Colorado Springs, USA October 04-07, Fausto Ferrari (Speaker) Saipem S.p.A. - Italy. Ivano Miracca Saipem S.p.A. Italy

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1 Gasification Technology Conference 2009 Colorado Springs, USA October 04-07, 2009 Prospects for Gasification in a Carbon Constrained World: A European Perspective Fausto Ferrari (Speaker) Saipem S.p.A. - Italy Coauthor: Ivano Miracca Saipem S.p.A. Italy

2 Index Introduction Gasification Projects Overview Plant Availability CCS Perspective Saipem CCS Experience Conclusion

3 Saipem Global Presence Malaysia 2% Human Resources by Nationality: Others <2% 17% Algeria 2% Nepal 2% UK 2% Saudi Arabia 2% Italy 18% Russia 3% Angola 3% Perù 4% India 10% Nigeria 8% Philippines 8% Kazakhstan 7% France 7% Venezuela 5% 37,990 December 31, Nationalities Paris Milan Fano Operating and Engineering i Hubs Engineering Centres Yards & Main Logistic Bases Other Main Areas and Representative Offices Chennai

4 Saipem Financials Revenues (M ) New Contract Acquisitions Backlog H H H2009 Offshore Saipem Group Business Units Drilling Offshore Onshore Onshore

5 Introduction Topics: Learning curve in design, construction and operation of IGCC High Availability of IGCC plants >90% Experience & Lesson learned CCS application to gasification Economics of CCS CCS activities in Saipem

6 Gasification Plant Contract Summary Client ISAB Sarlux Eni-EniPower Contract type LSTK LSTK LS Scope of work EPC EPC EPC Contractor(s) SP(50)/FWI(50) SP(58)/GE(42) SP Licensor(s) GE(Texaco) GE(Texaco) Shell Dow/Lurgi UOP/Lurgi Dow/UOP Detailed eng. SP/FWI SP SP Construction SP/FWI SP SP POWER BLOCK Ansaldo Industria GE AnsaldoEnergia

7 Projects Overview Summary SARLUX (~550 MWe) ISAB Energy (~560 MWe) ENI (~250 MWe) - Feedstock: VVR(Tar) - Feedstock: Asphalt - Feedstock: VVR(Tar) - GE(Texaco) quench - GE(Texaco) quench - Shell radiant cooler - Low pressure (38 barg) - High pressure (67 barg) - High pressure (62 barg) - Physical SRU (Selexol-UOP) - Hybrid SRU (MDEA-Dow) - Hybrid SRU (MDEA-Dow) - Sulphur tail gas recycled - Sulphur tail gas to incinerat. - Ni-Carbonyls removal - Hydrogen (Membr.+PSA -UOP) - Expander - Hydrogen (Membr.+PSA) - 3 x STAG109E (GE/NP) - 2 x V94.2 (Siemens/Ansaldo) - 1 xv94.2k(siemens/ansaldo) - 3 gasif.trains + 2 LTGC etc. - 2 gasif. + 1 LTGC etc. - 2 gasif. + 1 LTGC etc. - Comm. op.: Jan Comm. op.: April 2000 Comm. op.: July 2006

8 Projects Overview ENI IGCC Eni Gas & Power EniPower Natural gas (12.5 km new pipeline) Ansaldo-Siemens V94-3A.2 (400 MW) Eni Refining & Marketing Ansaldo-Siemens V94-3A.2 (400 MW) H2 Gasification i plant 50 t/h Tar Syngas Ansaldo-Siemens V94-2K (250 MW)

9 Projects Overview ENI IGCC PPU SYNGAS CCU CCU TAR FU UELGAS CW HYD DROGEN TA AIL GAS ACI ID GASES BD Refinery MPS DW BD (FIRE WATER, IW, WATER TREAT., IA, SIGNAL EXCH., etc.)

10 Plant Availability Syngas Production 100% 90% 80% 70% ISAB Energy start-up % SARLUX start-up % 40% ENI R&M start-up % 20% 10% 0% I II III IV V VI VII VIII Year of commercial operation

11 Shutdown Duration Distribution ISAB Energy gasification ENI R&M gasification External 24% Planned 23% Instrumentation 14% External, 16% Planned, 36% Mechanical 4% Common part, 5% Operational, 1% Instrumentation, 4% Common part 19% Operational 16% Mechanical, 38% period: period:

12 Gasification Saipem gasification plants have reached 94% of availability First year of operation availability enhanced to 74% First year performance to be increased implementing feedback and lesson learnt to get 90% of availability during the first year Such results can be extended to coal gasification

13 Gasification + CCS Next step: gasification + CCS Many countries (EU, USA, Australia, Canada, New Zealand, Japan) has introduced CO 2 emission limit and/or capture & sequestration economic bonus CCS application will develop following stringent trend of emission reduction regime Gasification is the natural technology for CCS concept application since pure (and dried) CO 2 can be easily separated All major components of CCS technically proven and referenced (shift & AGR unit, CO 2 compression and liquefation, transportation & storage) Storage and pipeline are the key factor for CCS economics

