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Mason County approves landfill gas deal promising royalty revenue and methane capture

November 08, 2024 | Mason County, Kentucky


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Mason County approves landfill gas deal promising royalty revenue and methane capture
Mason County Fiscal Court voted unanimously Nov. 8 to enter an agreement with Renewable Natural Gas Company LLC to install and operate a landfill gas collection and processing system at the Mason County landfill.

Under the agreement described at the meeting, the company will finance, design and build a gas-collection and processing system and tie it into the Columbia Gas transmission line. The company told commissioners it would remove contaminants and produce pipeline-quality renewable natural gas for sale; county officials were told the firm's proposal includes an advance payment, ongoing royalty payments and obligations to complete construction on a set schedule.

Why it matters: The project is designed to reduce methane emissions from the landfill, convert that methane into saleable renewable natural gas and generate revenue for the county. Presenters estimated the county's share could be on the order of hundreds of thousands of dollars annually once the project is operating.

What commissioners approved and what was emphasized in the meeting: Renewable Natural Gas Company representative Jeff Craig told the court the company would cover all design, permitting and construction costs and had already begun design discussions with the pipeline operator. "Our proposal to the county is to pay 20% of the gross revenues that we generate," Craig said during the presentation. He said the company expects to pay a $250,000 advance within about six months and estimated the county's royalty could eventually be in the neighborhood of $750,000 to $800,000 per year.

County officials and counsel stressed conditions and protections. An agreement drafted for the court describes a 20-year initial term, renewable for two five-year terms, and includes performance obligations for the company to complete construction within a 24-month window. County officials also flagged permitting as a required next step: the company and county must obtain state permits and the contract requires the company to cover engineering and permitting expenses. County counsel and a landfill director told the court the landfill committee had already recommended the agreement.

Potential next phases: Presenters discussed adding a food-waste digester or biogas center as a second phase to supplement gas supply and make a pipeline tap more economical. The company said a typical digester can produce roughly twice the gas the landfill currently produces and that such a facility could create more permanent jobs; the company proposed a small additional royalty for that phase.

Timing and conditions: The company said a project started this year could be operational roughly a year after construction begins, though the agreement allows up to 24 months for completion. Craig also noted certain federal tax credits that would encourage beginning physical work this year and said those credits are scheduled to sunset Dec. 31, creating urgency to finalize contracts and early work.

What the court will do next: The court approved entering the agreement and authorized moving forward; the county will proceed with contract finalization and permitting steps described during the meeting. County staff said they will continue to oversee permitting and retained closure/liability responsibilities for the landfill site.

At the meeting: Jeff Craig, a representative of Renewable Natural Gas Company LLC, presented the plan. Owen McNeil, Mason County Judge Executive, and landfill director Travis Cooley participated in the Q&A and discussed county oversight and permitting. The court's vote to enter the agreement was unanimous.

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Scribe from Workplace AI
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