2016 NAP2 OFFSET PROJECT REPORT FOR ORICA NITRIC ACID PLANT 2 - NITROUS OXIDE ABATEMENT FROM NITRIC ACID PRODUCTION FOR 1 JANUARY TO 31 DECEMBER 2016

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1 2016 NAP2 OFFSET PROJECT REPORT FOR ORICA NITRIC ACID PLANT 2 - NITROUS OXIDE ABATEMENT FROM NITRIC ACID PRODUCTION FOR 1 JANUARY TO 31 DECEMBER 2016 JANUARY 18, 2017

2 Project Document Information Project Title: Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production Report Date: January 18, 2017 Reporting Period: January 01, 2016 to December 31, 2016 Project Scope and Description This report updates Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production Project for 2016 reporting period. The project start date was 29 March, The Project will reduce greenhouse gas emissions associated with nitric acid production by installing a dedicated catalyst to abate nitrous oxide which is formed during the ammonia oxidation step in the nitric acid plant (NAP) 2. Credit Start Date: 29 March, 2012 Credit Duration Period: 29 March, 2012 to 29 March, 2020 The Project is expected to continue under the approved protocol through the credit duration period with possible 5-year extension. Therefore the expected lifetime of the Projects is from March 29, 2012 to March 29, 2020 with a possible extension to March 29, The project is expected to generate annual emission reductions in excess of 75,000 tco2e. Total emissions reductions (in tonnes) for the Project by vintage year are summarized in the table below: Emissions Reduction ( tonnes CO2e) by Period Period CO2 eq. abated ( tonnes ) 29 March, 2012 to 101,078 December 31, Calendar Year 116, Calendar Year 235, Calendar Year 263, Calendar Year 232,848 Project Total to Date 949,237 Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 1

3 The Project complies with the Alberta Approved Quantification Protocol for Nitrous Oxide Abatement from Nitric Acid Production V1.0 (October 2009). The project abates N 2O emissions that would otherwise be emitted to the atmosphere. The Project complies with the aforementioned Protocol in that a dedicated catalyst is installed in a Nitric Acid Plant to abate Nitrous Oxide formed during the oxidation of Ammonia, which in absence of the Project would be released to the atmosphere. The emissions baseline of Nitrous Oxide was determined as per the Protocol. These emissions are continuously monitored and recorded as per the Alberta N 2O Meter CEMs Code (2008). Orica Canada Inc. is located at Township Road 221 Carseland, Alberta T0J 0M0. All credits generated by the project are registered on the Alberta Emissions Offset Registry only. The site is 16 hectares and is 50 kilometres southeast of Calgary. The longitude and latitude is 20033E to E and 23063N to 25296N. The site is owned and operated by Orica Canada Inc. Orica Canada Inc. has sole legal right to the offset credits generated from the Project. Orica Canada Inc. uses an independent third party verifier who meets regulatory requirements to conduct annual audits on the Project results for each vintage year. This particular Project meets the all Offset Requirements under the Climate Change and Emissions Management Act: Specified Gas Emitters Regulation in the following: The Project is based in Alberta; At the provincial level, Bill-3 Climate Change and Emissions Management Act and associated Specified Gas Emitters Regulation (SGER) impacts facilities that emit over 100,000 tonnes of greenhouse gases but exempts from reduction targets the industrial process emissions related to chemical reactions. The industrial process emissions from the Orica s NAP 1 and NAP 2 are exempt from the SGER reduction targets. Since the Project is exempt from targets it qualifies for the creation of Alberta-based Offset Credits; The Project actions were taken and occur after January 1, 2002; Actual measurements are used to quantify the emission reductions realized from the Project; therefore making the reductions both real and demonstrable; and Emission reductions are measured and quantifiable using continuous real time measurement; The Project site is owned and operated by Orica Canada Inc. Third party secondary catalyst suppliers have no claim to any reduction credits generated using their technology at Orica Canada s Carseland Site. Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 2

4 Project Contact Information Project Developer Contact Information Orica Canada Inc. Jeff Zubach SHES Specialist Township Road 221 Carseland, AB T0J 0M0 Canada (403) (403) Verifier ICF International Selena Fraser, P.Eng. Senior Associate Somerset Street West Ottawa, ON K2P 2G3 CANADA Ph: (613) This is the third year of verification of this protocol by ICFI. Project Description and Location Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 3

