PRODUCTION & LOGISTICS FOR AN IN-MARKET FRAC SAND SUPPLY

Hog Lick AGGREGATES LLC
Air Emissions –
A Factor to Consider in Frac Sand
Production and Logistics
Feb 21 2023

Hog Lick Aggregates LLC page 2
Confidential Information – Subject to Non Disclosure
► The entire natural gas supply chain is under pressure to reduce carbon
emissions:
 Some jurisdictions (e.g., NYC, SFO) have passed ordinances to prohibit the
installation of gas stoves and furnaces in new / remodeled construction.
 There are efforts to extend the monitoring of oil/gas producer emissions to include
materials that become “permanent components” of a gas well (e.g., frac sand).
► Under the Inflation Reduction Act (IRA) producers and pipelines will be
required to monitor/reduce emissions from wells and transport infrastructure
(even though the practical implementation is still being worked out).
 Frac sand and aggregate producers will soon be subject to more stringent
regulations for diesel engines, silica dust, and water discharge.
 Actions to monitor/control air emissions will impact the economics of where/how
frac sand is produced, and how it is transported and stored.
► What actions will the frac sand industry take to address these requirements?
Air Emissions: A Design Factor to Consider

A Zero Air Emissions Frac Sand Plant in the Marcellus
Mountain Valley Pipeline
► 277 acres with access to major interstate
(I-79) Bridgeport and Morgantown, WV.
► On-site water, a 15kV power interconnect,
and a natural gas pipeline on-site.
► Current operations supply sandstone and
limestone aggregate.
► HLA’s sandstone seam has tested favorably
at between 6k and 7k crush strength.

► Diesel emissions from trucks and equipment:
 Develop in-basin sources of frac sand to reduce emissions from long-haul transport.
 Convert aggregate and frac sand processing equipment from diesel to electric and
use renewable energy to power the equipment.
 Convert truck transport and construction equipment from diesel to electric or
hydrogen.
 Produce H2 with carbon capture and sequestration (CCS) to fuel trucks/ equipment.
► Emissions from the power and steam generation required for aggregate and
frac sand operations:
 Use renewable energy to generate the required power and steam requirements.
 Use wet vs. dry frac sand at the well pad to eliminate emissions from drying.
 Use carbon capture and sequestration technology to prevent the CO2 generated
from being released into the atmosphere (i.e., blue hydrogen).
Air Emission Sources/Mitigants

Five (5) Design Components to Reduce Air Emissions
#2 Replace Diesel Equipment with
Electric Equipment
#4 H2 Production and
Use as Transport Fuel
#2 Biomass Steam &
Power Plant
CO2
Biomass
& SPF
#3 Frac Sand Drying Using Process
Steam vs. Direct Fired Natural Gas
Power
Biomass
Replaces Nat Gas
and Coal in WV
Biomass Use
Saves Landfill
Capacity
Eliminate CO2
Release from Nat
Gas Burn
Electric Equip.
Reduces
Emissions and
Improves
Efficiency
#5 Carbon Capture and Storage
Steam & Power
#1 In-Basin Frac Sand
Reduces Emissions from
Long Haul Sand Transport
Steam & Power
Hydrogen as Fuel for Transport & Equipment
H2 Fueled or
Electric Trucks
Reduces Emissions
Wet Frac Sand
CaCO3
Product
CO2

