1. 1 ECONOMICS, BARRIERS, AND RISKS OF OIL SHALE DEVELOPMENT IN THE UNITED STATES Khosrow Biglarbigi Hitesh Mohan Peter Crawford Marshall Carolus INTEK, Incorporated 28 th USAEE/IAEE North American Conference New Orleans, LA December 4, 2008

2. 2 America’s Oil Shale Resource Technology Economics Environmental Path Forward

3. 3 What is Oil Shale? Rock Kerogen Pyrolysis Upgrade 700 - 800 °F Syn- Crude Naphtha Gasoline Jet Fuel Diesel HC Gas

4. 4 Most Concentrated Hydrocarbon Deposit 2 Trillion Barrels 6 Trillion Barrels Source: US DOE, 2004

5. 5 Oil Shale Production Approaches Mining Retort Upgrading Resource Refinery Surface Process Drilling Heating Upgrading Resource Refinery In Situ Process Source: US DOE, 2004 Choke Point

6. 6 Shell In-Situ Conversion Process Source: US DOE, 2008 High Value Products Pilot Test (Colorado) Light Surface Processing HEATER PRODUCER OVERBURDEN

7. 7 Other Examples of In-Situ Technology Pilot Tests (Colorado) IDT–EGL Resources Process Chevron Process Fractures Injector Producer Source: US DOE, 2004

8. 8 Alberta Taciuk Processor (ATP) Pilot Test (Utah) Preheat tubes Vapour tube Combustion zone Retort Preheat tubes Cooling zone Oil shale feed 750°C 500°C250°C Source: US DOE, 2006

9. 9 Other Surface Retort Technology Gas Combustion Retort (GCR) High thermal efficiency High retort efficiency Present use –Petro-six operating in Brazil –Paraho Process being tested for a major project abroad Source: US DOE, 2007

10. 10 First Generation Project Costs Item UnitRange Capital Cost$/BPD O&M Cost$/Bbl12-20 40K-55K * * Barrel of Daily Capacity Source: INTEK Inc., 2006

11. 11 Canadian Oil Sands Operating Costs Source: Suncor, 2008 $0 $5 $10 $15 $20 $25 $30 $35 $40 200620072008 $35 $30 $23 Dollar/ Barrel Year

12. 12 Source: Canadian Association of Petroleum Producers, April 2008 $1,000 per Bbl of Daily Capacity 140000 0 20 40 60 80 100 120 Suncor - Millennium AlbianSyncrude - Aurora 2 & UE 1 Nexen – OPTI CNRL - Horizon Shell - Muskeg & Scotford PCA/UTS Fort Hills $3 Billion$11 Billion 100,000 Bbl/D Project 2001200320062007200820102011 Canadian Oil Sands Capital Costs

13. 13 Economic Price for Oil Shale Technology 2007 Dollars Per Bbl Source: INTEK Inc., 2008 Rate of Return - 15% $38 $47 $57 $62

14. 14 Cashflow of a Generic Oil Shale Project -1000 -800 -600 -400 -200 0 200 400 600 800 1000 1200 510152025303540 After Tax Before Tax Year Cum. Discounted Cashflow (MM$) Room for Government Action Source: INTEK Inc., 2008

15. 15 Impact of Incentives on Generic Cashflow -1000 -800 -600 -400 -200 0 200 400 600 800 1000 1200 510152025303540 After Tax Before Tax Year Cumulative Discounted After Tax Cashflow (MM$) $10/Bbl Production Credit $5/Bbl Production Credit 15% investment Credit 10% Investment Credit Accelerated Depreciation Source: INTEK Inc., 2008

16. 16 Oil Shale Environmental Impacts Air Quality Oil Shale Processing HC Gas CO 2 SO x NO x CO 2 Enhanced Oil Recovery Sequestration Other Industrial Uses Capture and Clean Existing Technology Process Plant Use Source: SPE #110590, 2007

17. 17 Land Use Depends On The Process 1 MMBbl/D Production for 40 Years – Surface: 31 Square Miles – In-Situ: 14 Square Miles Example for 2.5 MMBbl/D Industry: – 52 Square Miles 2.5 MMBbl/d 52 Square Miles Green River 17,000 Square Miles Source: SPE #110590, 2007

18. 18 Water Requirements 1-3 Barrels of Water per Barrel of Shale Oil Challenges: –Water rights –Water availability –Ground water protection –Water runoff Source: US DOE, 2007

19. 19 Development Hurdles Access to Land –70% on Federal Land –BLM issued final regulation (November 18, 2008) RD & D Environmental Permitting Fiscal Regime Public Education

20. 20 Total Resource 6 Trillion Barrels High Quality Resource 2 Trillion Barrels Technical Recovery 1 Trillion Barrels Reserves 600 – 750 Billion Bbls The Prize $50 - $65 / Bbl @ Source: INTEK Inc., 2008

21. 21 0 500 1,000 1,500 2,000 2,500 2005201020152020202520302035 Year Thousand Bbl/D Projected Production Potential (Shale Oil in the U.S.) Base Tax Incentives RD&D Accelerated Scenario Measured Scenario Business as Usual Source: US DOE, 2007

22. 22 Example Benefits of Oil Shale Development Cumulative (Over 25 Years) Item RD&D Direct Public Sector Revenues85 Value of Imports Avoided325 Production12.8 Direct Federal Revenues48 Direct Local/State Revenues37 Contribution to GDP1300 New Jobs300 Unit Base Incentive Billion $2548 Billion $70170 Billion Bbls3.27.4 Billion $1527 Billion $1021 Billion $310770 1000 FTE60190 Source: INTEK Inc., 2007

23. 23 Summary Over 6 trillion barrels of in place resource The most concentrated hydrocarbon deposits on Earth Conversion technologies are advancing rapidly Sustained production potential of up to 2.5 MMBbl/Day Substantial economic benefits to the Nation Requires concerted effort by the private sector, Federal & State governments, and local communities