p. 1


# OAR Box 1865 Prepped by Charmelle Mathews



### Document

Number: 

# 138 ) VI-B- 3 Docket Number: 

# A-83-2 7

Printed 12/3/20083:22:20PM

Sheet 138of 198P. 2 

### 4 

# MMHM I

# A-83-2 7

VI-B- 3 MEMORANDU M TO : Fre dPorter , EPA/SD B
FROM : Davi dWhite , Butc hStackhouse , an dIren e Kuo , Radia n
DATE : Octobe r 14 , 198 8
SUBJECT : Respons e t o API/NFP A Petitio nRegardin g Flu e Ga s Desulfurizatio nSystem Malfunctio nCost s

BACKGROUN D Th e America nPape r Institut e an dth e Nationa l Fores t Product s Associatio n(API/NFPA ) petitione dEPA t o modif y

it s fina l regulation s on< • sulfu r dioxid e (S0 2 ) emission s fro m industria l boiler s (5 2 Federa l Registe r 47,826 ) t o allow

variance s fro

m S0 2 contro l requirement s durin g startup , shutdown , an

dmalfunctio nperiods . Th e API/NFP A petitio nstate s tha t EP A di dno t includ e al l th e cost s associate dwit hmaintainin g backu pfue l supplie s durin g period s o f flu e ga s desulfurizatio n(FGD ) system malfunction . Thi s memorandu m examine s th e issue s raise db y API/NFP A regardin g th e cos t o f regulator y complianc e durin g period s o f FG D system malfunction . PREVIOU S ANALYSI S Th e cost s fo r installin g an doperatin g backu pFG D equipmen t o r switchin g t o low

sulfu r fuel s durin g FGD malfunctio nperiod s wa s examine db y 2 3 EPA intwo separat e analyse s conducte dprio r t o proposa l o f regulations . ' Thes e analyse s considere dth e emission s an dcost s (i nJanuar y

198 3 dollars ) associate dwit hcontrollin g S0 2 emission s fro m mode l coal-fire dboiler s wit h hea t inpu t capacitie s o f 100 , 150 , 250 , an d40 0 millio nBtu/hour . Fue l price s wer e base do nhig hsulfu r coa l (5. 5 lb s S0 2 /millio nBtu ) i nEP AP. 3

Regio nV . Severa l FG D malfunctio nalternative s wer e considered :

o Tota l flu e ga s bypas s durin g malfunctio nperiods ; o Installatio no f backu pscrubbin g equipmen t (i.e. , absorbe r plu s associate dpump s an

dtanks , bu t no t spar e fee d preparatio no r solid s separatio nequipment) ; an d o Installatio no f fue l storag e an dhandlin g equipmen t t o allow us e o f low sulfu r fuel s suc ha s natura l ga s an dlow sulfu r fue l oils . 2 Th e firs t o f thes e two analyse s assume dtha t dua l alkal i scrubbin g wa s use d 3 fo r FGD , whil e th e secondanalysi s wa s base do nsodiu m scrubbing . Th e annualize dcost s o f th e backu pFG D an dlow sulfu r fue l option s wer e compare dt o th e tota l bypas s option . Fo r al l th e case s examined , th e tota l annualize d cos t o f th e boile r an dFG D system

wa s 1 t o 4 percen t highe r whe n usin g th e backu pFG D o r lo w sulfu r fue l option s tha nwhe nallowin g tota l bypass . Th e cos t effectivenes s value s range dfro m $326/to nSO - remove dwhe n a spar e FG D system

wa s use d t o $2,029/to nS0 2 remove dwhe nusin g 0. 3 l b S0 2 /millio nBt ufue l oil . CURREN T ANALYSI S Th e analysi s presente dinthi s memorandu m reexamine s th e cos t o f controllin g S0 2 emission s durin g FG D malfunction s base don(1 ) th e issue s raise db y API/NFP A

regardin g th e cos t o f maintainin g backu pfue l supplie s an d(2 ) change s infue l price s an dFG D equipmen t assumption s mad e sinc e th e 4 time o f th e previou s analyses . Thi s analysi s als o consider s liquefie d petroleu m ga s (LPG ) a s analternativ e backu pfuel . T o bette r examin e th e cos t an demissio nimpact s specifi c t o th e pulp , paper , paperboard , an dwoo d product s industries , thi s analysi s focuse s ona 40 0 millio nBtu/hou r mode l boile r locate dinEPA Regio nIV . Us e o f two differen t coal s wer e include d inth e analysis : a hig hsulfu r bituminou s coa l (H-bituminous , 5. 5 lb s S0 2 /millio nBtu ) a s wa s use dinth e previou s analyse s an da mediu

m sulfu r coa l (F-bituminous , 2. 8 lb s S0 2 /millio nBtu ) a s wa s use db y API/NFP A

