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Commodity CO2-EOR- Greenhouse Gas-Economic Development-Sequestration Michael E. Moore Managing Partner Falcon ES/GHG Partners/CO2 Norway Houston November.

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Presentation on theme: "Commodity CO2-EOR- Greenhouse Gas-Economic Development-Sequestration Michael E. Moore Managing Partner Falcon ES/GHG Partners/CO2 Norway Houston November."— Presentation transcript:

1 Commodity CO2-EOR- Greenhouse Gas-Economic Development-Sequestration Michael E. Moore Managing Partner Falcon ES/GHG Partners/CO2 Norway Houston November 18, 2004

2 White House Agrees that Science Supports Man-Made CO2 is Impacting the Climate New York Times Aug 26 th, 2004

3 White House Shifts Its Focus on Climate By ANDREW C. REVKIN August 26, 2004 New York Times “In a striking shift in the way the Bush administration has portrayed the science of climate change, a new report to Congress focuses on federal research indicating that emissions of carbon dioxide and other heat-trapping gases are the only likely explanation for global warming over the last three decades. In delivering the report to Congress yesterday, an administration official, Dr. James R Mahoney, said it reflected "the best possible scientific information" on climate change. Previously, President Bush and other officials had emphasized uncertainties in understanding the causes and consequences of warming as a reason for rejecting binding restrictions on heat-trapping gases.”

4 Primary Sequestration Geologic Terrestrial Ocean

5 Geologic Sequestration of CO2 - Today’s Most Viable Option Geologic sequestration may be most viable option in the near- to mid-term Technology basically proven Costs and economics of long-term storage uncertain Monitoring, verification, and safety need to be included Additional value from incremental oil and gas recovery Incentives and tradable credits will help offset sequestration costs

6 Carbon Sequestration Leadership Forum Source:

7 Magnitude of Current Geologic Sequestration Work Source:www.cslforum.org

8 Kyoto, EU ETS and RGGI Signed by Putin, Kyoto kicks into action within 90 days. The European Union’s “Emission Trading Scheme” starts trading on January 1, 2005 The “Regional Greenhouse Gas Initiative” comprising of 10 New England states, is slated to start mid 2005 California Mandates

9 Gulf Coast Carbon Center: Developing a Business Plan for Carbon Use and Sequestration in the US Gulf Coast Lead: Susan Hovorka, Ian Duncan, Mark H. Holtz, and Eugene Kim Michael Moore-Advisor Gulf Coast Carbon Center Bureau of Economic Geology The John A. and Katherine G. Jackson School of Geosciences The University of Texas at Austin

10 GCCC Infrastructure

11 Pilot site Power plants Industrial sources High sand trend in the Frio Houston 20 miles Regional Setting of Frio Brine Pilot Site Significance to US carbon program: Potential to upscale to impact US releases

12 FutureGen in Texas Source: Texas Clean Coal Technology Council Announces Bid to Bring Billion Dollar, Zero-Emission Power Plant Prototype to Texas The Governor’s Clean Coal Technology Council announced on July 28, 2004 that it will lead the effort to bring FutureGen – a billion dollar, 10-year project to create the world’s first coal-based, zero-emission power plant designed to capture and permanently sequester carbon dioxide – to Texas. In addition to improving air emissions globally, FutureGen could be used to spur enhanced oil and gas recovery in Texas where 31 billion barrels of crude oil could be recovered though CO2 flooding. Texas Railroad Commissioner Michael L. Williams, who serves as chair of the Governor’s Council, has already sent a preliminary letter to the Department of Energy (DOE) notifying it of Texas intention to host FutureGen. Since the project was initially announced by President George W. Bush early in 2003, DOE has approved the first round of funding for the prototype and is scheduled to name an industry consortium that will partner in the project later this year. The industry consortium is required to put up $200 million for FutureGen funding, and the project is also expected to attract international participation. Texas, with an ample supply of coal, unmatched geology for sequestering carbon dioxide and the need for enhanced oil recovery, ready markets for the energy produced and a transmission grid capable of handling the increased load, would be the ideal location for FutureGen according to the chairman of the Governor’s Clean Coal Technology Council. “Bringing FutureGen to Texas is a perfect fit,” Williams said. “For this prototype to be successful, it is going to have to be profitable. That means that enhanced oil recovery can help us produce affordable, clean energy.”

