Global CCS Institute

Regional Meetings

Austin & Calgary

November 2011

Tenaska Trailblazer Energy Center

• Why? Energy Security!

• 600 MW (net) pulverized coal plant

• Post-combustion CO2 capture

– 85 to 90% capture

• CO2 sold for use in enhanced oil recovery (EOR)

– 5.75 million tons/year

– 11.5 million bbls incremental oil production per year

• Total capital cost: $3.5 - $4.0 billion

Why Build in West Texas?

• Permian Basin oil fields

for CO2 use & storage

• Dual rail transportation

• Transmission access

• Highway access

• Texas Legislature

approved incentives

• Community support

Development Milestones

• February 2008 Project Announced

• September 2008 ERCOT Issued Initial Transmission Study

• January 2009 County Tax Abatement

• June 2009 EPC Contractor - Fluor

• March 2010 Arch Coal Purchased 35% of Trailblazer

• June 2010 Funding Agreement with the Global CCS

Institute

• July 2010 Fluor Econamine FG Plus Carbon Capture

Technology

• December 2010 Final Air Permit

• July 2011 Water Agreement with City of Stamford

Lessons Learned

• Global CCS Institute

– 10 Lesson Learned Reports

• Public Engagement

• Infrastructure

• Technology

• Markets

• Financing

Public Engagement

• Establish a local presence to help maintain accessibility

and two-way communication with local residents

• Engage with local, state and federal leaders early in the

development process

• Information sharing is an ongoing process.

• Information must be communicated in multiple formats

• Establish and maintain a good stakeholder list

Infrastructure

• Water is an emotional issue

• Opponents will use to try to stop projects

• Efforts should be made to reduce water usage to

the maximum extent possible

• CO2 transportation and storage have not been

an issue

• Electric Transmission has not been an issue

Infrastructure

Dry Cooling

• Reduces water use by 90%

• Average water requirement of 1 mgd

• Increased capital costs

• Lower O&M costs

• Feasible for Fluor’s Econamine FG+ technology.

• Lowest total evaluated cost

– High cost of water in West Texas is big impact

• Dry cooling nominally doubles the footprint of

the carbon capture plant

Layout Optimization

• Layout optimization can yield significant results

in terms of project cost and schedule.

Layout Optimization

• In-line configuration will result in capital cost

savings of USD$10 million and lower O&M costs

Steam Turbine Sizing

A full-sized steam turbine and condensing capability will

allow the facility to operate in the carbon dioxide capture

mode as well as the full power generating mode without

making any equipment changes

Steam Turbine Sizing

• There is no significant economic advantage for building

the plant with less than full or near-full steam turbine and

condensing capability

Technology Evaluation

• The gas treatment industry is changing rapidly

• Based on its technology evaluation, Tenaska has

confidence that current technology providers can meet

the CO2 capture requirements of Trailblazer

• Look for a technology vendor that has a consistent

scale-up development plan backed by solid

demonstration results.

• There are advantages to selecting a single EPC

contractor/carbon capture technology provider

• Fluor was determined by the 30-year evaluated cost and

commercial experience with the process.

Electric & CO2 Markets

Electric & CO2 Markets

Electric & CO2 Markets

The gap can be filled in one of three ways:

• If oil prices continue to increase, CO2 revenues

potentially could increase enough to bridge the gap

• Electric prices could increase enough to bridge the gap

• Federal policies could change to bridge the gap.

In the future, technological improvements and/or a reduced

risk premium as technology matures also could help bridge

the gap.

Financing

• Careful contracting is essential

– Creditworthy counterparties

– Risk allocated to the party best able to mitigate it

• Equity partners

– Strategic or pure financial

– Tenaska selected Arch Coal, a strategic partner

• An economic reason to capture CO2 and/or federal

support is required

– Cap and Trade

– Tax Credits

– Loan Guarantees

www.tenaskatrailblazer.com