Fact Sheet, Attachment A BTA Determination – NPDES Permit ...

Fact Sheet, Attachment A – BTA Determination of 55 Delaware City Refinery (DCR)

Draft – June 8, 2011

Fact Sheet, Attachment A BTA Determination – NPDES Permit Requirements For

Cooling Water Intake and Discharges at Delaware City Refinery and Power Plant (DCR)

Table of Contents

1 Summary ..................................................................................................................... 3 2 Background ................................................................................................................. 6 3 Regulatory framework.................................................................................................. 9

3.1 ―Best Technology Available‖ (BTA) for Cooling Water Intake Structures ...................... 9

4 BTA Determinations, General Discussion ...................................................................11 5 BTA Determination for DCR Cooling Water Intake Structures .....................................13 6 Supporting Information for BTA Determination,...........................................................14

6.1 Age of Equipment and Facilities Involved ....................................................................14

6.2 Process Employed/Engineering Aspects of the Application of Various Types of Control

Techniques/Process Changes. ...................................................................................14

6.2.1 Existing Intake Configuration ...............................................................................14

6.2.2 Problems Associated with Existing Intake Configuration ......................................15

6.2.3 Impingement and Entrainment Impacts ................................................................23

6.2.4 Technologies to Reduce Impingement and Entrainment ......................................25

6.2.5 Delaware River Conditions Near the Intakes ........................................................26

6.3 Economic Achievability ...............................................................................................31

6.3.1 DCR Parent Corporations ....................................................................................31

6.3.2 BTA Cost Offsets .................................................................................................32

6.3.3 Cost of BTA and Impacts on DCR Parent Corporations .......................................35

6.3.4 Cost of BTA and Impacts on DCR Itself ...............................................................37

6.3.5 Impact of BTA Cost on Consumers ......................................................................42

6.4 Non-Water Quality Environmental Impacts .................................................................43

6.5 Other Factors Permitting Jurisdiction Deems Appropriate ...........................................44

6.5.1 Cumulative Impacts, Considering Other Cooling Water Intake Structures (CWIS)

44

6.5.2 Benthic Impacts of the Existing Cooling Water Flows in Locally Shallow Waters .47

6.5.3 Benefits Beyond Those to the Site Itself ...............................................................51

7 Glossary .....................................................................................................................55



Table of Figures

Figure A-1. Total Daily DCR and Other Intake Volumes, Shown for an Estuary Depth of 20 Feet ....................................................................................................................................... 5

Figure A-2. Benefits Categories for Reducing Impacts from Cooling Water Intake Structures .... 6 Figure A-3. Daily Volume of Delaware River Affected by DCR Intake ........................................ 8 Figure A-4. Once-Through Non-Contact Cooling Water Flows for the Delaware City Power Plant

(DCPP) and Refinery (DCR) ..........................................................................................10 Figure A-5. Layout of Intake Channel at the Delaware City Refinery .........................................15 Figure A-6. Intake Channel Siltation Choke Areas ....................................................................18 Figure A-7. Intake Channel Flow Velocities Increase, as Siltation Reduces Channel Depth ......19 Figure A-8. Frequency of Low Tides That Can Result in DCR Cooling Water Intake Problems, 20 Figure A-9. ―Wind Rose‖ – Direction, Speed and Frequency of Winds Near DCR Intake ..........21 Figure A-10. Hourly Air & Water Temperatures for Delaware River, Near the DCR Intake ........22 Figure A-11. Frequency of Low and High Delaware River Water Temperatures, 2009-2010 Data

......................................................................................................................................23 Figure A-12. DCR Daily Cooling Water .....................................................................................24 Figure A-13. Delaware River Water Depths Near the DCR Intake .............................................27 Figure A-14. Detail – Delaware River Depths Near the DCR Intake and Discharge ..................28 Figure A-15. Monitoring Results at Locations in Delaware River ...............................................29 Figure A-16. Parcels Owned by DCRC .....................................................................................30 Figure A-17. U.S. Gross Refining Margin Increases Since 4th Quarter 2009..............................39 Figure A-18. Number of Crude Oils (of 37 tracked by EIA) Available at 3, 5, & 7$/bbl Discounts

Vs. Average $/bbl Paid by U.S. Refiners .......................................................................40 Figure A-19. Margins (vs. 2009 Values) and Crude Oil Feedstock Discounts for DCR ..............42 Figure A-20. View Delaware City Power Plant, Looking West from State Route 9 .....................43 Figure A-21. View of Delaware City Refinery, Looking North From State Route 72 ...................44 Figure A-22. Total Lower and Bay Region Water Withdrawals, Exports, and Consumptive Use45 Figure A-23. Total Daily DCR and Other Intake Volumes ..........................................................46 Figure A-24. Delaware River Sediments & Habitats ..................................................................48 Figure A-25. Delaware River Shallows and Sediments Near the DCR Intake ............................49 Figure A-26. Benefits Categories for §316(b) ............................................................................53 Figure A-27. Estimated Losses To Local Economy for Recreational Fishing .............................53



1 SUMMARY

This ―Fact Sheet Attachment A‖ proposes and defends a ―Best Technology Available (BTA) Determination‖ for the cooling water intake structure (CWIS) at the Delaware City Refinery (DCR). Decades of court cases have established the idea that if a technology is not ―affordable‖, then it is not really ―available‖. To the limited extent that considerations of ―Affordability‖ are allowable in BTA Determinations under Clean Water Act §316(b), the assessment of ―Economic Achievability‖ considers the resources available from the parent corporation of a NPDES permittee. The existing CWIS directly kills many millions of organisms every year, and indirectly causes both air and water environmental impacts when cooling water intake interruptions result in operational upsets in Refinery operations, as well as consequent air and water discharge (NPDES) permit violations. Beyond the environmental impacts to the River and neighboring citizens, the existing CWIS adversely affects the profitability of the DCR itself. The Department has determined that BTA is a ―closed cycle cooling system‖ (that is, cooling towers), or its equivalence. The NPDES permit requirement then, for the existing refinery cooling water intake from the Delaware River, are

cooling water intake must be reduced by at least 90%, to 45.2 mgd; or

entrainment and impingement mortalities caused by that intake must be reduced by 90%, to a level commensurate with a 45.2 mgd water intake.

That is, if the permittee can achieve 90% reductions in entrainment and impingement mortalities by some other means than a closed-cycle cooling system, then the permit allows that alternative for compliance with CWA 316(b) requirements for CWIS. The Department may then require verification monitoring for that alternative, to ensure compliance with the 90% mortalities reductions requirements. The Department proposes to require the permittee to achieve these requirements as soon as possible, but no later than 10 years after the permit effective date. The discussion below shows that the proposed BTA is ―affordable‖, considering the viability and profitability of the DCR site itself, under anything other than historically dire economic conditions. Valero closed DCR on November 20, 2009. PBF Energy bought DCR, effective June 2, 2010, and began re-start the site in April, 2011. That begs the question, ―Will this BTA Determination affect the viability of the site?‖ The answer is, ―No‖. Those effects are a reasonable concern that is addressed in Section 6.3, ―Economic Achievability‖, beginning on page 31 of this document. Further, understanding the economic viability of the DCR itself helps in understanding how BTA costs will affect that viability. The shutdown of DCR was less caused by ―under performance‖ than by a confluence of dire circumstances in the wider U.S. Economy. ―Fact Sheet, Attachment B, BTA Determination – Baseline Economic Viability of Delaware City Refinery and Power Plant (DCR)‖ discusses those circumstances.



As shown in Table A-7 below, estimated total retrofit costs will be $75,100,0001. Amortizing

those costs over 20 years, the annualized cost of CCCS is $7,746,000. The BTA cost will increase costs by

$0.068 (6.8¢) per barrel to refine crude oil,2

$0.0016 (0.16¢) per gallon to produce gasoline,

$2.25 per year per consumer for total petroleum products. The Department estimates that the DCR has a net refining revenue of $1,500,000 to $2,600,000 per day, depending on market conditions.3 That is, prevention of only less than 4 days of those intake-related losses of production per year could completely offset BTA costs, more than paying for CCCS.4 In recent operating years, those problems have occurred more often than 2 day per year. In the past, the DCR has curtailed or completely shut down production, up to days at a time, due to problems with its existing intake structure:

siltation,

unusual tides,

unusual winds,

freezing, and

recirculation of heated water from the discharge into the intake.

Further, past DCR operators have cited those cooling water intake problems as cause for an emergency dredging permit request, for NPDES permit noncompliance, and for excess air pollution emissions.5 However, from past dredging and from 2009 - 2010 weather data, these circumstances can be expected to recur. Of course, some of those events happen on the same days, but that only makes intake problems all the more likely when events coincide.

1 http://www.swrcb.ca.gov/water_issues/programs/npdes/docs/cwa316b/symposium_2007jan/john_maulbetsch.pdf

2 Uses values at refinery capacity. At 2008 throughput rate of 166,000 bbl/day, those costs increases are

0.00202$/bbl (0.202 cents/gallon). The bases for cost estimates are shown in detail under Item 6.3, ―Economic Achievability‖ on page 18 below.

3 See Table A-11. Effect of BTA Cost for the Delaware City Refinery‖ on page 38.

4 See ―Table A-11. Effect of BTA Cost for the Delaware City Refinery‖, on page 39 Table A-11. Effect of BTA Cost

for the Delaware City Refinery. 5 ―Delaware Department of Natural Resources and Environmental Control (DDNREC) (Delaware City Refinery).

Our Delaware City Refinery is subject to 12 outstanding notices of violation (NOVs) issued by the DDNREC. Ten of the NOVs allege unauthorized air emission events at the refinery. Two NOVs allege solid waste violations. No penalties have been specified in these NOVs. We are pursuing settlement of these NOVs.‖ 10-K Form for 2008, page 18, http://www.sec.gov/Archives/edgar/data/1035002/000095013409003971/d66469e10vk.htm

http://www.swrcb.ca.gov/water_issues/programs/npdes/docs/cwa316b/symposium_2007jan/john_maulbetsch.pdf

http://www.sec.gov/Archives/edgar/data/1035002/000095013409003971/d66469e10vk.htm



Table A-1. Frequency of Events Associated with Problems in the DCR’s Current Cooling Water Intake Structure (CWIS)

Type of Intake Problem Frequency of Recurrence**

Notes

Siltation Every 6 Months Intake channel depth is ≤ 4 feet below MLW*

Unusual tides 4.3 Days/Year Low tide is ≥ 2 feet below MLW*

Unusual winds

13 Hours/Year Wind from Northwest at Speeds > 25.3 mph

59 Hours/Year Wind from Northwest at Speeds from 19.6 to 24.2 mph


Freezing 39 Days/Year Intake water temperature ≤ 32°F

Re-circulation of heated water from the discharge into the intake.

61 Days/Year Intake water temperature >83°F

* ―MLW‖ is ―Mean Low Water‖, the average water level at low tide. ** Except for siltation, numbers are yearly averages, from 2009 & 2010 local weather station.

For comparison, the EPA recommends a frequency of 1 day in 3 years as the allowable frequency for exceeding a water quality criteria.6 By that measure, the existing DCR CWIS, constructed in the 1950‘s, is just not designed robustly enough for local conditions, to keep problems ―acceptably‖ infrequent. The DCR is a significant part of the larger problem of the cumulative impact of multiple large cooling water intakes in the Delaware River. ―Figure A-1. Total Daily DCR and Other Intake Volumes, Shown for an Estuary Depth of 20 Feet‖ below represents those daily water withdrawals, relative to total withdrawals and to the areas of the River affected.

6 ―The Technical Support Document for Water Quality-based Toxics Control‖ (the ―TSD‖), §2.3.5, page 36,

http://water.epa.gov/scitech/swguidance/standards/mixingzones/upload/2002_10_25_pubs_owm0264.pdf.

Figure A-1. Total Daily DCR and Other Intake Volumes, Shown for an Estuary Depth of 20 Feet

http://water.epa.gov/scitech/swguidance/standards/mixingzones/upload/2002_10_25_pubs_owm0264.pdf



The mortality of weakfish due to the refinery is of special concern, since weakfish have declined throughout their range coast wide. The Delaware Bay stock has seen one of the earliest and steepest declines. Comparing ―Conditional Mortality Rates‖7, a 1 mgd8 intake volume at DCR kills 3 times as many fish as a 1 mgd intake volume at Salem. The Salem intake volume is 3,024 mgd (vs. DCR‘s 452 mgd), but does have some improvements, relative to the DCR intake. The total ―conditional mortality rate‖ for the combined effect of the DCR and the Salem Nuclear Power Plant intakes was 56% for Striped Bass. That is, just those two intakes killed more than half of the Striped Bass in the Delaware River. §6.5.1, ―Cumulative Impacts, Considering Other Cooling Water Intake Structures (CWIS)‖ on page 44 below discusses this in more detail. BTA for the DCR entails other benefits for the DCR itself and for the citizens of Delaware, as well as other Delaware Estuary States. Section 6.5.3, ―Benefits‖, on page 51 below discusses some of those benefits.

Figure A-2. Benefits Categories for Reducing Impacts from

Cooling Water Intake Structures9

2 BACKGROUND

7 The ―conditional mortality rate‖ (CMR) is the percent of population mortality caused by a stressor, such as a

cooling water intake structure 8 ―Mgd‖ is ―million gallons per day‖.

