WrapWrap--Up/An Ammonia Fuel Up/An Ammonia Fuel

Business PlanBusiness Plan

55thth Annual Ammonia Fuel ConferenceAnnual Ammonia Fuel Conference

Minneapolis, September 30, 2008Minneapolis, September 30, 2008

John Holbrook, John Holbrook, AmmAmmPowerPower LLCLLC

John.holbrook@charter.netJohn.holbrook@charter.net

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OverviewOverview

�� ReRe--cap of meetingcap of meeting

�� NewsNews

�� Ammonia Fuel NetworkAmmonia Fuel Network

�� An Ammonia Fuel Business PlanAn Ammonia Fuel Business Plan

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Conference ReConference Re--CapCap�� Excellent attendance and participation (75% more than 2007)Excellent attendance and participation (75% more than 2007)

�� Ammonia transport in NG pipelines w/ carbon sequestrationAmmonia transport in NG pipelines w/ carbon sequestration

�� Validation of lowValidation of low--emission, powerful performance in SI and CI emission, powerful performance in SI and CI ICEsICEs

�� Partial “cracking” to H2 and N2 may offer benefitsPartial “cracking” to H2 and N2 may offer benefits

�� NH3 from OPEC promisingNH3 from OPEC promising

�� NH3 is potential excellent energy storage medium for RE, NH3 is potential excellent energy storage medium for RE, especially stranded REespecially stranded RE

�� Progress in directProgress in direct--ammonia fuel cellsammonia fuel cells

�� Safety issues with storage and use of NH3 understood, and Safety issues with storage and use of NH3 understood, and largely manageablelargely manageable

�� Several avenues for clean, highSeveral avenues for clean, high--volume NH3 production, volume NH3 production, particularly from various RE sources, coal, and nuclearparticularly from various RE sources, coal, and nuclear

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Ammonia Conference Attendance DriverAmmonia Conference Attendance Driver

$4.29

$3.56

$2.84

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Number of Ammonia Fuel Attendees

U.S Avg Price/Gallon Regular

Gasoline at the end of June

eia.doc.gov

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NewsNews

�� Iowa Energy Center GrantsIowa Energy Center Grants

�� Ammonia highlighted in Edwin Black’s “Ammonia highlighted in Edwin Black’s “The The

PlanPlan””

�� Article in Article in thecuttingedgenews.comthecuttingedgenews.com on ammonia on ammonia

will reach 1.4 million viewerswill reach 1.4 million viewers

�� Motor Trend articleMotor Trend article

�� Alaska Renewable Energy FundAlaska Renewable Energy Fund

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Ammonia Fueled VehiclesAmmonia Fueled Vehicles

Rjukan 1933 Ann Arbor 2007

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1959 Fuel Cell Tractor1959 Fuel Cell Tractor

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Ammonia Fuel NetworkAmmonia Fuel Network

�� Established in WA state in 2007Established in WA state in 2007

�� Web site Web site www.ammoniafuelnetwork.orgwww.ammoniafuelnetwork.org –– over over

2000 visits since July2000 visits since July

�� Need Board of DirectorsNeed Board of Directors

�� Need ByNeed By--LawsLaws

�� Need to formalize membershipNeed to formalize membership

�� Need to determine how best to serve Need to determine how best to serve

membershipmembership

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Possible Functions of AFNPossible Functions of AFN

�� LibraryLibrary

�� ForumForum

�� News serviceNews service

�� R&D/feasibilityR&D/feasibility

�� Political ActionPolitical Action

�� EducationEducation

�� Other?Other?

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An Ammonia FuelAn Ammonia Fuel

Business PlanBusiness Plan

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Relevant quote 1 Relevant quote 1 ––

There are three kinds of ball players There are three kinds of ball players ––

those who those who makemake something happen, something happen,

those who those who watchwatch it happen, and those it happen, and those

who who wonderwonder what happened.what happened.

-- Tommy Tommy LasordaLasorda, LA Dodgers, LA Dodgers

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Relevant quote 2 Relevant quote 2 ––

Mr. Holtz, there are lots of people who Mr. Holtz, there are lots of people who don’t don’t knowknow what is going on. But, you what is going on. But, you don’t even don’t even suspectsuspect something is going something is going on.on.

