HomeMy WebLinkAboutIR 10270
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10270
May 7, 2019
To the Mayor and Members of the City Council
Page 1 of 2
SUBJECT: VILLAGE CREEK WATER RECLAMATION FACILITY DIGESTER
GAS CONTRACT
wastewater treatment plant, serving a growing population of retail and wholesale customers. The
City has a history of beneficial reuse of the byproducts generated from the wastewater treatment
process.
On May 30, 2000 (M&C C-18047) the City awarded a contract to install two gas turbine
generators, tuned to operate using low British thermal unit (Btu) biogas, such as biogas derived
from the VCWRF anaerobic digestion process or biogas derived from the waste degradation
process within a sanitary landfill.
On December 19, 2000 (M&C C-18397) the City awarded a contract to Lone Star Energy
Services, Inc. for the operations and maintenance of the two VCWRF gas turbines. Because the
digester biogas supply is insufficient to provide adequate fuel for the operation of a gas turbine,
on December 11, 2001 (M&C C-18877) a contract was approved with Lone Star Energy Services,
Inc. for the supply of biogas produced from the nearby Arlington landfill and a gas pipeline was
constructed connecting the landfill to VCWRF.
On June 29, 2004 (M&C C-20131), City Council authorized a renewal and amendment to the
existing biosolids processing and disposal contract with Renda Environmental, Inc. (REI),
incorporating landfill gas supply and operation and maintenance of the gas turbine generators.
The executed amendment (CSC No. 31532) also included a separate agreement between REI
and Renovar Energy Corporation for the supply of landfill gas, with a contract termination date of
September 30, 2019.
The assets of Renovar Energy Corporation were recently sold to a new owner, Renovar Arlington
Ltd. (RAL), who have invested in the design and construction of a renewable natural gas (RNG)
treatment facility, located at the Arlington Landfill. The RNG facility has the ability to clean landfill
and digester biogas to pipeline quality standards for injection into a common carrier natural gas
pipeline, with transportation to a qualified end user to generate Renewable Identification Number
(RINs) credits under the EPA Renewable Fuel Standards Program. These credits will be sold to
obligated parties needing these credits for regulatory compliance. This RNG facility is ready to
start operation, which will affect the supply of landfill gas to VCWRF.
In anticipation of the loss of the landfill biogas supply, on February 12, 2019 (M&C P-12298) the
City Council authorized an agreement to exchange/replace the existing gas turbine scheduled for
rebuild and overhaul with a rebuilt unit tuned to run off natural gas. This turbine was tested,
delivered and commissioned in April 2019. In addition, the existing VCWRF commercial natural
gas account will transition to an industrial account in order to obtain a lower commodity price for
natural gas. It is anticipated that a natural gas supply contract may be bid out in the near future
to lock in a fixed natural gas commodity rate.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10270
May 7, 2019
To the Mayor and Members of the City Council
Page 2 of 2
SUBJECT: VILLAGE CREEK WATER RECLAMATION FACILITY DIGESTER
GAS CONTRACT
The plan for the next three years is to run the VCWRF gas turbines off natural gas. Blending
natural gas, which has a high Btu content, with the lower Btu content and variable flowrate
digester biogas is possible, but considered a less desirable option.
As part of a proposed agreement with RAL, digester biogas generated at the VCWRF will be sent
to RAL for treatment, utilizing the existing gas pipeline connecting VCWRF with the Arlington
Landfill for transportation. At the RAL RNG facility, digester gas will be combined with landfill
gas, treated, delivered to a common carrier pipeline, where it can then be distributed to qualified
customers. RAL will pay the City a 15% royalty on gross revenues from the sale of the renewable
fuel commodity and credits derived from the digester biogas. Since January 2017, RIN prices for
the classification applicable to digester biogas have ranged from $1.61 to $2.93 per RIN, which
corresponds to a value of $18.88 to $34.37 per million Btu. In addition to the royalty payment,
RAL will be responsible for purchase and installation of the gas analyzer and metering facility at
the VCWRF, costs associated with compression and dehydration of digester biogas at VCWRF,
and any difference in cost between the landfill gas previously provided and the natural gas the
City will be purchasing through September 30, 2019.
RAL will also be responsible for compliance with the EPA Renewable Fuel Standard Program
requirements, accounting for RIN generation, marketing and sales, and disbursement of royalty
payments. The term of the proposed agreement with RAL is three years, beginning on the date
Fort Worth first delivers digester biogas. The contract can be renewed for two one-year terms.
Staff recommends approval of a digester gas supply contract with RAL. A M&C will be placed on
the May 14, 2019 City Council agenda for consideration.
Should you have any questions regarding this project procurement timeline, please contact Chris
Harder, Water Director, at 817-392-5020.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS