PS1.- Social and Environmental Assessment and Management Systems.
Several environmental and social impacts assessments have been performed for this project. The most recent ESIA for this project, covering both Phase I and Phase II, was approved by the Nicaraguan Environmental Ministry (MARENA) during the last quarter of 2008 and has been available to the public via the company’s website since early-March 2010 (
http://www.ram-power.com/Projects/San-Jacinto-Tizate-I--II-Nicaragua/default.aspx). Additionally, for Phase I financing, the company agreed with the lenders—lead by the FMO—on a very comprehensive environmental and social action plan (ESAP) to meet IFC PSs and relevant aspects of applicable EHS Guidelines. This ESAP is currently being executed and is completely applicable and relevant to Phase II.
The key EHS impacts and risks associated with the project’s construction are (a) potential contamination of surface and ground water, as well as soils, from drilling water, spent geothermal fluids, muds, and cuttings associated to any additional wells drilled for Phase II (b) increased water demand from drilling, well testing, and construction activities (c) potential air emissions, noise, and solid and hazardous waste generated from construction activities and/or accidental spills, (d) transportation of heavy equipment and machinery and increased hazards thereof (e) potential health and occupation risks to construction workers from working under extremely hot conditions and handling and operating heavy equipment and machinery and (f) incremental impacts associated with the easement and construction of a second circuit of an existing 12.5-km long transmission line. Once in operation, the key ESHS impacts and risks are: (g) potential soil and water contamination from re-injected process water and drilling wastes (muds, cuttings) (h) increased emissions of potentially hazardous (and malodorous) air pollutants such as hydrogen sulfide (H2S) and mercury (i) community and worker exposure to explosions, well blowouts, pipeline failures, induced seismicity and/or ground subsidence (j) increased water consumption necessary for geothermal power generation activities (primarily from cooling systems) and (k) hazardous working condition for plant personnel (e.g. increased exposure risks to toxic gases, working in confined spaces or heights, exposure to heat, high pressure gases, and noise). These impacts and risks can be managed with existing pollution prevention and control technologies and with standard environmental management practices, such as those described in IFC’s EHS Guidelines (
http://www.ifc.org/ifcext/sustainability.nsf /AttachmentsByTitle/gui_EHSGuidelines2007_GeneralEHS/$FILE/Final+-+General+EHS+ Guidelines. pdf and
http://www.ifc.org/ifcext/sustainability.nsf/AttachmentsByTitle/gui _EHSGuidelines2007_ GeothermalPowerGen/$FILE/Final+-+Geothermal+Power+Generation.pdf).
As part of the ESAP, PENSA has agreed to strengthen the project’s socioeconomic baseline, including the review of available information from government census and other sources, to be able to develop more effective social management and mitigation plans. This socioeconomic baseline will include: (a) a more complete picture of land tenure, ownership, and use within the project site and concession area, (b) current economic/livelihood activities within the project’s influence area (c) more detailed information of sources potable water and water usage by the local community within the project site and concession area, water-quality data, and periodic monitoring of water supplies (ground and surface) within the project site and concession area, (d) issues related to land/resource access and any impacts thereof as a result of PENSA’s activities and (e) more precise demographic data for the project site and the concession area. Per the ESAP, this baseline will be progressively developed, initially focusing on the project’s direct area of influence, and a later time to other affected areas, as the company expands it exploration and exploitation activities to the rest of the concession.
The company is in the process of finalizing and formalizing its social and environmental management system (SEMS) which is an integral part of the corporate ESHS manual (Corporate Manual), but most of the relevant ESHS necessary procedures are available. These include: (a) a drilling muds management plan, (b) a solid waste management plan (c) discharge and emissions control and pollution prevention and (d) environmental monitoring procedures for noise, air quality, and surface waters. Furthermore, Queiroz Galvão, the Brazilian EPC contractor, has an integrated quality, environmental, social, health and safety management system which is ISO 9001, ISO 14001, and OHSAS 18001 compliant, and they are also currently implementing SA 8000.
Additionally, the Corporate Manual incorporates the existing ESAP for Phase I as an integral element and consolidates ESHS standard operating procedures (SOPs) into a single manual/system that (a) builds on the merged companies ESHS policies, describes (b) the new organizational structure with clear responsibilities and chains of command, (c) expected project’s ESHS impacts/risk, (d) monitoring and supervision procedures/plans, and includes (e) training, (f) reporting, and (g) periodic revisions/quality assurance.
