements in the assumptions (e.g., “best estimates” as discussed above) and corrections to minor errors that occurred while preparing the June 2009 comments under a strict deadline. The differences do not alter relative values of the results or change the substance of the comments or conclusions regarding the cost effectiveness of catalytic controls. The five primary cases were introduced in Section 2 and are reiterated here: 1. “EPA Proposed Rule” – EPA estimated cost effectiveness values for post-combustion controls for reciprocating IC engines using select industry capital and operating and maintenance (O&M) cost data presented in the docket and methodologies prescribed in the EPA Cost Control Manual (CCM); hereafter referred to as the “Proposed Rule” costs. Tables 3 – 5 compare these Proposed Rule cost effectiveness estimates for 2SLB, 4SLB, and 4SRB engines, respectively, with estimates based on industry, vendor, and published cost data per the other four cases or methodologies. 2. “Revised EPA Model” – For 4SRB engines equipped with NSCR, the Proposed Rule EPA CCM estimate was revised by including costs for all required equipment, and using more realistic assumptions and real world capital and operating cost requirements; 3. “Industry Data” – Cost effectiveness values are based on capital and operating cost data provided by industry and vendors. This includes engineering, installation, and startup costs that can be compared to the engineering cost algorithms (i.e., percentage of equipment costs) defined in the CCM; 4. “2004 RICE NESHAP” – Cost effectiveness estimates developed by EPA for the original RICE NESHAP – i.e., the analogous cost analysis completed by EPA for the original rulemaking but not reconciled by EPA in the 2009 proposed rule; and 5. “Argonne / NMDEQ” – Cost effectiveness estimates developed using guidelines prepared by Argonne National Laboratory and the State of New Mexico Department of Environmental Quality for the Four Corners Air Quality Task Force work group. The Argonne / NMDEQ capital and operating cost data were introduced in the June 2009 comments and are further analyzed for cost effectiveness as an additional example for comparison purposes.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 9 Tables 3 though 5 summarize the cost effectiveness results for the different cases and scenarios (e.g., operating hours) considered. Table footnotes include important details regarding key assumptions and references. The Attachments present the detailed computations and references for information / cost sources. Following the tables, summary points regarding the cost effectiveness estimates are provided. Section 4 provides additional discussion of implications and comparison to cost feasibility thresholds defined in other EPA documents for NESHAP rulemakings.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 10 Table 3. Cost Effectiveness Estimates for 2-Stroke Lean Burn Engines (2007 $).

<50 hp 50-100 hp 100-175 hp 175-300 hp 300-500 hp 500-1000 hp
DocketA 

### 19,887 7,798 5,039 3,658 2,887 2,316 BaselineB 

### 11,961 8,069 6,122 5,034 4,288 Industry DataC 

### Baseline 206,791 132,397 84,366 2004 RICE NESHAPD 

### Baseline 57,830
Proposed RuleE 

### Baseline 5,152 3,476 2,637 2,169 1,847 Industry DataF 

### Baseline 89,079 57,033 36,342

DocketG 

### 25,122 BaselineH 

### 24,911 6,500 Operating Hours per Year

2004 RICE NESHAP Proposed Rule Cost Method Cost Basis Engine Size Range /Post-Combustion Emssion Control Cost-Effectiveness ($/ton 2,800 Operating Hours per Year



### A. Cost Effectiveness data from docket document EPA-HQ-OAR-2008-0708-0017 Table 2. For 500 – 1,000 hp size category, value is average of 600-750 hp and > 750 hp cost per ton ($/ton) HAP reduction values. Refer to Attachment J for additional detail. B. Cost Effectiveness calculated using data from docket document EPA-HQ-OAR-2008-0708-0017 with adjustments using best estimate values for useful equipment life (10 years) and HAP emission factor (0.000478 lb HAP/hp-hr). HAP control efficiency = 73%. Refer to Attachment K for additional detail. C. Industry cost effectiveness values based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (73%). Refer to Attachment N for additional detail. D. 2001 cost effectiveness data from original RICE NESHAP (docket document no. OAR-2002-0059-0225) with adjustments for inflation (to 2007 dollars based on 3% annual cost escalation/inflation), annual operating hours (2,800), and best estimate value for HAP emission factor (0.000478 lb HAP/hp-hr). The original control efficiency of 40% was retained because these cost estimates were developed before premium catalysts, required to achieve higher control efficiencies for 2SLB engines, were available.Refer to Attachment E for additional detail. E. Cost Effectiveness calculated using Proposed Rule data from docket document EPA-HQ-OAR-2008-0708-0017 with adjustments for annual operating hours (6,500) and using best estimate values for useful equipment life (10 years), and HAP emission factor (0.000478 lb HAP/hp-hr). ). HAP control efficiency = 73% Refer to Attachment M for additional detail. F. Industry cost effectiveness values based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (73%). Refer to Attachment Ofor additional detail. G. 2001 cost effectiveness data from original RICE NESHAP (docket document no. OAR-2002-0059-0225) with adjustment for inflation (to 2007 dollars based on 3% annual cost escalation/inflation). Refer to Attachment E, for additional detail.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 11 H. 2001 cost effectiveness data from original RICE NESHAP (docket document number OAR-2002-0059-0225) with adjustments for inflation (to 2007 dollars based on 3% annual cost escalation/inflation), and best estimate value for HAP emission factor (0.000478 lb HAP/hp-hr). The original control efficiency of 40% was retained because these cost estimates were developed before premium catalysts, required to achieve higher control efficiencies for 2SLB engines, were available. Refer to Attachment E for additional detail.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 12 Table 4. Cost Effectiveness Estimates for 4-Stroke Lean Burn Engines (2007 $).
<50 hp 50-100 hp 100-175 hp 175-300 hp 300-500 hp 500-1000 hp
DocketA 19,887 7,798 5,039 3,658 2,887 2,316 BaselineB 11,961 8,069 6,122 5,034 4,288 Industry DataC Baseline 26,420 2004 RICE NESHAPD Baseline 24,415 Argonne/ NMDEQE Baseline 36,148 21,407 Proposed RuleF Baseline 5,152 3,476 2,637 2,169 1,847 Industry DataC Baseline 11,381

DocketG 15,748 BaselineH 10,517 Argonne/ NMDEQE Baseline 15,572 9,221 Cost Basis

6,500 Operating Hours per Year Cost Method Engine Size Range /Post-Combustion Emssion Control Cost-Effectiveness ($/ton 2,800 Operating Hours per Year

2004 RICE NESHAP Proposed Rule



### A. Cost Effectiveness data from docket document EPA-HQ-OAR-2008-0708-0017 Table 2. For 500 – 1,000 hp size category, value is average of 600-750 hp and > 750 hp cost per ton ($/ton) HAP reduction values. Refer to Attachment J for additional detail. B. Cost Effectiveness calculated using data from docket document EPA-HQ-OAR-2008-0708-0017 with adjustments using best estimates for useful equipment life (10 years) and HAP emission factor (0.000478 lb HAP/hp-hr). Control efficiency = 90%. Refer to Attachment K for additional detail. C. Industry cost effectiveness values based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (90%). Refer to Attachment Lfor additional detail. D. 2001 cost effectiveness data from original RICE NESHAP (docket document number OAR-2002-0059-0225) with adjustments for inflation (to 2007 dollars based on 3% annual cost escalation/inflation), annual operating hours (2,800) and using best estimate values for HAP emission factor (0.000478 lb HAP/hp-hr) and control efficiency (90%). Refer to Attachment E for additional detail. E. Estimated costs from cost data presented in “Engine Classification Matrix Control Options and Costs” prepared by Argonne National Laboratory and the State of New Mexico Department of Environmental Quality [Argonne 2007] using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (90%). Refer to Attachment F for additional detail. F. Cost Effectiveness calculated using Proposed Rule data from docket document EPA-HQ-OAR-2008-0708-0017 with adjustments for annual operating hours (6,500), and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and control efficiency (90%). Refer to Attachment M for additional detail. G. 2001 cost effectiveness data from original RICE NESHAP (docket document number OAR-2002-0059-0225) with adjustment for inflation (to 2007 dollars based on 3% annual cost escalation/inflation). Refer to Attachment E for additional detail. H. 2001 cost effectiveness data from original RICE NESHAP (docket document number OAR-2002-0059-0225) with adjustments for inflation (to 2007 dollars based on 3% annual cost escalation/inflation) and using best estimates for HAP emission factor (0.000478 lb HAP/hp-hr) and control efficiency (90%). Refer to Attachment E for additional detail.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 13

Table 5. Cost Effectiveness Estimates for 4-Stroke Rich Burn Engines (2007 $).

<50 hp 50-100 hp 100-175 hp 175-300 hp 300-500 hp 500-1000 hp
DocketA 33,373 13,162 8,549 6,241 4,952 3,998 BaselineB 44,168 29,372 21,971 17,835 14,999 Revised EPA ModelC Baseline 269,008 267,273 178,868 129,486 Industry DataD Baseline 176,718 219,935 147,039 101,867 2004 RICE NESHAPE Baseline 57,444 Argonne/ NMDEQF Baseline 107,820 65,791 Proposed RuleG Baseline 19,206 12,653 9,464 7,683 6,461 Revised EPA ModelH Baseline 138,223 133,132 92,850 70,349 Industry DataI Baseline 112,906 119,063 81,494 58,522 DocketJ 86,935 BaselineK 24,745 Argonne/ NMDEQF Baseline 46,446 28,341 2004 RICE NESHAP Cost Basis Engine Size Range /Post-Combustion Emssion Control Cost-Effectiveness ($/ton HAP)
2,800 Operating Hours per Year

6,500 Operating Hours per Year Proposed Rule

A

### . Cost Effectiveness data from docket document EPA-HQ-OAR-2008-0708-0017 Table 2. For 500 – 1,000 hp size category, value is average of 600-750 hp and > 750 hp cost per ton ($/ton) HAP reduction values. Refer to Attachment A for additional detail. B. Cost Effectiveness calculated using data from docket document EPA-HQ-OAR-2008-0708-0017 with adjustments to best estimates for useful equipment life (10 years) and AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr). Control efficiency = 90%. Refer to Attachment B for additional detail. C. Revised EPA Model data. Cost Effectiveness approach from docket document EPA-HQ-OAR-2008-0708-0017 was revised. Adjustments were made to best estimates for useful equipment life (10 years) and AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC and power source), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost) and a fuel penalty associated with engine operation at a less efficient AFR for NSCR is considered. Control efficiency = 90%. Refer to Attachment C for additional detail. D. Industry cost effectiveness values based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%). Refer to Attachment Dfor additional detail. E. 2001 cost effectiveness data from original RICE NESHAP (docket document number OAR-2002-0059-0225) with adjustments for inflation (to 2007 dollars based on 3% annual cost escalation/inflation), annual operating hours (2,800), and using best estimate values for AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr) and control efficiency (90%). Refer to Attachment E for additional detail. F. Estimated costs from cost data presented in “Engine Classification Matrix Control Options and Costs” prepared by Argonne National Laboratory and the New Mexico Department of Environmental Quality [Argonne 2007] using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%). Refer to Att. F for detail. G. Proposed Rule Values (Docket Document EPA-HQ-OAR-2008-0708-0017 Table 2) with adjustments ] using best estimate values for useful equipment life (10 years) and AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and annual operating hours (6,500). Refer to Attachment G for additional detail.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 14 H. Revised EPA Model data. Cost Effectiveness approach from docket document EPA-HQ-OAR-2008-0708-0017 was revised with adjustments to 6,500 annual operating hours and as described in footnote C. Refer to Attachment Hfor additional detail. I. Industry cost effectiveness values based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%). Refer to Attachment Ifor additional detail. J. 2001 cost effectiveness data from original RICE NESHAP (docket document number OAR-2002-0059-0225) with adjustment for inflation (to 2007 dollars based on 3% annual cost escalation/inflation). Refer to Attachment E for additional detail. K. 2001 cost effectiveness data from original RICE NESHAP (docket document no. OAR-2002-0059-0225) with adjustments for inflation (to 2007 dollars based on 3% annual cost escalation/inflation), and using best estimate values for AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr) and control efficiency (90%). Refer to Attachment E for additional detail.


### Summary points regarding the cost effectiveness estimates in Tables 3 – 5 include:

• 

### The EPA Proposed Rule cost effectiveness estimates ($/ton HAP removed) are generally an order of magnitude or more lower than the other analyses, indicating the Proposed Rule costs are flawed and erroneous. This includes the EPA’s own cost effectiveness analysis for 500 – 1,000 hp engines that was conducted for the 2004 RICE NESHAP;

- 

### The primary reason for lower costs from the EPA Proposed Rule is erroneous cost data. For example, capital equipment costs are not consistent with standard vendor estimates or do not include significant components, and operating and maintenance costs are based on faulty assumptions. The costs and basis for the different cases and scenarios are discussed in these bullets and detailed in the Attachments.

• 

### For several estimation approaches and engine types and categories, especially smaller 2SLB and 4SLB engines (likely because oxidation catalysts are infrequently installed on small engines), data were not available for cost effectiveness calculations. Because cost effectiveness values would be expected to be higher for smaller engines, the cost effectiveness estimate from larger engines could serve as a lower estimate for the smaller engines (i.e., cost effectiveness will be at least this high).

• 

### For the 4SRB engine estimates, the Proposed Rule capital costs omitted major required equipment elements including the air/fuel ratio controller (AFRC) and a power source/battery for remote engine applications. In addition, the Proposed Rule capital costs appear to be from 2003 and 2005 and were not corrected for inflation to 2007 dollars. These omissions and errors results in the very low Proposed Rule TCC values;

• 

### For the 4SRB engine estimates, the Revised EPA Model and Industry Data estimates agree within about 25% over the range of engine sizes. For the Revised EPA Model, costs from other EPA analysis were used to fill gaps for missing costs (e.g., AFRC cost). This agreement is well within the uncertainty of the cost effectiveness estimates because, per EPA, “Cost Control Manualestimating procedure rests on the notion of the “study” (or rough order of magnitude – ROM) estimate, nominally accurate to within ± 30%.” This agreement suggests the “corrections” to the docket data for the “Proposed Rule” case to develop the Revised EPA Model estimates provide consistency with the estimate based on current industry equipment,Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 15 operations, and costs. These costs are also similar to the cost effectiveness estimate from the Argonne / NMDEQ data, indicating good agreement across three different cost sources;

• 

### 2SLB engines typically have backpressure limitations and high excess air levels that result in low engine exhaust temperatures; thus, oxidation catalyst retrofits often require expensive premium catalysts to compensate for lower operating temperatures and high muffler and catalyst retrofit engineering costs to minimize backpressure. These factors contribute to the high Industry Data capital costs for 2SLB engines (see detail in Attachments), as well as higher catalyst replacement costs due to the “premium” associated with 2SLB catalyst requirements for lower temperature performance and lower pressure drop. 4SLB engines typically have higher engine exhaust temperatures than 2SLB engines and less restrictive backpressure requirements; thus, 4SLB capital costs are lower than 2SLB capital costs as indicated by the “Industry Data” TCC estimates;

• 

### The operating and maintenance (O&M) costs presented in the EPA analysis for oxidation catalysts and NSCR catalysts assume annual maintenance costs are the same as required for catalytic diesel particulate filters (CDPF). This simplistic assumption is incorrect. CDPF maintenance requirements are basically limited to periodic filter cleaning that consists of ash removal from the filter. Conversely, operating and maintenance requirements for catalysts are multi-faceted and can include periodic (e.g., every three years) catalyst replacement, periodic (e.g., annual) catalyst cleaning (total catalyst replacement and cleaning costs include replacement or cleaning cost, shipping, downtime, crane rental, and labor for catalyst removal and installation and engine start up and shutdown), performance testing whenever catalysts are replaced or rotated for cleaning, thermocouple replacement, and for 4SRB engines, periodic oxygen sensor replacement and AFRC setpoint testing, and periodic replacement or maintenance of the AFRC, fuel flow control valve, battery, and battery recharger (alternator or solar panel). These O&M costs are reflected in the large difference between the Proposed Rule TAC and TAC estimated by the Revised EPA Model and the Industry Data approaches as shown in the Attachments; In addition, for 4SRB engines, a significant fuel penalty can be incurred when engine operation is adjusted from a maximum efficiency AFR of about 1.06 to an NSCR optimization AFR slightly rich of stoichiometric – about 0.995;

• 

### The HAP emission factor used for the Proposed Rule cost effectiveness analyses, 6.88 x 10-4

### lb HAP/hp-hr is based on emission data from all engine sizes. The docket includes a HAP emission factor for gas-fired engines < 500 hp (4.78 x 10-4

### lb HAP/hp-hr) that is more appropriate for cost effectiveness analyses for engines in this size range. This emission factor was used for the Revised EPA Model, Industry Data, and Argonne cost effectiveness calculations – i.e., judged the “best estimate” as the input for a common comparison across the different cases;