5 The Orica plant produces low density prilled ammonium nitrate which is used in mining, construction and logging industries. The NAP 2 plant began operation in 1998 to produce nitric acid (HNO 3) and uses a GPN Mono Pressure Process which oxidizes ammonia on platinum-rhodium catalyst gauze and absorbs nitrogen oxide gases in water. The oxidation reaction of ammonia that takes place on the platinum-rhodium catalyst has a side reaction which produces N2O. The project consists of the installation of a dedicated secondary catalyst in Orica s Nitric Acid Plant 2 (NAP 2) below the precious metal catalyst gauze to abate the nitrous oxide. This was Heraeus N 2O abatement catalyst (HR-SC) until September 2013, however this catalyst did not perform as expected. On September 17, 2013 a Johnson Matthey catalyst, Yara 58-Y1 was installed in an attempt to boost abatement. The opportunity to generate emission reduction credits comes from the installation of this dedicated catalyst for the destruction of the N 2O emitted to atmosphere from the tail gas stack. The Orica Canada Inc. s ammonium nitrate plant site operates two Nitric Acid Plants (NAP). The Project Site consists of the following: Main Office Building Nitric Acid Plant 1 (NAP1) Nitric Acid Plant 2 - (NAP2) The Project Ammonium Nitrate Building Product Storage and Loadout Effluent Treatment System Figures 1 provides an aerial view and map of the project site: Figure 1: Aerial View of Orica Canada Ammonium Nitrate Plant Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 4

6 Project Implementation and Variances Update to Project Plan There were no changes to the Project Plan in the 2016 year. Instrumentation The N2O CEMS and plant process instrumentation functioned normally during N2O RATAs were conducted in March, June and October, passing each time. Data Set The dataset for the project was reviewed and it was noted that 12.6% of the dataset was rejected due to the oxidation temperature ( OT ) falling outside the calculated control limits based on 5 historical primary catalyst gauze runs. The oxidation pressure was used to confirm that NAP2 baseline primary catalyst gauze campaign had operated similarly to the previous 5 runs. This was to ensure the plant s operation was not altered to increase N 2O emissions for the baseline. The most significant change to NAP2 which put the OP outside of the historical control limits is the installation of the secondary catalyst. The increased flow restriction due to the smaller secondary catalyst rings increases pressure drop through the ammonia convertor and hence increases overall plant pressures. At historical plant rates, the plant pressures will be higher with secondary catalyst installed and this has led to the largest source of OP outside of the control limits. Variance from Protocol and Project Plan The hourly data check that the OP falls within the lower and upper control limits has been removed on the data filter for the emissions data. As a result of the removal of the control limits on OP, oxidation temperature (OT) is now used to filter data. This results in the rejected emissions data set being 12.6% This variance is justified as it restores those data set hours where the plant operates at higher pressure and hence lower N 2O abatement efficiency. Exclusion of these data per the Protocol quantification method would decrease the 2012 project emission factor and increase the number of calculate tonnes of CO2 e reduced. Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 5

7 Plant Operations NAP2 was shut down from January 4 th to January 20 th, 2016 due to high product inventory. NAP2 was shut down March 14 th to 26 th, 2016 for primary catalyst gauze change and due to high product inventory and P-604 and N2O abatement issues. Secondary catalyst inspected during gauze change. NAP2 shut down April 4 th to 7 th, 2016 due to loss of services from Agrium NAP2 was shut down July 30 th to August 1 st, 2016 due to condensate supply issues NAP2 shut down August 16 th to 20 th, 2016 for primary catalyst gauze change and to complete repairs to catalyst basket. Secondary catalyst inspected during gauze change. NAP2 shut down September 13 th to 17 th, 2016 due to site power outage. Summary of Plant Operations Summary of Monthly Operations: January March 2016 Primary Gauze Run #10 Month Plant Operation Comments Data Set Comments January 2016 February 2016 March 2016 Plant shut down January 4 th to January 20 th due to high product inventory. Plant at reduced rates from February 17 th through to the end of the month. Plant trip on February 16 th due to loose contact on compressor bearing temperature card, plant immediately restarted. N2O RATA March 3 rd Plant shut down March 14 th 22 nd for gauze change out and due to high inventory. Plant remained down to March 26 th to troubleshoot P-604 and N2O abatement issues. Plant shut down most of the month No loss of data due to filtering Plant shut down part of the month Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 6

