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Orutsaramiut Native Council Natural Gas App
European LNG transport barge Orutsararmiut Native Council & PDC Harris Group LLC Application for Renewable Energy Grant to Alaska Energy Authority AEA-09-004 Liquefied & Compressed Natural Gas (LCNG) as a Bridge Solution to High Energy Prices in Rural Alaska SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Orutsararmiut Native Council Incorporated Type of Entity: Government Entity Mailing Address P.O. Box 927 Bethel, Alaska 99559 Physical Address 117 Alex Hatley Drive Bethel, Alaska 99559 Telephone 907-543-2608 Fax 907-543-2639 Email msamuelson@nativecouncil.org 1.1 APPLICANT POINT OF CONTACT Name Mike Samuelson Title Executive Director Mailing Address P.O. Box 927 Bethel, Alaska 99559 Telephone 907-543-2608 Fax 907-543-2639 Email msamuelson@nativecouncil.org 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer, or X A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) LCNG as a Bridge Solution to High Energy Costs In Remote Alaskan Communities TABLE OF CONTENTS 1. INDENTIFICATION OF PROJECT AND PARTIES ..................................... 1 1.1 Introduction ......................................................................................................... 1 1.2 Participants ......................................................................................................... 3 1.2.1 Orutsararmiut Native Council (ONC) .................................................................. 3 1.2.2 PDC Harris Group ............................................................................................... 3 1.3 Project Eligibility .................................................................................................. 4 1.4 Qualifications of Project Participants .................................................................. 4 1.4.1 Orutsararmiut Native Council .............................................................................. 4 1.4.2 PDC Harris Group ............................................................................................... 5 2. PROJECT SUMMARY ................................................................................ 8 2.1 Introduction ......................................................................................................... 8 2.2 LCNG as a Bridge Solution ................................................................................. 9 2.2 General Applicability Beyond Proposed Community ........................................ 10 2.3 Project Type ...................................................................................................... 10 2.4 Project Description ............................................................................................ 11 2.4.1 Project Location ................................................................................................ 11 2.4.2 Communities Served ........................................................................................ 11 2.4.3 Project Partners ................................................................................................ 11 2.5 Project Budget Overview .................................................................................. 12 2.5.1 Funds Requested ............................................................................................. 12 2.5.2 Nature and Source of Other Funds ................................................................... 12 2.6 Project Benefit .................................................................................................. 12 2.6.1 Economic & Environmental Benefits ................................................................. 12 2.6.2 Other Benefits to the Alaskan Public ................................................................ 13 2.6.3 Project Cost/Benefit Analysis ............................................................................ 13 3. PROJECT MANAGEMENT PLAN ............................................................. 13 3.1 Project Execution .............................................................................................. 13 3.2 Project Procedures Manual .............................................................................. 14 3.3 Project Manager ............................................................................................... 14 3.3.1 References ....................................................................................................... 14 Prop Draft 11_09_08 Word 7.doc ii 3.4 Project Schedule ............................................................................................... 14 3.4.1 Project Milestones ............................................................................................ 14 3.5 Key Tasks ......................................................................................................... 15 3.5.1 Reconnaissance Phase I .................................................................................. 15 3.5.2 Concept Design & Feasibility Analysis Phase II ............................................... 16 3.6 Project Resources ............................................................................................ 17 3.6.1 Team Organization & Resumes ........................................................................ 17 3.6.2 Partnerships/Commitments with Entities .......................................................... 17 3.6.3 Existing Contracts and Selection Process ........................................................ 17 3.7 Project communications .................................................................................... 19 3.7.1 Project Monitoring & Reporting ......................................................................... 19 3.7.2 QA/QC Change Management ........................................................................... 19 3.7.3 Communication to the Authority ........................................................................ 20 3.8 Project Risk ....................................................................................................... 20 3.8.1 Potential Threats to Project .............................................................................. 20 3.9.2 Risk Mitigation .................................................................................................. 21 4. PROJECT DESCRIPTION AND TASKS .......................................................... 21 4.1 Proposed Energy Resource .............................................................................. 21 4.1.1 LCNG Availability .............................................................................................. 22 4.1.2 Delivery of LCNG .............................................................................................. 22 4.1.3 On-Site Storage of LCNG ................................................................................. 23 4.2 Existing Energy System .................................................................................... 25 4.2.1 Configuration .................................................................................................... 25 4.2.2 Electrical Generation ........................................................................................ 26 4.2.3 Existing Energy Resources ............................................................................... 26 4.2.4 Impact to Existing Energy Infrastructure & Resources ..................................... 27 4.3 Existing Energy Market ..................................................................................... 27 4.3.1 Bethel Energy Supply Considerations .............................................................. 27 4.3.2 Project Impacts on Energy Customers ............................................................. 28 4.3.3 LCNG – Is There a Hidden Cost Disadvantage? .............................................. 28 4.3.4 Future Pricing Trends, Diesel vs. Natural Gas ................................................. 31 4.4 Proposed System & Feasibility Assessment Strategy ...................................... 31 4.4.1 Technology Description .................................................................................... 31 4.4.2 Systems Design ................................................................................................ 31 Prop Draft 11_09_08 Word 7.doc iii 4.4.3 LCNG Delivery Barge Considerations .............................................................. 32 4.4.4 Revision to Cost Estimate Basis for On-Shore LCNG System ......................... 32 4.4.5 Anticipated Capacity/Sizing .............................................................................. 32 4.4.6 Project Delivery Method .................................................................................... 32 4.6 Land Ownership ................................................................................................ 32 4.6.1 Land for Receipt and Storage of LCNG ............................................................ 32 4.6.2 Rights of Way for Gas Distribution Piping ......................................................... 32 4.7 Environmental Permits & Code Analysis .......................................................... 33 4.7.1 LCNG Related Permit & Code Requirements ................................................... 33 4.7.2 Applicable Permits ............................................................................................ 33 4.7.3 Permitting Timeline ........................................................................................... 33 4.7.4 Potential Permit Risk ........................................................................................ 33 4.8 Environmental Assessment .............................................................................. 33 4.8.1 Threatened or Endangered Species ................................................................. 33 4.8.2 Habitat Issues ................................................................................................... 34 4.8.3 Wetlands/Protected Areas ................................................................................ 34 4.8.4 Archaeological/Historical resources .................................................................. 34 4.8.5 Land Development Constraints ........................................................................ 34 4.8.6 Telecommunications Interference ..................................................................... 34 4.8.7 Aviation Considerations .................................................................................... 34 4.8.8 Visual/Aesthetics Impacts ................................................................................. 34 4.8.9 Other Potential Barriers .................................................................................... 34 4.9 Proposed LCNG Infrastructure Costs ............................................................... 34 4.9.1 Estimated Capital and Operating Costs ............................................................ 34 4.9.2 Business Model & Revenue Generation ........................................................... 34 4.10 Project Development Cost & Budget Form ....................................................... 35 4.10.1 Total Anticipated Cost & Cost for this Phase .................................................... 35 4.10.2 Requested Grant Funding ................................................................................ 35 4.10.3 Applicant Matching Funds ................................................................................ 35 4.10.4 Other Funding Sources ..................................................................................... 35 4.10.5 Projected Capital Cost ...................................................................................... 35 4.10.6 Projected Development Cost ............................................................................ 36 4.10.7 Investments to Date ........................................................................................ 36 4.11 Project Operating and Maintenance Costs ....................................................... 36 Prop Draft 11_09_08 Word 7.doc iv Prop Draft 11_09_08 Word 7.doc v 4.11.1 Operating Costs ................................................................................................ 36 4.11.2 Maintenance Costs ........................................................................................... 36 4.12 Power Purchase/Sale ....................................................................................... 36 4.12.1 Power Sales ...................................................................................................... 36 4.13 Business Plan ................................................................................................... 36 4.14.1 Operational Sustainability ................................................................................. 36 4.14.2 Business Structure ............................................................................................ 37 4.15 Analysis and Recommendations ...................................................................... 37 5. PROJECT BENEFIT .................................................................................. 37 5.1 Economic Benefit .............................................................................................. 37 5.2 Public Benefit .................................................................................................... 37 5.3 Potential Annual Fuel Displacement ................................................................. 38 5.4 Anticipated Annual Revenue ............................................................................ 38 5.5 Potential Additional Revenue Streams ............................................................. 38 APPENDICES ................................................................................................................. 38 Appendix 1 Endorsements and Certification of Project Participants ............................... Appendix 2 Project Execution Plan ................................................................................. Appendix 3 Project Team Resumes ................................................................................ Appendix 4 Preliminary Project Schedule ....................................................................... Appendix 5 Brochure - European LCNG Barge and Delivery System ............................. Appendix 6 Bergen Norway LCNG Project Summary ..................................................... Appendix 7 Representative Project Procedures Manual ................................................. Appendix 8 Completed Budget Form & Cost Worksheet ................................................ El Paso’s Sun Metro LCNG fueling station completed 2002 (compliments of North Star). 1. INDENTIFICATION OF PROJECT AND PARTIES 1.1 Introduction As Alaska’s economy began its remarkable expansion following World War II, statehood, and the discovery of the massive oil reserves on the North Slope, its remote village cultures were gradually propelled from a subsistence existence, to a more urban-like culture, with dependencies upon various imported commodities. These included motorized vehicles, processed foods, consumer electronics, indoor plumbing, and electrified kitchen appliances. Reliance on these modern conveniences has fostered a dependency within the villages on a supply of imported energy. There is an apparent opportunity to deliver a substantially less expensive substitute fuel to remote Alaskan communities in the form of LCNG. Quantifying the real project economics, determining a price range to provide a reasonable return on investment, and identifying supply options are the primary objectives of this project. This rural dependency upon imported energy has been subtle, as the BTU-rich fuels derived from petroleum were relatively inexpensive initially, especially when compared with the snow-machines, four-wheelers, boilers, home furnaces and generators that used these liquids. This cultural metamorphosis from subsistence to dependency continued nearly unabated in Alaska’s remote communities; occasionally deterred by spikes in fuel prices briefly in the early 70s and again in 80s. Generally though, the combination of a marketplace flooded with inexpensive oil, and nearly non-existent fuel 1 Prop Draft 11_09_08 Word 7.doc taxes in AK, alleviated most of the pain associated with purchasing fuel by rural Alaskans, even on meager fixed incomes – until the current oil price run- up began in 2003-2004. From the lean days of 2002, when a barrel of oil averaged approximately $22, to the maximum of nearly $145 per barrel observed during the summer of 2008, fuel pricing in remote Alaskan communities increased as dramatically, causing near universal fear, anger and frustration among village dwellers. This summer’s fuel barge deliveries to interior Alaskan villages brought unheard of prices, up $3 to $4 per gallon since the last year’s delivery, to $7.50 to $8.00 per gallon 1 . A double-whammy of high-priced fuel delivered by fuel burning transport ships or air tankers has resulted in astounding increases in home heating and electrical costs to rural villagers. Single family fuel costs, for space heating and cooking range from $300 to $900 per month, representing an average of 40% of a typical family’s income. This particularly grim situation for Alaska’s rural communities is not sustainable. Low per capita village income, coupled with sky-high fuel pricing has very quickly resulted in the transfer of a significant fraction of many village residents from their life-time home to urban settings in Anchorage and Fairbanks and other less rural communities, in a struggle to reach economic balance. The team bringing this grant application to AEA is acutely aware of the tenuous situation in Alaska’s rural communities, and the need to find a cost saving set of solutions as soon as is practical. This grant proposal details a strategy for assessment and feasibility work, and follow-on community level implementation of a potentially far-reaching solution; one that could impact nearly all villages battered by today’s high priced petroleum products. The technology set forth in this application also represents a clean fuel alternative that may serve as the basis for hybrid combinations with wind- powered electric generation, technologies that are handicapped by the requirement for base-loaded electrical generation to support them. The natural gas-based conversion described in our application fits very well in this role of hybrid renewable back-up generation. The LCNG technology described here is commercially-proven, robust and expanding at a rapid pace outside of Alaska. It requires little developmental risk to bring it to Alaska’s remote communities. 2 1 Anchorage Daily News, June 4, 2008. Prop Draft 11_09_08 Word 7.doc LCNG storage and fueling facility in Norway. 1.2 Participants 1.2.1 Orutsararmiut Native Council (ONC) Representing Bethel Native Alaskan residents and ONC tribal members, Orutsararmiut Native Council (ONC) is an eligible applicant under the guidelines established in Section 1.4 of AEA’s RFA document. Contact information for ONC is: Orutsararmiut Native Council Mike Samuelson – Executive Director PO Box 927 Bethel, AK 99559 Phone: (907) 543-2608, (800) 478-2654 msamuelson@nativecouncil.org ONC’s participation endorsement is provided in Appendix 1 1.2.2 PDC Harris Group ONC’s engineer for the project is PDC Harris Group LLC, an Anchorage engineering-design firm. PDC Harris Group is an Alaskan limited liability corporation founded in 2002 by PDC Inc (Alaska) and Harris Group Inc (Washington). Contact information is as follows: PDC Harris Group LLC Michael Moora – General Manager 2700 Gambell St., Suite 500 Anchorage, AK 99503 Phone: (907) 644-4716 mike.moora@pdcharrisgroup.com The firm is a respected service provider currently conducting work under various agreements with major oil companies, independent energy producers, utilities, rural cooperatives and federal agencies. Additional 3 Prop Draft 11_09_08 Word 7.doc information regarding PDC Harris’s qualifications and experience is available from their website at http://www.pdcharrisgroup.com. Further delineation of their role in the project is provided in subsequent sections of this application. 1.3 Project Eligibility ONC is a governing agency eligible as an applicant for AEA funds under this grant program. This project involves natural gas, in a community of less than 10,000 residents, as stipulated in paragraph 1.5.2 2 of the RFA. It is our opinion that this fuel substitution project further enables the project economics for typical intermittent renewable technologies, e.g. wind or solar, by virtue of the need to develop such electrical generation with firm fuel-fired backup capacity. For example, if the penetration of a typical wind generation system is 30%, it leaves 70% of the generation as conventional diesel-fueled engine generator capacity. Reducing the fuel cost for the conventional generation segment of the total is likely to make the combination more economically attractive than the 30% contributed by wind generation. 1.4 Qualifications of Project Participants 1.4.1 Orutsararmiut Native Council 3 The Orutsararmiut Native Council (ONC) is a nonprofit tribal organization headquartered in Bethel, Alaska. We are federally recognized as “the tribe” for Native Alaskans and American Indians living in Bethel. Bethel is also the regional hub community for the surrounding 56 villages. Bethel has a population of approximately 6,000, making it one of the largest communities in southwest Alaska. “Orutsararmiut” is a Central Yupik Eskimo word for “place of Gatherer People”, and our logo depicts a person gathering berries. Our organization serves approximately 2,600 tribal members and the community at large with a myriad of programs. Governed by a seven-member Council, and through their Executive Director, we successfully administer several programs under The Indian Self-Determination and Education Assistance Act (Public Law 93-638). These programs include social services, natural resource management, tribal operations, tribal courts, credit and finance programs, acculturation program, Bureau of Land Management program, and land selections under the Alaska Native Claims Settlement Act. The Orutsararmiut Native Council effectively also manages a number of programs under the Indian Employment, Training and Related Services Demonstration Act (Public Law 102-477). These programs consist of scholarships, adult basic education training, job placement services, and child care services for members. In addition, we have several grant programs we administer: three Alaska Department of Fish and Wildlife seasonal grants; Alaska Department of Health and Social Services, Administration for Children grant; State of Alaska 4 2 And correspondingly in Sec 42.45.045 (g) of HB152. 3 The City of Bethel has expressed interest in participating, but owing to the fast track nature of the proposal effort, did not have schedule council meeting in which to pass the necessary resolution. The city controls an additional 20 buildings and operates diesel-fueled power generator sets. Prop Draft 11_09_08 Word 7.doc Family Support grant, U.S. Department of Health and Human Services, Administration on Children & Families, Administration for Native Americans Tribal Court Development grant; Juvenile Justice grant (federal); Low-Income Home Energy Assistance Program (federal); Housing and Urban Development; and Native American Housing Assistance and Self- Determination Act programs, and in 2008, operates the Bethel Community’s Transit system. Pro active in the community and for the organization, approximately $72,000 per year is donated by ONC to the community of Bethel and individual tribal members. The Orutsararmiut Native Corporation is a highly successful organization, consisting of many departments. Programs are run through appropriate departments as applicable: Administration; Social Services; Tribal Housing; Education, Employment, Training, and Related Services; Realty; and Natural Resources and Environmental Services (Please see organizational chart located in Appendix 1 for further detail). ONC will be utilizing two of their owned buildings for this fuel conversion demonstration, and has the skills and knowledge to administer the “Pilot Test Program – Bethel LCNG Fuel Conversion” project. 1.4.2 PDC Harris Group Please refer to PDC Harris’s website for a more detailed look at their experience and qualifications: http://www.pdcharrisgroup.com . Additionally, PDC Harris Group’s parent company websites are, PDC Inc, Engineers: http://www.pdceng.com Harris Group Inc: http://www.harrisgroup.com PDC Harris Group’s specialized experience has been sub-divided in the following sections into that corresponding to the two parent companies, PDC Inc and Harris Group. Together these two engineering firms have worked cooperatively under the joint venture on a number of projects in Alaska, as summarized in Table 1. 5 Prop Draft 11_09_08 Word 7.doc Table 1 Recent PDC Harris Group Project Experience in Alaska Description Power Generation Oil & Gas Cold Regions Facilities BP Exploration (AK) Milne Pt HOT Power Generation ▀ ▀ ▀ BP Exploration (AK) Badami Wind Turbine Study ▀ ▀ ▀ BP Exploration (AK) MPX2 Power Generation ▀ ▀ ▀ BP Exploration (AK) MPU08 Generator Replace ▀ ▀ ▀ BP Exploration (AK) ULSD Procurement Assist ▀ BP Exploration (AK) MPU A Pad Maintenance Shop ▀ Point Lay Power Plant Upgrade ▀ ▀ Ft Wainwright Baghouse Detail Design ▀ Eielson AFB Baghouse Detail Design ▀ Ft Wainwright Construction Air Permit ▀ Forest Oil, Osprey Platform Design Services ▀ Forest Oil, On-shore Design Services ▀ ▀ ML&P, Plant 2A Concept Design & Develop Services ▀ ▀ Chugach Electric Assn., U5 Controls ▀ Chugach Electric Bernice Lake H2O Inject Design ▀ ▀ Ft Wainwright Baghouse Commissioning ▀ Ft Wainwright Air-Cooled Condenser Design ▀ ▀ GVEA, NP Expansion, Review P&IDs + ▀ Winstar Petroleum, Oliktok No. 1 ▀ AIDEA Healy Clean Coal, Eng’g Services ▀ Aurora Energy, Chena Compliance Study ▀ Doyon Utilities, Privatization Assessment Services ▀ ▀ Elmendorf AFB Energy System Decentralization ▀ Ft Richardson Energy System Decentralization ▀ A. PDC Inc Engineers PDC strengths emphasized for this project are provided as follows. Remote Alaska Community Facilities & Power Generation: PDC Inc has over 30 years of experience in the analysis, design and commissioning of facilities in rural Alaska, including schools, community centers, hospitals, clinics and power generation systems. They have extensive experience with both new construction and major renovation in a broad range of both industrial and institutional facilities. Over the past 10 years, PDC has accomplished the renovation design serving more than 2.5 million square feet of space. Most recently PDC was responsible for the design to convert both Fort Richardson and Elmendorf AFB from central steam heating to on-site gas-fired heating boiler applications. PDC’s HVAC systems experience includes power plants, shops and garages, heavy equipment maintenance shops, administrative spaces, secure facilities, enclosed substation and switchgear facilities, and computer and communications facilities. PDC’s experience includes extensive experience in heating and heat generation systems, glycol pumping 6 Prop Draft 11_09_08 Word 7.doc systems, and waste heat recovery systems. PDC developed the design for the 150,000 lb/hr auxiliary heating plant serving Eielson AFB, the 10 MMBTU outside air preheat system for the Greens Creek mine, and the heat generation, waste heat recovery, and heating distribution system for the $150 million Amundsen Scott South Pole Station (design temperature -100F). Fire Suppression and Detection: They have integrated the expertise of their civil, mechanical and electrical engineering staff to address fire protection issues in a comprehensive manner. PDC has helped clients with a broad range of fire protection applications including CO2, AFFF, Halon, Inergen and wet, dry and glycol based sprinkler systems. B. Harris Group Inc. The energy business unit of Harris Group has extensive experience in both gas turbine power generation, gas-fired engines, gas compressors and LNG plants.. Gas Turbine Power Generation (GTG): Harris Group has provided successful detailed engineering services for over 1,000 MW of GE aero-derivative capacity in the western US. They are fully-versed in the design issues of managing the procurement, engineering, and working with construction contracting partners for fast-tracked power generation systems. Harris Group discipline leads have performed multiple projects like this one, and are well aware of what deliverables are required to direct this team, the level of detail required, and most importantly – how to produce these deliverables for the lowest number of engineering hours. Pipeline Gas Compressor Stations: Another strength of Harris Group’s Energy business unit is in the area of gas pipeline compressor station design. Many of their discipline lead engineers who have successfully executed GTG projects have also executed fast-track gas compressor station projects in the western US. Harris Group project teams have provided detailed design packages for over 95,000 HP of natural gas compression capacity in recent years. LNG Plant Design & Operation: The senior process engineer assigned to this project, Doug Wiles, has designed and operated LNG plants in Egypt (SEGAS LNG) , and Nigeria (Bonny Island LNG Project), among others. 7 Prop Draft 11_09_08 Word 7.doc 2. PROJECT SUMMARY 2.1 Introduction City of Redlands, CA CNG fuel dispensing spheres, June 2003 (Compliments of North Star) Our proposed project addresses the largest contributor to sky-rocketing fuel costs in remote Alaskan communities – petroleum derived diesel fuel and fuel oil – by substituting lower priced and more environmentally acceptable natural gas. As stated, we envision this fuel substitution concept as a bridge to longer-term renewable solutions for remote Alaska communities. With the assistance of the grant funding and with our cost shared contribution, our team proposes to conduct Reconnaissance and Feasibility level analysis in Bethel to prove the economic and technical feasibility of transporting Liquefied Natural Gas (LNG) to a remote community, storing the fuel as Compressed Natural Gas (CNG) in commercially available pressure vessels on-site, and distributing the gas for use in existing furnaces, boilers and an engine-electric generator set 4 via low pressure piping, much like that used within in the lower 48 states. Based upon the very significant disparity in pricing between natural gas and petroleum-derived distillate fuel, the substitution of natural gas for diesel and fuel oil will result in price savings per unit of energy (Refer to the analysis presented in Section 4.3). Eroding natural gas pricing, prior to the recent economic downturn, is indicative of an increasing surplus of natural gas in the lower 48, which will likely increase the disparity in $ per BTU between these commodities for many years. 8 4 Provision of natural gas to the private utility diesel generator is not currently included in the scope of the project, based on preliminary discussions with the tribal council. However, negotiations with the utility owner to include a single engine-generator set in the project is planned as part of Reconnaissance activities. Prop Draft 11_09_08 Word 7.doc Henceforth in this application we will use the industrial acronym of LCNG to represent liquefied compressed natural gas, or more technically appropriate ‘liquefied to compressed natural gas’ technology. CNG is produced from LNG more efficiently than it is from the alternative source; pipeline natural gas. LNG is more efficiently transported than is CNG. These points are developed further in later sections of the application. The initiative has been titled as follows. Pilot Test Program – Bethel LCNG Fuel Conversion Omnitrans LCNG fueling station, Montclair, CA, 2002 (Compliments of North Star) 2.2 LCNG as a Bridge Solution The investment capital requirements for modifying a community energy infrastructure are minimized using this approach, as existing oil fired- equipment and diesel-driven electric generation can be converted to run on natural gas, and do not require wholesale replacement. For this reason, and the commercial availability of the hardware associated with the conversion to LNG and CNG, the time to implement this solution is short. Unlike renewable solutions, which generally require major changes to a community’s infrastructure system to accommodate a new source of thermal or electrical energy, this solution relies on: Maximizing the efficiencies and operational economics of LCNG technology and storage components, and transport know-how of this commercially successful technology 5 Maximizing the reuse of existing energy conversion systems installed in village homes, school, community buildings, and power generation utility thru the use of compatible, clean burning natural gas Minimizing the installation of capital intensive conversion systems which are often inefficient or require significant real estate to capture or convert a dilute renewable energy source 9 5 For introductory information on the commercial status of CNG in Europe, Asia and So. America, refer to http://en.wikipedia.org/wiki/Compressed_natural_gas Prop Draft 11_09_08 Word 7.doc 2.2 General Applicability Beyond Proposed Community Because of the general applicability of this project to nearly any Alaska community with barge access, for delivery of bulk LCNG, the results of this pilot – scale initiative are potentially beneficial to many more Alaskans than just the village program outlined in this grant application. In our opinion implementing LCNG conversion is a bridge solution; offering a short term solution to high energy prices before long-term alternative solutions can be placed on-line. Furthermore, the results from this project are scalable. The economic and technical findings are directly applicable to larger or smaller applications. Hardware components that are commercially available for this ‘Pilot Scale’ Bethel system, are applicable for a ‘Semi-Commercial’ scale for the surrounding regional communities, and then to ‘Full-Scale’ service to remote villages throughout Alaska. Phoenix’s Valley Metro LCNG fueling facility, May 2008 (Compliments of North Star) 2.3 Project Type This grant application addresses Phase I Reconnaissance Investigation and Phase II Feasibility Study activities sufficient to develop a concept design to serve the host community, and to refine project cost estimates and run pro forma economic models suitable for supporting later funding for detailed design, permitting, procurement, construction and commissioning. 10 Prop Draft 11_09_08 Word 7.doc Phase I and II efforts will include the following generalized activities aimed at providing detailed input to prove a) the economic feasibility of this business model, and b) demonstrating the pricing advantage of LCNG Negotiations with LNG or natural gas suppliers for long term gas supply contract sufficient for host community, as well as for larger volumes of gas reflecting expansion of business to a regional and state-wide model. Installed capital cost estimate for LCNG receiving, storage and distribution system for residential, communal and utility users. Operating cost estimate, including maintenance and inspection of a community natural gas distribution system. Operating cost estimate to transport LCNG 6 from point of purchase, to barge staging facility, to the host community 2.4 Project Description Phase I of the project will involve assessment of the current diesel and fuel oil users within the ONC controlled assets in Bethel; to estimate the volume of CNG to be supplied, the extent of modification required to accommodate the switchover 7 to natural gas, and of course the willingness of the village residents to be involved. Phase II will build on the inventory data from the first stage, and will entail development of conceptual design elements sufficient to support the economic analysis noted above, in 2.3. The second stage will also emphasize a firm supply of pipeline quality natural gas or LNG, as well as identifying critical path schedule constraints such as environmental or transport permits. 2.4.1 Project Location The host community for the Pilot Test Program – Bethel LCNG Conversion will be the City of Bethel (focusing on facilities owned by ONC). Refer to the following websites for more information on the community and the its related native council corporation, Orutsararmiut Corporation City of Bethel: http://www.cityofbethel.org/ ONC: http://www.nativecouncil.org/ 2.4.2 Communities Served The only community to be served by this initiative is a sub-set of the City of Bethel. However, as stated, if deemed economically feasible during the Phase III and IV ‘Pilot’, the concept may be generally applicable to the region and state. 2.4.3 Project Partners Table 2 lists the partners and their responsibilities for the project. 11 6 During the reconnaissance and concept design stages, the possibility of procuring and shipping natural gas from the Kenai LNG will also be investigated. 7 Based upon a survey of users, dual fuel capability may be considered for critical systems. Prop Draft 11_09_08 Word 7.doc Table 2 Project Organization Participant Role/Responsibility Orutsararmiut Native Council (ONC) Community host, owner-operator of on-site storage & distribution system PDC Harris Group Project development, engineering-design , cost estimating, and economic modeling. 2.5 Project Budget Overview 2.5.1 Funds Requested The applicant requests the following monies for conducting the work outlined here. Table 3 Summary of Funds Requested for LCNG Pilot Test Program Phase Total Budget Funds Requested Cost Shared I Reconnaissance $ 322,200 $ 292,900 $ 29,300 (10%) II Feasibility $ 449,700 $ 408,800 $ 40,900 (10%) I/II Combined $ 771,900 $ 701,700 $ 70,200 (10%) 2.5.2 Nature and Source of Other Funds Matching funds are provided as in-kind donation of project labor amounting to approximately 10% of the project budget. The project team also intends to apply for grants from the US Department of Energy and the Denali Commission for follow-on phases involving detailed design, construction, commissioning and testing. 