• 

### The assumption of 90% catalytic control for engines under all operating conditions is not supported in the docket by data and documentation. In addition, the assumed performance for the 2SLB engine is also optimistic. Oxidation catalyst control efficiencies are often well below 90% (or 73% for 2SLB engines). Thus, these cost effectiveness estimates would be higher if a lower catalyst performance level is assumed.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 16 4.0 Implications of Cost Effectiveness Estimates The tables above indicate that the EPA Proposed Rule costs are inordinately low, while the Revised EPA Model, Industry Data, 2004 RICE NESHAP, and Argonne/NMEQ cost effectiveness values in Tables 3 – 5 are consistently significantly higher and generally the same magnitude. In their June 2009 comments, INGAA Comment 14 and API Comment 7 discuss cost feasibility based on EPA decisions in the original RICE MACT (2004 Final Rule) and decisions made for the 2009 proposed rule. Precedent for cost effectiveness thresholds from EPA documents for the Proposed Rule and the original 2004 RICE NESHAP indicates that post-combustion controls are not cost effective or warranted for gas-fired engines less than 500 hp. Two EPA documents were referenced regarding cost feasibility thresholds for lean burn gas-fired engines. In the 2002 analysis for the original 2004 NESHAP, EPA concluded that the control costs (presented in Tables 3 and 4) werenot reasonable and above the floor controls were not required for existing engines. Thus, for 500 – 1,000 hp 4SLB engines, a cost effectiveness of $15,748/ton HAP ($13,189/ton HAP in 2001 dollars) was not considered cost effective and for 500 – 1,000 hp 2SLB engines, a cost effectiveness of $25,122/ton HAP ($21,039/ton HAP in 2001 dollars) was not considered cost effective. A comparison with the estimated Industry Data and Argonne/NMDEQ cost effectiveness values would conclude that post-combustion controls cannot be justified for existing gas-fired lean burn engines less than 500 hp. This document identified costs that were too high, but did not imply a threshold that is considered reasonable. An EPA document from the Proposed Rule docket further informs that issue. EPA perspective on the cost effectiveness threshold is found in docket document no. OAR-2008- 0708-0017 for the Proposed Rule. The cost effectiveness values in Table 2 of that document for non-emergency gas-fired engines are reproduced here for reference. Shading is added to the table to indicate cost per ton values for engines that donotrequire above the floor controls in the Proposed Rule. Thus, it is implied that these dollar per ton values arenot reasonable for that engine subcategory. The next cell to the right indicates a “reasonable” dollar per ton value. This table indicates that the “reasonable” threshold for cost effective controls should lie within this range. For example, the threshold is between $2,887 and $3,658 per ton for lean burn engines (note that the 250 hp subcategory size threshold in the rule is not specifically identified in the table) and between $13,162 and $33,373 per ton for 4SRB engines. Docket Document OAR-2008-0708-0117; Table 2. Cost per ton ($/ton) of HAP Reduced per Engine Size Range (HP) Engine <50 50 – 100 100 – 175 175 - 300 300 – 500 500 – 600 600 – 750 >750 

### 2SLB (OxCat) $19,887 $7,798 $5,039 $3,658 $2,887 $2,578 $2,425 $2,207 

### 4SLB (OxCat) $19,887 $7,798 $5,039 $3,658 $2,887 $2,578 $2,425 $2,207 

### 4SRB (NSCR) $33,373 $13,162 $8,549 $6,241 $4,952 $4,435 $4,180 $3,815


### For 2SLB and 4SLB engines, this document states, “The cost per ton of reducing formaldehyde by oxidation catalyst range from about $2,000 to $8,000. The costs for engines 250 hp and aboveTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 17 equipped with oxidation catalyst are reasonable and can be justified in light of the significant reductions of HAP that would be achieved from these particular engines.” The extrapolated cost per ton HAP removed for a 250 hp engine is about $3,600. The EPA 2004 RICE NESHAP, Industry Data, and Argonne/NMDEQ cost per ton estimates in Tables 3 and 4 for lean burn engines are significantly greater than this EPA defined threshold for lean burn engines. For 4SRB engines equipped with NSCR, docket document OAR-2008-0708-0017 states (for engines less than 50 hp) “The cost of above-the-floor options based of (on) add-on controls for engines less than 50 hp are considered significant. Therefore, MACT is equivalent to the MACT floor” and “The MACT floor for stationary engines less than 50 hp is the level that is achievable by existing engines of this size operating without add-on control technology.” The referenced cost per ton of HAP removed for 4SRB engines less than 50 hp is $33,373. A comparison with the cost effectiveness values in Table 5 for all engine sizes and for all the cost effectiveness calculation approaches would conclude that post-combustion controls cannot be justified for existing gas-fired 4SRB engines 500 hp and smaller. EPA notes that NSCR also controls CO and NOx emissions and these emission reductions reduce the cost per ton pollutant removed when HAP, CO, and NOx reductions are considered. However, this analysis is simplistic and does not consider potential deleterious emission impacts of NSCR. A detailed accounting of this issue is beyond the scope of this report, but there are several noteworthy negative impacts including greater fuel consumption, increased greenhouse gas emissions, and increased emissions of ammonia. When considering potential benefits, EPA should not over-state the benefits of NSCR reductions in CO and NOx without considering potential negative impacts on an array of emissions and complicating factors, which are briefly discussed here. Because NSCR equipped rich burn engines must operate at a lower, sub-stoichiometric air-to-fuel ratio (AFR) than uncontrolled engines, engine efficiency decreases; thus, CO2

### emissions will increase (i.e. more fuel carbon is oxidized). In addition, methane concentrations upstream of an NSCR catalyst can be much higher than from an uncontrolled engine operating at maximum efficiency (i.e., poorer combustion efficiency at the sub-stoichiometric AFR setpoint for NSCR engines). Because NSCR control efficiency for methane is much lower than for CO and HAPs (methane is very refractory), retrofit application of NSCR could result in a net methane emissions increase. Higher engine exhaust flowrates from increased fuel consumption will also contribute to increased methane emissions for NSCR-equipped engines. Similarly, uncontrolled CO emissions from an NSCR equipped engine operating at a sub-stoichiometric AFR can be an order of magnitude or more higher than from an uncontrolled engine operating at maximum efficiency. Thus, retrofit application of NSCR could result in a net CO emissions increase or only marginal reductions. Ammonia participates in atmospheric chemistry for fine particulate/haze formation and in areas where regional haze is a primary air quality issue, ammonia may be a rate-limiting reactant in some geographical areas. That is, other haze-formation reactants (e.g. NOx, VOC) are available in the atmosphere while ammonia is not, and increases in ammonia emissions impact atmospheric chemistry that contributes to haze. Thus, NSCR application could reduce NOx emissions yet negatively impact regional haze from the ammonia contribution. EPA should consider a relativeTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 18 weighting of natural gas-fired HAP emissions including the projected ancillary air quality benefits and recognize and include disbenefits when finalizing the above the floor decision. Collectively, these cost analyses document that EPA significantly underestimated costs and cost effectiveness in the Proposed Rule. As noted throughout this document, a detailed accounting of costs, calculations, and references for source material is provided in the Attachments. In addition, analyses based on several different “alternative” cases indicate similar costs significantly higher than the Proposed Rule estimate. These alternative cases include “corrections” to the Proposed Rule analysis based on EPA’s own information, an independent cost determination based on industry and vendor data, and additional costs available in the literature from an independent third party. When considering realistic cost estimates and comparing those cost effectiveness values to feasibility criteria from related EPA background documents, the assertions from the INGAA comments and API comments are affirmed: The proposed rule significantly under-estimates costs for the above the floor analysis, cost effectiveness values are well above thresholds defined from other NESHAP related documents, and above the floor catalytic controls for natural gas-fired engines are not warranted.

5.0 References Argonne/NMDEQ 2007 -http://www.nmenv.state.nm.us/aqb/4C/Docs/ArgonneRICEmat.DOCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 19 

## ATTACHMENTSA list of attachments is included with the Table of Contents and is repeated here. Detailed line-byline computations for the cost effectiveness calculations are shown for the different cases as well as scenarios for each of the cases that consider different assumptions. References for source information are provided in the “notes / comments” column, including primary references for cost data used in the analysis. The basis for key assumptions and best estimates are discussed in the report – i.e., see Sections 2 and 3.

List of Attachments Page No. Attachment A: Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/PostCombustion Controls: Proposed Rule Values.............................................................................. 21 Attachment B: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Proposed Rule Values with Adjustments for Best Estimates for Useful Equipment Life (10 years) & AP-42 HAP Emission Factor (2.43E-04 lb HAP/hp-hr). Control efficiency = 90%............................................................................................................. 27 Attachment C: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Revised EPA Proposed Rule data. Cost Effectiveness approach from docket was revised. Adjustments were made to best estimates foruseful equipment life (10 years) and AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC and power source), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost) and a fuel penalty associated with engine operation at a less efficient AFR for NSCR is considered. Control Efficiency = 90%.......................................................................... 32 Attachment D: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%).......................................................................................................................... 38 Attachment E: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB, 4SLB, and 2SLB Engines Post-Combustion Controls: Original RICE NESHAP cost effectiveness data with adjustments for inflation, annual operating hours, andbest estimate values for

### HAP emission factor, and HAP control efficiency ......................................................................................................... 42 Attachment F: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB & 4SLB Engines Post-Combustion Controls: Estimated costs from cost data presented in “Engine Classification Matrix Control Options and Costs” prepared by Argonne National Laboratory and the State of New Mexico Department of Environmental Quality andusing best estimate values for useful equipment life (10 years), HAP emission factor, and HAP control efficiency (90%)

### .................................................... 43 Attachment G: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/ Post-Combustion Controls: Proposed Rule Values were adjusted for useful equipment life (10 years), HAP emission factor (2.43E-04 lb HAP/hp-hr), and annual operating hours (6,500)......... 44Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 20 Attachment H: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Revised EPA Proposed Rule data. Cost Effectiveness approach from docket document EPA-HQ-OAR-2008-0708-0017 was revised. Adjustments were made to useful equipment life (10 years), HAP emission factor (2.43E-04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC & power source), annual operating hours (6,500), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost). Includes a fuel penalty associated with engine operation at a less efficient AFR for NSCR.............................................. 49 Attachment I: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, 6,500 annual operating hours, and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%)........................................................................... 55Attachment J: Cost Effectiveness Calculations for Gas-Fired 4SLB and 2SLB Engines PostCombustion Controls: Proposed Rule Values.............................................................................. 59Attachment K: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB Engines PostCombustion Controls: Proposed Rule Values with Adjustments Using Best Estimates for Useful Equipment Life (10 years) & HAP Emission Factor (4.78E-4 lb HAP/hp-hr)............................... 63Attachment L: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB Engines PostCombustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (90%) ......... 67 Attachment M: “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB and 2SLB Engines Post-Combustion Controls: Proposed Rule Values. Adjustments were made using best estimate values to useful equipment life (10 years) and HAP emission factor (4.78E-4 lb HAP/hp-hr), and to annual operating hours (6,500) ................................................................................................... 69Attachment N: “Baseline” Cost Effectiveness Calculations for Gas-Fired 2SLB Engines PostCombustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, 2,800 annual operating hours, and best estimate values for useful equipment life (10 years), HAP emission factor (4.78E-03 lb HAP/hp-hr), and HAP control efficiency (73%).......................................................................................................................... 73Attachment O: “Baseline” Cost Effectiveness Calculations for Gas-Fired 2SLB Engines PostCombustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (73%), and 6,500 annual operating hours....................................................................................................... 77 Attachment P: Vendor Quote for Gas-Fired 2SLB Engine Oxidation Catalyst ............................ 81 Attachment Q: Text of email from Bruce Chrisman of Cameron to Melanie King of EPA Discussing Control Efficiencies for 2SLB Oxidation Catalysts .................................................... 82Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 21 Attachment A – Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Proposed Rule Values (Docket Document EPA-HQ-OAR-2008-0708-0017 Table 2) 1 Parameter Value Units Notes/Comments 2Engine Manufacturer CAT CAT CAT OAR-2005-0030-0005 3 Model No. G3304 G3408 G3408 OAR-2005-0030-0005 4Engine Type 4SRB OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control NSCR OAR-2005-0030-0005 7 Control Purpose CH2O, CO, & NOx
8 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR-2008-0708- 0017, OAR-2008-0708-0001) 9 Project Duration (n) 20 20 20 20 20 20 20 20 years 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005)
11 Site-Rated Power (SR) 167 255 300 300 500 800 1500 3000 hp OAR-2005-0030-0005
12Average Operating Load (OL) 100% 100% 100% 100% 100% 100% 100% 100% % Assume 100% load for cost analysis

13 Annual Operating Hours (AOH) 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 14HAP Emission Factor (HAPEF) 6.88E-4 6.88E-4 6.88E-4 6.88E-4 6.88E-4 6.88E-4 6.88E-4 6.88E-4 lb HAP/ hphr EF for total HAP for NG-fired engines (OAR-2005-0030-0009) 15 HAP Emission Reductions (ǻHAP) 289.54 442.11 520.13 520.13 866.88 1387.01 2600.64 5201.28 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17 EPA Model NSCR Capital Costs (CC) $1,980 $4,660 $4,620 $5,180 $6,610 $8,410 $13,370 $33,630 $ OAR-2005-0030-0005, OAR-2005- 0029-0038, OAR-2005-0030-0087 18 Instrumentation (IC) $198 $466 $462 $518 $661 $841 $1,337 $3,363 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 19 Sales Taxes (STC) $59 $140 $139 $155 $198 $252 $401 $1,009 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR-2005-0030-Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 22 0005

20Freight (FC) $99 $233 $231 $259 $331 $421 $669 $1,682 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005-0030-0005
21 Purchased Equipment Cost (PEC) $2,336 $5,499 $5,452 $6,112 $7,800 $9,924 $15,777 $39,683 $ PEC = EC + IC + STC + FC

22Direct Installation Costs

23 Foundations and Supports (FSC) $187 $440 $436 $489 $624 $794 $1,262 $3,175 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
24Handling and Erection (HEC) $327 $770 $763 $856 $1,092 $1,389 $2,209 $5,556 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
25 Electrical (EEC) $93 $220 $218 $244 $312 $397 $631 $1,587 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
26Piping (PIC) $47 $110 $109 $122 $156 $198 $316 $794 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
27 Insulation for ductwork (IDC) $23 $55 $55 $61 $78 $99 $158 $397 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
28 Painting (PAC) $23 $55 $55 $61 $78 $99 $158 $397 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
29 Site Preparation (SPC) $0 $0 $0 $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
30Buildings (BC) $0 $0 $0 $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005 31 Direct Installation Cost (DIC) $701 $1,650 $1,635 $1,834 $2,340 $2,977 $4,733 $11,905 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 23 32Total Direct Capital Costs (TDC) $3,037 $7,148 $7,087 $7,946 $10,140 $12,901 $20,510 $51,588 $ TDC = PEC + DIC
33 Indirect Installation Costs

34Engineering (EIC) $234 $550 $545 $611 $780 $992 $1,578 $3,968 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005

35 Construction and field expenses (CFEC) $117 $275 $273 $306 $390 $496 $789 $1,984 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005

36 Contractor fees (CFC) $234 $550 $545 $611 $780 $992 $1,578 $3,968 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
37 Start-up (SUC) $47 $110 $109 $122 $156 $198 $316 $794 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
38 Performance test (PTC) $23 $55 $55 $61 $78 $99 $158 $397 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
39 Total Indirect Installation Costs (IIC) $654 $1,540 $1,526 $1,711 $2,184 $2,779 $4,417 $11,111 $ IIC = EIC + CFEC + CFC + SUC + PTC
40 Contingencies

41 Contingencies (COC) $70 $165 $164 $183 $234 $298 $473 $1,191 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
42Total Indirect Capital Costs (TICC) $724 $1,705 $1,690 $1,895 $2,418 $3,076 $4,891 $12,302 $ TICC = IIC + COC

43 Capital Cost Summary
44Total Direct Capital Costs (TDC) $3,037 $7,148 $7,087 $7,946 $10,140 $12,901 $20,510 $51,588 $Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 24 45 Total Indirect Capital Costs (TICC) $724 $1,705 $1,690 $1,895 $2,418 $3,076 $4,891 $12,302 $

46Total Capital Cost (TCC) $3,762 $8,853 $8,777 $9,841 $12,558 $15,977 $25,400 $63,890 $ TCC = TDC + TICC
47 Direct Annual Costs
48 Operator Labor (OLC) $0 $0 $0 $0 $0 $0 $0 $0 $

49 Supervisor Labor (SLC) $0 $0 $0 $0 $0 $0 $0 $0 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR-2005-0030- 0005 50 Operating Materials (OMC) $0 $0 $0 $0 $0 $0 $0 $0 $
51 Maintenance - Labor (MLC) $260 $260 $260 $260 $260 $260 $260 $260 $

52Maintenance - Materials (MMC) $0 $0 $0 $0 $0 $0 $0 $0 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 53 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $0 $0 $0 $ 54Electricity (ELC) $0 $0 $0 $0 $0 $0 $0 $0 $
55 Total Direct Annual Costs (TDAC) $260 $260 $260 $260 $260 $260 $260 $260 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 56Indirect Annual Costs
57 Overhead (OHC) $156 $156 $156 $156 $156 $156 $156 $156 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005.
58 Administrative Charges (ADC) $75 $177 $176 $197 $251 $320 $508 $1,278 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 25 59 Property Taxes (PTC) $38 $89 $88 $98 $126 $160 $254 $639 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.
60Insurance (INC) $38 $89 $88 $98 $126 $160 $254 $639 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.
61 Capital Recovery Factor (CRF) 0.094393 0.094393 0.094393 0.094393 0.094393 0.094393 0.094393 0.094393 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal -e.g., 10% = 0.1) 62 Capital Recovery (CRC) $355 $836 $828 $929 $1,185 $1,508 $2,398 $6,031 $ CRC = CRF * TCC

63 Total Indirect Annual Costs (TIAC) $662 $1,346 $1,336 $1,479 $1,844 $2,303 $3,570 $8,742 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 64 Cost Summary
65 Total Direct Annual Operating Costs (TDAC) $260 $260 $260 $260 $260 $260 $260 $260 $

66Total Indirect Annual Operating Costs (TIAC) $662 $1,346 $1,336 $1,479 $1,844 $2,303 $3,570 $8,742 $