9 Ibid., ―Figure A9-1: Benefits Categories for §316(b)‖ in the referenced document



The Delaware City Refinery (DCR) is located in the Delaware Estuary Watershed. The Refinery complex includes the Delaware City Power Plant (DCPP), which produces power primarily for use within the Refinery. When operating, the DCR withdraws up to 452 million gallons of water each day from the Delaware River and circulates it through the facility to cool process equipment. The water is then discharged back to the Delaware River at elevated temperatures of up to 110° Fahrenheit. This ―once-through‖ cooling system has contributed to the depletion of the Delaware Estuary fishery by destroying many millions of organisms per year for just the four species studied in detail through ―entrainment‖ and ―impingement‖ impacts:

Entrainment – Water taken from the Delaware Estuary Watershed by the facility contains aquatic life, much of which is early life-stage fish eggs and larvae. These organisms are pulled through (or ―entrained‖) in the facility and killed by severe physical and chemical impacts and extreme water temperatures.

Impingement – Cooling water withdrawals also create a water velocity at the intake pipes which traps (or ―impinges‖) many juvenile and mature fish against the intake screens. Altogether, over a billion organisms are lost to entrainment and impingement each year, including species of commercial and recreational importance, and forage fish and other organisms integral to the food web.

The Table below is a very broad summary of fish impinged and entrained by the DCR intakes during a 2 year study that began in April, 1998.

Note that the above table counts only the 4 ―Representative Important Species‖. During Year 1 of that Study, a total of 47 different species were caught and identified during Year 1 of that Study, and 36 different species in Year 2.

10 From ―Impingement and entrainment at the Cooling Water Intake Structure of the Delaware City Refinery, April 1998 – March

2000, Final Report‖, Tables 17 through 23, prepared by Normandeau Associates, Inc. for Motiva Enterprises, LLC, May 2001. 11

―Equivalent Adult‖ in this BTA Determination is the number of fish that would survive to 1-year old at natural mortality rates.

Table A-2. RIS* Fish Killed by the DCR Cooling Water Intake During a 2 Year Intake Study10

Total Number of Organisms Number of Equivalent Adults11

Study Year Entrained Impinged Total I&E % Entrained % Impinged Entrained Impinged Total I&E % Entrained % Impinged

Year 1** 44,270,000 176,976 44,446,976 99.6% 0.4% 1,719,472 73,824 1,793,296 95.9% 4.1%

Year 2*** 46,110,000 362,159 46,472,159 99.2% 0.8% 1,558,532 200,798 1,759,330 88.6% 11.4%

2-year Average

45,190,000 269,568 45,459,568 99.4% 0.6% 1,639,002 137,311 1,776,313 92.2% 7.8%

* RIS (Representative Important Species) are Striped Bass, White Perch, Bay Anchovy, and Weakfish for this intake study.

** Year 1 was from April, 1998 through March, 1999. *** Year 2 was from April, 1999 through March, 2000. Table A-5. Fish Killed by the DCR Cooling Water Intake on page 25 below shows more details of the results of

this Study.



Consistent with the Clean Water Act, the Department must require that DCR‘s cooling intake system reflects the best technology available to minimize the facility‘s adverse environmental impacts. Upgrading the Refinery‘s cooling system with modern technologies that cut water withdrawals will enable the DCR to reduce its harmful effects on the Delaware Estuary while continuing to refine crude oil into gasoline, diesel fuel, and other petroleum products. The figure below represents the volume of water equivalent to the DCR‘s 452 mgd daily intake from the Delaware River, at both estuary and the much shallower local water depths.

Figure A-3. Daily Volume of Delaware River Affected by DCR Intake

Shown at an Estuary Depth of 20 Feet (Yellow), and Local Water Depth (Red) This determination uses electric power industry estimates12 of costs to retrofit an existing once-through cooling water system with a closed-cycle cooling system. Those cost estimates are applicable to the DCR because the mechanical and engineering fundamentals for transferring large amounts of heat from large amounts of water are the same for the DCR refinery and power plant complex as for sites that only generate electricity.

12

CCCS technologies and retrofit costs for the petroleum industry are the same. Construction costs may be less for refineries in that cooling towers can be built at multiple locations within the refinery, nearer to processes and process clusters that use cooling water. This offers more flexibility in piping design, and staging of construction projects, in comparison to CCCS construction at power plants.



3 REGULATORY FRAMEWORK

The Clean Water Act (CWA) is a 1977 amendment to the Federal Water Pollution Control Act of 1972, which set the basic structure for regulating discharges of pollutants to waters of the United States.13 The CWA‘s section §316(b) provide a foundation for regulatory agencies to address intakes of cooling water used at power generating utilities and other industrial sites. §316(b), ―Best Technology Available‖ for Cooling Water Intake Structures – §316(b) requires

that the location, design, construction and capacity of the cooling water intake structures (CWIS) reflect the "best technology available for minimizing adverse environmental impact" (BTA).

Regulatory requirements for cooling water intakes and discharges will be addressed within the framework of ―Best Technology Available for Cooling Water Intake Structures.‖ 3.1 “Best Technology Available” (BTA) for Cooling Water Intake Structures

Section 316(b) of the Clean Water Act14 requires that the location, design, construction and capacity of the cooling water intake structures (CWIS) reflect the "best technology available for minimizing adverse environmental impact" (BTA). The U.S.E.P.A. had promulgated a Phase II Rule for existing power plants. That Rule allowed that intakes could satisfy CWA requirements by achieving 60-90% reductions in entrainment, and 80-95% reductions in impingement mortality. The refinery NPDES permit (Permit No. DE0000256) has an expiration date of August 31, 2002, but has been administratively extended since then. At the time of the Phase II Rule promulgation, considering the very similar technology and environmental problems for power plant and manufacturing intakes, the Department determined to apply the Phase II for existing power plants on a BPJ basis to both the existing power plant and refinery at the Delaware City site. The Second Circuit Court of Appeals decision in Riverkeeper II remanded several provisions of the Phase II Rule: EPA‘s determination of BTA, the performance standard ranges, the cost-cost and cost-benefit compliance alternatives, and others. With so many provisions if the Phase II Rule affected, EPA subsequently remanded the entire Phase II Rule. Pending promulgation of a new Rule, EPA is continuing to require that re-issued NPDES permits include a determination of BTA, and a compliance schedule for BTA implementation. Under current regulations, existing facilities are subject to Clean Water Act §316(b) conditions that reflect BTA for minimizing adverse environmental impact on a case-by-case, best professional judgment (BPJ) basis.15

13

http://epw.senate.gov/water.pdf, page 171 14

―CWA 316(b)‖ 15

40 C.F.R. §§125.90(b) and 401.14

http://www.catf.us/advocacy/legal/CWIS/RiverkeepervEPA%20P2%2004-6692-ag_opn.pdf

http://epw.senate.gov/water.pdf

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=6a9294f1db5b7f24c26d7ee6718658d2&rgn=div8&view=text&node=40:21.0.1.1.15.10.16.1&idno=40

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=841f6483f28a198d248d33369e69be6d&rgn=div8&view=text&node=40:28.0.1.1.2.0.1.5&idno=40



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Figure A-4. Once-Through Non-Contact Cooling Water Flows for the Delaware City Power Plant (DCPP) and Refinery (DCR) Disagreeing with the 2nd Circuit Court, the U.S. Supreme Court concluded that the EPA had discretion, and had permissibly used that discretion, in considering reasonable cost-benefit analysis for establishing performance requirements for cooling water intakes.16 Still, the 60-90 and 80-95% compliance ranges are no longer in effect, pending EPA‘s promulgation of a new Rule. Those ranges do provide an idea of what the EPA in 2004 deemed a reasonable standard to apply nationwide. ―The lower end of the range would take into account sites where there may be more fragile species that may not have a high survival rate after coming in contact with fish protection technologies at the cooling water intake structure.‖17 When the Phase II rule was promulgated, industry had thought it could meet entrainment requirements through restoration, but that option was remanded by the 2nd Circuit Court decision for the Riverkeeper I challenge.18 The Rule and subsequent Supreme Court decision allow for the possibility that somewhere, nationwide, a CWIS may be able to use an alternative technology that is close enough to the benefits of closed-cycle cooling systems (CCCS) for reducing fish kills.

16

Decided 4/1/2009, http://www.supremecourtus.gov/opinions/08pdf/07-588.pdf, page 16. 17

Federal Register, http://www.epa.gov/EPA-WATER/2002/April/Day-09/w5597a.htm, page 17142. 18

―Riverkeeper I‖, U.S. 2nd

Circuit Court of Appeals Decision Feb. 3, 2004, page 43.

http://www.ca2.uscourts.gov/decisions/isysquery/6b91053a-e0c1-4f64-a129-5ecae196cd0f/3/doc/02-4005_pet.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/6b91053a-e0c1-4f64-a129-5ecae196cd0f/3/hilite/

http://www.supremecourtus.gov/opinions/08pdf/07-588.pdf

http://www.epa.gov/EPA-WATER/2002/April/Day-09/w5597a.htm

http://www.ca2.uscourts.gov/decisions/isysquery/6b91053a-e0c1-4f64-a129-5ecae196cd0f/3/doc/02-4005_pet.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/6b91053a-e0c1-4f64-a129-5ecae196cd0f/3/hilite/



The Department notes that, in the specific case of the DCR, the record does not support reductions of impingement and entrainment mortalities of less than 90%, given conditions at the site.19 The DCR contracted a Report20 of its CWIS impacts, with sampling done at the intake for 2 years, starting in April, 1998. The intent of that Report was to evaluate the impact of the DCR cooling water intakes on ―Representative Important Species‖: striped bass, weakfish, white perch, and bay anchovy. Dr. Desmond Kahn, of the Department‘s Division of Fish and Wildlife, reviewed that report. The following are excerpted from his comments.

Weakfish – ―The recent severe declines in the stock, however, mean that the additional mortality imposed by the refinery is of grave concern. … In 2007, the National Marine Fisheries Service estimate of the number of weakfish landed in Delaware by the recreational fishery was only 4,132 weakfish. Five years earlier in 2002, the estimate was that 121,884 weakfish were landed in the state recreationally. This is a decline of almost two orders of magnitude. The average number landed recreationally over the last five years was 12,157 weakfish. The estimated harvest foregone from the 1998 and 1999 refinery kill ranged from 29% to 46% of this number. The kill by the refinery is not expected to decline as the adult stock of weakfish has declined. That is because neither the coastwide assessment, nor the Delaware Division of Fish and Wildlife‘s index of Young of Year weakfish abundance has declined to any significant extent. Consequently, available data indicates that the production of young-of-year weakfish has not declined. Rather survival to catchable sizes has declined dramatically. Bay Anchovy – Normandeau (2001) estimated that 19.0% of anchovy in the Delaware Bay and River stock were killed by the refinery in 1998. This level exceeds the threshold of 15% set by Versar21 (1991) as an upper limit for mortality of a forage species. Normandeau states that the reason that mortality was estimated to be that high from the refinery in that year is that bay anchovy, a small species, is vulnerable to entrainment as a juvenile for a long period. Second, juveniles in the Delaware estuary system were heavily concentrated in a region near the refinery that was subject to entrainment during the period from late June through November. The cumulative impact of continual entrainment mortality over that period produced the relatively high mortality estimate.

Section 6.5.1. ―Cumulative Impacts, Considering Other Cooling Water Intake Structures (CWIS)‖ on page 44 below has additional discussion regarding total intake volumes, of all users, withdrawn from the Delaware River. 4 BTA DETERMINATIONS, GENERAL DISCUSSION

Identifying the best performing technology for the industrial category provides a starting point for determining the BTA, but it is not determinative by itself. The BPJ application of the BTA standard to a particular facility is conducted on a case-by-case, site-specific basis, and a

19

See Section 6.2.5.2. ―Delaware River Intake Water Quality‖ on page 21. 20

―Impingement and entrainment at the Cooling Water Intake Structure of the Delaware City Refinery, April 1998 – March 2000, Final Report‖, prepared by Normandeau Associates, Inc. for Motiva Enterprises, LLC, May 2001

21 The Department had contracted Versar, Inc. to assess compliance of large once-through cooling water intakes &

discharges in Delaware with Federal Clean Water Act requirements.

http://www.versar.com/



technology that works at one power plant might not actually be feasible at another plant due to site-specific issues (e.g., space limitations). Accordingly, a technology that would be infeasible at the DCR would not be the BTA for this permit, even if that technology worked at a different facility. In addition, it is also necessary to consider various other pertinent factors beyond the minimization of adverse intake impacts and technical feasibility. These factors include considerations such as economic feasibility, ―non-water‖ environmental effects, and energy effects, and these factors must be evaluated specifically with regard to the DCR. EPA has determined that the best performing facilities in terms of minimizing the adverse environmental impacts by CWISs at existing open-cycle power plants are facilities that have converted from open-cycle cooling to closed-cycle cooling using some type of ―wet‖ cooling towers.22 EPA‘s research has identified a number of facilities that have made this type of technological improvement. See Memorandum from Sharon DeMeo, EPA, to Canal Station NPDES Permit File (May 9, 2008). See also California‘s Coastal Power Plants: Alternative Cooling System Analysis, Tetra Tech, February 2008. As discussed herein, for facilities using salt water, converting to closed-cycle cooling using wet cooling towers can reduce intake flow and attendant entrainment and impingement by 70 to 98 percent, depending on factors such as any restrictions on chloride discharges. Thus, EPA‘s analysis leads to the general conclusion that converting an existing, open-cycle cooling system to a closed-cycle cooling system with wet cooling towers would be the best performing technology in this industrial category in terms of reducing entrainment and impingement.23

22

As discussed above, the highest feasible reduction that can be achieved by closed-cycle cooling using wet mechanical draft cooling towers at the DCR will need to be determined based on certain site-specific factors. DNREC has written the Final Permit to require 90% reductions that would be practicable and reasonably achievable for conditions at the DCR, based on an optimized closed-cycle cooling system for that facility.

