OAR Box 1781 

Prepped by Ollie Stewart 

Document Number: 

28) 11-1-20 

Docket Number: 

A-90-37 

Printed 10/29/2008 10:46:19 AM Sheet 28 of 142 

P.1 
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.r* 

COLORADO DEPARTMENT OF HEALTH 

Division or Section of APCD/Stationary Sources Program 

^%~37 

Inter-Office Communication 

TO: 

FROM: 

DATE: 

SUBJECT: 

Cimarron - File 

Cathy Rhotfe}^ 

June 26, 1989 

MATER AVAILABILITY 

n 

\) 

• « 0 £ 

On this date, I met with Dave Nettles of the Groundwater Section of the Mater 

Resources Division of the Colorado Department of Natural Resources. He 

indicated that Cimarron's assumption that water sufficient to last the life of 

the project is not available on land adjacent to their existing land is 

reasonable. He did suggest, however, that Cimarron could possibly obtain 

water rights (eliminates need to purchase land) approximately eight miles from 

the plant. Referring to Borman's map, the saturation thickness would be 150 

to 200 feet. * About a year ago, Dave indicated water rights were going for 

approximately S2000/acre-feet. Based on 97 acre-feet per year, this equates 

to approximately 2 million dollars per year for water. Capital cost for 

piping, etc would cost approximately 1 million dollars. Annualized costs 

would therefore be similar to those for obtaining water 15 miles away, 

however, the uncertainty of being able to secure water rights exists and 

therefore the Division agress with Cimarron's water availability analysis. 

L 

CR/jsg 

1723b 
P,3_ 

AIR SCIENCES INC. 

' * * • 1 

' •'•7':'/. i)"HC:r:, 

June 16,1989 

Project 48-03 

Ms. Cathy Rhodes " ' J-

,:

 ' ^^7:] 

Air Pollution Control Division 

Colorado Department of Health 

4210 E. 11th Avenue 

Denver, CO 80220 

Re: BACT justification - Cimarron Chemicals Inc. Cogeneration Plant 

Dear Cathy: 

On May 16,1989 the Colorado Air Pollution Control Division (APCD) informed 

Air Sciences that without stronger justification, 42 ppm nitrogen oxides (NOx) stack 

emissions would be considered BACT for the Cimarron (CCl) cogeneration facility. 

On May 23 we met to discuss this issue, the role of EPA in the Colorado permitting 

process and the types of justification that APCD could legitimately require. 

Your letter of May 30 summarized the conclusions of that meeting and listed 

several specific types of information that Cimarron was to produce for the additional 

BACT justification. Subsequently, the EPA prepared a letter dated June 1, which 

discussed EPA's most recent appropriate means of determining BACT. In the 

following BACT analysis, your earlier infonnation requirements are set aside in 

favor of the EPA guidance because APCD appears to be following EPA guidance on 

this matter. From the EPA guidance, we are documenting the following: 

• secondary costs of the additional control in terms of the water 

consumption from the aquifer, 

• range of economic costs for steam injection control to 42 ppm for 

similar facilities already permitted and operating, 

• economics of steam injection control for the CCl power project, 

• demonstration of why these CCl control costs are unique, and 

• selection of appropriate BACT control level. 

The issue of appropriate NOx control level is focused on the primary and 

secondary costs of water consumption. At an emission level of 75 ppm NOx, the 

water consumption for emission control is 38 gpm (Malcolm Jones, March 1989). 

With increased control to 42 ppm, the water requirement would be 87 gpm, an 

increase of approximately 50 gpm. 

12596 West Bayaud Avenue. Lakewood. Colorado 80228 303/988 2960 FAX 988 2968 
P.4 

Ms. Cathy Rhodes 

June 16,1989 

Page 2 

Secondary costs 

The water for the CCl project is to be pumped from the local aquifer. Water is a 

scarce resource in the Walsh area because it is available only from the aquifer and 

recharge is slow. There are no local (within 40 miles) non-seasonal sources of surface 

water. Water that is consumed for the control of NOx will not be available for future 

agricultural purposes. In this BACT evaluation, consideration must be given for the 

wise management of a limited resource. 

