DKRW, Medicine Bow and EOR June 2007
DKRW Energy LLC Current Projects DKRW Wind Energy 505 MW operational in TX; 700 MW total under development 132 MW under development in Maine 800 MW under development in Wyoming 300 MW under development in New Mexico Sonora Terminal & Pipeline Nominal capacity: 1.0 Bcf/day EPNG interconnect at border El Paso Corp partner DKRW Advanced Fuels First domestic greenfield Coal-to-Liquids plant 13,100 bpd CTL plant in Wyoming Arch Coal Inc. partner 2 2
DKRW Advanced Fuels LLC VISION To be the world s leading developer of gasification and liquefaction facilities that convert coal and other hydrocarbons into liquid fuels and other market competitive energy products in an innovative and environmentally responsible manner. LEADERSHIP Has a combined 50 years of development experience including $3.0B in project finance and construction of 6,019 MWs. WHOLLY-OWNED SUBSIDIARY Medicine Bow Fuel & Power LLC 3
4 Overview of the CTL Business
Key Drivers of the CTL Business Economics Strong liquid fuel demand & prices Stable coal feedstock prices Energy Security Large coal reserves in key industrial nations Environment Production of low sulfur liquid fuels Sequesterable CO 2 emissions 5
Economics: Strong Demand & High Prices Steadily Increasing World Oil Demand Strong Demand is Keeping Prices Firm World Oil Consumption DOE Oil Forecast 140.00 $140.00 120.00 $120.00 MM Bbls/Day 100.00 80.00 60.00 40.00 $100.00 $80.00 $60.00 $40.00 20.00 $20.00 0.00 $- 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2006 2008 2010 2012 2014 2016 2018 2020 WTI Oil Prices $/BBL 2022 2024 2026 2028 Real 2004 $ Nominal $ Source: US DOE Annual Energy Outlook 2006 The world will consume 40 million more barrels of oil per day by 2030 Strong Asian demand and tight global supplies keep markets firm 6
Economics: Low Coal Feedstock Costs 12 DOE Energy Forecasted Prices ($ per MMBTU) 10 8 6 4 2 0 2007 2009 2011 2013 $ / MMBTU 2015 2017 2019 2021 2023 2025 2027 2029 Crude Oil Coal Source: US DOE Annual Energy Outlook 2006 Coal is projected to have a significantly lower cost than oil over the next 25-30 years BTU arbitrage 7
Energy Security: Coal Reserves Are Huge World Proved Energy Reserves 2005 (TBOE) 21% 21% 58% Coal Oil Gas Source: BP Statistical Review of World Energy 2006 World proved fossil fuel reserves total 5.4 trillion barrels of oil equivalent (TBOE) coal is 58% of this total 8
Energy Security: Sources for U.S. Oil Demand 9 9 Source: DOE Annual Energy Outlook 2007 Non-Aligned with US includes: The Middle East, Russia, Africa, Latin America, China
Energy Security: Hidden Cost of Imported Oil: Defense-related expenditures: Loss of Current Economic Activity: Loss of Domestic Investment: Loss of Government Revenues: Cost of Periodic Oil Supply Disruptions: $137.8 bn 117.4 bn 394.2 bn 42.9 bn 132.8 bn TOTAL HIDDEN COST OF Imported OiL $825.1 BN Source: National Defense Council Foundation 1010
Environmental Benefits of CTL in the Liquid Fuel Market FT Fuels are ultra-low in sulfur reducing SOx emissions Environmental regulators are pushing for limitations on the sulfur content of fuels US sulfur levels in diesel <15ppm by June 2006 Global warming pressures will lead to increased demand for diesel products Diesel engines are technically more efficient than gasoline engines generally producing lower CO 2 per mile driven Gasification process and diesel fuel production help in reducing CO 2 emissions Gasification process captures the pure CO 2 thereby facilitating carbon capture and sequestration 11
The Technology is Proven & Available Coal gasification 31 coal gasification facilities in operation worldwide Fischer-Tropsch Utilized by SASOL in South Africa (CTL) Utilized by Shell in Malaysia (GTL) US technology (Rentech, Syntroleum) Hydrocracking UOP long-term record of success 12
CTL Process Feedstock Conversion Facility Offtake 13
14 The Medicine Bow Project
Medicine Bow Project Participants Arch Coal: Carbon Basin Reserve option General Electric: Gasification license Rentech: Fischer-Tropsch license Sinclair: Liquids off-take agreement UOP: Cleanup / Upgrading Technology Licenses EnGlobal: Owner s Engineer SNC-Lavalin: EPC contractor Citibank: Financial advisor R W Beck: Independent Engineer Wyoming EOR Institute: CO2 Technical Advisor 15
Medicine Bow Fuel & Power Coal Conversion Facility Offtake Secure Coal Resources Technology & EPC Contracts Entered into Option with Arch Coal to purchase coal reserves in Carbon Basin Reserve Enables mine mouth CTL Mine to be built and operated by Arch Permits for surface & continuous mining completed QII 2008 construction start Coal-to-Liquids Plant Gasification (GE) Fischer-Tropsch (Rentech) Hydrocracking (UOP) Alliance Agreement w/ SNC Final permits to construct expected by end of 2007 Air Permit Application Submitted Completing ISA QII 2008 construction start In service 2011 Sinclair to purchase 100% of ULSD, Shipped via pipeline Naphtha Export Power CO 2 (to EOR) Sulfur Chemicals 16
Benefits to the State of Wyoming Investment $2.0+ billion investment Employment Up to 300 full time long-term more jobs 1500 + construction jobs, with 600 avg for 4 years Tax Base and Support Service Infrastructure Increase in local property tax base Existing commercial and industrial business base will expand Future additional commercial and industrial business base Revenues For State of Wyoming Increased oil production revenues from EOR operations 17 using project s CO 2 Other taxes (sales, use, severance, franchise)
Medicine Bow CO 2 Supply in Wyoming Opportunity Initial Supply -Mid-2011 -Up to 120 MMSCFD (6900 TPD) base load capacity Expansion Potential - after 2015-2x 3x Initial Supply Challenges No backbone CO 2 pipeline system and smaller scale CO 2 gathering systems available A consortium of interests industry, state and federal leadership -- will be essential for achieving CO 2 development 18
Growth of CO2-EOR Production in the U.S. 19
Plant Location relative to EOR Project Site 20
Project Location 21
Project Rendering 22
Photo Simulation 23