RGVSG RENEWABLE ENERGY PROJECT

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RGVSG RENEWABLE ENERGY PROJECT

• Presentation prepared by

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INTRODUCTION

• RGVSG proposes to construct a 23.8 million Clean
  Energy and Clean Air Project
• The Project will involve partial funding from the
  North American Development Bank (NADB)
• Certification by the Border Environment
  Cooperation Commission (BECC) is required

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PROJECT OBJECTIVES

• Project needs to result in a net reduction in the
  emission of air pollutants
• The Upgraded Facility should utilize all of the
  bagasse for on-site energy production with excess
  energy available that can be sold
• Improve efficiency for existing needs and for
  future expansion of Mill capacity

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BACKGROUND

• RGVSG Mill has been in existence since 1973 and
  employs 188 full-time personnel (approximately
  565 personnel during the grinding season)
• The RGVSG Cooperative has a membership of 127
  sugar growers and is the only sugar mill in the
  State of Texas

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BACKGROUND

• Project is located 2 ½ miles west of the City of
  Santa Rosa on Hwy 107
• The RGVSG members actively farm up to 47,000
  acres of sugar cane (3 of the arable land in
  RGV) yet provides almost 12 of the GDP in the
  RGV (75M/Yr)

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PROJECT HISTORY

• RGVSG contracted with Schaffer Associates in
  1998 to conduct planning and design work for a
  two-phase expansion of the Mill
• Schaffer Associates were the original design
  engineers in 1972 when the Mill was constructed
• Phase 1 includes Bagasse Boiler Upgrade
• Phase 2 includes Boiler House Upgrades

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PROJECT HISTORY

• C-K Associates were contracted by the RGVSG in
  2000 to complete the air emissions report,
  computer modeling and permit applications for the
  Air Quality Permit
• In 2002 RGVSG determined that due to market
  conditions and past performance, funding for the
  23.8 million Project would be sought to
  implement the design of the Phase 1 Mill
  Expansion

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PROJECT HISTORY

• RGVSG contacted NADB to request partial funding
  under the new mandate program by NADB
• Turner Collie Braden Inc. (TCB) was contracted
  by the RGVSG to coordinate and prepare the
  required Project Certification Documents for BECC
  approval
• NADB contracted Pollutech International Limited
  to complete the technical review on behalf of the
  NADB

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SUGAR MILL PROCESS

• The proposed Mill Operation is 200 operating days
  based on 100 new boiler capacity and a maximum
  of 70 old boiler capacity
• Plant was originally designed for 7,500 tcd (tons
  of cane per day) which has been upgraded to
  10,000 tcd and will remain at this capacity for
  the Project
• Potential to expand to 15,000 tcd with the
  implementation of Phase 2 Improvements in the
  future and change in US Quota (Farm Bill)

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SUGAR MILL PROCESS

• General Process of Operation includes
• - receipt and weighing of cane at the mill
• - washing of raw cane to remove soil
• - heavy duty shredding to prepare for milling
• - milling (7 mills in tandem) to remove 95 of
  sugar juice in cane
• - sugar juice limed and heated for contaminant
  removal
• - clarification of heated and limed juice
• - clarified juice to pre-heaters to produce
  concentrated syrup
• - concentration of syrup in vacuum pans to form
  crystalline sugar
• - batch centrifugation to separate sugar from
  liquor (molasses)
• - storage of crystalline sugar in the sugar
  warehouse

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Receipt of Cane at Mill
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Washing/Shredding of raw cane
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Milling of Cane (7 mills in tandem)
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Heating/Evaporation
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Separation of Sugar/Molasses
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Storage of Raw Sugar
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Storage of Molasses
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Bagasse Handling/Storage Area
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PROCESS FLOW CHART
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MASS BALANCE SUMMARY

• NOTE WATER MAKES UP THE REMAINING 48 LOST TO
  EVAPORATION

Component Percent of Cane 5 Year Average () Production Data (tons/year)
Raw Cane 100 1,600,000
Sugar 9.85 157,571
Molasses 3.7 59,283
Bagasse 30 480,296
Filter Mud 6.1 97,642
Cane Wash Sand 1.2 19,192
Ash 1.36 21,823
Air Emissions 0.03 471
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PROJECT DESCRIPTION

• The proposed project includes
• - conversion of all bagasse conveyors to fully
  automated belt conveyors
• - expansion and upgrade of the bagasse storage
  building
• - conversion of the boiler building to handle
  the modified bagasse conveyor system
• - installation of a new high efficiency boiler
• - new condensate storage tank
• - rebuilt 6,000 KW turbine generator