For purposes of assigning a cost to the water consumed for NOx control, two 

alternative means of obtaining the water from a surface source are considered, 

trucking of 50 gallons per minute to the Walsh area from the Arkansas River (John 

Martin Reservoir, 60 miles to the north) and piping it. The trucking costs will be 

somewhat greater than piping and are not detailed herein. Costs for receipt of the 

water from a pipeline are calculated on an attachment (Malcolm Jones, June 9, 

1989). These costs assume that a 500 gpm pipeline is to be built. For purposes of 

calculating the cost for replacement of the 50 gpm, we assume that the pipeline has 

been installed for another primary purpose and 50 gpm is purchased from the 

pipeline. These costs for 50 gpm, on an annualized basis, are $ 717,000 per year or 

$0.03 per gallon and are prohibitive for agricultural use. So, the water used for NOx 

control will be lost for agriculture. 

Range of costs for NOx control to 42 ppm for similar turbine facilities 

Most gas turbine cogeneration projects are located in metropolitan and 

industrial areas where water is available from a pressurized pipeline. Since the 

issue with CCl is cost of water availability at the plant site, the cost difference 

between the CCl project and these others is ljnuted_tocostsJbrwater and pumping. 

The costs of controlling the same cogenerationprojecFlb^louTTevelS, duvm~Ur42 ppm 

in other locations are estimated on the attachment, "Cost for Water-Other 

Installations". Water cost infonnation was gathered from five areas, representing 

26 other turbine installations controlling with steam injection. Annualized costs for 

the low and high ends of these costs are detailed in Tables 1 and 2 and summarized 

in Table 3. The range is from $ 740,000 to $ 780,000. These costs represent the 

range of steam injection costs for similar projects throughout the country and it is to 

these costs that the cost for steam injection in the Walsh area (Table 4) is compared. 

TABLE 3 

INCREMENTAL COSTS FOR STEAM INJECTION CONTROL 

Annual Cost ($) Unit cost ($/ton) 

Location 100-75 ppm 100-42 ppm 100-75 ppm 100-42 ppm 

Low-end Other 241,000 740,000 1,031 1,365 

High-end Other 252,000 780,000 1,076 1,440 

Walsh 247,000 1,875,000 1,055 3,459 
P.5 

Ms. Cathy Rhodes 

June 16,1989 

Page 3 

TABLE 1 

INCREMENTAL COSTS OF STEAM 

INJECTION CONTROL 

LOW-END OTHER INSTALLATIONS 

(present value dollars, two turbines) 

Cost Impact Component 

Operating Costs 

Fuel' 

Water Treatment Chemicals1 

Boiler Feedwater Chemicals1 

Additional Raw Water2 

Operating Cost Total ($/yr) 

Capital Costs 

Water Treatment Equipment1 

Piping1 

Pump and Desuperheater1 

Capacity1 

Additional Water Resource 

Development 

Installation Labor1 

Capital Cost Total ($) 

55-»42 ppm 100-»42 ppm 

$120,000 

26,194 

5,613 

3.835 

$155,642 

$ 63,750 

3,000 

64,000 

17,410 

3,730 

2.547 

87,687 

42,380 

2,400 

56,000 

21,110 

4,520 

3.093 

84,723 

51.375 

2,400 

80,000 

36,980 

7,930 

5,414 

130,324 

90,000 

4,200 

320,000 

101,694 

21,793 

14,889 

458,376 

247,505 

12.000 

4,000 

17.500 

$ 88,250 

1,700 

11.300 

57,780 

1,800 

13.700 

69,275 

2.500 

25.000 

121.700 

10,000 

67.500 

337,005 

Levelized Operating Cost 

(15yrs15%disc..5%esc) 

Annualized Capital Cost 

(15 yrs 15% disc., 12% Finance) 

