The COThe CO22 Enhanced Oil Recovery Enhanced Oil Recovery SSStoryStory

Tim BradleyTim BradleyPresident Kinder Morgan CO2 CompanyPresident Kinder Morgan CO2 Company

OutlineOutlineOutlineOutline

11 COCO22 Enhanced Oil Recovery OverviewEnhanced Oil Recovery Overview1.1. COCO22 Enhanced Oil Recovery OverviewEnhanced Oil Recovery Overview–– Oil Field Development SequenceOil Field Development Sequence–– US: Current and Future US: Current and Future

2.2. A Deeper LookA Deeper Look–– How it worksHow it works–– How its doneHow its done

3.3. Safety and EnvironmentalSafety and EnvironmentalO T k R dO T k R d–– Our Track RecordOur Track Record

A Representative Oil Field Development Sequence

Primary Secondary CO2 EOR

121416

81012

468

15-25% OOIP

10-15% OOIP

024

10-20% OOIP

00 5 10 15 20 25 30 35 40 45 50

US Active CO2 EOR Projects

75100125 Domestic CO2 EOR Achievements

US EOR CO2 D li i MMCF/d

0255075

1984 1988 1992 1996 2000 2004 2008Over the past 30+ years, the oil and gas

industry has:US EOR CO2 Deliveries, MMCF/d

3000

W i MississippiN. Dakota

– Produced and injected more than 10.8 TCF of CO2 from 7 sources.

• 1.2 TCF of which came from sources that otherwise

1000

2000

Permian Supplies

Wyoming Mississippiwould have been vented.

– Constructed over 3100 miles of CO2 mainline pipeline systems.

US EOR Oil Production, B/D

800000

01972 1977 1982 1987 1992 1997 2002 2007 – Produced in excess of 1.2 billion barrels of

incremental oil.

200000

400000

600000

Chemical

Other Gas

Thermal

– Secured operating practices of:• Corrosion management, Metallurgies, Elastomers• Separation, Dehydration and Hydrocarbon extraction• Compression/pumping• Injection and production well completion and

0

200000

1984 1988 1992 1996 2000 2004 2008

CO2

Injection and production well completion and operation

Sources: Oil & Gas Journal, Personal Knowledge

U.S. CO2 EOR Business

Rockies potential demand: 0-1.7 BCF/DIlli i t ti l d d 0 0 4 BCF/D

Currently injecting 2.5 BCF/d

MaineMaine

MassachusettsMassachusetts

MinnesotaMinnesota

MontanaMontana New HampshireNew Hampshire

N Y kN Y kOregonOregon

VermontVermont

WashingtonWashington

Wi iWi i

North DakotaNorth DakotaGreat Plains Coal Plant

Illinois potential demand: 0-0.4 BCF/D

Potential U.S. EOR CO2 Consumption:

ColoradoColorado

ConnecticutConnecticut

DelawareDelaware

IdahoIdaho

IllinoisIllinois IndianaIndiana

IowaIowa

MarylandMaryland

MassachusettsMassachusetts

MichiganMichigan

NebraskaNebraskaNevadaNevada

New JerseyNew Jersey

New YorkNew York

OhioOhio

PennsylvaniaPennsylvania

Rhode IslandRhode IslandSouth DakotaSouth Dakota

UtahUtah

W Vi i iW Vi i i

WisconsinWisconsin

WyomingWyomingLaBarge

2 p

13.5 Bcf/dor

0 26 GT CO /yr

AlabamaAlabama

ArizonaArizonaArkansasArkansas

CaliforniaCalifornia KansasKansas KentuckyKentuckyMissouriMissouri

New MexicoNew Mexico

North CarolinaNorth CarolinaOklahomaOklahoma

South CarolinaSouth CarolinaTennesseeTennessee

VirginiaVirginiaW. VirginiaW. Virginia

MississippiMississippi

McElmo Dome Sheep Mountain

Bravo Dome

0.26 GT CO2/yr

Domestic EOR could reduce U.S.

