Altona Cogeneration Project

1. Altona Cogeneration Project

2. Qenos – A Strategic Business • As Australia’s sole manufacturer and leading supplier of polyethylene (PE), Qenos is the cornerstone of Australia’s petrochemical and plastics industry • Primary focus on the Australian domestic PE market • Products supplied to hundreds of plastics fabricators • Manufacturing facilities at Altona (Vic) and Botany (NSW); • Through the conversion into high value chemicals rather than use as fuel, Qenos adds significant value to ethane and LPG from Bass Strait (Vic) and ethane from the Cooper Basin (SA) • Owned by China National Bluestar Group (Joint Venture) • 80% China National Chemical Corporation • 20% The Blackstone Group • Annual Turnover A$700M-A$900M

3. Background • Qenos manufacturing (steam cracking) process requires significant amount steam and electricity • 180 tph steam and 16 MW at Altona (Similar at Botany) • Past cogeneration evaluations not economic • Capital cost to install has been a barrier • Electricity and Gas prices expected to rise • Uncertainty over carbon cost

4. Background Drivers • Energy efficiency. • Reduced energy costs. • Mitigation of future carbon costs. • Sustainability leadership. • Footprint reduction. • Customers • Community • Operational reliability • Power and steam outages costly. • Avoided capital expense • Can retire one boiler that would need significant refurbishment

5. Barriers • Capital availability for a Qenos project. • Network access. • Fault levels. • Ability to secure long term feedstock supply contracts. • Now have at Altona • Availability of natural gas (HP). • High reliability required for steam and electricity for facilities. • Need seamless back up for electricity and steam supply

6. Proposal • AGL to build and operate at Qenos with 15 year agreement. • 21MW with an 88 tph Heat Recovery Steam Generator with supplemental duct firing. • One Qenos boiler shutdown avoiding capital outlay. • Huntsman Ethane line being used as a HP natural gas line avoiding significant cost. • Built on Qenos property close to steam system to minimise tie in costs • Existing Qenos utilities to support cogeneration

7. Issues • Works Approval needed by AGL. • Meeting noise requirements difficult with N1 regulations already exceeded. • Network connection cost high.(Est $4m). • Economics marginal

8. Benefits • Approximately 100 KTCO2e annual abatement. • Reduction in flaring associated with utility failures. • Reduction of CO and NOX emissions. • Continuity of utility supply during grid outages • Reduction of productivity losses. • Reduced energy costs. • Synergies with the Altona revamp project

9. Cogeneration Facility Schematic (courtesy AGL)