Cost-Benefit Analysis Methodology for Decommissioning & Reclamation

Transcription

1 Cost-Benefit Analysis Methodology for Decommissioning & Reclamation Graeme Strathdee,, Ken Reid and the SPPA-SE SE Fresh Start Team GEOTEC December 18, 2002

2 Environmental Modeling Protocol Adopted by SE and SPPA Companies Cost of Option Base Case #1 D&R Option Scenario #2 D&R Option Cost of Option Site Characteristics 3D GW Model 3D GW Model Site Characteristics Environmental Model Environmental Model Impact on Environment Impact on Environment Value of Impacted Environment Value of Impacted Environment Decision Analysis Implement the D&R Plan Base Case Preferred? Yes No 2nd Iteration

3 Case for Environmental Cost-Benefit Analysis Million dollar solution; 10 cent problem. Quantity Salt Brine Time Aerial photo of the Allan Division potash mine site showing tailings pile and brine pond: Point source of potential contamination. About 2 tonnes of salt and insolubles waste solids is separated for each tonne of potash produced. Waste management strategies can affect inventories.

4 Cost-Benefit Analysis Process Select and Model Options, Factors and Sensitivities Case A: Existing dykes Case A 2068 Case B A-B, 2068 Case B: Slurry Wall Lanigan Division Site: Two GW Cases

5 SPPA+SE Cost-Benefit Analysis Project Working Group Tasks Understand, define the environmental problem Build DPL decision model DPL is Decision Analysis modeling software Facilitates sensitivity and risk analyses Handles uncertainty systematically Apply economics theory to sub-models Handle disconnected impacts and costs correctly Calculate outcomes in linked Excel analyses Clear, bullet-proof and environmental-ideology ideology-free Embed fundamentals; Simplify building-block block decisions

6 Cost-Benefit Analysis Project Team U of S Academics+Consultants Consultants=CredibilityCredibility Dr. Gordon Sparks Project Director Mr. Paul Christensen Project Leader Project Economist. Mr. Scott Sillers Geo Environmental and Software Engineer. Dr. Suren Kulshreshtha Environmental Economics Dr. Dick Neal Ecologist Mr. Scott Halpin Ecologist Dr Gord Putz Water Quality Ms. Angela Gardiner Software Training Ms. Shawna M c Master Administrative Support Dr. Malcolm Reeves Engineering Geologist MDH Mr. Chris Johns Geo Environmental Engineer MDH Mr. R Pauls Technical Support - MDH PCS Potash, IMCC and Agrium environmental managers Saskatchewan Environment Regulators SK Energy and Mines Economists

7 Environmental Modeling Protocol Adopted by SE and SPPA Companies Cost of Option Base Case #1 D&R Option Scenario #2 D&R Option Cost of Option Site Characteristics 3D GW Model 3D GW Model Site Characteristics Environmental Model Environmental Model Impact on Environment Impact on Environment Value of Impacted Environment Value of Impacted Environment Decision Analysis Implement the D&R Plan Base Case Preferred? Yes No 2nd Iteration

8 Influence Diagram Problem Logic Creates Quantitative Analysis Case Assessed Influencing Factors Calculated Outcome Decision: Scenario for Analysis Node D Node A Node B Node C Outcome Node Decision E

9 Cost-Benefit Analysis Application Find the Case with Minimum Total Life-Cycle Costs + Costs for Mine, Mill and WMA Capital Operating + Farmland Value + Wildlife Habitat + Critical Wildlife Habitat + Rural Wells + Livestock Wells + Municipality Wells + Irrigation Wells + Flowing Water Bodies + Non-flowing Water Bodies