8 Decrease in N2O abatement efficiency noted Summary of Monthly Operations: April August 2016 Primary Gauze Run #11 Month Plant Operation Comments Data Set Comments April 2016 May 2016 June 2016 July 2016 August 2016 Plant shut down April 4 th to 7 th due to loss of services from Agrium Plant shut down April 19 th 20 th to troubleshoot higher than normal N2O levels. Warped catalyst basket allowing ammonia to bypass was determined to be the cause. Plant at reduced rates May 15 th through to the end of the month due to high product inventory. Plant at reduced rates entire month N2O RATA June 20 th Plant shutdown July 30 th to August 1 st due to condensate supply issue. Plant shutdown August 16 th to 20 th for gauze change out and to repair catalyst basket Plant shut down part of the month Plant shut down part of the month Plant shut down part of the month Summary of Monthly Operations: September December 2016 Primary Gauze Run #12 Month Plant Operation Comments Data Set Comments September 2016 Plant shut down September 13 th to 17 th due to site power outage. Plant shut down part of the month October 2016 Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 7

9 N2O RATA October 31 st November 2016 Plant operating normally December 2016 Plant operating normally. Reporting Period This report updates Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production Project for reporting period, Jan 01, 2016 to Dec 31, GHG Calculation The calculation of the greenhouse gas emission reductions is based on Alberta Environments Quantification Protocol for Nitrous Oxide Abatement from Nitric Acid Production (October 2009). Emission Reduction = Emissions Baseline Emissions Project Emissions Baseline = Emissions Factor Baseline * NAP * GWP N2O Emissions Project = Emissions Factor Project * NAP * GWP N2O NAP = Nitric acid production for the project campaign (thno 3). GWP N2O = Global Warming Potential of N 2O (tco 2e/tN 2O) Where Emissions Baseline are: Emissions Baseline = the sum of the GHG emissions under the baseline condition (tco2e) Emissions Factor Baseline = calculated emissions factor under the baseline conditions (tn2o/thno3) Emissions Factor Baseline = [(VSG Baseline * NCSG Baseline *10-9*OH Baseline) / Baseline NAP] * (1-Uncertainty/100) Where Emissions Project are: Emissions Project = the sum of the GHG emissions under the project condition (tco2e) Emissions Factor Project = calculated emissions factor under the project conditions (tn2o/thno3) Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 8

10 Emissions Factor Project = [(VSG Project * NCSG Project *10-9 *OH Project) / Project NAP]; VSG (Mean Stack Gas Volume Flow Rate) = (Stack Velocity * K)*Stack Pressure / (Normal Pressure*(Temperature + K) * Stack Area * 60(seconds)* 60(minutes) NCSG (Mean concentration of N2O emissions) = N 2O Concentration (ppmv) * Molecular Weight of N 2O/Standard Volume OH (Operating Hours) Normal Conditions are 0 degrees C and 100kPa; IUPAC Standard MW N 2O = g/mol Standard Volume = m 3 /kmol K = Absolute Zero in Kelvin degrees GHG Assertion Period of claim for emission reduction credits is Jan 01, 2016 to Dec 31, 2016 Below is a table summarizing the vintage 2016 emission reductions in tonnes: Reporting Period: Jan 1, 2016 to Dec 31, 2016 SSR CO 2 CH 4 N 2O CO 2e Total(CO 2e) BASELINE ,035 PROJECT , ,848 Total number of emission reductions in 2016 vintage year are 232,848 tonnes CO 2e. Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 9

11 Project Developer Signatory Authorization I am a duly authorized corporate office of the Project Developer mentioned above and have personally examined and am familiar with the information submitted in this Offset Project Report and the associated Project Plan including the accompanying GHG Assertion on which it is based. Based upon reasonable investigation, including my inquiry of those individuals responsible for obtaining the information, I hereby warrant and belief, and that all matters affecting the validity of the emission reduction claim or the protocol upon which it is based have been fully disclosed. I understand that any false statement made in the submitted information may result in de-registration and serialization of credits and may be punishable as a criminal offence in accordance with provincial or federal statutes. The project developer has executed this Offset Project Report as of the 18th day of January, Orica Nitric Acid Plant 2 - Nitrous Oxide Abatement from Nitric Acid Production offset project, Orica Canada Inc. Signature: Date: 18 January, 2017 Name: Title: Jeff Zubach SHES Specialist Orica Nitric Acid Plant 2 Nitrous Oxide Abatement from Nitric Acid Production 2016 Offset Project Report 10