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CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012
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CONSOL Energy R&D – Steven Winberg, Vice President – Global CCS Institute Regional Meeting Washington DC – January 2012

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  • 1. Global CCS InstituteSteven WinbergVice PresidentCONSOL Energy R&DJanuary 19, 2011 1
  • 2. Topics• Summary of CONSOL Energy Inc.• Global Energy• Climate Goals• Path Forward• CCUS Challenge 2
  • 3. About CONSOL Energy• Founded in 1864• $5.2 billion revenue• Member – Fortune 500; S&P 500• Largest underground coal producer in the U.S.• Largest natural gas producer in Appalachia• 12 active mining complexes in four states, including the largest underground mines in the world• 4.4 billion tons of proven and recoverable coal reserves• 6 natural gas operations across the U.S., spanning 7 states, with a net total of 12,500 wells• Private R&D facility working with U.S. DOE and others on advanced technology for coal and natural gas production and utilization• Over 9,000 employees 3
  • 4. Topics• Summary of CONSOL Energy Inc.• Global Energy• Climate Goals• Path Forward• CCUS Challenge 4
  • 5. View on EnergyThere is no Global energy crisis • Energy resources are widely distributed across the globe • Coal 120 years • Oil 174 years • Natural Gas 112 years • Affordable energy is available • Our past energy “crises” were political maneuvering and/or regulatory misstepsThere is a Global energy distribution crisis • Billions of people are suffering from lack of energy 5
  • 6. 6
  • 7. Topics• Summary of CONSOL Energy Inc.• Global Energy• Climate Goals• Path Forward• CCUS Challenge 7
  • 8. View on Climate Goals Solving the energy distribution crisis creates challenges with climate aspirations • Developing countries are on an energy growth path that likely will accelerate • Many of the global climate goals do not appear to be achievable • Blue Map • 450 ppm • Obama goals • Fossil energy will continue to play a prominent role beyond 2050 • It took 130 years to build the existing electricity infrastructure – Completely turning it around in 20 - 40 years does not appear practical There is a lot of money betting on the developed/developing economies reducing GHG emissions • That money will not go away • Alternative energy sources need higher energy prices to compete Without CCS, there is no meaningful reduction in CO2 emissions but….. CCS is too expensive in this market. 8
  • 9. Obama’s Clean Energy Standard Biomass 1% Current CES mandates 80% of electricity Other from “clean” sources by 2035. 2% Wind Natural gas gets ½ a “clean credit” 2% Coal Hydro 7% 45% EIA forecast: • Coal generation decreases by 46% Nuclear • Natural gas increases by 30% 20% Gas • CO2 emissions reduced by more than 50% 23% • Average electricity price increases by 29% This coal Biomass With CES must have But what if…. 5% ~90% CCS Other • Wind only doubled and nuclear stayed at 4% Wind 20% or biomass did not grow or “other” 6% Hydro Coal did not materialize? 20% 7% • And gas took up the 5% slack Nuclear • THERE IS NO ROOM FOR COAL, Gas 23% 35% WITHOUT ALSO EMPLOYING CCS ON NATURAL GASSource: National Mining Association 9
  • 10. Global CO2 emission (power generation) relative to the 2009 fuel mix in the New Policies Scenario 24 More efficient plants Gt 22 Nuclear Hydro 20 Biomass 18 Wind Other renewables 16 CCS 14 2009 fuel mix 12 New Policies Scenario 10 2010 2015 2020 2025 2030 2035 10Source: IEA WEO 2011
  • 11. US per Capita CO2 (eq) Emissions in 2006 vs. Obama’s 83% Reduction Goal for 2050 11Source: EPA presentation to 2011 Pittsburgh Coal Conference
  • 12. Topics• Summary of CONSOL Energy Inc.• Global Energy• Climate Goals• Path Forward• CCUS Challenge 12
  • 13. Path ForwardRecognize the limitations • Tightening federal budgets • Industry willing to manage projects but funding is a challenge • Low cost power market 13
  • 14. New Power Generation Costs vs. Current Market $45/MWH PJM *34% Capacity Factor Source : Energy Information Administration, Annual Energy Outlook 2011, December 2010, DOE/EIA-0383(2010) 14