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New Bagasse Handling System

• Necessary to remove limitations on the delivery
  of the primary fuel source for the boilers
• Significantly reduce or eliminate the need and
  associated costs of the front end loaders and
  operators

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New Boiler

• The addition of a new boiler to increase steam
  capacity by 300,000 lbs/hr for total capacity of
  800,000 lbs/hr (60 increase)
• A wet scrubber and mechanical dust collector to
  reduce air emissions
• Since the Plant only needs 540,000 lbs/hr to
  operate, existing boilers are operating at
  reduced capacity (reduced air emissions from both
  existing and new boilers)

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TURBINE GENERATOR

• New Boiler will be coupled with a Topping Steam
  Turbine (already purchased) and a new 6000 KW
  Turbine Generator
• Will bring installed power to 11,000 KW
• Will enable the Plant to produce energy for
  operation and export (sell) excess energy

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PROJECT BENEFITS

• Reduction in use of fossil fuels through the
  implementation of a renewable energy source
  through production of 11 MW leaving 5 MW for sale
• Eliminates the need for purchase of 1.7 MW of
  outside energy that will be available for use by
  others
• A 42 reduction in total mass of air pollutants
• Increased level of service to RGVSG members

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PROJECT COSTS

• Source NADB Pollutech Report
• Note Payback does not show any cost recovery
  from the sale of power

Process Upgrade (10,000 tcd) Capital Cost Annual Cost Savings Payback Period (years)
Bagasse Handling 6,442,532 247,478 26.0
Boiler Upgrades And Turbine Generator 17,384,405 1,853,120 9.4
Total Upgrade 23,826,937 2,100,598 11.3
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PLANT POWER BALANCE
Year Natural Gas Purchased Electricity Purchased Purchased MW Average Day Total Demand MW Bagasse Power MW Grid Power - Sale Purchase
1998 Mft3 160,332 438,278 KW 6,942,600 423,731 2,042 hrs 3.40 MW 239,211 tby 0.12 MW 3.40 MW
1999 Mft3 228,638 536,114 KW 8,354,400 486,289 2,939 hrs 2.85 MW 346,033 tby 0.12 MW 2.85 MW
2000 Mft3 268,171 701,962 KW 8,841,600 550,183 2,485 hrs 3.56 MW 316,836 tby 0.13 MW 3.56 MW
2001 Mft3 324,482 2,005,955 KW 17,906,400 1,363,775 4,076 hrs 3.80 MW 457,573 tby 0.13 MW 3.80 MW
2002 Mft3 23,210 52,723 KW 10,661,592 697,058 3,936 hrs 2.71 MW 457,573 tby 0.14 MW 2.71 MW
Typical Day 6 MW 4.3 MW 1.7 MW
Future KW 0 0 3,600 hrs 0 MW 6 MW 11 MW - 5 MW
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PLANT POWER SUMMARY

• Note based on 24/hr day, 150 days per year
  (3,600 hours/year)
• Source NADB Pollutech Report, January 2003

Operating Capacity Supply (kw/hr) Demand (kw/hr) Deficit (-) Excess () (kw/hr) Power Purchased (0.051/kw) Power Sold (0.025/kw)
Current production (10,000 tcd) 11,000 6,000 5,000 450,000
Bonus for reduce grid draw 1,700 312,120
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AIR QUALITY

• The RGVSG expect to receive the draft permit from
  the TCEQ for the Mill Operations issuance of
  final permit within 60 days after public comment
  period (Consolidated Permit No. 114)
• The RGVSG is defined as a major stationary
  source under the Federal Clean Air Act
• The RGVSG also has a Cane Burning Permit

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AIR QUALITY

• RGVSG is permitted for
• - 2,490.4 tpy CO
• - 0.54 tpy SO2
• - 233.2 tpy Nox
• - 222.08 tpy CO
• - 443.88 tpy VOC
• As a result, the RGVSG Mill is subject to PSD
  Regulations (Prevention of Significant
  Deterioration) thus must conduct analysis of BACT

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AIR QUALITY

• The proposed air quality permit limits the
  operation of the existing boilers at 70 capacity
  and the new boiler at 100 capacity (note power
  required for 10,000 tcd results in 29 capacity
  for old boilers)
• The reduction in total air emissions for the
  upgraded facility results from the reduced
  operation of the existing boilers and increased
  efficiency of the new boiler