2.6 Project Benefit 2.6.1 Economic & Environmental Benefits The Pilot Test Program – Bethel LCNG Conversion has several key benefits associated with community and residential cost savings, as well as environmental benefits. These are summarized below. Economic: Lowered cost of primary fuel for space heating, and power generation Rapid implementation relative to other renewable alternatives, based on maximizing the displacement of petroleum distillates with minimal retrofit expense Future credits associated with reduced greenhouse gas emissions relative to diesel or fuel oil use Enhanced reliability of burner and engine components, based on switchover to clean fuel 12 Prop Draft 11_09_08 Word 7.doc Environmental: Reduction in primary air pollutants SO2, hydrocarbons, metals (e.g. mercury, lead), and particulates Significant reduction in CO2 emissions Minimized diesel/fuel oil spills 2.6.2 Other Benefits to the Alaskan Public As stated above, there are potential benefits to the Western Alaska region, and perhaps a wider area, based upon a favorable outcome of the economic feasibility modeling to be conducted during the Phase II effort. The development of a viable business model for ONC/Bethel will be an indicator that regional villages would be subject to the same benefits. This logic is also transferrable to communities outside Western Alaska. 2.6.3 Project Cost/Benefit Analysis Section 4.3 of the application presents the economic driving force for an LCNG fuel supply and conversion system for Bethel. Figure 3 indicates a potential savings of up to $30 per million BTU for primary liquid fuels currently imported to Bethel, based on recent price data for Alaskan LNG delivered to Japan, and state-supplied data for Bethel diesel/fuel oil deliveries. This incremental savings represents ~ 80% of the March 2008 cost of fuel for Bethel. However, the referenced cost comparison is dangerously lacking, in that it does not represent the capital investment necessary to build an LCNG supply chain to Bethel. Without compiling a reasonably accurate cost estimate of such a system, and developing an economic model, the real cost of providing this remarkably less expensive fuel to Bethel (or the surrounding region) is an unknown. The stunningly low pricing of Alaska LNG shipped to Japan, is not indicative of what this fuel pricing would be for a smaller scale supply chain to Western Alaska. Estimating the capital cost of a representative supply system, and compiling the pro forma economic model is necessary before the real benefit can be estimated. The effort involved in conducting this level of investigation is beyond the scope of this application process. The applicants are requesting the funds to conduct this work under the AEA Renewable Energy Fund. 3. PROJECT MANAGEMENT PLAN Based on the project execution experience of PDC Harris Group, we bring a culture of strong project management to the project, to ensure AEA that objectives are met pursuant to the identified schedule and budget. The plan outlined in this section is aimed at providing a basic understanding of the approach we use to manage projects of this type. In several instances, references are made to procedure manuals, instructions and standards – each of which can be furnished upon request. 3.1 Project Execution The draft Project Execution Plan for the Pilot Test Program – Bethel LCNG Conversion is provided in Appendix 2. Please note that this is considered a guidance document until reaching Stage III, Final Design, Permitting and 13 Prop Draft 11_09_08 Word 7.doc Procurement; it will be upgraded to a full plan for detailed design and construction when the project advances to Stage III. 3.2 Project Procedures Manual Following the Phase I kickoff meeting involving AEA and our project team, the Project Manager will develop a project procedure manual (PPM) which will be specifically tailored to this project. A representative example of a PPM created for a recent PDC Harris Group project is provided in Appendix 7 3.3 Project Manager Project management responsibilities for the Stage I and II tasks will be handled by Michael Moora, PE. A resume for Mr. Moora is provided in Appendix 3. 3.3.1 References Professional references for Michael Moora are provided in Table 4, following. Table 4 Professional References – Project Manager Name Title Firm Contact Eugene Ori Plant Manager MOA, Municipal Light & Power (907) 263-5339 OriEA@ci.anchorage.ak.us Daniel Winter Project Lead BP Exploration (Alaska) Inc. (907) 564-4263 daniel.winter@bp.com Dustin Highers Project Manager Chugach Electric Association (907) 762-4775 dustin_highers@chugachelectric.com 3.4 Project Schedule The preliminary schedule for Phase I and II activities is provided in Appendix 4. Included in the schedule is the Work Breakdown Structure (WBS) we have outlined at this stage to execute the project. Some upper-level WBS activities and durations are also included for Phase III and IV work, in the interest of representing the overall duration of fast-track schedule to install and test the pilot system. 3.4.1 Project Milestones Table 5 provides major milestones for the project, taken from the preliminary Project Schedule. Please note that Phase III and Phase IV dates should be considered as ‘not firm’, based on the inability to accurately predict the durations of the following activities. Reasonable approximations were assumed for these activities based on our experience and the award schedule provided in the AEA RFA. Grant application cycle for Phase III/IV grant application Turnaround time for approval of AEA grant funding Delivery time for long lead time equipment (assumed 10 weeks for LNG storage tanks and CNG storage cylinders or spheroids) 14 Prop Draft 11_09_08 Word 7.doc Table 5 Schedule Milestones Activity Start Finish Duration Phase I - Reconnaissance 18 Mar 09 4 Sep 09 80 days Design Basis Memo (Village System) 22 July 09 10 Aug 09 14 days Issue Assessment Report 4 Sep 09 4 Sep 09 1 day Phase II – Feasibility & Concept Design 7 Sep 09 6 Jan 10 88 days Draft NG Distribution Drawing 30 Sep 09 6 Oct 09 5 days Vendor Quotes Village System 8 Oct 09 16 Oct 09 7 days Design Basis Memo Barge System 6 Oct 09 12 Oct 09 5 days Vendor Quotes LNG Barge Components 13 Nov 09 23 Nov 09 7 days Pro Forma Economic Modeling 7 Dec 09 16 Dec 09 8 days Present Conclusions/Recommendations 30 Dec 09 30 Dec 09 1 day Funding Approval Phase III/IV* 20 Jan 10 21 May 10 87 days Phase III - Design, Permitting & Procurement*4 June 10 11 Oct 10 91 days Detailed Design 7 June 10 30 Aug 10 3 months Permitting Applications 7 June 10 27 Sep 10 4 months Procurement 19 July 10 16 Aug 10 1 month Long Lead Equipment Delivery 2 Aug 10 11 Oct 10 10 weeks Phase IV – Construction & Commissioning*16 Aug 10 19 Nov 10 95 days Install Village System 6 Sep 10 4 Oct 10 4 weeks Construct Barge System 13 Sep 10 25 Oct 10 6 weeks Commission Barge LNG System 5 Nov 10 9 Nov 10 2 days Commission Village System 15 Nov 10 18 Nov 10 3 days * Denotes scope items not included in current grant application; shown for continuity. 3.5 Key Tasks The Work Breakdown Structure of the two project phases are listed in detail in the following sections. 3.5.1 Reconnaissance Phase I Field Assessment Project Kickoff Kickoff Meeting On-Site Survey Home Office Development Process Field Data Code and Guidance Analysis Permitting Assessment Study - LNG vs. CNG Storage Develop Design Basis Memo (Bethel System only) Preliminary Project Schedule, Revised 15 Prop Draft 11_09_08 Word 7.doc ROM Capital Cost Estimate (Bethel System only) Report Development and Review Report Draft Issue Reconnaissance Assessment Report 3.5.2 Concept Design & Feasibility Analysis Phase II Prelim Design - Bethel Storage & Distribution System Kick-Off Meeting Site Plan Drawing Process Flow Diagram Size CNG/LNG Storage Vessel Prelim Piping & Instrumentation Diagrams (P&IDs) NG Piping Distribution Drawings Equipment List Instrument Index Valve List Piping MTO Vendor Quotes – Equipment Prelim Design - LNG Barge Transport System Kick-Off Meeting Code and Guidance Analysis Permit Assessment Survey Current Barge System Design Elements Survey Available LNG Dewar Tanks Process Flow Diagram Design Basis Memo Electrical Classification Dwg. Size Storage System Preliminary P&IDs Survey Available Surplus/New Barges Prelim Barge Arrangement Dwg Equipment List Motor List Instrument Index Piping MTO Vendor Quotes - Storage Vessels Updated Project Schedule Economic Analysis Prelim Negotiation - LNG Supply Capital Cost Estimate Operating Cost Estimate Pro Forma Economic Modeling Conclusions & Recommendations 16 Prop Draft 11_09_08 Word 7.doc Report Development and Review Develop Draft Report Present to AEA & Stakeholders Finalize Report Issue Final Report 3.6 Project Resources 3.6.1 Team Organization & Resumes The project organization chart is represented in Figure 1, following. Corresponding resumes the project staff are provided in Appendix 3. Our primary contact for the project is Mike Samuelson, Executive Director of ONC. Mr. Samuelson will be responsible for liaison and communications between the engineering/development team @ PDC Harris Group, and the Bethel tribal stakeholders. The designated Project Manager, Michael Moora will be responsible for all aspects of the reconnaissance, appraisal, concept design and economic modeling to be conducted for the project. Royce Conlon, Environmental Specialist, will be responsible for regulatory assessment as it relates to permit acquisition for the project. Ms. Conlon is a senior associate with PDC Inc, and has conducted similar surveys on numerous Alaska projects. Doug Wiles, Lead Process Engineer, with design and operating experience on several LNG projects, will be responsible for LNG and CNG related studies and concept designs. Mr. Wiles will also be responsible for developing the economic model for the LCNG supply system, along with personnel from Harris Group’s Financial Consulting specialty group, based in Denver. He will be assisted be by Roger Full and Jeremy Kovacevich. 3.6.2 Partnerships/Commitments with Entities The Pilot Test Program – Bethel LCNG Conversion project team consists of the partners Orutsararmiut Native Council Inc and PDC Harris Group LLC. As mentioned earlier in the application, we will undertake negotiations with both Bethel Utility Corporation (BUC) and the City of Bethel to convert one of their diesel engine generator sets to natural gas/diesel dual-fuel firing. Earlier meetings with the City of Bethel have generated a willingness to be involved in the LCNG pilot project. 3.6.3 Existing Contracts and Selection Process There are currently no additional contracts between the applicant and other parties, pertaining to this initiative. Selection of contractors, sub-contractors, or specialists, if deemed necessary will be accomplished through the use of competitive selection. 17 Prop Draft 11_09_08 Word 7.doc Figure 1 LCNG Project Organization 18 Prop Draft 11_09_08 Word 7.doc 3.7 Project communications 3.7.1 Project Monitoring & Reporting Project monitoring and reporting is a critically important aspect of any project, and while we recognize and rely on traditional means of communicating to our customers and partners, the team will also use project websites extensively. Web-hosted sites for the posting and updating of project deliverables allow us to decrease communication delays associated with transmittal of ‘paper’ design deliverables, and keep our project participants up to date with the most current project trends. We are able to better collaborate with our project participants, communicate documents in one secure online location, easily control the access for each member of the project team, and share document updates and markups in close-to-real time. We firmly believe that project websites allow us to increase productivity and deliver projects more competitively. Our project websites are generally hosted using the Autodesk Buzzsaw system, for advanced workflow functionality, for greater visibility of project status, and more effective management of all project information. This functionality includes the ability to: Post recently updated documents, including drawings, bills of materials, procurement packages/specifications, tracking reports and schedules. Gather customer review comments on design deliverables. Retrieve vendor supplied equipment/package details, including fabrication details, material lists, delivery schedules, and other procurement related information. Quickly monitor project status, including all project elements, action items and initiatives. Track critical project information with standard and custom project reporting across projects, and within projects. Manage communications and workflow using responsibility assignment and tracking features. Assign tasks and track work status via central form logs viewable on dashboards. 3.7.2 QA/QC Change Management PDC Harris Group uses a database-driven 3D design package developed by Coade, known as CADWorx. The database supports the development of intelligent design documents which are linked through the database, such that a single entry change is reflected in all relevant design documents sharing common attributes. While the engineers recognize the potential productivity gains to be realized by bringing the engineering deliverables into the single CW database, such a process may compromise Quality Control (QC). As anyone involved in the management of detailed design projects will acknowledge, increases in productivity associated with automation of design documents may be 19 Prop Draft 11_09_08 Word 7.doc accompanied by proportional decreases in quality, i.e. an increase in errors. Without proper management of change applied to an intelligent design system, modifications may be applied by engineers/designers with access to the system at random. Without proper management of change and interdisciplinary communication, random changes by one discipline having an impact on other disciplines may go undetected. The additional cross-checking associated with the 3 independent data bases enhances and improves QC. PDC Harris Group also uses the following change management tools to minimize error propagation in our design deliverables associated with automated systems: Project managers and engineers foster inter-discipline communication using daily walk-around visits to discipline lead engineers/designers. Weekly project meetings are held to keep lines of interdisciplinary communication open. Key drawings, such as P&IDs, rely on a master set of drawings, where particular disciplines make color-coded changes. The master drawings are kept in common project areas to allow ready access to all participants. Changes to the CADWorx files, and the Process Equipment and Instrument-Control databases, are made based upon agreed to schedules for drawing and database revision. Random changes to the master files are not possible, based upon strict security access. Identification of interference issues between different design disciplines relies not only on the 3-D features of CADWorx, but also on periodic drawing coordination sessions. 3.7.3 Communication to the Authority Project reporting to the Authority will consist of a monthly report, using the report format provided with the RFA. The report will address the project activities completed, any existing or potential problems and activities targeted for the next reporting period. This report will be produced and can be delivered hard copy as well as electronically to the Authority project manager. We encourage customer project managers to become pro-active participants in project weekly meetings, and assume that AEA will have interest in doing so. Our meetings are documented in the form of concise minutes, and action items assigned to participants are tracked using a matrix updated weekly. Should the Authority have a need to gather information for the project at a mid-cycle point, our projects may be remotely tracked using the project website. This accessibility yields close to real time design/development status. Access can be authorized for AEA requested parties, as necessary. 3.8 Project Risk 3.8.1 Potential Threats to Project The following items are regarded as potential threats to project success: LNG Availability/Pricing Relationship: It is possible that LNG is not available in sufficiently small volumes at the prices necessary to drive the economics to an attractive return on investment. 20 Prop Draft 11_09_08 Word 7.doc Permitting Overly Complex: Without a working knowledge of permitting an LCNG project in Alaska, the possibility exists for delays and greater costs than anticipated for permit acquisition. Communities Unwilling to Accept Fuel Substitution: There exists the possibility that a rural community is unwilling to accept or unable to deal with the changes imposed by making a fuel substitution. LCNG – Distillate Fuel Price Disparity Disappears: In the future, there is the possibility of parity between the value of heat content in these two commodities. 3.9.2 Risk Mitigation Reducing these threats will entail further development of the project, as proposed. Other specifics include: LNG Availability/Pricing Relationship: Conduct negotiations with suppliers as early as possible to identify challenges and allow sufficient time to work alternatives. Permitting Overly Complex: Phase I/II effort will quantify this threat and provide suitable planning opportunity for Phase III permit application strategy. Communities Unwilling to Accept Fuel Substitution: During reconnaissance phase, attempt to quantify local acceptability. Develop necessary PR plan and public involvement meetings as necessary to educate and communicate. LCNG – Distillate Fuel Price Disparity Disappears: There is nothing the project applicants can do to impact this threat. If petroleum distillate fuels are reduced in terms of today’s $/BTU range, then community problems are reduced. 4. PROJECT DESCRIPTION AND TASKS This section of the application provides additional details of the pilot LCNG project, and the tasks outlined in the Work Breakdown Structure (refer to Preliminary Schedule in Appendix 4). 4.1 Proposed Energy Resource Natural gas, delivered and stored as LNG, and CNG 8 , respectively, will be used to substitute for diesel/fuel oil used as follows. Displacement of fuel oil with CNG-derived natural gas in four (4) boilers for space heating in ONC owned buildings. Converting a diesel engine electric generators from 100% diesel operation to dual fuel operation. This conversion, using commercially available hardware and control software, will allow replacement of a nominal 80% of the diesel fuel requirements at full-load operation with CNG-derived natural gas. The second bullet, relating to converting one of the BUC or city diesel engines to dual fuel capability describes an objective that is subject to 21 8 At this stage of project development, the concept is to store the fuel in a centralized or semi- centralized pressure vessel located near current liquid fuel storage and barge off-load area. During Phase I we will also study the merits of storing LNG on-site at near atmospheric pressure and cryogenic temperature. Prop Draft 11_09_08 Word 7.doc negotiation with a private entity; Bethel Utility Corporation (BUC). BUC operates the existing 6 x 2500 kW diesel engine-generator sets. The company has little incentive to switch fuels or cooperate with a conversion project, since their earnings are not related to fuel cost. As noted earlier, we are also discussing the same testing arrangement with the city. The project team will negotiate with BUC or the city to provide turnkey conversion of a single engine as part of the project. At this point in the development of the project, we are not able to predict the likelihood of success with the objective. Depending on information gathered during Phase I investigation, it may be prove beneficial to consider purchasing and installing a surplus diesel engine-generator for evaluation of the dual fuel conversion technology. 4.1.1 LCNG Availability LNG is currently available 9 from two sources within the state: the Kenai LNG Plant owned by ConocoPhillips Alaska Inc (CPAI) and Marathon, and a smaller LNG liquefaction plant owned by Fairbanks Natural Gas 10 (FNG) at Point McKenzie. Also, LNG is a world-wide commodity, and is therefore available from sources outside the state. Based on the quantity of LNG required to conduct pilot testing, either of these in-state sources is suitable. During Phase I investigations, contract negotiations with CPAI and FNG will be initiated, focused on acquiring sufficient liquefied natural gas with which to conduct pilot testing as part of Phase IV work. An application for detailed design, procurement, construction and pilot testing is anticipated with a favorable outcome from this work. From the perspective of longer term economics, it is advantageous to consider developing an alternative source of LNG, since both of the two existing sources serve established markets, and it is unlikely that either would offer optimum pricing. Additionally neither source will support larger sale volumes associated with the possibility of expanded regional use. In the future, LNG associated with the Alaska North Slope Gas Pipeline is the ideal source, potentially offering the lowest pricing for larger volumes, should this concept prove feasible for larger scale use. The economics of ANS natural gas as a source of LNG will be investigated as part of Phase II studies. Additionally, the world-wide LNG market will be investigated during Phase II. 4.1.2 Delivery of LCNG As noted in Section 2, delivery of natural gas to Bethel is accomplished most efficiently, in terms of transportation cost, in its most dense form, which is LNG.11 Stored at a atmospheric pressure, liquefied natural gas has a temperature of -256ºF, requiring double-walled insulated storage tanks, to 22 9 Acquiring LNG from these sources will need to be negotiated during the project reconnaissance stage. 10 FNG has announced plans to build another LNG plant on the North Slope, and has an agreement to purchase gas from ExxonMobil. However, construction of this plant appears to be delayed. 11 Relative to diesel or fuel oil, LNG has an energy density of approximately 60%, meaning a volume of approximately 167% the volume of diesel/fuel oil has the same energy content in heating value (British Thermal Unit, BTU). Prop Draft 11_09_08 Word 7.doc preserve cryogenic conditions. These conditions represent a technological challenge to a remote community, and storage as CNG represents a simpler approach. LNG has been in commercial use since the 1960s, serving as a means for monetizing stranded natural gas in producing basins not linked to markets by gas transmission pipelines. The industry has undergone tremendous growth in the last 5 years, and several world-scale import (re-gasification terminals) plants have been permitted and constructed in the lower 48 to accommodate anticipated imports. There are approximately 225 LNG transport ships world- wide, and 24 export terminals, as of early 2007. One of these is the Kenai LNG plant, the only export facility in the U.S. System components (tanks, pumps and heat exchangers) for storage and transport are readily available from numerous suppliers. Our preliminary plan is to design a suitable storage and transfer system for a standard delivery barge, similar to those currently used by Crowley Marine. Fabrication will involve outfitting a new or surplus barge with cryogenic storage tanks, filling system piping, off-loading piping, pumps and heat transfer equipment sufficient to transfer and convert the LNG to CNG for storage to a pressurized cylinder at the village site. Commercially available pre-fabricated barges for river delivery of LCNG are available from Europe, and well be investigated as well. Refer to Appendix 5 for a brochure graphic of such a system. To convert LNG to CNG requires raising the cryogenic liquid pressure from approximately atmospheric pressure (in the LNG transport tanks) to 3600 PSIG (standard storage tank pressure for CNG). This is accomplished using commercially-available pump designed for cryogenic service. Following pressurization, the dense-phase fluid must be heated to near ambient temperature for compatibility with the CNG storage vessel materials. This can be accomplished using an air to fluid heat exchanger, where fans direct ambient air across tube bundles; also commercially available technology. In the future, should LCNG be used regionally or state-wide, conversion of the diesel drives on-board the marine vessels used to haul the barges is also a possibility. Like the conversion from diesel in the communities, such conversions would yield benefits in terms of operating expense, and the emissions of CO2. 4.1.3 On-Site Storage of LCNG As stated in the prior section, natural gas delivered to the village as LNG will be converted to CNG using barge-mounted pump system and heat transfer equipment. Storage of natural gas as CNG may be more attractive for remote communities because: ¾ Cryogenic temperatures and specialized vessel alloys are not involved ¾ The wall thickness of the CNG vessel is sufficiently heavy to prevent punctures from vehicles or firearms ¾ Since the CNG storage vessel is closed and pressurized, boil-off loses are zero ¾ Conversion of LNG to CNG is accomplished with a pump and simple heat exchanger, and requires minor electrical power. 23 Prop Draft 11_09_08 Word 7.doc Also, as part of the work conducted during Phase I Reconnaissance, the team will conduct a short study comparing the alternative of installing LNG storage at the community against CNG storage. The study will examine costs, maintenance requirements, safety as well as potential boil-off loses from the LNG cryogenic system. 24 Prop Draft 11_09_08 Word 7.doc Figure 2 Schematic Diagram of System for Delivery, Conversion & Storage of LCNG Conceptual Diagram LCNG Transport, Storage & Dispensing 27 October 08 13 LNG CNG Bullet LNG to CNG Heater LNG Barge to Gas Users pump 4.1.2 Advantages & Disadvantages of Proposed Resource The cost and environmental advantages of LCNG over the current petroleum derived liquid fuels are summarized in Section 2.9. Generally the primary benefit of the replacement of these fuels with natural gas, delivered as LCNG, is cost-related. Not only is there a significant savings in terms of $/BTU with the LCNG substitution, but the fractional impact on total community BTU consumption is large. The latter cannot be claimed by many renewable resources. Due to the incremental cost savings associated with the fuel substitution proposed here, this technology complements the use of certain renewable energy sources which require a backup such as wind turbine generation, or solar photovoltaic systems. 4.2 Existing Energy System 4.2.1 Configuration The project envelope proposed in this application is a sub-set of the hub city of Bethel. It is our intention to more fully delineate the boundaries of the envelope and conduct a census of the fuel users within this area during Phase I Reconnaissance work. 25 Prop Draft 11_09_08 Word 7.doc Within the residences and tribal buildings included in the study and pilot installation are conventional thermal energy conversion devices (furnaces and boilers) found in nearly every off-the-road community in Alaska. The boilers are outfitted with burners that are readily convertible to natural gas, generally requiring only burner assembly replacement. Large centralized hot air furnaces are anticipated to be readily convertible via burner modifications as well. Smaller wall-mounted Monitor or Toyo direct vent heaters may be amenable to conversion, depending upon their age and configuration. If they are not convertible, replacement with new gas-fired units will not be prohibitively expensive, and will be included in the Phase III/IV budget development. 4.2.2 Electrical Generation As mentioned earlier in the application, we will undertake negotiations with Bethel Utility Corporation to convert one of their 6 x 2.5 MW diesel engine generator sets to natural gas/diesel dual fuel firing. As BUC has little incentive to participate in this project, we cannot confidently state that this aspect of the project will be executed as described here. We are also in discussions with city officials regarding obtaining access to either their operating diesel-generators, or a decommissioned diesel- generator unit. As noted elsewhere, the city is very likely to join this project, and was prevented from doing so only by their schedule of council meetings. The fast track nature of this proposal organization, did not allow this team to submit a request for participation prior to their last meeting in October. As an alternative, to be developed during Phase I Reconnaissance, we will investigate the purchase of a suitable surplus natural gas engine-generator set for the purpose of including electrical generation in the scope of the pilot installation. Generally, this project proposes no new electrical generation in the community, only substitution of natural gas for approximately 80% to 95% of the diesel fuel consumed in one of BUC’s (or the city’s) engine-generators. If it evolves that the project undertakes the installation of a dual-fuel diesel engine generator set, we will summarize the sizing basis, electrical output, air emissions and arrangements to be made with BUC and the city of Bethel for purchase of power from this additional generation capacity. 4.2.3 Existing Energy Resources A detailed description of the resources existing in the Bethel community is beyond the scope of this application. As stated elsewhere in the application, our team will conduct a survey of existing fuel users during Phase I, following discussions with the ONC regarding the tribal buildings and residences to be included in the reconnaissance study and feasibility analysis. It is our understanding, based on discussions with City of Bethel staff, that the city is pursuing the installation of a Tradewind 100 wind turbine generator. A grant application, presumably for this project, was submitted in Round 1 funding requests in partnership with Alaska Wind Energy. During Phase I scoping and reconnaissance, the team will discuss this wind generation project with city and AEA personnel to determine if synergies exist for linking the wind turbine with the piloting of a dual fuel diesel system, as a hybrid electrical generation test. The goal in linking the two projects would be a 26 Prop Draft 11_09_08 Word 7.doc formal analysis of economic benefits to be achieved when wind generation is supported by a base-load engine generator operated on LCNG (natural gas). 4.2.4 Impact to Existing Energy Infrastructure & Resources This project has the potential to impact numerous residential and public energy users in the community, once equipment is ordered for installation as a pilot project. Individual residential space heaters (furnaces or boilers) will be converted to natural gas use with minimal impact, from a physical and economic perspective. The same philosophy applies to public buildings included in the project; conversion to natural gas is expected to have minimal impact. Conversion work will be planned for the warmer months, to minimize periods when space heating is in demand. As part of the residential and public fuel user census conducted in Phase I, the team will identify particular installations where backup fuel oil heating is recommended; based on user reluctance to switch fuels, or other sensitive issues such medical needs. Conversion of one of the diesel generator drives to dual fuel operation will potentially have more of an impact. Hardware and control software will need to be installed, functionally tested and commissioned. Fortunately several US and European companies now market the components for converting large industrial scale diesel engines to dual fuel operation. A project of this scope may be expected to consume 60 to 100 days (for installation and functional checkout only), and will require that the engine-generator set be decommissioned for a comparable period. The plan and schedule for conducting this work will be developed during Phase I and II work. As indicated in an earlier section, the investment capital requirements for modifying the community energy infrastructure are expected to be minor, when compared with the costs associated with a Greenfield renewable project, such a wind turbine or solar array. There will be new capital equipment required for a centralized CNG storage system, and distribution piping. The installation costs associated with these components will be identified in Phase II feasibility investigations. Likewise, as shown in the Preliminary Project Schedule and WBS, we also intend to develop cost information for a barge-mounted LNG storage and transfer system, capable of navigating Alaska’s rivers, and serving the same markets presently supplied by diesel/fuel oil suppliers. 4.3 Existing Energy Market 4.3.1 Bethel Energy Supply Considerations Presently ONC is supplied energy in the form of No. 1 fuel oil, by periodic barge shipments handled by Crowley Marine. Pricing of fuel oil for Bethel and surrounding communities has been volatile lately, owing to the instability in world financial markets, and a general economic recession. Quoted prices reported for June 2008 indicate a delivered price for No. 1 heating oil of $6.33 per gallon, of which approximately $1.30 to $1.50 per gallon can be attributed to transportation cost to Bethel. Monthly pricing trends for diesel/fuel oil delivered to Bethel between March 2003 and March 2008 are plotted in Figure 3, following. Note that the data points in Figure 3, in $ per million BTU, were derived from federal Energy Information Administration (EIA) reports for Alaskan wholesale diesel fuel, 27 Prop Draft 11_09_08 Word 7.doc and adjusted to reflect the cost of shipment to Bethel. The differential cost of shipment was calculated using as-delivered fuel pricing reported periodically by the Alaska Department of Commerce, Community and Economic Development (DCCED). 4.3.2 Project Impacts on Energy Customers Also shown in Figure 3 is the price trend for Alaskan LNG, landed in Japan, during the same period. These data were acquired from EIA, in the format of $ per 1000 standard cubic of natural gas equivalent, and were converted to the units of $ per million BTU, based on the higher heating value of Kenai LNG. Certainly the landed Japanese pricing for LNG does not represent the actual price of LNG shipped to Bethel on smaller, less efficient vessels, but the potential is nonetheless obvious; there is a massive pricing disparity between the two, sufficient to warrant additional investigation. It is precisely this difference that drives the need to conduct the investigations described in this application. There is an apparent opportunity to deliver a substantially less expensive substitute fuel to remote Alaskan communities in the form of LCNG. Quantifying the real project economics, determining a price range to provide a reasonable return on investment, and identifying supply options are the primary objectives of this project. 4.3.3 LCNG – Is There a Hidden Cost Disadvantage? Critics of this concept will likely point out a logical weakness of our preliminary plan; that a comparison such as that in Figure 3 does not adequately represent the costs of purchasing, transporting, and storing LCNG on a scale that represents low volume use in dispersed Alaskan communities. This may be true, but points back to the question of what is known about these costs. Very little, and this substantiates the need for this investigation. Consider one approach to addressing the real costs of shipping and storing LCNG: Based upon the published costs of imported LNG landed in the US, assume that LNG is transferred via barge from a point in Anchorage, much the same as diesel and fuel oil are transported now. Using published data from both EIA, for wholesale diesel pricing in Alaska, and DCCED, for delivered diesel pricing in Bethel, determine the $/gallon of liquid fuel which is incrementally added to handle and transport diesel from Anchorage to Bethel. This value, which averaged $1.34/gal in 2006-2007 12 , can then be added to the landed price of imported LNG, to provide a very approximate picture of the commodity pricing that could be expected if imported LNG was ‘handled twice’ in order to transfer smaller volumes to Bethel. These trends are presented in Figure 4, following. 