Fort knox peak shaving and back up power

Using Devonian Era Shale Gas for Electricity Peak Shaving and Creating Backup Power

The Fort Knox Shale Gas Program

Harvesting Shale Gas• A Renewable, Alternative

Energy SourceEnvironmental Protection

Improvements to Local Training Areas

T TTrico Tiger

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Energy Transformation at Fort Knox

The Following Topics are Addressed:1. The Devonian Era Shale Gas program

2. The Devonian Era Shale Gas powered Peak Shaving Program

3. Using Combined Heat and Power Generators to reduce Electric Bills

4. Creating Back Up Power with Diesel Generators

5. Incentives for Garrison Commanders to implement new Energy Strategies resulting in Cost Savings, Energy Independence and Security

Trico/Tiger Development, LLC

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The Fort Knox Shale Gas Model• Bottom Line: In 2007, Fort Knox teamed up with a private energy company (Trico Tiger

Development) to harvest their Devonian Era Shale Gas - shift from fossil fuel to a renewable (green) source of energy, meet the natural gas needs of a Large Military Installation, and move closer to becoming an Energy Island. That goal was achieved in 2010. Fort Knox and Trico Tiger Development have further teamed up with Nolin Electric and Trane to produce electricity on post that can be used to meet the demands during peak hours and serve as backup power during emergency periods.

• The Shale Gas project at Fort Knox is No Cost to the Government. Trico Tiger Development resourced the exploration, clearing the right of way, establishing the infrastructure, extracting the gas, compressing and conditioning the gas and delivering the gas. Once in place, the infrastructure became the Real Property of Fort Knox, but continues to be maintained by Trico Tiger Development.

• Fort Knox pays Trico Tiger Development to deliver the Shale Gas based on the Market Exchange Rate. The current cost to Fort Knox equals 86% of previous program costs. The Shale Gas remains Fort Knox gas and is not taxed by The Department of Interior. The Bureau of Land Management (BLM) is not involved in this process. Fort Knox Does Not purchase the gas from Trico Tiger Development. Fort Knox owns the gas and they Do Not pay a Marketing Fee for the gas ($.45/mcf).


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Generating Backup Power at Fort Knox

• Background: Dec 2008 - Kentucky is hit by a major Ice Storm that knocks out power to Fort Knox for 7 days. The post looses connection with the local public power utility – Louisville, Gas and Electric. Following the Ice Storm, Fort Knox created an Energy Fusion Team to determine how to best establish uninterrupted power during weather emergencies.

• The 2008 Ice Storm spurred a major energy security and independence project that relies heavily on Combined Heat and Power onsite generators - CHP systems - to provide on demand backup power to the entire post. Combined Heat and Power systems are the most effective way to give Fort Knox the energy security, independence and energy savings that it needs. These systems earn their “combined-heat-and-power” name because they capture the heat that they generate when producing power. Facilities can then use this captured energy and lower yearly heating bills.

• In the Fall of 2014, Fort Knox will have a reliable source of backup power when severe weather strikes again.


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Shaving Peaks During High Demand Times

• In addition to installing backup generators, Fort Knox is installing primary generators to use for onsite electricity generation when buying power from the public utility grid would be at its most expensive – Peak Shaving. Fort Knox officials can decide to purchase power directly from the public grid or it can rely on its own smaller microgrid to generate its own power, depending upon when each option makes better financial sense.

• The final project will include 21 generators. This includes Four CHP engines, Ten Diesel Powered Backup Generators and Seven Peak Shavers. The peak shaving generators will be powered by Devonian Era Shale Gas harvested at Fort Knox and provided by Trico Tiger Development. Fort Knox’s Shale Gas is a renewable, alternative energy source.

• Once the project is complete, Fort Knox will have 44 MW of new electrical-generating equipment for Emergency Backup use and Peak Shaving – enough power to run the entire installation.


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Generating Primary and Backup Power


20 MW New Diesel Emergency Generation

16 MW New Natural Gas Lean Burn Peak Shaving Generation

8 MW New CHP Generation

44 MW New Emergency Power Generation plus Existing Emergency Power Generation exceeds the post needs

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Cost Savings• In addition to providing energy security and independence, the new power

system will also reduce the posts energy costs by an estimated $8 million a year. Much of these yearly savings—over $5 million—will come from the CHP systems, and more than $2 million will accumulate whenever Fort Knox generates its own power during peak energy usage times.

• Electricity is far more expensive during times of peak demand, such as a 95°F Kentucky day in the middle of August. By relying on its onsite generators to produce power during these times of high demand, Fort Knox will see its power bills fall dramatically throughout the year.

• Fort Knox will use its yearly energy savings to pay for the entire energy security and efficiency project - a bill expected to reach $70 million. With $8 million in energy savings each year, this means that Fort Knox will be able to cover the project’s costs in seven and a half years. After this payback period ends, the post can simply enjoy the annual energy savings.