The management structure at PENSA has been undergoing reorganization with the recent merger between Western GeoPower, Ram Power, and PENSA. At the HQ level, in Reno, Nevada (USA), a Vice-President, reporting directly to the CEO, has responsibility for managing ESHS and land-related issues for the company’s projects worldwide, including PENSA. In Managua, a recently hired Corporate Social and Environmental Manager (SEM), reports directly to the corporate VP in Reno and has primary responsibility for the San Jacinto-Tizate project. Reporting to the Corporate SEM, there are also an on-site Environmental Manager and a Safety Officer who assure and document compliance of all ESHS procedures in the field. All PENSA EHS personnel report to or coordinate with the Corporate SEM on issues pertaining to ESHS compliance. San Jacinto ESHS site personnel also report routinely to the Operations Manager. ESHS personnel directly employed on the construction project report to the Project Manager and coordinate with the SEM. PENSA requires all departments to allocate time and personnel to the SEM as required.
PS2.- Labor and Working Conditions.
Human Resources: PENSA has a total of 123 employees, 43 of whom work in the field, 35 in the plant and operations, 28 in base camp support roles and 17 in the Managua office. All are permanent, full-time staff hired on a one year contract with the exception of three temporary workers in the camp workshop. PENSA staff is approximately 69% local hires and 28% female. The current legal minimum wage for companies in the energy sector is about C$3,117 (US$148) per month (C$3,803 or $181 per month in the construction sector) and these figures were increased by 6% on in March 2010. Only two employees on the payroll earn the minimum wage, and no one is paid less than the minimum wage. The National Minimum Wage Committee established by Law 625 reviews minimum wage every six months and uses as a reference a “basic basket” of goods that helps ensure a minimum level of caloric/nutritional intake and parity with inflation and other price increases.
The construction timeline for Phase II is approximately 24 months. The largest employer will be Queiroz Galvão with a total of 16 company representatives, all of whom will be housed off-site in León. The workforce, including PENSA, contractors and sub-contractors will peak at 200 employees, 90% or more will be recruited from local communities. PENSA does not anticipate any significant retrenchment. It must be noted that Queiroz Galvão is working toward SA 8000 certification which includes requirements related to the ILO’s core labor standards.
PENSA has a draft internal HHRR regulation that implements the requirements of Art. 255 of the Nicaraguan Labor Code, and defines wages, benefits, bonuses, vacations, code of conduct, workplace prohibitions, and some generic health and safety aspects. PENSA does not make use of migrant labor, forced labor or child labor. Legal minimum employment age in Nicaragua is 14 years old, though the law requires parental permission for anyone under 16. PENSA does not use child labor (<14 years of age as defined by Nicaraguan law), forced, and/or prison labor.
As stated above, PENSA’s is in the process of consolidating its Corporate Manual. This manual includes a specific section dedicated to human resources policy and management procedures, which specifically articulate the employees right to from unions and collective bargain, as well as the specific prohibition of child and force labor. This section will also include (a) an employee grievance mechanism, (b) a formal mechanism to assure that no-children under the age of 16 will be hired and (c) procedure to assure and document that work of younger workers will not interfere with their education or involve inappropriate hazards. These policy and procedures will be made available to all existing and new employees.
Occupational Health and Safety (OHS): As stated above, PENSA hired a Safety Officer who is in-charge of ensuring compliance with the company’s OHS plans and procedures. PENSA is in the process of finalizing its Corporate Manual which will include OHS policy and procedures. PENSA has identified the main OHS risks associated with construction and operation of the project and has developed procedures and training to adequately address these risks, outlining the different tasks/activities’ intrinsic risks, the required training, restrictions, and personal protection equipment (PEP) necessary to be able to perform such tasks/activities. These procedures include, but are not limited to, working in confined spaces, exposure to H2S and heat, and working at heights. For instance, all steam pipes and other surfaces are insulated and labeled to prevent exposure to heat and potential burns, and well heads are fenced-off to prevent entrance of persons and animals. Additionally, PENSA’s personnel carry H2S sensors when working in confined spaces and other places where this gas could accumulate (e.g. well cellars) and use self-contained breathing equipment when there is a risk of elevated gas concentrations. Ambient H2S concentration is also monitored at well sites and near the plant. Finally, there is an on-site doctor at the base camp during normal working hours (medical service is extended to 24 hour coverage during drilling operations).
PENSA regularly tracks accidents within the company and its principal contractors. For 2008, there were a total of 28 accidents/incidents among PENSA and its contractors. These accidents resulted in a total loss of 104 man days. For 2009, there were a total of 6 accidents among PENSA and its contractors. These resulted in a total loss of 62.5 man days. As part of the ESAP, PENSA will provide the IFC with a consolidated OHS manual, including an OHS Policy, standard plans and procedures, expected benchmark/goal, indicators for incident and accident reports (e.g. frequency, severity, etc), corrective actions, reporting, and training.