While the use of ―dry‖ cooling might achieve an even greater marginal reduction in entrainment and impingement,

EPA has not identified a single case of a facility retrofitting from open-cycle cooling to dry cooling. Significant additional analysis would be required to determine whether a conversion to dry cooling would be feasible at Canal Station. Dry cooling, which would only achieve a relatively small additional marginal reduction in entrainment and impingement over the high end of the reduction range that can be achieved with wet cooling towers, is significantly more expensive, requires more space for installation and raises more significant noise concerns than wet cooling towers. In the absence of a single example of such a conversion ever having been implemented, EPA will not conclude that a conversion to dry cooling should provide the best performing technology benchmark for the Canal Station BTA analysis. See also Riverkeeper, Inc. v. EPA, 358 F.3d 174, 194-96 (2d Cir. 2004) (―Riverkeeper I‖) (upholding EPA‘s rejection of dry cooling as the BTA for the Phase I § 316(b) Rule addressing new facilities).

23 http://www.epa.gov/ne/npdes/mirantcanal/pdfs/Canal-RTC-SectionIX.pdf, page IX-25. Flow reduction

improvements could also be made without actually changing technology by simply reducing the amount of cooling water used by the power plant. To achieve impingement and entrainment reductions commensurate with CCCS, however, would likely require either substantial generating unit outages or increased thermal discharge. The latter could indirectly require curtailed generation if permitted thermal discharge limits would be exceeded. Requiring such cutbacks in generation, sometimes on a seasonal basis, has been required in some permits. See, e.g., Bulletin, Marine Resources Advisory Council, Vol. IX, No. 4, ‗Effects of Power Plants on Hudson River Fish,‘ (requirements for plant included scheduled plant outages); In the Matter of Florida Power Corporation, Crystal River Power Plant, Units 1, 2 and 3, Citrus County, Florida (Findings and Determinations Pursuant to 33 U.S.C. ' 1326; NPDES Permit No. FL 0000159), p. 8. Achieving flow reductions with closed-cycle cooling, however, allows a facility to reduce entrainment and impingement while also reducing its thermal discharges and continuing to generate and sell electricity (with a relatively small energy ―penalty‖ from lost efficiency and needing to meet cooling system needs). In this case, DNREC has evaluated intake flow reductions from pumping reductions

http://www.epa.gov/ne/npdes/mirantcanal/pdfs/Canal-RTC-SectionIX.pdf



Both EPA and DNREC conclude that from the standpoint of reducing entrainment and impingement mortality, converting to a closed-cycle cooling system using wet cooling towers would generally be the best performing technology for existing power plants with once-through cooling systems. However, note especially that this is not a finding of what would constitute the BTA on a State-wide, industrial category-wide basis. For this permit analysis, DNREC is making a site-specific BTA determination for Delaware City Refinery and is not making any sort of determination or undertaking an analysis of what would constitute the BTA on a State-wide, industrial category-wide basis. In this BTA determination, DNREC has considered site-specific conditions and features; DNREC has also considered costs of alternative technologies, to the extent that they come close to achieving the reductions in impingement and entrainment mortalities associated with CCCS, but are more ―cost-effective‖. 5 BTA DETERMINATION FOR DCR COOLING WATER INTAKE STRUCTURES

The Department is now in a good position to make and defend a BTA determination regarding the DCR Cooling Water Intake Structures (CWIS), considering the following:

EPA‘s determination that any permit issued must contain a determination of BTA based on Best Professional Judgment (BPJ)24;

EPA‘s Remand of the Phase II Rule for Cooling Water Intake Structures25;

The Supreme Court Decision26 on April 1, 2009; and

Department technical and economic review of BTA at this site. Considering site conditions and feasible alternative cooling water intake structure (CWIS) technologies at the DCR, technologies other than closed-cycle cooling systems (CCCS) do little to alleviate the primary problem of entrainment effects by the DCR CWIS, and would not be ―close enough‖ to be acceptable as BTA for this site. To address both impingement and entrainment at this site, cooling towers are best technology, and available. Recommended BTA for the remaining cooling water intake for Unit 3 then is a 90% reduction in cooling water intake volume (that is, intake flow reduced to 45.2 mgd), or the

without utilizing closed-cycle cooling, but has determined that this approach does not represent the BTA at IRGS. This site-specific evaluation is discussed both above and farther below. IRGS, however, always has the option of meeting permit limits by curtailing operations.

In the Phase I CWA §316(b) Rule, EPA also determined that entrainment and impingement mortality reductions

commensurate with closed-cycle cooling with wet cooling towers reflect the BTA for new facilities with CWISs. See 40 C.F.R. Part 125, Subpart I (Phase I CWA §316(b) Rule). This is secondarily supportive of the identification of closed-cycle cooling with wet cooling towers as the best performing technology for Canal Station because closed-cycle cooling at new facilities can be viewed as a ―transfer technology‖ for existing facilities at which a retrofit would be feasible. Of course, retrofitting a technology to an existing plant is different than installing that technology at a new plant; for example, the costs, engineering considerations, and other considerations may differ substantially.

24 Memorandum dated March 20, 2007 re. ―Implementation of the Decision in Riverkeeper, Inc. v. EPA, Remanding

the Cooling Water Intake Structures Phase II Regulation‖, U.S.E.P.A., Benjamin Grumbles. 25

EPA published suspension of Phase II Rule for cooling water intake structures on July 9, 2007; 72 Fed. Reg. 37107, http://edocket.access.gpo.gov/2007/pdf/E7-13202.pdf.

26 Supreme Court of the United States, Entergy Corp. v. Riverkeeper, Inc., Et Al., No. 07–588. Argued Dec. 2,

2008—Decided April 1, 2009, http://www.supremecourtus.gov/opinions/08pdf/07-588.pdf.

http://edocket.access.gpo.gov/2007/pdf/E7-13202.pdf

http://www.supremecourtus.gov/opinions/08pdf/07-588.pdf



entrainment and impingement mortalities caused by that intake must be reduced by 90%, to a level commensurate with a 45.2 mgd water intake. 6 SUPPORTING INFORMATION FOR BTA DETERMINATION,

Various statutes, regulations, and court discussions mention ―BAT‖ (Best Available Technology) and ―BTA‖ (Best Technology Available). In light of 2nd Circuit Court of Appeals and Supreme Court Decisions referenced above, the Department views the 5 parts of a BAT determination described below to also be applicable to its Best Professional Judgment determination for BTA. CWA27 §§ 301(b)(2)(A) and 304(b)(2)(B) and EPA regulations at 40 C.F.R. §§ 125.3(c)(2) and

125.3(d)(3) dictate that in setting BPJ-based BAT effluent limits certain additional factors be considered. ―The CWA requires EPA (or the NPDES permitting jurisdiction) to ‗take into account‘ the following factors when setting BAT limits for a particular point source category or

individual discharger:‖ 28

1. Age of Equipment and Facilities Involved, 2. Process Employed/Engineering Aspects of the Application of Various Types of

Control Techniques/Process Changes, 3. Economic Achievability, 4. Non-Water Quality Environmental Impacts, and 5. Other Factors Permitting Jurisdiction Deems Appropriate.

These topics are considered and discussed below. 6.1 Age of Equipment and Facilities Involved

Construction of the Delaware City Refinery began in the early 1950s, with start-up in 1957. The intake configuration is largely unchanged since then. DNREC has considered that the DCR cooling water intake structure and cooling system are existing equipment, and that installation of CCCS would entail retrofitting that equipment. See additional discussion under ―6.3 Economic Achievability‖ on page 31 below. 6.2 Process Employed/Engineering Aspects of the Application of Various Types of Control

Techniques/Process Changes.

The following discusses the current intake system, impacts of that system on aquatic life, and the intake technology alternatives that will both address those impacts and be feasible for site-specific conditions at DCR. 6.2.1 Existing Intake Configuration

From the discussion under ―6.5.1, Cumulative Impacts, Considering Other Cooling Water Intake Structures (CWIS)‖, the 452 mgd DCR intake is causing as much Conditional Mortality as a 1,356 mgd to 1,446 mgd intake at Salem, for Weakfish and Striped Bass, respectively.

27

http://epw.senate.gov/water.pdf 28

§4.2.3, ―Best Available Technology Economically Achievable-Based Limits‖, http://www.epa.gov/region01/braytonpoint/pdfs/BRAYTONchapter4.PDF, page 4-7

http://epw.senate.gov/water.pdf

http://www.epa.gov/region01/braytonpoint/pdfs/BRAYTONchapter4.PDF



The most unusual aspects of the intake are

screens are not mounted at the bank of the Delaware River and

the screen wash fish return system does not deliver the fish back to a main stream channel.

Figure A-5. Layout of Intake Channel at the Delaware City Refinery

As shown in Figure A-5 above, the screens are located at the southwest end of an open channel, 4,673 feet from the Delaware River side bank. Fish returned from those screens have to swim 4,326 feet (0.82 miles), against the intake flow, from the return point to find and reach the Delaware River. The ability of a fish to escape depends on both its swimming speed and endurance, which are both likely to be impaired by the impingement injuries. Fish swimming speed and endurance increases as fish grow into adults, but very young organisms have little (if any) speed or endurance to escape back to the main River channel. Even adult fish, once injured by the intake screens & return system, could have difficulty making it out of the intake channel. Anything that does not make it to the Delaware River will eventually be drawn back into the intake screens by the flow velocities within the intake channel. Additional injuries will make escape that much more difficult, if not impossible. 6.2.2 Problems Associated with Existing Intake Configuration

The DCR has experienced inability to draw in sufficient cooling water through the intake channel. This has resulted in environmental impacts, violations of air and water permits for the site, and production curtailments or even shutdowns. Also, intake channel siltation problems have resulted in ―Emergency‖ requests for dredging permits from the Department.29

29

DNREC Division of Water Resources Subaqueous Lands Permit No. SP-174/10



The following newspaper articles are two very public examples of these costs and losses:

News Journal 2/6/2004 – Jeff Montgomery

―State regulators ordered the company to propose an overhaul of fish barrier systems on the refinery's massive river-water intake as a condition for the approval, and directed the company to disclose the costs of current and past dredging work.

30

Department of Natural Resources and Environmental Control officials said the company had cut back on maintenance dredging of the channel in past years, then ran into trouble in November and twice in January when unusual weather and extremely low tides nearly emptied the waterway.

"They had a depth of 12 feet and this time they only asked to dredge to 7 feet because they wanted to save money and thought that was all they needed," said William Moyer, DNREC wetland and subaqueous land manager. "They didn't account for the type of weather we've had." …

The problem with the channel came to light after high winds, cold weather and a buildup of silt deprived the plant of cooling-water needs that can exceed 400 million gallons a day, disrupting operations and forcing the company to send waste gases to open-burning incinerators. An outdated barrier system to exclude fish from intake pumps allowed a clog during one of the episodes; weeds and silt caused problems on another.

News Journal 01/22/2004 – Jeff Montgomery

―Thousands of fish clogged cooling water intake pipes at the Motiva Enterprises refinery near Delaware City early Wednesday, leading to the release of smoke and pollutants in an emission the state's top environmental official called disturbing and avoidable.

Unusually low tides, a silted-up water-supply channel and strong northwesterly winds contributed to the problem, said John A. Hughes, secretary of the Department of Natural Resources and Environmental Control. It was the third such cooling water problem since November. Each time large quantities of wastes were sent to open-burning incinerators and tons of pollution were released into the air. ―

The following table provides highlights, from §§6.2.2.1 through 6.2.2.4 below, of the frequency of events that have been associated with DCR intake problems in the past.

30

§6.3.2, ―BTA Cost Offsets‖ on page 29 below discusses those cost BTA Cost Offsetsdisclosures.



Table A-3. Frequency of Events Associated with Problems in the DCR’s Current Cooling water Intake Structure (CWIS)

Type of Intake Problem

Frequency of Recurrence**

Notes

Siltation Every 6 Months Parts of Intake channel have depth ≤ 4 feet below MLW*

Unusual tides 4.3 Days/Year Low tide is ≥ 2 feet below MLW*

Unusual winds

13 Hours/Year Wind from Northwest at Speeds > 25.3 mph



Re-circulation of heated water from the discharge into the intake.

61 Days/Year Intake water temperature >83°F

* ―MLW‖ is ―Mean Low Water‖, the average water level at low tide. ** Except for siltation, numbers are yearly averages, from 2009 & 2010 local weather station.

For comparison, the EPA recommends a frequency of 1 day in 3 years as the allowable frequency for exceeding a water quality criteria.31 By that measure, the existing DCR CWIS, constructed in the 1950‘s, is just not designed robustly enough for local conditions, to keep problems ―acceptably‖ infrequent. 6.2.2.1 Siltation

Figure A-6 below shows details of local bathymetry near the DCR main discharge and intake. The DCR is in an area of heavy siltation, and they have to dredge twice per year to keep the mouth of the intake channel open. Also, siltation is not uniform within the intake channel itself, but does accumulate faster in areas (shown as dashed ovals in Figure A-6 below) within the channel. This causes shallow areas that choke off cooling water intake flow, to the extent that DCR has had to curtail or shut down refinery production.

31

―The Technical Support Document for Water Quality-based Toxics Control‖ (the ―TSD‖), §2.3.5, page 36, http://water.epa.gov/scitech/swguidance/standards/mixingzones/upload/2002_10_25_pubs_owm0264.pdf.

http://water.epa.gov/scitech/swguidance/standards/mixingzones/upload/2002_10_25_pubs_owm0264.pdf



Local Water

Depths(meters) Figure A-6. Intake Channel Siltation Choke Areas

Notes: Blue arrows show discharge and intake channel flow directions. Dashed yellow ovals show areas where heavy siltation has choked intake flows.

