3 November 2011

2CO Energy – Don Valley Power Project Securing energy, supporting growth

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Heritage and Financial backing

Denbury Resources

•  1000 miles of pipelines, moving 20MT of CO2 for enhanced oil recovery

Hydrogen Energy

•  Developed three advanced CCS projects – Peterhead, Abu Dhabi and California

TPG Capital

•  One of the world’s largest private equity firms with almost $50bn invested

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0  

5  

10  

15  

20  

25  

30  

35  

40  

45  

Billion

 barrels  of  o

il  EOR – enabling CCS

3

25bn

8bn

3-8bn

Source: Produced, proven and probable – DECC ‘UK Oil Reserves and Estimated Ultimate Recovery 2011’. EOR estimate – Jon Gluyas, University of Durham

⇒ Revenue £150-£750bn

⇒ Deferred decommissioning £6-£24bn

⇒ 6000 -16000 direct jobs retained or created offshore

⇒ US DOE has now termed CCUS as the enabler for CCS

Already Produced

Proven and Probable Reserves

EOR

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Boundary Dam – Saskatchewan, Canada

  1 MT per annum CO2 capture

  $1.25 bn capital cost

  Low carbon power

  CO2 for EOR

•  Project sanctioned and under construction

•  Provincial Government owned utility

•  Government fully funding project and taking on all risks

4

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Kemper County – Mississippi, USA

  2 MT per annum CO2 capture

  $2.5 bn capital cost

  Low carbon power

  CO2 for EOR

•  Project sanctioned and under construction

•  $600m grants and tax breaks

•  Federal loan guarantee application

•  Premium priced electricity mechanism, similar to CFD capable absorbing risks

5

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The policy conflict

Balance sheet versus energy and climate goals

6

A project that aligns policy objectives

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  5 MT per annum CO2 capture

  £3 bn capital cost

  Low carbon power

  CO2 for EOR (tax revenue)

•  FEED complete

•  Awarded €180m grant under European Energy Programme for Recovery (EEPR)

•  NER application in place

•  Await UK process (CFD)

Central N Sea EOR

Don Valley Power Plant

CO2 Pumping

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Central N Sea EOR

Don Valley Power Plant

CO2 Pumping

Multiple benefits

Don Valley Power Plant

•  650MW power plant •  4.5 million tonnes per year CO2 captured •  1 million tonnes per year Yorkshire Coal

consumed – 350-400 jobs safeguarded •  1,200 jobs during construction, 300 during

operation •  Enable Yorkshire CO2 capture cluster – 60

million tonne CO2 per year, 55,000 jobs

EOR Project

•  150mmbbls incremental production •  £5.5bn oil taxation •  20 year extension in field life •  800 jobs during construction, 300 during

operation •  Upside cases – additional 50mmbbls, £5bn

taxation

8

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Compelling economics

9

0

20

40

60

80

100

120

140

160

180

200

Who

lesa

le

Pow

er P

rice

Ther

mal

w

ithou

t CC

S

CC

S

DVP

P ne

t of

EOR

taxe

s

Ons

hore

Win

d

Off

shor

e W

ind

Nuc

lear

Sola

r

£/M

Wh

Source: Mott Macdonald for DECC, UK Electricity Generation Costs Update June 2010

DECC 2013 cost of electricity forecasts

 DVPP is a catalyst

 De-risking EOR would enable subsequent projects to need no grant

 DVPP is fastest route to CCS feasibility

DVPP

Value Chains - Integration risks

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Key risks

•  Covers many Industries

•  Project on project confidence

•  Completion (cost and schedule)

•  Operation (availability and reliability)

•  Financing

•  Political

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www.donvalleypower.com www.2coenergy.com

The Don Valley CCS Project is co-financed by the European Union’s European Energy Programme for Recovery. The sole responsibility for this publication lies

with the author. The European Union is not responsible for any use that may be made of the information contained therein.