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DEC eyes Nikiski monofill closure finances

Posted: December 2, 2012 - 9:05pm

Permitting of a proposed drilling waste monofill in Nikiski has again stalled, this time due to Alaska Department of Environmental Conservation staff questions about financing of closing and monitoring the site.

AIMM Technologies originally submitted to DEC that it could close and monitor the site for a total of $58,000. However, DEC staff said that number needed to reflect what it would cost for the state to come in “cold” for closure and monitoring, which AIMM later estimated at $589,858. That number, however, still looked low to Lori Aldrich, DEC solid waste program coordinator.

“I just did some back-of-the-napkin math and came up with $1.1 million,” she said. “So we sent it back to them and said, ‘Look, your consultant needs to figure this as if they are bidding a project for the state to come in and finish this.’”

Nathaniel Emery, an environmental program specialist with DEC, said the agency does not have any regulatory reason to not permit the site. However, if AIMM can’t meet the state’s financial requirements, it would likely deny the permit, he said.

Emery said DEC has again paused their consideration of AIMM’s application until the company can provide solid numbers.

“We’re not concerned about it,” Aldrich said. “This is an ongoing discussion and it really is more giving them the proper perspective rather than the perspective of, ‘This is what it is going to take for you to close it,’ they need to look at what it would take for us to close it.”

Calls seeking comment from AIMM officials were not returned as of press time.

AIMM proposed in late April building a monofill in Nikiski near the end of Bakers Road designed to hold 15,000 tons per year of drilling waste and 1,000 tons per year of nonhazardous, hydrocarbon-contaminated soil from Cook Inlet oil and gas exploration.

The actual amount of material per year that would be held at the site would depend on Cook Inlet drilling activity from smaller oil and gas outfits the company hopes to serve.

According to AIMM’s permit, the monofill would be a system of three lined cells. As one cell fills up, it would be permanently capped with a liner, then covered with a layer of gravel, topsoil and replanted with vegetation. AIMM said each cell will be double-lined with a leak detection system installed between layers.

The proposal drew fire from hundreds of Nikiski residents who voiced concerns at a public meeting and asked if the company had the proper finances to close and monitor the site and possibly clean up a failure of the site’s lining system.

In all, 229 comments were submitted to DEC from local residents against the site. No comments were submitted in favor.

AIMM officials have said they plan on providing monthly visual and annual groundwater monitoring at six locations around the facility for five years, per state regulations. Emery said on Thursday DEC will likely require 10 years of monitoring, however.

In AIMM’s original $58,000 plan to close the site, AIMM estimated hardening the waste, removing its liquids, capping it and then covering it using third party contractors would cost $21,000. The company estimated five years of visual monitoring, water well sampling and other requirements at $37,000.

The company also submitted a letter to DEC from its bank saying the company was covered to complete the project up to $156,000, Emery said.

“It is basically a commitment from the company itself or the banking system they are using that the company has the means to pay off that sort of a project,” he said.

Emery said the state “expressed concern” over those numbers. In its re-submission to the state, AIMM completed a state-suggested form to get a better handle on what items would be needed and what they would cost if the state were forced to close out the site.

That final number came to $589,858 and in a Nov. 7 letter, AIMM’s financial services company said AIMM would qualify for a bond up to that amount, Emery said. In addition to the bond for post closure, AIMM will establish a closure trust fund guaranteed by an insurance policy responsible for any liability claims, including pollution and clean up totaling $3 million, Emery said.

Aldrich said the difference in her calculation of $1.1 million estimate to close the site and AIMM’s $589,858 estimate was a “difference in perspective.”

“It is not that they don’t have the money,” she said. “A bond is expensive. So certainly they are a business and they are going to do the smallest bond they can get away with and still have a reasonable number and we have just given them a better ballpark of where that reasonable number should be.”

Aldrich said the back-and-forth between DEC and AIMM is a unique situation — when considering similar monofills the state usually deals with larger oil and gas companies with heftier finances that can and have provided sound financial assurance and use a variety of ways to meet those regulations.

In fact, Aldrich said there are few, if any, drilling waste monofills financed by smaller companies like AIMM in the Kenai Peninsula area. Most of the existing monofills, she said, are located on the west side of Cook Inlet and companies are now finding other ways to deal with the waste.

“Most of the companies have gone to a grind and inject program where they grind the waste and then re-inject it into the annulus of the well or into a formation,” she said.

A number of companies have even started shipping their waste to the Lower 48, Aldrich said.

“Needless to say that is very expensive, so they are looking for a lower cost alternative on the Peninsula,” she said.

Brian Smith can be reached at brian.smith@peninsulaclarion.com.

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