67 Total Annual Costs (TAC) $922 $1,606 $1,596 $1,739 $2,104 $2,563 $3,830 $9,002 $ TAC = TDAC + TIAC 68 69 Site-Rated Power (SR) 167 255 300 300 500 800 1,500 3,000 hp 70

71 Linear Regression ofTACvs.SR: m = 2.65 $/hp Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. Truncated at 3 significant figures. "b" set at $657 rather than $658 to equal EPA calculations.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 26 72 b = 657 $ 73 r2= 0.9775 74 Cost Effectiveness Estimates 75 Size Range (SRg) < 50 50 - 100 100 - 175 175 -

300 300 -

500 500-

1000 hp
76 Size Range Average (SRgA) 25 75 138 238 400 750 hp
77 HAP Emission Reductions (ǻHAP) 43.34 130.03 239.26 412.63 693.50 1300.32 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
78 Total Annual Costs from Regression (TACR) $723 $856 $1,023 $1,288 $1,717 $2,645 $657 $657 $/yr TACR = SRgA *m +b

.
79 Cost Effectiveness (CE) $33,373 $13,162 $8,549 $6,241 $4,952 $4,067 #DIV/0! #DIV/0! $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 27 Attachment B – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Proposed Rule Values w/Adjustments for Best Estimates forUseful Equipment Life (10 years) & AP-42 HAP Emission Factor (2.43E-04 lb HAP/hp-hr). Control efficiency = 90%. 1 Parameter Value Units Notes/Comments 2Engine Manufacturer CAT CAT CAT OAR-2005-0030-0005 3 Model No. G3304 G3408 G3408 OAR-2005-0030-0005 4Engine Type 4SRB 4SRB 4SRB 4SRB 4SRB 4SRB 4SRB 4SRB OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control NSCR NSCR NSCR NSCR NSCR NSCR NSCR NSCR OAR-2005-0030-0005 7 Control Purpose CH2O, CO, & NOx
8 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% 90% 90% 90% % Assumed control efficiency for NSCRcatalysts (OAR-2008-0708-0017, OAR2008-0708-0001) 9 Project Duration (n) 10 10 10 10 10 10 10 10 years 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% % OAR-2005-0030-0005
11 Site-Rated Power (SR) 167 255 300 300 500 800 1500 3000 hp OAR-2005-0030-0005
12Average Operating Load (OL) 100% 100% 100% 100% 100% 100% 100% 100% % Assume 100% load for cost analysis

13 Annual Operating Hours (AOH) 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 hrs Annual operating hours that are the basisfor the EPA control cost analysis (OAR2005-0030-0005). 14HAP Emission Factor (HAPEF) 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 lb HAP/ hp-hr AP-42 EF for total HAP for 4SRB NGfired engines. 15 HAP Emission Reductions (ǻHAP) 102.26 156.15 183.71 183.71 306.18 489.89 918.54 1837.08 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17 EPA Model NSCR Capital Costs (CC) $1,980 $4,660 $4,620 $5,180 $6,610 $8,410 $13,370 $33,630 $ OAR-2005-0030-0005, OAR-2005- 0029-0038, OAR-2005-0030-0087 18 Instrumentation (IC) $198 $466 $462 $518 $661 $841 $1,337 $3,363 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 19 Sales Taxes (STC) $59 $140 $139 $155 $198 $252 $401 $1,009 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR-2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 28 20Freight (FC) $99 $233 $231 $259 $331 $421 $669 $1,682 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005-0030-0005
21 Purchased Equipment Cost (PEC) $2,336 $5,499 $5,452 $6,112 $7,800 $9,924 $15,777 $39,683 $ PEC = EC + IC + STC + FC

22Direct Installation Costs

23 Foundations and Supports (FSC) $187 $440 $436 $489 $624 $794 $1,262 $3,175 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005

24Handling and Erection (HEC) $327 $770 $763 $856 $1,092 $1,389 $2,209 $5,556 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
25 Electrical (EEC) $93 $220 $218 $244 $312 $397 $631 $1,587 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 26Piping (PIC) $47 $110 $109 $122 $156 $198 $316 $794 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
27 Insulation for ductwork (IDC) $23 $55 $55 $61 $78 $99 $158 $397 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
28 Painting (PAC) $23 $55 $55 $61 $78 $99 $158 $397 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
29 Site Preparation (SPC) $0 $0 $0 $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
30Buildings (BC) $0 $0 $0 $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 31 Direct Installation Cost (DIC) $701 $1,650 $1,635 $1,834 $2,340 $2,977 $4,733 $11,905 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 32Total Direct Capital Costs (TDC) $3,037 $7,148 $7,087 $7,946 $10,140 $12,901 $20,510 $51,588 $ TDC = PEC + DIC
33 Indirect Installation Costs
34Engineering (EIC) $234 $550 $545 $611 $780 $992 $1,578 $3,968 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 29 35 Construction and field expenses (CFEC) $117 $275 $273 $306 $390 $496 $789 $1,984 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005

36 Contractor fees (CFC) $234 $550 $545 $611 $780 $992 $1,578 $3,968 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
37 Start-up (SUC) $47 $110 $109 $122 $156 $198 $316 $794 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
38 Performance test (PTC) $23 $55 $55 $61 $78 $99 $158 $397 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005

39 Total Indirect Installation Costs (IIC) $654 $1,540 $1,526 $1,711 $2,184 $2,779 $4,417 $11,111 $ IIC = EIC + CFEC + CFC + SUC + PTC
40 Contingencies
41 Contingencies (COC) $70 $165 $164 $183 $234 $298 $473 $1,191 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
42Total Indirect Capital Costs (TICC) $724 $1,705 $1,690 $1,895 $2,418 $3,076 $4,891 $12,302 $ TICC = IIC + COC

43 Capital Cost Summary
44Total Direct Capital Costs (TDC) $3,037 $7,148 $7,087 $7,946 $10,140 $12,901 $20,510 $51,588 $
45 Total Indirect Capital Costs (TICC) $724 $1,705 $1,690 $1,895 $2,418 $3,076 $4,891 $12,302 $
46Total Capital Cost (TCC) $3,762 $8,853 $8,777 $9,841 $12,558 $15,977 $25,400 $63,890 $ TCC = TDC + TICC
47 Direct Annual Costs
48 Operator Labor (OLC) $0 $0 $0 $0 $0 $0 $0 $0 $

49 Supervisor Labor (SLC) $0 $0 $0 $0 $0 $0 $0 $0 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR-2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 30 50 Operating Materials (OMC) $0 $0 $0 $0 $0 $0 $0 $0 $
51 Maintenance - Labor (MLC) $260 $260 $260 $260 $260 $260 $260 $260 $

52Maintenance - Materials (MMC) $0 $0 $0 $0 $0 $0 $0 $0 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 53 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $0 $0 $0 $ 54Electricity (ELC) $0 $0 $0 $0 $0 $0 $0 $0 $ 55 Total Direct Annual Costs (TDAC) $260 $260 $260 $260 $260 $260 $260 $260 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 56Indirect Annual Costs
57 Overhead (OHC) $156 $156 $156 $156 $156 $156 $156 $156 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005.
58 Administrative Charges (ADC) $75 $177 $176 $197 $251 $320 $508 $1,278 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005.
59 Property Taxes (PTC) $38 $89 $88 $98 $126 $160 $254 $639 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 60Insurance (INC) $38 $89 $88 $98 $126 $160 $254 $639 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 61 Capital Recovery Factor (CRF) 0.142378 0.1423780.1423780.142378 0.1423780.142378 0.1423780.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 62 Capital Recovery (CRC) $536 $1,260 $1,250 $1,401 $1,788 $2,275 $3,616 $9,097 $ CRC = CRF * TCC

63 Total Indirect Annual Costs (TIAC) $842 $1,771 $1,757 $1,951 $2,446 $3,070 $4,789 $11,808 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 64 Cost Summary
65 Total Direct Annual Operating Costs (TDAC) $260 $260 $260 $260 $260 $260 $260 $260 $Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 31 66Total Indirect Annual Operating Costs (TIAC) $842 $1,771 $1,757 $1,951 $2,446 $3,070 $4,789 $11,808 $

67 Total Annual Costs (TAC) $1,102 $2,031 $2,017 $2,211 $2,706 $3,330 $5,049 $12,068 $ TAC = TDAC + TIAC 68 69 Site-Rated Power (SR) 167 255 300 300 500 800 1,500 3,000 hp 70

71 Linear Regression of TACvs.SR: m = 3.60 $/hp Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. Truncated at 3 significant figures. 72 b = 744 $ 73 r2= 0.9775 74 Cost Effectiveness Estimates 75 Size Range (SRg) < 50 50 - 100 100 - 175 175 -

300 300 -

500 500- 1000 hp
76 Size Range Average (SRgA) 25 75 138 238 400 750 hp
77 HAP Emission Reductions (ǻHAP) 15.31 45.93 84.51 145.74 244.94 459.27 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
78 Total Annual Costs from Regression (TACR) $834 $1,014 $1,241 $1,601 $2,184 $3,444 $744 $744 $/yr TACR = SRgA *m +b

.
79 Cost Effectiveness (CE) $108,989 $44,168 $29,372 $21,971 $17,835 $14,999 #DIV/0! #DIV/0! $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 32 Attachment C – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Revised EPA Proposed Rule data. Cost Effectiveness approach from docket document EPA-HQ-OAR-2008-0708-0017 was revised. Adjustments were made to best estimates foruseful equipment life (10 years) and AP-42 HAP emission factor (2.43E04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC and power source), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost) and a fuel penalty associated with engine operation at a less efficient AFR for NSCR is considered. Control Efficiency = 90%. 1 Parameter Value Units Notes/Comments 2Engine Manufacturer CAT CAT CAT OAR-2005-0030-0005 3 Model No. G3304 G3408 G3408 OAR-2005-0030-0005 4Engine Type 4SRB 4SRB 4SRB 4SRB 4SRB OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control NSCR NSCR NSCR NSCR NSCR OAR-2005-0030-0005 7Control Purpose CH2O, CO, & NOx 8Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR2008-0708-0017, OAR-2008-0708-0001)

9Project Duration (n) 10 10 10 10 10 years Industry budgets for AFRC and alternator replacement/system overhaul every 10 years. Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005- 0030-0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029-0038 lists catalyst replacement every 3 - 5 years. 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Site-Rated Power (SR) 167 255 300 300 500 hp OAR-2005-0030-0005 12Average Load (OL) 100% 100% 100% 100% 100% % Assume 100% load for cost analysis
13 Annual Operating Hours (AOH) 2,800 2,800 2,800 2,800 2,800 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 14HAP Emission Factor (HAPEF) 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 lb HAP/ hphr AP-42 EF for total HAP for 4SRB NG-fired engines.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 33 15 HAP Emission Reductions ǻHAP) 102.26 156.15 183.71 183.71 306.18 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17NSCR Capital Cost Year (CCY) 2003 2003 2003 2005 2005 Year OAR-2005-0030-0005, OAR-2005-0029-0038, OAR2005-0030-0087 18EPA Model NSCR Capital Costs (CC) $1,980 $4,660 $4,620 $5,180 $6,610 $ OAR-2005-0030-0005, OAR-2005-0029-0038, OAR2005-0030-0087 19AFRC Capital Cost Year (CCY2) 2003 2003 2003 2003 2005 Year OAR-2005-0029-0038 for engines <300 hp, OAR-2005- 0030-0086 for engines > 300 hp,
20AFRC Capital Costs (CC2) $5,440 $5,440 $5,440 $5,440 $7,500 $ OAR-2005-0029-0038 for engines <300 hp, OAR-2005- 0030-0086 for engines > 300 hp (avg of $5,000 & $10,000),
21 Adjusted Capital Costs (ACC) $8,351 $11,368 $11,323 $11,618 $14,969 $ Capital costs adjusted for inflation (to 2007 dollars at 3% per year) and inclusion of AFRC: ACC = CC*1.03^(2007-CCY) + CC2*1.03^(2007-CCY2)

22Additional Capital Equipment (AEC) $600 $600 $600 $600 $600 $ Additional capital equipment – battery, battery housing, alternator or solar panel – were assumed to cost $600 per engine. This assumes 50% of the engines do not have access to electricity and require this additional equipment for an NSCR retrofit

23 Combustion Control Equipment and Auxiliary Equipment (EC) $8,951 $11,968 $11,923 $12,218 $15,569 $ EC = AEC + ACC

24Instrumentation (IC) $895 $1,197 $1,192 $1,222 $1,557 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005- 0030-0005 25 Sales Taxes (STC) $269 $359 $358 $367 $467 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR2005-0030-0005 26Freight (FC) $448 $598 $596 $611 $778 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005- 0030-0005 27Purchased Equipment Cost (PEC) $10,563 $14,122 $14,069 $14,418 $18,372 $ PEC = EC + IC + STC + FC
28Direct Installation Costs

29Foundations and Supports (FSC) $845 $1,130 $1,125 $1,153 $1,470 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 34 30Handling and Erection (HEC) $1,479 $1,977 $1,970 $2,018 $2,572 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
31 Electrical (EEC) $423 $565 $563 $577 $735 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 32Piping (PIC) $211 $282 $281 $288 $367 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
33 Insulation for ductwork (IDC) $106 $141 $141 $144 $184 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
34Painting (PAC) $106 $141 $141 $144 $184 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
35 Site Preparation (SPC) $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
36Buildings (BC) $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 37Direct Installation Cost (DIC) $3,169 $4,237 $4,221 $4,325 $5,512 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 38Total Direct Capital Costs (TDC) $13,731 $18,358 $18,289 $18,743 $23,883 $ TDC = PEC + DIC
39Indirect Installation Costs
40Engineering (EIC) $1,056 $1,412 $1,407 $1,442 $1,837 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005

41 Construction and field expenses (CFEC) $528 $706 $703 $721 $919 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR2005-0030-0005

42Contractor fees (CFC) $1,056 $1,412 $1,407 $1,442 $1,837 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
43 Start-up (SUC) $211 $282 $281 $288 $367 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
44Performance test (PTC) $106 $141 $141 $144 $184 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 35 45 Total Indirect Installation Costs (IIC) $2,958 $3,954 $3,939 $4,037 $5,144 $ IIC = EIC + CFEC + CFC + SUC + PTC
46 Contingencies
47 Contingencies (COC) $317 $424 $422 $433 $551 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 48Total Indirect Capital Costs (TICC) $3,274 $4,378 $4,361 $4,469 $5,695 $ TICC = IIC + COC
49 Capital Cost Summary
50Total Direct Capital Costs (TDC) $13,731 $18,358 $18,289 $18,743 $23,883 $
51 Total Indirect Capital Costs (TICC) $3,274 $4,378 $4,361 $4,469 $5,695 $ 52Total Capital Cost (TCC) $17,006 $22,736 $22,651 $23,212 $29,579 $ TCC = TDC + TICC 53 Direct Annual Costs 54Operator Labor (OLC) $200 $200 $200 $200 $200 $
55 Supervisor Labor (SLC) $30 $30 $30 $30 $30 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR2005-0030-0005 56Operating Materials (OMC) $0 $0 $0 $0 $0 $ 57Maintenance - Labor (MLC) $846 $846 $846 $846 $846 $

58Maintenance - Materials (MMC) $1,070 $1,700 $1,700 $1,700 $2,400 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 59Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $

60Annual Testing or Downtime or other allowance for Catalyst washing (ATC) $3,978 $3,978 $3,978 $3,978 $3,978 $ Estimated cost for annual FTIR performance test and associated cost.
61 Electricity (ELC) $0 $0 $0 $0 $0 $ 62Total Direct Annual Costs (TDAC) $6,124 $6,754 $6,754 $6,754 $7,454 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 36 63 Indirect Annual Costs 64Overhead (OHC) $1,287 $1,665 $1,665 $1,665 $2,085 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005.
65 Administrative Charges (ADC) $340 $455 $453 $464 $592 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. FPC = [7,420 - 7,188] (Btu/hp-hr) * 1/900 (LHV = scf/Btu) * 1/1000 (scf/Mcf) * SR (hp) * OL (hp/hp) * AOH (hrs) * $7/Mcf. • 7,420 Btu/hp-hr is brake specific fuel consumption (BSFC) for Waukesha VGF GSI 4SRB engines operated at AFR = 0.995 (AFR for optimum NSCR performance) • 7,188 Btu/hp-hr is brake specific fuel consumption for Waukesha VGF GSI 4SRB engines operated at AFR =1.06 (AFR for optimum engine efficiency) • Waukesha VGF GSI BSFC data provided by Nick Kosinski, Waukesha engineer. 66Fuel Penalty (FPC) $844 $1,288 $1,516 $1,516 $2,526 $

• $7/Mcf - estimated average natural gas price in 2007 [DOE/EIA website] 67Property Taxes (PTC) $170 $227 $227 $232 $296 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 68Insurance (INC) $170 $227 $227 $232 $296 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 69Capital Recovery Factor (CRF) 0.142378 0.142378 0.142378 0.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 70Capital Recovery (CRC) $2,421 $3,237 $3,225 $3,305 $4,211 $ CRC = CRF * TCC 71 Total Indirect Annual Costs (TIAC) $5,233 $7,100 $7,312 $7,415 $10,006 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 72 Cost Summary
73 Total Direct Annual Operating Costs (TDAC) $6,124 $6,754 $6,754 $6,754 $7,454 $