1n thei r petition . Th e new analysi s als o include s annua l fue l deman dcharge sP. 4

an dstorag e cost s fo r backu pfuel s (suc ha s natura l gas , LPG , an dlow sulfu r oil ) whic hAPI/NFP A

state dwer e necessar y t o assur e fue l availabilit y durin g period s o f FG D malfunction . Mos t o f th e cost s use dinthi s new analysi s wer e take ndirectl y fro m Referenc e 4 whic hwa s prepare dinearl y 198 7 an

dassume dtha t natura l ga s woul db e use ddurin g period s o f FG D malfunction . Thes e cost s diffe r fro m thos e presente dinReference s 2 an d3 inthre e areas :

o Us e o f revise dfue l price s reflectin g lowe r projecte d fue l oi l an d natura l ga s prices , o Us e o f a "generic " algorith m fo r estimatin g FG D costs , an d o Updatin g o f al l cost s fro m Januar y 198 3 dollar s t o Jun e 198 5 dollars . T o updat e th e cos t o f backu pFG D system s inReference s 2 an d 3 fro m Januar y 198 3 t o Jun e 1985 , capita l cost s wer e multiplie d b y 1.0 3 base do

n th e Chemica l Engineerin g Plan t Inde xan dnon-fue l operatin g an dmaintenanc e (O&M ) cost s wer e multiplie d b y 1.03 5 base donth e Burea uo f Labo r Statistics ' Inde xo f Al l Industria l Commodities . Th e option s examine dinth e curren t analysi s fo r complianc e durin g FGD malfunctio ninclud e installatio no f backu pFG D equipment , us e o f natura l gas , us e o f low

sulfu r oi l (0. 3 l bS0 2 /mill1o nBtu) , an dus e o f LPG . Th e annualize d cos t o f backu pFG D equipmen t wa s base donth e averag e o f dua l alkal i scrubbin g cost s fro m Referenc e 2 an

dsodiu m scrubbin g cost s fro

m Referenc e 3 ; thes e cost s wer e escalate dfro m Januar y 198 3 t o Jun e 198 5 dollar s a s discusse dinth e precedin g paragraph . Th e natura l ga s alternative s ar e base donnon-carriage , rigi dnatura l ga s prices . Analysi s o f lo w sulfu r oi l includ e th e us e o f 0. 3 l bS0 2 /millio nBt udistillat e oi l an d0. 3 lb s S0,/millio nBt uresidua l oil . Th e LP Galternativ e assume s th e 6 pric e fo r LP Gi s equivalen t o na Bt ubasi s t o tha t o f th e distillat e oil . Capita l cost s associate dwit hfirin g natura l gas , LPG , distillat e oil , an dresidua l oi l durin g FG D malfunction s ar e $148,000 , $2,557,000 , $692,000 , an d$1,029,000 , respectively . Thes e estimate s reflec t th e cos t o f LPG , distillat e oil , an

dresidua l oi l storag e an dhandlin g facilitie s (sufficien tP. 5

t o operat e th e boile r fo r seve nday s a t ful l load) , boile r modifications , fue l gu nInstallations , specia l oi l heatin g an dpumpin g equipmen t t o handl e th e residua l oil , an

da vaporize r an

dmixe r fo r th e LPG . Thes e cost s wer e derive dfro

m Reference s 7 an

d8 . Th e estimate dcost s o f residua l oi l facilitie s ar e simila r t o thos e provide d 1nth e API/NFP A petition . Th e capita l cos t fo r th e LP Gfue l storag e an d handlin g equipmen t 1 s relativel y

expensiv e du e t o th e larg e numbe r o f tank s neede dfo r a seve nda y supply . Th e cos t o f th e tank s alon e mak e upfo r almos t 8 7 percen t o f th e

