Confidential Utility Client Environmental Liability Valuation of MGP Liability
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Geosyntec was retained through outside counsel for a gas utility client to provide a probabilistic valuation of potential environmental liabilities associated with a portfolio of manufactured gas plant (MGP) sites. This environmental liability valuation (ELV) was needed by the client to assess a potential acquisition target as part of an expedited environmental diligence period.

Geosyntec's Scope of Services

Geosyntec was asked to develop an approach to provide a probabilistic valuation of environmental liabilities associated with more than 10 MPG sites, most of which had little or no documentation related to environmental conditions at the sites. The client specifically required an approach consistent with the overall methodology employed by the Gas Research Institute Probabilistic Cost Model (GRI-MGPCost™).

In the course of one week, Geosyntec mobilized parallel modeling, research, and regulatory review teams to able to construct a probabilistic cost model, obtain and extract information from historic fire insurance mapping, and assess local regulatory requirements for each site. The probabilistic model employed a Monte Carlo approach to simulate a range of likely remedial outcomes for each site. The simulation provided an expected value consistent with ASTM E2137-06(2011) and probability distribution for each site, as well as a cumulative expected value and probability distributions for the entire portfolio.

Geosyntec prepared an expedited summary of the results of the ELV portfolio modelling for counsel to advise client management regarding the range of liabilities associated with this aspect of the potential acquisition. A detailed report of the basis and results of each site and cumulative model runs was also provided.

Notable Accomplishments

Geosyntec’s ability to rapidly assess this MGP portfolio with minimal information provided our client and its counsel a robust understanding of the distribution of potential liabilities associated with these sites. Geosyntec was able to engage parallel ELV teams to complete the necessary research, regulatory review, and development of a customized probabilistic model consistent with the GRI-MGPCost™ approach in less than a week and to deliver results ahead of schedule, supporting the client’s ultimately successful bid.

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Project Summary

  • Location: Southeast U.S.
  • Client: Confidential Utility Client
  • Project Practice Areas: Environmental Management
  • Type of Facility: Manufactured Gas Plant (MGP)
  • Services Provided: Environmental Liability Valuation; Probabilistic Cost Modeling; Transactional Support
  • Type of Work: Environmental Liability Valuation
  • Governing Regulation: Private