  • 15. Path Forward Recognize the limitations • Tightening federal budgets • Industry willing to manage projects • Low cost power market Harvest the low hanging fruit • Improve average fleet efficiency • Make sure we use existing funding • Generate revenue through EOR 15
  • 16. Efficiency Improvements = CO2 Emissions Reductions 16Source: World Coal Association
  • 17. FutureGen Project FutureGen 2.0 represents one of the world’s best prospects for a fully integrated near-zero emission project • Oxy-combustion – new build or retrofit • Minimum 90% capture on the entire plant • CO2 pipeline network • CO2 storage hub in deep saline formation Positioned for success • >$1 billion in funding firmly allocated • Right partners with the right expertise • Strong community support • Liability management framework 17
  • 18. Topics• Summary of CONSOL Energy Inc.• Global Energy• Climate Goals• Path Forward• CCUS Challenge 18
  • 19. Current EOR Market35 – 50 Billion barrels of EOR PotentialCurrent EOR = 100 M bbl/yrCurrent CO2 use = 115 M tonnes • 65 M tonnes new • 50 M tonnes recycled 19
  • 20. Potential EOR MarketAssumptions:1. Initial production = 100 M bbl/yr2. Increase rate = 10%3. Total EOR production = 45 B bbl 20
  • 21. Hypothetical EOR “Build-out” Increase Time 21 yrs Level Time 30 yrs Decrease Time 29 yrs TOTAL 80 yrs Max Capacity 41 GW Time to 10 GW 10 yrs Max Prod. .83 Bbbl/yr 21
  • 22. Anthropogenic CO2 Sources CO2 Source CO2 Cost CO2 Available EOR Cumulative ($/tonne) (MTPY) Potential * (Mbbl/y) (Mbbl/y)Natural $7-30 55 158 158NG Processing $37 10 29 187Hydrogen $39 .2 .5 188Refineries $39 16 46 233Ammonia $40 4 12 245Ethanol $42 17 50 295Cement $81 20 59 354Power Plants $113 1149 3,283 3,637* Assume 0.35 tonne CO2/bblSource: EIA 22
  • 23. Coal-based CO2 demand based on shortfall in CO2 supply from non-coal sources(10%/y EOR growth, 75% utilization of EIA non-power plant CO2) ~32 GW ~10 yr. Pushback 23
  • 24. CO2 Value vs. Lost Power Revenue 120 100CO2 Value ($/tonne) 80 60 40 20 Current CO2 Cost Range 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 Revenue for Lost Power ($/MWH) 24
  • 25. University of Wyoming Study – Oil Price vs. CO2 Price $76/tonne $28/tonne$100/bbl$40/bbl“Pegging Input Prices to Output Prices in Long-Term Contracts: CO2 Purchase Agreements in Enhanced Oil Recovery”, Klaas van ’t Veld and Owen 25R. Phillips Department of Economics & Finance Enhanced Oil Recovery Institute University of Wyoming, July 2009.
  • 26. Crude Oil Price AEO price for WTI in 120 2020 ($108) Crude Oil Price, 2010 $/bbl 100 Current mkt price 1/18 ($101) 80 60 Five-year rolling 40 average ($78) 20 WTI spot price, FOB* 0 1986 1991 1996 2001 2006Source: DOE NETL 26
  • 27. Return on RD&D Case 1 Case 2 Case 3 Case 4CO2 capture cost reduction, $/tonne $ 10 $ 15 $ 20 $ 25RD&D Cost/ $MM/yr. $ 500 $ 500 $ 500 $ 500RD&D Duration, Yrs. 10 10 10 10EOR production increase rate, %/yr. IRR 5.0% 8% 10% 11% 12% 7.5% 12% 14% 16% 17% 10.0% 15% 15% 17% 18% 15.0% 21% 27% 31% 35% 20.0% 28% 36% 43% 49% 25.0% 35% 46% 55% 63% Carbon Capture cost reduction creates positive return on RDD&D investment, but somewhat diminished by pace of EOR expansion 27
  • 28. Final Thoughts….. Fossil fuel industry needs to step back and reassess Climate goals • Focus on efficiency • Focus on remaining CCS demonstration projects CCUS • There is not enough natural CO2 available to produce all the available EOR potential • Natural CO2 and EOR opportunities vary regionally • CCUS has enormous potential benefits; - Expand oil reserve base - Reduce anthropogenic CO2 emissions • Need to better understand; - Cost of CO2 Capture - Naturally occurring CO2 cost & availability • Need to perform RD&D to reduce cost of capture • Likely, need to consider tax credits or other government subsidies to jump start CCUS 28
  • 29. Global CCS Institute Questions? Steven Winberg Vice President, CONSOL R&D January 19, 2011 29

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