8 tota l direc t cost . Th e larg e numbe r o f tank s 1 s du e t o siz e limit s o n individua l storag e tank s use d fo r storin g pressurize dLP G (60,00 0 gallons/tank) . A s a result , th e numbe r o f tank s neede d (an d th e associate dcapita l cost ) varie s linearl y wit hth e amoun t o f backu pfue l required . O na site-specifi c basis , undergroun dstorag e o f LP Gma y b e les s expensiv e tha ninabov e groun dpressurize dtanks . Indirec t cost s fo r engineering , constructio nfees , start-up , an dcontingencie s wer e adde d

4 base donpreviousl y

use dpercentage s o f direc t costs . Table s 1 an

d2 presen t cost s an

dcost-effectivenes s value s fo r eac ho f thes e complianc e option s fo r a mode l 40 0 millio nBtu/hou r boile r firin g a mediu m sulfu r coa l (F-bituminous ) an da hig hsulfu r coa l (H-b1tuminous) , respectively . Th e natura l ga s option s includ e (1 ) a baselin e cas e tha t assume s n o additiona l charge s ar e impose db y th e natura l ga s suppl y company t o assur e deliver y

o f natura l ga s o na short-term non-interruptlbl e basi s durin g FG D malfunction , an d(2 ) two alternativ e case s base dona deman d charg e b y th e natura l ga s supplie r o f $7/millio nBtu/day/mont han d $12/millio nBtu/day/mont ht o assur e ga s deliver y o na short-term non-interruptibl e basis . Th e additiona l charge s wer e identifie db y API/NFP A a s cost s tha t EPA

had overlooke dinprio r analyses . Thi s rang e o f deman dcharge s wa s base donjnformtio nprovide d t o EPA b y API/NFP A

1na g meetin g t o discus s thei r petition . Th e LP Gan

dth e lo w sulfu r oi l option s includ e th e cos t o f maintainin g a fue l inventor y

fo r us e durin g FG D malfunction . Thi s cos t 1 s handle da s a n amortize dcapita l charg e t o recove r th e cos t o f th e initia l fue l suppl y use d t o fil l th e fue l storag e tank(s) . Fue l use dt o refil l th e tan k afte r a nFGD malfunctio ni s a

nannua l 0& M

expense . Th e fue l inventor y expens e wa s identifie db

y API/NFP A

a s a cos t tha t hadbee noverlooke d1nprio r analyses .usssaxax s

U l TABL E I . COS TANALYSI S O F ALIERHAIIV E HAIFUHCIIO N PROVISION S FIRIN E FRI TCOA l I H REGIO N I V (i l CAPITA L COS

TANNOAIIIE D COS T

" " " INCREASE D TOTA L ANNUAL AVERAG E COS T HALFUNCIIO N MILE R I FUE L FUE L TOTA L UILE R I FUE L FUE L FUE L TOTA L ANNUAL!m > PERCEN T50 2 EFFECTIVENES S ONION S S0 2 COMRO l BURNIN G INVEN - BOILE R S0 2 CONTRO L MIMIN G INVEN - SWITC H HILE R COSIS , I d INCREASE , EHISSIONS , l/TO M SO I ' EOUIPHEN I EBUIPHEN I TOR Tlb ) EOUIPHEN I EOUIPHEN I TOR TIIOOO/Y R I TONS/Y R It) ) REHOV U I d •tisannuuciiiiMBaiHiiiNtEAtitBiiifxiszKiBisuiiuituuuitiBHtiuitajiaana ^ ••sssajsaKsnaaKsssscssBssisasjEx s s**xxx*4*4tm***m**mxvu%***a\mmmwmn**KBaa**xamKmK%ttZMnx*,n*mmm»UBKBWB*K»*uum*m* TOTAL BYPASS 16,74 4 STAR E FG D EOUIPHEN I I O 37,50 9 NATURA L GA

