"Coal: Energy for the 21 st Century and Beyond” Gasification and BTU Conversion of Coal

1. "Coal: Energy for the 21st Century and Beyond”Gasification and BTU Conversion of Coal Martin Considine Chris Hagedorn Washington University Chemical Reaction Engineering Laboratory (CREL) “Energy: From Molecular Transformation to Systems” October 25, 2006 BTU

2. Coal: Cornerstone toAmerica’s Energy Security World Oil Reserves May Have Peaked Growing Gas Demand Requires Unrealistic Imports America is Short on Oil & Gas & Very Long on Coal U.S. Coal is the Cornerstone to U.S. Energy Security …For Advanced Power Generation …For Substitute Fuels: Gasoline, Natural Gas & Hydrogen …For the Reindustrialization of America …For Environmental Improvements

3. U.S. is Home to 27%of World’s Coal Reserves The Resource: 27% of the World’s Coal is in the United States

4. Imbalance Forecast in U.S. Gas Supply & Demand Imports Unlikely to Close the Gap 26.9 20.9 22.0 18.2 21.1 21.0 U.S. Consumption (Trillion Cubic Feet) U.S. Production (Trillion Cubic Feet) Source: Energy Information Administration, Annual Energy Review 2003, 1970-2000; Annual Energy Outlook 2006 Reference Case, 2005-2030.

5. High Oil and Gas Prices Magnify Coal’s Competitive Advantage Natural Gas Futures Natural Gas Deliveries Coal Opportunity Oil Coal Deliveries 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Delivered cost of fossil fuel at steam electric utility plants. Source: Platts Fossil-Fuel Receipts at Steam-Electric Utility Plants through June 2005. EIA November 2005 Short-Term Energy Outlook, July – November 2005. NYMEX HH Futures December 2005 – December 2010, ino.com on Dec. 2, 2005.

6. NCC Sees Coal Converted toNatural Gas, Other Energy Sources • Study determined that clean coal technologies are available to turn abundant U.S. coal into multiple energy forms including electricity, natural gas, transportation fuels and hydrogen • By 2025, new capital investments of $515 billion (present value of $350 billion) in Btu Conversion technologies would create: • 100 GW in new generation capacity • 4 TCF of coal-to-natural-gas facilities • 2.6 million barrels per day of coal-to-liquids • U.S. coal production would more than double to 2.4 billion tons of coal per year

7. Southern States Energy Board Sees Coal Converted to Transportation Fuels • SSEB calls for 5.6 million barrels per day of oil from U.S. coal • Would require an additional 1 billion tons per year of production • Bipartisan council includes governors and select legislators from 16 states and two territories

8. Btu Conversion Technologies Expand Markets for Coal STEEL ELECTRICITY INDUSTRIAL GAS PIPELINE SYNGAS SPECIALTY CHEMICALS ETHANOL DIESEL JET FUEL HYDROGEN

9. What is Gasification ? • Gasification is a controlled partial oxidation of fuels, such as coal, to produce primarily carbon monoxide (CO) and hydrogen (H2), called syngas; rather than complete combustion to carbon dioxide (CO2) and water (H20). • Combustion: (Cm Hn) + O2 CO2 + H20 • Gasification: (Cm Hn) + 1/2O2 CO+ H2

10. What Can You do with Syngas ? • Combustion: CO+ H2 + O2 CO2 + H20 (for fuel) • Water Gas Shift: CO + H20 (steam)  CO2 + H2 (for hydrogen and CO2 recovery) • Methanation: CO+ 3H2 CH4 + H20 (for SNG) CO2 + 4H2 CH4 + 2H20 • Fischer-Tropsch: nCO+ 2nH2 (-CH2-)n + nH20 (for diesel and naphtha) + hydro-treating / refining

11. Gasification for Btu Conversion to Gas or Liquids is a Multi Step Chemical Processing Facility Coal-to-BTU Conversion Process Elements Heat Exchanger Gas Cleanup Pipeline-quality Synthetic Natural Gas or Ultra-low Sulfur Diesel / Jet Fuel Methanation Process Or Fischer-Tropsch Process Steam In-plant use of electricity Air Separation Unit

12. Gasification Technology Differences

13. Coal’s Long-Term Markets Expanding from Two to Five Emerging Markets Include Gasification, Liquefaction & Hydrogen

14. Details Regarding Potential Gasification Project Types Indicative BTU Conversion Project Characteristics