EFI Gas-to-Market Conference INTEK Oil Shale Development Economics May 16, 2007 Khosrow Biglarbigi INTEK, INC. EFI Gas-to-Market Conference The Westin Edmonton 14-16 May 2007

Economic Discussion Part I - Project Economics Project costs Economic price Cash flow Part II – A new oil shale industry Potential size Economic hurdles/solutions Benefits on U.S. economy

National Oil Shale Model

Resource Base Analyzed Industry nominated tracts 79 Billion Barrels of resource in place Detailed geologic & petrophysical data Western Oil Shale

Technologies Considered Surface Mining / Surface Retort Underground Mining / Surface Retort 1 2 3 4 Modified In-Situ True In-Situ

Alberta Oil Sands Production, MMBbl/Day First Generation Projects Project Costs Canadian Oil Sands 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 1981 1984 1994 1998 1999 2001 2003 2005 Production Cost, 2004 US $ 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 Alberta Oil Sands Production, MMBbl/Day Production Costs: Oil & Gas Journal, July 14, 2003, V. 101.27 Production Volumes: Canadian Association of Petroleum Producers, Historical Statistics O & M Costs First Generation Projects *Inclusive of mining, retort, & upgrading *

However, the Capital Costs are Increasing (Source: CAPP, March 2007)* *Presented at the 2007 EIA conference, Washington. D.C.

Economic Price for Oil Shale Technology Generic Projects (Price: $/Bbl) True In-Situ Surface Mining Underground Modified $35.00 $43.00 $52.00 $57.00 10 20 30 40 50 60 70 2004 Dollars Rate of Return – 15%

Breakdown of Economic Price for Generic Surface Project $43/Bbl Transfer Payments $6 $/Bbl

Cashflow of a Generic Oil Shale Project 1200 -1000 -800 -600 -400 -200 200 400 600 800 1000 5 10 15 20 25 30 35 40 Before Tax Room for Government Action Cumulative Discounted After Tax Cashflow (MM$) Year After Tax

Impact of Incentives on Generic Cashflow 1200 -1000 -800 -600 -400 -200 200 400 600 800 1000 5 10 15 20 25 30 35 40 Before Tax Cumulative Discounted After Tax Cashflow (MM$) After Tax Year $10/Bbl Production Credit $5/Bbl Production Credit 15% investment Credit 10% Investment Credit Accelerated Depreciation

Projected Production Potential (BOE) (Shale Oil in the U.S.) RD&D Accelerated Tax Incentives Measured Base

Potential Influence of Oil Shale Development World Demand Change In Oil Price Effects on Consumer Spending Drilling Rigs Skilled Labor Steel Pipes Power Heaters OPEC World Supply Oil Shale Investments Oil Shale Development Reduces Call on OPEC Oil Shale Direct and Indirect Jobs Reduces Imports Shale Oil Production Impact on National Economy Local, State, Federal Treasuries Contribution to GDP

Favorable Fuel Prices Will Increase Consumer Discretionary Spending, Non-Petroleum Jobs, And GDP Oil Price Fuel Price Consumer Discretionary Spending Industrial Energy Spending Non Petroleum Contribution to GDP Driven Jobs

Impact of Increased Production on Future Prices Reductions from Reference Prices $0

Savings to U.S. Consumers (Cumulative) $200 to $900 Billion

Contribution to GDP Up to $1.2 Trillion (Cumulative)

New Jobs Up to 250,000

Savings on Foreign Imports Up to $325 Billion

Direct Local, State, And Federal Revenues Will Increase by $25 to $85 Billion by 2035 (Cumulative)

Summary Provide Long Term Sustained Production With Substantial Benefits to the U.S. Economy: Contribution to GDP: up to $1.2 Trillion New Jobs: 250,000 Reduction in Foreign Imports: $325 Billion Consumer Savings: $900 Billion Additional Investments: $145 Billion (Stimulated) Public Revenues: up To $85 Billion Concerted Efforts by Government and Industry Needed to Capitalize on this Opportunity

Acknowledgements Office of Naval Petroleum & Oil Shale Reserves Office of Petroleum Reserves U.S. Department of Energy