1. 05/17/2010 DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only 1 National Petroleum Council Future Transportation Fuels Study Biofuels Sub-Task Group – Framing Update for CSC May 13, 2010 1

2. 05/17/2010 Biofuels Sub-Task Group – Initial Membeship Todd Werpy, ChairArcher Daniels Midland Company Tom BinderArcher Daniels Midland Company David BlatnikMarathon oil Corporation Joseph Caggiano, Chevron Corporation Dawn ManleySandia Laboratories John ReeseShell Oil Products US Jim Richardson Chevron Corporation David SternExxonMobil Corporation Puneet VermaChevron Corporation ADD ADDITIONAL DIVERSITY DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

3. 04/30/2010 3 Biofuels Sub-Task Group – A Value Chain / System Approach Source Transport Process Convert Distribute Feedstock Supply Demand Volumes Availability Billion Ton Study Logistics Transportation Existing Infrastructure Storage Contracting Biomass Types Biotechnology Thermal-Chemistry Separations Recovery Logistics Transportation Existing Infrastructure Storage Pretreatment DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only Raw Material Cost Metric e.g. Cost /bbl Energy Efficiency Metric e.g. Efficiency ratio Etc.

4. 04/30/2010 4 Biofuels Sub-Task Group – Initial Focus on Process and Conversion Biotechnology Fuel Types *Ethanol *Butanol *Isobutanol *Algal Oils *Isoprenoids Thermal-Chemistry Fuel Types *Pyrolysis Oil *Mixed Alcohols *Hydrocarbons *BioDiesel *Green Diesel *HTL Liquids *FT Liquids Separations Recovery *Low energy processes *Membranes *Reactive distillation *Novel extractions DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

5. 04/30/2010 5 Biofuels Sub-Task Group – Critical Expertise Required Biotechnology Resources *Biologists *Biotechnologist *Engineers *Modelers Thermal-Chemistry Fuel Types *Chemists *Catalyst Experts *Gasification Experts *Engineers *Modelers Separations Recovery *Chemists *Engineers *Modelers *Material Scientists DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

6. 05/12/2010 Coordinating Sub-Committee and Task Group Study Timeline

7. 04/30/2010 7 Team Resources Identified and Secured Sub-Task Group Kick Off Complete Frame and Framing Questions Developed Preliminary Overall Plan Agreed Key Decisions Defined Key Milestones Established Interfaces and Boundaries Clarified Base Case Findings Established Accelerated Case and Options Developed Infrastructure and Supply Fuels Characteristics Biofuels TBD Electric By End May By End June TBD Fossil Fuels By End May By End June TBD Natural Gas By End May By End June TBD Engine / Vehicle By End May By End June TBD 2050 Fuels By end July By End August TBD Key Task Group Interfaces Technology TBD Demand TBD Other TBD TBD Completed or on track Plans under way, some work still required Conceptual plans only Not applicable Progress Tracking Chart – Biofuels Sub-Task Group

8. 05/17/2010 DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only 8 Secretary Chu’s Guiding Questions 1.Define criteria for 2030 transportation fuels and relative improvement –Environmentless GHG, land and water use –Securityavailable resources, reliable infrastructure –Economiccapital investment, operating costs, achievable at scale, competitive, subsidy requirements 2.Describe 2030 baseline for transportation fuels based upon available studies 3.Identify technological advances, changes in supply, infrastructure and demand that could accelerate the transition to a more environmentally friendly, secure and economically competitive fuel mix 4.Provide insight on government and industry investments which could increase the probability of technological advances 5.Provide insight on the environment impacts such as GHG, water and land use 6.Provide insight on acceptance of these accelerated transportation fuels 7.Consider 2050 – describe the potential 2030 interim states or scenarios which could accelerate progress to a more advanced fuels mix by 2050 8