10 Cost Cost-Benefit Analysis DPL Model Benefit Analysis DPL Model Discount Rate DRTM: Initial Capital DRTM: Start Year DRTM: Lifespan DRTM: O&M DRTM: Total ($/yr) FVM: Assessed Value FVM: Market Ratio FVM: Affected Area FVM: Start Year FVM: Total ($/yr) Total Cost ($/yr) PWH: Affected Area PWH: Start Year PWH: Replace Factor PWH: Assessed Value PWH: Market Ratio PWH: Total ($/yr) CWH: Start Year CWH: Affected Area CWH: Replace Factor CWH: Assessed Value CWH: Market Ratio CWH: Total ($/yr) CWH: Enhance Costs PWH: Enhance Costs DOM: Clients DOM: Start Year DOM: Setup Costs DOM: Pipeline Costs DOM: kms/ tapoff DOM: Annual Costs DOM: Total ($/yr) LIV: Clients LIV: Pipeline Costs LIV: Start Year LIV: Setup Costs LIV: Annual Costs LIV: Total ($/yr) NFLW: Start Year NFLW: Affected Area NFLW: Enhance Costs NFLW: Assessed Value NFLW: Market Ratio NFLW: Replace Factor NFLW: Total ($/yr) MUN1: Treat. Type MUN1: Well? MUN1: Volume MUN1: Distance MUN1: Start Year MUN1: Total ($/yr) MUN2: Start Year MUN2: Treat. Type MUN2: Distance MUN2: Well? MUN2: Volume MUN2: Total ($/yr) MUN1: Affected? MUN2: Affected? II1: Affected? II1: Start Year II1: Distance II1: Well? II1: Volume II1: Total ($/yr) FLW: Capital Cost FLW: Annual Cost % FLW: Start Year FLW: Lifespan FLW: Total ($/yr) DOM: Existing Annual LIV: Existing Annual MUN1: Existing Annual MUN2: Existing Annual II1: Existing Annual MUN1: Well Depth MUN2: Well Depth Tax Cost ($/yr) LIV: Livestock Affected LIV: Pipline Water LIV: Well Water LIV: Avg km to source Avg K2O Price K2O Quantity Resource Income CCT Estimate DRTM Scenario DOM: Water Supply a 8b DPL Component of DRTM Cost-Benefit Model Influence Diagram Clusters of nodes define the model calculation Calculated Outcome Node Decision Node

11 Cost-Benefit Analysis Farmland Value Sub Model Brine Transport Affects Area and Time of Loss

12 Cost-Benefit Analysis DPL Model Links to Farmland Value Node Calculation Estimated Market Value of Affected Farmland: DPL Node Labels Assessed Value ($/acre) V FVM: Assessed Value 350 Market Value Ratio R FVM: Market Ratio 1.50 Market Value ($/acre) MV = V * R 525 Area Affected (acres) A FVM: Affected Area 50 Total Market Value ($) TMV = MV * A 26,250 Time to Impact (years) n FVM: Start Year 150 PW of Total Market Value ($) PWTMV = TMV * (P F,i,n) 17 AW of Total Market Value ($) AWTMV = PWTMV * i FVM: Total ($/yr) 1

13 Environmental Problem Definition Convert the Physical Problem to Economic Measures The project team applied the traditional sequence for environmental impact modelling: Source Pathway Receptor Impact

14 Waste Management Area Potential Source of Salt Contaminants Tailings Pile Brine Pond

15 Potential Pathways Salt, Slimes and Brine Transport Dust Breach Seepage Tailings Pile Spray Pond Dyke Shallow Lateral Migration Surficial Aquifer Aquitard Deep Lateral Migration Intertill and Other Deep Aquifers Basal and Other Deep Aquitards

16 Outputs from 3-D 3 D Site Characterization Quantities and Properties for Groundwater Modeling Seepage Tailings Pile Pond Dyke Shallow Lateral Migration Surficial Aquifer Aquitard Deep Lateral Migration Intertill and Other Deep Aquifers Basal and Other Deep Aquitards

17 3-D Groundwater Model Predictions Effect of D&R Strategies on Brine Transport Case A: Existing dykes Case A (2068) Case B (A-B, 2068) Case B: Slurry Wall

18 3-D Groundwater Model Predictions Lanigan Brine Plume Movement over 100 Years Case A Case A (2068) Case B Case B (A-B, 2068) Brine transport can be slow: SK tills are excellent aquitards Rate of vertical transport at Birsay SK: 1 m in 10,000 years (Hendry, U of S) Local geology and engineered barriers control brine migration rates and downstream consequences over time

19 Inventory of Salt-Sensitive Sensitive Receptors Distance from Source and Time Determine Impacts Major Flowing Waterbody (River) Non Flowing Water Bodies Minor Flowing Water Body (Creek) Rural Community (Wells) Adjacent Urban Community Primarily Wildlife Habitat Critical Wildlife Habitat Small Lakes & Marshes Acreages Rural Residential with wells Mine Site # 2 Groundwater Flows Primarily Agricultural Land Mine Site # 1 Farm Sites with wells