At the mouth of the intake channel, DCR‘s dredging task is to break through the sediments that accumulate on the west side of the Delaware River. Where that choke point will be within the channel is due to the silt ―settling velocity‖, which depends on the sizes and weights of the silt particles. As the intake channel becomes shallower, the DCR becomes more susceptible to operation emergencies, because it cannot draw in enough water to cool its processes. Moreover, the channel does not have to be ―zero depth‖ for production impairments and emergencies, caused by loss of cooling. 6.2.2.2 Low Tides

The DCR‘s dredging permit allows them to dredge to 12 feet below ―Mean Low Water‖ (+2 feet over-dredge allowance, i.e., down to 14 feet); they dredge twice per year. Recent dredging transect drawings show several locations within the channel where siltation has reduced depths to only 4 feet below MLW. Figure A-7 below shows that when the intake channel has just been dredged, flow velocities are 0.5 feet/sec; however, as siltation fills in the channel and reduces its depth, the 452 mgd intake has to flow faster, because it is squeezing through a shallower area. That increased velocity makes escape to the main channel even more difficult for fish. Most uninjured adult fish can swim against a 0.5 feet/second flow velocity and escape, but that assumes intake screens located at the Delaware River sidebank, and a screen wash system that does not make fish swim 0.82 miles to get out of the cooling water intake currents.



Figure A-7. Intake Channel Flow Velocities Increase, as Siltation Reduces Channel Depth

From NOAA water level data for the years 2001 through 2010, the DCR can expect ―unusually‖ low tides that will mean difficulties with the cooling water intake. Figure A-8 below shows the yearly frequency that a daily or hourly low tide has been ―x‖ feet lower than MLW. Those frequencies can reasonably be expected to continue, in the foreseeable future. For Example, Figure A-8 below shows that, on average

2.7 days per year have a low tide that is 2 feet lower than "Mean Low Water", and

4.3 days per year have a low tide that is 2 or more feet lower than "Mean Low Water" (4.3 = 0.4+1.2+2.7).



0.41.2

2.7

5.9

14.6

0.72.4

5.8

15.8

39.9

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-3.0 -2.5 -2.0 -1.5 -1.0

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Days/Year

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Figure A-8. Frequency of Low Tides That Can Result in DCR Cooling Water Intake Problems,

2001 through 2010 Data32 6.2.2.3 Winds

The newspaper articles above also mention ―strong northwesterly winds‖ as causing problems with the intake. Figure A-9 below is a ―Wind Rose‖ diagram, showing how frequently (% of the time) and how strongly winds blow from eight compass directions. The band color indicates wind speed. Thickness of the band indicates the % of the time winds of that speed occur.

32 http://www.tidesandcurrents.noaa.gov/data_menu.shtml?stn=8551762 Delaware City, DE&type=Datums

http://www.tidesandcurrents.noaa.gov/data_menu.shtml?stn=8551762%20Delaware%20City,%20DE&type=Datums



Figure A-9. ―Wind Rose‖ – Direction, Speed and Frequency of Winds Near DCR Intake33

Table A-4 below shows how many hours per year that winds blew most strongly from the northwest.34

Table A-4. Number of Hours in 2009 & 2010 with Winds Blowing from the Northwest

Wind Speed Number of Hours in 2009 & 2010

Hours per Year (Knots) (mph)

11 to 17 12.7 to 19.6 805 402

17 to 21 19.6 to 24.2 118 59

≥22 ≥25.3 26 13

6.2.2.4 Low and High Intake Water Temperatures

Low intake water temperatures can mean problems with blockage of the intake by icing, especially at the intake screens. High intake water temperatures limit the ability of the cooling water system to effectively cool process equipment. At the least, the site has to intake more water, with corresponding increases in impingement and entrainment, to achieve adequate

33

http://www.tidesandcurrents.noaa.gov/data_menu.shtml?stn=8551762 Delaware City, DE&type=Datums 34

Ibid.




cooling of equipment. If the cooling system cannot keep up with the heat generated by the processes, the site may have to reduce refining rates to reduce the heat generated. Figure A-10 below shows hourly Delaware River water temperatures at a monitoring station located on a pier 4,700 feet southeast of the mouth of the DCR intake channel.

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Figure A-10. Hourly Air & Water Temperatures for Delaware River, Near the DCR Intake35

Figure A-11 below shows the number of days per year water temperatures were below freezing temperatures (32°F) or above 81°F. Data are as reported for 2009 & 2010 at a National Oceanographic and Atmospheric Administration (NOAA) monitoring station located on a pier 4,700 feet southeast of the DCR intake.

35

http://www.tidesandcurrents.noaa.gov/data_menu.shtml?stn=8551762 Delaware City, DE&type=Datums




2

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Figure A-11. Frequency of Low and High Delaware River Water Temperatures, 2009-2010 Data

6.2.3 Impingement and Entrainment Impacts

DNREC‘s current effort to minimize the impact of the Delaware City Refinery‘s cooling water intake started in 1990. DNREC contracted a consultant, Versar, in to ―assess the regulatory status of 12 facilities by reviewing available information for determining the compliance of thermal discharges and water intake structures with Delaware‘s Water Quality Standards and Section 316 of the Clean Water Act.‖36 Considering these recommendations and the regulations that were effective when the existing permit was issued, Special Condition No. 13 of the existing NPDES permit required the following: ―13. No later than one (1) year after the permit issuance date, the permittee shall submit a

‗Study Plan for Assessing Impingement and Entrainment Effects of Water Intake Structures of the Motiva Enterprises Delaware City Refinery‘ to the Department for written approval. This Study Plan shall address

a. impingement (sampling duration and frequency, screen operation, mortality effects,

and collection efficiency tests) over a least a two (2) year duration, b. entrainment (sampling gear, duration, and frequency), and c. population field studies. The Study Plan may be modified if approved by the Department in writing.

36

―Technical Review and Permitting of the Thermal Discharge and Water Intake Structures for the Star Enterprise Delaware Refinery‖, page 1-1, Versar Inc., 2/28/92



0

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No later than three (3) years after permit issuance, the permittee shall submit to the Department a ‗Report of Impingement and Entrainment Effects of Water Intake Structures of the Motiva Enterprises Delaware City Refinery‘. This report shall provide impingement and entrainment study results: sampling results, surveys, database reviews, and calculations which substantiate the estimated impingement and entrainment effects.‖

The then permittee, Motiva, contracted a consulting firm, Normandeau, to do the required studies and reports. Motiva submitted their result, ―Impingement and Entrainment at the Cooling Water Intake Structure of the Delaware City Refinery, April 1998 – March 2000, Final Report‖ (―Motiva I&E Report‖). Page 5 of that report states, "Equivalent Adult Analysis was used to measure entrainment and impingement impact of DCR. This method estimates the number of adult fish that would have been added to the spawning population if they had not been killed by impingement or entrainment at an earlier life stage (Saila et al. 1997, EPRI 1999)."

Figure A-12. DCR Daily Cooling Water Intake Volume and Discharge Temperature

The DCR contracted a 2 year study37 of fish kills by their CWIS. Table A-5 below summarizes the results, showing two ways of measuring entrainment and impingement mortality impacts: ―Total number of organisms‖ and ―equivalent adults‖ killed. Percentages of fish lost through entrainment vs. impingement show relative impacts.

37 ―An Ecological Risk-Based 316(B) Evaluation For The Delaware River Generating Station, Volume I: Text‖,

Prepared for NRG Energy, Inc. Millsboro, DE by ENTRIX, Inc. New Castle, DE August 2003



Table A-5. Fish Killed by the DCR Cooling Water Intake38

Number of Organisms Equivalent Adults

39

Species Entrained Impinged Total I&E

% Entrained

% Impinged

Entrained Impinged Total I&E %

Entrained %

Impinged Ref.

Table

Year 1, Striped Bass 20,350,000 2,365 20,352,365 99.99% 0.012% 39,249 571 39,820 98.57% 1.434% 17

Apr-98 White Perch 5,890,000 66,251 5,956,251 98.89% 1.112% 168,946 50,970 219,916 76.82% 23.177% 19

Through Bay Anchovy 17,440,000 18,597 17,458,597 99.89% 0.107% 1,488,410 15,554 1,503,964 98.97% 1.034% 21

Mar-99 Weakfish 590,000 89,763 679,763 86.79% 13.205% 22,867 6,729 29,596 77.26% 22.736% 23

RIS_Total 44,270,000 176,976 44,446,976 99.60% 0.398% 1,719,472 73,824 1,793,296 95.88% 4.117%

No. of Species 47

RIS as % of Specimens 59% 74,781,351

Year 2, Striped Bass 8,660,000 2,608 8,662,608 99.97% 0.030% 11,741 386 12,127 96.82% 3.183% 18

Apr-99 White Perch 90,000 122,995 212,995 42.25% 57.745% 5,248 103,128 108,376 4.84% 95.158% 20

Through Bay Anchovy 35,710,000 152,189 35,862,189 99.58% 0.424% 1,497,280 91,500 1,588,780 94.24% 5.759% 22

Mar-00 Weakfish 1,650,000 84,367 1,734,367 95.14% 4.864% 44,263 5,784 50,047 88.44% 11.557% 24

RIS_Total 46,110,000 362,159 46,472,159 99.22% 0.779% 1,558,532 200,798 1,759,330 88.59% 11.413%

No. of Species 36

RIS as % of Specimens 32% 145,162,011

2-year Average 45,190,000 269,568 45,459,568 99.4% 0.6% 1,639,002 137,311 1,776,313 92.2% 7.8%

The study reported total number of species and specimens collected for impingement, but not for entrainment. The RIS species represent 59% and 32%, in study years 1 and 2 respectively, of impingement specimens collected for all species caught. For lack of information on other species, extrapolating those proportions to entrained organisms indicates that total organisms killed may be 75,000,000 to 145,000,000 per year. 6.2.4 Technologies to Reduce Impingement and Entrainment

At DCR, entrainment impacts are much larger than impingement impacts, by both measurements of ―Total number of organisms‖ and ―Total Equivalent Adults‖. Besides cooling towers, few technology alternatives (aquatic barriers, fine-mesh wedgewire screens, and fine mesh traveling screens) have the potential to achieve even the lower 60% entrainment reductions mentioned in the remanded Phase II regulations. See ―Table A-6. Effectiveness of Intake Structure Technologies‖ below.

38 From ―Impingement and entrainment at the Cooling Water Intake Structure of the Delaware City Refinery, April

1998 – March 2000, Final Report‖, Tables 17 through 23, prepared by Normandeau Associates, Inc. for Motiva Enterprises, LLC, May 2001

39 ―Equivalent Adult‖ in this BTA Determination is the number of fish that would survive to 1-year old at natural

mortality rates.



Technology comparisons assume closed-cycle systems (cooling towers) will have corresponding reductions in impingement and entrainment. ―Closed-cycle cooling systems use 96 to 98 percent less fresh water and 70 to 96 percent less salt water than once-through systems.‖43 The Department has considered achievable reductions for cooling water intakes from the Delaware River, and the possibility of eliminating the River intake altogether by use of fresh water sources. 6.2.5 Delaware River Conditions Near the Intakes

DNREC notes that converting to a CCCS would be practicable from an engineering standpoint. DNREC reviewed bathymetry and water conditions in the Delaware River near the DCR intakes, in evaluating feasible CWIS technologies and intake flow reductions achievable for a non-freshwater intake. At the least, the DCR should be able to achieve a 92% reduction in cooling water intake volume, by converting to a CCCS.

40

From ―National Pollutant Discharge Elimination System—Final Regulations to Establish Requirements for Cooling Water Intake Structures at Phase II Existing Facilities ―, Federal Register / Vol. 69, No. 131 / Friday, July 9, 2004 / Rules and Regulations, beginning on page 41598 of the Federal Register.

41 Ibid., page 41601 of the Federal Register, footnote No. 44.

42 ―Fine mesh‖ is 0.5mm. Reductions shown are only achievable for non-fragile organisms.

43 ―Riverkeeper II‖, U.S. 2

nd Circuit Court of Appeals Decision Jan. 25, 2007, page 30.

Table A-6. Effectiveness of Intake Structure Technologies40

Technology “reduction in entrainment

compared with conventional once-through systems”

“can reduce mortality from impingement by

up to”

Closed Cycle Cooling Systems41

Fresh Water Intake

96-98% 96-98%

Marine Water Intake

70-96% 70-96%

aquatic filter barrier systems 80 to 90%

99% fine-mesh wedgewire screens

wide-mesh wedgewire screens --

barrier nets -- 80 to 90%

Modified screens and fish return systems

--

60 to 90% fish diversion systems --

fine mesh traveling screens and fish return systems42

80 to 90%

“further reductions … in impingement mortality and entrainment”

―seasonal flow restrictions, variable speed pumps, and other operational measures and innovative flow reduction alternatives‖

15 to 30%

http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?position=all&page=41598&dbname=2004_register

http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?position=all&page=41601&dbname=2004_register

http://www.catf.us/advocacy/legal/CWIS/RiverkeepervEPA%20P2%2004-6692-ag_opn.pdf



6.2.5.1 Delaware River Depths Near the Intakes

The Delaware River is less than 3 feet deep in the vicinity of the DCR intakes, making aquatic barriers and wedgewire screens difficult, if not completely infeasible for this specific site. Mean Tidal Level (MTL) is at 0.061 ft (0.018470 m) and Mean Low Low Water (MLLW) at -2.696 ft (-0.821600 m), for a mean difference of 2.76 ft (0.8401 m). Both aquatic barriers and wedgewire screens can work well for reducing entrainment, for sufficiently low velocities (eg., 0.1 to 0.2 cfs) through the barrier or though the wedgewire screen slots. For a 45.2 mgd intake flow, both technologies would require a large submerged ―face‖ area to achieve those low velocities. The figure below shows river depths, taken near the DCR intake by the National Oceanic and Atmospheric Administration (NOAA).44

Figure A-13. Delaware River Water Depths Near the DCR Intake (in meters, at Mean Low Water)

44

Bathymetry for Delaware Bay was derived from seventeen surveys containing 321,774 soundings. No surveys were omitted. The surveys dated from 1945 to 1993. http://estuarinebathymetry.noaa.gov/

http://estuarinebathymetry.noaa.gov/



Figure A-14. Detail – Delaware River Depths Near the DCR Intake and Discharge

(in meters, at Mean Low Water)

The detailed view above shows some channeling of the DCR discharge back to the intake. For the sufficiently low velocities mentioned above, DCR could well pursue aquatic barriers and wedgewire screens as BTA alternatives to CCCS. However, to install such technologies in the Delaware River, DCR would need to address

Low local water depths mean very long aquatic barriers would be required to achieve 0.1

fps through-barrier velocity,

Silt Deposition

Hazards to local boating from the submerged structures,

Damage to the structures from ships, local boating, floating debris, and so forth.

