Clean Water Services advances plan to convert wastewater biogas into renewable natural gas; seeks design contract

Clean Water Services staff briefed the Washington County Board of Commissioners on an updated plan to treat biogas produced at the Rock Creek and Durham wastewater treatment facilities and convert it into pipeline‑quality renewable natural gas (RNG), asking the board for authority to continue project design and contract work.

The presentation laid out three broad options for the Rock Creek gas stream: (1) continue current practice (flaring and limited use for boilers), (2) re‑introduce on‑site cogeneration (electricity plus heat), or (3) install a treatment system (membrane or alternative) to produce RNG that can be injected into the natural‑gas pipeline. Clean Water staff said Rock Creek currently flares most of its biogas and uses a portion for plant heating; Durham accepts fats, oils and grease (FOG) and operates cogeneration.

Project staff emphasized market and technology tradeoffs. When Clean Water would own, operate and maintain an RNG plant, the agency retains more revenue upside but assumes more market risk. Staff outlined three market pathways: sell all RNG into the federal RINs compliance market (Renewable Identification Numbers under the EPA Renewable Fuel Standard); sell directly to Northwest Natural under a fixed‑price offtake; or a hybrid (sell into the RINs market with Northwest Natural serving as a price backstop). Northwest Natural also told the board it might offer capital contributions in exchange for a share of produced gas.

Clean Water presented high‑level economics based on a concept design and preliminary cost estimates. Staff labeled these figures preliminary: concept capital cost for a treatment facility was listed at about $19,200,000 with annual operations and maintenance around $680,300. A 20‑year net present value (NPV) analysis produced positive NPVs in each modeled scenario: selling all RNG into the RINs market produced the largest modeled NPV (about $10.7 million), while a model in which Northwest Natural paid half the capital cost and received 40% of the gas produced a smaller NPV (about $5.0 million); a scenario where Northwest Natural paid 25% of capital and received 20% of gas produced an NPV of about $9.5 million. Staff stressed the RINs market is volatile and that the estimates were concept‑level and subject to change.

On interconnection and pipeline capacity, Clean Water and Northwest Natural staff said no new pipeline construction would be required to inject Rock Creek RNG and that pipeline interconnection equipment and monitoring would be required to meet safety and quality standards. Clean Water staff said they have test data on gas quality and that pipeline customers require RNG quality to closely match conventional natural gas energy content (BTU) and contaminant limits. Technology alternatives to membranes were discussed, including pressure swing adsorption (PSA) options, and staff said they intend to issue a structured procurement (RFP) to evaluate vendors, uptime guarantees, O&M costs and capital proposals.

Board members asked about risks: the volatility of the RINs market; the 20‑year modeling horizon for capital payback; whether equipment life or salvage value had been included; and the logistics of switching sales between RINs and Northwest Natural. Clean Water acknowledged those risks and said the agency will study the optimal point on the risk‑reward spectrum and return recommendations. Clean Water staff asked the board for permission to continue with the design contract process, to return with a 30% design check‑in and to bring any consultant contract back to the board for review. Several commissioners signaled general support for proceeding with the next design steps and for further discussion of contract terms with Northwest Natural; there was no formal board vote recorded.

Next steps listed by staff: (a) continue vendor and technology evaluation and issue an RFP that permits membrane and PSA options, (b) continue negotiations with Northwest Natural including possible capital‑contribution arrangements, (c) proceed with the consultant design contract and return to the board at key design milestones (30%), and (d) refine economics and risk allocation and return with recommendations on the preferred market strategy.

Quotes from the meeting included staff framing the project tradeoffs and risks: "We've done our best to model based on our expectations of the future, but people should understand that some of this is pretty speculative when it comes to trying to predict the future," and the project director said, "If the RINs market goes south on us, we can sell to Northwest Natural at a price that we are going to know from the beginning."