OxyFuel Combustion - in a Portfolio of Low Emission Coal Initiatives

Transcription

1 OxyFuel Combustion - in a Portfolio of Low Emission Coal Initiatives Commercial in Confidence Oxyfuel Combustion Conference 2 Sept

2 Disclaimer: This presentation and its contents may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part for any purpose without the consent of Xstrata plc ( Xstrata ). The Directors of Xstrata accept responsibility for the information contained in this presentation. Having taken all reasonable care to ensure that such is the case, the information contained in this presentation is, to the best of the knowledge and belief of the Directors of Xstrata, in accordance with the facts and contains no omission likely to affect its import. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities, or a proposal to make a takeover bid in any jurisdiction. Neither this document nor the fact of its distribution nor the making of the presentation constitutes a recommendation regarding any securities. 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3 1. Xstrata Coal Overview 2. Future Demand for Coal 3. Addressing the Challenge of Climate Change 4. Wandoan CCS/CTSCo 5. Challenges Commercial in Confidence 3

4 Xstrata a global diversified mining group Fourth largest global copper producer Iron Ore Projects World s largest exporter of thermal coal and significant producer of hard coking and semi-soft coal Fourth largest global nickel producer and one of the world s largest producers of cobalt World s largest producer of ferrochrome and leading producer of primary vanadium One of the world's largest producers of refined zinc and zinc concentrates; significant producer of lead Commercial in Confidence 4

5 Xstrata Coal - global operations Xstrata Coal total managed production : 96.5Mt World s largest international exporter of thermal coal Employ >16,000 people globally (incl. contractors) Interests in over 30 operating coal mines: 20 operations in Australia 13 operations in South Africa 1 operation in Colombia New acquisitions in Canada. Xstrata Coal Americas 11 Mt export thermal Xstrata Coal South Africa 11 Mt export thermal 7 Mt domestic thermal Xstrata Coal Australia 8 Mt export coking 7 Mt export semi-soft 33 Mt export thermal 7 Mt domestic thermal 1 includes XC Americas production on consolidated basis (excluding Prodeco) Commercial in Confidence 5

6 Xstrata Coal largest thermal coal exporter Thermal Leading global producer Balanced regional exposure Operational diversification Competitive advantage through marketing network Returns through the cycle Seaborne Traded Thermal Coal 2010 Xstrata Bumi Anglo BHPB Adaro Metallurgical coal Significant position in prime hard coking coal Leading producer of high volatile semi-soft coking coal Potential for high returns BHPB Teck Xstrata Anglo Rio Tinto Traded Metallurgical Coal Source: Xstrata estimates; 1 Production on managed basis (Cerrejon consolidated), excludes Prodeco Commercial in Confidence 6

7 Xstrata Coal - Operations in Australia Employ ~ 8,000 people Potential 4,500 future jobs via new projects. Australian project pipeline of ~A$10bn for additional 50Mtpa. Largest producer in New South Wales Operate Australia s most productive underground mine. Oaky Creek in Queensland. World class growth of coal resources base to 28 billion tonnes and rising XC manage interest in 2 Iron Ore Projects in West Africa. Commercial in Confidence 7

8 Future Demand for Coal Commercial in Confidence 8

9 Coal Production past 30 yrs Mt Global Production Seaborne Trade Share 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: BP Statistical Review of World Energy 2010, XC 9

10 Global coal production and exports Lowest cost, highest quality coal producers dominate seaborne trade Major Coal Producers Country Production - Mt Prod n % China 3, USA India Australia Russia Indonesia South Africa Germany Poland Kazakhstan Colombia 72 1 Canada 63 1 World 6,941 Major Seaborne Exporters Country Exports- Mt Export % China 21 2 USA 50 6 Australia Russia Indonesia South Africa 69 8 Colombia + Ven 76 8 Canada 27 3 World Source: BP Statistical Review of World Energy

11 Coal-fired Build Rate - China and United States 11

12 2010 Seaborne Coal Flows 910Mt Global reach, supporting developed and developing economies # Coal Demand # Coal Exports Reference: Wood Mackenzie June 2010 (coking + thermal coal) 12

