BOARD MEETING DATE: April 5, 2002
AGENDA NO. 11

Execute Contracts to Fund Marine Vessel Projects under
RECLAIM Executive Order Mitigation Program

SYNOPSIS:

There is an immediate availability of very cost effective emission reductions from marine vessel projects. These NOx emission reduction credits are required to be generated under the RECLAIM Executive Order Mitigation program. It is recommended that eight engines be funded for re-powering under the RECLAIM Executive Order Mitigation Program in an amount not to exceed $3.1 million, resulting in estimated total NO_x reductions of approximately 1,070 tons over four years. It is also recommended that 14 engines be funded for re-manufacturing to new engines under the RECLAIM Executive Order Mitigation Program in an amount not to exceed $4.1 million, resulting in estimated total NO_x reductions of approximately 690 tons over four years.

COMMITTEE:

Technology, March 22, 2002, Recommended for Approval

RECOMMENDED ACTION:

1. Authorize the Chairman to execute a contract with Seaboard Marine to re-power two marine vessel engines and acquire one global positioning system (GPS) unit in an amount not to exceed $366,300 from the RECLAIM Executive Order Mitigation Program. The proposed marine vessel, as listed in Table 1, is Tuffy II.
   
    
2. Authorize the Chairman to execute a contract with OceanAir Environmental to re-power six marine vessel engines and acquire three GPS units in an amount not to exceed $2,716,900 from the RECLAIM Executive Order Mitigation Program. The proposed marine vessels, as listed in Table 1, are Avalon Express, Super Express, and Tioga.
   
    
3. Authorize the Chairman to execute a contract with OceanAir Environmental to re-manufacture 14 marine vessel engines and acquire seven GPS units in an amount not to exceed $4,017,100 from the RECLAIM Executive Order Mitigation Program upon EPA approval. The proposed marine vessels, as listed in Table 1, are Starship, Pacific Escort, Peter Foss, Leader, Admiral, Master, and Philip W.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On January 17, 2001 Governor Davis proclaimed a State of Emergency in response to the imminent threat of widespread and prolonged disruption of electrical power. In response, the AQMD Executive Officer, on February 6, 2001, executed the RECLAIM Executive Order Mitigation Program. As part of the executive order, mitigation fees for emissions in excess of RECLAIM allocations from RECLAIM-power producing facilities having the capacity to produce 50 MW or more, would be paid to the AQMD. These funds would then be used to mitigate the excess power plant emissions.

At the July 20, 2001 meeting, the Board approved $5.3 million for marine vessel contracts under Rule 118 Executive Orders #01-03 and #01-04 for NO_x and CO emissions mitigation. These contracts will potentially result in 170 tons of NO_x and 11 tons of PM emission reductions annually. Up to this date, AQMD has received approximately $22 million as mitigation fees pursuant to the Executive Order.

Proposal

The recommended projects are immediately available, can be implemented in the next three to six months, and are very cost effective. These proposed projects will provide the District with much needed NO_x emission credits for electric utilities under RECLAIM. The projects include re-powering and re-manufacturing marine vessel engines. Re-manufacturing these engines include replacing pistons, liners, fuel pumps, turbochargers, injectors, and cooling system with new factory certified low-emission components into new engines. The only remaining part will be the outer shell. The parts that are being replaced produce NO_x, CO, particulate matter, hydrocarbons, and green house gas emissions; and the replacement of these components is a very cost and time effective approach towards achieving significant emission reductions. After re-manufacturing, the engines will be assigned new serial numbers by the original equipment manufacturer, and these engines will be certified to emission standards for new engines.

The engines that are being proposed for re-manufacturing are 8 to 12 years old, and the engines for re-power are approximately 25 to 30 years old. Marine vessel engines in large tugboats are made to last 40 to 45 years with periodic engine overhaul. The engine block can last 40 to 45 years with no maintenance. For marine vessels in the category of large tugboats where the average annual NO_x reduction can be as mush as 40 tons per vessel, most engine re-manufacturing can be completed in less than 3 months whereas most engine re-powers take more than six months. Re-powering involves cutting the hull, dry docking for extended periods, removing and installing transmission and gears, and replacing the hull. This involves significant labor costs and loss of business for the vessel owner.

The staff recommends that eight marine vessel engines be re-powered with funds from the RECLAIM Executive Order Mitigation Program for an amount not to exceed $3,083,200. These projects will result in total NO_x and PM reductions of approximately 1070 tons and 60 tons over four years, respectively.

The staff also recommends that 14 marine vessel engines be re-manufactured to new engines with funds from the RECLAIM Executive Order Mitigation Program for an amount not to exceed $4,017,100 upon EPA approval. These projects will result in total NO_x and PM reductions of approximately 690 tons and 35 tons over four years, respectively.

The combined four-year cost effectiveness of these projects is approximately $3,700 per ton of NO_x reduction, and this will result in NO_x reductions of approximately 1760 tons over four years. These proposed projects must meet the requirements of Rule 1631, and in particular this includes source testing the engines and the installation of GPS units on the marine vessels. AQMD will reimburse Seaboard Marine and OceanAir Environmental for the cost of the GPS units as listed in Table 1.

On July 20, 2001, the Board approved a $800,662 contract with Millennium Maritime to re-power two marine vessel engines under the Pre-Funded RECLAIM AQIP program. On February 26, 2002, Millennium Maritime notified the AQMD that because of financial constraints, Millennium cannot pay for the labor cost associated with this re-power project, which amounts to approximately $500,000. It is recommended that Millennium be allowed to proceed with the same type of engine re-manufacturing as described above upon EPA approval. This proposed project will still remain under the Pre-Funded RECLAIM AQIP program, and can be completed at a reduced cost of $460,000. The project will achieve the same amount of NO_x emission reduction. This proposed approach will make will make this project more cost effective, and can be completed in less than three months.

Benefits to AQMD

The above mentioned proposed projects will produce real and surplus NO_x emission reductions of at least 1760 tons over four years, which will be credited to the RECLAIM Executive Order Mitigation Program. These projects are also very cost effective, and can be completed within three to six months, and this will provide the District with much needed NO_x emission credits.

Resource Impacts

The proposed funds of $3,083,200 and $4,017,100, which amounts to $7,100,300 (Table 1) will be obtained from the RECLAIM Executive Order Mitigation Program.

Attachment

List of RECLAIM Executive Order Mitigation Program projects

Table 1

List of RECLAIM Executive Order Mitigation Program Projects
 

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