-- High school guidance High school guidance counselercounseler

To Lou Holtz, future football coachTo Lou Holtz, future football coach

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An Ammonia Fuel Business PlanAn Ammonia Fuel Business PlanOutlineOutline

• Financial Plan

• Organizational Plan/Operating Plan

• Management Plan

• Marketing Plan

• Competitor Analysis

• Market Analysis

• Industry Description

• Mission

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• Financial Plan

• Organizational Plan/Operating Plan

• Management Plan

• Marketing Plan

• Competitor Analysis

• Market Analysis

• Industry Description

• Mission

An Ammonia Fuel Business PlanAn Ammonia Fuel Business PlanOutlineOutline

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AFBP MissionAFBP Mission

The ammonia fuel industry will replace The ammonia fuel industry will replace

70% of U.S. diesel generators, 80% of 70% of U.S. diesel generators, 80% of

farm and industrial diesel and gasoline farm and industrial diesel and gasoline

use, and 19.4% of highway use, and 19.4% of highway

transportation petroleumtransportation petroleum--based fuels based fuels

by 2030.by 2030.

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Mission QualifiersMission Qualifiers

�� The U.S. will not import any additional offThe U.S. will not import any additional off--shore, shore, fossilfossil--fuelfuel--based NH3 to accomplish the mission; that based NH3 to accomplish the mission; that would be exchanging an oil dependency for an would be exchanging an oil dependency for an ammonia dependency.ammonia dependency.

�� The U.S. will cease all foreign oil imports by 2030.The U.S. will cease all foreign oil imports by 2030.

�� Green incentives and carbon limits will be in place to Green incentives and carbon limits will be in place to incentivizeincentivize clean alternative fuel production and usage.clean alternative fuel production and usage.

�� The U.S. will pursue a portfolio approach (“fuel The U.S. will pursue a portfolio approach (“fuel democracy”) to solving the fuel problem; numerous democracy”) to solving the fuel problem; numerous fuels, including electricity, will be used to meet the U.S. fuels, including electricity, will be used to meet the U.S. need. There will be no Fuel King.need. There will be no Fuel King.

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Competitor AnalysisCompetitor Analysis

�� ElectricElectric

�� HydrogenHydrogen

�� BiofuelsBiofuels

�� CNGCNG

�� Coal to LiquidsCoal to Liquids

�� DomesticDomestic OilOil

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U.S. Oil ConsumptionU.S. Oil Consumption

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Top 5 U.S. Oil ImportsTop 5 U.S. Oil Imports

Daily imports (% of U.S. consumption):

1. Canada -- 2 million barrels (9.1%)

2. Saudi Arabia -- 1.5+ million barrels (6.8%)

3. Mexico -- 1.4 million barrels (6.4%)

4. Venezuela – 1.2 million barrels (5.5%)

5. Nigeria -- 1.2 million barrels (5.5%)

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2030 Assumptions2030 Assumptions

�� The U.S. will use 25% more total The U.S. will use 25% more total energyenergy for for transportation than it does today (180 billion transportation than it does today (180 billion gallons of gasoline and diesel per year)gallons of gasoline and diesel per year)

�� CNG, CNG, biofuelsbiofuels, and electric energy will each have a , and electric energy will each have a 15% share of the transportation energy market15% share of the transportation energy market

�� DOE’sDOE’s goal of 40 MT of hydrogen goal of 40 MT of hydrogen production/consumption will be achievedproduction/consumption will be achieved

�� Domestic U.S. oil production will drop to 5 million Domestic U.S. oil production will drop to 5 million barrels per daybarrels per day

�� Oil imports will be zero by 2030Oil imports will be zero by 2030

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2030 Transportation Energy2030 Transportation Energy(in billions of gallons gasoline equivalent)(in billions of gallons gasoline equivalent)

Total = 225 billion gge

Ammonia: 43 (19.4%) Hydrogen: 40 (17.8%)

Domestic Oil: 40 (17.8%)CNG: 34 (15%)

Biofuels: 34 (15%) Electric 34 (15%)

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Market AnalysisMarket Analysis

Successful completion of the mission will require:Successful completion of the mission will require:

�� Additional annual U.S. production of ~300 million tons of Additional annual U.S. production of ~300 million tons of NH3 (current world production is ~130 million tons)NH3 (current world production is ~130 million tons)

