ST. JOHNS LANDFILL GETS A NEW USE, The Oregonian, Portland, Or., Jun 26, 1998
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Authors: Schement, Elisa
Underneath 700 grazing sheep and a llama, the 238-acre St. Johns landfill produces 880,000 million Btu of natural gas a year. About 50 years’ worth of Portland’s decomposing garbage releases enough methane and carbon dioxide gases — notorious contributors to global warming — to heat 3,500 homes a year.
Metro has been struggling with the North Portland site for years. The landfill stopped operating in January 1991, but complaints of government indifference to public health in low-income neighborhoods and poor control of environmental pollutants continued to circulate.
Thursday, two miles of pipeline away from St. Johns, about 100 people celebrated Oregon’ only landfill-to-industry pipeline, at Ash Grove Cement Co. Aided by an obscure portion of the federal tax code, Ash Grove Cement will use the methane gas to help power its lime kilns. Doug Kinney, president and owner of Palmer Capital Corp., a Chicago private investment banking firm, has financed 18 landfill energy projects in the United States since 1982. He worked in conjunction with Ash Grove and Metro to finance the lime plant’s use of methane gas as an alternative energy source.
The landfill is covered with a plastic membrane, grass and clover, but the gas had to be vented. Metro had been burning off the vented gas, “which is kind of a shame because nobody’s getting any benefit out of that,” Kinney said.
He said he bought the royalties to the methane, Metro’s pipelines and wells for $2.4 million. In return, Kinney will earn $500,000 of tax credits a year until 2007 from his investment.
But in this situation, everybody benefits, he said: Ash Grove gets the same tax deal plus cheap fuel, Metro will get $150,000 in income a year and citizens benefit from less pollution.
This first development may be the last, Kinney said, because the tax-credit program expires July 1. “It’s going to stop landfill gas development cold,” he said.
Ash Grove had discussed fueling its kilns with the methane gas produced by the landfill numerous times. But the numbers never worked out, said Chuck Wiedenhoft, Ash Grove senior vice president of manufacturing. Palmer Capital produced a sound economic proposal, he said.
“When you go out and buy gas, you don’t care where you get it, and unfortunately the lime and cement business is like that,” Wiedenhoft said. “To be a long-term player in this business, you just have to be a low-cost producer, and projects like this help us.”
Ash Grove is using the landfill’s entire methane output. The landfill methane is enough to run two and a half of the company’s three kilns. It uses other fuel sources to make up the difference when the plant needs to run at full capacity. The company anticipates a 30 percent reduction in fuel costs, he said.
The company, based in Overland Park, Kansas, is the fourth-largest cement producer in the United States, Wiedenhoft said. Besides striving to correct a historical mess, the deal ensures the 55 Oregon lime factory workers will keep their jobs and that the state’s industry stays competitive, said Mike Burton, executive officer of Metro.
“We will have a task of many many years of monitoring what we as human beings forgot to do,” Burton said, referring to ongoing landfill pollution problems.