28 12 Wilson et al, “Components of Delivered Fuel Prices in Alaska” AEA June 2008 report incremental cost increases in Bethel during 2007 of $1.70 per gallon of fuel oil, attributable to transfer, transport, storage and dealer markup. We used the lower value to reflect pricing basis used in the data available to us. Prop Draft 11_09_08 Word 7.doc 29 Figure 3 Trended Fuel Prices, Diesel/Fuel Oil and AK Export LNG $0$5$10$15$20$25$30$35$40Mar‐2003May‐2003Jul‐2003Sep‐2003Nov‐2003Jan‐2004Mar‐2004May‐2004Jul‐2004Sep‐2004Nov‐2004Jan‐2005Mar‐2005May‐2005Jul‐2005Sep‐2005Nov‐2005Jan‐2006Mar‐2006May‐2006Jul‐2006Sep‐2006Nov‐2006Jan‐2007Mar‐2007May‐2007Jul‐2007Sep‐2007Nov‐2007Jan‐2008ar‐2008Cost of Fuel, US Dollars per Million BTU of Heating Value (HHV)Comparison of Delivered Fuel Price*, $/Million BTUMDiesel Delivered to Bethel AK, $/Million BTUAK LNG Delivered to Japan, $/Million BTU* data from Energy Information Administration monthly reportsLanded Japanese LNG PriceAK Wholesale Diesel Fuel Pricing ,including adjustment for shippingto Bethel Prop Draft 11_09_08 Word 7.doc 30 $0.00$5.00$10.00$15.00$20.00$25.00$30.00$35.00$40.00Mar‐2003May‐2003Jul‐2003Sep‐2003Nov‐2003Jan‐2004Mar‐2004May‐2004Jul‐2004Sep‐2004Nov‐2004Jan‐2005Mar‐2005May‐2005Jul‐2005Sep‐2005Nov‐2005Jan‐2006Mar‐2006May‐2006Jul‐2006Sep‐2006Nov‐2006Jan‐2007Mar‐2007May‐2007Jul‐2007Sep‐2007Nov‐2007Jan‐2008Mar‐2008Price in US Dollars per Million BTU of Heat Value (HHV)Comparison of Delivered Fuel Price, $ per Million BTUImported LNG versus DieselDiesel Fuel Wholesale in ANC includingadjustment for shipping to BethelImported LNG transferred from ANCto Bethel in 2nd shipmentFigure 4 Trended Fuel Prices, Diesel/Fuel Oil and AK Imported LNG Imported LNG w/ Delivery ANC to Bethel, $/MMBTUDiesel Oil Delivered to Bethel, $/MMBTUImported LNG, Landed $/MMBTUImported LNG landed in USProp Draft 11_09_08 Word 7.doc Figure 4 presents (in blue trend line) the same delivered diesel pricing, in $ per million BTU of heat value, as that plotted in Figure 3. Below this, and showing similar pricing disparity as did exported LNG, are the data from EIA for imported LNG landed in the US (in green trend line). Substantially above the imported pricing, (in red trend line) are the adjusted data accounting for a) the cost per gallon to transport a gallon of LNG to Bethel from Anchorage, and b) also penalizing LNG for its lower energy density 13 . The latter means that approximately 60% more gallons of LNG must be transported to equal the energy content of the denser diesel or fuel oil. Despite the impact of penalizing LNG pricing for ‘double handling’, the trends in Figure 4 indicate that from ~March 2006 through March 2008, LNG shows a price advantage. While this exercise is certainly crude, it nonetheless indicates the possible advantage offered by LNG if the real cost of transport and storage is somewhere between that represented by ‘once handled’ (green trend line) and ‘double handled’ (red trend line) LNG. 4.3.4 Future Pricing Trends, Diesel vs. Natural Gas Will the price disparity between natural gas (LNG, LCNG) and petroleum distillates continue? Given the volatility of fuel prices during the period that this application was prepared, no one can make such predictions with confidence. However, the applicants believe that over the longer term, natural gas will remain a bargain compared with diesel/fuel oil, for the following reasons: Natural gas commodity prices have eroded significantly during the last 12 months, driven by higher production from the basins in the Rocky Mountains, and additional production of unconventional gas. Very large discoveries of oil and associated gas from tight sands and shale resources in North Dakota, Texas and the Appalachian Mountains are likely to push natural gas commodity pricing lower. World-wide LNG production capacity continues to grow. To date, little LNG has been imported to the US, despite a number of new import terminals being built World-wide demand for diesel fuel is strong, and supply surplus is tight. Pricing for gasoline, diesel, fuel oil and other distillates are not likely to experience advantages relative to natural gas. 4.4 Proposed System & Feasibility Assessment Strategy 4.4.1 Technology Description Please refer to Sections 2 and 4.1 which adequately describe the project scope and technology proposed. 4.4.2 Systems Design Conceptual LCNG system design, integration, and vendor price quotations necessary to support a ±30% capital cost estimate will handled by the PDC Harris Group engineering team. Such work will rely, to the extent possible, on design information and pricing for commercially available barge systems, 31 13 As mentioned prior, LNG has approximately 60%-65% of the density of diesel fuel, in terms of BTU per unit of volume. Prop Draft 11_09_08 Word 7.doc delivery pumps, pressure vessels, burner assemblies and other components of the LCNG supply system intended as a pilot system in Bethel 4.4.3 LCNG Delivery Barge Considerations Once the design basis for the Bethel pilot system is agreed to and documented, the team will begin the concept design basis for a shallow draft LCNG barge (‘Off-Shore’ system) for transport and delivery of the LNG/CNG to Bethel. It is expected that early-on in this conceptual process, it may be shown that available barges, or pre-engineered LCNG fueling barges (see Appendix 5) will have greater capacity than that required for the small pilot capacity proposed for Bethel. If this is the case, we will work with the AEA Project Manager to make adjustments to project economic modeling strategy, such as the direction summarized in the following paragraph. 4.4.4 Revision to Cost Estimate Basis for On-Shore LCNG System Should the scenario anticipated in the prior section become a controlling factor in developing a cost for the Off-Shore system capital cost estimate, we may develop a scaling strategy to increase the theoretical capacity of the On- Shore system to match it more closely to the LCNG Off-Shore basis. This scale-up will be for costing and economic modeling purposes, and will not affect the design, nor the capacity of the pilot system to be installed in Bethel. 4.4.5 Anticipated Capacity/Sizing Clearly, based on the two preceding sections, the capacity or sizing basis of the system components have yet to be determined. 4.4.6 Project Delivery Method Delivery of the project, in terms of how it will be packaged for a construction contractor and bid has yet to be determined. Portions of the project, such as the barge components may be fabricated in Anchorage or another community having a pool of craftsmen. The decision on whether to approach the stick- built and modular pre-fabrication components of the project will be determined in concert with AEA and other participants following favorable results in Phase II. 4.6 Land Ownership To date land issues have not been addressed for this project. Our intent is to develop a land and asset ownership plan during the Phase II feasibility studies. The following general generalized topics will need to be more fully developed during the course of the analyses. 4.6.1 Land for Receipt and Storage of LCNG The land necessary for receiving lines, storage systems and containment dikes will be identified and a plan developed for acquiring rights, if necessary. The objective for Bethel is co-locating these components within the tank farm area presently used for storage of diesel, fuel oil and gasoline. 4.6.2 Rights of Way for Gas Distribution Piping Low pressure gas distribution will be routed through existing utilidors or pipe supports to the extent possible, i.e. using the same pathway as existing oil distribution lines. Where this is not feasible, lines will be run above ground or 32 Prop Draft 11_09_08 Word 7.doc shallow buried to the primary gas users. Easements or rights of way will be investigated in Phase I reconnaissance and laid-out in Phase II. 4.7 Environmental Permits & Code Analysis Environmental permitting for this project has been surveyed, from the standpoint of transporting LNG and CNG. Phase I activities identified in the Preliminary Project Schedule and WBS indicate that additional assessment time will be devoted to the permit planning and code analysis. Further discussion is provided in the following sub-sections. 4.7.1 LCNG Related Permit & Code Requirements The Department of Homeland Security, US Coast Guard (USCG) is responsible for regulatory authority of ports, waterfront facilities and navigable waterways as they apply to LNG operations. Regulations and permit requirements are found under 33 CFR 127 ‘Waterfront Facilities Handling Liquefied Natural Gas and Liquefied Hazardous Gas’. Additionally, there are requirements regulatory requirements which may be applicable under the following federal agencies. Environmental Protection Agency Department of Transportation Federal Energy Regulatory Commission Fish and Wildlife Service US Army Corps of Engineers Minerals Management Service 4.7.2 Applicable Permits At this point in the conceptual development of this project, a detailed listing of permits required for intrastate shipping of LNG has not been determined. This will be accomplished during Phase I Reconnaissance work. If the project considers purchasing imported LNG as it is developed, permitting requirements will become more complex, requiring additional investigation. 4.7.3 Permitting Timeline A detailed permitting schedule will be developed as part of the investigation noted in the prior section. Preparation of permit applications will be undertaken in Phase III, once the project’s technical and economic feasibility are properly demonstrated. 4.7.4 Potential Permit Risk Permitting requirements represent a potential risk to a small scale LCNG pilot project, simply because they are not quantified at this point in the project. Based on initial work to be conducted during Phase I, this risk is likely to be reduced, as the regulatory framework is developed. 4.8 Environmental Assessment 4.8.1 Threatened or Endangered Species The identification of threatened or endangered species issues will be addressed in the reconnaissance study. This project is expected to have little 33 Prop Draft 11_09_08 Word 7.doc impact on any such findings, as no significant changes to community infrastructure or transportation methods are anticipated. 4.8.2 Habitat Issues The identification of any habitat issues will be addressed in the reconnaissance study. This project is expected to have little impact on any such findings, as no significant changes to community infrastructure or transportation methods are anticipated. 4.8.3 Wetlands/Protected Areas Any wetlands or protected areas will be identified and addressed in the reconnaissance study. 4.8.4 Archaeological/Historical resources The presence of any archaeological or historical resource will be identified and addressed in the reconnaissance study. 4.8.5 Land Development Constraints Land development constraints and issues will be identified and addressed in the reconnaissance study. This project is expected to have little impact on any such findings, as no significant changes to community infrastructure or transportation methods are anticipated. 4.8.6 Telecommunications Interference Telecommunication interference is not expected to be an issue with this project. Further research will be conducted in the reconnaissance study. 4.8.7 Aviation Considerations Aviation impacts are not expected from this project. Further investigation will be undertaken during the reconnaissance study. 4.8.8 Visual/Aesthetics Impacts Visual and aesthetics relating to the storage of LCNG will be adequately addressed in the reconnaissance and phase I studies. 4.8.9 Other Potential Barriers Any additional potential barriers will be identified and addressed during the reconnaissance study. 4.9 Proposed LCNG Infrastructure Costs 4.9.1 Estimated Capital and Operating Costs The work to be conducted as a result of this grant application will identify capital and operating costs, as well develop more detailed project economics. Phase IV will entail capital investment. Therefore, there are no cost estimates to report in this Phase I/II funding request. For the funding requested here, the capital cost of systems to transport, store and distribute LCNG in Bethel will be developed during Phase II, as will the operating costs. 4.9.2 Business Model & Revenue Generation Revenue, in terms of income generated by the sale of natural gas to residential users, the City of Bethel, or to the Bethel Utility Corporation is expected to occur in a meaningful manner following successful demonstration 34 Prop Draft 11_09_08 Word 7.doc of the concept of displacing petroleum based fuels. The business model for accomplishing this will be initially developed in Phase II, and will then be verified as a result of the work conducted on a reduced, pilot-scale in the City of Bethel. During the pilot operation planned for Phase IV, there will be revenue generated, albeit minor, from the sale of natural gas to residential or utility users tied to the test system. However, meaningful commercial-scale revenues are not expected until scale-up from ‘Pilot’ to ‘Demonstration’ scale operation, where a substantial portion of the city’s fuel users are converted to LCNG service, including the power generation system. At this point, significant capital will be required to provide the storage, distribution piping and metering infrastructure supporting the full-scale substitution. The capital investment necessary to make the full-scale conversion of Bethel to LCNG will be well defined following the construction and operation of the pilot system. Financial modeling will be conducted to determine the gas price rate structure necessary to produce an acceptable rate of return. As envisioned at this early stage of development, ONC, or its regional analog Calista Corp, will own and operate the LCNG supply chain. This includes supply barges, harbor storage facilities, distribution piping and residential meters. LNG will be competitively purchased either in Alaska (future ANS gas pipeline, Kenai LNG or other) or the Pacific Rim market. Capital investment in the demonstration scale (city-wide) system will likely be a combination of federal, state and matching tribal financing, subsidies and loan guarantees. 4.10 Project Development Cost & Budget Form 4.10.1 Total Anticipated Cost & Cost for this Phase At the current stage of project development, the applicant is not able to predict the total installed cost of the system described for transport, storage and distribution of LCNG for pilot testing. The primary purpose of the work to be conducted during Phase I and II will the systematic development of the capital and operating costs, sufficient to run pro forma economic modeling. As noted in Section 2.5, the total cost for conducting both phases of reconnaissance and feasibility is $ 771,900. A breakdown of this budget amount is available upon request, and a completed AEA Budget Form is provided in Appendix 8. 4.10.2 Requested Grant Funding As noted in Section 2.5, and Appendix 8, we are requesting funding of $292,900 for Phase I and $408,800 for Phase II. 4.10.3 Applicant Matching Funds In kind labor matching by the project team is $29,300 for Phase I, and $40,900 for Phase II. 4.10.4 Other Funding Sources Presently, we offer no other funding for the Phase I and II project. However, upon submittal of this application to AEA, we will approach both the US DOE and Denali Commission for funding of these phases. 4.10.5 Projected Capital Cost 35 Prop Draft 11_09_08 Word 7.doc As noted, we have not developed the project sufficiently to offer an estimate of the installed capital cost for the pilot program. 4.10.6 Projected Development Cost Completion of detailed design, engineering and commissioning of the pilot system will cost on the order of $1 million to $2 million, depending on the level of permitting required for intrastate LNG transport. This range is independent of equipment or construction costs. Note that significant portion of this estimated amount is applicable to equipment components that will be duplicated or scaled, should this concept prove feasible for a regional application. 4.10.7 Investments to Date The concepts presented in this application are primarily the result of strategies developed over the prior 2 months. Catalyzed by Anchorage media attention on the problems associated with rural energy costs, and attendance of energy workshops at this year’s Alaska Federation of Natives convention, the project team has invested approximately $25,000 in the study of LCNG, and compiling this application. 4.11 Project Operating and Maintenance Costs 4.11.1 Operating Costs Operating costs for the LCNG supply chain concept will be developed during Phase II activities. 4.11.2 Maintenance Costs Likewise, maintenance cost estimates will be rolled into the economic model developed in Phase II. 4.12 Power Purchase/Sale 4.12.1 Power Sales This project does not involve new generation capacity or power sales. If we are not able to negotiate a pilot test agreement with BUC or the city for operation of one of their generators on dual fuel, we may embark on procuring a surplus system for use in the pilot testing stage. Only then would we need to develop an agreement with BUC for the purchase of power. 4.13 Business Plan 4.14.1 Operational Sustainability As noted in the section on system costs, our conceptual business plan is dependent upon demonstration of technical and economic feasibility during the first two phases of the project. Confidence in the sustainability of this proposed initiative will be built as a result of these studies. It is also important to note that ONC and PDC Harris Group consider this concept a ‘bridge’ to real renewable energy in rural Alaska, using technology that is based on a sustainable resource, with minimal emissions of greenhouse gases. Based on the following points, the project developers are of the opinion that a city-wide or regional system has a strong likelihood of generating revenue sufficient to be sustainable. 36 Prop Draft 11_09_08 Word 7.doc A very significant disparity in $/BTU exists between Alaska LNG shipped to Japan, and diesel fuel shipped to the Bethel region. While the difference is reduced when considering importing LNG to Alaska and paying comparable shipping costs per gallon to western Alaska, there is nonetheless still a cost advantage for LNG. LNG and CNG technologies are commercially mature, and represent little technological risk, especially for cold climate applications. Norway’s LCNG industry is a potential template upon which to base an Alaskan business model. An example is the story of Bergen’s project, which came on-line in 2005. Refer to Appendix 6 for a summary of the project. 4.14.2 Business Structure As stated prior, the business model for a demo-scale or full-scale LCNG supply chain for Bethel and regional villages will involve an own-operate entity formed with ONC or Calista Corporation. The development of this larger business model must wait on the outcome of the feasibility analysis, and the installation of the pilot-scale system. If the pro forma models indicate an attractive and financeable project, there is a possibility of attracting other project participants, from development companies such as Mitsubishi, to major producers, or perhaps the State of Alaska. 4.15 Analysis and Recommendations The economic justification for this funding application is presented in Section 4.3 of this document. We intend to develop a detailed pro forma model of the LCNG pilot program to demonstrate the economic feasibility and potential fuel cost savings. We recommend providing the funding requested to carry out the diligence necessary to determine the feasibility of the LCNG concept presented to AEA. 5. PROJECT BENEFIT 5.1 Economic Benefit The impact of lowered cost of primary fuel for space heating, and power generation will be assessed as a result of this work. The potential for rapid implementation relative to other renewable alternatives, makes the LCNG concept more attractive. Enhanced reliability of burner and engine components, following conversion to natural gas is also an economic benefit. Indirectly, should LCNG technology spread to many regions of Alaska, the demand associated with increased use of LNG will foster the economies of scale associated with bulk purchase, i.e. higher volumes purchased will likely result in lower costs to all users. 5.2 Public Benefit Public health will benefit from the applications of LCNG technology, based on a reduction in primary air pollutants SO2, hydrocarbons, metals (e.g. mercury, lead), and particulates. Reductions in CO2 emissions will assist in meeting climate change goals. Conversion on a larger regional or state-wide scale may be assumed to result in the conversion of tug or barge drive systems from diesel to natural gas, yielding additional public health and climate change benefits. 37 Prop Draft 11_09_08 Word 7.doc Prop Draft 11_09_08 Word 7.doc 38 Elimination of diesel/fuel oil spills are also a benefit to local residents, as the quality of ground water and surface water are protected. 5.3 Potential Annual Fuel Displacement This technology has the potential to maximize the displacement of rural Alaska’s most expensive energy source – petroleum distillates. 5.4 Anticipated Annual Revenue Project revenues, costs, return on investment and other aspects of the economics of an LCNG project will be developed during Phase II. 5.5 Potential Additional Revenue Streams In the future, an emissions cap and credit system is very likely to become part of federal regulations aimed at curbing the emissions of greenhouse gases. These credits will have a finite value in an open trading environment. LCNG technology has the potential to markedly reduce CO2 emissions, based on the high ratio of hydrogen to carbon atoms in a methane molecule (primary constituent in LNG/CNG/natural gas), compared with that of petroleum derived liquids. # # # APPENDICES Appendix 1 Endorsements and Certification of Project Participants Appendix 2 Project Execution Plan Appendix 3 Project Team Resumes Appendix 4 Preliminary Project Schedule Appendix 5 Brochure - European LCNG Barge and Delivery System Appendix 6 Bergen Norway LCNG Project Summary Appendix 7 Representative Project Procedures Manual Appendix 8 Completed Budget Form & Cost Worksheet Appendix 1 Endorsements and Certification of Project Participants Prop Draft 11_08_08 Word 7.doc 23. List all other State or Federal grants received or applied for during proposed budget years: Form #06-5437 Page 2 of 2 Identify Granting Agency Grant Program/Project (Program Name & Project Name) Enter “YES” If grant award has been confirmed. Grant Period Award Amount SOA Family Support No 07/01/2008- 06/30/2009 62,942 Dept. of Interior BIA-638-08 Yes 01/01/06- 12/31/2008 522,119 Dept of Interior Self-Governance Compact Yes 01/01/06- 12/31/2008 3,179,576 Dept of HHS LIHEAP Yes 01/01/07- 12/31/2009 123,874 Dept of HHS Child Welfare-IVB Yes 10/801/07- 09/30/2009 15,316 GA-96055801 EPA-Indian General Asst. Program Yes 10/01/07- 09/30/2009 219,922 Dept. of Justice ONC Children’s Justice Program Yes 09/01/2006- 08/30/2008 549,168 Dept of Housing & Urban Development NAHASDA-05 Yes 10/01/2005- 09/30/2007 1,714,848 SOA Dept. of Fish and Game-SOA Yes 06/08/2007- 05/31/2008 37,409 Dept HHSS Senior Center-Home Based Yes 07/01/2007- 06/30/2008 101,287 Dept HHSS Senior Center-NTS Yes 07/01/2007- 07/31/2008 74,348 DHSS Senior Center-Equip Purchase Yes 07/01/2007- 06/01/2008 75,000 DHSS Senior Center-Deferral Maintenance Yes 07/01/2007- 06/01/2008 151,295 Dept of HHS AVCP Child Care Yes 01/01/2008- 12/31/2008 160,100 SOA Dept. of Fish and Game SOA Yes 10/01/2007- 06/01/2008 23,705 AK-18-x030-00 US Dept of Transportation Yes 01/01/2007- 12/01/2007 105,193 B-06-SR02-0020 US Dept. of HUD Yes 10/01/2004- 09/01/2006 149,222 Prop Draft 11_08_08 Word 7.doc Appendix 2 Project Execution Plan ONC Approval _____ Rev. Date Nov. 2008 Section Cover Page AEA Renewable Energy Fund DRAFT PROJECT EXECUTION PLAN Pilot Test Program – Bethel LCNG Conversion Stage 0 Issue Uncontrolled Copy Controlled Copy Number ONC Approval ________ Rev. Date Sept 2008 Section Revision Log PROJECT EXECUTION PLAN POLICY STATEMENT OBJECTIVES These Project Execution Planning Guidelines are intended to provide an outline and format for the thought process used in planning a project and communicating such plans to interested parties. This outline provides the Project Manager with a list of topics to be considered when planning, organizing, leading and controlling a project through the Phase III and Stage IV stages of project execution. Good engineering judgment and consistent application of sound project management principles will compliment the intended use of these guidelines. A written Project Execution Plan (PEP) for the project should document the planning process. A well executed project, maximizing value through effective planning, is the desired result. The size and complexity of a project should dictate which guidelines are applicable to any given project and to the level of detail contained in the PEP. RESPONSIBILITY AND TIMING The Project Manager is responsible for the preparation and development of the PEP as well as updates thereto. The Project Lead will coordinate with the organizations and parties involved with executing the project and shall insure their participation in Plan development as appropriate. The PEP shall be an evergreen document that is updated as the project progresses through each development stages. The PEP shall be prepared in writing in accordance with the attached guidelines unless specifically excepted by the Projects Manager. Preparation of the PEP should be initiated early in the project and consistent with attainment of appropriate levels of planning definition. A PEP should be developed at the end of Stage II prior to passing through the decision gate to Stage III (Final Design and Permitting) and should be upgraded at a minimum, consistent with completion of the Define Stage and plans to submit the project for full sanction. Subsequent revisions should be developed at the discretion of the Project Manager when Plan revisions of significance (scope, schedule, cost, etc.) occur and when the level of planning definition warrants. DISTRIBUTION The Project Manager is responsible for proper distribution and file maintenance with respect to PEPs and updates thereto. PEPs shall be distributed to all stake holders with an interest in the project. ONC Approval ________ Rev. Date Sept 2008 Section Revision Log PROJECT EXECUTION PLAN REVISION LOG REVISION NUMBER/DATE SECTION DESCRIPTION APPROVAL Rev. 0 Issue for AEA funding, Stage I/II Michael W. Moora PROJECT EXECUTION PLAN TABLE OF CONTENTS 1.0 PROJECT DESCRIPTION ................................................................................................... 3 1.1 Project Description ................................................................................................ 3 1.2 Project Location ..................................................................................................... 3 1.3 Design Basis Memo ............................................................................................... 3 1.4 Scope ..................................................................................................................... 4 1.5 Cost ....................................................................................................................... 4 1.6 Key Project Milestones & Schedule Considerations ............................................. 4 2.0 ORGANIZATION (PDC Harris to Revise) ............................................................................. 4 2.1 Designated Contacts ............................................................................................. 5 3.0 CRITICAL ISSUES ............................................................................................................... 7 4.0 PROJECT CONTROLS ........................................................................................................ 7 4.1 Project Management ............................................................................................. 7 4.2 Cost Control and Status Reporting ........................................................................ 7 4.3 Project Cost Breakdown Structure ........................................................................ 7 4.4 Scope Change Procedure ..................................................................................... 8 4.5 Project Baseline Schedule..................................................................................... 8 5.0 FUNDING PLAN ................................................................................................................... 8 5.1 Project Funding ..................................................................................................... 8 5.2 Capital Cost Estimate Preparation ........................................................................ 9 6.0 HAZARDS & SAFTEY EVALUATION (HSE) PLAN ............................................................. 9 6.1 Plan ........................................................................................................................ 9 6.2 Management of Change (MOC) ............................................................................ 9 6.4 Process Hazard Assessment ................................................................................ 9 6.5 Permitting Requirements ....................................................................................... 9 7.0 QUALITY PLAN .................................................................................................................... 9 7.1 QA/QC Plans ......................................................................................................... 9 8.0 ENGINEERING PLAN ........................................................................................................ 10 8.1 Engineering Contracting Responsibility ............................................................... 10 8.2 Engineering Deliverables ..................................................................................... 10 9.0 PROCUREMENT PLAN ..................................................................................................... 12 9.1 Procurement Responsibility ................................................................................. 12 9.2 Long Lead Equipment and Material .................................................................... 12 9.3 Sole Source Requirements .................................................................................. 12 9.4 Field Preference/Field Standard Requirements .................................................. 12 10.0 FABRICATION PLAN ......................................................................................................... 13 10.1 Fabrication Overview ........................................................................................... 13 10.2 Fabrication Contracting ....................................................................................... 13 10.3 Fabrication Site Oversight ................................................................................... 13 10.4 Logistics and Transport Plans ............................................................................. 13 11.0 CONSTRUCTION PLAN .................................................................................................... 13 Draft Pilot LCNG PEP 10 Nov.doc PDC Harris Group Approval M Moora Rev. Date Oct. 2008 Section Table of Contents Page ii 11.1 Construction Overview ........................................................................................ 13 11.2 Construction Contracting ..................................................................................... 13 11.3 Construction Oversight ........................................................................................ 13 11.4 Interfaces and Work Areas Requiring Special Consideration ............................. 13 12.0 FCO, TURNOVER, COMMISSIONING & START-UP ....................................................... 14 12.1 Division of Responsibility ..................................................................................... 14 12.2 Systems or Equipment Requiring FCO ............................................................... 14 12.3 FCO Procedures .................................................................................................. 14 12.4 Turnover to Operations ........................................................................................ 14 12.5 Commissioning and Startup ................................................................................ 14 13.0 DOCUMENTATION ............................................................................................................ 14 13.1 Documentation Overview .................................................................................... 14 13.2 Documentation Turnover ..................................................................................... 14 13.3 Archive Project Documents ................................................................................. 14 13.4 As-Builting ........................................................................................................... 15 14.0 PROJECT CLOSE-OUT ..................................................................................................... 15 14.1 Incomplete Work (IWL) ........................................................................................ 15 14.2 EPT, WO and AFE Closure ................................... Error! Bookmark not defined. PDC Harris Group Approval ______ Rev. Date Oct. 2008 Section Organization Page 3 of 14 1.0 PROJECT DESCRIPTION 1.1 Project Description The Project involves Phase I Reconnaissance and Phase II Feasibility Study activities sufficient to develop a concept design, for a system to serve the host community, and to refine project cost estimates and run pro forma economic models Stage I of the project will involve assessment of the current diesel and fuel oil users within the city of Bethel, to estimate the volume of LCNG to be supplied, the extent of modification required to accommodate the switchover to natural gas, and of course the willingness of the city residents to be involved. Stage II will build on the inventory data from the first stage, and will entail development of conceptual design elements sufficient to support the economic analysis noted above, in 2.3. The second stage will also emphasize a firm supply of pipeline quality natural gas or LNG, as well as identifying critical path schedule constraints such as environmental or transport permits. Cost estimation work will involve the following generalized activities to supply input cost parameters: ¾ Negotiations with natural gas suppliers for long term gas supply contract sufficient for host community, as well as for larger volumes of gas reflecting expansion of business to a regional and state-wide model. ¾ Installed capital cost estimate for LCNG receiving, storage and distribution system for residential, communal and utility users. ¾ Operating cost estimate, including maintenance and inspection of LCNG distribution system. ¾ Operating cost estimate to transport LCNG from compression station and staging facility to the host community 1.2 Project Location The host community for the Pilot Test Program – Bethel LCNG Conversion will be the city of Bethel. The only community to be served by this initiative is Bethel. However, if deemed economically feasible during the Phase III and IV ‘Pilot’ the concept may be generally applicable to region and state. 1.3 Design Basis Memo A design basis memo (DBM) will be drafted during the early weeks Stage I Reconnaissance study effort. The purpose is to establish the generalized objectives of the LCNG compression and filling system, transportation vessels, on-site storage system, the Bethel distribution system, and the retrofit conversion systems. Like the Project Execution Plan, the DBM will be a living document, intended for multiple issues to document assumptions, defining guidance and changes in scope. PDC Harris Group Approval ______ Rev. Date Oct. 2008 Section Organization Page 4 of 14 1.4 Scope Scope of work will be broken down into the following WBS elements: Phase I Community Systems Appraisal Phase II Concept Engineering and Economics Phase III Preliminary Engineering & Permitting Detailed Engineering & Procurement Phase IV Fabrication Materials Transportation Installation Functional Checkout (FCO)/Testing Start-up 1.5 Cost The total installed project cost is estimated to be $_______, based on the Phase I estimate provided by the engineering contractor and reviewed/approved by the Project Estimating Group. 1.6 Key Project Milestones & Schedule Considerations • Project Kickoff May 2009 • Complete Stage I Sept 2009 • Issue Stage I Package Sept 2009 • Begin Stage II Sept 2009 • Complete Stage II Jan 2010 • Apply AEA Stage III 1Q 2010 • Award III/Start Stage III 2Q 2010 • Purchase Order Long Lead Equip 2Q 2010 • Start-up 4Q 2010 – 1Q 2011 2.0 ORGANIZATION PDC Harris Group Approval ______ Rev. Date Oct. 2008 Section Organization Page 5 of 14 2.1 AEA Project Ma nager PDC Harris Group Project Manager Mike Moora PDC Harris Group Lead Process Engineer, Doug Wiles PD C Harris Group Process Engineer, J Kovacevich PDC Harris Group Mechanical Engineer, R Full PDC Harris Group Civil Engineer, D Arehart PDC Harris Group Env ironmental Speci al ist, R Conlon ONC Executive Di rector Mike Samuelson LCNG Phase I/II Project Organization PDC Harris Group Approval ______ Rev. Date Oct. 2008 Section Organization Page 6 of 14 2.1 Designated Contacts NAME TITLE OFFICE PH.PAGER/CELL A E-MAIL ONC Corp AEA Engineering Contractor Mike Moora Project Manager 907-644-4716 mike.moora@pdcharrisgroup.com PDC Harris Group Rev. Date October 2008 Section Engineering Plan Page 7 of 14 3.0 CRITICAL ISSUES The only critical issue that the project is currently facing is to negotiate either pipeline quality natural gas, or LNG sufficient to support the pilot project. Establishing a long-term competitive price, in terms of $/MM Btu of gas is one of the planks of the project’s long-term strategy. Gas contracting options to be investigated during the Phase I Reconnaissance include: ¾ Pipeline quality gas from Enstar ¾ LNG from the Nikiski LNG plant ¾ LNG from Fairbanks Natural Gas 4.0 PROJECT CONTROLS 4.1 Project Management Changes is scope, schedule or team organization will be reported to AEA’s counterpart Project Manager pursuant to Appendix D of the Sample Grant Agreement 4.2 Cost Control and Status Reporting Our Project Manager will provide expenditure and status reports to the AEA Project Manager reports on a monthly basis, as a minimum. These reports will be in compliance with Appendix D, Paragraph 3 of the Sample Grant Agreement, and will be submitted on the AEA template (Progress Report Form). Quarterly reports, pursuant Appendix D will also be provided to the AEA Project Manager on or before the following dates, o 15 January o 15 April o 15 July o 15 September 4.3 Project Cost Breakdown Structure Cost Category Engineering PDC Harris Group Environmental Permitting PDC Harris Group Fabrication TBD Installation TBD Installation Support TBD PDC Harris Group Rev. Date October 2008 Section Engineering Plan Page 8 of 14 FCO 1 /Inspection PDC Harris Group/ FCO TBD/Inspection Operator Costs Joint Venture Anc Labor Field Labor Operator Travel Costs 4.4 Scope Change Procedure Scope change: All scope changes will require an approval from the AEA’s PM. Our Project Manager will trend significant impacts to schedule and budget, and submit change order notification as described in the Project Procedures Manual. Project team/procedure change: Any changes in the project team or to any referenced procedure will require an approval from the project lead. The change will be logged in the project change log. If the project lead determines that the change will impact scope, schedule or cost, the change will be communicated to the gatekeeper via the change form. 4.5 Project Baseline Schedule See attached project schedule. 