13 CO2 Driven EOR and GHG Sequestration

14 How CO2 Works CO 2 mixes with oil much like turpentine cleans paint from a brush Inter-phase mass transfer typically yields NGL rich gas production Chase water injection helps control mobility and gas recycle

15 Texas Permitted CO2 Wells and 30+ Years Regulatory Experience 9279 Wells permitted for CO 2 injection in Texas 9176 of these in RRC Dist 8/8A (Permian Basin) Public acceptance is high Regulatory experience deep HSE issues well defined Knowledge base developed in Texas

16 US CO2 driven EOR Projects and Infrastructure Source: Denbury Resources, Inc., 2004

17 IEA US 2002 GHG Statistics

18 Storage Potential Global Capacity Storage Option Gigatons CO 2 Oil and Gas Fields 920 Deep saline formations 400 – 10,000 Unminable coal >15 Data source : IEA Greenhouse Gas R&D Programme

19 U.S. Basins very Mature, Production Peaked in 1970 Annual Domestic Crude Oil Production Source: API, DE, Bloomberg, Raymond James Research Report

20 Texas Oil Production Curve Deeper Dependence on Foreign Crude Economically and Strategically Dangerous for Nation and Texas The green represents estimated production

21 Louisiana Oil Production Curve Source: ARI/Reeves

22 Identified Recoverable Texas Crude Oil—Only with CO2 Source: Texas BEG/GCCC

23 10 Year Forward Price Curve WTI Source: Barclays Bank, NYMEX Futures, IPE Brent Futures and Derivatives Market Nov 16, 2004 These values now have banks seriously looking into financing long term CO2 driven EOR floods, required capture technology financing and infrastructure project financing as well as the future potential Emission Reduction Credits markets

24 $ Tax Incentives Sec 29 Sec 43 Commodity CO2 $25.00/tn 10 yrs Crude Oil WTI $ yrs Offsets $ ton Federal & State Economic Dev Funds Research Grants

25 Potential Sequestration Volume through CO 2 -EOR in Texas Source: Texas BEG/GCCC

26 Direct Economic Impacts of Crude Production in Texas Source: Texas BEG/GCCC

27 CO2 EOR is Important to Texas Hence, so is the CO2 Source Source: ARI/Kuuskraa

28 CO2 Demand Keeps Rising Source: ARI/Kuuskraa-Reeves

29 Growing Demand for CO2 Source: Steve Melzer/Melzer consulting

30 New 125 Mile CO 2 Line Monell Salt Creek Rawlins Rock Springs Cody Gillette Casper Cheyenne Anadarko’s Salt Creek and Monell 135 mmcf/d CO2 used in EOR from Exxon-Mobil Labarge Gas Processing Plant Sequestration Protocols developed by Battelle Existing CO 2 Line Point of Sale for CO 2 to Monell Point of Sale for CO 2 to Salt Creek

31 Potential Offsets for Market Timeline –Field Operations: Underway –Protocol: Completed –Implementation: Underway –Certification: Buyer Driven CO 2 Offset/ERC Inventory ProjectHistorical2004Annual to 2020 Lindsey600,000 tons300,000 tons Monell50,000 tons1.0 million tons1.1 million tons Salt CreekNone1.8 million tons2.6 million tons Total650,000 tons3.1 million tons4 million tons

32 Conclusion Gulf Coast Carbon Center delivers a win-win opportunity GHG issues are accelerating, GCCC provides solutions CO2 is as a valuable commodity to Texas, Louisiana, Kansas, Oklahoma, Kansas, Illinois, Mississippi, California, New Mexico & Wyoming Geologic Sequestration works for large scale abatement of CO2/GHG development globally via CSLF Supporting the Texas FutureGen initiative Huge opportunity for regional emitters and sinks as well as technology, equipment, and service providers States benefit from positive economic impacts and extended asset life as well as job growth Michael E. Moore Advisor Gulf Coast Carbon Center Managing Partner GHG Partners dba Falcon Environmental Services Director Commodity Markets for CO2 Norway Emerging energy commodity market development for past 20 years Yorktown, Suite 500 Houston, Texas Main: Fax:


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