S 34,74 4 NAIURA L GA

S 36,74 4 (HU H A 47/MMI H KHAN D CHARGE) <« ) NATURA L GA

S 36,74 4 (HU H A II2/H0NT H BEMN t CHARGE) l| ) LIOUEFIE D PETROLEU M GA S 36,74 4 IISIIUAI E OI L 16,74 4 IO. I I k S02 / •illi m »tu ) 0 0 14 8 14 1
14 1 2,55 7 69 2 H/

A It ) 36,74

4 N/ A 17,50 1 N/ A 34,892 N/ A 34,892
N/ A 34,892
26 1 19,36 2 26 1 37,69 7 11,70 5 15,(3 6 15,70 5 15,70 5

RESIDUA L OI L 16,74 4 1,02 9 22 1 37,99 6 10. 1 I k S02 / •illio o IU ) R»iMii£taEtxtNiuiii>Biiis:A3»33i;::tEi3sis:3i33iiictiE3axtseittt::saai3Xiuti>tiU3Gtus i 0 N/ A 0 N/ A 2 5 N/ A 2 5 N/ A 0 15,70 5

0 15,83 6 14 0 15,87 0 94 6 16,47 7 15,70 5 2 3 N/ A 1,52 2 17,25 3 15,70 5 43 9 4 5 14 1 14,31 0 15,70 5 11 9 4 5 14 1 14,00 9
15,70 3 17 4 3 8 8 1 16,00 1 13 1 14 5 97 2 I,SA B

42 5 30 4
29 4 I

I 6

1 0

4 2 17 7

24 0 22 8 22 8

22 8

22 8 24 3

24 3 95

4 1,110 4,52 2 10,38 8 4,19 3 2,27 2 2,20 7
!B«nallllBttBI«l«inMH*lttCBI3X3tataiI(IC333ia3aS31XE£CS(*tai*CCiaS33333MUXS131UaiNUUaaB*2tB t U ) Al l COST

S I N 100 0 198 5 DOLLAR

S FO R A 40 0 BILLIO N ITU/H R MODE L I0ILER . lb ) IN I HA L COS I O

F FUE L INVENTOR

YASSUMING A 7 DA

TSUPPL Y I d IH E INCREHENTA L ANALYSI S I S OVER TH E TOTAL BYPASS OPTION . It) ) OASE D O N 92 1 S0 2 CONIRO L EFFICIENC YAH D 95 1 SCRUBBE R RELIABILITY . It ) N/ A = NO I APPLICABL E I O GENERIC FLU E GA

S DESULFURI/AIIO N I S BASE D O N THE COSI S O

F DUA L AltAL I AND SOOIU H SCRUBBE R SISTERS . (g l OEHAN

D CHARGE S RANG E FRO H I7-M2/HILL10 H BIU/DAV/nOHI Ho » TABL E 2 . COS TANALYSI S OF AITERHAIIV E HALFUNCIIO N PROVISION S FIRIN G H-BI I COA L I H RE6I0 N I V U l CAPITA L COS I ANNUALWE D COS T

- : - INCREASE D TOTA L ANNUAL AVERAG E COS T HALFUNCIIO N BOILE R I FUE L FUE L IOIA L BOILE R t FUE L FUE L FUE L TOTA L ANNUALUE O PERCENTS0 2 EFFECTIVENESS , OPTION S S0 2 CONTROL BURNIN G INVEN - BOILE R S0 2 CONTROL BURNIN G INVEN - SNITC H BOILE R COSIS , I d INCREASE , EHISSIONS , l/IO N S0 2 EOUIPHEH TEOUIPHEN I TOR Y(b l EOUIPHEN I EOUIPHEN I TOR YIIOOO/V R I TONS/Y R (A l RENSVE B (c )
IOIA L BYPASS SPAR E ABSORBE R I O NATURA L GA

S 17,148

18,11 4 17,36 8 NATURAL GA

S 17,34 8 (NIT H A 17/NONI H OEHAN D CHARGE) l| ) NAIUtA L GA

S 16,74 4 (NIT H A M2/HONI H OEHAN D CHARGE) (| l II0UEF1E I PEIROLEU H GA S DISTILLAT E OI L (0. 3 I k SOJI •illio o Btu ) KSlkUAL OI L 17,36 8 37,16 8 17,16 8 0

