Investor Presentation1

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Investor Presentation1

  1. 1. WELL POWER ENERGY LLC Re-Completing Gas Wells In Mississippi and Texas Using Linear Driver Technology Frank Smith, President Sologen Systems LLC January 12, 2010
  2. 9. WHY IS THE INTERNATIONAL PRESS INTERESTED IN A GEOTHERMAL PROJECT IN TEXAS?
  3. 10. GENERATION TECHNOLOGY COMPARISON Source: CPS Energy, August 10, 2009 (geothermal added) Traditional Generation Renewable Generation NUCLEAR COAL GAS WIND SOLAR THERMAL GEO THERMAL Targeted Generation Baseload Baseload Baseload & Peak Variable Variable Baseload Total Cost Per MW $4.8 M $3.2 M $0.9 M $2.5 M $11.4 M $0.75 M Fuel Cost /MM Btu $0.80 $2.40 $8.60 $0.00 $0.00 $0.00 Capacity Factor 85% 85% 50% 34% 41% 90% Cost of Electricity 8.5¢ 10.5¢ 10.5¢ 12.5¢ 21.0¢ 9.0¢ Emissions None High Medium None None None Water Use High High Low – Medium None High None
  4. 11. TEXAS ENERGY FACTS: <ul><li>Texas consumes almost 12% of the energy used in the United States </li></ul><ul><li>California is second; 38% lower than Texas </li></ul><ul><li>Electricity accounts for over 30% of energy use </li></ul>Source: Texas Renewable Energy Resource Assessment, Dec 2008
  5. 12. TEXAS ELECTRICITY FACTS: 1995-2006 <ul><li>Peak demand has increased by 33.6 %, from 46,668 MW to 62,339 MW </li></ul><ul><li>The population of Texas has increased by approximately 28%, from 18.7 million to 24 million. </li></ul><ul><li>Retail sales of electricity in Texas have increased by 30.2%, from 263,278,592 MWh to 342,724,213 MWh </li></ul><ul><li>Retail electricity cost has increased by 221.8%, from $16.0 billion to $35.5 billion </li></ul><ul><li>The average retail price of electricity in Texas has increased by 70%, from $0.061 per kWh to $0.104 per kWh. </li></ul>Source: Texas Renewable Energy Resource Assessment, Dec 2008
  6. 13. TEXAS GEOTHERMAL FUN FACTS <ul><li>Since 1960 there have been over 534,000 oil and gas wells drilled in Texas </li></ul><ul><li>The ground water temperature around San Antonio has temperatures as high as 118ºF </li></ul><ul><li>Geopressure wells in the Texas Gulf Coast are able to flow with pressure up to 15,000 psi to the surface and if not controlled would shoot hundreds of feet into the air. </li></ul><ul><li>The hottest well recorded is 510ºF @ 23,800 ft east of Victoria, Texas </li></ul><ul><li>BUT, there is no significant geothermal electricity development in Texas! </li></ul>
  7. 14. TEXAS RENEWABLE ENERGY POTENTIAL *1 quad = 293,071,000,000 KWh or about 8 BILLION gallons of gasoline Source: Texas Renewable Energy Resource Assessment, Dec 2008 Resource Total Physical Resource (quads*/yr) Accessible Resource (quads*/yr) Energy Density (MJ/m 2 /yr) SOLAR 4,300 250 8,000 WIND 22 7 500 BIOMASS 9 1 500 WATER 0.10 0.02 10 GEOTHERMAL 400,000 81,000 600
  8. 16. ORGANIC RANKINE CYCLE – BINARY CYCLE <ul><li>Works on the principle of thermodynamics </li></ul><ul><li>Hot liquid is brought to the surface from a well </li></ul><ul><li>The hot liquid enters a heat exchanger to boil a “working fluid” to create steam to turn a turbine </li></ul><ul><li>The turbine is connected to a generator </li></ul><ul><li>The cooled liquid is either pumped back into the ground or separated at the surface </li></ul><ul><li>An efficient system if there is a significant temperature difference between the hot liquid and the working fluid. </li></ul>
  9. 17. ENHANCED GEOTHERMAL SYSTEMS <ul><li>Linear Drive Engine aka “Free Piston” Engine </li></ul><ul><ul><li>Patented Systems </li></ul></ul><ul><ul><li>Exclusive North America License </li></ul></ul><ul><ul><li>Combines existing technologies for a new application </li></ul></ul><ul><ul><li>High efficiency </li></ul></ul><ul><li>How is it different from traditional Geothermal? </li></ul><ul><li>Captures Kinetic Energy </li></ul><ul><li>EARTH PROVIDES THE SYSTEM ENERGY </li></ul><ul><ul><li>(GEOPRESSURE and GEOTHERMAL) </li></ul></ul>
  10. 18. LINEAR DRIVER TECHNOLOGY <ul><li>Works on the principle of Kinetic Energy, not thermodynamics </li></ul><ul><li>Kinetic Energy = ½ Mass times Velocity 2 </li></ul><ul><li>Uses Organic Rankine Cycle, but uses the wellbore as the heat exchanger as follows: </li></ul><ul><li>Liquid CO2 is pumped down to the bottom of the well where hot brine is. CO2 instantly flashes to gas creating high pressure and water “lift” </li></ul><ul><li>When velocity of the brine increases linearly, the power increases exponentially </li></ul><ul><li>The high velocity brine enters the Linear Driver where it drives a piston and creates energy </li></ul>
  11. 19. WELL CONVERSION <ul><li>Our principal strategy is to convert existing oil and gas wells and turn them into electrical power producers using our proprietary Linear Power Technology. </li></ul><ul><li>Converting wells to electric producers does not present any significant challenges. </li></ul>
  12. 22. EARLY LINEAR DRIVER – “BIG BLUE”
  13. 23. REENGINEERED LINEAR DRIVER
  14. 27. ELECTRICITY PRODUCTION PER MW <ul><li>Power Purchase Agreement with utility company $90/MWh (9¢/kWh) </li></ul><ul><li>24 hours/day * 365 days = 8,760 hours per year </li></ul><ul><li>8,760 hours * $90/MWh = $788,400/year </li></ul>
  15. 28. GOVERNMENTAL ASSISTANCE <ul><li>Production Tax Credits (“PTC”) = $21 / MWh </li></ul><ul><li>PTCs continue for 10 years! </li></ul><ul><li>8,760 hours * $21 / hour = $183,960 PTC/MW/yr </li></ul><ul><li>$183,960 * 10 years = $1,839,600 in PTCs/MW </li></ul><ul><li>5-year MACRS Depreciation – depreciate project cost over a five year period </li></ul>
  16. 29. ANNUAL WELL PRODUCTION Per MW 2 MW Well 5 MW Well Electric Production $788,400 $1,576,800 $3,942,000 Tax Credits $183,960 $367,920 $919,800 TOTAL $972,360 $1,944,720 $4,861,800 Capital Cost $750,000 $1,500,000 $3,750,000
  17. 30. INITIAL OPPORTUNITY <ul><li>Special Purpose Entity for Investment </li></ul><ul><li>4 wells in Mississippi </li></ul><ul><ul><li>High power wells – estimates 5-10 MW / well </li></ul></ul><ul><li>5 wells in Texas </li></ul><ul><ul><li>Typical wells – estimate 2.0 MW / well </li></ul></ul><ul><li>Offer to include Production Tax Credits </li></ul><ul><li>Offer to include Depreciation </li></ul><ul><li>Offer to include Electricity Sales </li></ul>

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