74Total Indirect Annual Operating Costs (TIAC) $5,233 $7,100 $7,312 $7,415 $10,006 $ 75 Total Annual Costs (TAC) $11,356 $13,854 $14,066 $14,168 $17,460 $ TAC = TDAC + TIACTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 37 76 77 Site-Rated Power (SR) 167 255 300 300 500 hp 78
79Linear Regression ofTAC vs.SR: m = 17.5 $/hp Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. 80 b = 8,839 $ 81 r2= 0.9739 82 Cost Effectiveness Estimates 83 Size Range (SRg) < 50 50 - 100 100 - 175 175 - 300 300 - 500 hp 84Size Range Average (SRgA) 25 75 137.5 237.5 400 hp
85 HAP Emission Reductions ǻHAP) 15.31 45.93 84.20 145.44 244.94 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE

86Total Annual Costs from Regression (TACR) $9,278 $10,155 $11,252 $13,007 $15,858 $/yr TACR = SRgA *m +b. Note, engines < 100 hp are not required to conduct performance tests; thus, TACR for "< 50" and "50 - 100" reduced by $3,777 from linear regression estimate. 87 Cost Effectiveness (CE) $689,525 $269,008 $267,273 $178,868 $129,486 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 38 Attachment D – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%). 1 Parameter Value Units Notes/Comments 2 Engine Type 4SRB 4SRB 4SRB 4SRB 3 Fuel Used Natural Gas 4 Post Combustion Control NSCR NSCR NSCR NSCR 5 Control Purpose CH2O, CO, & NOx 6 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR2008-0708-0017, OAR-2008-0708-0001)

7 Project Duration (n) 10 10 10 10 years Industry budgets for AFRC and alternator replacement/system overhaul every 10 years. Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005-0030-0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029-0038 lists catalyst replacement every 3 - 5 years. 8 Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 9 Engine Size Range (ESR) 50 - 100 100 - 175 175 - 300 300 - 500 hp OAR-2008-0708-0017 Table 2. 10 Site-Rated Power (SR) 75 137.5 237.5 400 hp Midpoint of Engine Size Range 11 Average Operating Load (OL) 100% 100% 100% 100% % Assume 100% load for cost analysis 12 Annual Operating Hours (AOH) 2,800 2,800 2,800 2,800 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 13 HAP Emission Factor (HAPEF) 2.43E-4 2.43E-4 2.43E-4 2.43E-4 lb HAP/ hp-hr AP-42 EF for total HAP for 4SRB NG-fired engines. 14 HAP Emission Reductions (ǻHAP) 45.9 84.2 145.4 244.9 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 15 Capital Costs 16 Purchased Equipment Cost (PEC) $9,195 - - - Refer to Footnote A. 17 Purchased Equipment Cost (PEC) - $11,008 - - Refer to Footnote B. 18 Purchased Equipment Cost (PEC) - - $12,706 - Refer to Footnote C.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 39 19 Purchased Equipment Cost (PEC) - - - $14,769 Refer to Footnote D. 20 Total Capital Cost (TCC) $12,222 - - - $ Refer to Footnotes A, E 21 Total Capital Cost (TCC) - $13,840 - - $ Refer to Footnotes B, E 22 Total Capital Cost (TCC) - - $15,616 - $ Refer to Footnotes C, E 23 Total Capital Cost (TCC) - - - $17,474 $ Refer to Footnotes D, E 24 Direct Annual Costs

25 Operating and Maintenance Material Costs (O&MM) $664 $1,071 $1,706 $2,384 $ Annualized equipment Cost to replace Catalyst (every 3 years), O2 Sensors (8 months,~2,000 operating hours), Thermocouples (7.5 years), Crankcase Filters (3 months), Fuel Valve (4 - 8 years), and Battery (2 years). Cost for annual catalyst cleaning, crane (for larger engines), and rotational catalyst.

26 O&M Labor Cost (O&ML) $1,275 $1,320 $1,360 $1,380 $ Annualized labor Cost to replace and rotate (for cleaning) Catalyst, O2 Sensor, Thermocouples, Fuel Valve, Crankcase Filter, Battery, and Perform Equipment Testing (e.g. O2 Sensor Test, AFRC optimization after O2 sensor replacement)

27 Annual Performance Testing or Downtime or other allowance for Catalyst washing (ATC) $0 $3,978 $3,978 $3,978 $ Estimated cost for annual FTIR performance test and associated cost; required when catalysts are replaced or rotated for outside cleaning. 28 Total Direct Annual Costs (TDAC) $1,939 $6,369 $7,044 $7,742 $ = O&MM + O&ML + ATC 29 Indirect Annual Costs Administrative Charges (ADMC) $0 $225 $225 $225 FPC = [7,420 - 7,188] (Btu/hp-hr) * 1/900 (scf/Btu (gas LHV)) * 1/1000 (scf/Mcf) * SR (hp) * OL (hp/hp) * AOH (hrs) * $7/Mcf. • 7,420 Btu/hp-hr is brake specific fuel consumption (BSFC) for Waukesha VGF GSI 4SRB engines operated at AFR = 0.995 (AFR for optimum NSCR performance) • 7,188 Btu/hp-hr is brake specific fuel consumption for Waukesha VGF GSI 4SRB engines operated at AFR =1.06 (AFR for optimum engine efficiency) 30 Fuel Penalty (FPC) $379 $695 $1,200 $2,021 $

• Waukesha VGF GSI BSFC data provided by Nick Kosinski, Waukesha engineer.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 40 • $7/Mcf - estimated average natural gas price in 2007 [DOE/EIA website] 31 Capital Recovery Factor (CRF) 0.142378 0.142378 0.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 32 Capital Recovery (CRC) $1,740 $1,971 $2,223 $2,488 $ CRC = CRF * TCC 33 Total Indirect Annual Costs (TIAC) $2,119 $2,890 $3,648 $4,734 $ TIAC = ADMC + FPC + CRC 34 Cost Summary - Total Annual Costs (TAC) 35 Total Direct Annual Costs (TDAC) $1,939 $6,369 $7,044 $7,742 $
36 Total Indirect Annual Costs (TIAC) $2,119 $2,890 $3,648 $4,734 $ 37 Total Annual Costs (TAC) $4,058 $9,259 $10,692 $12,476 $ TAC = TDAC + TIAC 38 Cost Effectiveness 39 Cost Effectiveness (CE) $176,718 $219,935 $147,039 $101,867 $/ton HAP CE = TAC /ǻHAP / 2000

40 A. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 50 to 100 hp. Exterran provided cost data for ten recent installations with average PEC = $9,195 (range of $8,979 - $9,203) and average installed TCC = $12,665 (range of $11,989 to $13,362). Engines include Arrow VRG 220 and VRG 330; Waukesha VRG 265, 195 GK, VRG 310, 135 GZ, VRG 330, 140 GZ, and F554G; and Caterpillar G3304NA (range of 53 - 95 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." MCBU provided that "Rich burn NSCR and AFR procurement and installation costs for 50-250 HP range from $10,000 - $15,000." MCBU has five engines of 50 - 100 hp equipped with NSCR. For this smallest engine range (50 - 100 hp), the low end of these costs were used. TCC used for cost effectiveness calculations based on average of Exterran average and the Devon and MCBU values. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.38.

41 B. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 100 to 175 hp. Exterran provided cost data for six recent installations with average PEC = $11,008 (range of $10,167 - $12,284) and average installed TCC = $15,391 (range of $14,737 to $16,731). Engines include Waukesha F11G, F817G, WAK-B, 145 GZ; and Caterpillar G3306NA and G333NA (range of 116 - 172 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." MCBU provided that "Rich burn NSCR and AFR procurement and installation costs for 50-250 HP range from $10,000 - $15,000." MCBU has 51 engines of 100 - 250 hp equipped with NSCR. For this engine range (100 - 175 hp), a linearly extrapolated estimate based on 137.5 hp was used. TCC used for cost effectiveness calculations based on average of Exterran average and the Devon and MCBU values. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.40.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 41 42 C. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 175 to 300 hp. Exterran provided cost data for 13 recent installations with average PEC = $12,706 (range of $10,703 - $19,337) and average installed TCC = $17,849 (range of $15,763 to $24,934). Engines include Waukesha F1197G, F1905G, F18G, and F11GSI; and Caterpillar G3306TA, G3406NA, G3306TAA, G342NA, G343NA, G353NA, G3408NA, G342TA, and G342TAA... (range of 203 - 265 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." MCBU provided that "Rich burn NSCR and AFR procurement and installation costs for 50-250 HP range from $10,000 - $15,000." MCBU has 51 engines of 100 - 250 hp equipped with NSCR. For this engine range (175 - 300 hp), the maximum of $15,000 was used. TCC used for cost effectiveness calculations based on average of Exterran average and the Devon and MCBU values. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.40.

43 D. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 300 to 500 hp. Exterran provided cost data for 15 recent installations with average PEC = $14,769 (range of $11,777 - $18,547) and average installed TCC = $20,948 (range of $16,838 to $24,100). Engines include Waukesha H2475G, LRO, F18GSI, F18GSID, F2895G, LRZ, L3711G; and Caterpillar G3508NA, G306TA, G379NA, G3408TA, G3408TAW, G379TA, G379TAA, AND G398NA. (range of 310 - 500 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." TCC used for cost effectiveness calculations based on average of Exterran average and the Devon value. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.42. 44 E. Total Capital Costs do not include initial performance test which would be required with or without post-combustion controls installation.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 42 Attachment E – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB, 4SLB, and 2SLB Engines Post-Combustion Controls: Original RICE NESHAP (docket document number OAR-2002-0059-0225) cost effectiveness data with adjustments for inflation, annual operating hours, andbest estimate values for

### HAP emission factor, and HAP control efficiency.
Cost Effectiveness Analysis Engine

Type Engine

Size (hp) 2001 CE ($ton) Inflation

Rate 2007 CE

($ton) HAP EF -

Docket (lb/hp-hr) HAP EF -

Baseline (lb/hp-hr) ǻHAP -

Docket ǻHAP - baseline Op

Hours - Docket Op

Hours - Baseline Baseline

CE ($ton) Notes
A B C D = B*C^6 E F G H I J K* Baseline 2,800 hours 4SRB 750 $72,807 1.03 $86,935 8.30E-05 2.43E-04 75% 90% 6,500 2,800 $57,444 1 Baseline 2,800 hours 4SLB 750 $13,189 1.03 $15,748 4.42E-04 4.78E-04 65% 90% 6,500 2,800 $24,415 2 Baseline 2,800 hours 2SLB 750 $21,039 1.03 $25,122 4.74E-04 4.78E-04 40% 40% 6,500 2,800 $57,830 3
Baseline 6,500 hours 4SRB 750 $72,807 1.03 $86,935 8.30E-05 2.43E-04 75% 90% 6,500 6,500 $24,745 4 Baseline 6,500 hours 4SLB 750 $13,189 1.03 $15,748 4.42E-04 4.78E-04 65% 90% 6,500 6,500 $10,517 5 Baseline 6,500 hours 2SLB 750 $21,039 1.03 $25,122 4.74E-04 4.78E-04 40% 40% 6,500 6,500 $24,911 6 * K = D * (E/F) * G/H) * (I/J) 1. Cost effectiveness adjusted for inflation, HAP emission factor, HAP control efficiency, and operating hours. 2. Cost effectiveness adjusted for inflation, HAP emission factor, HAP control efficiency, and operating hours. 3. Cost effectiveness adjusted for inflation, HAP emission factor, and operating hours. The original control efficiency of 40% was retained because these cost estimates were developed before premium catalysts, required to achieve higher control efficiencies for 2SLB engines, were available. 4. Cost effectiveness adjusted for inflation, HAP emission factor, and HAP control efficiency. 5. Cost effectiveness adjusted for inflation, HAP emission factor, and HAP control efficiency. 6. Cost effectiveness adjusted for inflation and HAP emission factor. The original control efficiency of 40% was retained because these cost estimates were developed before premium catalysts, required to achieve higher control efficiencies for 2SLB engines, were available.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 43 Attachment F – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB & 4SLB Engines Post-Combustion Controls: Estimated costs from cost data presented in “Engine Classification Matrix Control Options and Costs” prepared by Argonne National Laboratory and the State of New Mexico Department of Environmental Quality [Argonne 2007] andusing best

estimate values for useful equipment life (10 years), HAP emission factor, and HAP control efficiency (90%). Cost Effectiveness Analysis Engine

Type Engine Size (hp) Capital

Cost Capital Recovery Factor Annualized

Capital Cost Annual Operating Cost Perf

Test Cost HAP EF (lb/hp-hr) Annual

Operating Hours Control Efficiency ǻHAP (lb

HAP/yr) Cost

Effectiveness ($/ton HAP) A B* C D = B*C E F G H I J** K*** Baseline 2,800 hrs 4SRB 400 $22,510 0.14238 $3,205 $6,000 $4,000 

### 2.43E-4 2,800 90% 244.9 107,820 Baseline 2,800 hrs 4SLB 400 $12,000 0.14238 $1,709 $6,000 $1,000 

### 4.78E-4 2,800 90% 481.8 36,148
Baseline 2,800 hrs 4SRB 750 $35,876 0.14238 $5,108 $6,000 $4,000 

### 2.43E-4 2,800 90% 459.3 65,791 Baseline 2,800 hrs 4SLB 750 $18,750 0.14238 $2,670 $6,000 $1,000 

### 4.78E-4 2,800 90% 903.4 21,407
Baseline 6,500 hrs 4SRB 400 $22,510 0.14238 $3,205 $6,000 $4,000 

### 2.43E-4 6,500 90% 568.6 46,446 Baseline 6,500 hrs 4SLB 400 $12,000 0.14238 $1,709 $6,000 $1,000 

### 4.78E-4 6,500 90% 1118.5 15,572
Baseline 6,500 hrs 4SRB 750 $35,876 0.14238 $5,108 $6,000 $4,000 

### 2.43E-4 6,500 90% 1066.2 28,341 Baseline 6,500 hrs 4SLB 750 $18,750 0.14238 $2,670 $6,000 $1,000 

### 4.78E-4 6,500 90% 2097.2 9,221 * For 400 hp 4SRB engines, B = A (hp) * $50/hp * 1.03^4 For 400 hp 4SLB engines, B = A (hp) * $30/hp For 750 hp 4SRB engines, B = A (hp) * $42.5/hp * 1.03^4 (750 hp cost based on linear extrapolation between 500 hp and 1100 hp costs) For 750 hp 4SLB engines, B = A (hp) * $25/hp (750 hp cost based on linear extrapolation between 500 hp and 1100 hp costs) ** J = A * G * H * I *** K = (D +E + F)/(M/2000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 44 Attachment G – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Proposed Rule Values (Docket Document EPA-HQ-OAR-2008-0708-0017 Table 2) were adjusted for useful equipment life

(10 years), HAP emission factor (2.43E-04 lb HAP/hp-hr), and annual operating hours (6,500). 1 Parameter Value Units Notes/Comments 2Engine Manufacturer CAT CAT CAT OAR-2005-0030-0005 3 Model No. G3304 G3408 G3408 OAR-2005-0030-0005 4Engine Type 4SRB OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control NSCR OAR-2005-0030-0005 7 Control Purpose CH2O, CO, & NOx
8 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR-2008-0708- 0017, OAR-2008-0708-0001) 9 Project Duration (n) 10 10 10 10 10 10 10 10 years 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Site-Rated Power (SR) 167 255 300 300 500 800 1500 3000 hp OAR-2005-0030-0005 12Average Operating Load (OL) 100% 100% 100% 100% 100% 100% 100% 100% % Assume 100% load for cost analysis

13 Annual Operating Hours (AOH) 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 14HAP Emission Factor (HAPEF) 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 lb HAP/ hp-hr AP-42 EF for total HAP for 4SRB NG-fired engines. 15 HAP Emission Reductions (ǻHAP) 237.40 362.50 426.47 426.47 710.78 1137.24 2132.33 4264.65 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17 EPA Model NSCR Capital Costs (CC) $1,980 $4,660 $4,620 $5,180 $6,610 $8,410 $13,370 $33,630 $ OAR-2005-0030-0005, OAR-2005- 0029-0038, OAR-2005-0030-0087 18 Instrumentation (IC) $198 $466 $462 $518 $661 $841 $1,337 $3,363 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005-0030-0005
19 Sales Taxes (STC) $59 $140 $139 $155 $198 $252 $401 $1,009 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR-2005-0030- 0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 45 20Freight (FC) $99 $233 $231 $259 $331 $421 $669 $1,682 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 21 Purchased Equipment Cost (PEC) $2,336 $5,499 $5,452 $6,112 $7,800 $9,924 $15,777 $39,683 $ PEC = EC + IC + STC + FC
22Direct Installation Costs

23 Foundations and Supports (FSC) $187 $440 $436 $489 $624 $794 $1,262 $3,175 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
24Handling and Erection (HEC) $327 $770 $763 $856 $1,092 $1,389 $2,209 $5,556 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
25 Electrical (EEC) $93 $220 $218 $244 $312 $397 $631 $1,587 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
26Piping (PIC) $47 $110 $109 $122 $156 $198 $316 $794 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
27 Insulation for ductwork (IDC) $23 $55 $55 $61 $78 $99 $158 $397 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
28 Painting (PAC) $23 $55 $55 $61 $78 $99 $158 $397 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
29 Site Preparation (SPC) $0 $0 $0 $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
30Buildings (BC) $0 $0 $0 $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005 31 Direct Installation Cost (DIC) $701 $1,650 $1,635 $1,834 $2,340 $2,977 $4,733 $11,905 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 32Total Direct Capital Costs (TDC) $3,037 $7,148 $7,087 $7,946 $10,140 $12,901 $20,510 $51,588 $ TDC = PEC + DIC
33 Indirect Installation CostsTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 46 34Engineering (EIC) $234 $550 $545 $611 $780 $992 $1,578 $3,968 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
35 Construction and field expenses (CFEC) $117 $275 $273 $306 $390 $496 $789 $1,984 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
36 Contractor fees (CFC) $234 $550 $545 $611 $780 $992 $1,578 $3,968 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
37 Start-up (SUC) $47 $110 $109 $122 $156 $198 $316 $794 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005
38 Performance test (PTC) $23 $55 $55 $61 $78 $99 $158 $397 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005 39 Total Indirect Installation Costs (IIC) $654 $1,540 $1,526 $1,711 $2,184 $2,779 $4,417 $11,111 $ IIC = EIC + CFEC + CFC + SUC + PTC 40 Contingencies

