BOARD MEETING DATE: November 4, 2005
AGENDA NO. 9

Issue RFP to Facilitate Development and Expansion of LNG Refueling Infrastructure

SYNOPSIS:

Recently, several plant/facility breakdowns have interrupted pro-duction and delivery of LNG for the Southern California area. This has created significant concerns for public and private fleets that rely on continuous deliveries of fuel for their day to day operations. On October 7, 2005, the Board approved the allocation of $500,000 to facilitate the development and expansion of the LNG refueling infrastructure to assure that adequate LNG supply is available dur-ing periods of supply disruption. This action is to release an RFP to facilitate the development and expansion of the LNG refueling infrastructure.

COMMITTEE:

Technology, October 28, 2005. Less than a quorum was present during the discussion of this item; the Acting Chairman communicated his concurrence and recommendation that this item be forwarded for Board consideration.

RECOMMENDED ACTION:

Approve issuance of a Request for Proposals (RFP #P2006-11) to solicit proposals to facilitate the development and expansion of the LNG refueling infrastructure in an amount not to exceed $500,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Continued expansion of the natural gas fueling infrastructure is critical to support in-creased public and private fleet alternative fueling needs and support future incentive program awards such as the Low Emission School Bus Replacement Program and the Carl Moyer Program. In the past few months, there have been several plant/facility breakdowns that have caused the production and delivery of LNG to be in short supply for the Southern California area creating significant concerns for public and private fleets that rely on continuous deliveries of fuel for their day to day operations. Since 2001, there has been a significant increase in the number of heavy duty vehicles fueled by LNG and a number of fleets continue to purchase LNG-fueled vehicles. In addition, a number of new refueling facilities are due to begin operation over the next 18 months. Secure and uninterrupted fuel supplies are essential in order to maintain a smooth transition to alter-native fuels. LNG is a fuel of choice for waste haulers, transfer vehicles, street sweepers, public works fleets, some transit agencies and private truck fleets and it is forecast that the daily demand for LNG may double within the next 18 months.

On October 7, 2005, the Board approved the allocation of $500,000 to facilitate develop-ment and expansion of LNG refueling infrastructure, and directed staff to prepare an RFP to solicit appropriate projects.

Proposal

To facilitate the expansion of the LNG refueling infrastructure in the South Coast Basin and provide additional assurances that there will be adequate backup LNG supply during periods of possible disruption in LNG production or delivery, staff is recommending that an RFP be released to solicit proposals to address these issues. There are two elements in the proposed RFP:

1. Solicit competitive, cost-share proposals from qualified consultants/contractors for the local production of liquefied natural gas (LNG) fuel. Proposed projects must be located within the South Coast Air Quality Management District. However, proposed projects located outside of the South Coast district will be considered if the production of LNG is based on renewable fuel such as landfill gas. Proposed project must have a minimum capacity of 5,000 gallons per day and may request cost-share funds for capital investment costs only. Proposed projects could include on-site, skid-mounted, pressure-drop, or peak shaving liquefiers, or other types of natural gas liquefaction equipment.
2. Solicit competitive, cost-share proposals from qualified LNG refueling facilities for increasing on-site LNG storage capacity. Minimum amount of additional storage required to be considered is at least 6,000 gallons. Vendors proposing large (>200,000 gallons) central storage facilities that could act as a buffer to supply interruptions are also qualified to submit proposals. Proposed projects can also include the expansion of existing facilities, including power plants (including co-generation) that wish to have LNG as a back-up fuel. Proposals may include co-operative buying strategies for LNG to help buffer supply interruptions.

Proposed projects will be required to provide a detailed description of the proposed natural gas liquefaction technology, feed gas pretreatment, liquefaction process, LNG storage, method of delivering LNG to vehicle fueling stations in the South Coast Basin, and project financing.

Applicants may be either public agencies or private entities. Cost-share participants may include state and local governments, local natural gas providers, manufacturers of natural gas liquefaction systems, LNG suppliers, LNG marketers, and fleet operators or end users of the LNG fuel. Cost-share funds can only be requested for capital investment costs as-sociated with the LNG production plant or storage facility.

The general requirements of the RFP are identified below:

1) Proposed project must be located within the jurisdictional boundaries of the South Coast Air Quality Management District.

2) Project construction schedule shall be limited to a two-year timeframe. A sliding scale will be used to provide additional points to projects that can be completed within a shorter time period.

3) Proposed projects that are co-located with an electricity generating facility, such as a co-generation plant, are considered desirable since these projects are expected to minimize electricity demands.

4) Proposed project may request cost-share funds for capital investment costs only.

Benefits to AQMD

The 2003 AQMP relies on the expedited implementation of advanced technologies and clean fuels in the South Coast to achieve air quality standards. By constructing more LNG production or storage facilities, benefits from this project will accrue to all cities and area residents. Such new construction will provide a coordinated effort, plan for growth of the overall infrastructure and enable the transition to future hydrogen refueling infrastructure. There are economies of scale from the extensive infrastructure being planned and installed, possibly reducing the cost and making alternative refueling stations more affordable. While having no direct impact on air emission reductions, new LCNG production and storage facilities will help facilitate the introduction of low-emission, natural gas-fueled vehicles (NGVs) initially in private and public fleets in the area. Such increased penetration of NGVs will provide direct emissions reductions of NOx, VOC, CO, PM, and air toxic compounds throughout the South Coast region.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertis-ing the RFP/RFQ and inviting bids will be published in the following publications:
 

Additionally, potential bidders may be notified utilizing the Los Angeles County MTA Directory of Certified Firms, the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; and AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, and placed on the Internet at AQMD’s Web site (http://www.aqmd.gov where it can be viewed by making menu selections "Inside AQMD"/"Employment and Business Opportunities"/"Business Opportunities" or by going directly to http://www.aqmd.gov/rfp/index.html). Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724. This RFP can also be downloaded from AQMD’s RFP web site: www.aqmd.gov/rfp.

In addition to publication in the above-cited publications, over 100 individual RFP no-tices will be mailed to interested businesses and individuals.

Bid Evaluation

Proposals received will be evaluated by a diverse, technically qualified panel in accordance with criteria contained in the RFP.

Resource Impacts

Total funding for the project will be made available from the Clean Fuels Fund.

Attachment (DOC* 1 MB)

A - RFP #P2006-11 Facilitate Development and Expansion of LNG Refueling Infrastructure

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