The Enid News and Eagle, Enid, OK

March 18, 2013

City shares details on Koch’s plans to reduce drinking water usage

By James Neal, Staff Writer
Enid News & Eagle

ENID, Okla. — The city of Enid and Koch Nitrogen are continuing efforts to reduce potable water usage at the nitrogen plant.

The city issued a press release last week announcing “cooperative efforts” between the city and Koch “to evaluate possible solutions for effectively managing the water resources of Enid and surrounding communities.”

Koch is the largest consumer of city potable water, accounting for more than 42 percent of the city’s water usage in 2012.

The city of Enid supplied more than 3.8 billion gallons of potable water to residential and industrial consumers in 2012. About two-thirds of that water went to industrial customers, including 1.6 billion gallons to Koch.

The bulk of Koch’s water consumption prior to 2010 was supplied from city of Enid gray water, or treated water.

That changed in 2010, when the Oklahoma Department of Environmental Quality changed the water quality standards at the Enid Koch plant.

According to figures provided by ODEQ, the permissible amount of total dissolved solids in water used at Koch was reduced in 2010 by more than 40 percent — from 4,500 mg per liter to 2,694 mg/L.

According to ODEQ, Koch explored several options for meeting the stricter water standards in 2010, including drilling its own water wells; installing an on-site demineralization facility; land application of the effluent; and purchasing potable water, which meets ODEQ standards, from the city.

Koch signed a contract in March 2010 with the city to purchase as much as 4,027 gallons of potable water per minute — equivalent to more than 2.1 billion gallons per year.

The change from gray water, or industrial water, to potable water came with a significant increase in price for Koch, increasing from 6.5 cents per 1,000 gallons for industrial water to the current rate of $2.68 per 1,000 gallons for potable water.

Enid City Manager Eric Benson said in an interview last week that signing the contract with Koch was necessary to keep a major industrial producer and employer in the local economy.

“It kept one of our biggest industrial customers able to sustain production,” Benson said. “If they hadn’t been able to buy fresh water from us, they wouldn’t have been able to stay in operation.”

According to Koch figures, the Enid plant employs about 140 people and pays out to local workers annual compensation and benefits worth more than $13 million.

But, it’s not just in annual payroll that Koch is paying into the local economy.

According to figures provided by Garfield County Assessor Wade Patterson, Koch Nitrogen is the fourth-largest ad valorem taxpayer in the county, behind ADM, AdvancePierre Foods and OG&E.

Patterson said Koch Nitrogen currently pays more than $1 million per year in property taxes.

About 85 percent of that ad valorem revenue goes to local schools, while another 11-12 percent goes into the county general fund. The remainder is split between Garfield County Health Department and the city of Enid sinking fund for bridge bonds. The city portion of that tax expires this year.

Patterson said Koch’s valuations have steadily increased, with a corresponding increase in the amount the company pays in to local schools and county government.

Plant expansion doubled the company’s valuation in the county in 2008, from $40 million to $80 million.

Patterson said new additions are expected to increase Koch’s valuation to $90 million next year, increasing the company’s property tax payment in Garfield County to about $1.15 million per year.

Koch Nitrogen also has generated millions of dollars in revenue for the Enid Municipal Authority in potable water payments.

According to city records obtained through an Open Records Act request, Koch Nitrogen purchased 1.6 billion gallons of potable water in 2012 at a statute rate of $2.38 per 1,000 gallons, generating $3.8 million in revenue.

Enid Chief Financial Officer Jerald Gilbert said all of that revenue, along with all other utility revenue, goes into the Enid Municipal Authority.

The funds are used to fund EMA departments and capital improvements, including construction of new water wells, water lines, water towers and other water-related infrastructure.

Gilbert said the EMA brought in about $11.5 million in utility revenue in 2012.

Koch’s portion of that revenue — about one-third in 2012 — was due almost entirely to potable water consumption.

Koch now is exploring options for reverting to gray water consumption at the plant — a move that would simultaneously decrease city water demand by as much as 40 percent and cut by about one-third the city’s utility revenue available for water system improvements.

Mike Kleis, Koch Nitrogen plant manager, said in last week’s press release: “The focus of this evaluation is to understand which water treatment technologies the Enid plant might be capable of installing that could decrease the plant’s usage of potable (drinking) water and increase the use of non-potable discharge (industrial water) from the city’s water treatment plant.”

Koch Industries declined to comment any further on the company’s plans for implementing gray water usage at the plant.

Benson said Koch has been exploring options for increasing gray water usage for the past 18 months, and already has increased its gray water usage as much as possible within DEQ guidelines.

“Koch is researching a variety of measures by which they can increase their use of gray water,” Benson said. “I know any future expansion plans of theirs depend on their ability to use more gray water, and they want to decrease their use of potable water, because they know the impact it has on the community.”

Benson said Koch has discussed with the city the possibility of the company implementing a pilot water treatment program at the Enid facility.

“They are keenly aware of the perceptions and the impact on the community through their use of potable water, and they have for some time been trying to reduce that impact,” Benson said.

The city also is conducting a feasibility study to determine the costs of constructing a city treatment plant to produce gray water suitable for all industrial users.

The city contracted in January with Alan Plummer Associates, of Fort Worth, to conduct the study.

Steve Kime, director of marketing and public relations for the city, said the study will determine what options are available and what the costs would be for the city to treat gray water for industrial and irrigation uses.

The Alan Plummer study is expected to be completed this summer.

Benson said a cost estimate for a city treatment facility is not yet available, but it would require “a multi-million dollar up-front investment.”

If Koch constructs its own facility, the city may not need its own treatment facility, but the city still would lose the utility revenue from potable water sales to Koch.

Benson said if Koch constructs its own treatment facility at the plant, there would be no extra infrastructure required from the city to support the plant’s increased draw of gray water.

“We’re already plumbed for them to take gray water, so it’s really just a matter of us opening a valve,” Benson said.

Benson said Koch could have a pilot program for gray water treatment available at the Enid plant by mid-summer.

Benson said the city will facilitate Koch’s efforts as much as possible.

“We’ll be looking at all available options, including allowing them free access to our gray water,” Benson said.

If the plant does become capable of operating solely or predominantly off city gray water, Benson said there will be costs to the city in utility revenue.

“When you wean a major customer like that off, it does have economic implications,” Benson said. “But, on balance, it’s the right way to go, and we’re all pleased they’re headed this way.”