5.0 FUNDING PLAN 5.1 Project Funding Phase I Reconnaissance & Appraisal AFE: Title: Pilot Test Program – Bethel LCNG Conversion Originator: Mike Moora Start Date: ~02/01/08 Completion Date: TBD Total Cost Estimate (in $1,000's): TBD % Approved: 0% Scope: See project description above Phase II Feasibility Analysis & Concept Design Title: Pilot Test Program – Bethel LCNG Conversion 1 FCO = functional checkout PDC Harris Group Rev. Date October 2008 Section Engineering Plan Page 9 of 14 Originator: Mike Moora Start Date: TBD Completion Date: TBD Total Cost Estimate (in $1,000's): TBD % Approved: 0% Scope: See Project Description 5.2 Capital Cost Estimate Preparation The Phase I and II Capital and Operating Cost estimates will be prepared by PDC Harris Group’s cost engineering group. Data used in these estimates will be collected by the Phase 1 project team. The capital estimate will be a factored estimate, using the cost of equipment as the basis for factoring other Direct and Indirect Field Cost accounts. 6.0 HAZARDS & SAFTEY EVALUATION (HSE) PLAN 6.1 Plan The joint venture team will provide an HSE plan specific to the scope of work prior to kicking off Stage III, Detailed Design and Procurement. This plan will address several different risk areas including management of change, process hazards analysis, and environmental permitting requirements. 6.2 Management of Change (MOC) Upon approval of funding for Phase IV, a Management of Change (MOC) plan will be distributed to the project stakeholders. Once approved, the MOC will be used to monitor and control changes to the project scope and budget. 6.3 Process Safety Assessment A process safety assessment (PSA) will be performed in the during the final stages of Phase II, as part of the concept design package. 6.4 Process Hazard Assessment A PHA including fire and gas analysis will be conducted in the Define Stage. 6.5 Permitting Requirements {To be completed during the Phase II by the permitting contractor.} 7.0 QUALITY PLAN 7.1 QA/QC Plans All engineering drawings will be subject to PDC Harris Group’s QA/QC program. Operations and Construction teams will perform reviews at the conclusion of each phase of project development, as well. Material Requisitions will be reviewed for completeness by a quality control team established during the Phase II effort. PDC Harris Group Rev. Date October 2008 Section Engineering Plan Page 10 of 14 Fabrication and material will have standard SQS requirements. All construction shall be subject to the construction contractor’s QC Program under the auspices and oversight of Bethel Corp. QA Program. 8.0 ENGINEERING PLAN 8.1 Engineering Contracting Responsibility PDC Harris Group will conduct work under a services agreement established under the joint venture for the project. 8.2 Engineering Deliverables Typical Phase II/III Deliverables • Final Work Breakdown Structure (WBS) • Final Project Execution Plan (PEP) • Project Cost Estimate • Project Baseline Schedule with milestones, spend commitment/cash flows • Process Hazards Analysis - Results and resolutions • Engineering Scope of Work and Engineering Budget for Phase IV • Project Meeting Minutes and Action Item/Decision Log • Procurement Packages • Phase III IFR Engineering Package The Phase III Engineering Package to include: Typical IFR Deliverables • Scope of Work • Design Basis • Fire and Gas Philosophy IFR Engineering Packages (classified by Discipline Packages) • Process o Process Flow Diagrams (PFD), Piping & Instrumentation Diagrams (P&ID) • Piping/Mechanical o Tie-in, Line, Valve and Equipment Lists o Piping Plans, o Demolition Drawings o Reference Drawings and Typical Details • Civil/Structural o Location Map and Site Plan o Site Preparation & Grading Drawings o Structural Drawings (if applicable) • Electrical o One-Line Diagram o Area Classification Drawing o Equipment list, Data Sheets o Tie-ins and Preliminary Power circuit drawings • Instrumentation, Controls & Automation o Instrument and Control Valve Data Sheets o Instrument Index o Control Logic Diagrams or Narratives o Cause and Effect Matrix o Graphics display requirements PDC Harris Group Rev. Date October 2008 Section Engineering Plan Page 11 of 14 • Communications o Equipment list, Data Sheets o Tie-ins and Comm circuit drawings Phase III Equipment Procurement Packages The Phase III Procurement Packages will include: vendor QA/QC requirements; VDDR requirements; requests for recommended spare parts; recommended PM intervals, procedures, special tools for all off-site fabrication/equipment procurement. A representative list of packages follows, CNG Systems • Structural Foundation Procurement Package • Gas Cylinder Fill Station Module Procurement Package • Module Transport Procurement Package • Gas Cylinder Procurement Package LCNG Transport & Delivery System • Transport Equipment Procurement Package Bethel ONC Site Systems • Geo-Tech Services Procurement Package • Gas Storage System Procurement Package • Structural Foundation Procurement Package • Mechanical - Piping Procurement Package • Instruments & Controls Procurement Package • Electrical Equipment Procurement Package • Civil-Site Work Procurement Package • Communications Systems Procurement Package PDC Harris Group Approval M Moora Rev. Date Oct. 2008 Section Procurement Plan Page 12 of 14 9.0 PROCUREMENT PLAN 9.1 Procurement Responsibility All Procurement will take place during the Phase III. The table below illustrates who will be responsible for specifying and procuring materials. Description ENG TC 2 AMER 3 later MR BUY later EMR later EMR “ “ EMR “ “ EMR EMR EMR 9.2 Long Lead Equipment and Material Long lead equipment requiring modification of the procurement plan or early bidding will be identified during Phase II 9.3 Sole Source Requirements Sole sourcing requirements are yet to be addressed. 9.4 Field Preference/Field Standard Requirements A preferred vendor list will be developed during Stage III 2 TC = Tatitlek Corp. 3 AMER = Ameresco PDC Harris Group ______ Rev. Date Oct 2008 Section Project Closeout Page 13 of 14 10.0 FABRICATION PLAN 10.1 Fabrication Overview Larger bore piping materials associated with compression equipment may be prefabricated 10.2 Fabrication Contracting TBD in Phase II and III 10.3 Fabrication Site Oversight TBD in Phase II and III 10.4 Logistics and Transport Plans TBD in Phase II and III 11.0 CONSTRUCTION PLAN 11.1 Construction Overview TBD 11.2 Construction Contracting TBD 11.3 Construction Oversight TBD 11.4 Interfaces and Work Areas Requiring Special Consideration TBD PDC Harris Group ______ Rev. Date Oct 2008 Section Project Closeout Page 14 of 14 12.0 FCO, TURNOVER, COMMISSIONING & START-UP 12.1 Division of Responsibility FCO activities will be shared between the PDC Harris engineering staff, and Ameresco and Bethel construction monitoring groups. The project will develop the process for turnover from construction to FCO and from FCO to Operations, during the early stages of Phase IV. Likewise FCO checkout procedures will be developed to suit the systems provided at both the compression site, and in the Bethel community. 12.2 Systems or Equipment Requiring FCO Describe the systems or equipment that will require FCO. Include any offsite fabrication that will require FCO before transport. (Will be completed in Phase III) 12.3 FCO Procedures A project-specific FCO procedure that verifies system function per the engineered control devices and safety systems will be 12.4 Turnover to Operations When FCO has completed system checkout, turnover to Operations will be accomplished via the turnover procedures noted above. 12.5 Commissioning and Startup The facility supervisor will be responsible for all commissioning and startup activities. The Facility Single Point of Contact (SPOC) and/or the Area Operator will write the start-up procedures. 13.0 DOCUMENTATION 13.1 Documentation Overview Document Control requirements are outlined in the Project Procedure document approved prior to engineering work commencing in any given stage. The project will be using the PDC Harris Group documentation coordinator, that is fully trained in the use of Primavera Contracts Manager software. 13.2 Documentation Turnover The project will follow standard documentation procedures. No exceptions will be required. 13.3 Archive Project Documents Project documents will be archived through standard PDC Harris Group documentation procedure and practice, using the file key shown in the Project PDC Harris Group ______ Rev. Date Oct 2008 Section Project Closeout Page 15 of 14 Procedures Manual as the initial basis. No new systems or process will be required from the project team. 13.4 As-Builting As-builting will follow the PDC Harris Group procedure. It will be done between a collaborative effort between the engineering & design team and the on-site constructor. 14.0 PROJECT CLOSE-OUT 14.1 Incomplete Work (IWL) The PDC Harris Group standard indicates that the project MOC must be closed within 90 days from start-up. All IWL’s wil be finished before the MOC can be closed. Spending will stop after the MOC is closed. 14.2 Project Documentation Copies of all engineering-design drawings & specifications, procurement documents, vendor documents as-builts, site inspections, acceptance and turnover documentation will be filed a centralized engineering file to be filed in a) the city and b) at the joint venture headquarters in Anchorage. Pursuant to the AEA grant agreement terms and conditions Appendix 3 Project Team Resumes Prop Draft 11_08_08 Word 7.doc AEA Project ManagerPDC Harris Group Project ManagerMike MooraPDC Harris Group Lead Process Engineer, Doug WilesPDC Harris Group Process Engineer, J KovacevichPDC Harris Group Mechanical Engineer, R FullPDC Harris Group Civil Engineer, D ArehartPDC Harris Group Environmental Specialist, R ConlonONC Executive DirectorMike Samuelson LCNG Phase I/II Project Organization − • • • ⎯ ### Appendix 4 Preliminary Project Schedule Prop Draft 11_08_08 Word 7.doc IDTask NameDurationStartFinish1PHASE I - RECONNAISSANCE80 daysMon 5/18/09Fri 9/4/092Field Assessment80 daysMon 5/18/09Fri 9/4/093Project Kickoff1 dayMon 5/18/09Mon 5/18/094Kickoff Meeting1 dayTue 5/19/09Tue 5/19/095On-Site Survey15 daysFri 5/22/09Thu 6/11/096Process Field Data4 daysMon 6/15/09Thu 6/18/097Code and Guidance Analysis6 daysFri 6/19/09Fri 6/26/098Permitting Assessment8 daysFri 6/19/09Tue 6/30/099Study - LNG vs. CNG Storage15 daysWed 7/1/09Tue 7/21/0910Develop Design Basis Memo (Village System only)14 daysWed 7/22/09Mon 8/10/0911Preliminary Project Schedule, Revised2 daysTue 8/11/09Wed 8/12/0912ROM Capital Cost Estimate (Village System only)3 daysThu 8/13/09Mon 8/17/0913Report Draft10 daysTue 8/18/09Mon 8/31/0914Issue Reconnaissance Assessment Report1 dayFri 9/4/09Fri 9/4/0915PHASE II - FEASIBLITY & CONCEPT DESIGN87 days?Mon 9/7/09Tue 1/5/1016Prelim Design - Village Storage & Distribution System30 days?Mon 9/7/09Fri 10/16/0917Kick-Off Meeting1 dayMon 9/7/09Mon 9/7/0918Site Plan Drawing4 daysTue 9/8/09Fri 9/11/0919Process Flow Diagram3 daysTue 9/8/09Thu 9/10/0920Size CNG/LNG Storage Vessel1 day?Fri 9/11/09Fri 9/11/0921Prelim Piping & Instr Diagrams (P&IDs)12 daysMon 9/14/09Tue 9/29/0922NG Piping Distribution Dwg 5 daysWed 9/30/09Tue 10/6/0923Equipment List3 daysWed 9/30/09Fri 10/2/0924Instrument Index3 daysFri 10/2/09Tue 10/6/0925Valve List2 daysFri 10/2/09Mon 10/5/0926Piping MTO2 daysTue 10/6/09Wed 10/7/0927Vendor Quotes - Equipment7 daysThu 10/8/09Fri 10/16/0928Prelim Design - LNG Barge Transport System55 daysTue 9/15/09Mon 11/30/0929Kick-Off Meeting1 dayTue 9/15/09Tue 9/15/0930Code and Guidance Analysis7 daysWed 9/16/09Thu 9/24/0931Permit Assessment5 daysFri 9/25/09Thu 10/1/0932Survey Current Barge System Design Elements7 daysWed 9/16/09Thu 9/24/0933Survey Available LNG Dewar Tanks4 daysFri 9/25/09Wed 9/30/0934Process Flow Diagram3 daysThu 10/1/09Mon 10/5/0935Design Basis Memo5 daysTue 10/6/09Mon 10/12/0936Electrical Classification Dwg.3 daysTue 10/13/09Thu 10/15/0937Size Storage System3 daysTue 10/13/09Thu 10/15/0938Preliminary P&IDs7 daysFri 10/16/09Mon 10/26/0939Survey Available Surplus/New Barges3 daysFri 10/16/09Tue 10/20/0940Prelim Barge Arrangement Dwg5 daysTue 11/3/09Mon 11/9/095/189/49/79/15AprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMar2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter1st QuarterTaskSplitProgressMilestoneSummaryProject SummaryExternal TasksExternal MilestoneDeadlinePDC Harris Group + ONCPreliminary Schedule LCNG Bethel/ONC Conversion ProjectRev 18 Nov 08AEA Grant Sched 11_08_08Page 1PDC Harris Group LLC Project: AEA Grant Sched 10_25_08Date: Mon 11/10/08 IDTask NameDurationStartFinish41Equipment List5 daysTue 10/27/09Mon 11/2/0942Motor List2 daysTue 11/3/09Wed 11/4/0943Instrument Index3 daysTue 10/27/09Thu 10/29/0944Piping MTO3 daysTue 11/10/09Thu 11/12/0945Vendor Quotes - Storage Vessels7 daysFri 11/13/09Mon 11/23/0946Updated Project Schedule5 daysTue 11/24/09Mon 11/30/0947Economic Analysis68 daysMon 9/14/09Wed 12/16/0948Prelim Negotiation - LNG Supply8 wksMon 9/14/09Fri 11/6/0949Capital Cost Estimate7 daysThu 11/26/09Fri 12/4/0950Operating Cost Estimate2 daysFri 11/6/09Mon 11/9/0951Pro Forma Economic Modeling8 daysMon 12/7/09Wed 12/16/0952Conclusions & Recommendations14 daysThu 12/17/09Tue 1/5/1053Develop Draft Report9 daysThu 12/17/09Tue 12/29/0954Present to AEA & Stakeholders1 dayWed 12/30/09Wed 12/30/0955Finalize Report3 daysThu 12/31/09Mon 1/4/1056Issue Final Report1 dayTue 1/5/10Tue 1/5/1057PREPARE PHASE III/IV AEA GRANT APPLICATION87 days?Wed 1/20/10Fri 5/21/1058Compile Application5 wksWed 1/20/10Tue 2/23/1059Submit Application1 day?Wed 2/24/10Wed 2/24/1060AEA Process Applic. & Recommend3 monsThu 2/25/10Wed 5/19/1061Funding Approval1 day?Thu 5/20/10Fri 5/21/1062PHASE III - DETAILED DESIGN & PERMITTING91 days?Fri 6/4/10Mon 10/11/1063Kick-Off1 day?Fri 6/4/10Mon 6/7/1064Detailed Engineering3 monsMon 6/7/10Mon 8/30/1065Permit Applications4 monsMon 6/7/10Mon 9/27/1066Procurement4 wksMon 7/19/10Mon 8/16/1067Long Lead Equipment Delivery10 wksMon 8/2/10Mon 10/11/1068PHASE IV - CONSTRUCTION & COMMISSIONING131 days?Mon 8/16/10Tue 2/15/1169Mobilize Contractor - Village1 day?Mon 8/16/10Tue 8/17/1070Install Village System4 wksMon 9/6/10Mon 10/4/1071Construct LNG Barge System (ANC)6 wksMon 9/13/10Mon 10/25/1072Functional Checkout (Village Sys)7 daysMon 10/4/10Wed 10/13/1073Functional Checkout (Barge Sys)7 daysMon 10/25/10Wed 11/3/1074Commissioning (Barge Sys)2 daysFri 11/5/10Tue 11/9/1075Transport LNG (ANC to Village)4 daysTue 11/9/10Mon 11/15/1076Commissioning (Village Sys)3 daysMon 11/15/10Thu 11/18/1077Commercial Operation 1 dayThu 11/18/10Fri 11/19/1078Compile Operating Report1 day?Fri 2/11/11Mon 2/14/1179Submit 1st Commercial Operation Report1 dayMon 2/14/11Tue 2/15/1112/301/511/182/14AprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMar2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter3rd Quarter4th Quarter1st QuarterTaskSplitProgressMilestoneSummaryProject SummaryExternal TasksExternal MilestoneDeadlinePDC Harris Group + ONCPreliminary Schedule LCNG Bethel/ONC Conversion ProjectRev 18 Nov 08AEA Grant Sched 11_08_08Page 2PDC Harris Group LLC Project: AEA Grant Sched 10_25_08Date: Mon 11/10/08 Appendix 5 Brochure - European LCNG Barge and Delivery System Prop Draft 11_08_08 Word 7.doc Appendix 6 Bergen Norway LCNG Project Summary Prop Draft 11_08_08 Word 7.doc First LCNG station in Bergen, Norway By Terje Simmenes, Gasnor Project Manager Mannsverk December 12. 2005 is a milestone for Gasnor. On this day the new LCNG station in Bergen was filled with LNG for the first time. The following weeks the station will be running in test modus and serve a small number of buses. In February 2006 the station will be fully operative and serve 22 buses on a regular basis. The Bergen Programme This station is the last of three filling stations for buses in the "Bergen Programme". This is a programme supported by Bergen Municipality and Hordaland County initially launched in 1999. The programme has 2 main objectives: • Reduce emissions of NOx, SO2 and particles in the Bergen area; • Contribute to more domestic utilisation of natural gas which is landed at the Kollsnes Terminal 40km outside Bergen. Both objectives are reached as 59 buses in Bergen have converted from diesel to natural gas. When the LCNG station is fully operative in February 2006, the total number will be 80 buses. In addition the programme lead to the commercialisation of domestic natural gas distribution from Kollsnes. Further this lead to the construction of a 40 000 t/y LNG plant at Kollsnes in 2003, which again opened up for this LCNG station. Challenges related to infrastructure To understand why Gasnor decided to build this LCNG plant, it is important to understand the challenges in distribution of natural gas in Norway. Our country is more known for its beautiful fiords than for densely populated cities. And there is a reason for that. Norwegians live scattered around the coast. In addition the topography, especially along the West Coast where the gas resources are available, is not suited for pipeline distribution of natural gas. Local grids around gas terminals occurs, but interconnections between such gas islands is not economic feasible. The first two filling stations in the Bergen Programme were supplied by CNG compressed at Kollsnes and transported by semi-trailers to the filling stations. At the filling station the CNG was recompressed and filled on buses. The intention at that time was to let CNG distribution be a vanguard of a future pipeline from Kollsnes to Bergen. However, this pipeline is still not economic feasible, and CNG is not fit for distribution over longer distances. Something had to be done to establish a future oriented and robust distribution system. The solution was the construction of a 40.000 t/y LNG plant which was ready in 2003. (Gasnor is now about to extend the plant to 120 000 t/y.) By doing this Gasnor was able to supply the whole Norwegian bulk marked with LNG, thus creating several LNG islands along the coast. In 2004 Gasnor decided to build the last of the three filling stations as an LCNG station. The stations could have been built as a CNG station. However Gasnor supposes a future natural gas to vehicles market in Norway will have a number of LCNG stations due to the LNG islands along the coast. Gasnor has also experienced CNG distribution as challenging. An LNG trailer is transporting six times as much energy as a CNG trailer. Energy consumption is about 4 times as high in the compressor stations compared to the high pressure pumps in the LCNG station. In addition LCNG stations require less space and the LNG chain is more reliable than the CNG chain. LNG is also cleaner than CNG because there always is some leakage of seal oil from compressors, something you avoid in LCNG stations. Therefore the transition to LCNG is appreciated by the bus companies. Technical details and suppliers The station at Mannsverk consists of a 54m3 cryogenic tank. Two high pressure pumps at 15 l/m capacity each can supply up to 1000 Sm3/h through air fanned high pressure vaporizers. There is a storage tank of 6,4m3 water volume, which allows 3 buses to be filled without starting the pumps. There are 22 slow-fill masts which allow the buses to be refilled during the night. In addition there are 3 fast-fill masts which will be used on daytime when occasional filling is needed. As limited space was a challenging issue in this case, the plant was built very compact. Pumps, valves and vaporizers are all delivered in a 40 feet iso skid. The tank is placed vertically on top of this. The LNG part is delivered by Chart Industries. This company has wide experience in building LCNG stations in the US. However, this is their first European station. Therefore their European branch, Chart-Ferox from Czech Republic, assisted in the project thus ensuring the transition to European norms, measurements and other requirements were fulfilled. The CNG part of the station, including filling masts, was contracted to Bergen Engineering. This is a local company which also has participated in building the other two filling stations in Bergen. Future By fulfilling the Bergen Programme, Gasnor hopes the remaining 300 city buses in Bergen gradually will be converted to natural gas, and that this project shows that natural gas can be used in vehicles any place in Norway - regardless if a grid is available. Appendix 7 Representative Project Procedures Manual Prop Draft 11_08_08 Word 7.doc 1 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual PROJECT NUMBERS: LLC: L06006.02 HGI: 67021.20 PDC: A05060.25 VERSION 2 Rev 2, July 13, 2007 CUSTOMER DESIGNATION: WO # REPORT TITLE: PROJECT PROCEDURE MANUAL, ML&P PLANT 2A CONTACT / CLIENT: ML&P REPORT AUTHOR: M. Moora ENGINEERING ASST: O LEE QUALITY ASSURANCE BY: DATE: SIGNATURE FINAL CHECK BY: DATE: SIGNATURE P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual ML&P PLANT 2A PROJECT SELECT STAGE ENGINEERING ML&P ANCHORAGE, AK PROJECT PROCEDURE MANUAL Rev 2, July 13, 2007 PROJECT NO. L06006.02, AO5060.25, 67021.20 PDC Harris Group LLC ML&P PLANT 2A PROJECT PROCEDURE MANUAL DISTRIBUTION MATRIX Distribution of Project Procedure Manual Name Title Anchorage Or Denver No. of Copies ML&P Eugene Ori Project Manager Anchorage 1 Bob Price Generation Manager Anchorage 1 Scott Jeffreys Maintenance Manager Anchorage 1 Jon Rivera Mechanical Engineer Anchorage 1 Dan Helmick Manager of Generation Planning Anchorage 1 PDC Harris Group Jim Vail Program Manager Anchorage 1 Mike Moora Project Manager Anchorage 1 Philip Bellio Engineering Manager Denver 1 Steve McCormick Senior Mechanical Engineer Denver (a) Glen Kershaw Mechanical-Process Engineer Denver (a) Nick Arvin Mechanical-Process Engineer Denver (a) Adam Schmetzko Mechanical-Process Engineer Denver (a) Robin Vidimos Mechanical-Process Engineer Denver (a) Mona Olguin Procurement Manager Denver 1 Tim Wakefield Project Controls Denver (a) Project File: A05060.25 file 1.03 Original (a) Common library copy in Denver. ML&P POWER PLANT 2A PROJECT PROCEDURE MANUAL TABLE OF CONTENTS 1.0 PROJECT DESCRIPTION / SCOPE OF WORK 1 1.1 Project Description 1 1.2 Introduction to Appraise Stage Work 1 1.2.1 Detailed Appraise Stage Scope of Work 3 1.2.2 Select Phase Deliverables 5 1.2.3 Define Stage Deliverables 6 1.2.4 Project Services 8 1.2.5 Schedule 8 1.3 Work by Others and Assumptions 9 1.4 Owner Furnished Equipment and Systems 9 2.0 PROCESS PERFORMANCE CRITERIA 9 2.1 Plant Capacity and Output 9 2.2 Waste Heat Recovery and Rejection 9 2.3 Inlet Air Anti-Icing & Additional Heating 9 3.0 ORGANIZATION 10 3.1 Project Organization Chart 10 4.0 ENGINEERING EXECUTION PLAN 13 4.1 Engineering Plan 13 4.2 Integration Plan – Anchorage/Denver Communications 13 4.2.1 Project Meetings- 13 4.2.2 Interdisciplinary Reviews 13 4.2.3 PFD and P&ID Reviews 13 4.2.4 E-Mail 14 4.2.5 Central Engineering File (CE File) 14 4.2.6 Project Website & Buzzsaw 15 4.3 Drawings 16 4.3.1 Software 16 5.0 CODE OF ACCOUNTS 18 6.0 PROJECT SCHEDULE 19 7.0 PROJECT COST CONTROL 19 7.1 Objective 19 7.2 Hourly Labor Charges 19 7.3 Engineering Cost Accounting & Control 19 7.4 Change Orders 20 7.5 Project Invoicing 21 8.1 Design Criteria 21 8.2 Deliverables 21 8.3 Intelligent Systems & Error Propagation 21 8.3.1 CAD and Computer Systems 21 8.3.2 Intelligent Systems 21 8.3.3 QA/QC and Change Management 22 9.0 PROCUREMENT 24 9.1 Functions 24 10.0 DOCUMENT MANAGEMENT 26 10.1 Project Documents 26 10.1.1 File Key 26 10.1.2 Project Procedures 26 10.1.3 Project Memoranda and Memos 26 10.1.4 Meeting Minutes and Trip Reports 27 10.1.5 Communication Records (Telephone) 27 10.1.6 Fax Transmissions 27 10.1.7 E-Mails 28 10.1.8 Letters 28 10.1.9 Transmittals 28 10.1.10 Request for Quotation (RFQ) 29 10.1.11 Bid Evaluations 29 10.1.12 Request for Purchase (RFP) 29 10.1.13 Procurement Tracking Report 29 10.1.14 Technical Specifications 29 10.2 Purchasing Documents 30 10.3 Document Distribution 30 10.4 Vendor Data 30 10.4.1 General 30 10.4.2 Vendor Data Categories 30 10.4.3 Operating and Maintenance 30 10.4.4 Vendor Data Handling and Distribution 30 10.4.5 Data Responsibility 32 10.4.6 Documentation Requirements Form 32 11.0 REPORTS 35 12.0 QUALITY ASSURANCE 37 12.1 General 37 12.2 Quality Assurance (QA) Implementation Plan 38 12.3 Risk Management 38 12.4 Quality Control 38 13.0 OFFICE AND FIELD SAFETY PROCEDURES 50 13.1 General 50 14.0 CONSTRUCTION SUPPORT 50 15.0 BILLING AND PAYMENT 50 16.0 PROJECT CLOSURE 50 16.1 General 50 16.2 Report 50 Appendix A 53 PROJECT FILE KEY 53 Appendix B 59 ENGINEERING CODE OF ACCOUNTS 59 Appendix C 60 PROCESS & POWER PLANT CAPITAL CODE OF ACCOUNTS 60 Appendix D 61 DELIVERABLES LIST 61 Appendix E 64 PROJECT DOCUMENTATION DISTRIBUTION MATRIX 64 Appendix F 72 CAD DRAWING PROCEDURES 72 Appendix G 73 CHANGE NOTICE / CHANGE ORDER PROCEDURE 73 Appendix H 79 PROJECT SAFETY MANUAL 79 Appendix I 139 Pre-Appraise Stage Presentation to ML&P 139 Appendix J 140 pROJECT SCHEDULE 140 1 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 1.0 PROJECT DESCRIPTION / SCOPE OF WORK 1.1 Project Description The following is excerpted from the pre-Appraise Stage kickoff scope of work provided by ML&P’s Project Manager: The project will focus on two frame 6FA gas turbines with HRSGs tied together to a single steam turbine. Details of the power block include; simple cycle stack dampers, SCR scrubbers and CEMS systems for exhaust monitoring and at least a two pressure HRGS system, possibly triple pressure, cascading bypass valves such that full boiler steam can go to condenser (for steam turbine trip conditions). ML&P would like the majority of the gas turbine equipment and HRSGs built into a turbine hall building with the steam turbine for maintenance. ML&P would like large bridge cranes that can access all equipment and heavy arctic insulation on any exterior HRSG part (such as instruments). ML&P specifically specifies that natural gas pre-heaters (via BFP water) be included; Evaporative Coolers installed as well as inlet air heating; Wet Condensing vs. Dry Condensing is still up in the air- to be decided; and demineralization plant fully split auxiliary power bus with auto-synch tie breakers. The “power island” should also contain the following, a switchyard, GSUs and containment. Site lighting, fencing, and paving shall be included. An administration building with control room, break room, men’s and women’s bathroom, kitchen, eight offices, and an attached warehouse large enough to handle all equipment for Power Plant 2A. ML&P needs to do significant work upfront before Plant 2A’s construction. MP&P will need to buy the land, survey, and get it zoned for the plant they want. The engineers at ML&P will do all the civil design for the site. ML&P will engineer a water supply sewer drain to the site dealing with AWWU. ML&P will engineer a site storm water system general to proposed site layout. ML&P will design to at least 35% level with owner’s engineers. This will include electrical one lines, heat balance, GA, proposed site layout, general piping runs, minimal foundation plans, and develop detailed engineer’s estimate. 1.2 Introduction to Appraise Stage Work Prior to beginning the Appraise Stage work for ML&P, PDC Harris Group prepared a presentation to ML&P management (presented on 31 January 2007) addressing issues of project execution and strategy. This presentation is provided in Appendix H. During that presentation, we proposed development of the project using a gated 4 stage process as referenced in Table 1 TABLE 1 Level of Engineering Development Per Project Development Stage 2 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual The following is quoted from the Overview section of the Appraise Stage deliverables package: Municipal Light & Power (ML&P) is planning the installation of a new combined cycle power generation facility at its Plant 2 location. The new Plant 2A facility is being planned to generate more electric power for future needs and replace older, less efficient units. ML&P provides electric service to a 20-square mile area in the northern portion of the municipality. Electric power is generated at approximately 66.0 MW at the Hank Nikkels Plant (Plant 1) and 241.9 MW at the George M. Sullivan Power Plant (Plant 2). Power is also generated at the Eklutna Hydroelectric Project and power is purchased from the Bradley Lake Hydroelectric Project. Due to the aging of existing power generation assets at Plant 1 and 2, there is a distinct need to upgrade ML&P’s generating facilities. Also, a re- evaluation of generating resource options and configurations is being considered currently. ML&P contracted PDC Inc (and subsidiary PDC Harris Group LLC) to perform a feasibility study for a new power generation facility to be located adjacent to Plant 2. This feasibility study consisted of the conceptual engineering-design of the power generation cycle, cost estimates (capital and operating), development of a preliminary schedule, equipment arrangement, and other related engineering deliverables. Project management documents were also developed during this stage, in recognition of the scale and capital cost of this significant project. To assist ML&P in planning and management of the Plant 2A Project, PDC Harris Group (PDC-HGI) has proposed developing the project based on a gated four stage development program. Each of the gates involves a review process and associated decisions by ML&P to proceed with the next. In two separate sessions, we presented this program, and also a template for increasing the probability of the Plant 2A Project being executed successfully, as compared against industry norms. As part of the project development program outlined in these meetings, two management-level reports are provided in this document, a Procurement Plan and a Risk Management Plan. Both these documents will be revisited and refined in the subsequent stages of the project. Follow-on engineering work planned for the next phase, called the Select Stage, will entail investigation of alternatives to allow the project team to Project Stage Engineering % Complete Activity Focus Appraise <2 Planning, Risk Analysis, Permit Strategy Select 5-10 Alternatives Study, Optimization of Cycle, Permit Application Support, Major Equipment Specifications Define 15 - 20 Preliminary Engineering Execute 100 Detailed Design, Commissioning 3 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual determine the optimal configuration for the plant, and formalize the design basis. Select Stage investigations will involve technical aspects such as steam condenser cooling (evaporative vs. non-evaporative), waste heat rejection, auxiliary duct combustion and heat recovery steam generation optimization. The primary product of this next phase will be an optimum plant configuration recommended to ML&P, as well as more accurate capital and operating cost estimates for ML&P planning and financing activities. Two (2) more phases of the project will then bring Plant 2A into commercial operation; these being the Define and Execute Stages. The Define Stage represents the preliminary design development to approximately 30% completion. Execute Stage work involves finalizing the design, constructing the plant and commissioning it for commercial power generation. As envisioned, long lead equipment such as the gas turbines, steam turbine, condenser, and transformers would be ordered at a point when the Select Stage is complete, with sufficient lead time to commission the new generating facility by 1Q 2011. Refer to the Procurement Plan provided in Attachment 9 for additional detail. 1.2.1 Detailed Appraise Stage Scope of Work The following scope definition was presented to ML&P at the initiation of the Appraise Stage engineering. 1.2.1.1 Milestone Schedule Development Identifies the significant project dates for planning and evaluating the project. Dates such as Commercial Operation Date, Construction Substantial Completion, Construction Start Date, Major Equipment Order and Delivery Dates and Notice to Proceed Date may have important contractual significance. 1.2.1.2 Initial Major Equipment List Lists the major equipment expected on the project with an initial estimate of the size and capacity, horsepower and establishes the official equipment name and equipment tag number for all other project documents. Identify expected delivery for each equipment item. 1.2.1.3 Approximated Heat Balance A quick general guide to the project performance for feasibility purposes only. Results include the plant output and fuel and water consumption. 4 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 1.2.2.1 Capital Cost Rough Order of Magnitude +40%/-20% A factored estimate based on published and in-house equipment costs. 1.2.2.2 Operating Cost Rough Order of Magnitude A factored estimate based on published and in-house operating costs for similar plants. 1.2.2.3 Power Island Footprint Drawing The drawing defines the basic footprint of the power island, including the combustion turbines, HRSGs, steam turbine generator, and heat rejection equipment. This drawing provides space allowances only for secondary systems, support buildings, and site- specific influences such as roadways. 1.2.2.4 Conceptual Electrical One-Line Drawing Identifies the conceptual thoughts on the electrical interconnect requirements to protect both the plant and the electrical transmission system. It defines voltage levels and equipment ratings for both technical review and cost estimating. 1.2.2.5 Project Risk Matrix and Mitigation Plan Help identify potential risk areas to the successful completion of the project, assign a level of likelihood of occurrence and define a level of impact in three areas: technology, schedule and cost. Develop ideas to mitigate each identified risk to reduce or eliminate project impact. 1.2.2.6 Support Site Selection Process Provide technical support to ML&P during the site selection process. 1.2.2.7 Develop Procurement Plan for Long Lead Items Assist ML&P to develop a procurement plan customized for this project, including assisting with the development of the ML&P’s procurement terms and conditions. 1.2.2.8 Recommend Project Execution Method Provide ML&P with alternative methods for executing the project (e.g. design-build or design-bid-build) and a recommendation for conducting this project. 5 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 1.2.2 Select Phase Deliverables The following list is derived from the latest scope of work prepared for the project. 1.2.2.1 Project Procedures Manual 1.2.2.2 Execution Plan Select Stage Engineering Plan Select Stage Procurement Plan 1.2.2.3 Major Equipment Supplier Recommendations 1.2.2.4 Select Stage Contracting Plan 1.2.2.5 Select Stage Risk Management Plan 1.2.2.6 Select Stage Studies Waste Heat Rejection Alternatives Study Cycle Optimization Studies Reheat vs. Non-reheat Pressurized vs. Vacuum Deaeration Inlet Air Cooler Study Condenser/Cooling Tower/Waste Heat Optimization Study 1.2.2.7 Cycle Selection – Recommendation Report 1.2.2.8 Design Basis Memorandum 1.2.2.9 Select Stage Project Description 1.2.2.10 Project Schedule (Level 2) 1.2.2.11 Combustion Turbine Specification/Bid Package (Phase One) 1.2.2.12 Steam Turbine Specification/Bid Package (Phase One) 1.2.2.13 Heat Recovery Steam Generator Specification/Bid Package (Phase One) 1.2.2.14 Select Stage Equipment List (Phase One) 1.2.2.15 Power Island General Arrangement 1.2.2.16 Preliminary P&IDs (Phase One) 6 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 1.2.2.17 Preliminary Piping Materials Specification 1.2.2.18 Major Equipment List 1.2.2.19 Tie-Point List 1.2.2.20 Heat Balances for Winter Peak, Summer Peak and Annual Average 1.2.2.21 Water Balance for Winter Peak, Summer Peak, and Annual Average 1.2.2.22 Process Flow Diagrams 1.2.2.23 Conceptual Control System Architecture Drawing 1.2.2.24 Preliminary P&IDs (Phase Two) 1.2.2.25 Updated Electrical One-Line 1.2.2.26 Conceptual Electrical Load List 1.2.2.27 Generator Step Up Transformers Specification/Bid Package 1.2.2.28 Combustion Turbine Specification/Bid Package (Phase Two) 1.2.2.29 Steam Turbine Specification/Bid Package (Phase Two) 1.2.2.30 Heat Recovery Steam Generator Specification/Bid Package(Phase Two) 1.2.2.31 Select Stage Major Equipment List (Phase Two) 1.2.2.32 Select Stage Capital Cost Estimate +30%/-10% 1.2.2.33 Environmental Permit Support 1.2.3 Define Stage Deliverables The following is a preliminary deliverables list for the Define Stage engineering. This list to be modified based upon knowledge of the scope as the work for this phase of the project unfolds. 1.2.3.1 Site Civil Design Package Includes engineering and design drawings that define the civil works required for the project, including clearing and grubbing specifications, general site grading specifications and drawings, and site drainage plans. 1.2.3.2 Define Stage Equipment List including estimated auxiliary power 7 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 1.2.3.3 Define Stage Water Balances 1.2.3.4 Define Stage Project Schedule including procurement schedule 1.2.3.5 Review and evaluate economic data, fuel analyses, water analyses, interconnect data, meteorological data, and proposed operational regimen provided by ML&P. 1.2.3.6 Define Stage Cost Estimate Define Stage Operating Cost Estimate 1.2.3.7 Define Stage System Descriptions System Descriptions define the scope of each system, provide a detailed design basis for each system, establish the control approach, and describe normal, startup, and upset operating parameters. 1.2.3.8 Define Stage Electrical One-Lines 1.2.3.9 Main Power System 1.2.3.10 Medium Voltage System 1.2.3.11 Low Voltage Distribution System 1.2.3.12 Backup Power 1.2.3.13 Technical Bid Evaluations of Long Lead Major Equipment services Combustion Turbine Generator Steam Turbine Generator Condenser HRSG Transformers Technical bid recommendations for above items 1.2.3.14 Preliminary Control System Architecture Drawing This drawing shows the how the major components of the control system are interconnected and mode of communication 1.2.3.15 Controls Narrative Defines the detailed control scheme for each individual control loop. 1.2.3.16 Develop secondary equipment conditions of service and bid packages. 