41 Contingencies (COC) $70 $165 $164 $183 $234 $298 $473 $1,191 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005 42Total Indirect Capital Costs (TICC) $724 $1,705 $1,690 $1,895 $2,418 $3,076 $4,891 $12,302 $ TICC = IIC + COC
43 Capital Cost Summary
44Total Direct Capital Costs (TDC) $3,037 $7,148 $7,087 $7,946 $10,140 $12,901 $20,510 $51,588 $
45 Total Indirect Capital Costs (TICC) $724 $1,705 $1,690 $1,895 $2,418 $3,076 $4,891 $12,302 $
46Total Capital Cost (TCC) $3,762 $8,853 $8,777 $9,841 $12,558 $15,977 $25,400 $63,890 $ TCC = TDC + TICC
47 Direct Annual Costs 48 Operator Labor (OLC) $0 $0 $0 $0 $0 $0 $0 $0 $Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 47 49 Supervisor Labor (SLC) $0 $0 $0 $0 $0 $0 $0 $0 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR-2005-0030- 0005 50 Operating Materials (OMC) $0 $0 $0 $0 $0 $0 $0 $0 $
51 Maintenance - Labor (MLC) $260 $260 $260 $260 $260 $260 $260 $260 $

52Maintenance - Materials (MMC) $0 $0 $0 $0 $0 $0 $0 $0 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 53 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $0 $0 $0 $ 54Electricity (ELC) $0 $0 $0 $0 $0 $0 $0 $0 $
55 Total Direct Annual Costs (TDAC) $260 $260 $260 $260 $260 $260 $260 $260 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 56Indirect Annual Costs
57 Overhead (OHC) $156 $156 $156 $156 $156 $156 $156 $156 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005.
58 Administrative Charges (ADC) $75 $177 $176 $197 $251 $320 $508 $1,278 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.
59 Property Taxes (PTC) $38 $89 $88 $98 $126 $160 $254 $639 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.
60Insurance (INC) $38 $89 $88 $98 $126 $160 $254 $639 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.
61 Capital Recovery Factor (CRF) 0.142378 0.1423780.1423780.142378 0.1423780.1423780.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 48 62 Capital Recovery (CRC) $536 $1,260 $1,250 $1,401 $1,788 $2,275 $3,616 $9,097 $ CRC = CRF * TCC
63 Total Indirect Annual Costs (TIAC) $842 $1,771 $1,757 $1,951 $2,446 $3,070 $4,789 $11,808 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 64 Cost Summary
65 Total Direct Annual Operating Costs (TDAC) $260 $260 $260 $260 $260 $260 $260 $260 $

66Total Indirect Annual Operating Costs (TIAC) $842 $1,771 $1,757 $1,951 $2,446 $3,070 $4,789 $11,808 $

67 Total Annual Costs (TAC) $1,102 $2,031 $2,017 $2,211 $2,706 $3,330 $5,049 $12,068 $ TAC = TDAC + TIAC 68 69 Site-Rated Power (SR) 167 255 300 300 500 800 1,500 3,000 hp 70

71 Linear Regression of TACvs.SR: m = 3.60 $/hp Total annual operating costs as function of 4SRB engine hp. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. Truncated at 3 sig figures. 72 b = 744 $ 73 r2= 0.9775 74 Cost Effectiveness Estimates 75 Size Range (SRg) < 50 50 - 100 100 - 175 175 -

300 300 -

500 500- 1000 hp
76 Size Range Average (SRgA) 25 75 138 238 400 750 hp
77 HAP Emission Reductions (ǻHAP) 35.54 106.62 196.17 338.33 568.62 1066.16 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
78 Total Annual Costs from Regression (TACR) $834 $1,014 $1,241 $1,601 $2,184 $3,444 $744 $744 $/yr TACR = SRgA *m +b

.
79 Cost Effectiveness (CE) $46,949 $19,026 $12,653 $9,464 $7,683 $6,461 #DIV/0! #DIV/0! $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 49 Attachment H – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Revised EPA Proposed Rule data. Cost Effectiveness approach from docket document EPA-HQ-OAR-2008-0708-0017 was revised. Adjustments were made to useful equipment life (10 years), HAP emission factor (2.43E-04 lb HAP/hp-hr), capital costs (inflation adjust docket cost data and include costs for AFRC & power source), annual operating hours (6,500), and O&M costs (EPA assumption that NSCR annual O&M is equivalent to diesel particulate filter cleaning is incorrect and severely underestimates cost). Includes a fuel penalty associated with engine operation at a less efficient AFR for NSCR. 1 Parameter Value Units Notes/Comments 2Engine Manufacturer CAT CAT CAT OAR-2005-0030-0005 3 Model No. G3304 G3408 G3408 OAR-2005-0030-0005 4Engine Type 4SRB 4SRB 4SRB 4SRB 4SRB OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control NSCR NSCR NSCR NSCR NSCR OAR-2005-0030-0005 7 Control Purpose CH2O, CO, & NOx 8 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR2008-0708-0017, OAR-2008-0708-0001)

9 Project Duration (n) 10 10 10 10 10 years Industry budgets for AFRC and alternator replacement/system overhaul every 10 years. Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005- 0030-0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029-0038 lists catalyst replacement every 3 - 5 years. 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Site-Rated Power (SR) 167 255 300 300 500 hp OAR-2005-0030-0005 12Average Operating Load (OL) 100% 100% 100% 100% 100% % Assume 100% load for cost analysis 13 Annual Operating Hours (AOH) 6,500 6,500 6,500 6,500 6,500 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 14HAP Emission Factor (HAPEF) 2.43E-4 2.43E-4 2.43E-4 2.43E-4 2.43E-4 lb HAP/ hp-hr AP-42 EF for total HAP for 4SRB NG-fired engines.
15 HAP Emission Reductions ǻHAP) 237.40 362.50 426.47 426.47 710.78 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct CostsTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 50 17 NSCR Capital Cost Year (CCY) 2003 2003 2003 2005 2005 Year OAR-2005-0030-0005, OAR-2005-0029-0038, OAR2005-0030-0087 18 EPA Model NSCR Capital Costs (CC) $1,980 $4,660 $4,620 $5,180 $6,610 $ OAR-2005-0030-0005, OAR-2005-0029-0038, OAR2005-0030-0087 19 AFRC Capital Cost Year (CCY2) 2003 2003 2003 2003 2005 Year OAR-2005-0029-0038 for engines <300 hp, OAR-2005- 0030-0086 for engines > 300 hp,
20AFRC Capital Costs (CC2) $5,440 $5,440 $5,440 $5,440 $7,500 $ OAR-2005-0029-0038 for engines <300 hp, OAR-2005- 0030-0086 for engines > 300 hp (avg of $5,000 & $10,000),
21 Adjusted Capital Costs (ACC) $8,351 $11,368 $11,323 $11,618 $14,969 $ Capital costs adjusted for inflation (to 2007 dollars at 3% per year) and inclusion of AFRC: ACC = CC*1.03^(2007-CCY) + CC2*1.03^(2007-CCY2)

22Additional Capital Equipment (AEC) $600 $600 $600 $600 $600 $ Additional capital equipment – battery, battery housing, alternator or solar panel – were assumed to cost $600 per engine. This assumes 50% of the engines do not have access to electricity and require this additional equipment for an NSCR retrofit 23 Combustion Control Equipment and Auxiliary Equipment (EC) $8,951 $11,968 $11,923 $12,218 $15,569 $ EC = AEC + ACC
24Instrumentation (IC) $895 $1,197 $1,192 $1,222 $1,557 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005- 0030-0005 25 Sales Taxes (STC) $269 $359 $358 $367 $467 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR2005-0030-0005 26Freight (FC) $448 $598 $596 $611 $778 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005- 0030-0005 27 Purchased Equipment Cost (PEC) $10,563 $14,122 $14,069 $14,418 $18,372 $ PEC = EC + IC + STC + FC
28 Direct Installation Costs
29 Foundations and Supports (FSC) $845 $1,130 $1,125 $1,153 $1,470 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 30Handling and Erection (HEC) $1,479 $1,977 $1,970 $2,018 $2,572 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 31 Electrical (EEC) $423 $565 $563 $577 $735 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 51 32Piping (PIC) $211 $282 $281 $288 $367 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 33 Insulation for ductwork (IDC) $106 $141 $141 $144 $184 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 34Painting (PAC) $106 $141 $141 $144 $184 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 35 Site Preparation (SPC) $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 36Buildings (BC) $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 37 Direct Installation Cost (DIC) $3,169 $4,237 $4,221 $4,325 $5,512 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 38 Total Direct Capital Costs (TDC) $13,731 $18,358 $18,289 $18,743 $23,883 $ TDC = PEC + DIC
39 Indirect Installation Costs
40Engineering (EIC) $1,056 $1,412 $1,407 $1,442 $1,837 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 41 Construction and field expenses (CFEC) $528 $706 $703 $721 $919 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 42 Contractor fees (CFC) $1,056 $1,412 $1,407 $1,442 $1,837 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 43 Start-up (SUC) $211 $282 $281 $288 $367 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 44Performance test (PTC) $106 $141 $141 $144 $184 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 45 Total Indirect Installation Costs (IIC) $2,958 $3,954 $3,939 $4,037 $5,144 $ IIC = EIC + CFEC + CFC + SUC + PTC 46 Contingencies 47 Contingencies (COC) $317 $424 $422 $433 $551 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 48 Total Indirect Capital Costs (TICC) $3,274 $4,378 $4,361 $4,469 $5,695 $ TICC = IIC + COC 49 Capital Cost SummaryTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 52 50Total Direct Capital Costs (TDC) $13,731 $18,358 $18,289 $18,743 $23,883 $
51 Total Indirect Capital Costs (TICC) $3,274 $4,378 $4,361 $4,469 $5,695 $ 52Total Capital Cost (TCC) $17,006 $22,736 $22,651 $23,212 $29,579 $ TCC = TDC + TICC 53 Direct Annual Costs 54 Operator Labor (OLC) $200 $200 $200 $200 $200 $ 55 Supervisor Labor (SLC) $30 $30 $30 $30 $30 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR2005-0030-0005 56 Operating Materials (OMC) $0 $0 $0 $0 $0 $ 57 Maintenance - Labor (MLC) $1,649 $1,649 $1,649 $1,649 $1,649 $

58 Maintenance - Materials (MMC) $839 $1,246 $1,881 $1,881 $2,589 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 59 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $

60Annual Testing or Downtime or other allowance for Catalyst washing (ATC) $3,978 $3,978 $3,978 $3,978 $3,978 $ Estimated cost for annual FTIR performance test and associated cost. 61 Electricity (ELC) $0 $0 $0 $0 $0 $ 62Total Direct Annual Costs (TDAC) $6,696 $7,103 $7,738 $7,738 $8,446 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 63 Indirect Annual Costs 64 Overhead (OHC) $1,631 $1,875 $2,256 $2,256 $2,681 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005. 65 Administrative Charges (ADC) $340 $455 $453 $464 $592 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. FPC = [7,420 - 7,188] (Btu/hp-hr) * 1/900 (LHV = scf/Btu) * 1/1000 (scf/Mcf) * SR (hp) * OL (hp/hp) * AOH (hrs) * $7/Mcf. 66Fuel Penalty (FPC) $1,959 $2,991 $3,519 $3,519 $5,864 $ • 7,420 Btu/hp-hr is brake specific fuel consumption (BSFC) for Waukesha VGF GSI 4SRB engines operated at AFR = 0.995 (AFR for optimum NSCR performance)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 53 • 7,188 Btu/hp-hr is brake specific fuel consumption for Waukesha VGF GSI 4SRB engines operated at AFR =1.06 (AFR for optimum engine efficiency) • Waukesha VGF GSI BSFC data provided by Nick Kosinski, Waukesha engineer. • $7/Mcf - estimated average natural gas price in 2007 [DOE/EIA website] 67 Property Taxes (PTC) $170 $227 $227 $232 $296 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 68 Insurance (INC) $170 $227 $227 $232 $296 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 69 Capital Recovery Factor (CRF) 0.142378 0.142378 0.142378 0.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 70 Capital Recovery (CRC) $2,421 $3,237 $3,225 $3,305 $4,211 $ CRC = CRF * TCC 71 Total Indirect Annual Costs (TIAC) $6,691 $9,012 $9,906 $10,008 $13,940 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 72 Cost Summary 73 Total Direct Annual Operating Costs (TDAC) $6,696 $7,103 $7,738 $7,738 $8,446 $
74Total Indirect Annual Operating Costs (TIAC) $6,691 $9,012 $9,906 $10,008 $13,940 $ 75 Total Annual Costs (TAC) $13,387 $16,115 $17,643 $17,746 $22,385 $ TAC = TDAC + TIAC 76 77 Site-Rated Power (SR) 167 255 300 300 500 hp 78
79 Linear Regression ofTACvs. SR: m = 26.6 $/hp Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. 80 b = 9,350 $ 81 r2= 0.9882 82 Cost Effectiveness Estimates 83 Size Range (SRg) < 50 50 - 100 100 - 175 175 - 300 300 - 500 hp 84 Size Range Average (SRgA) 25 75 137.5 237.5 400 hp 85 HAP Emission Reductions ǻHAP) 35.54 106.62 195.46 337.62 568.62 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCETechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 54 86Total Annual Costs from Regression (TACR) $10,016 $11,347 $13,011 $15,674 $20,001 $/yr TACR = SRgA *m +b. Note, engines < 100 hp are not required to conduct performance tests; thus, TACR for "< 50" and "50 - 100" reduced by $3,777 from linear regression estimate. 87 Cost Effectiveness (CE) $339,774 $138,233 $133,132 $92,850 $70,349 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 55 Attachment I – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SRB Engines NSCR/Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, 6,500 annual operating hours, and using best estimate values for useful equipment life (10 years), AP-42 HAP emission factor (2.43E-04 lb HAP/hp-hr), and HAP control efficiency (90%). 1 Parameter Value Units Notes/Comments 2 Engine Type 4SRB 4SRB 4SRB 4SRB 3 Fuel Used Natural Gas 4 Post Combustion Control NSCR NSCR NSCR NSCR 5 Control Purpose CH2O, CO, & NOx 6 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR-2008-0708- 0017, OAR-2008-0708-0001)

7 Project Duration (n) 10 10 10 10 years Industry budgets for AFRC and alternator replacement/system overhaul every 10 years. Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005-0030- 0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029-0038 lists catalyst replacement every 3 - 5 years. 8 Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 9 Engine Size Range (ESR) 50 - 100 100 - 175 175 -

300 300 -

500 hp OAR-2008-0708-0017 Table 2. 10 Site-Rated Power (SR) 75 137.5 237.5 400 hp Midpoint of Engine Size Range 11 Average Operating Load (OL) 100% 100% 100% 100% % Assume 100% load for cost analysis 12 Annual Operating Hours (AOH) 6,500 6,500 6,500 6,500 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 13 HAP Emission Factor (HAPEF) 2.43E-4 2.43E-4 2.43E-4 2.43E-4 lb HAP/ hp-hr AP-42 EF for total HAP for 4SRB NG-fired engines.
14 HAP Emission Reductions ǻHAP) 106.6 195.5 337.6 568.6 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 15 Capital Costs 16 Purchased Equipment Cost (PEC) $9,195 - - - Refer to Footnote A. 17 Purchased Equipment Cost (PEC) - $11,008 - - Refer to Footnote B. 18 Purchased Equipment Cost (PEC) - - $12,706 - Refer to Footnote C. 19 Purchased Equipment Cost (PEC) - - - $14,769 Refer to Footnote D.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 56 20 Total Capital Cost (TCC) $12,222 - - - $ Refer to Footnotes A, E 21 Total Capital Cost (TCC) - $13,840 - - $ Refer to Footnotes B, E 22 Total Capital Cost (TCC) - - $15,616 - $ Refer to Footnotes C, E 23 Total Capital Cost (TCC) - - - $17,474 $ Refer to Footnotes D, E 24 Direct Annual Costs