9. 04/30/2010 9 Biofuels Sub-Task Group – Draft Scope In Scope (in frame or scope for Supply and Infrastructure Task Group): Biofuels products and full supply chain for biofuels Edible biomass All biofuels process technologies Implications of international policy on biofuels supply / demand for US Global available arable land, both in and out of current arable use Consideration of all co-products of the biofuels process i.e. waste as well as desired products Engine / vehicle systems Baseline with underlying assumptions Alternative (or ‘accelerated‘) cases for transportation fuel supply Non-US fuel supply Life cycle cost analysis CSC FEEDBACK REQUESTED 5/13 DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

10. 04/30/2010 10 Biofuels Sub-Task Group – Draft Framing Questions Draft Framing Questions: 1.How will we enhance the acceptability of biofuels? 2.Are there new possible synergies between fuels types 3.How to incentivize biofuels across all elements of the value chain e.g. from vehicle design, through feedstock provision, and fuel production to end use 4.Is the fuel type more efficiently utilized in a regional or national model 5.How to address forward and backward compatibility of biofuels with engine types 6.What biofuels volumes can be supply at what cost and by when? 7.What is our defined base case and basis for selection? 8.How will biofuels meet actual demand by fuel/user type? 9.How do we meet current projections of demand by 2030? i.What are the alternatives possible? ii.Which biofuels/propulsion system combinations are capable of meeting commercially and materially significant volume? 10.What constitutes a commercially and materially significant volume? 11.What are the characteristics of each biofuel (using the agreed fuel characteristics measures)? 12.How do we ensure eco-evolution of biofuels wit next generation engine design? CSC FEEDBACK REQUESTED 5/13 DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

11. 04/30/2010 11 TO BE DEFINED Biofuels Sub-Task Group – Draft Deliverables to Other Teams Draft Deliverables To Others: 1.a

12. 04/30/2010 12 TO BE FURTHER DEFINED Biofuels Sub-Task Group – Draft Deliverables from Other Teams Draft Deliverables for Others: 1.When will advanced engine technology be available 2.What is the perspective on carbon capture for algae 3.Regional vs national implications for transportation (assumed mobility model)

13. 05/17/2010 Biofuels Sub-Task Group - Future Meetings Calendar DateTime (EST)Highlight Biofuels Meetings Fri 30 th AprilBiofuels Kick Off Wed 5 th May1:00 pm (3 hrs)Biofuels Framing Questions/Boundaries for CSC Wed 12 th May7:30 am (9 hrs) Biofuels Preliminary Overall Workplan Wk, 24 MayTBD (2-3 hrs)Kick Off and Sub Task Group Leader Onboarding TBD Regular Check Ins/ Standing meetings Day (TBD)hour (TBD)Agenda (TBD), frequency = weekly 13 DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

14. 04/30/2010 14 Biofuels Sub-Task Group- Appendices

15. 04/30/2010 15 Biofuels Framing – Supply / Source Questions / Boundaries Boundary (in frame or scope for Biofuels Study): How much biofuels supply can be achieved Primarily US sourced biomass but identify large global impacts on supply demand Consider potential for other step out / unconventional source as a biofuel (e.g. algae, waste, etc) Process robustness e.g. feedstock variability, feedstock composition Need awareness of total biomass availability versus global food supply/demand position Land application / utilization for fuel vs food or flexible food-fuel biomass Availability of viable acreage Optimization of plant scale / infrastructure relative to raw material source Sourcing includes collection of raw material Feedstock flexibility / versatility ­e.g. co-location for biomass / coal production, co-generation of power (security / reliability of supply / production, for droughts etc) Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Is edible biomass in scope (vs only non-edible biomass)? Use of internationally sourced sugarcane for US processing? Use of US food based materials relative to global food supply/demand position? Cost of emissions Framing Questions: What is the economic radius for biomass supply to processing / conversion infrastructure? Is there a relevance threshold e.g. must be able to meet x% of supply by 2030/2050 Relevant Study Materials 90 billion gallon study (GM/Sandia) 1 billion tonne DOE Study DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