1.2.3.17 Initial review of major equipment items in the vendor submittal 8 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual packages. 1.2.3.18 Electrical Load List Includes motors, electric heaters, heat trace, lighting, and miscellaneous power users. 1.2.3.19 Contractor Bid Package 1.2.3.20 This package defines the contractor’s scope of responsibility, the level of quality via material specifications, installation specifications, schedule requirements, project objectives, etc. 1.2.4 Project Services PDC Harris Group will provide the project services listed in Table 2 during the course of the project. TABLE 2 Project Services Summary, Appraise Through Execute Stages Description Frequency Project Status Report Monthly Project Schedule Periodic (Note A) Procurement Plan Appraise & Select Stages Risk Management Plan Appraise & Select Stages Contracting Plan Select Stage Procurement Assistance Define & Execute Stages Procurement Status Report Periodic (Define – Execute) Vendor Document Control Define & Execute Stages Engineering Plan Select (Note B) Capital Cost Estimate One per Development Stage Operating Cost Estimate One per Development Stage Vendor Job Books (Note C) Execute Stage Notes: (A) One issue each during Appraise & Select; minimum of every 6 weeks during Define & Execute. (B) Engineering Plan is defined within the Project Procedures Manual. (C) Compilation of all vendor-provided equipment data and selected PDC Harris Group engineering documents at completion of engineering. Stages 1.2.5 Schedule Refer to section 6.0 9 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 1.3 Work by Others and Assumptions The following exclusions and assumptions are identified in the PDC Harris Group proposal. A. ML&P review of deliverables will be limited to a single cycle per document. B. A one day review meeting will be held in the PDC Harris Group offices. C. The schedule attached in Appendix J is based on a lag time between the Select and Define Stages of less than one month. A longer idle time before initiating detailed design and ordering long lead equipment will result in slipping the commercial operation date of 2Q 2011 1.4 Owner Furnished Equipment and Systems ML&P owns and operates all components associated with this project. 2.0 PROCESS PERFORMANCE CRITERIA 2.1 Plant Capacity and Output Refer to the Design Basis Memorandum and the Select Stage deliverables package. 2.2 Waste Heat Recovery and Rejection Refer to the Design Basis Memorandum and the Select Stage deliverables package for more detailed discussion of the system recommended for rejection of the heat of condensation for operation of the steam turbine-generator. As developed for this phase of the design, all or portions of the condensing heat will be rejected to incoming potable water from the Eklutna Treatment Plant, prior to sending it on to the distribution system for the municipality. This concept will benefit the Anchorage Water and Wastewater Utility by mitigating winter water main freezing, and it will benefit the AWWU customers by decreasing water heating requirements. Indirectly this scheme has the potential to save significant energy in terms of water heating, as well as decrease emissions from home hot water heaters. 2.3 Inlet Air Anti-Icing & Additional Heating Refer to the Design Basis Memorandum and the Select Stage deliverables package. 2.4 Steam Turbine Exhaust Condensing Refer to the Design Basis Memorandum and the Select Stage deliverables package. 10 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 2.5 Duct Firing Duct firing was determined to be not economically feasible, based upon ML&P’s future load predictions and constraints imposed by spinning reserve requirements. Refer to the Design Basis Memorandum and the Select Stage deliverables package. 3.0 ORGANIZATION 3.1 Project Organization Chart Following is the PDC Harris Group organization chart effective 20 June 2007, midway through the Select Stage. ML&P Program Manager 1-Jim Vail Project Manager 1-Michael Moora Engineering Manager 2-Philip Bellio Mechanical Process2 -Steve McCormick Nick Arvin2 Glenn Kershaw2 Adam Schmetzko2 Robin Vidimos2 Piping2 __________ Structural2 ___________ Building Systems1____________ Procurement2 _Mona Olguin Electrical2 T Woodruff Controls ____________ Project Controls2 - Tim Wakefiels Legend 1= Anchorage 2= Denver Civil1 _______________ 11 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 3.2 Project Communications List ML&P Plant 2A Engineering ML&P 1200 East 1st Ave. Anchorage, AK 99501-1685 Phone: 907-263-5300 Fax: 907-263-5349 Primary Contact: Secondary Contact: Eugene Ori, Project Manager Robert Price, Generation Manager Phone: 907-563-5303 Phone: 907-263-5275 Cell: 907-317-7225 Cell: 907-317-7196 Fax: 907-263-5349 Fax: 907-263-5441 Email: OriEA@ci.anchorage.ak.us Email: PriceRH@ci.anchorage.ak.us PDC HARRIS GROUP 2700 Gambell St., Suite 500 Anchorage, AK Phone: (907) 743-3200 Fax: (907) 743-3295 Primary Contact: Secondary Contact: Jim Vail, Program Manager Mike Moora, Project Manager Phone: (907) 743-3200 Phone: (907) 743-3263 Cell Cell (907) 317-4763 Fax: (907) 743-3295 Fax: (907) 743-3295 Email: jimvail@pdceng.com Email: mike.moora@pdcharrisgroup.com 12 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual Engineering Manager: (a) Philip Bellio, Project Manager Phone: 303-291-0355 Fax: 303-291-0136 Email: philip.bellio@harrisgroup.com (a) Harris Group Inc, 1999 Broadway, Ste 1500, Denver, CO 80202 13 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 4.0 ENGINEERING EXECUTION PLAN 4.1 Engineering Plan Plan not required for Select Study. 4.2 Integration Plan – Anchorage/Denver Communications Due to the additional challenges of maintaining effective communications between project personnel in Anchorage and Denver, additional emphasis is placed on enhancing status and progress review, as well ready access to technical documents to all project participants. 4.2.1 Project Meetings- Bi-Weekly Internal Status Meetings: Bi-Weekly status meetings are held via teleconference Tuesdays 9:00 am Alaska time, this schedule begins June 1, 2007 between Denver and Anchorage to discuss project-wide and interdisciplinary issues. During this meeting various discipline technical needs are reviewed and identified and added to the Action Item List, for distribution to the participants. Other business conducted includes, status of study tasks and information gathering, schedule, customer concerns and potential corrective actions. External Status Meetings: ML&P hold team meetings beginning June 14th are held bi-weekly on Thursdays at 8:30 am in the PDC conference room. All meetings are subject to schedule change as needed. 4.2.2 Interdisciplinary Reviews Much of the interdisciplinary reviews are provided informally among project members. The matrix in Appendix E, Project Document Distribution, shows the distribution of key design deliverables and interim products to discipline engineers who are dependent on input from others {Note: this matrix is generally not required for this stage of project and is provided for information only}. Also by way of the project server and project website, background information is available for use by other disciplines thus minimizing the need to copy information to all team members. Formal reviews and peer checking are conducted periodically on detailed design projects (refer to Section 12, Quality Assurance) 4.2.3 PFD and P&ID Reviews {To be updated for Define & Execute Stage engineering} A formal procedure is used for the review of the PFD’s and the P& ID’s before the appropriate people sign them off. Prior to these reviews, copies of the P&ID’s are sent to each discipline engineer who is cognizant in that area or system by the system engineer. The drawings are reviewed and brought to the P& ID review meeting where the concerned 14 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual system engineer walks everyone thorough the system. Step by step each piece of equipment and the associated controls and piping are discussed. The flow sheets, normally hung on the wall, are marked up and action items noted. The P&ID’s are then updated and reissued for review and eventually signed. 4.2.4 E-Mail E-mail has become the most cost effective way of communicating and moving moderate sized files such as drawings, data and text within the project team, whether in the home office or in the field, be they constructor, engineer or owner. E-mails sent and received related the project will be stored in the project electronic file on the PDC Harris Group server. Hard copies key e-mail messages are filed in the Central Engineering (CE) File in appropriate files. Project participants will be responsible for maintaining organized Personal Folders files (.pst) to be archived at project end. Note that deliverables sent by e-mail will be followed up by a formal transmittal and a signed hardcopy of the deliverables revision. The transmitted hard copy is the record copy of the document. Similarly decisions, direction or clarifications sent or received by e-mail must be recorded by placing a hardcopy of the e-mail in the CE File communication files. Contract issues will be followed up by a letter signed by the Project Manager. 4.2.5 Central Engineering File (CE File) PDC Harris Group utilizes a Central Engineering File approach that is set up and maintained by trained data control assistants. All original documentation for the project is maintained in this Project CE File during the course of the project. At the close of the project the CE File will be archived for future reference. Section 10 provides additional information regarding the CE File. 15 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 4.2.6 Project Website & Buzzsaw A Project Website is established using Autodesk Buzzsaw IP hosting service and associated software. The project website is used to enable the transfer and sharing of larger files between various locations, and generally enhances collaboration. Introductory and tutorial information is available from the service provider (refer to http://usa.autodesk.com/) or from the PDC Harris Group project website administrator: Amy Walker Harris Group Inc, Seattle (206) 494-9400 (800) 488-7410 amy.walker@harrisgroup.com The website administrator provides set-up and administrative service for the Buzzsaw website and handles the security/access levels assigned to each project participant. Security levels allow for ‘Download only’ or ‘Upload & Download’. In addition, the Project Manager and Document Control Manager have administrative capabilities to change 16 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual security/access levels, create directories, and monitor the usage of the site. The project website will include the use of the established file key mirroring the paper and electronic filing already in use at the end of the select stage. 4.3 Drawings 4.3.1 Software Drawings will be produced using the latest version of AutoCAD (current version is 2005). The CAD Drawing procedures for the project can be found in Appendix G. {Note: These procedures are superseded by the Customer’s drafting standards 1 where applicable}. ¾ Drawing Issue and Sign-Off Drawings will be prepared and submitted to the Owner for review as reflected in the Submittal Schedule and then issued for construction. Drawings issued prior to Issued For Construction (IFC) need only be initialed by the originator, checker (if checking has been performed), project discipline lead and the Project Engineer/Project Manager. IFC ISSUE All drawings issued IFC shall be initialed or signed by the following individuals, in the sequence listed: DRAWN Designer/Drafter (Responsible for drawing content) CHK’D Checker (Responsible for drawing design verification and that all review comments have been resolved) APP’D Discipline Lead (After discipline and inter-discipline checking have been performed. DL is responsible to assure that all checking and reviews are complete and incorporated) APP’D Discipline Manager (After discipline lead approval is responsible to assure that document conforms to discipline and CAD Standards) 17 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual APPROVED Proj. Mgr/Proj. Eng. (After discipline manager approval is responsible to assure the document conforms to Project requirements and acknowledge issue status of drawing.) DRAWING REVISIONS Drawings issued “Issued for Construction” will be Revision 0, with subsequent revisions as 1, 2, 3, etc. Drawings issued prior to IFC for internal review, Owner review, etc. will be issued as revision A, B, etc. Specific project requirements will determine when drawings are issued, the number of revisions, etc., in the absence of project specific requirements, the following guidelines will be followed for numbering drawing revisions: Revision A, Initial Drawing. Revision B, In-house Review. Revision C, Client Review. Revision D, if necessary, etc. Revision 0, Issued for Construction. Revision 1, specific revision. Revision 2, specific revision. Drawing revisions are initialed by the designer/drafter (in the revision box), discipline lead (in the revision box) and project manager (in the main approved box). It is the discipline leads’ responsibility to verify that the changes have been reviewed and/or checked. The first time a drawing is issued IFC, signatures will be hand-initialed. For subsequent revisions, the initials will be entered in the CAD file and only those signatures required under 3.2 above hand-initialed. The standard signature/approved box is shown for clarification. SCALE NONE MO DAY YR DRAWN CHK’D APP’D APP’D APPROVED DATE PROJECT *Initialed each time the drawing is issued. 18 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 5.0 CODE OF ACCOUNTS The standard PDC Harris Group Engineering Code of Accounts will be used for discipline labor-hour charges to the project. The Project Manager will communicate special code of accounts requirements for individual projects. The complete engineering account structure can be provided upon request. Sub- job 00 covers the base project accounts and includes all management, expenses and discipline accounts. Additional sub-jobs 01 through 98 would be established to cover changes to the base scope of work. Do not charge to sub-job 99 unless instructed to do so by the Project Manager or Project Engineer. Project tasks for Select Stage engineering are as follows: 1 – KO Meeting 2 – Design Basis Memo 3 – Procedure Manual 4 – General Arrangement Dwg 5 – Cycle Studies Including (reheat/non-reheat, fuel heating, duct firing, air vs. cooling tower, inlet air heating/cooling, waste heat Rejection), 6 – Long lead equipment packages including (CTG, STG, Cond, HRSG, Air Cooled Exchanger, GSU) 7 – Project Desription 8 – Project Execution Plan 9 – Heat Balances (Winter Peak, Summer Peak & Aver.) 10 – Water Balances ( “ “) 11 – Process Flow Diagram 12 – Prelim. P&IDs 13 – Major Equipment List 14 – Electrical One Line & Load List 15 – Control System Architectural Dwg. 16 – Tie Point List 17 – Cost Estimates (Capital & Operating) 18 – Project Schedule 19 – Risk Management Tracking 20 – MOA Project Development Services 21 – ADEC Permit Support 22 – Project Management Services 23 – Project Controls Services 24 – EA and Document Control 19 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 6.0 PROJECT SCHEDULE The current schedule is provided in Appendix J. 7.0 PROJECT COST CONTROL 7.1 Objective The principal objective of project cost control is to assist the Project Manager in completing the Project within the target estimate budget and agreed completion date. Control is exercised by continually comparing actual resources utilized and costs expended with the relevant budget and work plan, by analyzing trends, by forecasting resources and costs to complete the work, and by assessing of the cost of variations and changes. Through these efforts the Project Plan is evaluated and updated as necessary to achieve the Project objectives. 7.2 Hourly Labor Charges Each employee is responsible for completing a weekly timesheet with the correct project number, sub-job, labor code and hours worked on the project. Time charges for labor must be in accordance with the Engineering Code of Accounts established for the project. 7.3 Engineering Cost Accounting & Control Engineering accounting is accomplished by the corporate accounting group. Labor hours and costs are collected weekly through the timesheet system. The weekly Project Detailed Report, Weekly Project Progress Report and Monthly Billing Worksheet published by accounting will provide the input for reporting actual labor hours and costs for the Project. Engineering control is achieved by monitoring and comparing labor hours and costs for budget (planned), committed, actual and forecast values. When these comparisons indicate that the budget may not be achieved, the Project execution plan will be analyzed and adjusted to control the project budget. The budget values are based on the current project estimate for engineering, including design and support activities. The definitive execution plan will include a schedule for preparation of engineering deliverables; labor hours to complete these defined deliverables; costs based on those labor hours and a staffing plan to provide the resources. Actual progress will recognize measured work performed weighted by the labor hours budgeted to perform the work. The amount of work performed is 20 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual determined using completion milestones that estimate completion percentages for the type of deliverable. The product of the amount of work done (percent) and the budget labor hours to do the work is the earned labor hours. These earned labor hours are to be calculated at a detail level and then summarized. Progress to date, or percent complete for the Project or specific discipline is determined by dividing the total earned labor hours to date by the total Project budget labor hours as follows: SUMMATION OF THE EARNED LABOR --------------------------------------- x 100 = PERCENT COMPLETE TOTAL LABOR Actual labor hours and costs will be summarized from the Project accounting reports which have been reviewed by the Project Manager. After taking account of actual performance to date and the current program, the future progress performance will be estimated and may be used to adjust the value of hours or resources required to earn the balance of budget man hours. Performance measurement can be calculated as: Actual labor hours Earned labor hours A forecast of resources to complete the defined scope of work combined with the actual labor hours to date yield a total forecast for the Project. Labor hours times forecasted unit rates are added to the actual cost to date and yield a total forecast of costs. The progress data will be summarized in the monthly Project cost report, which will be distributed internally. PDC Harris Group’s Project Cost Reporting System (PCR) program facilitates the collection, analysis and reporting of this information for use by the Project team. 7.4 Change Orders Engineering change orders will be used to maintain scope control. Changes to the defined scope of work will be documented by change order proposals submitted to ML&P. Each change will be recorded, assessed for cost and/or schedule impact and submitted to the client Project Manager. The change order will become a budget and/or schedule adjustment. The project budget and work plans will be adjusted to reflect the revised scope. This will insure that progress and performance are monitored against an accurate baseline. 21 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual Project team members are responsible for identifying and documenting scope changes. The Project Manager is responsible for evaluating and processing change order proposals and for transmitting the change order to ML&P. See Appendix G for the established PDC Harris Group Change Order Procedure. 7.5 Project Invoicing Billings for engineering and design performed on the project will be submitted periodically, at the frequency determined by the contractual documents. Section 15 provides more information about invoicing and payment 8.0 ENGINEERING 8.1 Design Criteria Refer to the Design Basis Memorandum developed during the Select Stage. 8.2 Deliverables Refer to Section 1, Project Description & Scope. 8.3 Intelligent Systems & Error Propagation 8.3.1 CAD and Computer Systems PDC Harris Group maintains and uses computer hardware and software current with the engineering industry. As well, we maintain a Novell local area network to link our staff and field personnel. Numerous engineering analysis and design applications have been purchased or developed by PDC Harris Group LLC. The application list includes: Finite element and structural analysis STAAD Finite element and mat analysis and design SAFE Process Balances and Simulations ASPEN Hysys, Gatecycle Line Sizing and Fluid Modeling AFT Arrow & Fathom + In-house Short Circuit Analysis Dapper and Captor Pipe Stress Analysis Caesar Flow Element Sizing AFT Arrow & Fathom+In-house Document Tracking Software Expedition 8.3.2 Intelligent Systems PDC Harris Group uses the intelligent CAD software system provided by Coade, known as CADWorx (CW). CW includes a resident data base having functioning connectivity to the following engineering documents: ¾ P&IDs – links to equipment tag numbers and process equipment design parameters, piping specification, valve designation/specification, and piping specialty items. 22 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual ¾ Line List – enumerates each piping segment having a unique designation, providing design specification, line size, conditions of service and tie-in description. ¾ Valve List – provides information on valve type, design specification, conditions of service and location. The following engineering documents are connected to the CW database. 1. Equipment Database - The equipment database is a Microsoft Access application that is maintained by the Process/Mechanical Systems Group. Access to the files is limited to Process/Mechanical Group personnel. The database is used to generate the following reports: a) Equipment List – provides process equipment data including item name, tag number, design information, conditions of service, a general description, and the inclusion of components for packaged equipment services. b) Equipment Data Sheets – details operating and design conditions of service, and other procurement details for each tagged process equipment service using an industry standard format. 2. Instrument Database - The instrument database is a Microsoft Access application that is maintained by the I&C Group. Access to the files is limited to I&C Group personnel. The database is used to generate the following reports: a) Instrument Index – a detailed listing of all instrument/control components, including item name, tag number, design specifications, conditions of service, and general descriptive information. b) I/O List – details all input and output signals to/from the distributed control system (DCS) or programmable logic controller (PLC). c) Instrument Data Sheets – details operating and design conditions of service, and procurement details for all field-mounted instrumentation devices. 3. Specialty Items List - The Specialty items Database is a Microsoft Access application that is maintained by the Process/Mechanical Group. Access to the files is limited to Process/Mechanical Group personnel. The database is used to generate the following reports: a) Specialty Items List- detailed report forms, depending on the item, of all specialty items (e.g., hoses, expansion joints, orifices,) including tag number, conditions of service and general descriptive information. 8.3.3 QA/QC and Change Management PDC Harris Group uses a database comparison program for each of the database applications that will compare the data in the CADWorx db to the info in each of our external databases. This “DB Compare” will list only the differences between the two for us to manually correct. By utilizing this approach we maximize QC of 23 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual our documents; minimize the time to do so; each discipline maintains control of their work products and the project maintains change control since the external databases must be manually downloaded to the CADWorx DB applications (using the CADWorx DB would allow for automatic updates without approval of the project or notification of other disciplines). While PDC Harris Group recognizes the potential productivity gains to be realized by bringing the latter list of engineering deliverables into the single CW database, we remain cautious regarding the impact upon Quality Control (QC) of our products. As anyone involved in the management of detailed design projects will acknowledge, increases in productivity associated with automation of design documents may be accompanied by proportional decreases in quality, i.e. an increase in errors. Without proper management of change applied to an intelligent design system, modifications may be applied by engineers/designers with access to the system at random. Without proper management of change and interdisciplinary communication, random changes by one discipline having an impact on other disciplines may go undetected. The additional cross-checking associated with the 3 independent data bases enhances QC. PDC Harris Group also uses the following change management tools to minimize error propagation in our design deliverables associated with automated systems: 1. Project managers and engineers foster inter-disciplinary communication using daily walk-around visits to discipline lead engineers/designers. 2. Weekly project meetings are held to open lines of inter-disciplinary communication. 3. Key drawings, such as P&IDs, rely on a master set of drawings, where particular disciplines make color-coded changes. The master drawings are kept in common project areas to allow access to all participants. 4. Changes to the CADWorx files, and the Process Equipment and Instrument-Control databases, are made based upon agreed to schedules for drawing and database revision. Random changes to the master files are not possible, based upon strict security access. 5. Identification of interference issues between different design disciplines relies not only on the 3-D features of CADWorx, but also on periodic drawing coordination sessions. 24 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 9.0 PROCUREMENT PDC Harris Group assumes that the role outlined in the Appraise Stage Procurement Plan 1 is applicable for the Define and Execute phases of the project. Following is an outline of the elements of this work. 9.1 Functions z Equipment List The PDC HARRIS mechanical and electrical engineers will provide the equipment list. z Bidders List PDC HARRIS will review the Owner’s list of acceptable and unacceptable suppliers and provide additional suggested suppliers to include on a proposed list for each RFQ package. z Equipment Specifications Equipment specifications will be prepared by PDC HARRIS where appropriate. z Data Sheets Data sheets will be prepared by PDC HARRIS for all equipment items. z Construction Drawings and Specifications Construction Drawings will be prepared by PDC HARRIS. Construction specifications will be based on the {Later}. z Receive Bids and Tabulate Bids PDC HARRIS will review proposals for specification and data sheet compliance and will provide tabulation for each of the bidders. Bid tabs will not be prepared for negotiated equipment and material. z Letter of Recommendation PDC HARRIS will prepare a letter of recommendation that will be accompanied by the bid tabulation and pertinent Vendor information. z Pre-Award Meeting {Revise as necessary.} z Conform the Specification for Purchase PDC HARRIS will conform the specifications and data sheets for purchase and submit the conformed specification and data sheets to ML&P. 1 Refer to Rev 3, April 25 2007 version in Plant 2A Appraise Stage Design and Project Management Package, Draft 2, May 22, 2007. 25 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual z Sign / Issue ML&P will sign and issue the Purchase Orders to the sellers with copies sent to PDC HARRIS for use during engineering. z Expedite PDC HARRIS will team with ML&P to expedite the drawings of the purchased equipment. ML&P will expedite delivery of equipment to support the installation and construction schedule. z Drawing and Data Review PDC HARRIS will receive Vendor drawing and data, record the receipt, stamp the drawings for distribution, review the drawings and data, gather and summarize all comments, and return the drawings and data to the Vendors. Additional submittals will be reviewed by PDC HARRIS. This activity will be completed when the drawings reach the, “reviewed with no further comments”, stage. z Vendor Manuals PDC HARRIS will assemble vendor Operating and Maintenance data. A set of certified drawings will accompany the manuals. 26 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 10.0 DOCUMENT MANAGEMENT This section describes the types of documents that will be used on the Project and the procedures for distribution, coding, filing, and issuing these documents and their revisions. 10.1 Project Documents All documents that are issued on the Project shall be under the signature of the Project Sponsor, Project Manager, or Project Engineer. All documents distributed internally will be copied to the Project Manager and Project Engineer. The master files and sequential listing of all documents shall be maintained in the Central Engineering (CE) files by the Document Controller. Documents prepared/issued by PDC Harris Group personnel shall include the document name, date, project name and project number(s). Engineering documents, RFI’s and vendor information will initially be posted to the BUZZSAW project website in accordance with PDC Harris group procedures for distribution and hardcopy filing will follow. 10.1.1 File Key The project file key is an index of all documents maintained on the project. They are maintained by the Document Controller. The key lists the CE file sections and subsections used for the Project. A copy of the File Key is maintained in Section 1.01 of the CE file for reference purposes, and is attached in Appendix A. All project documents will be filed in accordance with the File Key. 10.1.2 Project Procedures Project procedures are used to describe the administrative features of the Project and are incorporated into this, the Project Procedures Manual. Project procedures and changes are issued by the Project Manager. All project documentation shall be submitted through the Engineering Assistant for editing, formatting and distribution. 10.1.3 Project Memoranda and Memos Project memoranda are short reports pertaining to certain features of the Project. Project memoranda are used to present design options, convey findings of an investigation, and establish Project parameters. Project memoranda are normally brief with attachments and no appendices. They are to be formatted with a summary, introduction, subject, conclusions and recommendations, but do not require titled subdivisions. Project memoranda are to be issued under the signature of the Project Manager. 27 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual Project memoranda identify the project number and sub-job number. Office memos are written for the general distribution to the project and normally are not sent to the client. The person issuing the office memo is responsible for its distribution. No office memo numbering system is required. If specific filing instructions are required they should be noted on the office memo. 10.1.4 Meeting Minutes and Trip Reports Minutes are kept of all meetings at which decisions affecting the project are made and all trips where information, pictures, or data valuable to the Project are obtained. Meeting minutes/trip reports are prepared by PDC Harris Group and published within five working days. The PDC Harris Group discipline lead at the meeting/trip insures that a person responsible for taking notes and preparing the minutes/trip report is designated. When PDC Harris Group has responsibility, minutes and trip reports are issued under the signature of the note taker after review and approval by the Project Manager. Copies are distributed to each person in attendance at the meeting/trip and others as designated. Minutes/trip reports are concise, accurate condensations of the proceedings presented. The minutes/trip report clearly reflects action(s) required and who is to take the action on each item recorded. The format follows the standard heading including project name, number, and location and client name and is followed by: Trip or Meeting Date(s) Trip or Meeting Location Purpose Attendees (by Employer Group) Minutes of meeting and trip reports will be dated by the Engineering Assistant and filed. 10.1.5 Communication Records (Telephone) All pertinent, verbal communication obtained over the telephone or in person is documented on a standard PDC Harris Group conversation record form. A separate record is prepared for each conversation. The person preparing the communication record is responsible for identifying any special filing instructions. 10.1.6 Fax Transmissions Fax communications are made using the standard PDC Harris Group fax form. 28 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 10.1.7 E-Mails Pertinent E-mails are forwarded to Document Control for printing and filing either as hard copy or an electronic copy. E-mails sent and received on the project will be stored in the project electronic file. Hard copies of e-mail’s should be filed in the CE File in appropriate files. All e-mail’s originating from PDC Harris Group for this project should incorporate the project number on the subject line and a cc copy sent electronically to the Project Document Controller. Forwarded documents need to indicate Project Number and appropriate File Key Code(s). The recipient of the E-mail will be responsible for incorporating the project number, file key code and forwarding for internal distribution. 10.1.8 Letters Letters are utilized to document requests for information or to convey important information and are written in the standard PDC Harris Group format and on PDC Harris Group letterhead. The letter reference line is as follows: Reference: Project Home Subject PDC Harris Group Project No. All letters are to be given to the Engineering Assistant for finalization, QC and distribution. Letters cover only one subject to facilitate filing and retrieval. When it is necessary to address more than one subject in the letter, a copy is filed with each subject. All PDC Harris Group letters to the customer are to be issued under the signature of the Project Manager. 10.1.9 Transmittals All documents sent out of the office are to be accompanied by the standard project Transmittal Letter, PDC Harris Group Letter of Transmittal, or by a cover letter. Appropriate comments are included on the Letter of Transmittal. Transmittals are typed and identify the document's distribution according to the attached Distribution of Documents list. Transmittals are dated and maintained by the Project Document Controller. Transmittals are issued under the signature of Project Document Controller. E-mail is a short-term communications tool. If an e-mailed drawing or other document is issued to the customer or to a construction site, it is documented on a transmittal and followed-up with a hard copy document having the appropriate project signatures denoting the proper level of quality assurance, including any P.E. stamps. The use of e-mail to send documents out of the office is encouraged to expedite the conveyance of the documents. The documents that could be sent include, 29 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual but are not limited to, design criteria, memos, specifications, drawings, sketches, lists, vendor information, etc. All data sent electronically will be immediately followed-up by sending a hard copy of the data. A transmittal will be sent that reflects the documents were sent electronically and by hard copy. The electronic version of documents will not include signatures and as such are not the official document. The hard copy is to be signed according to PDC Harris Group procedures and sent as the official distribution of the document. Requests to have documents copied, distributed and sent will use the Distribution Request Form. The form is available in the CE file area. This form will be used to convey to the Project Document Controller what files are to be or have been sent, whether hard copy or electronic. For electronically sent data, Document Control needs to know the addressee, document number, title, revision, and issue status. Communications (letters, telecons, faxes, transmittals, and e-mail) are filed chronologically. Vendor transmittals are filed with the appropriate vendor package. 10.1.10 Request for Quotation (RFQ) RFQs for all equipment will be prepared for the Project based on the PDC Harris Group RFQ package format and as approved by the customer. Completed RFQ packages will be submitted to ML&P for issue to bidders and maintained in CE file by the Document Controller. 10.1.11 Bid Evaluations Bid evaluations are prepared by PDC Harris Group and the customer to provide comments and recommendations for procurement action by the customer’s purchasing organization. 10.1.12 Request for Purchase (RFP) RFP’s for all equipment will be prepared based on the PDC Harris Group bid evaluation format. Completed RFP’s will be submitted to ML&P for issuing an order to the successful bidder and maintained in the CE file by the Document Controller. 10.1.13 Procurement Tracking Report This report is maintained and issued on a regular basis by project procurement personnel. The customer’s tracking system is to be integrated where applicable. 10.1.14 Technical Specifications Technical specifications are prepared using PDC Harris Group specification sheets (data sheets) and PDC Harris Group specifications. 