25 Operating and Maintenance Material Costs (O&MM) $839 $1,246 $1,881 $2,589 $ Annualized equipment Cost to replace Catalyst (every 3 years), O2 Sensors (8 months, ~ 2,000 operating hours), Thermocouples (7.5 years), Crankcase Filters (3 months), Fuel Valve (4 - 8 years), and Battery (2 years). Cost for annual catalyst cleaning, crane (for larger engines), and rotational catalyst.
26 O&M Labor Cost (O&ML) $2,560 $2,604 $2,664 $2,667 $ Annualized labor Cost to replace and rotate (for cleaning) Catalyst, O2 Sensor, Thermocouples, Fuel Valve, Crankcase Filter, Battery, and Perform Equipment Testing (e.g. O2 Sensor Test, AFRC optimization after O2 sensor replacement)
27 Annual Performance Testing or Downtime or other allowance for Catalyst washing (ATC) $0 $3,978 $3,978 $3,978 $ Estimated cost for annual FTIR performance test and associated cost; required when catalysts are replaced or rotated for outside cleaning. 28 Total Direct Annual Costs (TDAC) $3,399 $7,828 $8,523 $9,234 $ = O&MM + O&ML + ATC 29 Indirect Annual Costs Administrative Charges (ADMC) $0 $225 $225 $225 FPC = [7,420 - 7,188] (Btu/hp-hr) * 1/900 (scf/Btu (gas LHV)) * 1/1000 (scf/Mcf) * SR (hp) * OL (hp/hp) * AOH (hrs) * $7/Mcf. • 7,420 Btu/hp-hr is brake specific fuel consumption (BSFC) for Waukesha VGF GSI 4SRB engines operated at AFR = 0.995 (AFR for optimum NSCR performance) • 7,188 Btu/hp-hr is brake specific fuel consumption for Waukesha VGF GSI 4SRB engines operated at AFR =1.06 (AFR for optimum engine efficiency) • Waukesha VGF GSI BSFC data provided by Nick Kosinski, Waukesha engineer. 30 Fuel Penalty (FPC) $880 $1,613 $2,786 $4,692 $

• $7/Mcf - estimated average natural gas price in 2007 [DOE/EIA website] 31 Capital Recovery Factor (CRF) 0.142378 0.1423780.1423780.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 32 Capital Recovery (CRC) $1,740 $1,971 $2,223 $2,488 $ CRC = CRF * TCCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 57 33 Total Indirect Annual Costs (TIAC) $2,620 $3,808 $5,234 $7,404 $ TIAC = ADMC + FPC + CRC 34 Cost Summary - Total Annual Costs (TAC) 35 Total Direct Annual Costs (TDAC) $3,399 $7,828 $8,523 $9,234 $
36 Total Indirect Annual Costs (TIAC) $2,620 $3,808 $5,234 $7,404 $ 37 Total Annual Costs (TAC) $6,019 $11,636 $13,757 $16,638 $ TAC = TDAC + TIAC 38 Cost Effectiveness 39 Cost Effectiveness (CE) $112,906 $119,063 $81,494 $58,522 $/ton HAP CE = TAC /ǻHAP / 2000

40 A. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 50 to 100 hp. Exterran provided cost data for ten recent installations with average PEC = $9,195 (range of $8,979 - $9,203) and average installed TCC = $12,665 (range of $11,989 to $13,362). Engines include Arrow VRG 220 and VRG 330; Waukesha VRG 265, 195 GK, VRG 310, 135 GZ, VRG 330, 140 GZ, and F554G; and Caterpillar G3304NA (range of 53 - 95 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." MCBU provided that "Rich burn NSCR and AFR procurement and installation costs for 50-250 HP range from $10,000 - $15,000." MCBU has five engines of 50 - 100 hp equipped with NSCR. For this smallest engine range (50 - 100 hp), the low end of these costs were used. TCC used for cost effectiveness calculations based on average of Exterran average and the Devon and MCBU values. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.38.

41 B. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 100 to 175 hp. Exterran provided cost data for six recent installations with average PEC = $11,008 (range of $10,167 - $12,284) and average installed TCC = $15,391 (range of $14,737 to $16,731). Engines include Waukesha F11G, F817G, WAK-B, 145 GZ; and Caterpillar G3306NA and G333NA (range of 116 - 172 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." MCBU provided that "Rich burn NSCR and AFR procurement and installation costs for 50-250 HP range from $10,000 - $15,000." MCBU has 51 engines of 100 - 250 hp equipped with NSCR. For this engine range (100 - 175 hp), a linearly extrapolated estimate based on 137.5 hp was used. TCC used for cost effectiveness calculations based on average of Exterran average and the Devon and MCBU values. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.40.

42 C. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 175 to 300 hp. Exterran provided cost data for 13 recent installations with average PEC = $12,706 (range of $10,703 - $19,337) and average installed TCC = $17,849 (range of $15,763 to $24,934). Engines include Waukesha F1197G, F1905G, F18G, and F11GSI; and Caterpillar G3306TA, G3406NA, G3306TAA, G342NA, G343NA, G353NA, G3408NA, G342TA, and G342TAA... (range of 203 - 265 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." MCBU provided that "Rich burn NSCR and AFR procurement and installation costs for 50-250 HP range from $10,000 - $15,000." MCBU has 51 engines of 100 -250 hp equipped with NSCR. For this engine range (175 - 300 hp), the maximum of $15,000 was used. TCC used for cost effectiveness calculations based on average of Exterran average and the Devon and MCBU values. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.40.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 58 43 D. Based on capital cost data provided by Devon, Exterran, and MCBU for engines ranging from 300 to 500 hp. Exterran provided cost data for 15 recent installations with average PEC = $14,769 (range of $11,777 - $18,547) and average installed TCC = $20,948 (range of $16,838 to $24,100). Engines include Waukesha H2475G, LRO, F18GSI, F18GSID, F2895G, LRZ, L3711G; and Caterpillar G3508NA, G306TA, G379NA, G3408TA, G3408TAW, G379TA, G379TAA, AND G398NA. (range of 310 - 500 hp) and the costs do not include an initial performance test. Devon estimated installed NSCR cost/TCC = $14,000 for engines 50 - 500 hp "based on some recent catalyst installations performed in two different operational areas." TCC used for cost effectiveness calculations based on average of Exterran average and the Devon value. The average ratio of Total Capital Cost to Purchased Equipment Cost (for engines where PEC was provided) was 1.42. 44 E. Total Capital Costs do not include initial performance test which would be required with or without post-combustion controls installation.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 59 Attachment J – Cost Effectiveness Calculations for Gas-Fired 4SLB and 2SLB Engines Post-Combustion Controls: Proposed Rule Values (Docket Document EPA-HQ-OAR-2008-0708-0017 Table 2) 1 Parameter Value Units Notes/Comments 2Engine Manufacturer 3 Model No. 4Engine Type Lean Burn OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control Ox cat OAR-2005-0030-0005 7 Control Purpose CH2O & CO 8 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR-2008-0708-0017, OAR-2008-0708-0001) 9 Project Duration (n) 20 20 20 20 20 20 years 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Site-Rated Power (SR) 500 1000 2000 3000 5000 8000 hp OAR-2005-0030-0005 12Average Operating Load (OL) 100% 100% 100% 100% 100% 100% % Assume 100% load for cost analysis
13 Annual Operating Hours (AOH) 2,800 2,800 2,800 2,800 2,800 2,800 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030- 0005). 14HAP Emission Factor (HAPEF) 6.88E-4 6.88E-4 6.88E-4 6.88E-4 6.88E-4 6.88E-4 lb HAP/ hp-hr EF for total HAP for NG-fired engines (OAR2005-0030-0009) 15 HAP Emission Reductions ǻHAP) 866.88 1733.76 3467.52 5201.28 8668.80 13870.08 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17 EPA Model NSCR Capital Costs (CC) $5,390 $6,930 $11,180 $14,210 $28,480 $49,740 $ OAR-2005-0030-0005, OAR-2005-0029-0038, OAR-2005-0030-0087 18 Instrumentation (IC) $539 $693 $1,118 $1,421 $2,848 $4,974 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 19 Sales Taxes (STC) $162 $208 $335 $426 $854 $1,492 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 20Freight (FC) $270 $347 $559 $711 $1,424 $2,487 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 21 Purchased Equipment Cost (PEC) $6,360 $8,177 $13,192 $16,768 $33,606 $58,693 $ PEC = EC + IC + STC + FCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 60 22Direct Installation Costs 23 Foundations and Supports (FSC) $509 $654 $1,055 $1,341 $2,689 $4,695 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 24Handling and Erection (HEC) $890 $1,145 $1,847 $2,347 $4,705 $8,217 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 25 Electrical (EEC) $254 $327 $528 $671 $1,344 $2,348 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 26Piping (PIC) $127 $164 $264 $335 $672 $1,174 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 27 Insulation for ductwork (IDC) $64 $82 $132 $168 $336 $587 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 28 Painting (PAC) $64 $82 $132 $168 $336 $587 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 29 Site Preparation (SPC) $0 $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 30Buildings (BC) $0 $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 31 Direct Installation Cost (DIC) $1,908 $2,453 $3,958 $5,030 $10,082 $17,608 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 32Total Direct Capital Costs (TDC) $8,268 $10,631 $17,150 $21,798 $43,688 $76,301 $ TDC = PEC + DIC 33 Indirect Installation Costs 34Engineering (EIC) $636 $818 $1,319 $1,677 $3,361 $5,869 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 35 Construction and field expenses (CFEC) $318 $409 $660 $838 $1,680 $2,935 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 36 Contractor fees (CFC) $636 $818 $1,319 $1,677 $3,361 $5,869 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 37 Start-up (SUC) $127 $164 $264 $335 $672 $1,174 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 38 Performance test (PTC) $64 $82 $132 $168 $336 $587 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 39 Total Indirect Installation Costs (IIC) $1,781 $2,290 $3,694 $4,695 $9,410 $16,434 $ IIC = EIC + CFEC + CFC + SUC + PTC 40 ContingenciesTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 61 41 Contingencies (COC) $191 $245 $396 $503 $1,008 $1,761 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 42Total Indirect Capital Costs (TICC) $1,972 $2,535 $4,090 $5,198 $10,418 $18,195 $ TICC = IIC + COC 43 Capital Cost Summary 44Total Direct Capital Costs (TDC) $8,268 $10,631 $17,150 $21,798 $43,688 $76,301 $
45 Total Indirect Capital Costs (TICC) $1,972 $2,535 $4,090 $5,198 $10,418 $18,195 $ 46Total Capital Cost (TCC) $10,240 $13,166 $21,240 $26,996 $54,106 $94,496 $ TCC = TDC + TICC 47 Direct Annual Costs 48 Operator Labor (OLC) $0 $0 $0 $0 $0 $0 $ 49 Supervisor Labor (SLC) $0 $0 $0 $0 $0 $0 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR-2005-0030-0005 50 Operating Materials (OMC) $0 $0 $0 $0 $0 $0 $ 51 Maintenance - Labor (MLC) $260 $260 $260 $260 $260 $260 $

52Maintenance - Materials (MMC) $0 $0 $0 $0 $0 $0 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 53 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $0 $ 54Electricity (ELC) $0 $0 $0 $0 $0 $0 $ 55 Total Direct Annual Costs (TDAC) $260 $260 $260 $260 $260 $260 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 56Indirect Annual Costs
57 Overhead (OHC) $156 $156 $156 $156 $156 $156 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030- 0005. 58 Administrative Charges (ADC) $205 $263 $425 $540 $1,082 $1,890 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 59 Property Taxes (PTC) $102 $132 $212 $270 $541 $945 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 62 60Insurance (INC) $102 $132 $212 $270 $541 $945 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 61 Capital Recovery Factor (CRF) 0.094393 0.094393 0.094393 0.094393 0.094393 0.094393 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 62 Capital Recovery (CRC) $967 $1,243 $2,005 $2,548 $5,107 $8,920 $ CRC = CRF * TCC 63 Total Indirect Annual Costs (TIAC) $1,532 $1,925 $3,011 $3,784 $7,428 $12,856 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 64 Cost Summary 65 Total Direct Annual Operating Costs (TDAC) $260 $260 $260 $260 $260 $260 $
66Total Indirect Annual Operating Costs (TIAC) $1,532 $1,925 $3,011 $3,784 $7,428 $12,856 $ 67 Total Annual Costs (TAC) $1,792 $2,185 $3,271 $4,044 $7,688 $13,116 $ TAC = TDAC + TIAC 68 69 Site-Rated Power (SR) 500 1,000 2,000 3,000 5,000 8,000 hp 70

71 Linear Regression ofTACvs. SR: m = 1.52 $/hp Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. Truncated at 3 significant figures. "b" set at $657 rather than $658 to equal EPA calcs. 72 b = 393 $ 73 r2= 0.9816 74 Cost Effectiveness Estimates 75 Size Range (SRg) < 50 50 - 100 100 - 175 175 -

300 300 -

500 500- 1000 hp 76 Size Range Average (SRgA) 25 75 138 238 400 750 hp 77 HAP Emission Reductions ǻHAP) 43.34 130.03 239.26 412.63 693.50 1300.32 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
78 Total Annual Costs from Regression (TACR) $431 $507 $603 $755 $1,001 $1,533 $/yr TACR = SRgA *m +b

. 79 Cost Effectiveness (CE) $19,887 $7,798 $5,039 $3,658 $2,887 $2,358 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 63 Attachment K – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB Engines Post-Combustion Controls: Proposed Rule Values (Docket Document EPA-HQ-OAR-2008-0708-0017 Table 2)

### w/Adjustments Using Best Estimates for Useful Equipment Life (10 years) & HAP Emission Factor (4.78E-4 lb HAP/hp-hr) 1 Parameter Value Units Notes/Comments 2Engine Manufacturer 3 Model No. 4Engine Type Lean Burn OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control Ox Cat OAR-2005-0030-0005 7 Control Purpose CH2O & CO 8 Target Reduction -Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR2008-0708-0017, OAR-2008-0708-0001) 9 Project Duration (n) 10 10 10 10 10 10 years 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Site-Rated Power (SR) 500 1000 2000 3000 5000 8000 hp OAR-2005-0030-0005 12Average Operating Load (OL) 100% 100% 100% 100% 100% 100% % Assume 100% load for cost analysis
13 Annual Operating Hours (AOH) 2,800 2,800 2,800 2,800 2,800 2,800 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 14HAP Emission Factor (HAPEF) 4.78E-4 4.78E-4 4.78E-4 4.78E-4 4.78E-4 4.78E-4 lb HAP/ hphr EF for total HAP for NG-fired engines < 500 hp (OAR-2005-0030-0009) 15 HAP Emission Reductions ǻHAP) 602.28 1204.56 2409.12 3613.68 6022.80 9636.48 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17 EPA Model NSCR Capital Costs (CC) $5,390 $6,930 $11,180 $14,210 $28,480 $49,740 $ OAR-2005-0030-0005, OAR-2005-0029-0038, OAR2005-0030-0087 18 Instrumentation (IC) $539 $693 $1,118 $1,421 $2,848 $4,974 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR2005-0030-0005 19 Sales Taxes (STC) $162 $208 $335 $426 $854 $1,492 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR2005-0030-0005 20Freight (FC) $270 $347 $559 $711 $1,424 $2,487 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR2005-0030-0005 21 Purchased Equipment Cost (PEC) $6,360 $8,177 $13,192 $16,768 $33,606 $58,693 $ PEC = EC + IC + STC + FCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 64 22Direct Installation Costs
23 Foundations and Supports (FSC) $509 $654 $1,055 $1,341 $2,689 $4,695 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 24Handling and Erection (HEC) $890 $1,145 $1,847 $2,347 $4,705 $8,217 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 25 Electrical (EEC) $254 $327 $528 $671 $1,344 $2,348 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 26Piping (PIC) $127 $164 $264 $335 $672 $1,174 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 27 Insulation for ductwork (IDC) $64 $82 $132 $168 $336 $587 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 28 Painting (PAC) $64 $82 $132 $168 $336 $587 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 29 Site Preparation (SPC) $0 $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 30Buildings (BC) $0 $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 31 Direct Installation Cost (DIC) $1,908 $2,453 $3,958 $5,030 $10,082 $17,608 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 32Total Direct Capital Costs (TDC) $8,268 $10,631 $17,150 $21,798 $43,688 $76,301 $ TDC = PEC + DIC
33 Indirect Installation Costs
34Engineering (EIC) $636 $818 $1,319 $1,677 $3,361 $5,869 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 35 Construction and field expenses (CFEC) $318 $409 $660 $838 $1,680 $2,935 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 36 Contractor fees (CFC) $636 $818 $1,319 $1,677 $3,361 $5,869 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 37 Start-up (SUC) $127 $164 $264 $335 $672 $1,174 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 38 Performance test (PTC) $64 $82 $132 $168 $336 $587 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 39 Total Indirect Installation Costs (IIC) $1,781 $2,290 $3,694 $4,695 $9,410 $16,434 $ IIC = EIC + CFEC + CFC + SUC + PTCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 65 40 Contingencies 41 Contingencies (COC) $191 $245 $396 $503 $1,008 $1,761 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 42Total Indirect Capital Costs (TICC) $1,972 $2,535 $4,090 $5,198 $10,418 $18,195 $ TICC = IIC + COC 43 Capital Cost Summary
44Total Direct Capital Costs (TDC) $8,268 $10,631 $17,150 $21,798 $43,688 $76,301 $
45 Total Indirect Capital Costs (TICC) $1,972 $2,535 $4,090 $5,198 $10,418 $18,195 $ 46Total Capital Cost (TCC) $10,240 $13,166 $21,240 $26,996 $54,106 $94,496 $ TCC = TDC + TICC 47 Direct Annual Costs 48 Operator Labor (OLC) $0 $0 $0 $0 $0 $0 $ 49 Supervisor Labor (SLC) $0 $0 $0 $0 $0 $0 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR2005-0030-0005 50 Operating Materials (OMC) $0 $0 $0 $0 $0 $0 $
51 Maintenance - Labor (MLC) $260 $260 $260 $260 $260 $260 $