13 Seaborne Thermal Demand Forecast Global growth at 4.1%pa is underpinned by; Developing Asia: India, Vietnam, Malaysia and Thailand Southern China domestic supply shortfalls European domestic supply substitution Mt 1,200 CAGR , % % 0% 1.7% 4.9% 2.3% India China Japan South Korea Other Asia Europe Americas Africa & Middle East Source: WoodMackenzie Coal Market Service 13

14 Seaborne Thermal Supply Forecast Global supply potential exists but is highly dependant on Indonesia and Australia Mt 1,200 CAGR , % % 2.9% 2.6% 1.0% Indonesia Australia Russia Colombia South Africa Other China Vietnam Venezuela USA Source: WoodMackenzie Coal Market Service 14

15 Addressing the Challenge of Climate Change 15

16 Xstrata Climate Change Public Position We recognise climate change poses global social, economic and environmental risks that require a global solution We believe that emission reductions from the use of fossil fuels for energy are necessary and achievable We believe that growing global energy demand will mean all forms of power generation will be needed coal, oil, gas, nuclear and renewables Xstrata will address climate change through: A constructive contribution to international and national climate change efforts by engaging with governments and other key stakeholders Understanding, measuring and monitoring our footprint Reducing emissions produced directly from our activities and indirectly from our energy usage Supporting the development and demonstration of emerging mining and low emission technologies for coal Commercial in Confidence 16

17 Global Abatement Task CCS 19% Renewables 17% Nuclear 6% Power generation efficiency and fuel switching 5% End-use fuel switching 15% End-use fuel and electricity efficiency 38% 17

18 Xstrata Coal involvement World Coal Association IEA Coal Advisory Board IEA Clean Coal Centre Australian Coal Association ACALET Global CCS Institute Qld Clean Coal Council Callide Oxyfuel Project FutureGen Project Otway Basin CCS Wandoan CCS Flagship Project Newcastle Uni Institute for Energy & Resources ; Qld & Sydney Uni Masters in International Energy Studies NSW Clean Coal Council ANLEC R &D 18

19 Over A$210M in Low Emission Technologies Includes the following: A$180million contribution (via 20c/t coal levy on production) to industry A$1 billion COAL21 Fund. Callide Oxyfuel Project demo of capture technology. Otway Basin CCS Project demo of injection and storage of CO2 Delta-Munmorah PCC Project demo of capture technology A$10million commitment to USA Futuregen CCS project. A$10million commitment to Wandoan CCS project in Queensland. 100% owned subsidiary CTSCo Project listed under Government s A$1.68 billion CCS Flagship Program Focused on developing large scale deep underground storage (CCS) 19

20 Role for Oxyfuel Technology Xstrata Coal s approach has been to support a range of projects Promote competitive environment to get best/optimal results Number of challenges to large scale demonstration projects in Australia We support oxyfuel because: option for retrofit and new build coal plant currently in demonstration phase of development multiple projects globally developing knowledge base Callide Oxyfuel Project and FutureGen are both key projects for advancing oxyfuel technology towards commercial scale deployment. 20

21 XC Greenhouse R&D Projects Direct Injection Coal Engine Project collaborate with XT, CSIRO and MAN on coal water fuel for direct injections into diesel engines for power generation Bio Char Research Project - use of coal tailings for the creation of Biochar for soils to enhance productivity in agriculture Chemical Looping Project collaborate with University of Newcastle on chemical looping for combustion and gasification of coal (CCS related) Oxyfuel Technology Project collaborate with University of Newcastle to develop further knowledge of Coal Impurity and Gas Quality Control for Oxy fuel Technology (CCS related) Membrane Research Project collaborate with UQ to develop ceramic capillaries from current hollow fibres for the air separation to produce oxygen for the use in Oxyfuel Power Generation (CCS related) Nanotechnology Project collaborate with University of Sydney to develop nano structured sorbent to use in Post Combustion Capture of CO2 (CCS related) 21

