PROJECT UPDATES - Arlington, Texas

The Arlington landfill is owned and operated by the city of Arlington, Texas.
Arlington has a population of 332,969 according to the 2000 census and is the
third largest city by population in the north central Texas region. The landfill
accepts approximately 1,200 tons per day of municipal solid waste and is divided
into a West Disposal Area and an East Disposal Area. The West Disposal Area is a
pre-Subtitle D area and was closed with a clay cap in 1998. The East Disposal
Area is divided into Sectors 1 through 6. Sector 1 is a Pre-Subtitle D area that began
receiving waste in 1978. Sectors 2 through 6 are all permitted as Subtitle D areas
that will have geomembrane liners and caps.

The City installed a gas collection system in 1997 consisting of 77 vertical landfill
gas ("LFG") extraction wells and 5 LFG horizontal collectors in the West Disposal
Area and 12 vertical LFG extraction wells in Sector 1 of the East Disposal Area.
LFG production has been approximately 1,100 cfm. Renovar operates the gas
collection system under a long-term contract with the City. The City was anxious
to have an environmentally friendly beneficial use project at its landfill and Renovar's
contract with the City allowed it to develop such a project.

Renovar determined that the best project, though not the easiest, would be to
transport the LFG approximately four (4) miles for use at the Village Creek
Wastewater Treatment Plant ("Village Creek Plant") owned by the city of Fort Worth,
Texas. The Village Creek Plant is capable of processing 144 million gallons of
wastewater each day and generates significant amounts of methane gas during
anaerobic digestion. As part of its energy recycling efforts, the Village Creek Plant
utilizes its digester gas to generate electricity on-site and uses the waste heat from
the system to heat digesters that produce methane. The Village Creek Plant had
plans to install two new 5 MW gas turbine generators that would require more fuel
than the volume of digester gas produced by its own system. Renovar initiated
discussions with the City of Fort Worth to utilize the Arlington LFG as a supplemental
fuel for the new electric generation system at the Village Creek Plant. Complicating
matters was the fact that the City of Fort Worth had contracted out much of its
electric generation operations to Lone Star Energy Services, Inc., an affiliate of
the local utility company. Renovar then successful negotiated the sale of the
Arlington LFG directly to Lone Star for use at the Village Creek Plant.

Perhaps the most challenging obstacle to the project, the solution to which required
the most time and ingenuity, was the fact that the only feasible pipeline route from
the Arlington landfill to the Village Creek Plant was through the River Legacy Park.
The River Legacy Park has been described as "a 1,300 acre oasis on the Trinity
River in the heart of north Arlington". The land was donated to the City of Arlington
as parkland. In 1988, with the support of the Arlington Parks and Recreation
Department, a group of Arlington citizens formed the River Legacy Foundation,
whose mission is "to preserve and enhance land along the Trinity River and its
tributaries as an extraordinary recreational, educational and natural resource".
The public/private partnership between the City and the Foundation has been
enormously successful in preserving the land, providing environmental education
to the public, and offering recreational opportunities with trails, river overlooks,
picnic areas and playgrounds. The centerpiece of the Foundation¹s education
effort is the 12,000 square foot River Legacy Living Science Center, which houses
an impressive collection of interactive exhibits.

Renovar determined that the best way to cross the Park with a minimum amount of
environmental impact was to work cooperatively with the City¹s Parks and
Recreation Department, the River Legacy Foundation, the cities of Arlington and
Fort Worth, and the Trinity River Authority ("TRA"), an independent State agency.
Renovar hired naturalists and surveyors to identify those routes through the Park
least likely to damage older, larger trees, even if by doing so it created a longer
and more expensive pipeline route. Renovar walked the proposed routes on
numerous occasions with representatives of the Parks and Recreation Department
and the Foundation. The TRA allowed Renovar to utilize parts of an existing
easement that kept the impact of the pipeline on the trees to a minimum. When
it bored under the Trinity River, Renovar bored hundreds of additional feet beyond
the riverbank in order to avoid a Park recreational trail and a number of magnificent
older trees. Both cities provided adjacent rights of way, and the Neighborhood
Services Department of the City of Arlington provided enormous assistance in
working through the various administrative agencies involved in the Project. In the
end very few trees, and none of the trees identified by the Parks and Recreation
Department as particularly in need of protection, were damaged by the Renovar
pipeline.

Renovar was also mindful of the public education mission of the River Legacy
Foundation and is working with the Foundation to further that mission. With design
approval by the Foundation, Renovar is developing displays explaining the project
and its environmental benefits. The displays will be placed at two locations; in the
Park near a hiking trail along the Trinity River, and at the River Legacy Living
Science Center. The Project was structured to provide long-term economic benefits
to all the parties in the belief that everyone must benefit from a renewable energy
project in order to make it work. Renovar is expanding the gas collection system at
the Arlington landfill to maximize the amount of LFG available for the project. The
cost of the expansion and the operation of the gas collection system are being
undertaken by Renovar at no cost to the City of Arlington. The LFG being purchased
from Renovar by Lone Star on behalf of the City of Fort Worth is priced below the
market price of natural gas on an MMBtu basis. Renovar is selling the LFG at a
reasonable price that covers its costs and provides an acceptable rate of return.
The commercial terms of the transaction, while not a windfall to any party, provides
reasonable commercial benefits to all. This Project is the ultimate renewable energy
project. LFG that would otherwise be flared is being combined with digester gas from
the wastewater treatment process to fuel electric generation facilities and provide
waste heat for other uses. The voluntary expansion of the landfill gas collection
system reduces the amount of methane and carbon dioxide emissions that would
otherwise be produced at the landfill. By utilizing landfill gas in conjunction with
digester gas as alternative fuel sources, the Village Creek Plant is able to reduce its
dependence on fossil fuels, which is one of the primary objectives of any renewable
energy project. One of the most striking aspects of this Project is the high degree of
cooperation that was developed over time between adjacent municipalities, an
independent State agency, a public utility company, a private non-profit
environmental foundation, and a renewable energy developer. The existence of so
many diverse parties in a single project is often sufficient in and of itself to doom
that project. Despite the obvious merits of this Project, it had been pursued in the
past for a number of years without success.

Today, however, with renewable energy gaining acceptance throughout the
country, parties are more likely to try and make projects work rather than dismiss
them as environmentalists¹ folly. Renovar anticipates that the success of this Project
and the resulting favorable publicity will encourage other municipalities in the north
Texas area to seek their own renewable energy success stories. Developing
public/private partnerships are the key to more extensive renewable energy
development in this country and globally. This Project demonstrates that such
partnerships can work.