STATEMENT OF BASIS for NEWARK BAY COGENERATION PARTNERSHIP L.P.

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1 I. FACILITY INFORMATION Newark Bay Cogeneration Partnership L.P. is located at Avenue P, Newark, New Jersey, Essex County and consists of a 120-megawatt cogeneration plant. The facility is owned by Talen Energy LLC and is operated by Ethos Energy Group. The facility is classified as a major facility based on its potential to emit 183 tons per year of nitrogen oxides, 34.0 tons per year of volatile organic compounds, 113 tons per year of particles 10 microns or less in diameter and 113 tons per year of particles 2.5 microns or less in diameter. This permit allows individual hazardous air pollutant to be emitted at a rate to not exceed: 62 pounds per year of acrolein, 10 pounds per year of arsenic, 4 pounds per year of cadmium, 6800 pounds per year of formaldehyde, 12 pounds per year of lead, 712 pounds per year of manganese, 56 pounds per year of polycyclic organic matter. VOC emissions are being corrected to include formaldehyde emissions previously not accounted for. This emission increase is meant to capture emissions already present and no new actual emissions are being generated. As a result, the Department is not revisiting the applicability of State of The Art (N.J.A.C. 7: ) and Federal New Source Review (40 CFR PSD and N.J.A.C. 7:27-18). II. AREA ATTAINMENT CLASSIFICATION The Federal Clean Air Act (CAA) sets National Ambient Air Quality Standards (NAAQS) for six common air pollutants. These commonly found air pollutants (also known as "criteria pollutants") are particulate matter, ground-level ozone, carbon monoxide (CO), sulfur dioxide (SO2), nitrogen dioxide (NO2), and lead. The US Environmental Protection Agency (USEPA) also classifies areas as attainment or nonattainment for each criteria pollutant, based on the magnitude of an area's problem. Nonattainment classifications are used to specify what air pollution reduction measures an area must adopt, and when the area must reach attainment. Currently, the entire State of New Jersey is designated as nonattainment for the 8-hour ozone NAAQS. New Jersey is designated attainment for all other pollutants. For nonattainment classification refer to III. BACKGROUND AND HISTORY The equipment that emits air contaminants from this facility include: two 640 million BTU per hour combustion turbines burning natural gas and ultra-low sulfur diesel, a 38 million BTU per hour auxiliary boiler burning natural gas and ultra-low sulfur diesel, an ultra-low sulfur diesel storage tank, and an ammonia storage tank. Table 1 - Operating Permit Revision History (located at the end of this document) provides a summary of all the changes that have been incorporated into the operating permit through seven-day notice changes, administrative amendments, minor modifications, or significant modifications since the approval of the initial operating permit or the most recent renewal thereof. Please refer to the attached explanation sheet for the structure and configuration of conditions of approval, included in the Facility Specific Requirements section of this permit. A Facility-Wide Risk Assessment was conducted as part of the review of this permit application and health risk was determined to be negligible consistent with NJDEP Technical Manual This is a Permit Modification with Renewal and includes the following changes: 1. Removal of Clear Air Interstate Rule attachment and addition of Cross State Air Pollution Rule attachment. 2. Renewal of Acid Rain Permit effective with renewed Title V operating permit approval. 3. Removal of 2,000 and 500 ppm by weight maximum sulfur in distillate fuel requirements because they are now subject to the 15 ppm standard pursuant to N.J.A.C. 7:27-9. Template Rev. 11/6/17 1