PS3.- Pollution Prevention and Abatement.
Corporate senior management has been developing and managing geothermal power plants in the US for many years and have extensive experience ranging from ten to thirty years in the industry, and therefore are knowledgeable in standard pollution prevention and abatement practices for the industry. PENSA’s direct pollution is managed as follows:
Effluents: PENSA re-injects process water (from wells) into the formation, which is best practice for the industry and helps to maintain the pressure of the reservoir. The three operating production wells that power the existing 2 x 5MW turbines currently produce about 625 m3 of water per hour. Surplus condensate from the Phase I and II power plants will also be re-injected into the formation. Additionally, most mud pits are lined with geo-membranes and the company uses primarily water-based drilling fluids which are re-injected into bore holes. All wells also employ leak-proof casings through first several 100 meters to prevent any seepage into the groundwater. Process water from the plant is likewise injected back into the formation.
Air Emissions/Air Quality: Air emissions consist primarily of carbon dioxide (CO2) and hydrogen sulfide (H2S) in the waste steam and from around well heads. These two parameters are measured continuously during drilling operations and ambient levels are measured on a semi-annual basis around well platforms, power plant, rocket muffler and platforms since 2006. Ambient CO2 and H2S levels are well within OSHA, ACGIH and WHO standards in all monitoring data reviewed.
Phase I and II may produce additional emissions from their cooling towers once installed, but the proposed binary plant should have close to zero emissions. In any case, the concentration of so-called non-condensable gases in the steam resource—which consist mostly of CO2 (approximately 88%)—are very low compared to most geothermal fields at 0.04-0.2% by weight.
Ambient concentrations of SO2 is not monitored, but since there is evidence of corrosion around the substation suggesting that there may be some acid deposition in the immediate vicinity of the plant, the company agreed to monitor this parameter as part of the ESAP and establish baseline ambient concentrations. It should be noted that the new plant using condensing turbines will have reduced emissions compared to the current back pressure units. The back pressure units will be decommissioned when Phase II is complete.
GHG: This project is expected to positively reduce the climate footprint of energy generation in the country. The combined carbon credit for Phase I and II of 72 MW net, beginning in 2012, is estimated at 423,534 tons CO2 per year (using 0.713 tons CO2 /GWh).
Solid waste: The main solid waste produced by PENSA is drilling mud and cuttings. Even though PENSA uses only water-based drilling muds, these can be hazardous if they contain heavy metals, drilling fluids residues, or other contaminants. The production and reinjection wells drilled for Phase I produced a total volume of about 845 m3 of mud, or an average of about 211 m3 per well. PENSA has a drilling muds/cuttings management and “land farming” procedure, which includes periodic pre- and post- treatment chemical analyses. Drilling muds are consolidated in a centralized pit, lined with a geo-textile, treated in batches to lighten the mud density and then wind-rowed at the land-farm site; after which they are used to sow vetiver grass for erosion control. With the eight additional wells required for Phase II, the project will produce another 1,700 m3 of drilling muds that will require the same type of treatment. Chemical analysis of drilling muds suggests large variations between wells and high levels of numerous metals including arsenic, cadmium, copper, mercury, and lead. Some of these metals have naturally elevated concentrations, and well-designed and consistent monitoring of drilling muds pre- and post-treatment is critical to document treatment effectiveness and adequacy for the proposed erosion control re-use. The ESAP include rigorous monitoring of heavy metals in the drilling muds before and after treatment.
Other solid waste generated includes cooling tower sludge, lubricants and plastic bags. Once the new turbines are installed, the cooling towers will produce a “cake” consisting of elemental sulfur (from oxidation of H2S), heavy metals and some residual biocides. PENSA will extract this sludge during cleaning of the cooling towers (every few years) and incorporate it into cement blocks to stabilize these contaminants. Additionally, PENSA has a succinct solid waste management plan which includes principles of reuse and recycling to address all other conventional process and drilling wastes such as lubricants and plastic bags.
Noise: Noise levels do not vary between night and day as the plants and the pumping stations operate 24/7. Noise levels near the pump station and rock muffler (intermittently operated) can exceed 70 dB[A]. The two turbines installed for Phase I and Phase II will have an operating noise of approximately 90 dB[A] at 1 meter. The turbines will be housed within an enclosed powerhouse. The cooling tower will have an estimated 85.3 dB[A] at 1 meter distance. Employees will be issued and required to wear hearing protection when on the job. PENSA does not anticipate a significant increase in plant/facility noise levels, however the company will continue to monitoring noise at the source as well as at the closest receptors.