14 Hydrogen From Gasification NITROGEN H2 from gasification + CCS Process Block Diagram SULPHUR AIR AIR SEPARATION UNIT OXYGEN ACID GAS SULPHUR RECOVERY GASIFICATION & ACID GAS FILTRATION SHIFT & CO2 PSA REMOVAL HYDROGEN FEEDSTOCK FEEDSTOCK HANDLING SLAG / ASH SLAG & ASH TREATMENT CARBON DIOXIDE COMPRESSION & LIQUEFATION TRANSPORTATION HYDROGEN FILTER CAKE = unit added for CCS application INJECTION & STORAGE

15 Power From Gasification Power from gasification + CCS Process Block Diagram AIR NITROGEN AIR SEPARATION UNIT OXYGEN ACID GAS SULPHUR RECOVERY SULPHUR GASIFICATION & ACID GAS FILTRATION SHIFT & CO2 SATURATION REMOVAL POWER FEEDSTOCK FEEDSTOCK HANDLING SLAG / ASH SLAG & ASH TREATMENT CARBON DIOXIDE COMPRESSION & LIQUEFATION FILTER CAKE TRANSPORTATION = unit added for CCS application INJECTION & STORAGE = unit modified for CCS application

16 CCS Economical Impact /kg CO 2 (low) /kg CO 2 (high) Notes Gasification to CO2 delta cost: LOW case= Hydrogen Availability of storage ready to Gasification to be fed and the short power transportation distance Natural gas to power Cost includes Capex and Opex 1 Mt/year CO2 case study based on in-house data Location: Italy

17 Gasification + CCS European policy European enviromental policy based on Emission Trading Scheme (ETS) ETS applied to european industrial and energy installations (nationals quotes decided by centralized authority) Allowances are allocated to industrial operators (CAP) New stringent policy for to be set on december 2009 (deviation foreseen) Operators within ETS limit can trade the allowance CAP will decrease starting 2012 increasing the price of carbon trade

18 CCS Perspective Emissions vs EU Cap Trend O2 Mt C EU CAP Emissions

19 40,0 35,0 30,0 0 25,0 20,0 15,0 10,0 0 5,0 0,0 CCS Perspective CCS economical impact vs EUA EUA CCS (H2 plant) - low case CCS (H2 plant) - high case CCS (power plant) - low case CCS (power plant) - high date case /01/ /05/ /09/ /09/ /10/ /11/ /12/ /01/ /09/200 02/01/ /05/200 /kg CO2

20 CCS Perspective CCS applied to gasification is sustainable due to european (and other countries) carbon emission policy CO2 emissions price forecast stable in future at high level due to limitation in GHG emission Capex difference between NGCC and IGCC reduced d with CCS implementation ti High impact of transportation and storage on CCS economics o cs Availability of onshore, exhausted wells close to the plant will drop the capex of CCS

21 CCS: Saipem Experience Saipem built experience on the whole chain of CCS supporting ENI in the preparation of the CO2 injection in Cortemaggiore: scheduled start in Saipem services included: o Modeling / simulation of the diffusion of injected CO2 in the reservoir using an in-house software (TMGAS). o Modeling / simulation of CO2 interaction with the caprock and the wellbore cement using software validated on experimental results. o Coordination of caprock integrity studies to evaluate the risk of leakage. o Design /installment of a sub-surface surface tool for continuous monitoring of CO2 o Design of the surface facilities for storage/injection of CO2

22 CCS: Saipem Experience evolution of the CO2 plume in the reservoir in 2 years Start of CO2 injection on 2010: o Three years of CO2 injection o Two years of monitoring

23 Conclusion Lack of gasification plant availability was a significant hindrance for the gasification application in the power industry. Saipem has reached over 90% of availability on 3 IGCC plants in Italy for a total of 1.4 GWe installed Same results can be achieved in coal gasification: 90% of availability starting from first year of operation is a reachable target The next step of gasification is represented by the CCS implementation to permit the respect of new GHG emission policy of many countries The application of CCS would increase the cost of gasification products (power and hydrogen) to be recovered trading the CO2 allowance developed due to new environmental policy

24 Conclusion In European Community the forecast is to have CO2 emission price covering the investment for CCS unit starting 2013 Transportation ti and storage represent an opportunity to reduce the capex and increase the economics of such technology Saipem has a complete and wide experience acting as a complete EPC contractor from gasification to CO2 storage passing through capture and transportation.

25 THANKS TO: Claudio Allevi, Sarlux Roberto Lavecchia, ENI Power; ; Raffaella Lucarno and Claudio Zanelli, ENI R&M; G.Guarino and Daniele Castiglia, ISAB Energy;

26 THANK YOU S SA Fausto Ferrari Gasification Technology Manager Phone: Fax: fausto.ferrari@saipem.eni.it