2Co Energy and the Don Valley Power Project

1. 2Co Energy and the Don Valley Power Project Aligning energy and fiscal policy Securing energy, supporting growth November 2011

2. Heritage and Financial backing • Denbury Resources • 1000 miles of pipelines, moving 20MT of CO2 for enhanced oil recovery • Hydrogen Energy • Developed three advanced CCS projects – Peterhead, Abu Dhabi and California • TPG Capital • One of the world’s largest private equity firms with almost $50bn invested 2 the reverse effect

3. The policy conflict Balance sheet versus energy and climate goals 3 the reverse effect

4. Boundary Dam – Saskatchewan, Canada • 1 MT per annum CO2 capture • $1.25 bn capital cost • Low carbon power • CO2 for EOR • Project sanctioned and under construction • Provincial Government owned utility • Government fully funding project and taking on all risks 4 the reverse effect

5. Kemper County – Mississippi, USA • 2 MT per annum CO2 capture • $2.5 bn capital cost • Low carbon power • CO2 for EOR • Project sanctioned and under construction • $600m grants and tax breaks • Federal loan guarantee application • Premium priced electricity mechanism, similar to CFD capable absorbing risks 5 the reverse effect

6. EOR – an opportunity for the UK 3-8bn • Revenue £150-£750bn • Deferred decommissioning £6-£24bn • 6000 -16000 direct jobs retained or created offshore EOR Already Produced 8bn Proven and Probable Reserves 25bn Source: Produced, proven and probable – DECC ‘UK Oil Reserves and Estimated Ultimate Recovery 2011’. EOR estimate – Jon Gluyas, University of Durham 6

7. Don Valley Power Project - multiple benefits Central N Sea EOR CO2 Pumping Don Valley Power Plant 7 the reverse effect

8. Project status • Onshore • FEED complete • S36 awarded • Awarded €180m grant under European Energy Programme for Recovery (EEPR) • NER application in place • Await UK process (CFD) • Transportation • National Grid Carbon • Offshore • EOR feasibility studies on two oil fields underway with Talisman Central N Sea EOR CO2 Pumping Don Valley Power Plant the reverse effect

9. Local relationships and issues • Context: • Local social/economic environment • Unfilled promises • Manage expectations • Stakeholders: • Doncaster Metropolitan Borough Council • Councillors and Town Councils • Local MP • Pressure group • Issues: • Legacy – noise, dust/dirt, phone/TV signals • 2Co – jobs, link road, EOR • Current and future interaction: • Regular but informal and visible • Becoming more formal – Community Liaison Committee etc in future 9

10. Current permitting related activity for Don Valley Power Project • Discharge of planning conditions • Commencement of Development at Stainforth before February 2012 • Permitting of new coal spoil tip site • Environmental permit for power plant • Transportation – National Grid Carbon • Offshore – petroleum production licence as well as storage licence • Pipeline permitting • Leading project for • Yorkshire/Humber cluster the reverse effect

11. National Grid Carbon – onshore pipeline consultation Source: National Grid Carbon

12. Levelised cost of electricity DECC 2013 cost of electricity forecasts • DVPP is a catalyst • De-risking EOR would enable subsequent projects to need no grant • DVPP is fastest route to CCS feasibility DVPP Source: Mott Macdonald for DECC, UK Electricity Generation Costs Update June 2010 12

13. Capital Structure Equity Govt/Official debt - EIB, ECAs, HMG Commercial debt UK Govt (Backing NER and up to £1bn) NER (as grant) EEPR the reverse effect

14. The Don Valley CCS Project is co-financed by the European Union’s European Energy Programme for Recovery. The sole responsibility for this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein. www.2coenergy.com www.donvalleypower.com