30 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 10.2 Purchasing Documents Purchase package data (RFQ, bids, bid evaluation & recommendation, purchase approval from client, RFP, PO & vendor data) will be filed by PDC HARRIS package number. Within the package file, the RFQ, bids and bid evaluation are filed separately, the RFP & PO are filed together, vendor data are filed together, and vendor correspondence is included. 10.3 Document Distribution Distribution of project technical information is based on the following distribution matrices. Document Control will verify that all appropriate signatures are in-place prior to issuing the document. It is the responsibility of the project manager; project engineer and responsible discipline lead to obtain the necessary sign-off on document. 10.4 Vendor Data 10.4.1 General The following paragraphs provide a guide to the classification, handling, and review of vendor data for the Project. Timely receipt, review, and turnaround of vendor data are key to the overall design and schedule of a plant or facility. 10.4.2 Vendor Data Categories Vendor data for equipment and systems is divided into seven general data categories: z Schedules z Drawings z Data/Lists z Calculations z Procedures z Reports/Records 10.4.3 Operating and Maintenance Data for each category is based on the individual orders Documentation Requirement Form. 10.4.4 Vendor Data Handling and Distribution Step 1: Receipt and logging of vendor data 31 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual Vendor data is received by Document Control. Document Control (DC) will stamp “RECEIVED” and date each document. DC will determine, with the aid of the Project Manager, Project Engineer or responsible discipline engineer, the package identity. DC will stamp (similar to the one below) and log each document into the Vendor Documentation Database. DC will maintain an index of vendor information. PDC HARRIS GROUP, INC. PROJECT # ACCOUN T RECEIVED TAG NO. FILE NO. IR- FOR INITIAL REVIEW CHECKLIST# RE- FOR REVIEW OF EDITIONS RR- REVISE & RESUBMIT FOR REVIEW STATUS FM- FURNISH AS MARKED, SEND CORRECTED CERTIFIED COPY FS- FURNISH EQUIPMENT AS SUBMITTED, SEND CERTIFITED COPY CC- SUBMITTED AS CERTIFIED CORRECT COPY FI- FOR INFORMATION ONLY RECEIVED BY: DATE: REVIEW IS FOR GENERAL COMPLIANCE DOCUMENTS AND IN NO WAY RELIVES VENDOR OF DESIGN RESPONSIBILITY, DIMENSIONS, QUANTITIES, SUITABILITY OF MATERIAL OR CONSTRUCTION TECHNIQUES AND PERFORMING THEIR WORK IN A SAFE AND SATISFACTORY MANNER. Step 2: Distribution of Documents DC will place a copy on review in the squad check area; the original will be maintained by DC. Documents will issue and e-mail to all reviewers when new vendor documentation has been placed in the squad check area. Step 3: Discipline Review Each discipline will review the vendor data for adequacy and accuracy relative to their needs and contractual obligations. Comments should be legible and concise. Each discipline will need to initial after all comments placed on vendor documentation. Reviewer initials will also be placed on the attached checklist signifying completion of review by that discipline. In the event that there are no comments to the data, indicate N/C (no comment) on 32 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual the checklist, sign and date. Step 4: Receipt and Distribution of Discipline Comments When all the disciplines have completed the review of the vendor data, DC will remove the data from the squad check and distribute the review copy and the original reproducible to the responsible discipline engineer. Step 5: Incorporation of Comments The responsible discipline engineer is to incorporate or resolve all discipline comments. The responsible discipline engineer will transfer all applicable comments to the original reproducible copy and forward the package, including the other discipline’s review copies, to DC. Comments will be made in RED pen so as to stand out and make a suitable copy. DC will distribute the review copies to the disciplines. DC will make a copy of the original “red-marked” document. The copy will be filed in the appropriate location in the CE files. The original will be transmitted to the vendor. A copy of the transmittal will be sent to the Discipline Lead, PM and PE’s. Step 6: Revisions from the Vendor As revised documents are received from the vendor the process will begin again with Step 1. 10.4.5 Data Responsibility Responsibility for reviewing vendor data rests with the discipline impacted by the adequacy and accuracy of the information. As an example, civil is responsible for reviewing all civil-related information provided for a piece of mechanical equipment. This review typically includes review of calculations, anchor bolt locations, and component/equipment weights. The civil engineer/designer takes "ownership" for this portion of the equipment package; the "responsible" mechanical engineer would be responsible for ensuring that the appropriate reviews took place. The "responsible" engineer assigns the appropriate data distribution and coordinate transfer of comments from the disciplines back to the vendor. The flow diagram in Figure 1 following defines the responsibilities for review of adequacy and accuracy of vendor data. 10.4.6 Documentation Requirements Form The timely receipt of vendor data is key to the overall design, construction and start-up of a plant or facility. The identification of specific data needs and the communication of these requirements to the vendor in a concise, well defined form are important in ensuring the timely receipt of the required data. The vendor must understand his obligations concerning the types of data and the timing for submittal before a purchase order is placed. PDC Harris Group utilizes a Documentation Requirements Form for communicating 33 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual the types of data required and the timing for receipt. 34 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual FIGURE 1 PDC HARRIS GROUP DATA REVIEW FLOW DIAGRAM Lawrence County Generation Project Harris Group, Inc. Vendor Data Processing Diagram Key RE – HGI Responsible Engineer DC – HGI Document Clerk DL- HGI Discipline Lead Engr SQUAD CHECK REVIEW & COMMENT RE, DL LOG DATA INTO SYSTEM & COMPLETE ROUTING SLIP DC TRACK & EXPEDITE DATA DC PREPARE TRANSMITTAL & LOG DATA OUT DC SCAN DUPLICATE & ISSUE DATA DC PROJECT WEBSITE TIC CONSTRUCTION COPY 2 C VENDOR (ORIGINALS) TRACK & EXPEDITE RESUBMITTAL: PROCESS STARTS OVER DC RECEIVE DATA DC CONSOLIDATE COMMENTS RE HGI CENTRAL FILES DC 35 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 11.0 REPORTS Engineering studies are documented in Project Memoranda or Project Reports. The basic outline for a Memorandum includes the following sections: • Summary • Introduction • Description of Existing Conditions/Design Criteria • Assumptions and Qualifications • Calculations • Discussion • Conclusions/Recommendations • Attachments Reports are similar to memoranda but are used for more formal presentations of information. The following outlines the basic contents of a report: • Summary • Introduction • Description of Facility • Discussion • Conclusion • Recommendations • Appendices • Glossary of Terms • Calculations • Equipment List • Estimate Details • Drawings 36 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual Variations of this table of contents are used to meet specific study and project requirements. Monthly Engineering Progress Reports (during the Define and Execute Stages) are issued in a format that combines the needs of the customer with the internal reporting needs of PDC Harris Group. These reports generally include the following sections. • Summary of Work • Engineering Progress by Discipline • Contract Cost Summary • S-Curve on Schedule Progress • Engineering Schedule Update • Drawing Schedule • Change Order List • Outstanding Engineering Issues List 37 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 12.0 QUALITY ASSURANCE 12.1 General PDC Harris Group's Quality Assurance (QA) Quality Control (QC) Plan consists of four stages: 1. Defining project responsibilities. 2. Identifying project objectives (both client and PDC Harris Group objectives). 3. Development of a project specific QA/QC implementation plan. 4. Implementation of QA/QC plan. Quality: Everyone with PDC Harris Group is responsible for their own actions and resulting impact on quality. They are expected to: Do it right the first time. Question their supervisor/manager if they are not certain what the right thing to do is or how it should be done. Document where data or assumptions come from. Coordinate their actions with others and obtain whatever correct information they may need from others to do their work correctly the first time. In timely fashion correct information others may need to do their work correctly the first time. Quality Assurance: PDC Harris Group's Project Sponsor is responsible for selecting, establishing and assigning responsibility for actions necessary to evaluate the adequacy and effectiveness of quality control. Quality Control: PDC Harris Group's Project Manager is responsible for defining and attaining client and PDC Harris Group objectives and for selecting, establishing and assigning responsibility for the operational techniques and activities used to attain the objectives. Additionally, the following project organizational personnel responsibilities have been established. z Project Sponsor The Project Sponsor is responsible for the overall PDC Harris Group quality assurance and performance and executive liaison with the client on policy matters. 38 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual z Operations Manager The Operations Manager is responsible to the Project Sponsor for project management assignment and quality of operations support to the project. He identifies the minimum performance requirements of the Project Manager and guides him in their implementation. z Engineering Manager The Engineering Manager is responsible to the Operations Manager for the following: ⎯ Establishment of a pool of experienced and qualified discipline staff for assignment to the project. ⎯ Assignment of specialists, engineers and technicians to the project. ⎯ Providing technical and computer based resources. ⎯ Establishment of the minimum technical requirements and their documentation for the project. 12.2 Quality Assurance (QA) Implementation Plan PDC Harris Group's QA Implementation Plan focuses on two key elements, risk management and quality control. By 1) identifying and proactively managing project risks and 2) developing design techniques and procedures that match the project objectives QC. 12.3 Risk Management Refer to the Risk Management Plan for this project. 12.4 Quality Control Quality control and checking are to be performed in accordance with PDC Harris Group Corporate Procedures, and instructions. Checking includes the following: z Discipline Checking Discipline engineers, designers and checkers on each project, all assume responsibility for quality in their respective assigned areas. They initial drawings and documents as required when all checking and reviews have been completed. Specific checking guidelines and procedures for drawings, specifications, etc., are detailed in the design instruction for each discipline. z Intra-Discipline Checking Specific intra-discipline checking guidelines and procedures for drawing, specifications, etc. are detailed in design instruction for each discipline. It is the responsibility of the Discipline Manager to implement these guidelines 39 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual and procedures and assign personnel to assure that they are performed. z Inter-discipline Checking Inter-discipline checking procedures of documents are detailed in the discipline instructions. It is the responsibility of both the Discipline Manager(s) and Project Engineer/Project Manager to insure that the inter-discipline checking is performed. X - Required INTERDISCIPLINE REVIEW Work Product Project Mechanical/ Process Electrical Instrument Piping Civil/ Structural Mechanical / Process Equipment List, Revision A X X X X X X Equipment List, Revision B X X X X X X Equipment List, Revision 0 X X X X X X GA’s / Plot Plans, Revision A X X X X X GA’s / Plot Plans, Revision B X X X X X GA’s / Plot Plans, Revision 0 X X X X X P&ID’s, Revision A X X X X X P&ID’s, AFC X X X X X P&ID’s, Revision s X X X X X Electrical Area Classification X X X One-Line Diagrams X X X X Underground Drawings X X X X X X Lighting Plans X X X Aboveground Drawings X X X X Circuit Schedule X X Wiring and Connection Diagrams X X Heat Tracing X X X X Instrumentation - PDC Harris Group 40 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual X - Required INTERDISCIPLINE REVIEW Work Product Project Mechanical/ Process Electrical Instrument Piping Civil/ Structural Instrument Index/ I O List X X X X Instrument Detail Drawings X X X Control Panel Layout X X Control Panel Specification X X Instrument Data Sheets X X X Control Valve Data Sheets X X X X Piping Piping Orthographics X X X X X X Piping ISO’s X X X Piping Lists X X X X Stress Analysis X X X Piping Hangers X X X Pipe Spec X X X X Civil / Structural Civil / Site Design X X X X X X Steel Standards X X Building Drawing / Spec X X X X X Concrete Standards X X Building Frame Analysis X X Building Foundations X X Miscellaneous Steel X X X Equipment Foundations X X X X X 50 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual 13.0 OFFICE AND FIELD SAFETY PROCEDURES 13.1 General PDC Harris Group believes in providing a safe working environment to all of its employees. PDC Harris Group has established safety procedures to introduce new employees to PDC Harris Group’s safety standards and precautions, as well as to serve as a refresher for the experienced. Employees must follow the safety procedures and guidelines documented in the Safety Manual. Section B of the PDC Harris Group Safety Manual outlines office safety procedures while Section C outlines the field safety procedures. {NOTE: Customer safety procedures for field work will be adopted and distributed to PDC Harris Group involved in field visits, site work or construction/field investigations.} The safety manual is distributed to all PDC Harris Group employees and sub- consultants working for PDC Harris Group. All employees and subcontractors are asked to read this manual and return a signed and dated confirmation form. FIELD SAFETY PROCEDURES Refer to the Project Safety Manual included in Appendix H. 14.0 CONSTRUCTION SUPPORT PDC Harris Group will provide engineering support in the field and home office technical support to the customer as needed during construction. Technical support will also be provided to supply information to the customer start-up group for preparation of the start-up and performance testing procedures and review of the test results. 15.0 BILLING AND PAYMENT Project billing will be prepared on a monthly basis. Monthly billing invoices will be based on the agreement between PDC Harris Group and ML&P. The Project Manager is responsible for understanding ML&P’s billing approval and payment systems to insure the timely payment of all billings. The address, telephone and e-mail numbers for the customers’ accounts payable contact shall be included in Section 3 to permit inquiries about unpaid bills. 16.0 PROJECT CLOSURE 16.1 General The final cost analysis and cost report will require collaboration with the project controls person assigned to the Project. It is also helpful to retain information about the working relationships with the customer, owner and contractors. 16.2 Report The report is an expanded final progress report for the project. Areas to be 51 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual summarized and reported in the final report shall include: a) General Information b) Project Description c) Scope of Engineering Services d) Special Features e) Problems/Critique f) Key Schedule Dates (Planned and Actual) g) Project Costs i. Engineering costs ii. EPC costs iii. Change order estimates and actuals h) Contract Issues i. Unresolved Issues ii. Billings and Payments iii. Retainage i) Customer Evaluation (See attached form for submittal to customer) 52 P:\2005\A05060.25 --- ref. A05060.20\1.00 Contract, Procedures, and Information\1.03 Scope of Work, Description & Criteria, Project Procedures Manual\ML&P Project Procedures Manual PDC HARRIS GROUP LLC Phone: (907) 644-4716 2700 Gambell St, Suite 500 Anchorage, AK 99503 FAX TO: Ed Portaro, Project Sponsor HARRIS GROUP INC. at (303) 291-0136 Please Respond Company: Evaluator: Project: Please indicate your response to each question by circling the appropriate number, using a rating of 1 = unsatisfactory and 5 = outstanding. If a particular question does not apply to this project, please circle N/A. Thank you. CLIENT PROJECT EVALUATION Unsatisfactory ⎯ Did Harris Group provide the services outlined in the scope a professional and timely N/ 1 2 3 4 5 Did Harris Group provide you with timely and accurate updates projects progress, schedule, and N/ 1 2 3 4 5 Did the services provided by Harris Group meet your expected and N/ 1 2 3 4 5 Were the drawings and documents prepared by Harris concise, accurate, and well N/ 1 2 3 4 5 Were Harris Group invoices accurate and submitted in a timely with enough detail to sufficiently N/ 1 2 3 4 5 Were you sufficiently satisfied with the services provided that you retain Harris Group in the Yes No Would you provide a professional reference for Harris Yes No Please provide additional comments you feel would improve Harris Group’s services to you in the 53 Appendix A PROJECT FILE KEY SECTION 1.00 CONTRACT, PROCEDURES AND INFORMATION 1.01 File Key (Table of Contents) 1.02 Project Opening Notice / Contract / Memorandum of Engagement 1.03 Scope of Work / Description & Criteria / Project Procedure Manual 1.04 Engineering Estimates / Budget 1.05 Engineering Schedule / Milestones 1.06 Engineering Change Notices 1.07 Engineering Change Orders 1.08 Insurance Certificates and Correspondence 1.09 Engineering Consultants’ Agreements SECTION 2.00 BILLINGS & STATUS REPORTS 2.01 Invoice, Billing Worksheets and Backup (Filed w/Project Services) 2.02 Monthly Engineering Progress Report 2.03 Project Controls Report (PCR) 2.04 Procurement Status Report *Denver Only 2.05 Expediting Status Report *Denver Only 2.06 Purchase Order / Sub-Contract Report *Denver Only SECTION 3.00 COMMUNICATIONS (Includes: Transmittals, Letters, Faxes, Telecons, E-Mails, Etc.) 3.01 Transmittals 3.01.1 HGI Document Transmittals 3.01.2 Vendor Document Transmittals 3.01.3 ML&P Document Transmittals 3.01.4 Miscellaneous Document Transmittals 3.02 Communications to/from Customer 3.02.1 Communications to/from Customer 3.03 Office Communications 3.04 Other Non-Office Communications 54 3.05 Meeting Minutes 3.06 Trip Reports 3.07 Action / Needs (RFI’s) List 3.08 Publicity and News Releases 3.09 Communications to/from Field 3.09.1 Communications to/from Field SECTION 4.00 APPRAISE STUDIES & DELIVERABLES 4.01 Studies 4.02 Deliverables SECTION 5.00 SELECT STUDIES & DELIVERABLES 5.01 Studies 5.02 Deliverables SECTION 6.00 APPRAISE PHASE REFERENCE MATERIALS 6.01 Site Data (Includes gotech, survey, etc.) 6.02 Environmental Data 6.03 Customer Furnished Data 6.04 Permits 6.05 Government Data 6.06 Photographs 6.07 Owner’s Overall Project Schedule SECTION 7.00 SELECT PHASE REFERENCE MATERIALS 7.01 Site Data (Includes gotech, survey, etc.) 7.02 Environmental Data 7.03 Customer Furnished Data 7.04 Permits 7.05 Government Data 7.06 Photographs 7.07 Owner’s Overall Project Schedule SECTION 8.00 SELECT STAGE ENGINEERING DOCUMENTS 55 8.01 Issued Deliverables Lists (Keep Current, Supersede Old Revisions) 8.02 Sketches (Filed in Flat File) 8.03 Data Sheets / Pipe Supports (Filed Here and w/ Procurement Pkg) 8.03.1 Mechanical Data Sheets (Keep Current, Supersede Old Revisions) 8.03.2 Instrument Data Sheets (Keep Current, Supersede Old Revisions) 8.03.3 Pipe Supports / Hangers (Keep Current, Supersede Old Revisions) 8.04 Lists (Keep Current, Supersede Old Revisions) 8.04.1 Mechanical (Equipment List, Equipment Package List Etc.) 8.04.2 Process (System Descriptions, PFD Index Etc.) 8.04.3 Electrical (Motor/Load List, Circuit Schedule, Cable Code List Etc.) 8.04.4 Instrumentation (Instrument Index, DCS I/O List, Logic Narrative, Etc) 8.04.5 Piping (Line List, Valve List, Specialty Items List, Tie-Point List Etc.) 8.04.6 Civil / Structural/ Architectural Lists 8.05 Design Drawings (Filed in Flat File) 8.06 Isometric Drawings (Filed in Flat File) 8.07 Specifications (Original Filed in File Cabinets) 8.08 Calculations (Kept by Discipline until Project Closes) SECTION 9.00 DEFINE STAGE ENGINEERING DOCUMENTS 9.01 Issued Deliverables Lists (Keep Current, Supersede Old Revisions) 9.02 Sketches (Filed in Flat File) 9.03 Data Sheets / Pipe Supports (Filed Here and w/ Procurement Pkg) 9.03.1 Mechanical Data Sheets (Keep Current, Supersede Old Revisions) 9.03.2 Instrument Data Sheets (Keep Current, Supersede Old Revisions) 9.03.3 Pipe Supports / Hangers (Keep Current, Supersede Old Revisions) 9.04 Lists (Keep Current, Supersede Old Revisions) 9.04.1 Mechanical (Equipment List, Equipment Package List Etc.) 9.04.2 Process (System Descriptions, PFD Index Etc.) 9.04.3 Electrical (Motor/Load List, Circuit Schedule, Cable Code List Etc.) 9.04.4 Instrumentation (Instrument Index, DCS I/O List, Logic Narrative, Etc) 9.04.5 Piping (Line List, Valve List, Specialty Items List, Tie-Point List Etc.) 9.04.6 Civil / Structural/ Architectural Lists 9.05 Design Drawings (Filed in Flat File) 9.06 Isometric Drawings (Filed in Flat File) 56 9.07 Specifications (Original Filed in File Cabinets) 9.08 Calculations (Kept by Discipline until Project Closes) SECTION 10.00 EXECUTE STAGE ENGINEERING DOCUMENTS 10.01 Issued Deliverables Lists (Keep Current, Supersede Old Revisions) 10.02 Sketches (Filed in Flat File) 10.03 Data Sheets / Pipe Supports (Filed Here and w/ Procurement Pkg) 10.03.1 Mechanical Data Sheets (Keep Current, Supersede Old Revisions) 10.03.2 Instrument Data Sheets (Keep Current, Supersede Old Revisions) 10.03.3 Pipe Supports / Hangers (Keep Current, Supersede Old Revisions) 10.04 Lists (Keep Current, Supersede Old Revisions) 10.04.1 Mechanical (Equipment List, Equipment Package List Etc.) 10.04.2 Process (System Descriptions, PFD Index Etc.) 10.04.3 Electrical (Motor/Load List, Circuit Schedule, Cable Code List Etc.) 10.04.4 Instrumentation (Instrument Index, DCS I/O List, Logic Narrative, Etc) 10.04.5 Piping (Line List, Valve List, Specialty Items List, Tie-Point List Etc.) 10.04.6 Civil / Structural/ Architectural Lists 10.05 Design Drawings (Filed in Flat File) 10.06 Isometric Drawings (Filed in Flat File) 10.07 Specifications (Original Filed in File Cabinets) 10.08 Calculations (Kept by Discipline until Project Closes) SECTION 11.00 PROCUREMENT / VENDOR DOCUMENTATION * DENVER ONLY PKG NO. (Includes: RFQs, Proposals, Quotes, Bid Evaluations, RFPs, P.O. Infomation, Correspondence, Transmittals and Vendor Documentation) (Filed by Package No.) • A – Earthwork • B - Concrete • C - Structural Steel • D - Mechanical Bulks • E - Mechanical Equipment • F - Piping • G - Electrical • H - Instrumentation & Controls 57 • J - Surface Coating & Protection • K - Insulation • L - Buildings SECTION 12.00 CONSTRUCTION 12.01 Construction Progress Reports 12.02 Request For Information (RFI’s) Field Generated 12.03 Field Reference Materials (P.O.’s, Schedules, Meetings, Deficiencies, Etc. ) 12.04 Start-up / Commissioning 12.05 Performance Tests SECTION 13.00 CUSTOMER COMMENTS TO PDC HARRIS GROUP LLC DOCUMENTS 13.01 Comments to Drawings (By Dwg #) 13.02 Comments to Packages / Specifications (By Pkg / Spec #) 13.03 Comments to Lists (By Document #) 13.04 Comments to Project – General SECTION 14.00 SUPERSEDED PDC HARRIS GROUP LLC. ENGINEERING DOCUMENTS 14.01 Issued Deliverable Lists (Superseded) 14.02 Sketches (Superseded) 14.03 Data Sheets / Pipe Supports (Superseded) 14.04 Lists (Superseded) 14.04.1 Mechanical Lists (Superseded) 14.04.2 Process Lists (Superseded)) 14.04.3 Electrical Lists (Superseded) 14.04.4 Instrumentation Lists (Superseded) 14.04.5 Piping Lists (Superseded) 14.04.6 Civil / Structural/ Architectural Lists (Superseded) 14.05 Design Drawings (Superseded) 14.06 Isometric Drawings (Superseded) 14.07 Specifications (Superseded) 14.08 Calculations (Superseded) 58 SECTION 15.00 SUPERSEDED NON-PDC HARRIS GROUP LLC. DOCUMENTS 15.01 Superseded Vendor Documentation (By Package #) 15.02 Unsuccessful Bidders (By Package #) 15.03 Customer Supplied Documents 59 Appendix B ENGINEERING CODE OF ACCOUNTS Project team members have a copy of the Engineering Code of Accounts. Copies are also filed in the project C.E. File, and are available upon request. 60 Appendix C PROCESS & POWER PLANT CAPITAL CODE OF ACCOUNTS Project team members have a copy of the Process & Power Plant Capital Code of Accounts. Copies are also filed in the project C.E. File and are available upon request. 61 Appendix D DELIVERABLES LIST Appraise Phase Deliverable • Milestone Schedule Development • Initial Major Equipment List • Approximated Heat Balance • Capital Cost Rough Order of Magnitude +40%/-20% • Operating Cost Rough Order of Magnitude • Power Island Footprint Drawing • Conceptual Electrical One-Line Drawing • Project Risk Matrix and Mitigation Plan • Support Site Selection Process • Provide technical support to ML&P during the site selection process. • Develop Procurement Plan for Long Lead Items • Recommend Project Execution Method Select Phase Deliverables • Conceptual Design Basis • Project Procedure Manual • Power Island General Arrangement • Cycle Optimization Study,Cycle Selection • Geotechnical Specification • Site Surveying Specification • Conceptual Project Description • Define Project Execution Plan • Define Engineering Plan 62 • Define Procurement Plan • Define Contracting Plan • Heat Balances for Winter Peak, Summer Peak and annual average • Water Balance for Winter Peak, Summer Peak, and Annual Average • Process Flow Diagrams • Preliminary Piping Materials Specification • Preliminary P&IDs • Updated Major Equipment List • Updated Electrical One-Line • Conceptual Electrical Load List • Conceptual Control System Architecture Drawing • Tie-Point List • Air Cooled Condenser vs. Cooling Tower • Updated Capital Cost Estimate +30%/-10% • Level 2 Project Schedule • Major equipment Bid Packages • Combustion Turbine Generator Bid Package • Steam Turbine Generator Bid Package • Heat Recovery Steam Generator Package • Including SCR and CO Catalyst Systems and Exhaust Stack • Generator Step Up Transformers Package • Environmental Permit Support • Once site is selected, Plot Plan Define Stage Deliverables • Site Civil Design Package 63 • Updated Equipment List including estimated auxiliary power • Updated Water Balances • Updated Project Schedule including procurement schedule • Refined Cost Estimate based on equipment bids • Updated Operating Cost Estimate • Preliminary System Descriptions • Updated Electrical One-Lines • Main Power System • Medium Voltage System • Low Voltage Distribution System • Backup Power • Technical Bid Evaluations of Long Lead major equipment items • Combustion Turbine Generator • Steam Turbine Generator • HRSG • Transformers • Technical bid recommendations for above items • Preliminary Control System Architecture Drawing • Controls Narrative • Develop secondary equipment conditions of service and bid packages. • Initial review of major equipment items in the vendor submittal packages. • Electrical Load List • Contractor Bid Package 64 Appendix E PROJECT DOCUMENTATION DISTRIBUTION MATRIX (NOTE: Distribution matrix to be updated during the initial stages of the project.) DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 65 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Project File Key 1.01 1 1 1 1 1 1 1 1 1 1 Project Opening Notice 1.02 1 1 1 1 1 1 1 1 1 1 Project Contract 1.02 1 1 1 1 1 1 1 1 1 1 Project Procedure Manual 1.03 1 1 1 1 1 1 1 1 2 1 Engineering Estimates 1.04 1 1 1 1 1 1 1 1 1 1 Engineering Schedule 1.05 1 1 1 1 1 1 1 1 2 1 Engineering Change Notice 1.06 1 1 1 1 1 1 1 1 1 1 Engineering Change Order 1.07 1 1 1 1 1 1 1 1 1 1 Insurance Certificates 1.08 1 1 Engineering Consultants’ Agreements 1.09 1 1 1 Weekly Staff Time Reports 2.01 1 1 Billing Worksheets and Invoices 2.02 1 1 Monthly Engineering Progress Report 2.03 1 1 1 1 1 1 1 1 1 1 Project Controls Report (PCR) 2.04 1 1 1 1 1 1 1 1 1 1 Procurement Status Report 2.05 1 1 1 1 1 1 1 1 1 1 DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 66 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Expediting Status Report 2.06 1 1 1 1 1 1 1 1 1 1 Purchase Orders 2.07 1 T T 1 Subcontract Reports 2.07 1 1 Transmittals 3.01 1 1 1 1 1 1 1 1 2 1 Communications (telephone,Email,fax) 3.02 1 As indicated by originator of correspondence Interoffice Memos 3.03 1 As indicated by originator of correspondence Meeting Minutes 3.05 1 As indicated by originator of correspondence Trip Reports 3.06 1 As indicated by originator of correspondence Action Item Lists 3.07 1 1 1 1 1 1 1 1 2 1 3 Week Look Ahead 3.07 1 1 1 1 1 1 1 1 1 1 News Releases 3.08 1 1 1 1 1 1 1 1 1 1 Field Communications 3.09 1 1 1 As indicated by originator of correspondence DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 67 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Site Data 4.01 1 Distribution determined by PE on case by case basis Environmental Data 4.02 1 Distribution determined by PE on case by case basis Customer Furnished Data 4.03 1 Distribution determined by PE on case by case basis Permits 4.04 1 Distribution determined by PE on case by case basis Government Data 4.05 1 Distribution determined by PE on case by case basis Photographs 4.06 1 Distribution determined by PE on case by case basis Owner’s Overall Project Schedule 4.07 1 1 1 1 1 1 1 1 1 1 Capital Cost Estimates 4.08 1 1 1 Distribution determined by PE on case by case basis Studies 4.09 1 1 2 Distribution determined by PE on case by case basis Bidders List 6.00 1 T 2T 1 One copy for responsible engineer Request for Proposal Packages 6.00 1 T 2T 1 One copy for responsible engineer Proposals 6.00 1 T 2T 1 One copy for responsible engineer Bid Evaluations 6.00 1 T 2T 1 One copy for responsible engineer Recommendation Letters 6.00 1 T 2T 1 One copy for responsible engineer DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 68 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Request for Purchase Packages 6.00 1 T 2T 1 One copy for responsible engineer Construction Progress Reports 7.01 1 1 1 1 1 1 1 1 1 1 Field RFI's 7.02 1 1 As determined by PE Field Reference Material 7.03 1 As determined by PE Startup and Commissioning Data 7.04 1 2 As determined by PE Performance Test Data 7.05 1 2 As determined by PE Vendor Data 6.00 See separate vendor distribution matrix for internal distribution Deliverables List 5.01 1 1 1 1 1 1 1 1 1 1 Design Documents- Mechanical 5.04.1 1 One copy for responsible engineer Design Documents- Process 5.04.2 1 One copy for responsible engineer Design Documents- Electrical 5.04.3 1 One copy for responsible engineer Design Documents- Controls 5.04.4 1 One copy for responsible engineer Design Documents- Piping 5.04.5 1 One copy for responsible engineer Design Documents- Civil/Structural 5.04.6 1 One copy for cognizant engineer DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 69 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Sketches 5.02 1 Distribution determined by PE on case by case basis Lists- Mechanical 5.04.1 1 T Equipment List 1 1 1 1 1 1 1 1 Lists- Process 5.04.2 N/A Lists- Electrical 5.04.3 1 T Load/Motor List T 1 1 1 1 Circuit/Conduit Schedule T 1 1 1 Heat Trace Schedule T 1 1 1 Lists- Controls 5.04.4 1 T Instrument Index T 1 1 1 1 I/O List T 1 1 1 Lists- Piping 5.04.5 1 T Line List T 1 1 1 1 1 1 2 1 Specialty Item List T 1 1 1 1 1 2 1 DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 70 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Valve List T 1 1 1 1 1 2 1 Tie Point List T 1 1 1 1 1 1 1 Lists- Civil/Structural 5.04.6 N/A Drawings- Mechanical 5.05.1 1 T P & ID 1 T 1/2 F & 1/2 F & 1/2 1/2 1/2 2-1/2 F & 1/2 Drawings- Process 5.05.2 N/A Drawings- Electrical 5.05.3 F & 1/2 Physical 5.05.3 1 T 1/2 1/2 1/2 1/2 1/2 F & 1/2 Non-Physical 5.05.3 1 T 1/2 1/2 1/2 F & 1/2 Drawings- Controls 5.05.4 1 T 1/2 1/2 1/2 1/2 Drawings- Piping 5.05.5 1 T 1/2 1/2 1/2 1/2 1 F & 2 1/2 F & 1/2 Drawings- Civil/Structural 5.05.6 1 T 1/2 1/2 F & 1/2 F & 1/2 Specifications-Systems 5.07.1 1 T 1 1 1 1 Specifications- Electrical 5.07.3 1 T 1 1 1 DCC: PM: PE: Procure: Systems: Elect: Instr: Piping: Struct: CM: 71 Project Documentation Distribution Project: ML&P Plant 2A Distribution Document File Key No. DDC PM PE PC Procure Systems Elect Instr Piping Struct CM Specifications- Controls 5.07.4 1 T 1 1 1 Specifications- Piping 5.07.5 1 T 1 2 1 Specifications- Civil/Structural 5.07.6 1 T 1 1 1 72 Appendix F CAD DRAWING PROCEDURES 1.0 CAD DRAWING PROCEDURE 1.1 For CAD drawing procedures see PDC HARRIS’s Standard (Generic) CAD Manual. An electronic copy of the manual is located in the following folder: k:\Stds\EN\cad\AutoCAD\acad2000\Guides. Additionally, the manual can be view from the following web page http://PDC Harrisweb.harrisgroup.com/energyweb/ under Standards and then Manuals. 1.2 The following are qualifications to the Standard (Generic) CAD Manual. The borders referenced in Section 8.0 PDC Harris Group Borders in the Standard (Generic) CAD Manual will not be reference directly into a new drawing. Under the project Border folder there are separate discipline template folders. Each folder contains the appropriate discipline template drawing. These template drawings will be use in place of the border drawings. Each template drawing references the project border drawing and each file contain the correct discipline layers, linetypes, fonts, dimstyles and the following .ctb files 11x17-M- Monochrome12.ctb, 11x17-P-Monochrome12.ctb, Arch D24x36-M- Monochrome1.ctb and Arch D24x36-P-Monochrome1.ctb. 1.2.1 .ctb files are found in the following folder: k:\Stds\EN\cad\AutoCAD\acad2000\PLOTTERS. The files mentioned above should be copied into your C:\Program Files\AutoCAD 2000i\Plotters folder. Additionally, these ctb files only plot to the 1050c plotter and 5000 printer in the 15th floor print room. Other .ctb files can be used if they plot according to the plot settings described in the Standard (Generic) CAD Manual. 73 Appendix G CHANGE NOTICE / CHANGE ORDER PROCEDURE BACKGROUND During project execution, cumulative changes in technical/material specifications, field conditions, regulatory requirements, third party deliverables, vendor deliveries, and client requests can significantly impact budgeted management and engineering labor hours, drawing quantities, deliverables, and the overall engineering schedule. To assure that PDC Harris Group is compensated for effort beyond the work scope defined in a Contract, Change Orders are prepared and sent to the client for approval. Change Orders must have at least a verbal approval by the client prior to the commencement of work. The approved Change Order becomes an adjustment to the project budget and work plan. Every change in work scope, no matter how insignificant, should be identified and quantified in hours or expense by project personnel. On firm price projects, Change Orders will impact cash flow, progress payment schedules and interest charges during engineering and construction. These impacts should be included in any change notice when appropriate. PROCEDURE OBJECTIVE This document covers the internal procedures to be followed when work scope changes to the Engineering Agreement (Contract) between PDC Harris Group and the client are identified during project execution. The objective of this procedure is to provide: 1. A simple, non-time consuming avenue for any project personnel to submit perceived or potential changes in work scope to Project Controls and Project Management; 2. An avenue for Project Controls to log and track all changes submitted; 3. Project Management with the information necessary to efficiently assess whether submitted changes will be pursued as client Change Orders, or not, and an avenue for replying back to project personnel consistently and in a timely manner; 4. A consistent avenue for Project Discipline Leads to be notified of each pending Change Order, and provide an avenue for them to input respective impact in labor hours and expenses; 74 5. An avenue for Project Management, and all disciplines, to provide input prior to Project Controls preparing a client Change Order; 6. Project Management with confidence that any Change Order submitted to a client for approval, is well documented and complete. DEFINITIONS Original Budget The budget per the Contract signed between PDC Harris Group and the client. Current Budget The Original Budget plus any work scope changes approved by the client. Project Change Notice (PCN) A document initiated by anyone involved on a project which identifies a perceived or potential change (+ or -) in the budget and/or work plan for the project. (See Attachment 1) An electronic version is located in the “GEN” directory of the Project directory. Change Order A document prepared by the Project Cost Engineer at the direction of the Project Manager, with input from all Project Discipline Leads (See Attachment 2). The Project Manager submits the Change Order to the client requesting a change to the Contract - usually a change to the budget and/or schedule. Once approved by the client, the Change Order will be incorporated into the Current Budget and Engineering Schedule maintained by the Project Cost Engineer. Engineering Change Notice Log (Log) A document maintained by the Project Cost Engineer that records and tracks a PCN from initiation to resolution as a Change Order or an Internal Adjustment (See Attachment 3). Internal Adjustment (Internal) A PCN that the Project Manager determines will not result in a change to the Contract with the client. This may be work that PDC Harris Group should have understood to be in the original work scope, or the PCN may shift budgeted hours from one product to another. It may also be a Change Order that the client has rejected. An Internal Adjustment changes the project forecast only, not the Current Budget. Do Nothing A PCN that the Project Manager determines is not in the original scope, but hours should not be expended in completing the perceived change. 