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Summary• Beginning in the Fall of 2014, Fort Knox will have a complete backup power

generation system and will be using their alternative energy, renewable natural gas source as a means to power peak shaving generators. With this new capability, Fort Knox will become an Energy Island – capable of operating off the local utility grid.

• Under a UESC, Trico Tiger Development has the resources to explore, harvest, process and deliver an installations Renewable Devonian Era Shale Gas…at No Risk to the installation. Trico Tiger Development uses private investors to resource the project. There is No Cost to the Government.

• In addition to their Shale Gas Project, Fort Knox is installing high-capacity generators (powered by Fort Knox's Shale Gas) to use for onsite electricity generation when buying power from the public utility grid would be at its most expensive – Peak Shaving.

• Fort Knox is also installing Combined Heat and Power Generators and well as Back-Up Power Generators capable of powering the entire installation (44 MW).


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Summary (Continued)• Legal Opinion (Department of the Army JAG): “Fort Knox is not buying any

product. They are merely buying a service to extract a renewable resource, at 86% of the price they would be paying someone else for their fossil fuel product. This process complies with DOD Directives and Presidential Directive 13123 (Greening the Government through Efficient Energy Management).

• Under the Trico Tiger Development, Nolin Electric and Fort Knox initiative, the post will save millions of dollars annually ($8 Million) on their current Electricity and Natural Gas bills.

• Additional benefits include: Energy, Security, Independence and Training Area Improvements.

• The Fort Knox Devonian Era Shale Gas project is the Standard of Excellence in the Department of Defense.


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Generating Primary and Back up Power


Jenbacher Shale Gas Powered Generator

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Back Up Slides


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Types of Energy Contracts• Energy Savings Performance Contracts - ESPC

• Makes it easier for Federal agencies to finance renewable energy projects.

• Project funding flexibility is increased by allowing agencies to combine appropriated funds and private financing.

• Utility Energy Service Contract - UESC• Arranges funding to cover the capital costs of the project, which are

repaid over the contract term from cost savings generated by the energy efficiency measures. With this arrangement, agencies can implement energy improvements with no initial capital investment. The net cost to the Federal agency is minimal, and the agency saves time and resources by using the one-stop shopping provided by the utility.


Initial Site Selection and GoephysicsDetermine Usage of Gas and ElectricityDetermine Overall Economics

Present concept to Installation Command TeamSecure Contract Agreement

Conduct Final Site Survey and Feasibility StudyDrill Test Well

Establish InfrastructureContinue Exploration

Deliver Gas

Major Decision Points

Phase 1

Phase 2

Phase 3

Phase 5

Phase 6: Electricity Peak Shaving – Shale Gas powered electricity generators. Requires separate Contract Agreement, Site Survey, and Feasibility Study

Phase 6

Phase 4

Electricity Peak Shaving

The Fort Knox Model

Contract established

between Trico Tiger Development

and the Govt

Conduct Site Survey and Geophysics Review

Drill Test Well

Continue Exploration

Establish Infrastructure

End

Yes

No

Deliver Gas

Electric Peak Shaving Option

Is the site selected acceptable to all

parties

YesIs the quantity and

quality of Gas acceptable

Decision Criteria

Yes

Critical Event

Can we establish key tie-in points

Can we determine the location of additional

wells

Are the economics acceptable without the Peak Shaving Option

End

End

No

No

No

No

Further discussion with DPW

Yes

Yes

Yes

Determine the Economics of the

Project

Does the installation use enough Gas and

Electricity to make the project economical

EndNo

Yes

Further discussion with DPW

No Further discussion of economics

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The 3 Legged Stool


Pea

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havi

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Ene

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Inde

pend

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Gas

Cre

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Assist the Government by Harvesting their Renewable, Alternative Energy Source – Devonian Era Shale Gas - Biogenic Methane Gas. Resulting in reduced Energy Costs, Energy Security and Independence.

Convert Devonian Era Shale Gas into Electricity.

The Government receives Credit or Payments for producing excess Shale Gas. Credits can be shared with other posts. Revenue can be used for Operational Requirements.

Future Initiative

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10 Questions a Garrison Commander could ask the Energy Manager and the Trico Tiger Team

1. What are our Natural Gas needs on post? Who uses

Natural Gas and how much do we use (by volume)?

2. Where does our Natural Gas come from?

3. How much do we pay in Natural Gas bills every

month/year? How does that price break down?

4. Is there Natural Gas under our post?

5. If there is Natural Gas under our post, who owns the

rights to it? Is there existing legal opinion?

6. What is the difference between Fossil Fuel and

Renewable Energy?


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7. What can we do to change the way we receive Natural

Gas?

8. What are the risks and costs?

9. How can I save or make money with this program?

10. How does this project impact the environment?


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End of presentation


19Trico/Tiger Development, LLC





Government & Nonprofit

Fort knox peak shaving and back up power