0 14 8 14 8
I4 B 2,55 7 69 2 1,029 N/

A li t N/ A N/ A N/ t
N/ A
26 1 26 1

22 1 17,16 8 18,11 4 37,51 6 37,51 4
34.B9 2 40,18 6 38,32 1 18,62 0 15,650

15,78 1 15,65 0 15,650 15,65 0 15,65 0 15,65 0 15,63 0 0

0 2 5 2 5

2 3
43 9 11 9

17 4 N/ A N/ A l/ A N/ A
N/ A

4 5 4 5
3 8 0

0 16 3 94 9 1,54 5
16 4 14 4
10 4 15,450 15,78 1 15,83 8 14,44 5 17,22 1 14,29 7 15,97 7 15,949 - I l l

IBB 99 5 1,57 1

44 7 12 7
11 9 - 1

1 4

1 0

4 2

2 71 4

46 4 44 1 44 3

44 1

44 3 43 8
45 8 - 48

9 44 7 3,41 8 5,19 8 2,22 4 1,18 4 1,155 (0. 1 I k S02 / •illi M IU ) a s s a aas s * s B S ;s3»ES3»a8a«cazax3 * s » s ss ^ U > A U COST

S I N 100 0 198 5 DOLLARS FO R A 40 0 HILLIO N BTU/H R ROOE L BOILER . lb ) INITIA L COS

TOF FUE L INVENTORYASSURIN G A 7 DA YSUPPL Y I d TH E INCREMENTA L ANALYSI S I S OVE R IH E TOTA L BYPAS S OPTION . I l l BASE I O N 92 1 S0 2 CONTRO L EFFICIENC YAN O 95 1 SCRUBBE R RELIABILITY . I l l N/ A •NO I APPLICABL E I O GENERI C FLU E GA

S BESULFURUATID N I S BASE D O N IH E COST

S O F SPRA YDRYIN G AN D SO

O I L B SCRUBBE R SYSTEHS . (9 ) RERAN ) CHARGE

S RANG E FRO H I7-JI2/HUUO M BIU/DAY/M1NI HP. 8

Th e cos t increase s associate d wit hprovidin g backu pFG D equipmen t o r low sulfu r fue l capabilit y relativ e t o flu e ga s bypas s rang e fro m 1 t o 6 percen t inal l case s excep t whe na $12/millio nBtu/day/mont hdeman d charg e fo r natura l ga s i s assumed . Inthi s case , th e Increas e inannualize dcost s ar e 1 0 percen t highe r tha ni f flu e ga s bypas s i s allowed . Not e tha t thes e percentage s an

dth e incrementa l dolla r cost s ar e roughl y equa l fo r bot h mediu m sulfu r coa l an

dhighsulfu r coa l analyses . Not e als o tha t th e tota l annualize d cos t o f operatin g th e boile r an dFG D system

(includin g spar e FG D equipmen t o r fue l switchin g durin g malfunction ) wit hhig hsulfu r coa l i s generall y

$30,00 0 t o $50,00 0 les s tha nwit hmediu m sulfu r coal . While th e annualize dcost s ar e simila r fo r bot hcoals , th e cost-effectivenes s value s fo r mediu m sulfu r coa l ar e roughl y doubl e thos e fo r th e highsulfu r coa l du e t o th e smalle r annua l S0 « emissio nreductions . Fo r mediu

m sulfu r coal , th e cost-effectivenes s value s rang e fro m $596/to n SO - remove dbase donus e o f spar e FG D equipment , t o $1,110/to nfo r natura l ga s wit hn o deman dcharge , t o $2,206-2,271/to nfo r th e two lo w sulfu r oi l * options , t o $4,193/to nfo r LPG , t o $6,522-10,388/to nfo r th e two natura l ga s option s wit ha deman dcharge . Fo r highsulfu r coal , th e cost-effectivenes s value s rang e fro

m $489/to nSO * remove dbase donus e o f spar e FG D equipment , t o $647/to nfo r natura l ga s us e withou t a deman dcharge , t o $1,155-1,186/to n wit hth e two lo

w sulfu r oi l options , t o $2,224/to nfo r LPG , t o $3,418-$5,398/to nfo r th e tw o natura l ga s option s wit ha deman dcharge . COMPARISO N