The Technology Exists, the Heat/Mass Balance Works, But is it Profitable?
#5 C02
Sequestration
#4 SMR H2
Unit
#2 Biomass
Steam Plant
#4 H2 for
Quarry Trucks
Biomass &
SPF Supply
Water
Treatment
• 7MW for internal use
• 1MW excess or to grid
90 kg/hr H2
Nat Gas 337 MMBtu/hr
CO2
2,826 kg/hr
Condensate Return
130 klbs/hr Boiler Feedwater
Steam
Turbine Gen #2 Plant Elec.
Motors
Nat Gas
CaCO3 Aggregate
Product for Sale
Condensate Return
Steam
• 1.7 klb/hr
• 436 psig
• 750 deg F
Biomass:
• 192 MMBtu/hr
• 17.5 tons/hr
• 17 trucks/day
#3 Steam
Sand Dryer
Condensate Return
Dry Frac Sand & Water Vapor
Wet Frac Sand
#1 Marcellus
Sand Plant
Steam
• 31 klb/hr
• 150 psig
• 366 deg F
CO2
29,086 kg/hr
Calcium Rich Geomass
for CO2 Sequestration

► Using Marcellus sourced frac sand would eliminate $30 - $50/ton in long-haul
shipping costs as well as the associated CO2 emissions generated.
 Shipping 500k tpy of frac sand from WI by train (at $40/ton) costs about $20MM/yr
and generates approximately 40MM lbs/yr CO2 emissions (0.02MM tpy).
 At a carbon value of $10/ton, the emissions would be worth $200k/yr.
Component 1: In-Basin Frac Sand
CO2 Emissions CO2 per Mode WI to WV Sand Shipped CO2 Emissions CO2 Emissions CO2 Credit CO2 Credit
lbs/(st-mi) (miles) (st/yr) (lbs/yr) (st/yr) ($/ton) ($/yr)
Train Transport 0.101 800 500,000 40,355,305 20,178 10.00
$ 201,777
$

Component 2: Electric Equipment with On-site Steam/Power
► Replace existing diesel aggregate processing equipment (crushers, screeners,
belts, etc.) with electric powered equipment:
 Eliminate current diesel spend of $300k/yr required to fuel stationary aggregate
crushing/screening equipment and $40k/yr for hydraulic oil.
 Eliminate 683 tpy of diesel emissions, worth $6k/yr at a carbon price of $10/ton.
► Install a biomass boiler and steam turbine to generate the required
power/steam to operate the full production line:
 Biomass was selected to take advantage of cheap plentiful wood waste in the area that is
currently burned in open pits or is sent to a landfill.
 A biomass boiler would provide a means to dispose SPF paper waste from ND Paper’s nearby
paper plant (30,000 tpy) that is currently sent to a landfill.
 Biomass would offset coal use in WV – coal is 91% of WV generation capacity (as of 2021).
 US Gov backed financing and open loop biomass tax credits are available to offset capital cost.
► Sell surplus power to the grid at $50/MWh to cover fixed costs of the plant.
► Sell steam at a price to cover fuel cost and variable O&M.

Total kW # of Motors CO2 Emissions
Description Total hp (@75%) & Pumps (lbs/yr)
Sandstone Crushing/Screening 1,642 1,224 39 553,658
Limestone Crushing/Screening 629 469 23 212,154
Rip Rap Plant & Wash Plant 1,181 880 25 398,168
Buildings, Lights, Welder, Equip. 600 450 10 203,540
Aggregate Processing Total: 4,051 3,023 97 1,367,520
Biomass for Steam (klbs/hr, Biomass For
Description Total kW kWh (MMBtu/hr) psig, deg C) Steam (MMBtu/hr)
Aggregate Processing Equip 3,023 52.5 N/A
Frac Sand Plant w/ Steam Dryer 3,120 54.3 31, 150, 185 49.9
H2 Plant with Carbon Capture 800 13.9 1.7, 436, 400 2.8
Surplus Capacity 1,057 18.3 N/A
Total All Projects/Uses 8,000 139.0 52.7 Total = 191.7
Note:
1. Total Biomass Use = 139.0 + 52.7 = 191.7 MMBtu/hr @11 MMBtu/ton = 17.4 tons/hr = 418 tons/day
2. 418 tons/day @ 10 tons/truckload = 41.8 trucks/day = 1.7 trucks/hour

► Economics for 8MW Biomass
Steam/Power Plant:
 $32MM CapEx
 Heat Rate 15,800 Btu/kWh
 Wood cost $3/ton, $1.50/MMBtu
 1.3 cents/kWh open loop tax credit
 80% leverage at 6% p.a. interest
provided by US Dept of Agriculture.
 15% pre-tax equity IRR
► Biomass fuel @ 192 MMBtu/hr is
required for both power and steam
 Wood @11 MMBtu/ton = 17.4 tph
 Delivery rate @ 10 tons per
truckload = 1.7 trucks/hour
► Excess power is sold to the grid at
First Energy’s avoided cost.