75 76 PROJECT CHANGE NOTICE - PCNXX CLIENT NAME: PREPARED BY: PROJECT TITLE: DATE: PROJECT NO.: DISCIPLINE: SCOPE CHANGE DESCRIPTION & PRODUCTS AFFECTED: Click & Type APPROXIMATE ADDITIONAL MAN-HOURS REQUIRED: OTHER DISCIPLINES POTENTIALLY AFFECTED: ENGINEERING SCHEDULE IMPACT: Click & Type OTHER COMMENTS: Click & Type PROJECT MANAGEMENT USE ONLY CHANGE ORDER INTERNAL DO NO WORK APPROVED BY HARRIS GROUP INC. NAME, TITLE DATE Attachment 1 77 Primary Contact Company Name Address City, State Zip Code REFERENCE: CHANGE ORDER NO: XX Title Project Title: Harris Group Inc. Project No. Dear Mr. : This change affected the Engineering effort as follows:. Description Total Mh's Total Management - -$ Construction - -$ Mechanical - -$ Process - -$ Electrical - -$ Controls - -$ Piping - -$ Civil / Structural - -$ Expenses -$ TOTAL - -$ Labor hours 0.0 Budget Change: -$ Schedule Impact: 0 days Sincerely, HARRIS GROUP INC. Signed Project Manager Approved: ___________________________Date:_____________ Authorized Signature cc: Project Manager (HGI), Project Controls (HGI), Project File 1.07 (HGI) Your signature in the space provided and the return of one signed copy of this letter will give Harris Group confirmation of acceptance of the Change Order, which grants HGI the authorization to proceed. If you have any questions regarding this Estimated Budget Change, please advise. Other Comments: June 3, 2003 Scope Change: In accordance with Contract, your approval of this referenced Change Order is requested. A detailed description and cost estimate breakdown of this Change Order is as follows: Attachment 2 78 Client: Company Name Project No. Project Title: Date: 6/3/2003 Location:Revision No. 0 Prepared By: XXX Account Engineer Engineer Engineer Designer Designer Designer Total Total Code Description Man-Hours Rates Costs Man-Hours Rates Costs Man-Hours Costs 11000 Project Management - -$ -$ - -$ 12000 Project Engineer - -$ -$ - -$ 16000 Engineering Assistant -$ - -$ - -$ 17000 Project Controls - -$ -$ - -$ 18000 Purchasing - -$ -$ - -$ 20000 Construction - -$ -$ - -$ 30000 Mechanical - -$ - -$ - -$ 40000 Process - -$ - -$ - -$ 50000 Electrical - -$ - -$ - -$ 60000 Controls - -$ - -$ - -$ 70000 Piping - -$ - -$ - -$ 80000 Civil / Structural - -$ - -$ - -$ -$ -$ - -$ -$ -$ - -$ -$ -$ - -$ TOTAL - -$ - -$ - -$ Total Labor -$ Expenses Included in Rates Above Account / Description Qty. UoM Rate Costs Travel Lot Repro & Printing - Hrs -$ -$ Purchased Reproduction Hrs -$ -$ Telephone - Hrs -$ -$ CAD/Computer - Hrs -$ -$ - -$ Other Expenses - Hrs -$ -$ Total Expenses -$ TOTAL CHANGE ORDER COST -$ Title CHANGE ORDER NO: XX HARRIS GROUP INC. Attachment 2 79 APPENDIX H PROJECT SAFETY MANUAL EMPLOYEE SAFETY MANUAL 80 INDEX SECTION 1 - INTRODUCTION 1.1 COMPANY SAFETY PHILOSOPHY SECTION 2 - GENERAL GUIDELINES 2.1 GENERAL SAFETY GUIDELINES 2.2 OFFICE SAFETY 2.3 NEW EMPLOYEE ORIENTATION 2.4 SAFETY RULES AND REGULATIONS FOR SUB-CONTRACTOR’S 2.5 FIRE PREVENTION AND PROTECTION 2.6 INCIDENT REPORTING PROCEDURE SECTION 3 - LIQUID, GAS, AND CHEMICAL SAFETY 3.1 CRUDE OIL AND REFINED PETROLEUM PRODUCTS 3.2 BENZENE 3.3 HYDROGEN SULFIDE SECTION 4 - PERSONNEL PROTECTION 4.1 HEARING CONSERVATION PLAN SECTION 5 – HYDROTEST AND LIFE FILL SAFETY 5.1 HYDROTEST AND LINEFILL PROCEDURES EMPLOYEE SAFETY MANUAL 81 SECTION 1.1 − COMPANY SAFETY PHILOSOPHY PDC Harris Group, LLC is dedicated to maintaining a safe and healthy work environment for all employees, sub-contractors, and customers, as well as complying with federal, state, and local safety, environmental, and health laws and regulations. PDC Harris Group, LLC will administer a safety program for the protection of employees and the prevention of damage to property and the environment centered around five basic ideas: 1. All injuries can be prevented. This is a realistic goal, not a theoretical objective. 2. Equipment, operations, and maintenance procedures should be designed to eliminate hazards. Employees are encouraged to recognize, and required to report, all unsafe conditions, procedures, or equipment. 3. All employees will be provided with training to promote and encourage safe work practices. They should understand that working safely is to the employee’s advantage, as well as that of PDC Harris Group, LLC. 4. The prevention of injuries is beneficial both on and off the job. In addition to causing personal suffering to the employee, injuries increase costs and reduce operating efficiency. 5. Safety is the responsibility of all employees. This includes the safety of others, as well as for the employees themselves. It should be recognized that this manual cannot cover every situation that may arise in the workplace. We hope that the basic concepts in this manual encourage a sense of safety in every individual, so that when unsafe situations arise that are not covered; they will be approached in a prudent and safe manner. This manual is designed to aid employees in completing their work safely and efficiently every day. Therefore, all employees are encouraged to actively participate in keeping this manual up-to-date and practical. All comments and questions concerning the contents of this manual are solicited, and this manual will be updated periodically to reflect necessary changes. EMPLOYEE SAFETY MANUAL 82 Remember - “Our work is never so urgent or important that we cannot take the time to do it safely.” This manual has been prepared for the exclusive use of PDC Harris Group, LLC and its employees and subcontractors. EMPLOYEE SAFETY MANUAL 83 SECTION 2.1 - GENERAL SAFETY GUIDELINES The following guidelines are general in nature and apply to all of PDC Harris Group LLC. These guidelines are designed to aid employees in completing their work safely and efficiently. The cooperation of all employees in following these guidelines will help eliminate unnecessary accidents and/or injuries in the future. I. Injuries Injuries, no matter how slight, must be reported to the employee's Supervisor. This will ensure the well being of all employees. The Supervisor should take necessary first aid action prior to medical treatment, if necessary. Refer to the "Injury and Accident Reporting" section (Section 2.6) of this manual for steps to follow in the event of an accident that involves an injury. II. Housekeeping Good housekeeping and sanitation are essentials of good business. Besides promoting orderliness and cleanliness, they help to eliminate accidents and fire hazards; they save space, time and effort in material handling and improve employee morale by developing pride in neat and orderly places of work. A. Many industrial injuries are caused by falls, falling objects, and the mishandling of materials. These are often a direct result of poor housekeeping. Thus, good housekeeping is economically beneficial to the workers as well as to PDC Harris Group LLC. B. Good lighting reduces accidents and encourages good housekeeping. C. Floors and aisles should be kept free of obstructions such as working materials and litter. D. Materials, especially heavy, bulky objects, should be stacked as low as possible so that they will not fall or present a tripping hazard. EMPLOYEE SAFETY MANUAL 84 E. Cleaning of the work area as the job progresses is good housekeeping. Each workman should keep his work area clean and orderly. III. Drinking Water An adequate supply of fresh, pure drinking water must be available for workmen. When the weather is very hot, an electrolyte drink, such as Gatorade, replaces body fluids much better than water alone. IV. No Smoking Policy A. The prohibition of smoking in hazardous or potentially hazardous areas is to ensure maximum protection to employees and the general public. Our client’s work usually involves the handling of crude oil, refined products, natural gas, and carbon dioxide; however, any flammable product (solvents, starter fluid, etc.) deserves the same attention to safety practices. B. It is the duty of the onsite safety supervisor to define the "smoking" and "no smoking" zones at a new location. C. It is the responsibility of every employee to insure that the "no smoking" signs are posted and the "no smoking" policy is not violated. D. All employees are to observe the "no smoking" restrictions of other Companies when working on their property. A violation of these rules can be extremely serious. E. Unless otherwise posted, smoking is prohibited in client owned buildings and pump stations. EMPLOYEE SAFETY MANUAL 85 F. The fact that a station is by-passed or that welding is being done within the restricted area does not nullify the prohibition of smoking in the restricted area. G. Employees will be held responsible for not smoking around petroleum spills, leaks, line breaks, etc. H. The habit of carrying only safety matches or a mechanical lighter is encouraged. So called "kitchen matches" are dangerous and should not be carried on the job. I. When employees are working on a line leak or break where there is a petroleum spill, they are to leave all matches, lighters, and smoking material in the truck. J. No smoking is allowed in or near bell holes while welding is being done on loaded lines or when welding is being done on open lines even after spilled oil has been cleaned up. K. Extreme caution shall be exercised by all personnel to assure that forest land, crop land, pasture land or other property along pipeline rights-of-way are not endangered by smoking or the disposal of cigarettes or matches. All cigarettes, cigars or matches should be disposed of properly. L. Smoking is prohibited in the immediate vicinity where engine refueling is taking place. V. Public Safety If a situation arises that poses a threat to members of the public, priority must be given to those activities which will eliminate the threat to the public. EMPLOYEE SAFETY MANUAL 86 In most cases, the threat to public safety arises from the accidental release of a flammable liquid or vapor, or a release involving Hydrogen Sulfide. If such a release occurs near a public roadway or in an inhabited area, steps must be taken to evacuate members of the public from the hazardous area. If evacuation is not necessary, the public should be warned of the potential hazard involved. In the event of an emergency, the client representative must be contacted as soon as the public is removed from the threat. In a release, the flow of liquid or vapor should be stopped as soon as possible, keeping in mind that the safety of personnel and the public is the first consideration. Employees should utilize their knowledge of the operation and use their best judgment in such an instance. When necessary, assistance from local authorities should be solicited. For response to emergency releases, the clients should be consulted immediately. VI. Safety Meetings Safety meetings should be held at least once a month. The meetings can be used to cover new procedures, Occupational Safety and Health Administration (OSHA) regulations, or general safety awareness topics. These meetings also provide an opportunity for employees to exchange information helpful in keeping working conditions safe. Employees should report all unsafe conditions so that action can be taken to prevent an accident or injury. All employees are urged to participate in the meetings and to provide comment on any aspect of this Safety Manual or other topics. A "Safety Meeting Attendance Form" should be completed for each meeting and sent to the persons listed at the bottom of the form. EMPLOYEE SAFETY MANUAL 87 VII. Forbidden Activities The following activities are forbidden, and if engaged in, will result in the person or persons involved being removed and restricted from the facility, and/or possible legal action being taken: A. Smoking in other than approved areas. Strike-anywhere matches and lighters with exposed strikers are not permitted. B. Unauthorized operation of equipment, valves, or controls. C. Vandalism, including willful destruction or defacement of public or private property. D. Being in a state of intoxication or under the influence of non-prescription drugs and/or selling or possessing intoxicating liquor or controlled substances. E. Theft of personal or client property. F. Horseplay or flagrant violation of any safety rule. G. Carrying weapons or being involved in a fight on client property. H. Solicitations for contributions, chances, tickets, etc. EMPLOYEE SAFETY MANUAL 88 VIII. Facial Hair Policy The following policy is for either gender, if and as it applies: When employees are involved in jobs that require respiratory protection of any type, they must comply with PDC Harris Group LLC’s or client’s Facial Hair Policy. The policy applies when self-contained breathing apparatus or negative pressure-type respirators are used. PDC Harris Group LLC’s Facial Hair Policy is as follows: A. As it applies, be clean-shaven, except moustaches and sideburns. Moustaches and sideburns are acceptable as long as the moustache does not extend beyond the corner of the upper lip and sideburns do not extend below the ear lobes. B. Have their hair above the top of a regular shirt or jacket collar. Long hair must either be trimmed or contained by a substantial hairnet. The length or cut of the hair must provide fit of a safety helmet and respiratory face mask. Refer to the drawings on the following pages for illustrations of acceptable hair lengths. IX. Miscellaneous A. Each Supervisor should exercise good judgment concerning the safety of employees. When unsafe acts or conditions are noticed, action should be taken immediately to prevent an injury. Each Supervisor is responsible for assuring that employees are provided with personal protective equipment when job hazards are present, and for assuring that this equipment is worn. B. All employees should stay clear of suspended loads. EMPLOYEE SAFETY MANUAL 89 C. The use of compressed air or compressed gas for cleaning clothes is not allowed. This practice can create a serious eye hazard and other hazards. D. When lifting heavy objects, keep the back as upright as possible, using mainly the leg muscles. Do not attempt to lift more than can be safely handled. Use mechanical means for very heavy objects. E. When working with chemicals that could damage the eyes or skin, a supply of eye wash or other water supply should be nearby if the work area is not near an emergency shower or eyewash. F. Lunches should not be eaten in places where hazardous chemicals are used or stored. Do not store gasoline, crude oil, or other chemicals in refrigerators where food is kept. G. Jewelry, neckties, dangling sleeves, or other loose clothing must not be worn while working close to moving machinery. Long hair should be contained within a hard hat when it could be caught in moving machinery. H. Care should be exercised when working and moving about areas that are slippery for one reason or another, to prevent slipping, tripping, or falling. The slippery area should be wiped up or dried, or a suitable material used to improve walking conditions on sidewalks and other walkways. I. Objects that could pose a tripping hazard should not be left in stairways, aisles, or other walkways. Employees should clean up their work area after completing work and assure that no debris is left behind to pose a hazard to other employees. J. When possible, avoid working under scaffolds or other elevated work areas. EMPLOYEE SAFETY MANUAL 90 When objects will be thrown or dropped from above, the area below must be roped off or guarded to prevent persons from entering the hazardous area. EMPLOYEE SAFETY MANUAL 91 SECTION 2.2 – OFFICE SAFETY I. Introduction Employees working in offices are also exposed to certain job hazards. Although these hazards may be less serious than hazards in the field, they still must be considered for the protection of ALL employees. The following general precautions should be considered when working in an office: A. Each employee should be familiar with all fire escape routes. These routes and exits must be kept clear at all times to allow quick escape in the event of a fire. B. Fully extinguish all cigarettes, cigars, and matches before disposing of them. Never throw these items into a wastepaper basket. C. Electric cords and other wires should not be placed to create a tripping hazard. D. All electric cords and plugs should have an Underwriters Laboratories (UL) seal of approval. E. Keep portable heaters away from flammable materials such as paper, boxes or wooden furniture. F. Damaged or defective appliances or wires should be reported immediately for repair. Do not use these items until they are fixed by a qualified person. EMPLOYEE SAFETY MANUAL 92 G. The drawers of desks or filing cabinets should never be left open to create a hazard for passers by. H. Chairs, especially the swivel-type, should not be used as ladders. I. Any time that a liquid or other material is spilled on the floor, clean it up to prevent others from slipping and falling. J. All power-driven office machines must be equipped with proper guards. The guards on these machines should not be removed for any reason other than to be repaired by a qualified person. Do not clean or adjust machines while they are running. K. When lifting heavy objects, do not attempt to lift more than your physical capabilities. Obtain help from others or use mechanical lifting aids to avoid straining your back. L. Always be aware of the location of first-aid kits in your area. Even minor cuts should be treated promptly to avoid infection. M. Portable fire extinguishers should be located in each office area in case of a fire. For electrical equipment, only HALON or Carbon Dioxide (CO2) extinguishers should be used, as they do not damage electronic equipment. N. Flammable liquids, cleaning solvents, and other chemicals must be stored in a safe location away from sources of heat. Chemicals should never be stored in a refrigerator that is used for storing food or beverages. All employees should report unsafe conditions to their Supervisor so that they are corrected immediately. EMPLOYEE SAFETY MANUAL 93 SECTION 2.3 – NEW EMPLOYEE ORIENTATION I. Introduction New employees will be given a formal safety orientation as soon as possible after employment. This orientation should be given before the employee is assigned to duties where job hazards are present. The following employees are exempt from this formal safety orientation: A. Temporary employees used in offices or in areas where exposure to job hazards is very minimal B. Casual employees hired for short-duration maintenance work The above employees are exempt from formal orientation but must be instructed in the specific hazards and chemicals and precautions to be taken for their particular job. II. Orientation Topics The checklist attached to this section of this Safety Manual must be completed each time a new employee goes through orientation. The checklist covers the following topics: A. A discussion of this Manual and its contents. A copy of this Manual will be given to the employee. The employee should read this Manual and bring any questions to their Supervisor for clarification. B. A discussion of the specific hazards that may be encountered in the employee's new job and methods of avoiding and controlling those hazards. A good example would be dealing with Hydrogen Sulfide, how to avoid exposure to the gas, and the use of breathing air as a protective measure. EMPLOYEE SAFETY MANUAL 94 C. Hazard Communication Training While it is rare in the engineering and construction administration role PDC Harris Group LLC plays, there is occasion where our employees come in contact with hazardous materials. In accordance with OSHA Hazard Communication Standard 29 CFR 1910.1200, "Haz Mat" training must be given to each employee who may be exposed to a hazardous material before the possibility arises. The training will cover the following areas: 1. Material Safety Data Sheets (MSDS): a. Understanding the sheets. b. MSDS book locations for reference. 2. Chemical labeling. 3. All hazardous chemicals possibly encountered by the employee with names, health effects, locations, etc. of each. 4. Protective measures for hazardous chemicals. D. Instruction on the use of personal protective equipment such as ear plugs, safety shoes, hard hats, gloves, goggles, etc. E. Discussion of the PDC Harris Group LLC "Drug and Alcohol Abuse Policy". The employee will be furnished with a copy of this policy. F. Discussion of injury and accident reporting responsibilities. The employee will be briefed on when to report accidents and on how they should be EMPLOYEE SAFETY MANUAL 95 reported. In addition, a discussion of first aid facilities available to the employee in the event of an injury will be discussed. G. Discussion on the use of safety permits on the job and how they are issued. (For example, the use of the "Confined Space Entry Permit"). H. Training on defensive driving techniques will be covered. Specific driving hazards in the new employee's work area should be discussed. Upon completion of this safety orientation, the employee and the person conducting the orientation will complete the "orientation checklist" and both will sign the sheet. At this time, the employee is urged to ask questions on any area that they do not understand. The Supervisor or trainer should answer all questions before the employee begins work, and inform the employee about PDC Harris Group LLC’s safety philosophy and how regulations are enforced. Also, the potential consequences of safety violations should be discussed, keeping in mind that the rules are for the well-being of all employees. EMPLOYEE SAFETY MANUAL 96 NEW EMPLOYEE SAFETY ORIENTATION CHECKLIST New Employee: Date: Job Title: Supervisor: The following topics must be covered with each new employee before they are exposed to hazards on the job. This orientation is designed to make the employee aware of the hazards to which they may be exposed on the job, and to help the employee effectively avoid or eliminate those hazards. This will help create a safer, more healthful work environment for ALL employees. As each item on the checklist is covered, write that day’s date in the “COMPLETE” column at the right. This indicates that the employee understands the material covered. If the employee does not understand the material, be sure that they do before this form is signed. TOPIC DATE COMPLETE 1. Safety Manual (issue copy to employee) 2. Specific Job Hazards Present 3. Personal Protective Equipment (PPE) 4. Drug & Alcohol Policy (issue copy) 5. Injury and Accident Reporting 6. Defensive Driving (CBT) 7. Smoking Policy Employee Signature: Date: Trainer/Supervisor Signature: Date: EMPLOYEE SAFETY MANUAL 97 EMPLOYEE SAFETY MANUAL 98 SECTION 2.4 – SAFETY RULES AND REGULATIONS FOR SUB-CONTRACTORS I. General Welcome to PDC Harris Group LLC. PDC Harris Group is dedicated to providing a safe and healthy work environment for all employees and sub- contractors. In keeping with this objective, the rules and regulations in this section have been developed to assist each sub-contractor in preparing their own safety procedures and performing their work safely. Should any questions arise concerning safe working conditions, please contact the Project Manager or other Supervisor. REMEMBER THAT SAFETY AT PDC Harris Group IS NOT JUST A LIST OF RULES AND REGULATIONS; IT IS A CONDITION OF WORK. For a more complete listing and description of the actual sub-contractor safety rules, please see Section 6 of this manual. II. Before Work Begins Before beginning work for PDC Harris Group, the sub-contractor and their approved subcontractors must comply with all of PDC Harris Group’s current insurance requirements and have appropriate certificates of insurance on file with PDC Harris Group. The sub-contractor and their approved subcontractors must also meet all of PDC Harris Group’s Hazard Communication Compliance Program and must schedule a safety meeting with the Project Manager (or his representative). At the safety meeting, the Project Manager (or his representative) will provide a representative of the sub-contractor with a list of all hazardous chemicals present on the job site. It is the sub-contractor's responsibility to assure that his employees receive proper training on hazardous chemicals and other hazards present at the site. At this time, the sub-contractor will provide the Project Manager (or his representative) with a list of chemicals or other hazardous substances that will be used on the job. Before work begins the sub-contractor will: A. Provide Material Safety Data Sheets to PDC Harris Group for all chemicals and/or hazardous substances provided by the sub-contractor and used on the job. EMPLOYEE SAFETY MANUAL 99 B. Provide proper labeling for all chemicals and/or hazardous substances used on the job. C. Provide the Project Manager (or his representative) with any training needed to handle the above chemicals and/or hazardous substances. D. Provide sub-contractor's employees with all information/training concerning PDC Harris Group LLC's "Rules and Regulations for sub- contractors" including the Hazardous Communication Compliance Program. Again, refer to Section 6 of this manual. E. Sign a Contract provided by PDC Harris Group LLC assuring that the above has been done. F. Provide evidence that the sub-contractor and his employees are enrolled in an approved drug control program if work involves pipeline operations, maintenance or emergency response. III. Rules Involving Vehicles A. Parking brakes on vehicles are to be set when vehicles are parked. B. Do not allow riders on the bed of a truck with any kind of load that may shift. C. Do not allow riders on cranes or fork-lifts. D. Operators and riders must remain seated with their seat belts fastened while equipment or the vehicle is moving. EMPLOYEE SAFETY MANUAL 100 E. Vehicles should not be left running when unattended. IV. Brief Rules For Some Specific Operations For Sub-Contractor's Employees And Work Area: A. A clean, orderly, and sanitary work area will be maintained at all times. B. Oil and chemical spills caused by the sub-contractor must be reported immediately to the Project Manager (or his representative). C. Hard hats and steel-toed footwear are strongly recommended for all sub- contractors when overhead hazards and foot hazards exist. D. Earplugs are to be worn at all times when working in high noise areas. The sub-contractor shall provide ear plugs. E. Safety glasses, goggles and/or face shields must be used when eye hazards exist. F. Smoking will be allowed in designated areas only. No smoking is allowed at client buildings or pipeline stations. G. Restrooms will be provided by the sub-contractor for his employees and will be maintained in a neat, orderly, and sanitary manner. Clean, sanitary facilities will also be provided for employees to eat in. H. Suitable and approved respiratory protective equipment must always be used whenever entering an area where the atmosphere is oxygen deficient or where it is known that toxic vapors or harmful dusts could be present in EMPLOYEE SAFETY MANUAL 101 harmful concentrations. The sub-contractor shall provide all personal protective equipment and shall follow all applicable state and federal regulations pertaining to protective equipment. I. All fire extinguishing equipment supplied by sub-contractors must be in good working condition at all times. Extinguishers with broken seals must be replaced immediately. J. Fire hydrants and fire fighting equipment must be accessible at all times. Sub-contractor’s equipment and vehicles shall maintain a minimum of 50 feet of clearance from hydrants and fire fighting equipment. K. All electrical equipment must be properly grounded. L. Only qualified and authorized personnel shall be permitted to repair or adjust electrical equipment. M. Only approved extension cords, lights, and pumps shall be used on PDC Harris Group LLC or client property. If in doubt, consult the Project Manager. N. Records of all accidents or injuries while working at or for PDC Harris Group LLC are to be submitted to the Project Manager. Contractors shall furnish such records within 24 hours of the occurrence. O. Injured employees of sub-contractors shall be escorted by the sub- contractor to receive medical attention. Ambulance services may be obtained by the sub-contractors by calling the local emergency services number. P. All materials must be stored and stacked in a safe manner to prevent falling. Materials must not be stored where they may obstruct walkways, stairs, ladders, exits, doorways, roadways, or safety and fire protection EMPLOYEE SAFETY MANUAL 102 equipment. Incompatible materials shall not be stored together and all chemical containers shall be labeled per OSHA Hazard Communication Standard 29 CFR 1910.1200. Q. All work performed on client property must comply with all State, Federal, and local laws and regulations pertaining to safety and health. V. Facial Hair Policy When contractor employees are involved in jobs that require respiratory protection of any type, they must comply with PDC Harris Group’s Facial Hair Policy. Please refer to Section 2.1, Paragraph VIII of this manual for more information. VI. Forbidden Activities Some activities are forbidden, and if engaged in, will result in the person or persons involved being removed and restricted from PDC Harris Group’s or client’s property, and/or possible legal action being taken. For a list of these forbidden activities, please refer to Section 2.1, Paragraph VII of this manual. VII. Appendix All sub-contractors shall conform to all local, State, and Federal laws and regulations concerning any activity. Any records required by these regulations such as medical surveillance, decontamination procedures, and training shall be made available to the Project Manager upon request. The sub-contractor is responsible for the acts and omissions of their employees, agents, and subcontractors while working for PDC Harris Group LLC and shall instruct all employees regarding these safety rules and ensure compliance. EMPLOYEE SAFETY MANUAL 103 SECTION 2.5 – FIRE PREVENTION AND PROTECTION I. Introduction The prevention of fires is important not only for the protection of employees but also for the protection of the public and our facilities. Prevention of fires is accomplished with safe procedures and handling of flammable and combustible materials. However, when prevention fails and fires do occur, it is imperative that we are prepared to deal with them. Protection from fires is accomplished with training and the proper use of fire fighting equipment. The following guidelines are designed to help employees in their effort to prevent unwanted fires and to effectively deal with fires should they occur: II. Types of Fires Fires are divided into four classes as follows: A. Class A fires are fires fueled by ordinary combustible materials such as paper, rubbish, rags, wood, etc. Quenching by water is the most effective method of extinguishment. B. Class B fires are fires of flammable liquids, gases, greases, oils, gasoline, paint, varnish, etc. A blanketing or smothering effect is the most effective method of extinguishment. C. Class C fires are fires in electrical equipment, which call for the use of non-conducting extinguishing agents such as dry chemical. D. Class D fires are burning metals, which require special extinguishment and are not covered in this manual. III. Types of Extinguishers The type of fire extinguishers recommended for the above classes of fires are: EMPLOYEE SAFETY MANUAL 104 A. Class A fires - loaded stream (water base liquid expelled by a carbon dioxide cartridge), foam, or water. B. Class B fires - dry chemicals, carbon dioxide, or foam. C. Class C fires - dry chemicals or carbon dioxide. IV. Inspection of Extinguishers A. Periodic The person(s) in charge of a given station, vehicle, or other facility that is equipped with a fire extinguisher should periodically check each extinguisher. The person should make sure that the extinguisher is: 1. Fully charged, with seal not broken 2. Readily visible and accessible 3. Not obstructed 4. Located in its designated place When an extinguisher is not fully charged or the seal is broken, it should be recharged and re-tagged as soon as possible. Another extinguisher should be substituted until the original unit is returned and put into service. EMPLOYEE SAFETY MANUAL 105 B. Annual Each fire extinguisher must be inspected by a trained, authorized person (or Company) on an annual basis. Inspections should be conducted following the manufacturer’s recommendations. The annual inspection must include: 1. Recharging when necessary 2. Inspection of hoses, fittings and propellant cartridges 3. Inspection of the extinguisher shell 4. A metal tag bearing the name of the inspecting group and the date of inspection 5. Hydrostatic testing in accordance with federal regulations V. Training In order to ensure that employees know how to properly use fire extinguishers, annual training should be conducted. The training should include the following: A. Proper use of hand-held and wheeled fire extinguishers B. Periodic inspection of fire extinguishers EMPLOYEE SAFETY MANUAL 106 C. Maintenance of extinguishers D. Limitations of each type of extinguisher All training should be well documented with training rosters, written reports, and/or video taping of the session. Training will include both instructional and hands-on type education. VI. General Precautions A. Good housekeeping is the easiest way of preventing fires. Eliminate and dispose of such things as oily rags, cans of old oil and other flammable wastes. Rubbish that can burn should be stored away from flames and other sources of ignition. B. All containers holding flammable liquids, such as sample bottles, must be properly identified and stored away from ignition sources. C. Only approved electrical equipment may be used in areas likely to contain flammable vapors. D. Personnel should always remember to alert others who may not be aware of the potential hazard when flammable or combustible materials are present. This is especially true when a leak of crude oil is being repaired and/or cleaned up. E. In the event a spill/leak of a flammable liquid occurs, eliminate all sources of ignition immediately. Some possible ignition sources are matches, cigarettes, running vehicles, cutting torches, faulty electrical equipment and static electricity. EMPLOYEE SAFETY MANUAL 107 Also pay attention to wind direction when flammable vapors are being released. Ignition sources downwind of the spill must also be eliminated to prevent ignition of the vapors. VII. Vehicle Precautions Truck fires are extremely serious, because quite often they occur when you are miles from help. The following precautions should be adhered to: A. When starting to work each day: 1. Check fire extinguishers for full charge (if applicable) 2. Check tires 3. Check for leaking oil and fuel B. Keep a clean vehicle. Keep interior of cab and all storage compartments clean and free from oily rags, waste, oil cloths, paper, and so forth. C. Inspect tires at every stop. Flat or low tires may generate enough heat to start burning. D. Do not use an over capacity fuse in the electrical system. Never short through the fuse terminals with a solid piece of metal. If fuses keep blowing, request maintenance personnel to check and remedy cause. E. Cut ignition on your vehicle and any other vehicle involved in case of collision or upset. EMPLOYEE SAFETY MANUAL 108 F. Do not permit people to smoke close to your vehicle. G. Disconnect battery terminals in case of accident. H. Do not leave vehicle in case of upset or collision until relieved by supervisor. I. Inspect electrical wiring for frayed or bare wires and request assistance from maintenance personnel if any are discovered. EMPLOYEE SAFETY MANUAL 109 SECTION 2.6 – INCIDENT REPORTING PROCEDURE I. Background The prompt reporting of accidents and injuries is an important part of PDC Harris Group’s everyday activities. For every major injury that occurs, there are several minor injuries that occur. Each of these minor injuries has the potential, under the wrong conditions, to become more serious. In order to prevent both major and minor injuries, we need to learn more about the causes of our incidents so that we may develop methods of preventing similar incidents. II. Purpose The purpose of this procedure is: A. To gather information and knowledge on incidents to better understand their causes. This information will then be used to develop measures to prevent similar incidents in the future, and; B. To compile company-wide statistics for use in evaluating the effectiveness of the Safety Program, and; C. To assure that all occupational injuries and illnesses are recorded, as required by OSHA regulations, and; D. To assure that all state workers' compensation statutes are complied with. III. Scope This procedure applies to all employees of PDC Harris Group LLC. EMPLOYEE SAFETY MANUAL 110 IV. Definition An incident is defined as "an event that results in (1) an actual or potential injury to an employee, customer, or third party, or; (2) damage to PDC Harris Group LLC’s property, a customer's property, or a third party's property." V. Incident Reporting A. All incidents, no matter how minor, must be reported to the immediate or on-site supervisor as soon as possible after the occurrence. The supervisor being notified must notify the president as soon as possible after receiving the information. B. When an incident is reported, the involved employee and his/her immediate supervisor must complete PDC Harris Group LLC’s "Incident Investigation Report." This form should be completed and sent to the president within the next working day of the accident. C. The "Incident Investigation Report" must also be filled out for the following types of incidents, even if no personal injuries result: 1. Near-miss accidents 2. Fires 3. Chemical exposures VI. Other Forms There are two (2) other forms that must be completed when certain types of incidents occur: EMPLOYEE SAFETY MANUAL 111 A. State Worker's Compensation Forms (Appendix A) - to be used anytime an employee is injured. These forms are titled differently in each state: Employer's Basic Report of Injury (Form 100) Employer's Report of Accident (Form 1101) Employer's First Notice of Injury Employer's First Report of Injury or Illness B. PDC Harris Group LLC’s "Station or Vehicle Incident Report" - to be used for the following types of incidents: 1. Vehicle accidents, both injurious (Appendices A & C) and non-injurious (Appendix C) 2. PDC Harris Group LLC property damage (Appendix D) 3. Third party liability claims (Appendix B) 4. Another party's property damage (Appendix D) VII. Incident Investigation Report A. The "Incident Investigation Report" should not be filled out until an investigation of the incident is conducted. This investigation should include the employee, supervisor, and any witnesses to the incident. The investigation should be conducted in the following manner: EMPLOYEE SAFETY MANUAL 112 1. Inspect the conditions that may have contributed to the incident such as slippery surfaces, improper housekeeping, etc. This inspection should include a trip to the site of the incident. 