22 Xstrata Coal reducing our GHG footprint In 2010 XC GHG emissions were 9.5 million tonnes of CO2e 70% of emissions from underground operations (45% of this is VAM) 30% of emissions from open cut operations In 2010 XC avoided emissions of over 1.1 million tonnes of CO2-e Installed flares at underground operations; R&D into VAM gas abatement Utilisation of waste coal mine gas from Oaky Creek, Teralba and Tahmoor provided additional power generation of up to 31MW. Feasibility project for installing up to an additional 30MW of power generation capacity at Bulga running on waste coal mine gas. 22

23 Xstrata Coal -reducing methane emissions (5%) 23

24 Wandoan CCS/CTSCo 24

25 The Wandoan CCS project (similarities with FutureGen1.0, 2.0?) 10% 10% What we thought... Technical What we have... Technical Approvals 30% 40% Approvals 80% Stakeholder and community 30% Stakeholder and community IGCC with CCS 2.5 million tonnes CO 2 per annum driven by IGCC plant outcomes Industrial scale storage by 2015 Standalone CCS demonstration project separated from industrial scale storage stage 1 million tonnes CO 2 per annum goal driven by industrial scale requirement Demonstrable pathway to industrial scale storage by

26 Xstrata/CTSCo goals Prove up 30 years of CO2 storage capacity at 1Mtpa for CCS Flagship project Demonstrate progressively that more than 100Mt CO2 can be stored safely at a known cost as part of a storage hub Promote competitive environment to get best/optimal results Phase 1- Pre-Feasibility Study ($44M IGCC/CCS) commenced Q $24M for storage PFS modelling from existing data to predict behaviour of CO2 and water; exploration well (EPQ 7) Phase 2 - Feasibility Study Storage: $150M application by 30 Sept 11 under Federal Govt Flagship program drill 4 wells for injection and monitoring; inject 200,000 tonnes CO2 Phase 3- Execution - 1Mtpa injection for a large scale demonstration integrated CCS project 26

27 Potential for CCS in the Surat Basin Suitable geological formations for CO 2 storage in Surat Basin GHG Storage Atlas potential of up to 2900 Mt Substantial amount of existing data and information lots of well and seismic data Collaborative information sharing with Geological Survey of Queensland s CGI program Innovation (e.g. Digital Core Analysis) to speed up proving work and keep costs down Potential for demonstration on Xstrata owned land with no overlapping tenement rights 27

28 Storage target is Precipice Sandstone part of the GAB Regional livelihood s depend on water drawn from the GAB 1000 km circumference Lots of near-surface water data Almost no deep-water data Oil and gas region that is well explored 28

29 Extracting geological trends Outcrops, existing data and Digital Core Analysis. Chinchilla 29

30 Innovation CAT scan of core (well)samples Innovations such as Digital Core Analysis have a significant part to play in reducing, cost, timeframes, risk and communicating pore space concept Cat scan of void ANLEC R&D grant to ANU 30

31 Challenges for CCS in the Surat Basin 47 major resource projects by 2013 (Source: Western Downs Regional Council) Overlapping tenement rights and resource competition 6000 existing CSG wells growing to 40,000 Explaining 5 or 6 CO 2 storage wells with CO 2 storage Strategic Cropping legislation Land Access regime now enacted Community consultation fatigue 31

32 Stakeholder environment is complex and sensitive Concern over Great Artesian Basin water resource contamination Consultation fatigue so many regional projects Well organised active lobby groups in the Surat Coal4breakfast Lock the Gate etc. Need to differentiate as a demonstration project from extensive commercial business developments Funded by governments and associations 32

33 Project support Projects of this kind need support and the project wishes to acknowledge the following parties: 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 Assistance provided also by CO2CRC, CSIRO, ANLEC R&D 33

34 Challenges 34

35 Challenges going forward Lack of conviction around the need for, and the achievability, of CCS The IEA Blue Map (19% CCS) is not understood as a fundamental requirement to achieve 450ppm or 550ppm Global economic challenges & financing how will the demonstration projects be funded? Community opposition how do we overcome community opposition? Government policy making, or lack of - particularly around coal fired power Technological breakthroughs 35

36 Thank You Oxyfuel Combustion Conference 2 Sept