2 4. Removal of expired N.J.A.C. 7: NOx emission limits based on heat inputs at Units 1, OS2 and Unit 2, OS2. The current N.J.A.C. 1: emission limits, effective on May 1, 2015, are in the permit. 5. Addition of PM-2.5 emission limits to Unit1, U2 and GR 2 equal to PM-10 emission limits. Since the PM- 2.5 limits are equal to the PM-10 limits, and PM-2.5 is a subset of PM-10, the permit indicates that satisfying the PM-10 monitoring, recordkeeping, and recording requirements satisfies the requirements for PM-2.5 as well. 6. Addition of MACT JJJJJJ, National Emission Standards of Hazardous Air Pollutants for Industrial/Commercial/Institutional Boilers at Area Sources, requirements to U9 OS Summary. 7. Update FC Requirements to conform to the current template. 8. Add Federal Requirements Summary to U1 and U9 OS Summary. 9. Revise cross referencing from Reference numbers to titles of requirements. 10. Add CEMS QA / QC requirement to U1 and U2 OS Revising long-term and short-term VOC Emissions in GR2, U1 and U2 emissions to include formaldehyde as discussed above. 12. Addition of N.J.A.C. 7: (a) citations for NOx and VOC limits, because the facility was required to obtain emission offsets for NOx and VOC when it was constructed. Inclusion of 40 CFR citations for NOx, TSP, and PM-10 emission limits, because the facility was subject to Prevention of Significant Deterioration requirements for those emissions. 13. Update Landfill Gas Vents Unit 6 to monitor hydrogen sulfide quarterly and record results. 14. Update each monitoring requirement with a stack emission test to the average of three Department validated stack test runs. 15. Addition of the following hazardous air pollutant emissions: acrolein, arsenic, polycyclic organic matter, cadmium, lead and manganese. Formaldehyde emissions are being reduced. These are not changes in actual emissions, but are changes due to updated emission factors. This renewal will also change the allowable emission limits as listed in the following table: Allowable Emission Limits VOC NOx CO SO2 TSP Potential to Emit (tons per year) Other PM10 PM2.5 Pb HAPs CO2e Current PTE Proposed PTE Change (+ / -) NA , NA , VOC Volatile Organic Compounds PM10 Particulates under 10 microns NOx Nitrogen Oxides PM2.5 Particulates under 2.5 microns CO Carbon Monoxide Pb Lead SO2 Sulfur Dioxide HAPs Hazardous Air Pollutants TSP Total Suspended Particulates CO2 e Carbon Dioxide equivalent Other Any other air contaminant regulated under the Federal Clean Air Act The changes made during this permitting action result in allowable annual emissions changes as follows: VOC emissions increased from 30.6 to 34.0 tons per year after inclusion of formaldehyde emissions. HAP emissions increased from 3.55 to 3.83 tons per year. Template Rev. 11/6/17 2

3 IV. BASIS FOR MONITORING AND RECORDKEEPING REQUIREMENTS The facility s operating permit includes monitoring, recordkeeping and reporting requirements that are sufficient to demonstrate the facility s continued compliance with the applicable requirements consistent with the following: 1. Provisions to implement the testing and monitoring requirements of N.J.A.C. 7: , the recordkeeping and reporting requirements of N.J.A.C. 7: , and all emissions monitoring and analysis procedures or compliance assurance methods required under the applicable requirements, including any procedures and methods promulgated pursuant to 40 CFR 64; and 2. Where the applicable requirement does not require direct periodic monitoring of emissions, the Department requires periodic monitoring of surrogate parameters sufficient to yield reliable data from the relevant time period that are representative of the facility's compliance with the permit. For combustion turbines U1 and U2, the facility monitors the fuel use as the surrogate for the long-term (TPY) emission limits for VOC, SO2, TSP, PM-10. PM-2.5 and HAPs. The facility monitors the maximum gross heat input and fuel type/fuel oil sulfur content as the surrogate for the short-term (pounds per hour) emission limits for SO2 and HAPs. For boiler U9, the facility monitors fuel use as the surrogate for the long-term (TPY) emission limits for VOC, NOx, CO, SO2, TSP, PM-10 and PM-2.5. Surrogate monitoring for the short-term (lb/hr) emission limits are combustion process adjustment for NOx and CO, and fuel oil sulfur content for SO2, and heat input as a surrogate for VOC, TSP, PM-10 and PM-2.5 emission limits. 3. In some cases, direct periodic monitoring of emissions and/or surrogate parameters is not required due to one or more of the following: Equipment size and capacity limitations, Subject equipment being permitted at the maximum rated capacity, There is no specific state or Federal standard that applies to this piece of equipment, Not a pollutant of concern for this piece of equipment, Agreements with EPA on the frequency of testing and monitoring for combustion sources. V. APPLICABLE STATE AND FEDERAL RULES The facility is subject to New Jersey Air Pollution Control Regulations, codified in N.J.A.C. 7:27-1 through 34, as applicable. A complete text of these regulations is available at: The facility is also subject to Federal regulations listed below. 40 CFR Prevention of Significant Deterioration NSPS Subpart A: General Provisions NSPS Subpart Dc: Small Steam Generating Units NSPS Subpart GG: Stationary Gas Turbines NSPS Subpart Kb: Volatile Organic Liquid Storage Vessels MACT Subpart A: General Provisions MACT Subpart JJJJJJ: Boilers The Greenhouse Gas (GHG) emissions from this facility are 605,176 TPY CO2e and there is no GHG emissions increase. Template Rev. 11/6/17 3

