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DKRW, Medicine Bow and EOR

June 2007

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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

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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

DKRW Advanced Fuels LLC

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Overview of the CTL Business

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− 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 CO2 emissions

Key Drivers of the CTL Business

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World Oil Consumption

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

MM

Bbl

s/D

ay

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

Strong Demand is Keeping Prices FirmSteadily Increasing World Oil Demand

DOE Oil Forecast

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

WTI

Oil

Pric

es $

/BBL

Real 2004 $ Nominal $

Economics: Strong Demand & High Prices

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Coal is projected to have a significantly lower cost than oil over the next 25-30 years—BTU arbitrage

Source: US DOE Annual Energy Outlook 2006

Economics: Low Coal Feedstock Costs

DOE Energy Forecasted Prices($ per MMBTU)

0

2

4

6

8

10

12

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

$ /

MM

BTU

Crude Oil Coal

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World proved fossil fuel reserves total 5.4 trillion barrels of oil equivalent (TBOE)–coal is 58% of this total

Source: BP Statistical Review of World Energy 2006

Energy Security: Coal Reserves Are Huge

World Proved Energy Reserves 2005 (TBOE)

58%

21%

21%

CoalOilGas

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Energy Security: Sources for U.S. Oil Demand

Source: DOE Annual Energy Outlook 2007Non-Aligned with US includes: The Middle East, Russia, Africa, Latin America, China

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Energy Security: Hidden Cost of Imported Oil:

−Defense-related expenditures: $137.8 bn−Loss of Current Economic Activity: 117.4 bn−Loss of Domestic Investment: 394.2 bn−Loss of Government Revenues: 42.9 bn−Cost of Periodic Oil Supply Disruptions: 132.8 bn

TOTAL HIDDEN COST OF Imported OiL $825.1 BN

Source: National Defense Council Foundation

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Environmental Benefits of CTL in the Liquid Fuel Market

− FT Fuels are ultra-low in sulfur reducingSOx 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 CO2 per mile driven

− Gasification process and diesel fuel production help in reducing CO2 emissions• Gasification process captures the pure CO2 thereby facilitating carbon capture and sequestration

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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

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CTL Process Feedstock ConversionFacility Offtake

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The Medicine Bow Project

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− 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

Medicine Bow Project Participants

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Secure Coal Resources Technology & EPC Contracts

Medicine Bow Fuel & Power

− 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− CO2 (to EOR)− Sulfur− Chemicals

Coal ConversionFacility

Offtake

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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 using project’s CO2

• Other taxes (sales, use, severance, franchise)

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Medicine Bow CO2 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 CO2 pipeline system and smaller scale CO2

gathering systems available• A consortium of interests – industry, state and federal leadership -- will be essential for achieving CO2 development

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Growth of CO2-EOR Production in the U.S.

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Plant Location relative to EOR

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Project Site

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Project Location

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Project Rendering

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Photo Simulation

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