Council to consider contract for landfill gas-to-RNG project; city expects royalties and reduced O&M costs

The City of Waco is scheduled to consider a contract (Resolution 2025-4-59) to grant gas-rights at the existing landfill to a private developer to build and operate a renewable natural-gas (RNG) processing facility.

Public Works Director Cody Petillo told council the project covers gas rights only at the existing landfill; development of the new landfill will be considered separately after it begins producing landfill gas. The selected developer—identified in the presentation as a national landfill-RNG operator—will fund the required expansion of the landfill gas collection system, design and construct the on-site gas processing facility and inject processed RNG into a pipeline (staff noted an Atmos injection point just outside the landfill gate).

Financial terms summarized by staff include: the developer funds capital construction (avoiding an estimated $5 million city capital expense to expand the gas system), the city’s annual O&M burden for the gas-collection system (approximately $110,000) shifts to the developer, and the city will receive a tiered royalty on gross revenue (tiers run roughly 6%–15%, staff estimated an average royalty of about 6.42%). Staff projected first-year city revenue of about $887,000 and an estimated $10.8 million to the city over a 20-year initial term; staff noted high market volatility in RNG/credit pricing and showed a sensitivity band of roughly ±35% on some projections. Under a prior settlement the city will share 50% of revenue with a previous developer through 2026.

Petillo outlined environmental benefits—capturing methane currently combusted in a flare—and said the developer expects to complete planning, permitting, construction and commissioning within roughly 18 months if council approves the contract. Petillo said the vendor has signed the contract and work would proceed on receiving council approval.