20 The Receptors Characterize and Predict in 3-D 3 D over Time Aquitard 1 Aquitard 2 Aquifer 1 Aquifer 2

21 Analysis of the Problem Source Pathways Receptors Wind (Dust) Primarily Agricultural Land Pile Wind (Spray) Breach (Dyke) Primarily Wildlife Habitat Critical Wildlife Habitat Non Flowing Waterbodies Small Lakes & Marshes Pond Seepage (Through Dyke) Waterways Flowing Waterbodies Rural Residential Minor (creeks) Major (rivers) Shallow Lateral Migration (Surficial Aquifer) Wells Industrial Rural Community Deep Lateral Migration (Intertill & Other Deep Aquifers) Others

22 Pathways Analysis Threshold Criterion for Switching on the Impacts Salt Concentration Economic Impact Pathways Receptor Physical Impact Primarily Agricultural Land Background None None > 10,000 mg/l Total Farmland Value Model Shallow Lateral Migration (Surficial Aquifer) Primarily Wildlife Habitat Critical Wildlife Habitat Waterbodies Non Flowing Small Lakes & Marshes Flowing Creeks & Rivers Rural Residential Background > 10,000 mg/l Total Background > 10,000 mg/l Total Background > 10,000 mg/l Total Mass or salt/unit of time Volume of water/ unit of time Background None None None None None Wildlife Habitat Value Model None Critical Wildlife Habitat Value Model None Non Flowing Waterbodies Value Model (Small Lakes & Marshes) Concentration (None to A Lot - Variable) None > 10,000 mg/l Total Well Value Model Wells Other Industrial Rural Community Background None None > 10,000 mg/l Total Well Value Model Background None None > 10,000 mg/l Total Well Value Model

23 Cost-Benefit Analysis Project Deliverables Have we met the SPPA-SE project goals? Yes To understand, define the environmental problem Identified and modeled all significant salt transport processes To build a decision model Focuses on, and constrains the analysis to, critical variables Facilitates sensitivity and risk analyses To analyze system economics Represents the physical problem with one economic scoring system To present standardized, accepted calculations Transparent, simple, regulatory-pre pre-emptiveemptive Merits of alternative strategies and technologies can be tested

24 Saskatchewan Environment

25 Cost-Benefit Analysis Methodology for Decommissioning & Reclamation Graeme Strathdee,, Ken Reid and the SPPA-SE SE Fresh Start Team GEOTEC December 18, 2002

26 The Receptors Cross Section View Critical Wildlife Habitat Primarily Wildlife Habitat Rural Residential (Acreages) Primarily Agriculture Land Farm House Barn Dyke Time and Distance Tailings Pile Pond Dyke River Well Small Lake/ Marshes Creek Well Property Line Tailings Management Area Property Line

27 Cost-Benefit Analysis DPL Model Decision Tree View DRTM Scenario DOM: Water Supply Base Case Scenario A Pipeline Total_Cost yr_ Water Haul Total_Cost yr_

28 Farmland Value Model Principle: Market Based Land Values Assessed Value of Farmland Farmland Value Model Recent Sales in Area Current Market Value = Multiple of assessed value (periodically updated)

29 Well Value Model Principle: Supply equal or better quality and quantity of water. Well Value Model Rural Residential Industrial Rural Community Well Value Model Process Alternate Source RO Technology $10-15/1,000 gals. (operating) $2,000 - $20,000 Capital Alternate Well Pipeline Truck?

30 Critical Wildlife Habitat Value Model Principle: Net quality and quantity of critical wildlife habitat must remain stable or increase. Identical Reclaim & Rehabilitate Feasibility? Similar Critical Wildlife Habitat Thou Shalt Not Impact Critical Wildlife Habitat Unavoidable At Any Cost Avoidable At High Cost Replace - Equal Quality & Quantity Avoid New Location Feasibility Add To and Enhance Existing

31 Flowing Waterbodies Value Model Salt Concentration Physical Impact Economic Impact Mass of Salt/ Unit Time Flowing Waterbodies (Creek or River) 1 mg/l mg/l No Totally Destroyed Impact Very Large None Volume of Water/ Unit Time

32 Flowing Waterbodies Value Model Principle: Discharge of any contaminants into a flowing waterbody will be handled on a case-by by-case basis using SERM protocols. Increase in Concentration Physical Impact Economic Impact Mean Annual Background Level Plus Three Standard Deviations None None Flowing Waterbodies Between Prior Annual Backround Level Plus Three Standard Deviations and Irrigations Objectives Potential Impact On Irrigation Use SERM Protocols Between Irrigation Objectives And Drinking Water Objectives Potential Impact On Irrigation, Aquatic Life, Human Health And Riparian Zone Use SERM Protocols Above Drinking Water Objectives Potential Impact On Irrigation, Aquatic Life, Human Health And Riparian Zone Use SERM Protocols