Hazardous Materials: PENSA or its contractors use some HAZMATS such as sodium hydroxide (NaOH), silica, and freon (R-22). Sodium hydroxide is extremely caustic and must be handled and stored carefully. Inhalation of silica dust can lead to respiratory complications such as bronchitis and/or silicosis, and must likewise be used carefully. R-22 is a refrigerant and ozone depleting hydrochlorofluorocarbon scheduled for gradual phase-out under the Montreal Protocol, as well as a powerful GHG. Sulfur hexafluoride (SF6)—a powerful GHG—is being used as a cooling medium inside some of the breakers in the substation. Additionally, PENSA uses four pesticides as part of its greenhouse and reforestation operations: Carbendazim (fungicide), Cypermethrin (insecticide), Picloram and glyphosate (the last two of which are herbicides). These are used in small amounts, break down quickly, and are therefore unlikely to enter groundwater or bio-accumulate. As part of the ESAP, the company has committed to prepare, in form and content acceptable to the lenders, a HAZMAT handling, treatment, and disposal plan, including commitment to (a) R-22 phasing out, (b) reporting the quantities of SF6 used, and (c) specific measures to minimize leakage of the latter substance.
Water consumption and extraction: Well drilling requires a significant amount of water (3-4m3/minute) as will cooling of the larger turbines for Phases I and II. This water comes from a pond located near the plant which is fed by a well located several kilometers away. PENSA is planning on drilling an additional well close the existing one to provide additional water to the pond.
Emergency Plan: PENSA has an emergency preparedness, response and contingency plan covering fire, medical emergencies, evacuation, blowouts and other drilling-related emergencies. All wells are also equipped with emergency valves and blowout prevention equipment. The company has an agreement with the fire department in León to respond to emergencies and an on-site clinic. As part of the ESAP, the company will update their existing emergency preparedness, response, and contingency plan, to include all reasonably likely emergency scenarios (e.g. hurricanes, volcanic eruptions, and earthquakes), better define roles and responsibilities with other stakeholders (government, contractors), develop clear chains of command and communication procedures, incorporate local communities, and begin more regular and formal drills, including evaluations. PENSA is in the process of creating this program which will coordinate with local response agencies. In March 2008 PENSA participated in an emergency response drill for volcanic eruptions. The drill was organized by the Civil Defense and PENSA provided first aid equipment and mobilization for the San Jacinto community that took part of the drill.
PS4.- Community Health, Safety and Security.
The plant and most well sites are not located near any large communities or settlements. Nonetheless, potential risks to nearby people and communities include fire, volcanic activity (natural), seismic activity (natural and induced), subsidence (induced), flooding, exposure to escaping H2S, hot water or steam, transportation-related accidents and contamination of drinking water supplies. The ESIA addressed some of these risks and emphasized the need for coordinating emergency response with local and central government emergency response authorities. Additionally, PENSA works on firefighting activities with local communities and has a reforestation program to stabilize areas that are prone to erosion and landslides.
Geothermal production zones and groundwater aquifers used for potable water are separated by thousands of meters of rock and soil. There is no evidence that the project’s water consumption is competing with the demands of nearby communities and the water that will be required for drilling is only temporary, lasting through the end of 2010. PENSA provided support to the GoN (Nicaraguan Institute of Territorial Studies - INETER by its Spanish acronym) to perform a hydrological study of the concession area between 2005 -2007. According to the company, the study confirmed using isotopic data, that there was no communication between the PENSA supply wells and local community wells. The company has also done some sporadic monitoring of surface waters used for potable water supplies. This monitoring revealed cadmium and nickel levels in excess of WHO and other drinking water norms, and levels of chromium right at the level of at least one of the standards used as a benchmark. As mentioned above, as part of the socio-economic baseline, the ESAP requires that potable water supplies indentified within both, the project area and the concession area, be included in a regular monitoring program. In any case, drilling in the first several hundred meters is also done only with water (no drilling fluids) and casings are carefully cemented to prevent any contamination of aquifers.
The company also monitors ambient H2S roughly every quarter, though it is unlikely that neighbors and/or local communities would be exposed to harmful concentrations of H2S, due to their distance from wellheads and other potential sources of this gas, and the location of the plant on an exposed hill.
The current security contractor, ECESA, has been working for PENSA for many years. ECESA has about a dozen armed guards who are stationed near the plant, certain wellheads, the pumping station and other key areas, as well as the base camp. Even though there is no grievance mechanism that would allow affected communities to lodge a complaint against this security forces, the relationship between locals and the security company is cordial with no known incidents to date. Nonetheless, as note in the next section, the ESAP requires the company to develop an external grievance mechanism that would formally register and respond to community complaints or concerns related to security or any other issues.
