City Hears Methane Proposal
By Jeff Arnold
Wednesday, November 23, 2005 8:28 AM CST
TIMES RECORD •
JARNOLD@SWTIMES.COM
Methane gas produced by decomposing trash could bring cash into city
coffers if a California-based company is allowed to expand its landfill
gas collection system at the Fort Smith Regional Landfill.
Since 1997, Cambrian Energy has collected methane gas
produced by decomposition at the landfill — which is required under
state and federal landfill regulations — and converted it to a mid-grade
heating fuel available for sale.
Initially, about 20 percent of the gas was sold and currently none of
the gas is being sold, according to a memo from Deputy City
Administrator Ray Gosack.
Under the terms of a partnership created in 1997
between the city and Cambrian, the city receives a 13 percent royalty on
methane gas sales, which generated about $18,000 annually when gas was
being sold.
Evan Williams, president of Cambrian Energy, told the Fort Smith Board
of Directors at a study session Tuesday that if his company is allowed
to process the gas and convert it to a product more equivalent to
natural gas, the city could initially receive an estimated $141,000
annually from its sale if the city agreed to drop its royalty to 6.5
percent.
After five years, the royalty would increase to 10
percent, about $216,000 annually, said Williams.
Williams said his company will assume the $6 million investment to
upgrade its facility in exchange for the city agreeing to the decreased
royalty and increasing the land area at the landfill that Cambrian
leases for a processing facility.
Although the royalty percentage will decrease, because the gas being
sold would be higher quality and Cambrian believes it can sell 100
percent of the gas captured at the landfill, Williams said the city will
earn more annually.
Cambrian also has two potential clients already — Arkansas-Oklahoma Gas
Corp. and Seminole Energy — and has acquired almost all of the easements
for a transmission line to an AOGC facility in Sebastian County,
Williams said.
Gosack said city staff viewed the proposal favorably because of the
potential for higher royalty payments and Cambrian’s capital investment
which saves the city millions of dollars.
State and federal landfill regulations require the city to capture
landfill gas so it doesn’t escape into the atmosphere. If there was no
partnership with Cambrian, the city would bear sole responsibility for
the cost of capturing the landfill gas, said Gosack.
The board will vote on the proposal at its Dec. 6 regular meeting.
Copyright © 2005 Stephens Media Group.
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