6.2.5.2 Delaware River Intake Water Quality

Make-up water solids concentrations and temperature strongly affect flow reductions achievable with a closed-cycle cooling system (CCCS). DNREC evaluated available information and finds that the DCR can achieve water intake reductions of 90% or more, given conditions at the site. Further, DNREC had that evaluation double-checked with the assistance of an EPA contractor, which came to the same conclusion regarding achievable flow reductions. Based on data from the 71 samples collected June 2002 through October 2008, at the Pea Patch Island monitoring site at river mile 60.6, the maximum TDS that should be expected is 10,400 ppm with an average of 2,901 ppm salinity.



Salinity (parts per thousand) Total Dissolved Solids (parts per million)

Figure A-15. Monitoring Results at Locations in Delaware River

The following is taken from a Technical Memorandum dated September 29, 009, from the EPA contractor mentioned above. 45

―For the majority of the non-contact cooling water flowing through Outfall 001 (which includes Outfall 015), an estimate of the maximum ∆T can be obtained by comparing the discharge maximum temperature to the Delaware River temperature measurements taken at Pea Island 0.6 miles downstream. A comparison of the monthly measured river water temperatures (average if more than one) to the maximum monthly discharge temperature for the available data for 2007 and 2008 is provided in Table 3. This data shows that the estimated monthly maximum ∆T ranged from 13.4 to 41.1 oF (second highest was 32.3 oF) with an average of 24.6 oF. It should be noted that the river water data are mostly collected on a single day each month and that the monthly maximum effluent value is the maximum value from multiple days during each month. On some of those days, the river temperature may have been higher and therefore the ∆T calculated by this means is likely to be an overestimate. This is tempered somewhat by the fact that some cooling occurs in the guard basins and that a small portion of the flow is not cooling water. Another factor affecting this analysis is the fact that the water intake and discharge points are located not far from each other on a tidal river, and so it can be expected that a certain amount of recirculation of heat is occurring. When this occurs, the calculated ∆T would appear to be higher than it really is, since the intake water temperature would already be higher than the ambient river water temperature outside of the discharge plume. Thus, the highest measured discharge temperatures would tend to occur during

45

Technical Memorandum dated September 29, 2009 from Steven Geil of Tetra Tech.



periods when some recirculation is occurring. Given these considerations, a ∆T of 30 oF seems to be a reasonable estimate for the maximum ∆T to be used in estimating the minimum percent cooling water reduction that can be achieved. The estimated minimum percent reduction for the non-contact cooling water contributing to Outfall 001 is 92.4% based on a COC46 of 1.5 and a ∆T of 30 °F. For the power plant non-contact cooling water component (Outfall 015), the estimated minimum percent reduction is 94.6% based on a COC of 1.5 and a ∆T of 20 °F.‖

Lastly, the DCR site does have adequate space to install cooling towers.

Figure A-16. Parcels Owned by DCRC

Consequently, the Department has drafted the NPDES Permit to require entrainment and impingement mortality reductions comparable to levels achievable by closed-cycle cooling, but has not required the installation or use of closed-cycle cooling per se. Therefore, DCR may pursue ―equivalent alternatives‖ to achieve the required entrainment and impingement mortality reductions (e.g., reduced water withdrawals, variable speed pumps) as part of its approach to complying with the NPDES Permit. If the permittee proposes an ―equivalent alternative‖, DNREC would necessarily require periodic performance verification studies, to ensure that claimed equivalencies have been achieved and maintained over time.

46

―COC‖ is ―cycles of concentration‖, the ratio of the recirculating water dissolved solids concentration to that in the make-up water.



Lastly, compared to CCCS, the performance that the various intake screening technologies could achieve at DCR is uncertain. Specifically, the level of entrainment reduction they would achieve is uncertain, as is the degree to which formerly entrained organisms would survive being impinged on the screens of a new system. Thus, the current record supports a finding that for this facility, intake screens would not achieve comparable performance to that of closed-cycle cooling.47 Compared to CCCS, alternative technologies would have to be followed up by substantial ―Verification Monitoring‖ of the resulting impingement and entrainment mortalities. 6.3 Economic Achievability

From a national perspective, the petroleum industry made a lot of money up until the last quarter of 2008, did poorly through 2009, but has shown recovery in 2010. Per regulatory requirements, the fundamental question for a ―Best Technology Available Determination‖ is, ―Can DCR‘s corporate parents ‗afford‘ CCCS, or its equivalence?‖ If a technology is not ―affordable‖, it is not really ―available‖. This determination, both Parts A and B, considers if CCCS is affordable to the DCR itself and addresses the question, ―Does CCCS make the DCR unviable, relative to a reasonable peer group of refining competitors?‖ The DCR has cited the current cooling water intake structure set up as a cause for production curtailments and for permit noncompliance. For the DCR during a normal economy, less than 4 operating days per year would more than pay for the cost to retrofit CCCS. The bases for these estimates are provided in detail in subsections below. The Department‘s ―obligation is to meet its duty to explain its cost analysis fully.‖48

It is very important to note again that, to the limited extent that considerations of ―Affordability‖ are allowable in BTA Determinations under Clean Water Act §316(b), the assessment of ―Economic Achievability‖ considers the resources available from the parent corporation of an NPDES permittee. 6.3.1 DCR Parent Corporations

Premcor purchased the DCR on 4/30/2004.49 Valero purchased the DCR on 4/25/2005, closed the site on 11/21/2008, and then sold it to PBF Energy as of 6/1/2009. ―PBF‖ at the time was created as a combined investment from Petroplus Holdings AG, the Blackstone Group, and the First Reserve Corporation. Notably, First Reserve is a private equity firm. Blackstone and

47

As noted above, the permit writer developing BAT limits on a site-specific, BPJ basis applies the same performance-based approach to an individual point source that EPA applies to whole categories and classes of point sources when it develops effluent limitations guidelines (ELGs). See NRDC v. EPA, 859 F.2d at 201(‗in establishing BPJ limits, EPA considers the same statutory factors used to establish national effluent guidelines. BPJ limits thus represent the level of technology control mandated by the CWA for the particular point source.‘); Trustees for Alaska v. EPA, 749 F.2d 549, 553 (9th Cir. 1984) (EPA must consider statutorily enumerated factors in its BPJ determination of effluent limits); U.S. EPA Permit Writers‘ Manual (EPA-833-B-96-003) (Manual) at p. 70 (1996). See also NRDC v. EPA, 863 F.2d at 1425 (‗courts reviewing permits issued on a BPJ basis hold EPA to the same factors that must be considered in establishing the national effluent limitations‘ (citations omitted)).

48 §4.2.3, ―Best Available Technology Economically Achievable-Based Limits‖,

http://www.epa.gov/region01/braytonpoint/pdfs/BRAYTONchapter4.PDF, page 4-19 49

http://www.nccde.org/parcelview/ParcelDetails.aspx?ParcelKey=125525

http://www.pbfenergy.com/partners.asp

http://www.petroplusholdings.com/

http://www.blackstone.com/cps/rde/xchg/bxcom/hs/Home.htm

http://www.firstreserve.com/go.asp?Go=!SiteStation&x=TPLGen&ResType=Folder&ResID=620&TPL=HomePage.htm

http://www.epa.gov/region01/braytonpoint/pdfs/BRAYTONchapter4.PDF

http://www.nccde.org/parcelview/ParcelDetails.aspx?ParcelKey=125525



Petroplus are publicly traded, respectively on the New York Stock Exchange (NYSE) and on the Six Swiss Exchange in Switzerland. On 9/26/2010, Petroplus announced

―That it has reached an agreement in principle with the Blackstone Group and First Reserve, its partners in PBF Energy Company LLC, for the sale of Petroplus' 32.62% share of the company. The sale price is $91 million, and will result in a small gain on Petroplus' investments in PBF to date.‖50

This is significant because one of the current DCR owners (First Reserve) is not required under SEC rules to provide as much information as publicly held companies. So relatively little information is publicly available to consider costs at the level of that corporate parent of the DCR. The available information is sufficient to make a reasonable BTA Determination, but much more information could be required of the current corporate parents, as provided in Section 308 of the Clean Water Act. Valero files financial reports with the U.S. Securities and Exchange Commission (SEC); those reports are available via the SEC‘s EDGAR system51. Substantial information is available from the U.S. Securities and Exchange Commission (SEC)52 about Valero‘s financial condition and intentions. The U.S. Energy Information Administration (EIA)53 of the Department of Energy provides information that helps describe broader market conditions for the petroleum industry. Valero filings with the SEC report profitability for refineries by region, unless an event for an individual refinery bears note. Valero includes the DCR in its ―Northeast‖ group of refineries, which also includes refineries in Quebec and in Paulsboro, NJ. The most specific yearly information for DCR then, is available in Valero‘s financial statements to the SEC about the Northeast Region. However, Valero‘s SEC filings show the DCR refinery operations for the year 2008 as ―discontinued operations‖ separately from Quebec and Paulsboro. So some financial information specific to the DCR (such as costs and profitability) are publicly available, albeit indirectly, but only for the year 2008. 6.3.2 BTA Cost Offsets

In assessing cooling water intake structures at the DCR, the following is especially noteworthy (submitted by Valero to the SEC):

―A significant interruption in one or more of our refineries could adversely affect our business. Our refineries are our principal operating assets. As a result, our operations could be subject to significant interruption if one or more of our refineries were to experience a major accident or mechanical failure, encounter work stoppages relating to organized labor issues, be damaged by severe weather or other natural or man-made disaster, such as an act of terrorism, or otherwise be forced to shut down. If any refinery were to experience an interruption in operations, earnings from the refinery could be materially adversely affected (to the extent not recoverable through insurance) because of lost

50

http://www.petroplusholdings.com/med_pre_details.php?id=1474758&year=2010 51

―Electronic Data Gathering, Analysis, and Retrieval system‖ 52

Valero‘s NYSE ticker symbol is ―VLO‖. Valero ENERGY CORP/TX CIK#: 000103500), http://www.sec.gov/cgi-bin/browse-edgar?CIK=0001035002&action=getcompany

53 See http://tonto.eia.doe.gov/ and http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp.

http://www.six-swiss-exchange.com/index_en.html

http://water.epa.gov/lawsregs/guidance/wetlands/sec308.cfm

http://www.sec.gov/edgar/searchedgar/companysearch.html

http://www.sec.gov/edgar/searchedgar/companysearch.html

http://www.petroplusholdings.com/med_pre_details.php?id=1474758&year=2010

http://www.sec.gov/cgi-bin/browse-edgar?CIK=0001035002&action=getcompany

http://www.sec.gov/cgi-bin/browse-edgar?CIK=0001035002&action=getcompany

http://tonto.eia.doe.gov/

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp



production and repair costs. A significant interruption in one or more of our refineries could also lead to increased volatility in prices for crude oil feedstocks and refined products, and could increase instability in the financial and insurance markets, making it more difficult for us to access capital and to obtain insurance coverage that we consider adequate.‖54

The DCR has experienced production curtailments in the past, associated with reduced intake capacity. More reliable production and reduced production losses should significantly offset costs for CCCS. Impaired throughput may be a much bigger cost than the catastrophic failures, because they are so much less obvious, and could even be considered ―normal‖. For example, if cooling water problems impair production by just 2%, over 365 days that would be 7.3 days of lost production. Even when the refinery is not operating at capacity, and has spare capacity to make up for the impaired production rates, those impairments will mean increased refining costs for each barrel of oil. Compared to the existing CWIS, a well-designed CCCS will

use 90% to 98% less River intake water, if not eliminate the Delaware River intake altogether,

pull less silt into the intake channel, and

be less susceptible to o low tides, o high winds, o very cold and very warm intake water temperatures, and o clogging by fish.

§6.2.2. ―Problems Associated with Existing Intake Configuration‖ on page 15 above discusses how often these events occur. Estimates of cost offsets from reduced production losses are highlighted in Table A-11. Effect of BTA Cost for the Delaware City Refinery‖ on page 40 below. Costs for CCCS would be substantially or completely offset55 if accounting considers

costs of noncompliance (air & water),

lost production due to cooling water intake problems and

costs of maintenance dredging. At the least, CCCS as BTA would mean substantially reduced dredging within the intake channel. The water intake volume itself carries sediment load into the channel; reducing that volume by 90% or more should correspondingly reduce sediment pulled into the channel. Depending on the ultimate design of the CWIS, the DCR could still need to dredge the intake channel mouth, or could eliminate its intake from the Delaware River altogether. For example, if the CCCS is designed to reduce intake by 97-98% (i.e., needs only 2-3% make-up water), then a fresh water sources become possible. Fresh make-up water for cooling towers would mean less solids accumulation in the cooling system, and less expensive cooling tower water treatment.