16. 04/30/2010 16 Biofuels Framing – Raw Material Transport Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Clarification: This ‘transport’ element covers raw material transport in the value chain Cost to transport Energy required to transport Cost to value ratio for end product (i.e. economic / environmentally appropriate radius to harvest –transport-process – distribute Practical operating transport radius for infrastructure Implications of above on scale of infrastructure Storage (for raw feedstock to deliver system reliability / ratability) ­Physical availability of storage ­Cost ­Shelf life of feedstock Regional / seasonal variability of feedstock and implications for product quality / reliability Is a ‘spoke and hub’ or more local /regional model appropriate versus a broader ‘final fuel’ model (this connects to the question on scale and ‘practical radius’) Opportunity to increase density of load prior to transport Understanding of existing transport infrastructure constraints Optimum degree of pre-processing prior to or during transport Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): System and Value Chain Component Efficiencies – is this a separate / overarching theme e.g. ­Cost to value ratio ­Radius of transportation ­Cost of emissions Framing Questions:. MOVE - Can we create a biofuels business model that is sustainable for 30+ years (possible critical success factor) Relevant Study Materials. DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

17. 04/30/2010 17 Biofuels Framing – Process Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Next Phase of Study – thresholds / barriers relevant to differentiate / assess process options Process robustness e.g. how robust from year to year e.g process reliability, ability to use multiple biomass feedstocks Understanding of water use characteristic Consideration of co-products and waste All process technologies are in scope Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Should we use a boundary condition or study threshold based on efficiency of process Cost is not seen as a boundary as it may be too constraining at this phase when the timeframe extends to 2050 Are process and conversion separate parts of the value chain or combined (for this study) Framing Questions:.Need to include some Technology related questions Relevant Study Materials. DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

18. 04/30/2010 18 Biofuels Framing – Conversion Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Energy yield vs. energy utilized to produce i.e. the Fuel Value Chain energy balance What flexibility is possible on the conversion process e.g. for supply quality or product quality and to flex between diesel and gasoline (ICE) fuels Assume no boundaries to technology in the data gathering/due diligence of the first phase of the study Can methanol be a viable fuel for direct use (it offers the most simple conversion process from syngas) Bio fuels to syngas – implications of policy e.g. recent decision by China on coal to syngas Assessment of state of technology development and future state (overall) Assessment of potential for solutions that can be deployed to commercial scale / meaningful scale by 2030 or accelerated to before 2030 Identify co-processing opportunities / needs Assessment of waste product implications as well as desired products from any process Conversion does not include blending, blending is in distribution Define the hurdles, timeframe, and accelerators for deploying technology to achieve meaningful scale (overall) How can barriers to progress from the complexity or ‘newness’ of any process be overcome, what are the related time implications (overall) What is the efficient build / growth rate for biofuels (overall) How to compare costs within each process/conversion type during the ‘synthesis of studies’ (overall) Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?):. Framing Questions: Should we set a threshold expectation on energy ration e.g. maximum unit energy use/unit energy generation ratio.Need to include some Technology related questions Relevant Study Materials Auto-Oil study of 20 years ago DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

19. 04/30/2010 19 Biofuels Framing – Distribution Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Differences in current fuels vs. projected fuels mix e.g. E20, etc Implications for infrastructure and full cycle cost perspective Regulatory implications and successes e.g. biofuels in Brazil, possibly CNG in Colombia, possibly diesel in Europe (overall) Options for blending of flex fuel mix i.e. if ethanol is a larger component does the ethanol content require the infrastructure to be re-assessed as we move from gas with ethanol to ethanol with some gas What are the step-out opportunities e.g. biomass to hydrogen Who has jurisdiction on distribution networks is this regional / national etc What is the right flex fuel mix Who pays for the changes needed to meet new specs (may be a question for later).e.g. infrastructure changes What is the mobility model versus a more hub and spoke assumption Will we use existing infrastructure or build a parallel infrastructure for new biofuels What are the fuel characteristics (note: this will help define the possibility of cross regional distribution) What is the relevant timeline for developing vehicles and infrastructure Who will have jurisdiction on pipelines Assessment of ‘drop-in’ fuels implications What would you do different with a ‘free drop’ on distribution and what is the optimum complementary model Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Are we free to consider meeting US demand needs with global biofuel supply e.g. imported ethanol Framing Questions:. Relevant Study Materials EPA Studies Auto Oil Study ARPA –E studies DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