► Use steam to dry the frac sand rather
than burning natural gas in a direct
heat dryer:
 Steam tube dryer CapEx of $4.5MM vs.
$2.5MM for direct heat dryer;
 Assume 500,000 tpy of frac sand
throughput
 4 yr simple payback comes from lower
energy costs of wood vs. natural gas:
• Wood @ 1.50/MMBtu vs.
• Nat gas @ $4.00/MMBtu
► 39,479 MMBtu/hr of nat gas would
produce 4,618 tons/yr of CO2
► Analysis does not include any tax
credits that may be available for
avoiding CO2 emissions.
Component 3: Sand Drying Using On-Site Steam
Steam Tube vs. Direct Heat Steam Tube Direct Heat
Dried Sand Output (tph) 125 125
Nat Gas Consumption (MMBtu/hr) N/A 39,479
Annual Production (tpy) 500,000 500,000
Operating Hours Required (hrs) 4,000 4,000
Capacity Factor (% hrs /yr) 46% 46%
Nat Gas Price ($/MMBtu) N/A 4.00
$
Wood Price ($/MMBtu) 1.50
$ N/A
Incremental O&M ($/MMBtu) 0.15
$ N/A
Total Variable Cost 1.65
$ 4.00
$
Energy + Variable Spend ($/yr) 206,927
$ 631,664
$
Incremental Boiler CapEx 100,000
$ -
$
Dryer Cost 4,000,000
$ 2,500,000
$
Total Cap Ex 4,100,000
$ 2,500,000
$
OpEx Savings 424,737
$
Incemental CapEx 1,600,000
$
Simple PayBack Period (yrs) 3.8

► HLA is participating in the Appalachian Regional Hydrogen Hub (ARCH2)
consortium seeking to secure a portion of the $8 bn of Hydrogen Hub funding
offered through the US DoE.
► The Hydrogen Hub program provides for 50% DoE funding and 50% private
funding and seeks to establish regional hydrogen hubs across the USA.
► Initially HLA will produce H2 from natural gas using a leased skid-mounted
steam methane reformation (SMR) unit.
► The SMR unit will be eliminated once a lower-cost sources of H2 are available
from larger scale H2 production units within the Appalachian Hub.
► H2 will be used in quarry trucks and construction equipment:
 Use H2 to power tri-axle trucks to deliver aggregate to customers and trucks to deliver frac
sand to producers.
 Use H2 to power on-site haul trucks and construction equipment.
 Offer H2 to local users for transportation needs (UPS, FedEx, Frito Lay, etc.)
Component 4: Blue Hydrogen as Truck/Equipment Fuel

► Nat Gas - Existing pipeline connection will support gas demand
► Steam & Power – Provided by biomass steam boiler / turbine.
► Manpower – Quarry manpower can be shared and cross-trained.
► Facilities – Maintenance, scales, security, water, sewage can be shared.
C02
Sequestration
SMR H2
Unit
H2 for Quarry
Trucks
Water
Treatment
Nat Gas
Steam
Boiler
90 kg/hr H2
CO2
2,826 kg/hr
CaCO3
Aggregate
for Cement
Marcellus
Sand Plant
Calcium (Ca)
Geomass
Steam
• 1.7 klb/hr
• 436 psig,750 deg F
Aggregate &
Cement Market
Aggregate
CaCO3 Aggregate
Product for Sale