54

http://www.sec.gov/Archives/edgar/data/1035002/000095013409003971/d66469e10vk.htm, Pg. 14 55

Table A-11. Effect of BTA Cost for the Delaware City Refinery‖ on page 38 below provides estimates of these cost offsets.




Intake channel siltation problems have resulted in ―Emergency‖ requests for dredging permits from the Department. The most recent of these permits56 (issued June 15, 2010) requires that DCRC pay ―Aquatic Resources Mitigation Compensation‖ of $135,000 per year that the intake channel is dredged:

3. In order to compensate for impingement and entrainment impacts associated with the cooling

water intake system, the DCRC shall be obligated to pay $135,000 each year that dredging is

undertaken in Cedar Creek (the Cooling Water Intake Channel). These monies, “the Aquatic

Resources Mitigation Compensation,” may, be remitted to DNREC annually in September in

the amount of $135,000 per year for years 1 through 10, OR annually in September in the

amount of $270,000 per year beginning in year 6 and continuing through year 10 of the term

of this permit.

Alternatively, the DCRC may remit these monies to a dedicated account controlled by DCRC,

the “Mitigation Compensation Account.” All funds placed by DCRC in the Mitigation

Compensation Account shall a) be expended toward construction of the Best Technology

Available determined for the cooling water intake structure, OR b) be directed to DNREC by

the expiration date of this Permit/Certification or prior to the transfer of the controlling

interest in the refinery, whichever occurs first. If the monies are placed in the DCRC’s

Mitigation Compensation Account, an annual report of the funds, clearly detailing all

transactions, shall be submitted to the Wetlands and Subaqueous Lands Section in September

of each year.

That permit does provide that DCR may apply the $135,000/year to paying for BTA. DCR must dredge the intake channel twice per year to maintain its cooling water flows. DCR reported those costs for two dredging instances:

Dredging In Reported Cost

November 2002 $326,360 July 2003 $239,050

Total Yearly Cost $565,410 Mitigation Compensation $135,000

Total $700,410 Given the problems experienced with the existing intake, accounting for BTA should include a cost offset for ―risk aversion‖; that is, to future problems if the CWIS continues ―as is‖. ―Risk aversion is usually quantified by the mathematical expected value that one is willing to forego in order to get greater certainty.‖57 People and corporations routinely pay insurance companies, because of risk aversion. CCCS will in several ways serve as an ―insurance policy‖. As a broad example, if DCR intake problems (freezing, silting, clogging, etc.) average to 4 days per year of lost or impaired throughput, with $1,500,000 lost per day in profits, then that yearly loss is $6,000,000.58 If those intake problems also result in non-compliance with air or water permits, the site could suffer additional losses from State or Federal permit enforcement fines, Judicious management planning should also have a ―risk aversion value‖, an investment to be paid to prevent the consequences of those losses:

56

DNREC Division of Water Resources Subaqueous Lands Permit No. SP-174/10 57

http://www-personal.umich.edu/~alandear/glossary/r.html 58

The Department estimates that the DCR has a net refining revenue of $1,500,000 to $2,600,000 per day, depending on market conditions. See ―Table A-11. Effect of BTA Cost for the Delaware City Refinery‖ on page 38.

http://www-personal.umich.edu/~alandear/glossary/r.html



“Production Loss Risk Aversion”,

“Enforcement Consequences Risk Aversion”, and

“Citizen Suit Risk Aversion”59.

For example, the Natural Resources Defense Council, Inc. (NRDC) and the Delaware Audubon Society brought a citizen suit60 against the then owner of the DCR, Texaco Refining and Marketing, Inc. The decision notes that, ‖Aesthetic and recreational interests of their members were injured by company‘s illegal pollutant discharges.‖ The decision also mentions that the ―company failed to show that events allegedly causing system upsets were either exceptional or beyond the company‘s control.‖ The decision required that Texaco pay a $1,680,000 civil penalty and implement a ―monitoring program‖ that Texaco estimated would cost $895,588.61. for a total of $2,575,588 in 1992. That is $4,128,761 in 2011 dollars. 6.3.3 Cost of BTA and Impacts on DCR Parent Corporations

As shown in the Table A-7 below, estimated total retrofit costs will be $75,100,00062, using

Electric Power Research Institute (EPRI) costs for a 393 mgd63 CWIS, for an installation of average difficulty. Those cost estimates are applicable to the DCR because the mechanical and engineering fundamentals for transferring large amounts of heat from large amounts of water are the same for the DCR refinery and power plant complex as for sites that only generate electricity. The Refinery does have more design optimization and construction cost-saving opportunities than most power plants: flow reductions, leak elimination, placement of cooling towers near processes, scheduling & balancing of production, and so forth. So the EPRI estimates are applicable and, if anything, will overestimate costs compared to power plants that have fewer options. Amortizing those costs over 20 years, the annualized cost of CCCS is $7,746,000. Valero‘s 10-K filing for 2008 reported a 33% tax rate. At that tax rate, the after tax annual cost of CCCS would be $5,190,000.

59

The Federal Clean Water Act, Subchapter V, General Provisions, §505 generally allows for citizens to initiate a civil suit against any person, including the United States and other government agencies for violating the Clean Water Act. See http://www.epa.gov/oecaerth/civil/cwa/cwaenfreq.html and http://uscode.house.gov/download/pls/33C26.txt.

60 In the U.S. District Court, district of Delaware, No. 88-263-JRR. The decision date is August 13, 1992.

61 The plaintiffs estimated the monitoring program would cost $1,592,517, but the court found Texaco‘s estimate

more credible. 62

http://www.swrcb.ca.gov/water_issues/programs/npdes/docs/cwa316b/symposium_2007jan/john_maulbetsch.pdf 63

393 mgd is based on past refinery daily flows needed to comply with the ―12 month rolling average‖ of 303 mgd, required in the DRBC Docket.

http://idea.sec.gov/Archives/edgar/data/1013871/000095012309002616/y74515e10vk.htm

http://www.epa.gov/oecaerth/civil/cwa/cwaenfreq.html

http://uscode.house.gov/download/pls/33C26.txt




Table A-7. Retrofit Cost Estimates for a Closed-Cycle Cooling System (CCCS) at DCR64

Flow, After Planned Intake Reduction

MGD 393

GPM 273,083

Retrofit Installation Difficulty Easy Average Difficult

Retrofit Cost, $/gpm 125 275 425

Total Retrofit Cost, Rounded, $ 34,100,000 75,100,000 116,100,000

Total Retrofit Cost, as % of Total Revenues during 2008

0.0287% 0.0630% 0.0974%

Yearly Amortized Cost, $ 3,521,000 7,746,000 11,971,000

Note: Amortization calculations use an interest Rate of 8.17%, based on Valero Moody's Rating of Baa2 and and market rates as iof the calculation date. That rating since has dropped, with negative outlook for future ratings. Current owners should have better credit ratings, meaning that these calculations use a conservatively high interest rate and cost of capital.

For this BTA Determination, based on site conditions and layout, retrofit difficulty at DCR is taken to be ―average‖, but could well be ―easy‖.

Table A-8. Things That Set Degree of Difficulty for Retrofit65

• Siting tower – Relocation of structures – Land acquisition – Grading of site for gravity

return

• Excavation for circ. water lines and sump – Interferences – Soil conditions

• Wet, unstable • Bedrock • Contaminated

More things • Noise control – Special fans – Wind walls

• Plume abatement – Higher cost tower – Harder to site

Refinery throughput curtailments during construction and start-up of a CCCS could add an ―opportunity cost‖ of lost product sales. However, there is no ―opportunity cost‖ if the product would not have sold anyway or if the product is available through inventory. During an economic downturn, lower customer demand and Refinery Capacity Utilization Rates (CUR) provide opportunity to operate at higher CURs before and after any throughput interruptions, to the extent storage capacity is available at the DCR and in the distribution system. Lastly, throughput curtailments can be avoided and minimized by construction design choices for staging of the CCCS construction, and for the ultimate tie-in of the new equipment to existing facilities. The Refinery is already committed to reduce its intake from the Delaware River. A Delaware River Basin Commission (DRBC) Docket66 requires those reductions:

64

http://www.swrcb.ca.gov/water_issues/programs/npdes/docs/cwa316b/symposium_2007jan/john_maulbetsch.pdf, Jan. 16, 2008

65 http://www.swrcb.ca.gov/water_issues/programs/npdes/docs/cwa316b/symposium_2007jan/john_maulbetsch.pdf, Pages 7

and 8 66

Approved on May 14, 2008.





D-93-4-6 (The Premcor Refining Group, Inc. - Ground and Surface 7

Water Withdrawal)

f. The docket holder shall undertake an initiative to construct improvements

to reduce Delaware River surface water withdrawals in accordance with the following:

i. The docket holder shall complete construction of a project to reduce the

annual Delaware River surface water intake from 452 mgd to 303 mgd,

based on a 12 month rolling average, by December 31, 2013. If any issues

that arise that will delay implementation/construction of the project, the

docket holder shall notify DNREC within 90 days of such discovery.

The more that DCR can reduce cooling water needs and leaks, the less its costs will be to install and operate a closed-cycle cooling system (e.g., less make-up water and treatment chemical costs). The Department estimates that the annualized ―BTA Cost‖, including tax offsets, would be 0.0065% of Valero‘s 2008 total revenue, and 0.36% of Blackstone‘s 2009 total revenue. Blackstone and First Reserve Corporation are 50%/50% partners in the PBF Energy venture. Total revenues for First Reserve and for PBF Energy are not publicly available.

Table A-9. “BTA Cost” and Economic Impact for Parent Company

NPDES Permitted Flow (after flow reductions) 393.2 mgd

273,083 gpm

Retrofit Installation Difficulty Average

Retrofit cost 275 $/gpm

Amortization period 20 Years

Discount Rate 8.17%

CCCS total annualized cost 7,746,000

Tax rate on Valero‘s net income 33%

Tax deduction on CCCS cost 2,556,000

CCCS annualized cost, after tax deductions 5,190,000

Valero‘s Annual Operating Revenue (2008) $119,114,000,000

CCCS Annualized cost, as % of Valero’s 2008 Revenue 0.0065%

Blackstone’s Total Revenue (2009) $1,400,000,000

CCCS Annualized cost, as % of Blackstone’s Revenue 0.37%

Note that the above estimates do not consider offsets and benefits of CCCS, which are discussed below in sections: ―6.3.2 . BTA Cost Offsets‖ (page 32), ―6.4. Non-Water Quality Environmental Impacts‖ (page 43), and ―6.5. Other Factors Permitting Jurisdiction Deems Appropriate‖ (page 44). 6.3.4 Cost of BTA and Impacts on DCR Itself

In Calendar 2008, ―operating costs per barrel‖ at DCR were $8.89/bbl, from Valero reports to the SEC. The U.S. national average was $5.21/bbl for 2008. DCR‘s advantage is that they can process the more difficult and expensive to refine crude oils. In normal economic conditions, those poorer quality crude oils are up to 30% cheaper than the benchmark WTI Crude Oil; at $81.45/bbl for WTI, even with the $3.78/bbl higher operating cost (versus the national average), that is an advantage of $20.76 per barrel.



Table A-10. DCR Performance in Calendar 200867

$/barrel Total $/year

Operating income (loss) (2.66) (163,000,000)

Throughput volumes (thousand barrels per day) 166 60,756,000

Throughput margin per barrel (f) 6.23 378,663,600

Operating costs per barrel (d):

Refining operating expenses 7.07 (79%) 429,266,760

Depreciation and amortization 1.83 (21%) 111,066,360

Total operating costs per barrel 8.89 540,333,120

Losses per day (441,720)

Notes (per 10-K for Calendar 2009): (b) Due to the permanent shutdown of our Delaware City Refinery during the fourth quarter of 2009, the results

of operations of the Delaware City Refinery, as well as costs associated with the shutdown, are reported as discontinued operations for 2009 and 2008, and all refining operating highlights, both consolidated and for the Northeast Region, exclude the Delaware City Refinery for both years. (d) The asset impairment loss for 2009 relates primarily to the permanent cancellation of certain capital projects classified as ―construction in progress‖ as a result of the unfavorable impact of the continuing economic slowdown on refining industry fundamentals. Losses resulting from the permanent cancellation of certain capital projects in 2008 have been reclassified from operating expenses and presented separately for comparability with the 2009 presentation. The asset impairment loss amounts are included in the refining segment operating income but are excluded from the regional operating income amounts and the consolidated and regional operating costs per barrel, resulting in an adjustment to the operating costs per barrel previously reported in 2008. (f) Throughput margin per barrel represents operating revenues less cost of sales divided by throughput volumes.

Again, at throughput capacity, the estimated annualized capital cost for a closed-cycle cooling system (CCCS) is $0.0677/bbl (0.16 cents/gallon).68 U.S. refining margins were $7.90/bbl in 4th quarter 2009 when DCR closed, but have increased since then. Taking 4th quarter 2009 as the baseline, the following graph shows the U.S. refining margins net increases since then, as compared to $7.90.

67

Calculated from values reported in 10-K form for 2008 and the "Revised 2008" values reported in the 10K form for 2009. See http://www.sec.gov/Archives/edgar/data/1035002/000095012310018097/d70408e10vk.htm, Pg. 33 and http://www.sec.gov/Archives/edgar/data/1035002/000095013409003971/d66469e10vk.htm#117, Pg. 30.