52Maintenance - Materials (MMC) $0 $0 $0 $0 $0 $0 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 53 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $0 $ 54Electricity (ELC) $0 $0 $0 $0 $0 $0 $ 55 Total Direct Annual Costs (TDAC) $260 $260 $260 $260 $260 $260 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 56Indirect Annual Costs 57 Overhead (OHC) $156 $156 $156 $156 $156 $156 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005. 58 Administrative Charges (ADC) $205 $263 $425 $540 $1,082 $1,890 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 59 Property Taxes (PTC) $102 $132 $212 $270 $541 $945 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 66 60Insurance (INC) $102 $132 $212 $270 $541 $945 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 61 Capital Recovery Factor (CRF) 0.1423780.142378 0.1423780.1423780.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 62 Capital Recovery (CRC) $1,458 $1,874 $3,024 $3,844 $7,704 $13,454 $ CRC = CRF * TCC 63 Total Indirect Annual Costs (TIAC) $2,024 $2,557 $4,030 $5,080 $10,024 $17,390 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 64 Cost Summary 65 Total Direct Annual Operating Costs (TDAC) $260 $260 $260 $260 $260 $260 $
66Total Indirect Annual Operating Costs (TIAC) $2,024 $2,557 $4,030 $5,080 $10,024 $17,390 $ 67 Total Annual Costs (TAC) $2,284 $2,817 $4,290 $5,340 $10,284 $17,650 $ TAC = TDAC + TIAC 68 69 Site-Rated Power (SR) 500 1,000 2,000 3,000 5,000 8,000 hp 70 71 Linear Regression ofTAC vs.SR: m = 2.07 $/hp
72 b = 385 $ 73 r2= 0.9816 Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. Truncated at 3 significant figures. "b" set at $657 rather than $658 to equal EPA calculations. 74 Cost Effectiveness Estimates 75 Size Range (SRg) < 50 50 - 100 100 - 175 175 -

300 300 -

500 500-

1000 hp 76 Size Range Avg. (SRgA) 25 75 138 238 400 750 hp 77 HAP Emission Reductions ǻHAP) 30.11 90.34 166.23 286.69 481.82 903.42 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
78 Total Annual Costs from Regression (TACR) $437 $540 $671 $878 $1,213 $1,937 $/yr TACR = SRgA *m +b

. 79 Cost Effectiveness (CE) $29,010 $11,961 $8,069 $6,122 $5,034 $4,288 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 67 Attachment L – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB Engines Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendorsand using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (90%). 1 Parameter Value Units Notes/Comments 2 Engine Type 4SLB 3 Fuel Used Natural Gas 4 Post Combustion Control Ox Cat Ox Cat 5 Control Purpose 6 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% % Assumed control efficiency for Oxidation catalysts (OAR-2008-0708-0017, OAR-2008-0708-0001)

7 Project Duration (n) 10 10 years Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005-0030-0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029-0038 lists catalyst replacement every 3 - 5 years. 8 Project Discount Interest Rate (i) 7.0% 7.0% % (OAR-2005-0030-0005) 9 Engine Size Range (ESR) 300 - 500 300 -

500 hp OAR-2008-0708-0017 Table 2. 10 Site-Rated Power (SR) 400 400 hp Midpoint of Engine Size Range 11 Average Operating Load (OL) 100% 100% % Assume 100% load for cost analysis 12 Annual Operating Hours (AOH) 2,800 6,500 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 13 HAP Emission Factor (HAPEF) 0.000478 0.000478 lb HAP/ hp-hr EF for total HAP for NG-fired engines < 500 hp; the size range that is the basis for the above the floor analysis (OAR-2005-0030-0009) 14 HAP Emission Reductions ǻHAP) 481.8 1118.5 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 15 Capital Costs 16 Purchased Equipment Cost (PEC) $9,419 $9,419 Refer to Footnote A. 17 Total Capital Cost (TCC) $14,005 $14,005 $ Refer to Footnotes B. 18 Direct Annual CostsTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 68 19 Operating and Maintenance Material Costs (O&MM) $1,891 $1,891 $ Annualized equipment Cost to replace Catalyst (every 3 years), Thermocouples (7.5 years), and Crankcase Filters (3 months) and annual catalyst rotation for cleaning. Cost for rotational catalyst, catalyst cleaning, and crane. 20 O&M Labor Cost (O&ML) $1,053 $1,053 $ Annualized labor Cost to replace and rotate (for cleaning) Catalyst, Thermocouples, and Crankcase Filter.
21 Annual Performance Testing or Downtime or other allowance for Catalyst washing (ATC) $1,202 $1,202 $ Estimated cost for annual performance test and associated cost; required when catalysts are replaced or for annual rotation for outside cleaning.
22 Total Direct Annual Costs (TDAC) $4,146 $4,146 $ = O&MM + O&ML + ATC 23 Indirect Annual Costs 24 Administrative Charges (ADMC) $225 $225 25 Capital Recovery Factor (CRF) 0.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 26 Capital Recovery (CRC) $1,994 $1,994 $ CRC = CRF * TCC 27 Total Indirect Annual Costs (TIAC) $2,219 $2,219 $ TIAC = ADMC + CRC 28 Cost Summary - Total Annual Costs (TAC) 29 Total Direct Annual Costs (TDAC) $4,146 $4,146 $
30 Total Indirect Annual Costs (TIAC) $2,219 $2,219 $ 31 Total Annual Costs (TAC) $6,365 $6,365 $ TAC = TDAC + TIAC 32 Cost Effectiveness 33 Cost Effectiveness (CE) $26,420 $11,381 $/ton HAP CE = TAC /ǻHAP / 2000

34 A. Based on capital cost data provided by Exterran for engines ranging from 300 to 500 hp. Exterran provided cost data for three recent installations with average PEC = $9,419 (range of $7,149 - $10,555) and average installed TCC = $14,005 (range of $11,777 to $15,119). Engines include Waukesha F18GL and F18GLD, caterpillar G3408CLE and the costs do not include an initial performance test. The average ratio of Total Capital Cost to Purchased Equipment Cost was 1.49. 35 B. Total Capital Costs do not include initial performance test which would be required with or without post-combustion controls installation.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 69 Attachment M – “Baseline” Cost Effectiveness Calculations for Gas-Fired 4SLB and 2SLB Engines Post-Combustion Controls: Proposed Rule Values (Docket Document EPA-HQ-OAR-2008-0708-0017 Table 2). Adjustments were made using best estimate values to useful equipment life (10 years) and HAP emission factor (4.78E-4 lb HAP/hp-hr), and to annual operating hours (6,500). 1 Parameter Value Units Notes/Comments 2Engine Manufacturer 3 Model No. 4Engine Type Lean Burn OAR-2005-0030-0005 5 Fuel Used Natural Gas OAR-2005-0030-0005 6Post Combustion Control Ox Cat OAR-2005-0030-0005 7 Control Purpose CH2O & CO 8 Target Reduction - Catalyst Control Efficiency (CCE) 90% 90% 90% 90% 90% 90% % Assumed control efficiency for NSCR catalysts (OAR2008-0708-0017, OAR-2008-0708-0001) 9 Project Duration (n) 10 10 10 10 10 10 years 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Site-Rated Power (SR) 500 1000 2000 3000 5000 8000 hp OAR-2005-0030-0005 12Average Operating Load (OL) 100% 100% 100% 100% 100% 100% % Assume 100% load for cost analysis 13 Annual Operating Hours (AOH) 6,500 6,500 6,500 6,500 6,500 6,500 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 14HAP Emission Factor (HAPEF) 4.78E-4 4.78E-4 4.78E-4 4.78E-4 4.78E-4 4.78E-4 lb HAP/ hp-hr EF for total HAP for NG-fired engines < 500 hp (OAR-2005-0030-0009) 15 HAP Emission Reductions ǻHAP) 1398.15 2796.30 5592.60 8388.90 13981.5022370.40 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 16Direct Costs 17 EPA Model NSCR Capital Costs (CC) $5,390 $6,930 $11,180 $14,210 $28,480 $49,740 $ OAR-2005-0030-0005, OAR-2005-0029-0038, OAR2005-0030-0087 18 Instrumentation (IC) $539 $693 $1,118 $1,421 $2,848 $4,974 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR2005-0030-0005 19 Sales Taxes (STC) $162 $208 $335 $426 $854 $1,492 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR2005-0030-0005 20Freight (FC) $270 $347 $559 $711 $1,424 $2,487 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 70 21 Purchased Equipment Cost (PEC) $6,360 $8,177 $13,192 $16,768 $33,606 $58,693 $ PEC = EC + IC + STC + FC 22Direct Installation Costs
23 Foundations and Supports (FSC) $509 $654 $1,055 $1,341 $2,689 $4,695 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR2005-0030-0005

24Handling and Erection (HEC) $890 $1,145 $1,847 $2,347 $4,705 $8,217 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
25 Electrical (EEC) $254 $327 $528 $671 $1,344 $2,348 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 26Piping (PIC) $127 $164 $264 $335 $672 $1,174 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
27 Insulation for ductwork (IDC) $64 $82 $132 $168 $336 $587 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
28 Painting (PAC) $64 $82 $132 $168 $336 $587 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 29 Site Preparation (SPC) $0 $0 $0 $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 30Buildings (BC) $0 $0 $0 $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 31 Direct Installation Cost (DIC) $1,908 $2,453 $3,958 $5,030 $10,082 $17,608 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 32Total Direct Capital Costs (TDC) $8,268 $10,631 $17,150 $21,798 $43,688 $76,301 $ TDC = PEC + DIC 33 Indirect Installation Costs 34Engineering (EIC) $636 $818 $1,319 $1,677 $3,361 $5,869 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005
35 Construction and field expenses (CFEC) $318 $409 $660 $838 $1,680 $2,935 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005
36 Contractor fees (CFC) $636 $818 $1,319 $1,677 $3,361 $5,869 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 37 Start-up (SUC) $127 $164 $264 $335 $672 $1,174 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 71 38 Performance test (PTC) $64 $82 $132 $168 $336 $587 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 39 Total Indirect Installation Costs (IIC) $1,781 $2,290 $3,694 $4,695 $9,410 $16,434 $ IIC = EIC + CFEC + CFC + SUC + PTC 40 Contingencies 41 Contingencies (COC) $191 $245 $396 $503 $1,008 $1,761 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR2005-0030-0005 42Total Indirect Capital Costs (TICC) $1,972 $2,535 $4,090 $5,198 $10,418 $18,195 $ TICC = IIC + COC 43 Capital Cost Summary 44Total Direct Capital Costs (TDC) $8,268 $10,631 $17,150 $21,798 $43,688 $76,301 $
45 Total Indirect Capital Costs (TICC) $1,972 $2,535 $4,090 $5,198 $10,418 $18,195 $ 46Total Capital Cost (TCC) $10,240 $13,166 $21,240 $26,996 $54,106 $94,496 $ TCC = TDC + TICC 47 Direct Annual Costs 48 Operator Labor (OLC) $0 $0 $0 $0 $0 $0 $ 49 Supervisor Labor (SLC) $0 $0 $0 $0 $0 $0 $ SLC = 0.15 * OLC. EPA Cost Control Manual, OAR2005-0030-0005 50 Operating Materials (OMC) $0 $0 $0 $0 $0 $0 $ 51 Maintenance - Labor (MLC) $260 $260 $260 $260 $260 $260 $

52Maintenance - Materials (MMC) $0 $0 $0 $0 $0 $0 $ Annual operating & maintenance costs for parts (e.g. O2 sensor, catalyst, battery, alternator, TC, crankcase filter), labor (parts & catalyst replacement & testing), and outside services (i.e., catalyst cleaning, crane rental for catalyst removal for engines > 300 hp). Based on Industry O&M cost records. 53 Annual Combustion Control (ACC) $0 $0 $0 $0 $0 $0 $ 54Electricity (ELC) $0 $0 $0 $0 $0 $0 $ 55 Total Direct Annual Costs (TDAC) $260 $260 $260 $260 $260 $260 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 56Indirect Annual Costs 57 Overhead (OHC) $156 $156 $156 $156 $156 $156 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 72 58 Administrative Charges (ADC) $205 $263 $425 $540 $1,082 $1,890 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 59 Property Taxes (PTC) $102 $132 $212 $270 $541 $945 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 60Insurance (INC) $102 $132 $212 $270 $541 $945 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR2005-0030-0005. 61 Capital Recovery Factor (CRF) 0.1423780.142378 0.1423780.142378 0.1423780.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 62 Capital Recovery (CRC) $1,458 $1,874 $3,024 $3,844 $7,704 $13,454 $ CRC = CRF * TCC 63 Total Indirect Annual Costs (TIAC) $2,024 $2,557 $4,030 $5,080 $10,024 $17,390 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 64 Cost Summary 65 Total Direct Annual Operating Costs (TDAC) $260 $260 $260 $260 $260 $260 $
66Total Indirect Annual Operating Costs (TIAC) $2,024 $2,557 $4,030 $5,080 $10,024 $17,390 $ 67 Total Annual Costs (TAC) $2,284 $2,817 $4,290 $5,340 $10,284 $17,650 $ TAC = TDAC + TIAC 68 69 Site-Rated Power (SR) 500 1,000 2,000 3,000 5,000 8,000 hp 70

71 Linear Regression ofTACvs. SR: m = 2.07 $/hp Total annual operating costs as function of 4SRB engine horsepower. Determined from linear regression of Total Annual Costs vs. Site-Rated Power. Truncated at 3 significant figures. "b" set at $657 rather than $658 to equal EPA calculations. 72 b = 385 $ 73 r2= 0.9816 74 Cost Effectiveness Estimates 75 Size Range (SRg) < 50 50 - 100 100 - 175 175 -

300 300 -

500 500- 1000 hp 76 Size Range Average (SRgA) 25 75 138 238 400 750 hp 77 HAP Emission Reductions ǻHAP) 69.91 209.72 385.89 665.52 1118.52 2097.23 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
78 Total Annual Costs from Regression (TACR) $437 $540 $671 $878 $1,213 $1,937 $/yr TACR = SRgA *m +b

. 79 Cost Effectiveness (CE) $12,497 $5,152 $3,476 $2,637 $2,169 $1,847 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 73 Attachment N – “Baseline” Cost Effectiveness Calculations for Gas-Fired 2SLB Engines Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors, 2,800 annual operating hours, and best estimate values for useful equipment life (10 years), HAP emission factor (4.78E-03 lb HAP/hp-hr), and HAP control efficiency (73%). 1 Parameter Value Units Notes/Comments 2Engine Manufacturer 3 Model No. 4Engine Type 2SLB 5 Fuel Used Natural Gas 6Post Combustion Control Ox Cat 7Control Purpose CH2O & CO

8Target Reduction - Catalyst Control Efficiency (CCE) 73% 73% 73% % Based on vendor (Cooper Cameron/Ajax) net pricing estimate for Premium catalyst with muffler - offers 73% reduction for CH2O for one year of operation before cleaning or replacement is required. Refer to Attachment O and email from Bruce Chrisman of Cameron to Melanie King of EPA.

9Project Duration (n) 10 10 10 years Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005-0030-0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029-0038 lists catalyst replacement every 3 - 5 years. 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Size range 175 - 300 300 - 500 500-1000 hp
12Site-Rated Power (SR) 237.5 400 800 hp Mid-point of size ranges: 175 - 300, and 300 - 500 hp. For 500 - 1,000 hp, 800 hp is rating of Ajax DPC-2804LE that is basis for equipment capital costs. 13 Average Operating Load (OL) 100% 100% 100% % Assume 100% load for cost analysis 14Annual Operating Hours (AOH) 2,800 2,800 2,800 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 15 HAP Emission Factor (HAPEF) 0.000478 0.000478 0.000478 lb HAP/ hp-hr EF for total HAP for NG-fired engines < 500 hp; the size range that is the basis for the above the floor analysis (OAR-2005-0030-0009) 16HAP Emission Reductions ǻHAP) 232.05 390.81 781.63 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 17Direct CostsTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 74 18Combustion Control Equipment and Auxiliary Equipment (EC) $24,987 $30,409 $50,901 $ Based on vendor (Cooper Cameron/Ajax) net pricing estimate for Premium catalyst with muffler. For 175 - 300 hp range, equipment cost is average of costs for Ajax DPC-2202LE (296 hp) and Ajax DPC-2801LE (192 hp). For 300 - 500 hp range, equipment cost is cost for Ajax DPC-2802LE (384 hp). For 500 - 1,000 hp range, equipment cost is cost for Ajax DPC-2804LE (800 hp). Refer to Attachment O. The cost to retrofit an oxidation catalyst to a 2SLB engine is considerably greater than 4SLB retrofit applications. This is primarily because 2SLB engines have backpressure limitations (high backpressure would impact combustion cylinder scavenging and engine operation) and catalysts must be constructed with large surface areas for low backpressure. Other 2SLB cost impacts are muffler redesign to incorporate catalyst elements and premium catalysts to operate at lower 2SLB engine exhaust gas temperatures. Basic catalysts can be used but at significantly lower emission reductions. 19Instrumentation (IC) $2,499 $3,041 $5,090 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 20Sales Taxes (STC) $750 $912 $1,527 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 21 Freight (FC) $1,249 $1,520 $2,545 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 22Purchased Equipment Cost (PEC) $29,484 $35,883 $60,063 $ PEC = EC + IC + STC + FC 23 Direct Installation Costs 24Foundations and Supports (FSC) $2,359 $2,871 $4,805 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. Includes supports and brackets. 25 Handling and Erection (HEC) $4,128 $5,024 $8,409 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. Install catalyst and silencer. Crane rental. 26Electrical (EEC) $1,179 $1,435 $2,403 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. Install wiring, conduit, and thermocouple. 27Piping (PIC) $590 $718 $1,201 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. Upgrade exhaust and vent. 28Insulation for ductwork (IDC) $295 $359 $601 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 29Painting (PAC) $295 $359 $601 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 30Site Preparation (SPC) $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 31 Buildings (BC) $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 32Direct Installation Cost (DIC) $8,845 $10,765 $18,019 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 33 Total Direct Capital Costs (TDC) $38,329 $46,647 $78,082 $ TDC = PEC + DIC 34Indirect Installation CostsTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 75 35 Engineering (EIC) $2,948 $3,588 $6,006 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 36Construction & field expenses (CFEC) $1,474 $1,794 $3,003 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. 37 Contractor fees (CFC) $2,948 $3,588 $6,006 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 38 Start-up (SUC) $590 $718 $1,201 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 39Performance test (PTC) $295 $359 $601 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 40Total Indirect Installation Costs (IIC) $8,256 $10,047 $16,818 $ IIC = EIC + CFEC + CFC + SUC + PTC 41 Contingencies 42Contingencies (COC) $885 $1,076 $1,802 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 43 Total Indirect Capital Costs (TICC) $9,140 $11,124 $18,620 $ TICC = IIC + COC 44 Capital Cost Summary 45 Total Direct Capital Costs (TDC) $38,329 $46,647 $78,082 $ 46Total Indirect Capital Costs (TICC) $9,140 $11,124 $18,620 $ 47Total Capital Cost (TCC) $47,469 $57,771 $96,702 $ TCC = TDC + TICC 48Direct Annual Costs 49 Operator Labor (OLC) $201 $201 $201 $ 50Supervisor Labor (SLC) $0 $0 $0 $ No costs. 51 Operating Materials (OMC) $0 $0 $0 $ 52Maintenance - Labor (MLC) $674 $674 $674 $ Annualized Labor Cost to replace catalyst, thermocouples, general maintenance.

