Document wwoVrey9Zgp15yRd5VawreaQ

Vislo Chemicol Company 15990 North Barker's Landing Road Post Office Box 19029 Houston, Texas 77224 Phone (7131531-3200 March 28, 1989 Mr. B. I. Raffle Supervising Counsel Environmental & Engineering Group Conoco Legal Department P.O, Box 2197 Houston, TX 77252 96t M RF XR VISTA Mr. H. J. Neeld Director, Environmental Programs Environmental Conservation Conoco Inc. P.0. Box 2197 Houston, TX 77252 Re: . COST SHARING AGREEMENT FOR LCCC GROUNDWATER EXPENDITURES Gentlemen: The following is a summary of the meeting held on March 20 to further discuss cost sharing for the LCCC groundwater project. In summary, Conoco accepts the principles and elements outlined in Attachment I, with the exception of Items 4 and 5. Item 4 was discussed in terms of Conoco's offer to settle on a "cash-out" amount prior to DEQ approval of a remediation plan. Item 5 was tabled for later discussion. Conoco presented a cash-out proposal "concept" document (Attachment II) for discussion. This was reviewed in terms of contents and relative dollar amounts. The document was recognized not to include a value for Vista's risk. Vista noted that we felt manpower costs for the remediation system were significant for the 20 year remediation period and should be included in the "cash-out". The next meeting was scheduled for Tuesday, April 11, 1:00-3 :00 p .m. at Conoco. Prior to that meeting, Vista will develop a proposed value for Vista risk, and review the dollar amounts and elements presented in Attachment II. * Thomas G. Grumbles, C.I.H. Environmental Quality Manager dlj Attachment cc: W. L. McClain, M. G. Hayes-LCCP VVV 00G006973 DEFINITION OF CASH OUT The receipt by Vista of a lump sum payment of money in exchange for a total release of liability of Conoco for future costs incurred to remediate any and all subsurface "groundwater" at the Lake Charles Chemical Complex. ELEMENTS OF CASH OUT 1. Capital costs for: a. Recovery system (new equipment) b. Treatment system 2. 0 & M for: a. Recovery system b. Treatment system c. P & A costs 3. Value for Vista assumed risk ASSUMPTIONS 1. 20 year remediation life 2. 5% inflation 3. 10% discount factor 4. Based on system initially approved for installation by DEQ based on feasibility study recommendations. 5. Vista obtains subrogation rights against consultants 6. Separate treatment system that considers available synergies CASH OUT ADVANTAGES/DISADVANTAGES TO CONOCO/VISTA 1. Certain price for undefined actual project lifetime costs 2. Elimination of Conoco manpower and substitution of Vista manpower requirement for project management 3. Protection from and exposure to changing clean-up standards 4. Elimination of Conoco transactions with consultants-substitution of Vista 5. Adds another level of uncertainty for Vista APA claims based on scope of release. VW 000006979 LCCC Groundwater Project Buyout Costs Summary If Conoco continues to be involved in thia project at 70% cost for the next 5 years, 50% for the following 5 years, and 30/- for the following 5 years, and iO% for the last 5 years, it will cost an estimated 3=717,216 NPV (Net Present Value at 10% discount factor) for the next 20 years- This should be the starting point for negotiations. A risk factor needs to be included so the cost will go up by some amount. The major items anticipated to complete the project and estimated costs are discussed below. Remediation Wei 1 InstalIation ft design basis of 20 pumping wells in the 50--ft sand with an average pumping rate of 5 gpm each was used. It was assumed that 3 of the wells would be existing wells and IS would be new. Assuming 6--inch stainless steel wells, it would cost 5242,000 just for the well installation and the total project would cost in the neighborhood of 5300,000. Rented i ati on Pumping System lostal 1 at ion The system for the 2 current wells pumping the 30--ft sand cost about 510,000. For 13 more wells the cost was assumed to be 5180,000. Maintenance was assumed to be 5% of the capital cost per year with a 5% inflation factor. Mossvilie Monitorinq Mel1s Instal1ation It is assumed that 3 monitoring wells will in Mossville in the 30--ft sand. The total is estimated to be about 557,000. have to be installed cost for this project New Steam Strjpper Instal1ation and Operation The installation of a new steam stripper to treat 100 gpm of groundwater is estimated to cost about 5320,000. No operating costs were estimated, but they are expected to be low because excess steam is available and the pumps required are low horsepower. Maintenance costs are estimated at 5% of the capital cost annually with a 5% inflation factor. Plugging and Abandonment p-f Wells Three steel ellsf (soon to be 4) and 5 PVC wells have been P$tA ' ed to date. Only a couple of tnore wells have obvious problems and will need to he P&A'ed. The PS*A cost (and possibly other casts associated with these wells) may btis rsCOvttrsd from GicM. An effort to eliminate wells not needed tor either recovery or monitoring could result in P&A of a maximum at 30 wells. Using a cost of 10 times the cost of the three wells already P&A'ed plus 10 percent gives *a cost of *50*000. Hiscellanedcus Contractor Studies *10,000 per year was added to cover the cast af additional studies by a groundwater consultant. Also, *10,000 per year analytical costs for outside laboratories was added. Prices go up over the years, but the amount of studies and analyses should decrease. may 000006981 VV* LCCC BROUNDHATER Year Pumpout 1O 2 130,000 3 9,000 4 9,450 5 9,923 6 10,419 7 10,940 5 11,487 9 12,061 10 12,664 11 13,297 12 13,962 13 14,660 14 15,393 15 16,163 16 16,971 17 17 , S1 9 IS 13,710 19 19,646 20 20,628 Total NPV 233,130 PROJECT BUYOUT stripper New Wei 1s O 337,000 320,000 0 16,000 16,800 17,640 13,522 19,448 20,421 21,442 22,514 23,639 24,821 26,062 27,365 28,734 30,170 31,679 s^3,26o 34,926 36,672 414,452 324,545 contractors 70,000 20,000 20,000 20,000 20,000 20,000 20,000 20,OOO 20,000 20,000 20,000 20,OOO 20,000 20,000 20,OOO 20,OOO 20,000 20,OOO 20,OOO 193,412 Conoco cost *717,216 -t- Vista cast -- Total NPV *448,323 *1,165,539 vvv 000006^92