BOARD MEETING DATE: April 7, 2006
AGENDA NO. 6

Execute Contracts for Natural Gas Refueling Station Infrastructure

SYNOPSIS:

On November 4, 2005, the Board approved the release of an RFP to solicit proposals to facilitate the expansion of the LNG refueling infrastructure in the South Coast Air Basin and provide additional assurances that there will be adequate backup LNG supply during periods of possible disruption in LNG production or delivery. Three proposals were received by the closing date. Staff believes that two of the three proposals qualify for funding as they meet the RFP requirements as well as provide innovative LNG fueling supplies. This action is to recommend funding the two proposals for a total amount not to exceed $500,000 from the Clean Fuels Fund.

COMMITTEE: 

Technology, March 31, 2006, Recommended for Approval

RECOMMENDED ACTIONS:

1. Authorize the Chairman to execute a contract with Waste Management’s USA Waste of California in an amount not to exceed $200,000 from the Clean Fuels Fund to offset the costs of purchasing and installing a new LNG storage tank at their LNG fueling station in Long Beach, California.
2. Authorize the Chairman to execute a contract with Waste Management’s USA Waste of California, in an amount not to exceed $300,000 from the Clean Fuels Fund to offset the costs of purchasing and installing a new LNG production facility using landfill gas from the Altamont Landfill in Livermore, California.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Over the past few months, there have been several plant/facility breakdowns that have led to short supply of liquefied natural gas (LNG) fuel for the Southern California area.  The shortages have created 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 re-fueling 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 alternative fuels. 

At the November 2005 meeting, the Board authorized the release of an RFP to solicit proposals for facilitation of the local production of LNG fuel; however, proposed projects located outside of the South Coast district would be considered if the production of LNG was to be based on renewable fuels such as landfill gas. Cost-share proposals from qualified LNG refueling facilities for increasing on-site LNG storage capacity were also solicited. The minimum amount of additional storage required to be considered was at least 6,000 gallons. Total amount of funding for the subject RFP was $500,000.

Proposal

Three proposals were received by January 20, 2006 (the closing date of the solicitation) totaling $3.72 million in requested funding. All proposals received in response to RFP #2006-11 were evaluated and scored by a diverse, technically qualified panel in accordance with criteria contained in the RFP.  The evaluation panel’s technical scores for each proposal are provided in Attachment A.  Two of the three proposals are deemed technically qualified. Staff recommends funding the two technically qualified new proposals in the total amount of $500,000.

The RFP was divided into two parts: Scope #1 and Scope #2. Interested Proposers could bid on each scope independently or on both.  The goal of Scope #1 was to provide cost-share funds to assist Contractors in the development of an LNG production plant(s) in the SCAQMD.  The funding available under the RFP was designed to offset the capital investment costs associated with the design, construction and installation of a natural gas or landfill gas based liquefaction plant. Proposed projects were 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. If the project involved landfill gas as the basis for LNG production, a complete and detailed description of the process and project financing was required.

The goal of Scope #2 was to provide cost-share funds to assist Contractors in installing new or additional LNG storage either at their own re-fueling facility or at another site in a cooperative purchasing agreement. Applicants for both Scope #1 and Scope #2 could include public agencies or private entities.  Cost-share participants could also include state and local governments, local natural gas providers, manufacturers of natural gas liquefaction systems, LNG suppliers, LNG marketers, and end users of the LNG fuel.

Total AQMD funding available for the RFP for both Scope #1 and Scope #2 was $500,000.  These funds were available as cost-share funds for the development of a gas liquefaction plant, additional LNG storage, or both within the SCAQMD (or outside if renewables are used to make the LNG). 

As mentioned above, three proposals were received by the RFP deadline of January 20, 2006. All proposals were evaluated and scored by a diverse, technically qualified panel in accordance with criteria contained in the RFP.  The evaluation panel’s technical scores for each proposal are provided in Attachment A.  Two of the three proposals are deemed technically qualified. Staff recommends funding the two technically qualified new proposals in the amount of $500,000. In addition to the existing fueling network and LNG fuel provider, these projects’ facilities will help reduce current LNG shortages.

Table 1.  Projects Proposed to be Funded

Waste Management - USA Waste of California

USA Waste of California is proposing to construct an LNG production facility based on renewable fuels from landfill gas exceeding the minimum capacity of 6,000 gallons per day. The proposed site is the Altamont Landfill in Livermore, California. It is owned and operated by Waste Management. The facility will produce 12,400 gallons per day of LNG for heavy-duty trucks.  The facility also includes a 30,000-gallon storage tank as well as a new public access fueling station for LNG-powered fleets in the Bay Area. Approximately 90 percent of the LNG produced will effectively be utilized as fuel by Waste Management Inc. (WMI) heavy-duty refuse trucks operating in the SCAQMD. WMI is planning on installing a second unit in the South Coast Basin after conducting performance evaluations of the Altamont unit.  The total cost of the project is estimated to be $13 million. Staff proposes funding in the amount of $300,000.

Waste Management - USA Waste of California

USA Waste of California is proposing to install 16,000 gallons of additional LNG storage capacity to an existing 16,000 gallons for a total capacity of 32,000 gallons. The storage capacity will be added to the existing L.A. Metro Hauling District LNG fueling facility in Long Beach, California. The total cost of the new storage is estimated to be $440,000. Staff proposes funding in the amount of $200,000.

Benefits to AQMD

The 2003 AQMP relies on the expedited implementation of advanced technologies and clean-burning fuels in Southern California to achieve air quality standards.  By constructing more natural gas fueling 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 CNG and LCNG stations 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 Basin.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the following publications:

Additionally, potential bidders may have been 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 was 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/).  Information was also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

In addition to publication in the above-cited publications, over 100 individual RFP notices were mailed to interested businesses and individuals.

Bid Evaluation

Proposals received were evaluated by a diverse, technically qualified panel in accordance with criteria contained in the attached RFP. The evaluation panel consisted of a representative from the California Energy Commission, an independent technical expert, and the AQMD Fleet Rules Implementation Manager.  The panel breakdown was one Asian/Pacific Islander and two Caucasian; one female and two male. Three proposals were received with a requested funding totaling $3,720,000. Attachment A provides a summary of the proposals received, which met the minimum technical scores, ranked by the scores from the evaluation panel.  Both bids which met the minimum technical standards are being recommended for funding.

Resource Impacts

Funding, in an amount not to exceed $500,000, is proposed to fund the two recommended proposals shown in Table 1.  Funding of $500,000 is from the Clean Fuels Fund as originally allocated by the Board.

Attachment

A - Evaluation of Proposals RFP #P2006-11

Attachment A

Evaluation of Technically Qualified Proposals Submitted Under RFP P2006-11