New Century, New Business Models GEMI Power Conference June 2006

New Century, New Business Models 1 Private and Confidential China & India aspire to OECD living standards – their rise to materiality changes everything

New Century, New Business Models 2 Private and Confidential Oil has little competition in the transportation sector Global Transportation 85.9 Quads125.0 Quads % Source: EIA IEO2006

New Century, New Business Models 3 Private and Confidential Coal and natural gas are competing for power growth Global Power Generation Quads296.4 Quads +81% Source: EIA IEO

New Century, New Business Models 4 Private and Confidential Issue #1: Oil and gas suffer from a security of supply “externality”

New Century, New Business Models 5 Private and Confidential Issue #2: Coal suffers from a GHG emissions “externality” Source: EIA IEO2006

New Century, New Business Models 6 Private and Confidential Personal Mobility Electrons On Demand Emission s Control Primary “Goods” To address these issues, we must reframe our sense of industry purpose and boundaries Crude Oil Natural GasCoal Bio-fuels Wind, Tides, Currents, Waves, Solar Nuclear Engineered Crops Hydrocarbons Carbon Neutral Resource Segments Nuclear Waste Transportation Bio-refining Chem Processing Transmission Sequestration ICE Fuel Cell Gasoline & Diesel Gasification Combined Cycle Chemical Separation Syngas Hydrogen Fischer Tropsch Refining CO 2 Flue Gas PC

New Century, New Business Models 7 Private and Confidential Basic Power Play? Transport of Delight? What will be the Winning Business Models? Hydrocarbons Personal Mobility Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal Electrons On Demand CO 2 Flue Gas Emissions Abatement Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE

New Century, New Business Models 8 Private and Confidential Conservative Oil? Hydrocarbons Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal CO 2 Flue Gas Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE Personal Mobility Electrons On Demand Emissions Abatement

New Century, New Business Models 9 Private and Confidential Big Dig? Hydrocarbons Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal CO 2 Flue Gas Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE Personal Mobility Electrons On Demand Emissions Abatement

New Century, New Business Models 10 Private and Confidential Big Oil to Big Energy? Hydrocarbons Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal CO 2 Flue Gas Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE Personal Mobility Electrons On Demand Emissions Abatement

New Century, New Business Models 11 Private and Confidential Global Cool? Hydrocarbons Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal CO 2 Flue Gas Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE Personal Mobility Electrons On Demand Emissions Abatement

New Century, New Business Models 12 Private and Confidential Super-Power? Hydrocarbons Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal CO 2 Flue Gas Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE Personal Mobility Electrons On Demand Emissions Abatement

New Century, New Business Models 13 Private and Confidential Why Not? The Ultimate Resource is Human Ingenuity Hydrocarbons Crude Oil Gasoline & Diesel Natural Gas Syngas Hydrogen Gasification Fischer Tropsch Fuel Cell Refining Bio-fuels Wind, Tides, Currents, Waves, Solar Coal CO 2 Flue Gas Nuclear Combined Cycle Chemical Separation Nuclear Waste Engineered Crops Bio-refining Carbon Neutral ICE Personal Mobility Electrons On Demand Emissions Abatement

New Century, New Business Models 14 Private and Confidential Key strategic questions for an industry in transition to a very different future What are the big trends and how can we get downwind of them? Can we shape the way the rules of the game are written? What should be our direction and what goals should we set? What should be the boundaries of our business portfolio? Which areas should we focus on with greatest intensity? What is the best business model for competitive advantage? –What will be the value drivers? –How do we leverage our existing and new competencies? How do we build out the strategy to get where we want to? Which partners will we need to execute the strategy? Is our leadership aligned with the new direction?

New Century, New Business Models 15 Private and Confidential Chris Ross CRA International 1600 Smith Street Houston, TX (713)