Total Annualized Cost 

$208,078 117,229 

33.235 

$241,313 

21.760 

138,989 

113,266 

26,089 

139,355 

174,230 

45.832 

220,062 

612,803 

126,916 

739,719 

1

 Malcolm Jones, March 1989 

2

 Costs for Water-Other Installations 
P.6 

Ms. Cathy Rhodes 

June 16,1989 

P.ige 4 

Cost Impact Component 

Operating Costs 

Fuel1 

Water Treatment Chemicals' 

Boiler Feedwater Chemicals1 

Additional Raw Water2 

Operating Cost Total ($/yr) 

Capital Costs 

Water Treatment Equipment1 

Piping1 

Pump and Desuperheater 

Capacity1 

Additional Water Resource 

Development 

Installation Labor1 

Capital Cost Total ($) 

TABLE 2 

INCREMENTAL COSTS OF STEAM 

INJECTION CONTROL 

HIGH-END OTHER INSTALLATIONS 

(present dollars, two turbines) 

100*75 ppm 

$ 120,000 

26,194 

5.613 

11.669 

$163,476 

$ 63,750 

3,000 

4.000 

17.500 

$ 88,250 

75*65ppm 65*55 ppm 

64,000 

17,410 

3,730 

7,751 

92,890 

42,380 

2,400 

1.700 

11.300 

57,780 

56,000 

21,110 

4,520 

9,409 

91,039 

51,375 

2,400 

1,800 

13.700 

69,275 

55*42 ppm 

80,000 

36,980 

7,930 

16,474 

141,384 

90,000 

4,200 

2,500 

25,000 

121,700 

100*42 ppm 

320,000 

101,694 

21,793 

45,303 

488,789 

247,505 

12,000 

10,000 

67.500 

337,005 

Levelized Operating Cost 

(15 yrs, 5% esc, 15% discount) 

Annualized Capital Cost 

(15 yrs, 15% disc., 12% finance) 

Total Annualized Cost 

$218,551 124,185 

33,235 

$251,786 

21,760 

145,945 

121,710 

26,089 

147,799 

189,016 

45,832 

234,848 

653,462 

126,916 

780,378 

1

 Malcolm Jones, March 1989 

2

 Costs for Water-Other Installations 
P.7 

Ms. Cathy Rhodes 

June 16,1989 

Page 5 

Economics of Steam injection control for CCl 

If CCl is to use additional water for NOx control it will come from ground water 

because of the high cost of receiving it from surface sources. There is no pipeline in 

place currently from which to buy the water, so the costs defined above as secondary 

costs for piping 50 gpm cannot be used. An attached letter from Ted Zorich & 

Associates (June 14, 1989) discusses the limitations in obtaining reliable 

groundwater and the need for purchasing additional land with wells if total plant 

consumption exceeds presently estimated plant requirements with NOx control to 75 

ppm. The 50 gpm of water for control to 42 should come from another source. The 

source is to be reliable and. from the Zorich report, the least expensive source 

meeting these requirements is about 16 miles to the east, in the Ogallala Aquifer. 

Costs for this land are estimated in the attached Walker letter (June 13,1989) 

at $400 to 450 per acre. CCl has estimated the cost for land purchase, well tests and 

rehabilitation at $914,000 (data sheet in "Estimation of Costs for Additional Ground 

Water" attachment). Jones (June 15,1989) estimates the piping, tie-in and pumping 

station costs for the additional wells at $ .2,040*0.00. The total annualized costs for 

the additional water to control to 42 ppm will be $l7B7 million. Costs for NOx control 

with the added ground water requirements are listed in Table 4. For purposes of this 

cost analysis, it is assumed that there is enough water available from already 

purchased sources to support NOx control to 75 ppm. These costs are summarized in 

Table 3. 

Uniqueness of control costs 

The difficulty of acquiring water for NOx control at the CCl facility in the 

Walsh area is the unique feature in determining BACT. This unique feature adds 

both direct and secondary costs. No beneficial value for the added consumption of 

water is apparent except in decreasing the emissions of NOx. The benefit in terms of 

lower ambient impacts will be negligible. 

This unique problem, the scarcity of water, adds direct costs to the project as 

shown on Figure 1. The data for Figure 1 are from Tables 1,2, and 4 . It is apparent 

that annualized cost for control is higher in the Walsh area and well out of the range 

of control costs for turbines in the other areas. 

