Commercial in Confidence

CTSCO:a carbon storage solution

Surat Basin Hydrogeology-related Issues3 May 2011

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Wandoan IGCC with CCS

Project summary• Located in Surat Basin, Queensland• Proposed IGCC with up to 90% CCS

(341 MW sent out capacity) • ~2.5Mt CO2 pa, at 1-2 km’s

underground• Project integrates partners’ strengths

– GE IGCC and pre-combustion capture technology

– Stanwell power portfolio experience– CTSCo storage program development

• Fuel supply by Xstrata Coal

Stanwell Corporation & GE Energy

Power Plant & CO2 Capture

Xstrata Coal subsidiary

CO2 Transport & Storage

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Project strengths

Well defined fundamentals:

Operating and warrantied IGCC technology 90% capture capability from day 1 Surat strategy identified early Fuel supply tested and selected Grid Connection Enquiry lodged Water and gas supply available Efficient development spend Commercially fundable Preferred tenderer status for 3 storage tenements

within 200kms (>75Mt)

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Timely proving up of CO2 storage requires innovation

Storage target approachRegional Surat Basin hub potential 2,900 Mt capacity

Non potable aquifer and anticline storage options targeted to reduce risk

Extensive existing seismic and deep well data already available

Targeting best skills with many years specific resource experience

The challenge – to deliver:Faster assessment timeframes

Lower assessment risk

Lower assessment cost

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Go to the Surat Basin

Drill a deep hole

Find some pore space

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Precipice 58-0 Sand Isopach (m)

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CTSCo Objectives

1. To deliver a successful outcome from the CCS Flagship funding = industrial-scale CO2injection demonstration project, that:

– Is technically feasible– Is safe to operate and co-exist with landowners– Causes no environment harm– Is responsive to community concerns– Can help open up the basin for hub storage

2. To enable the Department of Environment & Resource Management (EPA) to issue the necessary approvals to:

– Inject CO2 stream for pilot and long-term injection

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CTSCo Objectives

3. To support the development of an effective Leakage Liability and Legislative regime that underpins the commercial realities

4. Share the information freely

=> Enable all stakeholders to take comfort in the risk, acceptability, liability of CO2 injection at industrial-scale

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CTSCo Strategies1. Understand the technical issues (capacity,

injectivity & containment)– Regional and locally consistent hydrogeological model

that informs the Dynamic Reservoir Simulation – Gaps

• What is the volume of CO2 required to be injected to be “Monitor-able and Verify-able”?

• How will the CCS Operator “show” the plume is contained and not channelling to a leak point?

2. Understand and focus on the concerns of the regulator(s)

– Engage with the Regulators early in the Injection Planning/approvals process

– Gaps• What is the permissible GHG Stream composition?

– BTEX– NOx, SOx etc

• What is the volume of CO2 required to be injected to satisfy regulators?

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CTSCo Strategies

3. Staged and Gated CO2 injection testing with effective M&V toresolve concerns and deliver increasing confidence to all Stakeholders to proceed to industrial-scale storage operations

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CTSCo Hydrogeology - Lessons learned

• Multiple GAB studies done but no common database

• Little integration by “hydro-consultants” between – Shallow groundwater focus – Deep aquifers by “hydro-consultants” (no-one asked about DSTs, correlations etc)

• Unconstrained & out-of-context comments feed concerns of non-technical CCS “gatekeepers”

– Statistics based on number of wells rather than the location in the aquifer (shallow or deep wells)

– Unqualified statements e.g. rate of movement 200m/y to 0.1m/y without saying where or why

• Needs skills that covers deep petroleum data types and shallow groundwater systems

– DST Pressure interpretation– DST water recovery – chemistry QC– Use consistent aquifer correlations

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What do we need?

Dynamic Plume

Hydrogeology

Reactive Chemistry

Geomechanics

Simulation

Dynamic Plume

Hydrogeology

Reactive Chemistry

Geomechanics

Simulation

• Robust linkage between models• At site-specific and regional scale

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What else do we need to do? • Need to gather site-specific data (data gap analysis)

– Water chemistry– Aquifer pressure, temperature– Reservoir and seal lithology, mineralogy

• Need to engage with regulators early– Regional– Site specific

• Need to know how we will demonstrate to regulators the impact of CO2 on aquifers and all potential stakeholders

– Pressure impact– Aquifer chemistry impact– Seal integrity– Extent of actual plume movement versus predicted

• Need the credibility of an expert Third Party (not CCS-aligned) to explain GAB and CO2 storage to Public

• Need to maximise opportunities for co-operation => CGI

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Carbon Geostorage Initiative

• Jonathan Hodgkinson (Geological Survey of Queensland )

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Project support• Projects of this kind need support and the project wishes to acknowledge the following

parties:Wandoan IGCC with CCS funding support

The project has received pre-feasibility funding from the Australian Government (as part of the Clean Energy Initiative), the Queensland Government and the Australian Coal Association Coal 21 fund. The views expressed in this presentation are not necessarily the views of these parties.

Project support– CO2CRC (our lead research organisation)– CSIRO (our principle research organisation in gasification)– Xstrata Coal

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Uniquely Capable Proponents

• One of the world’s leading technology developers • >300,000 people in over 120 countries• 60+ years of gasification experience• GE technology generates >25% of world’s power • Invests >US$2B annually in cleaner technologies

“ecomaginaton”

• Queensland based developer, owner and operator of power generation and coal resources

• 3GW under management and dispatch to the NEM• Vested interest and experience in power and carbon markets

• World’s largest thermal coal exporter and 5th largest miner• Headquarters in Australia• Extensive geological development experience and capability• Major contributor to COAL 21 voluntary industry fund