4 VI. FACILITY S COMPLIANCE STATUS The Responsible Official at the facility has certified that the facility currently meets all applicable requirements of the Federal Clean Air Act and the New Jersey Air Pollution Control Act. Based on this certification, the Department s evaluation of the information included in the facility s application, and a review of the facility s compliance status, the Department has concluded that this air pollution control operating permit should be approved. The facility has submitted a timely and complete application to renew their operating permit and an application shield is in effect. This operating permit also includes a permit shield, pursuant to the provisions of N.J.A.C. 7: A permit shield provides that compliance with the relevant conditions of the operating permit shall be deemed compliance with the specific applicable requirements that are in effect on the date of issuance of the draft operating permit, and which form the basis for the conditions in the operating permit. Also, prior to the expiration of the five-year period, the facility will be required to apply for a renewal of this operating permit, at which time the Department will evaluate the facility and issue a public notice with its findings. VII. EXEMPT ACTIVITIES The facility s operating permit does not include exempt activities such as office and interior maintenance activities, maintenance shop activities, food preparation facilities, cafeterias and dining rooms, etc. A complete list of exempt activities, as allowed by the Operating Permit rule, can be found at N.J.A.C. 7: Template Rev. 11/6/17 4

5 Operating Permit Revision History Table 1 - Operating Permit Revision History New Jersey Department of Environmental Protection Permit Activity Number Type of Revision Description of Revision Final Action Date BOP Administrative Amendment This Administrative Amendment updates the Facility Profile with the following changes: Owner (Current Primary) - Dale Lebsack Owner (Current CO-1) Remove. Environmental Officer - Mark Driscoll Emission Statements - Mark Driscoll. Fees/ Billing Contact - David Gibson. Other minor changes are being made to addresses and organization names. 10/29/2015 BOP Administrative Amendment This administrative amendment was filed to update the NOx RACT conditions in the facility's Operating Permit pertaining to high electric demand day ("HEDD") units. The application ensures that the Operating Permit requirements specifically describe the Phase 2 NOx RACT standard for HEDD units as a net megawatt (or net useful energy) standard, accurately describes the ozone season and non-ozone season emissions averaging periods, and includes the instruction in N.J.A.C. 7: (a)(1) to use 40 CFR 75 Appendix F to calculate NOx emissions. These requested corrections were intended solely to conform the permit language to the regulatory program. 9/29/2014 Facility Profile Contact Information updates were requested to reflect a new Responsible Official and other contact information updates. 11/6/17 5

6 FACILITY NAME (FACILITY ID NUMBER) BOP Activity Number assigned by the Department New Jersey Department of Environmental Protection Facility Specific Requirements Emission Unit Number assigned by the Facility Brief description of emission unit Emission Unit: U40 Sewage Sludge Incinerators Operating Scenario: OS Summary OR OS2 Fluidized Bed Incinerator OS Summary lists all rules and requirements that apply to an emission unit. An emission unit may contain one or more pieces of equipment and corresponding operating scenarios. OSX denotes the operating scenario number and lists the rules and requirements that apply to a scenario. An operating scenario represents various ways (or scenarios) a piece of equipment is permitted to operate. Item Number Description of applicable requirement Monitoring method to ensure compliance Recordkeeping to show facility s compliance Actions and submittals required for the facility Ref.# Applicable Requirement Monitoring Requirement Recordkeeping Requirement Submittal/Action Requirement 3 The permittee shall conduct an annual performance test for each pollutant in Table 2 of 40CFR62 Subpart LLL between 11 and 13 calendar months after the previous performance test or within 60 days of a process change. [40 CFR (a)] Other: Conduct the performance test using the test methods, averaging methods and minimum sampling volumes or durations as specified in 40CFR62 Subpart LLL and according to the testing, monitoring and calibration requirements specified in 40 CFR (a). [40 CFR (a)]. Other: (1) Maintain records of the results of initial, annual and any subsequent performance tests conducted to determine compliance with the emission limits and standards and/or to establish operating limits, as applicable. [40 CFR (e)]. Submit a report: Annually to the Administrator and to the Department. The permittee shall submit an annual compliance report as specified in 40 CFR 62. [40 CFR (d)] Rule citation for applicable requirement Rule citation for monitoring requirement Rule citation for recordkeeping requirement Rule citation for submittal/ action requirement Explanation Sheet for Facility Specific Requirements 11/6/17 6