► Converting ten (10) diesel aggregate delivery trucks to H2 offsets a diesel
spend of $600k/year (@ $4.00/gal diesel cost).
► HLA currently uses 10 delivery trucks with Cummins ISX diesel engines where
each 600 net hp engine produces approximately 447 net kW.
► Assuming the trucks operate at an average of 15% engine load (avg. of idling
hrs, loaded hrs, unloaded hrs) equals 5.9 gal for each truck operating hour.
► Assuming the trucks operate 8 hrs/day and 240 days/yr results in:
 11,390 gallons of diesel per truck-year, and 113,900 gallons per fleet-year.
 10,251 kg of H2 per truck-year or 102,510 kg of H2 per fleet-year.
► There are several truck / engine vendors working to provide H2 trucks:
 SANY and Plug Power are currently offering H2 powered triaxle trucks
 Cummins – developing large scale H2 engines
 First Mode – converting large scale diesel engines from diesel to H2.

► HLA estimates it can offset 300k gal/yr of diesel fuel valued at $1.2MM/yr
($4.00/gal)
► The wide variety of engine sizes and end-unit applications (e.g., dozers,
excavators, haul trucks, etc.) will delay the production of these units at scale.
► JCB of the UK is now offering a H2 powered excavator - https://youtu.be/q1-__SYskjc
► First Mode is now operating prototype H2 powered haul truck -
https://www.cnn.com/2022/10/06/world/hydrogen-mining-truck-first-mode-anglo-american-climate-spc-intl/index.html
Max Net Max Net % Load Diesel Gal per Op Hrs / Op Days / Diesel Gal / H2 (kg / Number Diesel Gal / H2 (kg /
Equipment Type Engine Pwr (HP) Pwr (kW) (avg op hr) (avg op hr) Op Day Op Yr Equip-Yr Equip-Yr) of Units Equip-Yr Equip-Yr)
CAT 777 Haul Trucks CAT C32 850 634 30% 15.77 8 240 30,273 27,245 4 121,090 108,981
CAT 395 Excavator CAT C18 542 404 30% 10.20 8 240 19,576 17,619 1 19,576 17,619
CAT 330 Excavator CAT C7.1 201 150 30% 4.06 8 240 7,795 7,016 1 7,795 7,016
CAT 315 Excavator CAT C3.6 108 81 10% 1.00 8 240 1,917 1,725 1 1,917 1,725
CAT 992 Wheel Loader CAT C32B 814 607 20% 10.68 8 240 20,497 18,448 1 20,497 18,448
CAT 988 Wheel Loader CAT C18 541 403 20% 7.17 8 240 13,767 12,390 1 13,767 12,390
CAT 980 Wheel Loader CAT C13 393 293 40% 9.29 8 240 17,831 16,048 2 35,663 32,097
CAT D11 Dozer CAT C32 850 634 20% 11.12 8 240 21,354 19,219 1 21,354 19,219
CAT D10 Dozer CAT C27 600 447 20% 7.91 8 240 15,186 13,668 1 15,186 13,668
TOTAL 290,047 261,043
H2 for Construction Equipment

► Project Capital Cost – All values are WAGS…… kinda!!
 $ 5 MM: SMR (based on NREL’s H2A-Lite H2 Analysis Pro Forma)
 $ 2 MM CO2 capture and sequestration in CaCO3
 $ 1 MM: H2 Storage and Load Out
 $ 5 MM: Incremental cost to replace / convert 10 existing diesel dump trucks
 $ 10 MM: Incremental cost to replace diesel haul trucks, excavators, wheel loaders, etc.
$ 24 MM TOTAL CAPEX (50% DoE and 50% private capital)
► Capital cost would need to be offset by lower fuel costs, emissions credits and
other value (e.g., lower maintenance cost).
► Work is required to quantify MACRS, tax credits, CO2 offset payments, etc.
► A large scale H2 production facility is required to achieve the scale required to
reduce the cost of H2 to make economic sense vs. diesel.
► HLA is having conversations with other potential users near to the quarry
(delivery services – UPS, food services – Frito Lay, utility vehicles).

