Commissioning Costs for Idaho Facility Double Previous Estimates
Mike Nartker
WC Monitor
1/16/2015
While the planned facility for addressing the remaining liquid waste at the Department of Energy’s Idaho site is anticipated to be in full operation before the end of this year, it won’t be until at least 2016 before treatment of the waste is completed, a senior official at the DOE Idaho Operations Office said late this week. However, that could lead to a significant fine from the state of Idaho, which has begun penalizing DOE $3,600 per day for failing to empty the waste tanks at the Idaho site by a Dec. 31 deadline, with the fine set to increase to $6,000 per day beginning July 1. “We’ll get up and running this year. We won’t be able to complete [the waste processing]. You can do the math to know that’s not credible to think we’d be able to finish that process this year,” Jack Zimmerman, Deputy Manager for the Idaho Cleanup Project at DOE’s Idaho Operations Office, told WC Monitor. He stressed, “The Department really remains committed to the safe startup of the facility and everything we’re doing with the iterative process to the startup testing is a function of that.”
DOE and cleanup contractor CH2M-WG Idaho (CWI) are in the midst of commissioning and starting up the Idaho Integrated Waste Treatment Unit, which is intended to treat the approximately 900,000 gallons of remaining liquid waste through a steam reforming process to convert the material into a dry form for disposal. DOE initially had a commitment to the state of Idaho to complete the liquid waste processing by the end of 2012, but in the summer of that year, startup of the facility was significantly disrupted by what has been described as a “pressure event” that occurred when the facility’s filters became clogged with carbon material during efforts to get it up to its operating temperature. As a result, the facility was shut down while DOE and CWI proceeded with a set of modifications, which were completed in the summer of 2013. Since then, DOE and CWI have been moving forward with testing and getting the IWTU into full operation, though over the past several months the facility experienced a number of technical issues that resulted in outages lasting weeks to months.
Approx. $100 Million Spent on Commissioning and Startup
So far, more than $100 million has been spent on commissioning and starting up the IWTU—more than double the target cost of approximately $46 million in CWI’s contract—with CWI spending approximately $3.5-4 million per month on the project. Zimmerman said, though, that the additional costs for getting the facility in operation have not impacted the other cleanup work underway at the Idaho site. “The good news side of the site picture is CWI’s performance in other areas is really good, and they have had significant cost savings with the majority of the cleanup work they’ve been performing to date, with the exception of IWTU. So the cost overrun has really been absorbed through cost savings on other projects, and has not impacted the baseline amount of work elsewhere at this point in time,” he said.
When asked if DOE has been pleased with CWI’s efforts to get the IWTU into operation, Zimmerman replied, “I think you can look at the cost and schedule performance related to this project and I don’t think anybody would be happy with that performance. But I do think they have had a number of technical challenges that were unanticipated and we have certainly worked with them to make sure we had a methodical and safe startup approach for the facility so that we can reach a compliant and safe state for radioactive waste processing. And that is our biggest concern—we want to be able to safely process the radioactive waste and we are on a path to be able to accomplish that.”
CWI Could Take Financial Hit for Overruns
However, the additional cost and time needed to get the IWTU operating could have a financial impact on CWI. Under its second contract at the Idaho site, CWI can lose $4 million in fee for failing to complete the waste processing by April 30, 2014; and another $1 million if the processing exceeds the target cost by at least 10 percent. “We will follow the contract with regard to those penalties,” Zimmerman said. CWI also appears likely to miss out on $3.75 million in fee associated with performing the final rinsing, cleaning and closure of the Idaho tank farm by the time its contract is currently set to end in September.
DOE also warned CWI this spring that it would assess the contractor’s costs in getting the IWTU operating to determine if any are inappropriate. “The DOE has a responsibility to ensure its contracts are being executed in accord with its expectations. In light of this responsibility, DOE intends to initiate an assessment of the IWTU project delays and cost overruns,” a DOE contracting officer wrote in a May 13, 2014, letter to CWI Vice President and Chief Financial Officer Jeff Kerridge, a copy of which WC Monitor obtained through a Freedom of Information Act request. “DOE will perform an audit to ensure that the costs incurred on this project are allowable, allocable, and reasonable, in accordance with the cost allowability principals in the Federal Acquisition Regulation and CWI’s contract. DOE will also engage the services of KPMG in performing an analysis on the cost incurred on the project,” the contracting officer wrote. According to Zimmerman, though, DOE has yet to determine that any of the costs incurred have been unreasonable.
In addition, CWI may be held responsible for helping to cover the cost of any final penalty levied by the state of Idaho. “We will follow the contract that we have in place with CWI. Right now the process is to the extent that CWI is responsible for the penalties associated with the NOV [Notice of Violation], they would be liable for those,” Zimmerman said. When asked if DOE planned to contest the fine being issued by the Idaho Department of Environmental Quality, he replied, “The state of Idaho certainly has the right to assess penalties and fines associated with progress on IWTU. We recognize that. But there’s a process that we follow and fully believe that we will follow that process to negotiate appropriate fines and penalties with the state and settle the issue.”
‘We Still Have a Long Way to Go’
The startup process for the IWTU reached a significant milestone last month when the facility began tests using a waste simulant. In a letter sent Dec. 31 to Idaho Governor Butch Otter, Secretary of Energy Ernest Moniz said the initial simulant testing involved the processing of more than 35,000 gallons of material, including more than 7,000 gallons of simulant with solids added to simulate worst-case conditions. As of the end of December, according to Moniz’s letter, 73 of 84 “acceptance criteria required by the simulated waste test” had been demonstrated.
The IWTU is currently in an outage period that began last week and is expected to run for six-to-eight weeks to allow for inspection of major equipment and to assess the data generated from the initial simulant testing. “I was very encouraged that the plant ran continuously without going to a cold shutdown for about six weeks. And I was encouraged with how stable the process was when it was running. We still have a long way to go,” Zimmerman said.
Once the outage is completed, DOE plans to conduct additional simulant testing to determine if any equipment upgrades are needed and to verify “the plant operational envelope,” Moniz wrote in his Dec. 31 letter. “These two items are sequential,” Moniz wrote, adding, “The verification of the plant operational envelope is one of the most critical steps in the start-up process for ensuring that potential transient conditions are identified and overcome during operations.” Zimmerman said, “We are developing criteria related to confirming the simulant run completion, but we would expect that we would run simulant to ensure we have safe, stable operations then we will evaluate that data. We will have to inspect the equipment, make changes to procedures and then revalidate that process. It’s an iterative process that we’re going through, and obviously once we have reached stability in that process, that’s when we would make the decision to be radioactive.”