From Figure 1 normal annualized costs for steam injection control to 42 ppm 

are about $760,000. The comparable cost to CCl is about $1,875,000 or over twice 
P.8 

Ms. Cathy Rhodes 

June 16,1989 

Page 6 

Cost Impact Component 

Operating Costs 

Fuel1 

Water Treatment Chemicals1 

Boiler Feedwater Chemicals1 

Additional Raw Water1 

(pumping costs: $1.00/1 .OOOgal)1 

Operating Cost Total ($/yr) -

Capital Costs 

Water Treatment Equipment1 

Piping1 

Pump and Desuperheater 

Capacity1 

Additional Water Resource 

Development3 

Installation Labor1 

Capital Cost Total ($) 

Levelized Operating Cost/yr 

(15% disc., 15 yrs, 5% esc) 

Annualized Capital Cost 

(15% disc., 15 yrs, 12% Finance) 

Total Annualized Cost/yr 

1

 Malcolm Jones, March 1989 

2

 Costs for Water-Other Installations 

-

1

 Estimations of Costs for Additional Ground Water 

TABLE 4 

INCREMENTAL COSTS OF STEAM 

INJECTION CONTROL 

WALSH INSTALLATION 

(present dollars, two turbines) 

100*75 oom 

$ 120,000 

26,194 

5,613 

8.160 

$159,967 

$ 63,750 

3,000 

4,000 

17.500 

$ 88,250 

$213,860 

33,235 

$ 247,095 

75*65ppm 65 

64,000 

17,410 

3,730 

5.420 

90,560 

42,380 

2,400 

1,700 -

681,000 > 

11,300 

738,780 

121,070 

278,225 

399,294 

i 

1 

*55 ppm 

56,000 

21,110 

4,520 

6.580 

88,210 

51,375 

2,400 

1,800 

826,000 

13.700 

895,275 

117,928 

337,161 

455,089 

55*42 ppm 

80,000 

36,980 

7,930 

11,520 

136,430 

90,000 

4,200 

2,500 

1,447,000 -

25,000 

1,568,700 

182,393 

590,772 

773,166 

100*42 ppm 

320,000 

101,694 

21,793 

31,680 

475,167 

247,505 

12,000 

10,000 

~*2,954,000 

67.500 

3,291,005 

635,251 

1.239,393 

1,874,644 
P.9 

Ms. Cathy Rhodes 

June 16,1989 

Page 7 

the cost. On a cost per unit of NOx controlled, normal costs are about $1,400 per ton 

and CCl costs will be about $3,500 per ton. 

In terms of secondary costs, the norm is to have water available from an 

existing source with an unrestricted supply. In Walsh, there is a fixed and limited 

supply of water available to agriculture, the primary source of income in the region. 

Whatever water is used for NOx control is lost for agriculture. 

Selection of BACT 

From the June 1 EPA BACT guidance letter, it is apparent that BACT is to be 

the industry norm unless unique conditions exist in a particular project resulting in 

costs beyond the norm. It is the burden of CCl to show that costs of controlling to 42 

ppm are beyond the norm and that they would place an unreasonable burden on CCl. 

In the previous paragraphs CCl has demonstrated that the costs for control to 42 

ppm are beyond the norm. CCl considers costs which are double those of the industry 

norm to be unreasonable. BACT is selected at a cost to CCl equivalent to that paid 

by the industry norm. 

BACT is selected as the level of NOx control that is equivalent in cost to control 

to 42 ppm for other installations. From Figure 1, the range of costs for control to 42 

ppm at other installations is equivalent to control to 62 to 63 ppm in Walsh. This is 

an appropriate BACT level for the CCl installation in Walsh. 

If you should have any questions regarding this or previously submitted 

information, give Dan Zunich (713-621-5303) or me a call. 

Sincerely, 

Rodger G. Steen 

Principal 

RGS.sls 

cc: John Dale - U. S. EPA 
•V 22-141 SO SHEETS 

22-142 100 SHEETS 

42-144 200 SHEETS 

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