53 Maintenance - Materials (MMC) $7,958 $7,958 $7,958 $ Annualized Materials Cost annual catalyst cleaning, and replace premium catalyst (36 months) and thermocouples (90 months). Shared cost for extra catalyst rotated during catalyst cleaning. Premium catalyst replacement is primary cost. 54Annual Combustion Control (ACC) $0 $0 $0 $

55 Annual Testing or Downtime or other allowance for Catalyst washing (ATC) $1,202 $1,202 $1,202 $ Retest required with each catalyst change (replacement or annual cleaning). Cost includes outside contractor and operator labor. 56Electricity (ELC) $0 $0 $0 $ 57Total Direct Annual Costs (TDAC) $10,035 $10,035 $10,035 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELCTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 76 58Indirect Annual Costs 59 Overhead (OHC) $5,300 $5,300 $5,300 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005. 60Administrative Charges (ADC) $949 $1,155 $1,934 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 61 Property Taxes (PTC) $475 $578 $967 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 62Insurance (INC) $475 $578 $967 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030-0005. 63 Capital Recovery Factor (CRF) 0.142378 0.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 64Capital Recovery (CRC) $6,759 $8,225 $13,768 $ CRC = CRF * TCC 65 Total Indirect Annual Costs (TIAC) $13,957 $15,836 $22,936 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 66 Cost Summary 67Total Direct Annual Operating Costs (TDAC) $10,035 $10,035 $10,035 $
68Total Indirect Annual Operating Costs (TIAC) $13,957 $15,836 $22,936 $ 69Total Annual Costs (TAC) $23,992 $25,871 $32,971 $ TAC = TDAC + TIAC 70 71 Site-Rated Power (SR) 237.5 400 800 hp 72 Cost Effectiveness Estimates 73 Size Range (SRg) 175-300 300-500 500 - 1000 hp 74Size Range Average (SRgA) 237.5 400 800 hp 75 HAP Emission Reductions ǻHAP) 232.05 390.81 781.63 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE
76Cost Effectiveness (CE) $206,791 $132,397 $84,366 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 77 Attachment O – “Baseline” Cost Effectiveness Calculations for Gas-Fired 2SLB Engines Post-Combustion Controls: Industry Cost Effectiveness Values - based on capital and operating cost data provided by industry and vendors and using best estimate values for useful equipment life (10 years), HAP emission factor (0.000478 lb HAP/hp-hr), and HAP control efficiency (73%), and 6,500 annual operating hours. 1 Parameter Value Units Notes/Comments 2Engine Manufacturer 3 Model No. 4Engine Type 2SLB 5 Fuel Used Natural Gas 6Post Combustion Control Ox Cat 7Control Purpose CH2O & CO

8Target Reduction - Catalyst Control Efficiency (CCE) 73% 73% 73% % Based on vendor (Cooper Cameron/Ajax) net pricing estimate for Premium catalyst with muffler - offers 73% reduction for CH2O for one year of operation before cleaning or replacement is required. Refer to Attachment P and email from Bruce Chrisman of Cameron to Melanie King of EPA.

9Project Duration (n) 10 10 10 years Miratech notes that for budgetary reasons should expect to replace a catalyst element after 24,000 to 32,000 hours of operation. Average = 28,000 = 10 years (OAR-2005-0030-0087). These hours not based on any performance guarantees, industry experience for guaranteed performance is more frequent catalyst replacement. OAR-2005-0029- 0038 lists catalyst replacement every 3 - 5 years. 10Project Discount Interest Rate (i) 7.0% 7.0% 7.0% % (OAR-2005-0030-0005) 11 Size range 175 - 300 300 - 500 500-1000 hp
12Site-Rated Power (SR) 237.5 400 800 hp Mid-point of size ranges: 175 - 300, and 300 - 500 hp. For 500 -1,000 hp, 800 hp is rating of Ajax DPC-2804LE that is basis for equipment capital costs. 13 Average Operating Load (OL) 100% 100% 100% % Assume 100% load for cost analysis 14Annual Operating Hours (AOH) 6,500 6,500 6,500 hrs Annual operating hours that are the basis for the EPA control cost analysis (OAR-2005-0030-0005). 15 HAP Emission Factor (HAPEF) 4.78E-4 4.78E-4 4.78E-4 lb HAP/ hphr EF for total HAP for NG-fired engines < 500 hp; the size range that is the basis for the above the floor analysis (OAR-2005-0030-0009) 16HAP Emission Reductions (ǻHAP) 538.68 907.24 1814.49 lb HAP/ yr ǻHAP = SR * OL * AOH * HAPEF * CCE 17Direct CostsTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

October 2009



### 78 18Combustion Control Equipment and Auxiliary Equipment (EC) $24,987 $30,409 $50,901 $ Based on vendor (Cooper Cameron/Ajax) net pricing estimate for Premium catalyst with muffler. For 175 - 300 hp range, equipmentcost is average of costs for Ajax DPC-2202LE (296 hp) and Ajax DPC2801LE (192 hp). For 300 - 500 hp range, equipment cost is cost for Ajax DPC-2802LE (384 hp). For 500 -1,000 hp range, equipment cost is cost for Ajax DPC-2804LE (800 hp). Refer to Attachment P. The cost to retrofit an oxidation catalyst to a 2SLB engine is considerably greater than 4SLB retrofit applications. This is primarily because 2SLB engines have backpressure limitations (high backpressure would impact combustion cylinder scavenging and engine operation) and catalysts must be constructed with large surface areas for low backpressure. Other 2SLB cost impacts are muffler redesign to incorporate catalyst elements and premium catalysts to operate at lower 2SLB engine exhaust gas temperatures. Basic catalysts can be used but at significantly lower emission reductions. 19Instrumentation (IC) $2,499 $3,041 $5,090 $ IC = 0.10 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 20Sales Taxes (STC) $750 $912 $1,527 $ STC = 0.03 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 21 Freight (FC) $1,249 $1,520 $2,545 $ FC = 0.05 * EC. EPA Cost Control Manual, OAR-2005-0030-0005 22Purchased Equipment Cost (PEC) $29,484 $35,883 $60,063 $ PEC = EC + IC + STC + FC 23 Direct Installation Costs 24Foundations and Supports (FSC) $2,359 $2,871 $4,805 $ FSC = 0.08 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. Includes supports and brackets. 25 Handling and Erection (HEC) $4,128 $5,024 $8,409 $ HEC = 0.14 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005. Install catalyst and silencer. Crane rental. 26Electrical (EEC) $1,179 $1,435 $2,403 $ EEC = 0.04 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005. Install wiring, conduit, and thermocouple. 27Piping (PIC) $590 $718 $1,201 $ PIC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005. Upgrade exhaust and vent. 28Insulation for ductwork (IDC) $295 $359 $601 $ IDC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 29Painting (PAC) $295 $359 $601 $ PAC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 30Site Preparation (SPC) $0 $0 $0 $ SPC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 31 Buildings (BC) $0 $0 $0 $ BC = 0.00 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 32Direct Installation Cost (DIC) $8,845 $10,765 $18,019 $ DIC = FSC + HEC + EEC + PIC + IDC + PAC +SPC + BC 33 Total Direct Capital Costs (TDC) $38,329 $46,647 $78,082 $ TDC = PEC + DIC 34Indirect Installation Costs 35 Engineering (EIC) $2,948 $3,588 $6,006 $ EIC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 79 36Construction & field expenses (CFEC) $1,474 $1,794 $3,003 $ CFEC = 0.05 * PEC. EPA Cost Control Manual, OAR-2005-0030- 0005. 37 Contractor fees (CFC) $2,948 $3,588 $6,006 $ CFC = 0.10 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 38 Start-up (SUC) $590 $718 $1,201 $ SUC = 0.02 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 39Performance test (PTC) $295 $359 $601 $ PTC = 0.01 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 40Total Indirect Installation Costs (IIC) $8,256 $10,047 $16,818 $ IIC = EIC + CFEC + CFC + SUC + PTC 41 Contingencies 42Contingencies (COC) $885 $1,076 $1,802 $ COC = 0.03 * PEC. EPA Cost Control Manual, OAR-2005-0030-0005 43 Total Indirect Capital Costs (TICC) $9,140 $11,124 $18,620 $ TICC = IIC + COC 44 Capital Cost Summary 45 Total Direct Capital Costs (TDC) $38,329 $46,647 $78,082 $ 46Total Indirect Capital Costs (TICC) $9,140 $11,124 $18,620 $ 47Total Capital Cost (TCC) $47,469 $57,771 $96,702 $ TCC = TDC + TICC 48Direct Annual Costs 49 Operator Labor (OLC) $201 $201 $201 $ 50Supervisor Labor (SLC) $0 $0 $0 $ No costs. 51 Operating Materials (OMC) $0 $0 $0 $ 52Maintenance - Labor (MLC) $674 $674 $674 $ Annualized Labor Cost to replace catalyst, thermocouples, general maintenance.

53 Maintenance - Materials (MMC) $7,958 $7,958 $7,958 $ Annualized Materials Cost annual catalyst cleaning, and replace premium catalyst (36 months) and thermocouples (90 months). Shared cost for extra catalyst rotated during catalyst cleaning. Premium catalyst replacement is primary cost. 54Annual Combustion Control (ACC) $0 $0 $0 $
55 Annual Testing or Downtime or other allowance for Catalyst washing (ATC) $1,202 $1,202 $1,202 $ Retest required with each catalyst change (replacement or annual cleaning). Cost includes outside contractor and operator labor. 56Electricity (ELC) $0 $0 $0 $ 57Total Direct Annual Costs (TDAC) $10,035 $10,035 $10,035 $ TDAC = OLC + SLC + OMC + MLC + MMC + ACC + ATC + ELC 58Indirect Annual Costs 59 Overhead (OHC) $5,300 $5,300 $5,300 $ OHC = 0.60 * (OLC + SLC + MLC + MMC). EPA Cost Control Manual, OAR-2005-0030-0005. 60Administrative Charges (ADC) $949 $1,155 $1,934 $ ADC = 0.02 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 80 61 Property Taxes (PTC) $475 $578 $967 $ PTC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005. 62Insurance (INC) $475 $578 $967 $ INC = 0.01 * TCC. EPA Cost Control Manual, OAR-2005-0030- 0005. 63 Capital Recovery Factor (CRF) 0.142378 0.142378 0.142378 CRF = i * (1+i)^n / [(1+i)^n - 1] (i expressed as a decimal - e.g., 10% = 0.1) 64Capital Recovery (CRC) $6,759 $8,225 $13,768 $ CRC = CRF * TCC 65 Total Indirect Annual Costs (TIAC) $13,957 $15,836 $22,936 $ TIAC = OHC + ADC + FPC + PTC + INC + CRC 66 Cost Summary 67Total Direct Annual Operating Costs (TDAC) $10,035 $10,035 $10,035 $
68Total Indirect Annual Operating Costs (TIAC) $13,957 $15,836 $22,936 $ 69Total Annual Costs (TAC) $23,992 $25,871 $32,971 $ TAC = TDAC + TIAC 70 71 Site-Rated Power (SR) 237.5 400 800 hp 72 Cost Effectiveness Estimates 73 Size Range (SRg) 175-300 300-500 300-500 hp 74Size Range Average (SRgA) 237.5 400.0 800.0 hp 75 HAP Emission Reductions (ǻHAP) 538.68 907.24 1814.49 lb HAP/ yr ǻHAP = SRgA * OL * AOH * HAPEF * CCE 76Cost Effectiveness (CE) $89,079 $57,033 $36,342 $/ton HAP CE = TACR/(ǻHAP/2,000)Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 81 Attachment P. Vendor Quote for Gas-Fired 2SLB Engine Oxidation Catalyst.Technical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 82 Attachment Q. Text of email from Bruce Chrisman of Cameron to Melanie King of EPA

Discussing Control Efficiencies for 2SLB Oxidation Catalysts. Melanie - Your Aug. 21 e-mail includes several questions about the application of an oxidizing catalyst to a two stroke engine. I'll provide answers for each of these questions, but to simplify the response, I want to begin with the following comment about this subject that I sent to the EPA on June 1: "Page 9705 - Section IV. Rationale for Proposed Rule (A): EPA states - "Oxidation catalyst control has been widely used and has been available for decades for use with lean burn stationary engines." Comment: This statement is true only for 4SRB and 4SLB engines. The experience period for 2SLB engines with oxidizing catalysts is less than five years. Ajax has worked with oil manufacturers to identify a suitable oil that does not contaminate the oxidation catalyst. This catalyst friendly oil has been demonstrated as successful for the 2SLB engines during the last five years of field validation testing. Recommendation: It is suggested that the EPA recognize this as an emerging technology and not make the requirements more stringent for 2SLB engines using this technology than the requirements for 4SLB engines." The successful application of an oxidizing converter to a two stroke engine is relatively new technology. I have Patent # 7,464,543 for a "Two-Stroke Lean Burn Gas Engine with a Silencer/Catalytic Converter." The applications of this converter to Ajax two stroke engines was done in the Summer of 2004. The first two of these field validation converters have now been operating successfully for about five years. We now have many of these converters operating in several states, and we have confirmations describing the field test results. The comments which you've received about the challenges associated with applying an oxidizing catalyst to two stroke engines were correct prior to the development of our converter. During the design and Lab testing of our converter, we had to deal with each of those challenges, as described below: 1. Low exhaust temperatures - We located our catalyst box in the lower part of the muffler, where the temperatures are typically in the 600 to 650 deg.F range. We have proven that our catalyst will produce high emissions removal efficiencies with any temperatures above 450 deg.F. Below 450 deg. F, the emissions removal efficiencies begin to be reduced. 2. Catalyst back pressure - We designed our muffler and catalyst so that the back pressure at the entrance to the muffler is less than 5 " H2O, which has been our back pressure limitation for at least the last 30 years. 3. Catalyst damage from "backfiring" - Two features are included in our converter design to protect the catalyst from damage that could be incurred because of rapid pressure increases in theTechnical Report: RICE NESHAP Control Costs Background for “Above the Floor Analysis”

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### 83 exhaust system: (1) The exhaust pipes are pointed directly at a pressure relief valve, and (2) There is a large "accumulator volume" in the muffler before the exhaust reaches the catalyst. 4. Oil contamination - Two features of our converter protect the catalyst form oil contamination: (1) The muffler is designed to cause drop out of any liquid or solid particles upstream from the catalyst, and (2) Our oil was reformulated ("catalyst friendly oil") to remove additives which could degrade the catalyst efficiency. 5. NOx increase across the catalyst - I have observed this phenomenon with catalysts on four stroke engines, but we have never seen this increase with any of the Ajax converters. All of our converter applications have demonstrated successful reduction of CO, VOC's, and H2CO for long time periods in field applications. We feel very comfortable in guaranteeing the following emissions reductions for at least one year before the catalyst needs to cleaned: CO - 83% removal VOC - 65% removal H2CO - 73% removal Actual field results indicate that the catalysts can produce the above removal efficiencies for much longer time periods. In fact some of these catalysts have operated for more than 24,000 hours without the need for cleaning. The 90% removal efficiency for CO that is proposed in the new NESHAP regulations may be achievable, but it is a stretch for our current converters. That was the reason for stating that the use of oxidizing catalysts should be considered as an emerging technology for two stroke engines. With the new NESHAP proposal, the CO emitted from the exhaust stack would have to be much lower for a two stroke engine than it is for a four stroke engine, which is an extreme leap in technology for the two stroke engines, when you consider that oxidation catalysts for four stroke engines have been widely used for decades. As an illustration of what I mean by the above comment about the proposed regulations requiring lower CO levels for two stroke engines, consider the following typical data in which the CO levels are expressed in terms of gm/BHP-hr:
4SLB 2SLB Typical pre-catalyst CO 2.3 1.2 Stack CO level with 90% removal 0.23 0.12 Hopefully the above information covered your questions about the application of oxidizing catalyst to two stroke engines. Please let me know if you need any additional information. Best regards, Bruce Chrisman Manager of Engineering Cameron's Compression Systems 2101 S.E. 18th Street Oklahoma City, OK 73129 Tel 405.619.5058