68 Even for the calendar year 2008 throughput of 166,000 bbl/day, that cost is $0.086/bbl (0.20 cents/gallon).


http://www.sec.gov/Archives/edgar/data/1035002/000095013409003971/d66469e10vk.htm#117



$0.00

$1.67

$7.96

$4.54

0

1

2

3

4

5

6

7

8

9

Q4-2009 Q1_2010 Q2_2010 Q3-2010

U.S

. Do

llars

pe

r B

arre

l

Figure A-17. U.S. Gross Refining Margin Increases Since 4th Quarter 200969

The Energy Information Administration (EIA) mentions 161 types of crude oil70, and tracks weekly prices for 37 types of crude oils worldwide. The EIA also tracks the average price paid by U.S. refineries for the crude oil they refine. DCR has a competitive advantage of being able refine heavy and sour crude oils, which are usually available at substantial discounts, compared to the average crude prices paid by other U.S. refiners. When Valero closed DCR in 2009, relatively few crudes were available at deep discounts. Just of the 37 crudes tracked by EIA, the following graph shows how many are discounted by $3, $5, and $7 cheaper than the average U.S. refiner price for their crude oil feedstocks.

69

http://www.eia.gov/emeu/finance/archive.html 70

http://tonto.eia.doe.gov/ask/crude_types1.html

http://www.eia.gov/emeu/finance/archive.html




-

5

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-09

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ceDiscounted 3$/bbl

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Discounted 7$/bbl

Figure A-18. Number of Crude Oils (of 37 tracked by EIA) Available at 3, 5, & 7$/bbl Discounts

Vs. Average $/bbl Paid by U.S. Refiners

Just considering recent increases in U.S. refining margins, and using near worst case scenario costs from 2008, CCCS would pay for itself if it prevented production losses or impairments by 13 days per year. As mentioned above on page 38 in ―Table A-10. DCR Performance in Calendar 2008‖, ―throughput margin‖ is operating revenues less cost of sale, and provides an estimate of the operating revenue for DCR.

Table A-11. Effect of BTA Cost for the Delaware City Refinery

Calendar 2008 Q2-2010 Q3-2010 Nominal

Refining Margins*, Net IMPROVEMENTS since 2009

7.96 4.54

Heavy-Sour crude discount, vs. U.S. Refiners Average Price ($/bbl)

4.86 4.88

Margin Improvements + Discounts

12.82 9.42 10 15

Throughput margin ($/bbl) 6.23 19.05 15.65 16.23 21.23

Total operating costs ($/bbl) 8.89 8.89 8.89 8.89 8.89

Refining Margin - Operating Cost ($/bbl) ($2.66) $10.16 $6.76 $7.34 $12.34

Throughput (bbls/day) 166,000 210,000 210,000 210,000 210,000

Feedstock Cost (nominal, $/bbl) 81 81 81 81 81

Daily DCR Total Refining Revenue** ($/day) 13,004,440 19,143,600 18,429,600 18,551,400 19,601,400

Daily DCR Net Refining Revenue*** ($/day) ($441,560) $2,133,600 $1,419,600 $1,541,400 $2,591,400

BTA (CCCS) Retrofit Cost:

Amortized ($/year) $5,189,758

Amortized ($/day) $14,219

Per barrel refined ($/bbl) 0.0857 0.0677 0.0677 0.0677 0.0677



Table A-11. Effect of BTA Cost for the Delaware City Refinery

Calendar 2008 Q2-2010 Q3-2010 Nominal

As % of Total Revenue (%) 0.11% 0.07% 0.08% 0.08% 0.07%

As % of Refining Net Revenue (%) -3.2% 0.7% 1.0% 0.9% 0.5%

DCR Operating Days per year to cover Yearly CCCS Retrofit Cost at DCR (Days)

--------- 2.4 3.7 3.4 2.0

Notes: * These margins compare average U.S. Refiner Sales-feedstock values. ** Daily DCR Total Refining Revenue = {Margin-Refining Cost+Feedstock Cost)}/bbl} x bbl/day *** Daily DCR Net Refining Revenue = {Margin-Cost)}/bbl} x bbl/day

The Energy Information Administration mentions 161 types of crude oil71, and weekly tracks prices for 37 types of crude oils worldwide. In the above table, the rightmost ―nominal‖ column considers longer term value for the sum of ―refining margins differences vs. 4th Quarter 2009 margins‖ plus the ―75 percentile discount for crude oils‖72, shown in the figure below, and range from -$2 to $32 per barrel. Table A-11 above shows that, for a midrange nominal value of $15 per barrel, CCCS would pay for itself if it prevents only 2 days of production losses that have been attributed to cooling water intake problems. In recent operating years, those problems have occurred more often than 2 day per year.

71

http://tonto.eia.doe.gov/ask/crude_types1.html 72

The ―75 percentile discount for crude oils‖ is vis-à-vis the average price paid by U.S. Refiners, for the 37 crudes tracked by

EIA. The 4th

Quarter 2009 average U.S. Refining margin was $7.90. Net increases or decreases from that point would also apply to DCR, as relative improvements or declines in market conditions. The ―75 %‘ile Disc‖ line represents the discounts for the cheapest one-fourth of the 37 crude oils for which EIA tracks spot prices. The cheapest one-fourth is considers that DCR is in business to process the cheaper heavy-sour crudes, and represents a reasonable estimate of prices for feedstocks that DCR should be able to acquire.




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Margin Difference vs. 4Q-09

75 %'ile Disc

Margin Increase + 75%'ile Disount

Figure A-19. Margins (vs. 2009 Values) and Crude Oil Feedstock Discounts for DCR

6.3.5 Impact of BTA Cost on Consumers

If PBF passes all ―BTA Costs‖ to ultimate consumers, then the cost effect on consumers is also an issue. Estimates of cost effects on consumers are significantly affected by choices of the number of consumers that will share the costs. PBF has choices in spreading those costs among its customers. For example, those costs can be spread among customers served by the DCR facility, some wider customer base served by PBF, which now owns two other U.S. refineries (in Paulsboro, NJ and in Toledo, OH). For competitive pricing or other reasons related to crude oil handling or to distribution and marketing margins, PBF could choose to spread those costs over some wider accounting entity, such as PBF‘s Paulsboro Refinery, which will also benefit from DCR‘s port. From the following table, the ―BTA Cost‖ for consumers would be an increased cost for petroleum products of up to $2.25 per year.



Table A-12. “BTA Cost” Impacts on Customers

At Refinery Capacity

At Refinery 2008 Throughput Units

CCCS Annualized cost* 5,190,000

$/year

DCR Throughput

3,372,600,000 2,544,780,000 gallons/year

CCCS Cost/Gallon

0.00154 0.00204 $/gallon

Delaware Population** 885,122 Delaware Consumption***

Motor Gasoline 503

gal/year/person Total Petroleum 1,101

gal/year/person

CCCS Cost per Person Motor Gasoline

$0.77 $1.03 $/year Total Petroleum

$1.69 $2.25 $/year

Notes: *(after tax deductions) ** 2009 calendar year, http://dataferrett.census.gov/ *** 2008 calendar year, http://www.eia.doe.gov/state/state_energy_profiles.cfm?sid=DE

6.4 Non-Water Quality Environmental Impacts

Potential need for noise abatement may affect permittee‘s choice of natural draft over mechanical draft cooling towers.

Aesthetic concerns regarding new cooling towers may need to be balanced during the design phase. Example aesthetic issues are noise, unsightliness, and water vapor plumes. Given DCR‘s already highly industrial skyline, aesthetics are very unlikely to pose a significant design challenge for DCR.

Figure A-20. View73 Delaware City Power Plant, Looking West from State Route 9

73

From Google Maps ―Street View‖

http://dataferrett.census.gov/

http://www.eia.doe.gov/state/state_energy_profiles.cfm?sid=DE

http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=delaware+city+de&aq=&sll=37.0625,-95.677068&sspn=44.928295,76.025391&ie=UTF8&hq=&hnear=Delaware+City,+New+Castle,+Delaware&ll=39.594563,-75.630179&spn=0,0.003416&t=h&z=20&layer=c&cbll=39.594563,-75.630434&panoid=iMhscrMXnSk0f1t-AqEJFg&cbp=12,276.83,,0,-8.4



Figure A-21. View74 of Delaware City Refinery, Looking North From State Route 72

6.5 Other Factors Permitting Jurisdiction Deems Appropriate

The regulations for the development of effluent limitations also indicate that DNREC‘s case-by-case analysis must consider ―any unique factors relating to the applicant.‖ 40 C.F.R. § 125.3(c)(2)(ii). These unique factors, discussed below, include

Cumulative Impacts, Considering Other Cooling Water Intake Structures (CWIS),

Benthic Impacts of the Existing Cooling Water Flows in Locally Shallow Waters, and

Benefits Beyond Those to the Site Itself. 6.5.1 Cumulative Impacts, Considering Other Cooling Water Intake Structures (CWIS)

In his comments, Dr. Khan also noted the combined effect of the DCR and Salem Nuclear Power Plant intakes. ―Normandeau (2001) estimated the weakfish conditional mortality rate for 1998 as 7.7%. This indicates that of every 13 weakfish produced in Delaware Bay, one would be killed at the refinery. This should be put in the context of an estimated mortality rate of 17% by the Salem Nuclear Generating Station (PSE&G 1999).75 The combined mortality rate of these two facilities would then be 22.9%, meaning that roughly 23% of all weakfish produced in Delaware Bay would be killed by one of these two facilities.‖

For striped bass, ―In isolation, the refinery mortality rate was estimated as 27%, while the Salem rate was estimated as 48%. When the two were combined, the total conditional mortality rate was 56%. In summary, when the kill of the two plants are combined for 1998, the resulting estimate indicates that the plants killed more than half of the bass in the River.‖

74

Ibid. 75

The Refinery intake during the study was 452 mgd, vs. Salem‘s intake of 3,024 mgd. Per mgd, The Refinery‘s Weakfish Conditional Mortality Rate is 3.0 times higher than Salem‘s CMR.

http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=delaware+city+de&aq=&sll=37.0625,-95.677068&sspn=44.928295,76.025391&ie=UTF8&hq=&hnear=Delaware+City,+New+Castle,+Delaware&ll=39.580203,-75.632474&spn=0,0.013663&t=h&z=18&layer=c&cbll=39.580204,-75.632021&panoid=5drc-7cRDhXWOExBCbV9Ig&cbp=12,321.21,,0,-0.95



The Delaware River Basin Commission reports the following total water withdrawals.

Figure A-22. Total Lower and Bay Region Water Withdrawals, Exports, and Consumptive Use76

76

―Excerpted from ―Fig. 1.11. Regional Water Withdrawals, Exports, and Consumptive Use‖, page 17 of the ―State of the Delaware River Basin Report 2008‖, DRBC, http://www.state.nj.us/drbc/SOTB/hydrology.pdf

http://www.state.nj.us/drbc/SOTB/hydrology.pdf



Figure A-23 ―Total Daily DCR and Other Intake Volumes‖ below represents those daily water withdrawals relative to total withdrawals and to the areas of the River affected.

Figure A-23. Total Daily DCR and Other Intake Volumes

Shown for an Estuary Depth of 20 Feet (Yellow), and Local Water Depth (Red) The Refinery intake volume during the study was 452 mgd, vs. Salem‘s intake of 3,024 mgd. Per intake mgd, the Refinery‘s ―Conditional Mortality Rate‖77 (CMR) is 3.0 times higher than Salem‘s CMR for Weakfish and 3.2 times higher for Striped Bass. That is, considering relative impacts and not just ―intake volumes‖, the DCR areas shown in the figure above would be three times bigger. The following are excerpts of Dr. Kahn‘s conclusions.

77

The ―Conditional Mortality Rate‖ is an estimate of the proportion of the species killed by the plant, assuming the plant was the only source of mortality. For purposes of this study, the CMR considers the fish population based on a seine survey for the area from above Philadelphia, short of Trenton, down to Augustine Beach.



―Recent Delaware recreational harvests of striped bass have been declining to the level of an estimated 10,095 fish in 2007. The harvest foregone due to the refinery is estimated to be between 3,921 from the 1999 kill and 12,872 fish from the 1998 kill. This range is from about 40% to almost 130% of the most recent harvest. The combination of this refinery kill and that estimated for the Salem Generating Station in 1998 is estimated to exceed the number of surviving striped bass produced in 1998.

The mortality of weakfish due to the refinery is of special concern, since weakfish have declined throughout their range coastwide. The Delaware Bay stock has seen one of the earliest and steepest declines. The harvest foregone that I have estimated from the kill of weakfish by the refinery is roughly equal or greater than the 2007 recreational harvest in number.

The rather surprising estimate provided by Normandeau that the refinery kills an estimated 19% of the total bay anchovy stock in the Bay and River indicates that the refinery could be having a noticeable impact on the total productivity of the Bay and River for the production of desirable predator species as well as reducing the attraction of adult predators. The combination of the refinery and the Salem Generating Station is certainly taking a significant part of the forage base of Delaware Bay. This is especially true because bay anchovy is a small-bodied species vulnerable for much of its lifespan, as the Normandeau report points out.‖

6.5.2 Benthic Impacts of the Existing Cooling Water Flows in Locally Shallow Waters

As mentioned above, the Delaware River is very shallow near the DCR, meaning that their cooling water intake and discharge have a disproportionately large impact on benthic habitat and organisms, compared to sites located in deeper areas of the River.78 In conjunction with the EPA, DNREC‘s Coastal Management Program has been developing a wealth of information79 regarding Delaware River bottom conditions, with a view towards understanding how they provide benthic habitat for aquatic species. From the NPDES perspective, this information will help understanding interactions between industrial activities (e.g., cooling water intakes), and habitats that should otherwise support of the designated use for protection and propagation of fish, shellfish, aquatic life and wildlife.80

78

For example, a 452,000,000 gallons volume with water depth of 20 ft. would have a benthic footprint of 1,738 ft. by 1,738 ft., the same area as 63 U.S. football fields. The same volume with water depth of 3 ft. would have a benthic footprint of 3,887 ft. by 3,887 ft., the same area as 315 U.S. football fields.