AlabamaAlabama

FloridaFlorida

GeorgiaGeorgia

LouisianaLouisianaTexasTexas

MississippiMississippi

Jackson Dome

CA potential demand: 0-2.9 BCF/D

emissions by 4%

PETRA 12/1/99 10:10:02 AMPETRA 12/1/99 10:10:02 AM

TX, LA potential demand: 1.3-8.5 BCF/DSource: ARI/DOE Feb 2006

CO2 EOR Expected to be ~25% of US Oil Production by 2030

67

456

Million Barrels

CO2 EOR

123

Barrels per Day

01

2006 2011 2016 2021 2026006 0 0 6 0 0 6

Source: AEO 2008

EOR Process Diagram-

CO2 is produced from 8,500’ wells in SW Colorado

CO2 and the

High Pressure & High Purity CO2 is d i d d f th d til

entrained oil from

producer wells in the

oil field-

dried and further compressed until in supercritical phase (“liquid”)

CO2 is re-injected into the oil bearing

formation

oil field

Oil is separated and70

00 F

EET

CLOSED SYSTEM

CO2 is then pumped to 2200 lbs pressure into a 30” pipeline

system

~ 3500’ – 9000’

Below the surface

separated and the CO2 is

returned to the injection wells

7

CO2 is metered into the oil field

-

CO2 Enhanced Oil Recovery: Process Schematic• CO2 mixes with oil much like turpentine cleans paint from a brushCO2 mixes with oil much like turpentine cleans paint from a brush

• Inter-phase mass transfer typically yields NGL rich gas production

• CO2 produced with the oil is captured dehydrated and reinjected - a closed systemCO2 produced with the oil is captured, dehydrated, and reinjected a closed system

• Chase water injection helps control mobility and gas recycle

CO2 Enhanced Oil Recovery: Animation

A Representative* Permian Basin CO2 EOR Project

2 0

300

CO2 Purchases Recycled CO2 WaterVolumetric Summary

Original Oil In Place: 600 MMB67 MMB EOR 11% 400 BCF purchased

150

200

250

~16 Mcf/b

W/G ~ 1.4

67 MMB EOR 11% 400 BCF purchased Net CO2 Utilization 6 Gross CO2 Utilization 15.8

Economic SummaryCapex: 8% of oil price per bbl

0

50

100

0 5 10 15 20 25 30

~6 Mcf/b

CO2 Cost: 2.5% of oil price per MCFPayout: 5 yearsIRR: 20%

0 5 10 15 20 25 30

121416

800

1000

1200

Cum. Cash Flow

468

10

Oil Production0

200

400

600

0 2 4 6 8 10 12 14 16 18 20 22 24

Annual Cash FlowCum. Disc. Cash Flow

024

0 5 10 15 20 25 30

Oil Production

-400

-200 0 2 4 6 8 10 12 14 16 18 20 22 24

Year

•Not necessarily typical

Environmental, Health, and Safety:

Myths:CO2 is toxicCO2 is toxic

•Its in the air we breathe and does not explode

•The operating risks include corrosion, high pressure, and asphyxiation – all of which have been successfully controlled by the industry for nearly 40 years

CO O fCO2 EOR results in significant releases to the environment

•Our EOR operations emitted 0.3% of the total volume of CO2 we handled in 2008•Key causes for releases: Routine maintenance and power outages caused by stormsKey causes for releases: Routine maintenance and power outages caused by storms

•Our source operations emitted .004% of the volume we produced in 2008•Key cause for releases: Routine maintenance

•Our reportable emissions on our 1300 miles of pipe in 2008 was .000035% (equivalent to emissions from 2 vehicles during the same time frame)

CO2 Enhanced Oil Recovery - Recap

It has reduced oil imports, and could generate ~25% of domestic production in 2 decades

•Uses existing footprint versus green-field developments

The environmental and safety track record in source, pipeline and EOR y p poperations is commendable

•CO2 releases to the atmosphere represent a tiny percent of the total volume involvedvolume involved

The operating practices to drill and complete wells, install needed piping, and construct required gas processing facilities has been successfullyand construct required gas processing facilities has been successfully deployed by the industry for nearly 40 years

•The technologies developed since the ‘70’s have paved the way for CCSCCS