Selection of Projects for Assessment

10.4. Selection of Projects for Assessment

Based on the assessments reviewed and our team’s site visits, the following projects have been selected for assessment. All projects anticipated to be undertaken in 2004/05. As they are relatively small initiatives, capital costs associated with these projects will be considered as part of the overall plant’s investment program.

1. Reconstruction of aeration tank for denitrification treatment – $250,000.

2. Reconstruction of air flotation units for Line 2 – $740,000: $40,000 design in 2004, $700,000 in 2005.

3. Replacement of sludge dewatering system – $1,500,000.

The rehabilitation of the oil transfer station is estimated to cost $250,000, and implemented in 2005. However, while very important to the water quality, it was not evaluated as its primary focus to protect the integrity of the groundwater.

Investment #1 – Reconstruction of Aeration Tank for Denitrification Treatment

Based on cost estimates provided by the MRP, $110,000 will be invested to rebuild the aeration tank at the wastewater facility for denitrification treatment. However, subsequent discussion with plant staff indicated that the final cost would likely be $250,000.

The following assumptions were made:

- Reductions in loadings will only occur at Outlet #2.

- Implementing this project will reduce the following loadings relative to the Status Quo:

Ammonium nitrogen – 10% reduction;

Nitrates – 60% reduction;

Nitrites – 5% reduction; and

Phosphates – 10% reduction.

- All reductions will take effect in 2005.

- The average treatment cost for residential wastewater will drop by 25%.

- For assessment purposes only: Energy costs will drop by 30%, and Maintenance costs will decline by 20%.

Detailed analysis of this investment can be reviewed in the attached “Investment 1” Spreadsheet.

Based on these assumptions in rebuilding the aeration tank, wastewater related costs would amount to $26.2 million, which would translate into 12.3% decline in costs. This would now constitute 3.5% of the total profits of the Refinery (a 0.5 point gain relative to the status quo).

With respect to overall environmental damages, based on the two outlets, the plant will begin to inflict slightly less damage – damages will level out to approximately $0.81 million a year. Over the identified timeframe, environmental damages will drop by 8.4%. If Outlet #2 is considered in isolation, that ratio between damages and net profit is 1% .

From an operation perspective, declines in energy and maintenance would amount to about $500,000 per year (a 24% decline). Thus, based on cost efficiency alone, this would be a worthwhile investment for the MRP.

Table 10.4.1. Mozyr Oil Refinery – Investment #1

Reconstruction of Aeration Tank for Denitrification Treatment

Dollars in 2001 constant USD

Investment #2 – Reconstruction of Air Flotation Units for Line 2

This Project would be implemented over 2004/05. Based on cost estimates provided by the MRP, $40,000 would be the cost of design, and $700,000 is required to rebuild the flotation units for Line 2, for a total project cost of $740,000.

The following assumptions were made:

- Reductions in loadings will at both Outlets.

- Implementing this project will reduce the following loading relative to the Status Quo (205/Onward):

Petroleum Products – 20%/90% reduction in Outlet 1, and 25%/50% reduction in Outlet 2.

- Reductions will take effect with initial declines in 2005, and full declines 2006 onwards.

- The average treatment cost for industrial wastewater will drop by 5% in 2005 and 10% from 2006 onwards, while residential wastewater will decline by 5% from 2006 onwards.

- For assessment purposes only: materials costs, energy, labour and maintenance will drop by 5% from 2006 onwards.

Detailed analysis of this investment can be reviewed in the attached “Investment 2” Spreadsheet.

Based on these assumptions for rebuilding the floatation units, wastewater related costs would amount to $27.8 million, which would translate into 7% decline in costs. This would now constitute 3.7% of the total profits of the Refinery (a 0.3 point gain relative to the status quo).

With respect to overall environmental damages, based on the two outlets, the plant will begin to inflict slightly less damage – damages will level out to approximately $0.86 million a year – an annual drop of approximately $23,000. Over the identified timeframe, environmental damages will drop by 2.6%.

From an operation perspective, declines in operating costs would amount to about $97,000 per year (a 4.5% decline).

Thus, based on cost efficiency and reductions in petroleum product discharges, even for this investment in these units, this would be a worthwhile investment for the MRP over the identified timeframe.

Table 10.4.2. Mozyr Oil Refinery – Investment #3

Reconstruction of Air Flotation Units for Line 2

Dollars in 2001 constant USD

Investment #3 – Replacement of Sludge Dewatering System

Based on cost estimates provided by the MRP, $900,000 is required to replace the sludge dewatering system. However, further consultations with MRP staff indicated that the final cost may reach $1 million. They also indicated that a new sludge field system, to manage the sludge removed, would likely cost $250,000 to $500,000. Thus, for purposes of analysis this project is assumed to cost $1.5 million, with its implementation over 2004/05.

This is a preferred project by Plant staff, and its implementation will improve cake quality and quality of wastewater, and result in operational savings and improved efficiencies in downstream processes.

The following assumptions were made:

- Reductions in loadings will at both Outlets.

- Implementing this project will reduce the following loading relative to the Status Quo (reductions will take effect in tow stages 2005/2006 onwards):

All Parameters – 10%/15% reduction in Outlet 1, and 10%/20% reduction in Outlet 2.

- Reduction in discharge volumes: 5% reduction from Outlet 1, and 10% reduction from Outlet 2.

- The average treatment cost for industrial wastewater will drop by 5% in 2005 and 15% from 2006, while residential wastewater will decline by 10% and then 20%.

- For assessment purposes only: Energy costs will drop first by 10% and then 15%, labour by 5% and 10%, and maintenance by 10% and 20%.

- Detailed analysis of this investment can be reviewed in the attached “Investment 3” Spreadsheet.

As this is a primary process that removes a great deal of solid matter upstream in the treatment process, this project would have (relatively) the most profound effect. Based on these assumptions with respect to replacing this system, wastewater related costs would amount to $24.5 million, which would translate into 18% decline in costs. This would now constitute 3.3% of the total profits of the Refinery (a 0.7 point gain relative to the status quo).

Overall environmental damages, based on two outlets, would decline by the highest level, damages will level out to approximately $0.68 million a year, an annual drop of approximately $0.21 million. Over the identified timeframe, environmental damages will drop by almost 24%. The ratio between damages and net profit would decline by one-quarter to 0.9%.

From an operation perspective, declines in operating costs would amount to about $458,000 per year (a 21% decline).

Thus, it would based on cost efficiencies and reductions in overall parameter discharges, this project, the largest investment of the projects evaluated, would be of interest to the MRP. The question arises if the MRP’s new facility could handle over 3,900 additional tonnes of sludge cake. The additional management cost, as indicated, has not fully been considered in this analysis.

Table 10.4.3. Mozyr Oil Refinery – Investment #3

Replacement of Sludge Dewatering System

Dollars in 2001 constant USD

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