20. 04/30/2010 20 Biofuels Framing – Demand Questions / Boundaries Boundary (in frame or scope for Biofuels Study): The following are questions that maybe raised with the Demand group How much biofuels demand is expected Fuel product demand split e.g. mogas vs diesel etc Implications of fuels spoilt on biofuels needs/role e.g. if US stays gasoline long will ethanol solve any supply issues Separate demand into Freight and Passenger and establish economic targets for production Clarify in meeting demand what portion comes from non-US sources of finished product Establish a common description for the fuels being discussed Task for Next Phase – define the volume and charateristics (in terms of economics/environmental/security etc) for each fuel considered in the fuel mix What degree of behavioral change is required to build acceptance by fuel type Clarify expected modes of distribution based on expected user base (especially non passenger vehicles) What is the preferred use / displacement model for biomass for transportation e.g. as a liquid fuel vs. as a power supply for electric vehicles Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Describe demand by regions – which regions?. Framing Questions: Need a model for fuel demand by type over time What assessment should be made I offsetting demand vs growing supply What are the predictions for vehicular advancement in the time frame under study What is the economic window (i.e. the affordable / realistic cost to produce Relevant Study Materials. DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

21. 04/30/2010 21 Biofuels Preliminary Work Breakdown Tasks : Data Gathering – Joseph to share structured approach used on Hard Truths, also to share the resources template Supply / Source/ Raw Material Transport – Todd/Tom to lead, David B involved Process/Conversion – TBD (possibly from Technology), David S involved Distribution – John Reese (tentative to be confirmed) to lead, David B involved Algae – David S/ David B to lead, Puneet involved Resources – Joseph to lead for university engagement Possible future contacts Business associations Enrel DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

22. 05/17/2010 Biofuels Sub-Task Group Action Items Develop contact list for Biofuels sub-task group List or link of studies – NPC site – guidance on copyright Send link for NPC site Definition – e.g. meaningful Block time for synthesizing / convergence on base case by end December Compare study assumptions vs actual  Are cost reasonable and holisitc  Provide transparency on assumptions  Consider bringing in key authors to present material Peaking power analogy in pursuit of reliability?  Used 2-3 days per month  Return security on investment Security – define how reliability relates to security Provide an alternate use for biofuels feedstock in years of plenty to ensure sufficient in years of need DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

23. 05/17/2010 Biofuels Sub-Task Group Action Items IEA study – how should we formalize a relationship with the study Prepare request for resources especially for data gathering and data management Is this a ‘synthesis of studies’ rather than study of studies i.e. debiasing prior studies in search of common perspective Gathering original study material will take time, current plan timeline may need to adjust length assumed for initial due diligence phase (though not necessarily total duration) Technology challenges are not seen as insurmountable in biofuels Pursuit of full and detailed economic analysis and full life cycle analysis would be a significant undertaking Need to provide clear boundaries on the scope of any policy input Issue to address the compatibility / interdependency of fuel components in the fuels mix Assess study input based on set criteria in a similar way to Hard Truths Assess costs DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

24. 04/30/2010 24 Plus Really smart people Very objective discussions Good experience sharing Open dialogue Delta Full time process/conversion resource needed maybe more than 1 for 4-6 months Need overall workflow and timeline clarity Biofuels Meeting 12 th May – Plus / Delta