�� Additional renewable or nuclear electric power of 250 to 400 Additional renewable or nuclear electric power of 250 to 400 GW to synthesize the NH3 GW to synthesize the NH3 oror equivalent amount of natural equivalent amount of natural gas or coalgas or coal

�� ~50 million NH3 vehicle conversions or new NH3 vehicles by ~50 million NH3 vehicle conversions or new NH3 vehicles by 2030 [many of these can be direct ammonia fuel cell vehicles]2030 [many of these can be direct ammonia fuel cell vehicles]

�� Additional distribution and delivery infrastructureAdditional distribution and delivery infrastructure——pipelines, pipelines, rail, trucks, bargesrail, trucks, barges——roughly 50X what currently existsroughly 50X what currently exists

�� Large amounts of water, ~420 gallons for each ton of NH3 Large amounts of water, ~420 gallons for each ton of NH3 produced with electricity [collect water exhaust?]produced with electricity [collect water exhaust?]

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So, What Will This Cost?So, What Will This Cost?

Using WindUsing Wind--toto--Ammonia as an example (i.e. all Ammonia as an example (i.e. all 19.4% ammonia transportation energy comes from 19.4% ammonia transportation energy comes from wind energy converted to ammonia):wind energy converted to ammonia):

�� Capital costs for wind turbines to produce electricity for Capital costs for wind turbines to produce electricity for NH3 = ~ NH3 = ~ $700B+$700B+..

�� Capital equipment costs for domestic windCapital equipment costs for domestic wind--powered powered NH3 synthesis of 300 million tons/year = $160B to NH3 synthesis of 300 million tons/year = $160B to $350B$350B

�� 50 million vehicle conversions at $5K @ would be 50 million vehicle conversions at $5K @ would be ~$250B, or a few dollars less.~$250B, or a few dollars less.

�� 50X additional delivery infrastructure, figure ~$200 50X additional delivery infrastructure, figure ~$200 millionmillion

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Organizational PlanOrganizational Plan

The ammonia fuel industry will require a concerted and The ammonia fuel industry will require a concerted and

coordinated effort (a subsidized effort?), including:coordinated effort (a subsidized effort?), including:

�� Renewable, nuclear, and clean coal/NG sourcesRenewable, nuclear, and clean coal/NG sources

�� Ammonia production facilitiesAmmonia production facilities

�� Storage and delivery infrastructureStorage and delivery infrastructure

�� Converted and new vehicles, farm and commercial Converted and new vehicles, farm and commercial

equipment, and generatorsequipment, and generators

�� Codes and regulationsCodes and regulations

�� Other?Other?

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Financial PlanFinancial Plan�� Who will pay for this?Who will pay for this?

�� PublicPublic

�� Private investorsPrivate investors

�� BanksBanks

�� CompaniesCompanies

�� Federal subsidiesFederal subsidies

�� AnswerAnswer——not sure, at present.not sure, at present.

�� ComparisonsComparisons�� Value of annual 300 million tons NH3 (43 billion Value of annual 300 million tons NH3 (43 billion ggesgges) is $175B to $300B) is $175B to $300B

�� Annual total oil usage of 22 million tons/day is about $1 trilliAnnual total oil usage of 22 million tons/day is about $1 trillionon

�� Current annual U.S. oil imports ~Current annual U.S. oil imports ~$700B$700B

�� Plenty of opportunity for all.Plenty of opportunity for all.

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Thank YouThank You

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BackBack--up Slidesup Slides

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U.S. Ammonia PipelineU.S. Ammonia Pipeline

3000 Miles

Total

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Ammonia Is Easy To StoreAmmonia Is Easy To Store

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Ammonia Delivery InfrastructureAmmonia Delivery Infrastructure

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Ammonia is easy to crackAmmonia is easy to crack

25-35 %2H2O����2H2+O2 [electrolysis]Water

~60%C2H5OH+3H2O����6H2+2CO2Ethanol

~45%CH3OH+H2O����3H2+CO2Methanol

25-30%CH4+2H2O����4H2+CO2Methane

12-15%2NH3����3H2+N2Ammonia

Energy

Lost (or

Cost)

Cracking Reaction to Produce

Hydrogen