Project #1

A Creative Approach Towards The EPC

WRAP
Institutional lenders typically require single point efficacy to meet Cost,
Schedule, and Performance guarantees on a large Project Financed project.
The Group, Inc. / Project located in south central Florida utilies a first of a
!ind con"ersion process. There are three areas of engineering and
construction specialties #ith this project, called islands$ %aterial &andling,
Pyrolysis, and Po#er. The %aterial &andling Island utilies similar equipment
and e'pertise to a typical pulp mill #ood yard, the Pyrolysis Island a Fluid
Catalytic Crac!ing (nit and Fractionator, and the Po#er Island a com)ined
cycle po#er plant )urning a liquid fuel.
Pass thru performance / process guarantees appear to )e a"aila)le on the
%aterial &andling and Po#er Island )ut not on the Pyrolysis Island. There are
three *+% "endors that appear to ready to ta!e on the Com)ustion Tur)ine
,Po#er Island- #ith upgrade modifications to utilie our pyrolysis liquids as
the fuel. .arranty issues surrounding any gray mar!et equipment used in
the Project ,Com)ustion Tur)ine, and may)e the Steam Tur)ine and &eat
/eco"ery Steam Generator- #ould )e co"ered )y purchased *+% #arranties
and/or insurance pac!ages. 0lso, the 1e"eloper and Pyrolysis Island
engineers are acti"ely pursuing qualified *+% contractors #ho #ould ta!e on
the &ydraulics type guarantees on the 2iomass Pyrolysis (nit ,2P(- and
associated Solids Cooler.
Therefore, the Project 1e"eloper is proposing the follo#ing guarantee matri'3
Material
Handling
Pyrolysi
s
Power
Cost EPC EPC EPC
Schedle EPC EPC EPC
Per!or"ance
EPC
EPC$ all process equipment acceptance
tests, 2P( *+% pro"iding
hydraulics, process tested hot #ith 45
fuel oil or )io6diesel start6up )urners
#wner$ *ff spec yields to pro forma 7
operating reser"e pac!age to finance
EPC$ CT mods
pass thru
#EM$%nsrance$
#arranties on
gray mar!et
ris! management plan
#&M$ )ac!stop ris! management plan
equipment
The +PC completion #ould )e defined as standard +PC agreements for the
%aterial &andling and the Po#er Island. .hereas, the Pyrolysis Island +PC
completion #ould )e defined as all process equipment performance
accepted, including the 2P( hydraulics and non6)iomass process operations
,operated #ith the 45 fuel or )iodiesel start6up )urners, #ithout )iomass
feed-. Therefore, the schedule completion and performance guarantees are
clearly defined for the +PC contractor.
The pyrolysis reactions are a function of holding the +6G up at a temperature
for a specified period of time. The 2P( #ill ha"e #ell o"er 589 capacity
margin )uilt into the design along #ith the a)ility to "ary time 7/6589 and
temperature ,up to 6:8F/7;8F, appro'imately 6.:</7;< times the reaction
rate-. The yields of =iquid +6Grass ,=+G$ com)ustion tur)ine fuel-, Syngas,
and Char is the most difficult ris! element for an +PC contractor to accept. If
the yields of =+G are lo#er than design, the process #ill fire harder to ma!e
up the difference )et#een the design yields per mass of +6Grass. The =+G
shortfalls and increased firing #ill result in a com)ination of increased
syngas and/or char. 2oth syngas and char ,e'cess that is required to restore
the >88F pyrolysis reaction temperature drop- are used to raise steam for
the Po#er Island. Therefore, additional electric generation could )e realied
if the Solids Cooler, &eat /eco"ery Steam Generator, and Steam Tur)ine
#ere slightly o"ersied in the off6design 2P( =+G yields. Therefore, the
1e"eloper see!s to push off the 2P( yields ris! off to Pro6Forma and the
remaining Pyrolysis Island de6)ottlenec!ing to an *#ner financed ris!
management program #ith an *?% contractor )ac!6stop.
The *#ner financed Process *perations /is! %anagement Plan ,P*6/%P
essentially a #orst case scenario de6)ottlenec!ing plan estimated @>8658%-
#ould )e secured prior to de)t closing as a meanine finance pac!age. This
plan #ould pro"ide for dra#s against the capital e'penditures as required
under the P*6/%P if necessary and #ould )e )ac!ed )y the Project re"enues
and released at +PC contract completion. This tranche of cash #ould co"er
the sum total of all technical operating ris! elements. In addition to the P*6
/%P, the *?% contractor #ould )e incenti"ied to )ac!6stop this program.