O F PREVIOU S AN D CURREN T ANALYSE S
Fo r highsulfu r coals , th e annualize dcost s inth e curren t analysi s fo r eac ho f th e examine dcontro l option s relativ e t o flu e ga s bypas s ar e les s 2 3 tha no r roughl y

equa l t o thos e presente dinth e previou s analyses , ' excep t whe nnatura l ga s deman dcharge s ($7/millio nBtu/day/mont han d $l2/m1llio n Btu/day/month ) ar e included . A s a result , cost-effectivenes s value s fo r highsulfu r coa l ar e les s tha nthos e inth e previou s analyse s excep t whe n natura l ga s deman dcharge s ar e assumed . Thi s decreas e incost-effectivenes s value s i s primaril y

du e t o th e lowe r fue l pric e differentia l betwee ncoa l versu s natura l ga s an dlo w sulfu r oils .P. 9

Fo r th e mediu

m sulfu r coa l (whic hwa s no t examine d i nth e earlie r analyses) , cost-effectivenes s value s estimate di nth e curren t analysi s fo r i nth e case s o f natura l ga s withou t a deman dcharg e an dlo w sulfu r oi l ar e generall y

simila r t o thos e presente di nth e earlie r analyse s base do nhig h sulfu r coal . Th e curren t cost-effectivenes s value s ar e higher , however , whe nspar e FG D equipmen t o r natura l ga s wit ha deman dcharg e i s assumed . Th e similarit y

incost-effectivenes s value s fo r natura l ga s withou t a demand charg e an

dlo w sulfu r oi l reflect s th e trade-of f betwee nlowe r fue l pric e differential s inth e curren t analyse s an d th e lowe r emissio nreduction s whe n mediu m sulfu r coa l i s used . Th e highe r cost-effectivenes s value s fo r th e backu pFG D equipmen t optio nreflect s simila r cost s bu t lower emissio n reduction s wit hmediu m sulfu r coal , wherea s fo r th e natura l ga s deman d charg e options , th e emissio nreduction s ar e lowe r an dth e annualize dcost s ar e higher .



### 8P.1 0

I ' REFERENCE S

1 . Petitio nfo r Reconsideratio no f th e America nPape r Institut e an d th e Nationa l Fores t Product s Association . Standard s o f Performanc e fo r New Stationar y

Sources ; Industrial-Commercial-Institutiona l Steam Generatin g Units . Docke t No . A-83-27 . 2 . Memorandu

m fro m Margerum , S.C , Radia nCorporation , t o Sedman , CB . Apri l 6 , 1984 . FGD System Malfunctio nCosts . 3 . Memorandu

m fro m Martinez , J.A. , Radia nCorporation , t o SO - Docke t Files . Januar y

8 , 1986 . Updat e onFlu e Ga s Desulfurizatio nSystem Malfunctio nCosts . 4 . Memorandu

m fro m Martinez , J.A . an

d E.F . Aul , Radia nCorporation , t o Porter , F.L . an

d W.H . Stevenson , EPA/SDB . Ma y 15 , 1987 . Assumption s an d Procedure s Use d t o Generat e Mode l Boile r Impacts . 5 . Lette r fro

m Hogan , T. , Energy

an d Environmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize d Industria l Natura l Ga s Prices . Augus t 27 , 1986 . 6 . Lette r fro

m Hogan , T. , Energy

an d Environmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Industria l Liquefie d Petroleu m Ga s (LPG ) Prices . Septembe r 7 , 1988 . 7 . PEDC O Environmental , Inc. , Capita l an d Operatin g Cost s fo r Industria l Boilers . Prepare d fo r U.S . Environmenta l Protectio nAgency . Researc h Triangl e Park , NC . Publicatio nNo . EPA 450/5-80-007 . Jun e 1979 . 8 . Telecon , Kuo , I.R. , Radia nCorporatio nwit hStocker , J. , Thoma s Associates . Septembe r 28 , 1988 . Discussio no f LP Gequipmen t an d cost . 9 . Memorandu

m o f Meetin g fro

m Porter , F.L. , EPA/SDB , t o File . Septembe r 22 , 1988 . Meetin g wit hAmerica nPape r Institut e Regardin g Industria l Boile r NSPS .