2. Interview the involved employee and any witnesses to the incident. Gather as much information as possible and note this information on the reporting form. 3. Determine whether PDC Harris Group LLC procedures and/or policies were being followed and list these on the form with a brief explanation. 4. Determine if the involved employee(s) had received proper training for the job they were performing. Note any lack of training on the form. If the employee wasn't properly trained, determine why the job was performed without training. 5. Discuss what measures could have been taken to prevent the incident. When items can be corrected immediately, they should be corrected. When an item is listed on the form as a possible corrective measure, it must be followed up and utilized if appropriate. It is the supervisor's responsibility to follow up on these items. 6. Remember, for the incident investigation to be useful, the true cause of an incident must be sought. The following phrases are commonly placed on these forms but rarely do they accurately describe the cause of an incident: "employee carelessness", "weather conditions", and "not preventable". Please be as descriptive as possible. Remember, every accident can be prevented. EMPLOYEE SAFETY MANUAL 113 7. Use the word "alleged" in all descriptions of dates, locations, and the incident if there is any doubt to the validity of the occurrence or injury. B. When completing the form, the supervisor should not fill out the employee's statement section. This section is only for the involved employee's account of the accident. C. When the form is complete, it must be given to the president for review and filing. The president will use this form to recommend corrective measures to prevent similar incidents. EMPLOYEE SAFETY MANUAL 114 SECTION 3.1 – WORKING WITH AND AROUND CRUDE OIL AND REFINED PETROLEUM PRODUCTS I. General The hazards associated with the types of crude oil and petroleum products shipped by our clients result from the physical characteristics of the crude oil or product, including high temperature. It is possible that the physical hazards may not be associated with the spilled material but may be present at the location where the spill occurred and must still be considered as part of the spill response. II. Normal Hazards A. Material Safety Data Sheet (MSDS) An MSDS, listing the various emergency response data necessary for the safe handling of crude oil or petroleum products, is available at the client’s safety department. B. Fire Hazards There are fire hazards associated with any spill or drainage of crude oil and petroleum products. C. Hazard to Skin Skin contact with crude oil and petroleum products is not normally hazardous, unless the product is of high temperature or there is prolonged exposure (see below). If contact is made, washing with soap and water is usually adequate. EMPLOYEE SAFETY MANUAL 115 D. Hydrogen Sulfide, Benzene, etc. Hydrogen sulfide gas, benzene, and other health and safety hazards in detectable levels may be present, dependent upon what is being shipped at a given time. III. Hazards Due To Extreme Temperature A. Although individual conditions may vary, the potential temperatures of crude oil could exceed 140 degrees Fahrenheit (60 degrees Celsius). These temperatures are high enough to burn human skin upon short duration contact. B. Individuals who, due to hazards present at the site, are required to work in personal protective equipment, must also be monitored for heat stress related conditions. C. Goggles are required where there is danger from the spraying of hot oils during operations. This is applicable whether the operation is active or nearby. D. The only first aid for contact with this heated crude oil is: 1. To remove the employee involved from the source of crude oil; 2. To “rinse” the affected area where contact with the heated crude oil was made with large volumes of clean cool water; 3. To bandage the affected area with sterile bandages; and, EMPLOYEE SAFETY MANUAL 116 4. To transport the employee to a clinic or hospital for immediate attention by medical personnel. EMPLOYEE SAFETY MANUAL 117 SECTION 3.2 – BENZENE I. Definition A benzene-containing liquid is any liquid that contains 0.1% or more benzene, by volume. II. What Is Benzene? Benzene is a clear, colorless liquid with a rather pleasant aromatic odor. It is flammable as a concentrate and is contained in many hydrocarbons such as crude oil, gasoline, and some fuel oils. The major hazard associated with benzene is the inhalation of its vapors over extended periods of time. When inhaled, benzene acts on the blood-forming organs and can cause several blood disorders. In addition, benzene is a suspected human carcinogen and is proven to cause cancer in laboratory animals. III. Exposure Limits OSHA has set the Permissible Exposure Limit for benzene at 1.0 parts per million (ppm) in air taken as an 8-hour Time-Weighted Average (TWA). The OSHA Action Level of 0.5 ppm, also taken as a TWA, is the level of exposure where certain actions must be taken to reduce employee exposures. The OSHA Short Term Exposure Limit (STEL) is 5 ppm. The STEL is the maximum exposure a person can receive over any given 15-minute period of the work day. IV. Exposure Monitoring A. Initial Monitoring: All job classifications will undergo initial exposure monitoring to determine average exposures to benzene. If exposures exceed the OSHA Action Level of 0.5 ppm, corrective action will be taken to reduce exposures and other necessary steps will be taken to comply with the standard. Both representative 8-hour TWA and 15-minute STEL monitoring will be conducted to identify all potential benzene exposures. EMPLOYEE SAFETY MANUAL 118 B. Emergency Monitoring: During any emergency release of a benzene- containing liquid, air monitoring will be conducted to determine the amount of benzene concentrations in the air. This will help to determine which type of respiratory protection should be used. For specific respirator types to be used refer to the Personal Protective Equipment section (Section 5.1). C. Employee Notification: All employees are notified of the results of personal exposure monitoring. These results are kept on file for further reference. The employee may request a copy of these results at any time. V. Hazard Communication A. Training: All employees potentially exposed to benzene will receive initial training on the hazards associated with benzene. The OSHA benzene standard will be covered along with safe work practices, protection methods, and emergency procedures. In addition, benzene will be the periodic topic of monthly safety meetings. B. Material Safety Data Sheets (MSDS): The MSDS for any given chemical will list the individual components of the mixture. Employees can determine actual benzene concentrations in liquid by simply referencing the MSDS for the substance. This is usually listed in the "Hazardous Ingredients" section of the MSDS. VI. Emergency Procedures These procedures cover emergency releases of benzene-containing liquids and apply specifically to benzene protection. More detailed procedures for emergency response are covered in the "Oil Spill Contingency Plan." A. Air Monitoring: Before response to a benzene-containing liquid emergency begins, the air must be monitored to determine benzene concentrations. Once actual concentrations are measured, appropriate respiratory EMPLOYEE SAFETY MANUAL 119 protection can be chosen (see the Personal Protective Equipment section for respirator selection). If it is infeasible to monitor the air before emergency response begins, all responders must be equipped with Self- Contained Breathing Apparatus (SCBA) for protection against unknown benzene concentrations. B. Personal Protective Equipment: 1. Respiratory Protection: Listed below are benzene-in-air concentrations with corresponding respiratory protection required. Concentration Required Respirator 1.0 - 10.0 ppm Half Mask Organic Vapor Respirator Greater than 10 ppm SCBA 2. Since benzene can be absorbed through the skin, persons responding to a benzene-containing liquid spill should wear impermeable rubber gloves and rubber boots. 3. Where a potential eye hazard exists (i.e., splashing liquid), employees should wear protective goggles and/or a face shield. C. Medical Surveillance: Persons responding to a benzene-containing liquid spill without a respirator must undergo emergency medical surveillance. This includes a urine sample that must be given no later than at the end of the work shift. The urine will be tested for urinary phenol levels that are elevated following benzene exposure. The urinalysis must be performed within 72 hours and each employee sampled will be notified of their results in writing. EMPLOYEE SAFETY MANUAL 120 NOTE: Each location has a specific medical facility which will analyze the samples. It is imperative that all urine samples are sent to the lab within 8 hours after collection and preferably immediately after collection. If urinary phenol levels are excessively high, the employee must undergo a complete blood count at monthly intervals for a duration of three (3) months. This is to assure that blood counts have returned to normal levels following benzene exposure. Once it is determined that blood counts are normal medical surveillance will be terminated. VII. Record Keeping The following records relating to benzene must be maintained: A. Employee Personal Exposure Records B. Employee Exposure Notification C. Emergency Medical Surveillance Records Records will be retained for a minimum of thirty (30) years. EMPLOYEE SAFETY MANUAL 121 SECTION 3.3 – HYDROGEN SULFIDE I. What Is Hydrogen Sulfide? Hydrogen Sulfide (H2S) is a highly toxic, colorless gas. It has a very characteristic odor of rotten eggs and it is also very flammable. H2S is heavier than air and will therefore settle in low areas when released. When H2S is inhaled, even at low concentrations, it can fatigue one's sense of smell. Thus, at high concentrations, H2S may not be detected by smell. A concentration of 1,000 parts per million (ppm) in air can cause death in less than two minutes. A concentration of 500 ppm can cause death in 30 minutes. II. Sources Of H2S H2S can be found in several places throughout our operation. It is mainly found at places where crude oil is stored or transferred. When exposed to the atmosphere, H2S vaporizes rapidly and expands (seventy ppm in liquid can emit 7,000 ppm in the atmosphere). Most H2S is contained during normal operations but it can appear while maintenance work is being done on equipment. Some potential areas for H2S exposure include: A. Spills or leaks of crude oil B. Pipeline repairs C. Maintenance operations on crude oil service equipment D. Meter skid operations EMPLOYEE SAFETY MANUAL 122 E. Inside buildings where crude oil is present III. Potential Health Effects Symptoms of H2S exposure can vary considerably from person to person, depending on the concentration, length of exposure, and individual body tolerance. Some general symptoms would include: A. At low concentrations (0-100 ppm): irritation to the eyes, nose, and throat. B. At moderate concentrations (100-300 ppm): headache, dizziness, nausea, vomiting, and coughing. C. At high concentrations (300 ppm or more): loss of consciousness, coma, and death. EMPLOYEE SAFETY MANUAL 123 D. The following information was taken from American National Standards Institute (ANSI) Z37.2, "Acceptable Concentrations of Hydrogen Sulfide": Concentration (ppm) Effect 0.13 minimum detectable odor 4.60 easily detectable odor 10.0 eye irritation/TLV* 27.0 strong, unpleasant odor 100 eye irritation, coughing, loss of sense of smell after 2 - 15 minutes 200-300 eye inflammation, respiratory irritation 300-700 loss of consciousness and possibly death in 30 - 60 mins. 700-1000 rapid unconsciousness, cessation of breathing, and death *NOTE: TLV is the "Threshold Limit Value" for H2S. This value (10 ppm) is the maximum amount that a person can be exposed to without adverse health effects, taken as an 8-hour, time-weighted average. The value is set by the American Conference of Governmental Industrial Hygienists (ACGIH). EMPLOYEE SAFETY MANUAL 124 All H2S exposure measurements are compared to this value. OSHA has set a ceiling limit (concentration that cannot be exceeded at any time during a shift) for H2S of 20 ppm. IV. Protection Against H2S - Respirators Due to Hydrogen Sulfide's poor warning properties at high concentrations, negative pressure respirators should never be used for H2S protection. The concentration of H2S in the air can change rapidly in some cases, which could lead to H2S concentrations greater than the protection capability of the respirator; for example, many respirators will protect up to 100 ppm of H2S. If H2S levels change from 10 ppm to 200 ppm, the respirator becomes useless. Therefore, ONLY SELF-CONTAINED BREATHING APPARATUS (SCBA) MAY BE USED FOR PROTECTION AGAINST H2S. In wearing this apparatus, all details in the "Respiratory Protection Plan" must be considered. V. Special Health Problems It is believed that employees with special health problems, such as those described below, should not work in an H2S atmosphere or in an atmosphere requiring the wearing of a respirator: A perforated eardrum may allow air passage through the Eustachian Tube into the respiratory tract. Emphysema, Chronic Pulmonary Obstructive Disease or Bronchial Asthma, Coronary Artery Disease or Angina Pectoris, Myocardial Infraction or Progressive or Severe Hypertension, or Claustrophobia, along with Diabetes, or severe Seizure Disorders (i.e., Grand Mal Epilepsy) may limit the wearing of a respirator. If you should have any of these conditions, please report them to your supervisor. VI. Special Problems In Respirator Use A. Facial Hair EMPLOYEE SAFETY MANUAL 125 Facial Hair lying between the sealing surface of a respirator face piece and the wearer's skin may prevent a good seal. Even a few days' growth of stubble may permit excessive contaminant penetration. B. Contact Lenses Contact lenses may not be worn while wearing a respirator in a contaminated atmosphere. C. Corrective Glasses Glasses that have temple bars or straps may not be worn with a respirator. D. Miscellaneous Sealing Problems Scars, hollow temples, very prominent cheekbones, deep skin creases, or the lack of teeth or dentures may cause respirator-sealing problems. VII. Training All employees will receive periodic training on the dangers of H2S. In addition, persons subject to wearing SCBA will be trained on such equipment to ensure proper use. All training records, rosters, etc., should be kept on file at each location and a copy sent to the Safety Department to be put on computer file. VIII. Emergency Procedures - H2S A person should never attempt to rescue someone overcome by H2S without a self-contained breathing apparatus complete with a 5-minute emergency egress bottle. When at all possible, attempt a rescue with more than one person in case a problem develops. A person overcome by H2S must have artificial respiration if breathing has stopped. If breathing has not stopped, simply remove the victim to fresh air and call for medical help. EMPLOYEE SAFETY MANUAL 126 IX. Detection Persons subject to working around sour crude oil should be equipped with personal gas detectors to determine actual H2S concentrations present. Some detectors have alarms designed to sound at 10 ppm, which alerts the wearer to be cautious and/or evacuate the area. However, the more preferable detectors display a digital readout of actual H2S concentrations in air. These units make the decision on protective equipment and evacuation much easier. All areas where H2S is present should be marked with signs or labels to warn personnel of the hazard. EMPLOYEE SAFETY MANUAL 127 SECTION 4.1 – HEARING CONSERVATION PLAN I. Purpose This plan is intended to address the requirements of the OSHA standard 29CFR 1910.95, “Occupational Noise Exposure”. This discussion is intended to inform PDC Harris Group LLC employees of the necessity and typical details of Hearing Conservation, and is not intended to substitute for that of the client/facility owner. This plan shall not be substituted for less stringent client/facility owner Hearing Conservation Plans and requirements. II. Scope This plan is designed to assure that proper hearing protection is provided and used in work areas or job assignments where exposure to noise cannot be controlled by engineering methods or work practices. Employees are covered by the plan when: A. The noise exposures within a working environment exceed recommended levels. Action will be taken in accordance with the provisions of the following requirements. B. It has been determined that engineering controls cannot feasibly reduce noise levels to or below the recommended maximums. These areas shall be designated as "high noise" areas and shall be placarded with signs stating "Hearing Protection Required in this Area." C. Performing work in any area where noise levels exceed recommended limits. Employees working in a placarded “high noise area” shall wear approved hearing protective devices. EMPLOYEE SAFETY MANUAL 128 III. Permissible Noise Exposures Protection against the effects of noise exposure shall be provided when the sound levels exceed those shown in Table 1 on the next page. When noise levels exceed those listed in the table, feasible administrative or engineering controls shall be utilized. If such controls fail to reduce sound levels to within the levels of the table, personal protective equipment shall be provided and used to reduce sound levels to within the levels of the table. An eight-hour time- weighted average (TWA) of 85 decibels (dBA), or a dose of fifty percent, shall be referred to as the action level. EMPLOYEE SAFETY MANUAL 129 TABLE 1 - PERMISSIBLE NOISE EXPOSURES Duration per day, hours Sound level dBA slow response 8 90 6 92 4 95 3 97 2 100 1-1/2 102 1 105 ½ 110 1/4 or less 115 Whenever a noise survey shows noise levels in excess of those listed above, necessary steps to reduce the noise exposure to or below those levels shall be taken. When an employee's exposure equals or exceeds an eight hour TWA of 85 dBA, audiometric testing will be provided. Exposure to impulsive or impact noise should not exceed 140 dBA peak sound pressure level. This sets the upper limit of sound level to which a person should be exposed, regardless of the brevity of the exposure. If the variations in noise level involve maxima at intervals of one second or less, it is to be considered continuous. This means that where the sound level meter on the A scale at slow response moves up from a generally steady reading, say from 88 to 92 dB, at intervals of one second or less, the high reading shall be taken as that to be used in Table I. EMPLOYEE SAFETY MANUAL 130 IV. Monitoring Noise surveys will be made at several different locations and for different job classifications (such as pump stations with large motors, welding, cutting, and backhoe operations) at least once a year to ensure that sound levels do not exceed the 85 dBA. A noise survey will be done whenever a change is made in either equipment or type of operations in which significant change in noise level is anticipated. V. Audiometry Audiometric tests will be made of all individuals working regularly in areas in which the noise level is above 85 dBA. Audiometric tests may be made as frequently as specified by PDC Harris Group LLC’s consulting physician, but only under very special conditions shall they be made more often than once a year. A. Test Facilities All hearing tests will be conducted by either a licensed or certified audiologist, qualified physician, or a person certified by the Council of Accreditation in Occupational Hearing Conservation or by an audiometric technician. Audiometric test rooms shall not have background sound pressure levels exceeding the following tables, using an octave band analyzer: Octave band frequency: 500 1000 2000 4000 8000 Sound pressure level: 40 40 47 57 62 B. Quiet Period Prior to Testing Quiet periods must precede the type of audiogram as follows: EMPLOYEE SAFETY MANUAL 131 1. Baseline - at least 14 hours without exposure to noise. 2. Annual - May be conducted anytime during the work shift provided that the employee wears ear protection from the start of the shift until the test. Earmuffs are recommended. C. Audiometric Records The following information must be noted on each audiogram: 1. Name and job classification 2. Date 3. Tester's name 4. Manufacturer, model and serial number of audiometer 5. Date of last exhaustive calibration of the audiometer An audiologist, or other qualified professional, should review all abnormal audiograms. THE OBJECTIVES OF HEARING TESTS ARE TO IDENTIFY EMPLOYEES WHO ARE LOSING THEIR HEARING AND TO TRY TO PREVENT FURTHER HEARING LOSS. EMPLOYEE SAFETY MANUAL 132 VI. Personal Protective Equipment Only earplugs approved by the Client Safety Department will be used. Properly fitted earplugs are essentially equal in attenuating ability to ear muffs. The Client Safety Department may issue earmuffs if needed. Long hair and spectacle or goggle temples will interfere with the seal made by the cushioned edges of the muffs and will correspondingly reduce the actual attenuation, as stated by the manufacturer. Regardless of the type of ear protector decided upon, its attenuation, as stated by the manufacturer, must be sufficient to reduce the noise level in the worker's ear to the level and for the duration prescribed in Table 1. The manufacturer's stated values are determined under ideal conditions, and therefore, as a precaution, it is wise to assume that the attenuation actually attained in use in the shop will be at least 5 dB less than the stated value. Only those ear protectors that have been tested in accordance with ANSI standard Z24.22- 1957, "Method for Measurement of the Real-Ear Attenuation of Ear Protectors at Threshold," are acceptable to the department. VII. Training Program Employees who are included in the hearing conservation program shall have annual training and be updated to be consistent with any changes in protective equipment and work processes. Contents of the training will include the following: A. The effects of noise on hearing. B. The purpose of hearing protectors. C. The advantages, disadvantages, and attenuation of various types of hearing protectors. EMPLOYEE SAFETY MANUAL 133 D. Instructions on the selection, fitting, use and care of the hearing protectors. E. The purpose of audiometric testing. F. An explanation of the test procedures. VIII. Record Keeping PDC Harris Group LLC will maintain an accurate record of all employee exposure measurements and all data from the audiometric tests. Noise exposure records shall be kept for two years and the Audiometric tests shall be kept for the duration of the affected employee's employment. EMPLOYEE SAFETY MANUAL 134 SECTION 5.1 − HYDROTEST AND LINEFILL SAFETY GENERAL COMMENTS ON COMMISSIONING CRITERIA & CONSIDERATIONS I. Overall Pipeline Safety Liquid pipelines are at some risk of failure throughout their operational life. However, two of the most likely times to precipitate a pipeline rupture actually occur early in the operational life of the pipeline. These periods of greatest risk occur during what are considered to be otherwise benign periods: A. Flooding the Line for Hydrotest, and B. Initial Filling the Line with Product. Unfortunately, the easiest methods for avoiding these ruptures are often discounted due to the rarity of these rather high consequence events. During these operations, there are two primary failure mechanisms that can lead to rupture of the pipeline: A. Pipeline detonation, and B. Pipeline cavitations. This discussion will review the root causes for failures in the context of a new pipeline being filled with liquid for the first time. Failure to understand these mechanisms can lead to risky practices; among these practices are: A. Filling a pipeline with volatile organic products without inert gas interface, EMPLOYEE SAFETY MANUAL 135 B. Filling a pipeline without maintaining adequate line-pack, and C. Filling a pipeline too fast. Below is a discussion of the specifics of these pipeline failure mechanisms. This discussion is not offered to be alarmist but to offer insight to these rare but possible types of failures. By understanding how these failures can occur, it is possible to put in proper perspective the reasons that the often- overlooked mitigation methods mentioned above are prudent. II. Pipeline Ignition / Detonation This potential failure mechanism exists during line fill operations due to the volatile nature of petroleum products. The simultaneous co-existence of oxygen, fuel (typically hydrocarbon vapor), and a source of thermal energy (i.e. spark or compression), provides a sufficient condition necessary for the process of combustion. These three elements, fuel, oxygen, and thermal energy, are often referred to as the “fire triangle”. Safe pipeline operations require additional concern and controls in any conditions where any two of these components are combined. Air by itself is considered safe, fuel by itself is considered safe, and thermal energy by itself is considered safe. A mixture of air and fuel (in proper proportions) is lacking only one more component to result in a fire – thermal energy. There are certain conditions where fuel and air are expected to mix in explosive concentrations. One example is a Hazardous Atmosphere as addressed by Area Classifications identified in API RP-500 and Article 500 in the National Electrical Code. In these cases additional mitigations are introduced to control the introduction of sparks and other forms of thermal energy that could complete the fire triangle and lead to a fire. During pipeline fill operations, where petroleum products (fuel) are being used to fill a pipeline that is not purged with an inert gas but left full of air (oxygen), an interface develops at the product/air boundary that can very easily exceed the Lower Explosion Limit (LEL). All that is required to complete EMPLOYEE SAFETY MANUAL 136 the fire triangle is a source of thermal energy. Below are two ways the final necessary and sufficient conditions for a fire could potentially be completed: • Static Discharge Ignition – An interface pig made of dielectric/plastic materials being pushed in a dry pipeline during fill operations can build-up friction-induced static charge and thus the potential for a static discharge from the pig to the pipe wall. If this discharge occurs in an oxygen-rich fuel mixture environment, the pipeline can catch fire on the inside. • Compression Ignition – A void in the line-pack containing a mixture of fuel vapor and air can cause an internal combustion (detonation). If pressure is added to the pipeline to adequately compress the fuel-air void, the mixture can reach its auto- ignition temperature. This is the operating principle of a diesel engine. The pressures that accompany these compression-fired engines are much lower than might first be expected (in the range of 310 – 380 psig with a compression ratio of 15:1 to 25:1). Gasoline/air mixtures have lower auto-ignition temperatures. Typical operating conditions in a gasoline engine (gasoline engines are spark-ignited, not compression-ignited) are in the range of 90 – 170 psig with compression ratios of 8:1 to 12:1. In the case of diesel and gasoline engines, it is easy to see that these pressures are easily achievable and within the normal operating pressures of the line. The single most effective method of mitigating the potential completion of the fire triangle in these conditions is by simply removing the air component. This is best done by filling the line with an inert gas, such as nitrogen, prior to line fill. However, filling a large cross-country line with nitrogen is not always economic. As an alternate, injecting a sufficient quantity (several miles) of nitrogen upstream of the product interface pig will effectively mitigate the introduction of air into the line. It is important to always use inert gas (or water) immediately ahead to the product to displace or dilute the existing air in the pipeline and eliminate the potential of creating an explosive mixture. EMPLOYEE SAFETY MANUAL 137 III. Pipeline Cavitation This potential failure mechanism exists during line fill operations due to inadequate care during the line fill process. These situations usually occur when there is a failure to maintain appropriate line-pack techniques or the line is filled too fast. Similar to the more common pump cavitation process, strong transient pressures associated with pipeline cavitation are created by the sudden collapse of gas bubbles formed in the line. Filling a pipeline without maintaining adequate line-pack during the line fill process can result in the formation of large gas bubbles in locations where the line-pack is subjected to strongly negative pressures. At these locations (typically at the top of steep hills), a phenomenon referred to as “column separation” can occur. At these points, the head of the line pack passes over the top of the hill. As more product is pumped over the hill, the weight of the fluid column, due to its length, will exert forces on the fluid column at the top of the hill that will tend to separate the fluid column. The result is that the head of the line-pack has a tendency to start “running away” from the rest of the line pack, unless a counter-acting, lifting force exists to resist the gravitational forces. The amount of force required to “separate” the fluid column is directly related to the vapor pressure of the fluid. The lower the vapor pressure, the easier it is to pull the product apart. In theory, the maximum height of a column of water is 33 feet before a perfect vacuum is created at the top of the column. A practical limit to holding a column of hydrocarbon liquid by suction methods is limited to about 15 feet or less. As the length of the column is increased, a better vacuum is created at the top of the line, and once the partial pressure falls below the vapor pressure of the liquid, the liquid will boil, making a transformation from a liquid state to a gaseous state. If this continues for a significant time, a large bubble can be left at the top of the hill. The real danger does not come from the bubble formation, but the rapid phase change from gas back to liquid. This typically happens after the pipeline is full and the pressure is being raised for the first time. As the EMPLOYEE SAFETY MANUAL 138 pressure rises, the bubble is compressed, and once the vapor pressure is reached, the gas is transformed back to a liquid state occupying a significantly lower volume. This rapid transformation can result in very high, localized flow rates. These high surge flows then collide with the adjacent, nearly stationary liquid. This collision brings the fluid to rest in a nearly instantaneous fashion. The resulting localized, transient high pressures can easily do damage to the pipeline. It is important to always maintain line pack in such a manner to keep column separation, bubble/void formation, and cavitation from occurring. These practices include filling the line with adequate head-pressure to prevent column separation at the top of hills and filling the line slowly so that fast, uncontrolled surges do not create voids that will collapse later when the pipeline is brought to operating pressures. Typically, velocities during line fill should be kept in the range of 3-5 feet per second. 139 Appendix I PRE-APPRAISE STAGE PRESENTATION TO ML&P 140 Appendix J PROJECT SCHEDULE Activity ID Activity Description Orig Dur Early Start Early Finish Milestones 541 Notice to Proceed 0 05MAR07A 561 Begin Construction 0 30JUN08* 641 Substantial Completion 0 09SEP10 571 Commence Commercial Operation 0 15MAR11 Appraise 371 Appraise Project 40 05MAR07A 27APR07A Select 381 Select Process 50 27APR07 05JUL07 Define 391 Define 55 06JUL07 20SEP07 481 Major Equipment Specifications 55 06JUL07 20SEP07 Execute 491 Bid / Award Long Lead Items 88 11SEP07 10JAN08 471 Design Engineering 299 21SEP07 12NOV08 591 Fabricate STG, FOB Factory 396 11JAN08 17JUL09 581 Receive Long Lead Data 88 11JAN08 13MAY08 621 Bid/Evaluate/Award Construction 55 11MAR08 26MAY08 611 Construction 618 30JUN08 10NOV10 601 Deliver STG 22 20JUL09 18AUG09 631 Startup/Testing 132 10SEP10 14MAR11 2007 2008 2009 2010 2011 2012 FEBM A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J Notice to Proceed Begin Construction Substantial Completion Commence Commercial Operation Appraise Project Select Process Define Major Equipment Specifications Bid / Award Long Lead Items Design Engineering Fabricate STG, FOB Factory Receive Long Lead Data Bid/Evaluate/Award Construction Construction Deliver STG Startup/Testing © Primavera Systems, Inc. Start Date 05MAR07 Finish Date 14MAR11 Data Date 27APR07 Run Date 26APR07 17:29 Early Bar Progress Bar Critical Activity AFAC Anchorage Municipal Light & Power Plant 2A-6FA CC Gas Turbine Project Preliminary Schedule Sheet 1 of 1 PDC/Harris Group Inc. Project 67021.00 Date Revision Checked Approved 20MAR07 Preliminary Schedule, Rev. A TLW SDM 27APR07 Preliminary Schedule, Rev. B TLW MWM Prop Draft 11_08_08 Word 7.doc Appendix 8 Completed Budget Form & Cost Worksheet LCNG Pilot Test ProgramPhase I and II Budget Alaska Energy Authority ‐ Renewable Energy FundONC + PDC Harris GroupRev 0RFA AEA09‐004 Budget FormRFA AEA09‐004 Budget FormBUDGET INFORMATIONBUDGET SUMMARY:Milestone or TaskFederal Funds State FundsLocal FundsMatch (Cash)LocFunal Match ds (In‐Kind)Other FundsTOTALS1 Reconnaissance Study$0.00 $292,900.00$0.00$29,300.00$0.00 $322,200.002 Feasibility$0.00 $408,800.00$0.00$40,900.00$0.00 $449,700.003$0.00$0.00$0.00$0.00$0.00$0.004$0.00$0.00$0.00$0.00$0.00$0.005$0.00$0.00$0.00$0.00$0.00$0.006$0.00$0.00$0.00$0.00$0.00$0.00Milestone # or Task #BUDGET CATAGORIES:123456TOTALSDirect Labor and Benefits$266,190.00 $374,580.00$0.00$0.00$0.00$0.00 $640,770.00Travel, Meals, or Per Diem$6,440.00 $5,940.00$0.00$0.00$0.00$0.00 $12,380.00Equipment$0.00$0.00$0.00$0.00$0.00$0.00$0.00Supplies$0.00$0.00$0.00$0.00$0.00$0.00$0.00Contractual Services$0.00$0.00$0.00$0.00$0.00$0.00$0.00Construction Services$0.00$0.00$0.00$0.00$0.00$0.00$0.00Other Direct Costs$49,570.00$69,180.00$0.00$0.00$0.00$0.00 $118,750.00TOTAL DIRECT CHARGES$322,200.00 $449,700.00$0.00$0.00$0.00$0.00 $771,900.00 Renewable Energy Fund Application Cost Worksheet Bethel LCNG Pilot Program ONC + PDC Harris Group 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. 100% for fuel-fired devices Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) Natural Gas 2. Existing Energy Generation a) Basic configuration (if system is part of the Railbelt 1 grid, leave this section blank) i. Number of generators/boilers/other Refer to Section 4.2 of application ii. Rated capacity of generators/boilers/other To be determined, Phase I iii. Generator/boilers/other type 4 boilers (minimum) + 1 diesel engine iv. Age of generators/boilers/other To be determined, Phase I v. Efficiency of generators/boilers/other To be determined, Phase I b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor To be determined, Phase II ii. Annual O&M cost for non-labor To be determined, Phase II c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] To be determined, Phase I ii. Fuel usage Diesel [gal] To be determined, Phase I Other To be determined, Phase I iii. Peak Load iv. Average Load v. Minimum Load vi. Efficiency To be determined, Phase I vii. Future trends Conversion from diesel fuel to LCNG (natural gas fuel) d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] To be determined, Phase I ii. Electricity [kWh] To be determined, Phase I 1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power. CostWork11_8_08 8 Nov 2008 Page 1 Renewable Energy Fund iii. Propane [gal or MMBtu] n/a iv. Coal [tons or MMBtu] n/a v. Wood [cords, green tons, dry tons] n/a vi. Other Future wind turbine impact to be assessed 3. Proposed System Design a) Installed capacity Refer to Section 4.5 of application b) Annual renewable electricity generation i. Diesel [gal or MMBtu] Renewable generation not proposed ii. Electricity [kWh] “ “ “ iii. Propane [gal or MMBtu] “ “ “ iv. Coal [tons or MMBtu] “ “ “ v. Wood [cords, green tons, dry tons] “ “ “ vi. Other “ “ “ 4. Project Cost a) Total capital cost of new system Refer to Section 4.10 of the application b) Development cost Refer to Section 4.10 of the application c) Annual O&M cost of new system Refer to Section 4.10 of the application d) Annual fuel cost To be determined during Phase II 5. Project Benefits a) Amount of fuel displaced for i. Electricity To be determined during Phase II ii. Heat To be determined during Phase II iii. Transportation Not applicable b) Price of displaced fuel Recently shipped diesel/heating oil @ $6 to $8/gallon c) Other economic benefits Expansion to region or state-wide d) Amount of Alaska public benefits To be determined during Phase II 6. Power Purchase/Sales Price a) Price for power purchase/sale To be determined during Phase II CostWork11_8_08 8 Nov 2008 Page 2 Renewable Energy Fund CostWork11_8_08 8 Nov 2008 Page 3 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio To be determined during Phase II Payback To be determined during Phase II