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PSD EVALUATION

• Growth Analysis No additional air emissions
  from off-site growth
• Air Quality Impact Analysis modeling analysis
  adequately evaluates the total ground level
  concentrations of NO2 from improvements
• Soils/Vegetation Analysis the projected NO2
  concentrations are below the standards and
  significant level thus no adverse impact
• Visibility Impairment Analysis plant is located
  in sparsely populated area with no scenic vistas
  or airports thus no impairment
• Area Impacts the plant is located 1,110 km from
  the closest Class 1 Area (Big Bend) thus no
  impact (gt100 km separation)

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PROJECTED EMISSIONS

• 1 Actual reported emissions based on stack
  testing of October 2001
• 2 Projections from Pollutech Analysis Boilers
  1 to 4 at 34, new Boiler at 90

Current Emission Rate (tpy)1 Old Boilers at 34 Cap (tpy) New Boiler at 90 Cap (tpy) Total Plant Emissions2 Emissions Change (tpy) Emissions Change ()
CO 2458 1091 229 1320 -1138 -46.3
SOx 2.1 0.9 0.01 0.91 -1.2 -55.3
Nox 482 214 225 439 -43 -9.0
PM10 385 171 27 198 -187 -48.6
VOC 157 70 9 79 -78 -50.0
Total 3484 1547 489 2036 -1448 -41.6
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CROP BURNING

• In addition to the Air Quality Permit for the
  Plant, the RGVSG also has a Crop Burning Permit
  under Order 94-35
• The cane burning is authorized only until such
  time that an alternative method of harvesting
  becomes technologically practicable and
  economically reasonable and which would not
  require outdoor cane burning

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CROP BURNING

• Permit was developed through input of the
  Sugarcane Burning Task Force which included the
  Sierra Club
• There are a number of conditions that must be met
  that include
• - RGVSG shall report each year on program to
  stimulate development of harvesting methods that
  eliminate outdoor burning
• - Submission of a comprehensive map of burn
  areas prior to harvesting
• - A series of preharvet burning conditions that
  limits burns to specific times and conditions
  and maximum number of acres per day in each
  quadrant (200 acres)
• - RGVSG was required to monitor cane burn for a
  1 year period after permit was issued in 1994 by
  an environmental firm for PM10 emissions before,
  during and after burns to set the baseline.

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CROP BURNING

• RGVSG is continuing to evaluate alternative
  technologies to cane burning at this time
• This past year the RGVSG reported that almost 30
  of the cane was green harvested and that they
  project this to increase in the future

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ENVIRONMENTAL ASSESSMENT

• TCB has provided an environmental assessment of
  the project in support of the Step 2 Report
• These findings are summarized below
• - Air Quality impacts are significantly reduced
• - Project promotes the use of renewable energy
  sources
• - Project reduces reliance on fossil fuels
• - There are no water/wastewater issues, Plant is
  effectively Zero Discharge although a Discharge
  Permit is in effect

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ENVIRONMENTAL ASSESSMENT

• RGVSG has a Stormwater Pollution Prevention Plan
  with proactive monitoring
• Cumulative Impacts are positive to the
  environment
• Positive socioeconomic impact through short-term
  impacts due to construction and long-term due to
  increased sustainability and efficiency
• RGVSG is proactive towards environment as
  evidenced by P2 Site Assistance Visit/Small
  Business Compliance Audit/TCEQ Pilot EMS Program

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BECC CRITERIA
BECC CRITERIA COMPLIANCE
Alternative Analysis ?
International Treaties and Agreements ?
Human Health and Environment ?
Compliance with State and Federal Regulations ?
Environmental Impact Assessment ?
Technical Feasibility ?
Appropriate Technology ?
Operation and Maintenance Plan ?
Design Regulations and Standards ?
Financial Feasibility ?
Community Participation Plan ?
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PROJECT STATUS

• Currently, the design has been completed for the
  Phase 1 and Phase 2 Expansions with some portions
  of Phase 1 already being bid with analysis of
  contractor bids
• RGVSG is seeking certification approval by the
  BECC in March 2003
• The Step 2 Report and Technical Evaluation by
  NADB will be completed by February 3, 2003

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PROJECT SCHEDULE

• Project approval on March 27, 2003
• Completion of PPA and Loan Closings in late
  2003/early 2004
• Completion of Bagasse Handling Facilities in 2004
• Completion of Boiler/Generator Facilities by
  April 2005 (12 months lag time from order to
  delivery of boiler)

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PUBLIC COMMENT

• Remember to sign the attendance log and survey
• If you do not wish to speak, written comments may
  be submitted to
• Rio Grande Valley Sugar Growers, Inc.
• P.O. Box 459
• Santa Rosa, Texas 78593
• Attention Jack Nelson, President
• Comments will be accepted up to February 3, 2003