► Blue Planet Systems offers a carbon sequestration technology that uses Calcium (Ca)
(or another geomass) to sequester CO2 present in flue gas.
► The process would create a synthetic aggregate - Calcium Carbonate (CaCO3) that can
be used in manufacturing cement.
► The calcium would be provided by the quarry and the flue gas would be provided by
the biomass boiler and the H2 SMR Unit.
Component 5: Synthetic Aggregate for CO2 Sequestration

► “Pre-process off-site” CO2 emissions reduction (tons per year):
20k Use of in-basin source of frac sand to reduce emissions from long-haul transport
► “In-process on-site” CO2 emissions from electricity, steam, and H2 production:
224k CO2 sequestered in synthetic aggregate from biomass boiler.
6.6k CO2 sequestered in synthetic aggregate from H2 production.
230.6k
► “End-use on-site” CO2 emissions reduction at HLA (tons per year):
0.7k Convert aggregate processing equipment from diesel to electric
4.4k Convert diesel transport and diesel construction equipment to hydrogen
4.6k CO2 avoided by using steam to dry frac sand instead of burning natural gas
9.7k
► End-use on-site carbon credits valued at $10/ton would indicate a value of
$97k/yr to convert diesel trucks and construction equipment from diesel to
electric and use steam rather than nat gas to dry frac sand.
► Carbon credits alone do not provide sufficient value to justify the incremental
cost of converting to H2.
Summary of Air Emissions Reduction

Summary – H2 Production Costs Will Dictate Overall Profitability
C02
Sequestration
SMR H2
Unit
Biomass
Steam Plant
H2 for Quarry
Trucks
Biomass &
SPF Supply
Water
Treatment
• 7MW for internal use
• 1MW excess or to grid
90 kg/hr H2
CO2
2,826 kg/hr
Condensate Return
130 klbs/hr Boiler Feedwater
Steam
Turbine Gen Plant Elec.
Motors
Nat Gas
CaCO3 Aggregate
Product for Sale
Condensate Return
Steam
• 1.7 klb/hr
• 436 psig
• 750 deg F
Biomass:
• 192 MMBtu/hr
• 17.5 tons/hr
• 17 trucks/day
Steam Sand
Dryer
Condensate Return
Dry Frac Sand & Water Vapor
Wet Frac Sand
Marcellus
Sand
Steam
• 31 klb/hr
• 150 psig
• 366 deg F
CO2
29,086 kg/hr
Calcium Rich Geomass
for CO2 Sequestration

► Component 1: In-market sources of frac sand eliminate significant shipping
costs and reduce CO2 emissions within the supply chain.
► Components 2 & 3: Fuel cost savings and increased energy efficiency offsets
the capital investment for on-site steam/power production:
 An onsite power/steam plant maximizes efficiency in sand/aggregate/H2 production
 Higher capital costs (e.g., steam tube dryer) are offset by lower energy costs.
 Subsidized financing and tax credits are available to construct renewable energy
facilities and to eliminate emissions by replacing fossil fuel engines.
► Component 4: H2 as fuel requires financial support to make sense:
 H2 production at scale is not yet available except in dedicated industrial applications
 US DoE Hydrogen program is needed to establish core H2 infrastructure.
 H2 engines for trucks and equipment exist but are not widely available.
► Component 5: CO2 sequestration to produce synthetic aggregate (CaCO3) could
be a game changer, but it needs to be demonstrated at scale.
Summary

Hog Lick AGGREGATES LLC
Designing a Frac Sand Plant with Zero
Carbon Emissions
Q1 2023

PRODUCTION & LOGISTICS FOR AN IN-MARKET FRAC SAND SUPPLY

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