79 http://www.swc.dnrec.delaware.gov/coastal/Pages/BenthicMapping.aspx

80 State of Delaware Surface Water Quality Standards, page 12,

http://www.wr.dnrec.delaware.gov/Services/OtherServices/Pages/Watershed%20Assessment%20Surface%20Water%20Quality%20Management.aspx .

http://www.swc.dnrec.delaware.gov/coastal/Pages/BenthicMapping.aspx

http://www.wr.dnrec.delaware.gov/Services/OtherServices/Pages/Watershed%20Assessment%20Surface%20Water%20Quality%20Management.aspx

http://www.wr.dnrec.delaware.gov/Services/OtherServices/Pages/Watershed%20Assessment%20Surface%20Water%20Quality%20Management.aspx



Figure A-24. Delaware River Sediments & Habitats



Figure A-25. Delaware River Shallows and Sediments Near the DCR Intake

Impacts on habitat and fish hatcheries are other offsets that reduce DCR‘s net cost for BTA.81

―The Habitat Replacement Cost uses a methodology for mitigation performed for PSE&G at the Salem power plant. described in the 2004 article, ―The habitat-based replacement cost method for assessing monetary damages for fish resource injuries‖ by E. M. Strange, P. D. Allen, D. Beltman, J. Lipton, and D. Mills. 2004 (Fisheries 29(7): 17-24). The fish impacts and analyses used in this estimate are based on data collected at the Delaware City refinery during the Normandeau Associates impingement and entrainment study. Below is some clarification of the estimates.

Table A-13. Habitat Replacement Cost Value of fish estimated killed at Valero refinery using Habitat-based Replacement

Cost (HRC)

Column A B C D E F

Species Age 1 fish

lost

Mean wt. of age 1

(g)

Kg lost per year

(A*B)

Annual kg production per

hectare per year

Hectares needed to

offset (C/D)

Restoration based on $5,000 per

hectare (E*$5,000)

Striped bass 1 74,064 220 16294.02 0.1900 85758 $428,789,940

Weakfish 2 39,806 118 4697.108 0.2485 18902 $94,509,215

White Perch 2 328291 9 2954.619 12.7500 232 $1,158,674

Bay Anchovy 2 1,546,368 1.7 2628.826 0.0340 77318 $386,592,000

Restoration hectares greatest for striped bass, thus restoration cost is: $428,789,940

81

From an e-mail dated October 13, 2009 by Joanne Lee, a Dept. Environmental Scientist in the Water Division‘s Subaqueous Lands Section.



Estimates based on analysis presented for PSEG Salem in Strange, E.M., P. D. Allen, D. Beltman, J. Lipton, and D. Mills. 2004. The habitat-based replacement cost method for assessing monetary damages for fish resource injuries. Fisheries 29(7): 17-24

1 Estimated Equivalent recruits developed at age 1 based on data supplied by Normandeau Associates, Inc.(2001) Tables 17 and 18. Average of estimates from 1998 and 1999 sampling.

2 Average of the Equivalent Adult weakfish and bay anchovy at age 1 killed by the Delaware City refinery in 1998 and 1999 by Normandeau Associates (2001), Tables 21 - 24. White perch Equivalent Adults from Normandeau Associates (2001), Tables 19 and 20, adjusted to age 1. In all cases, the estimate is the average of the estimated losses from the two years of sampling. Reference Cited Normandeau Associates (2001). Impingement and Entrainment at the Cooling Water Intake Structure of the Delaware City Refinery, April 1998 - March 2000. Final report for: Motiva Enterprises LLC, Delaware City Refinery, Delaware City, DE May 2001.

- Column E identifies the area in hectares needed to offset the losses. The offset, as based on the PSE&G model, is the restoration of tidal salt marshes. It should be noted that 1 hectare = 2.47 acres.

- Column F shows the restoration cost as $5000/hectare. It should be noted that this number of acres is not a sum of all the restoration acreages shown in column E because it is anticipated that a marsh that provides nursery habitat for multiple species. The estimated value of $5,000 per hectare is based on the PSE&G mitigation costs. Much of the PSE&G mitigation was the restoration of diked salt hay marshes to tidal salt marsh. The costs of such mitigation would likely differ in Delaware restoration projects. The value of $428,789,940 is therefore an estimate.

The Wetlands and Subaqueous Lands Section understands that the Habitat Replacement offset was used in lieu of the construction of cooling towers. The WSLS considers the construction of cooling towers to be necessary for the Refinery to mitigate for impingement and entrainment impacts in accordance with the "Regulations Governing the Use of Subaqueous Lands." As such, the WSLS does not deem this mitigation appropriate. However, habitat mitigation is appropriate until such time that the cooling towers are installed and in use, and for the physical impacts to the benthic organisms.

Hatchery Equivalent Cost

The hatchery equivalent cost is the cost of purchasing an equivalent number of fish annually to offset the fish killed by impingement and entrainment.

Table A-14. Hatchery Equivalent Cost Value of fish estimated killed annually at Valero refinery using hatchery equivalents to

offset losses.

Column A B C

Species Age 1 fish lost Cost per fish ($) Cost per year (A*B)

Striped Bass 74,064 $1.50 $111,095.58

Weakfish 39,806 $5.52 $219,729.12

White Perch 328,291 $0.36 $118,184.76

Bay Anchovy 1,546,368 $0.09 $139,173.12

Annual Cost

$588,182.58



The cost per replacement fish is from the 2003 book, ―Investigation and monetary values fish and freshwater mussel kills‖, R. I. Southwick. and A. J. Loftus, editors (American Fisheries Society Special Publication 30, Bethesda, MD). See Habitat Replacement Costs Worksheet for source of estimated age 1 fish losses.

This methodology is not recommended by the WSLS because there are concerns associated with the biodiversity of the fish community when using hatchery fish. It is also questionable that this many fish are available. However, this methodology does provide a dollar value - $588,182.58 annually - associated with the loss.‖

Note that the above estimates for ―Hatchery Replacement Cost‖ and ―Hatchery Equivalent Cost‖ only include the four species listed. Those costs would be even higher, if they accounted for the full biodiversity of the Delaware River ecosystem. The impingement and entrainment study reported fifty-three (53) different species82 impinged on the intake screens, in seventy-seven (77) sampling events from April 1998 through 2000; that study did not report the total number of species entrained. 6.5.3 Benefits Beyond Those to the Site Itself

Huge benefits related to BTA for the DCR CWIS have already been discussed above:

reduced fisheries impacts,

reduced benthic impacts,

improved permit compliance, and

reduced production losses. A reasonable accounting of the costs of BTA should also consider its benefits beyond those to the site itself. Dr. Desmond Kahn, in his comments ―Fisheries Impacts of the Delaware City Refinery on the Delaware River and Delaware Estuary‖ (dated March 20, 2008), discussed the significant impacts the DCR has on fisheries in the Delaware Estuary. The Department‘s Dr. Desmond Kahn, already mentioned herein, has provided an estimate of the dollar value for the fish themselves, for four species:

82

―Impingement and Entrainment at the Cooling water Intake Structure of the Delaware City Refinery, April 1998 – March 2000, Final Report‖, page 10, prepared by Normandeau Associates Inc. of Springfield Pa. for Motiva Enterprises, LLC, May 2001.



Table A-15. Value of fish estimated killed annually at refinery using hatchery equivalents to offset losses.83

For the Phase II Rule for 316(b), EPA developed a ―Case Study Analysis for the Proposed Section 316(b) Phase II Existing Facilities Rule‖84, which considers direct and indirect effects of CWIS on fish, birds, tourism, and so forth. Chapter A9 provides an overview of benefits categories:

83

Report titled ―Computation of Replacement Costs for Fish Losses due to Impingement and entrainment Per Million Gallons Withdrawn from the Delaware River by the Cooling Water Intake at the Delaware City Refinery‖, dated March 22, 2010, Desmond Kahn, Ph.D. DNREC Division of Fish and Wildlife

84 http://permanent.access.gpo.gov/websites/epagov/www.epa.gov/waterscience/316b/casestudy/index.htm, United States

Environmental Protection Agency, Office of Water (4303), EPA-821-R-02-002, February 2002

http://permanent.access.gpo.gov/websites/epagov/www.epa.gov/waterscience/316b/casestudy/cha9.pdf

http://permanent.access.gpo.gov/websites/epagov/www.epa.gov/waterscience/316b/casestudy/index.htm



Figure A-26. Benefits Categories for §316(b)85

In the referenced Case Study, Chapter B5 discusses effects on fishing tourism in the Delaware Estuary Watershed.

Figure A-27. Estimated Losses To Local Economy for Recreational Fishing

85

Ibid., ―Figure A9-1: Benefits Categories for §316(b)‖ in the referenced document

http://permanent.access.gpo.gov/websites/epagov/www.epa.gov/waterscience/316b/casestudy/chb5.pdf



Note that Figure 29 only considers recreational values.86

―This study understates the total benefits of improvements in fishing site quality because estimates are limited to recreation benefits. Many other forms of benefits, such as habitat values for a variety of species (in addition to recreational fish), nonuse values, etc. are also likely to be important.‖

Considering the size of the Delaware River and Bay, as well as the attractiveness that resource should have for tourists, reports for each Delaware County in 2007 show tourism for fishing purposes to be conspicuously absent for both New Castle and Kent Counties.87

Table A-16. What Do Person-Trips Mean to DE? 88

Each person-trip generates about $374 in expenditures, $75 of which goes to businesses that do not directly ―touch‖ that visitor

Every 213 person-trip create a new job in DE

Each person-trip creates about $117 in tax receipts, $48 of which goes to state & local authorities

Each person-trip generates $135 in wages paid to workers employed across an array of industries

Each person-trip adds about $222 to Gross State Product

The Delaware Economic Development Office reports that tourism contributed $1.8 billion to the State‘s economy in FY2006.

Table A-17. Impact of Tourism89

• In 2006, the total impact of travel & tourism (direct and indirect) was $1.80 billion. • The ratio of the total impact to total expenditures reveals that 57% of each tourism dollar spent

in Delaware is retained in the state. The remainder represents import leakages. • 31,532 direct jobs – were created by travel & tourism economic activity. This accounts for

7.2% of total employment in the state. • Another 6,459 indirect jobs were created by tourism. • Approximately $878 million in wages & salaries (direct impact) was generated by travel &

tourism in 2006. • Tourism generated $562 million in federal government taxes and $387 million in state & and

local government taxes in 2006.

Of course, cooling water intakes are not the only impacts affecting Delaware River water quality, but they are a very large and very direct winnowing of fish populations. BTA for CWIS has substantial benefits for the area eco-system and economy, beyond just the effects on cost of petroleum products.

86

http://permanent.access.gpo.gov/websites/epagov/www.epa.gov/waterscience/316b/casestudy/chb5.pdf, pg. B5-14 87

Tourism Reports by County: Kent County Visitor Profile 2007, New Castle County Visitor Profile 2007, Sussex County Visitor

Profile 2007 88

http://dedo.delaware.gov/information/tourism/Delaware-TSA-final_Feb2008.pdf, pg. 34 89

http://dedo.delaware.gov/information/tourism/Delaware-TSA-final_Feb2008.pdf, pg. 18.

http://permanent.access.gpo.gov/websites/epagov/www.epa.gov/waterscience/316b/casestudy/chb5.pdf

http://dedo.delaware.gov/pdfs/tourism/KentCounty07Final.pdf

http://dedo.delaware.gov/pdfs/tourism/NewCastleCounty07Final.pdf

http://dedo.delaware.gov/pdfs/tourism/SussexCounty07Final.pdf

http://dedo.delaware.gov/pdfs/tourism/SussexCounty07Final.pdf

http://dedo.delaware.gov/information/tourism/Delaware-TSA-final_Feb2008.pdf

http://dedo.delaware.gov/information/tourism/Delaware-TSA-final_Feb2008.pdf



7 GLOSSARY

316(b) Federal Clean water Act Section 316(b), requirements regarding cooling

water intake structures

BPJ ―Best Professional Judgment‖

BTA ―Best Technology Available‖

CCCS ―Closed-cycle cooling system‖

CMR ―Conditional Mortality Rate‖

COC ―Cycles of concentration‖

CWA The Federal ―Clean Water Act‖

CWIS ―Cooling Water Intake Structure‖

DCPP ―Delaware City Power Plant‖

DCR ―Delaware City Refinery‖

DCRC ―Delaware City Refinery Corporation‖

EDGAR Online database of the Securities and Exchange Commission (SEC)

EIA U. S. ―Energy Information Administration‖

Entrainment Aquatic life that passes through intake screens

EPRI Electric Power Research Institute

I&E Impingement and Entrainment

Impingement Aquatic life caught on intake screens

MGD ―Million gallons per day‖

MLW ―Mean Low Water‖, the average water level at low tide

NOAA ―National Oceanographic and Atmospheric Administration‖

NPDES ―National Pollutant Discharge Elimination System‖

NYSE New York Stock Exchange

OTCW ―Once-through Cooling Water‖

PBF PBF Energy Inc., the parent company of the DCRC

RIS ―Representative Important Species‖

SEC U. S. ―Securities and Exchange Commission‖

http://www.sec.gov/edgar.shtml

http://www.eia.gov/

http://www.google.com/url?sa=t&source=web&cd=1&sqi=2&ved=0CCIQFjAA&url=http%3A%2F%2Fwww.pbfenergy.com%2F&ei=rhXxTbDiMsuftgeLrt2aAw&usg=AFQjCNFjBw0RBuPIy8b_46PHyaqG4VUohw

http://www.google.com/url?sa=t&source=web&cd=1&ved=0CB8QFjAA&url=http%3A%2F%2Fwww.sec.gov%2F&ei=fhHxTZv9Lcin0AHm4YHKBA&usg=AFQjCNHB2C9C56ivzuqpgwjniD2sZ-axLg

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