CO2 for EOR in the North Sea (CENS) Present Status & Future Roadmap CO2 Emissions Reduction Strategies for the Power Industry 13-14th September 2007, Berlin, Germany. Presentation by Carl-W. Hustad, President & CEO CO2-Global AS, Norway “A company focused on developing projects, technology and commercial solutions for handling CO2-emissions in the 21 st Century”

Image from “Options for Establishing a North Sea Geological Storage Hub” by Tony Espie, BP Amoco Exploration. Presented at GHGT-5, Cairns, Early Storage Concepts (1998 – 1999)

Image taken from work by Torleif Holt & Erik Lindeberg, SINTEF (1999). From “The Norwegian CO2 Infrastructure Initiative: A Feasibility Study” by Hustad, CO2-Norway AS. Presented at GHGT-5, Cairns, Early Infrastructure Concepts (1999)

CENS Project ( ) CO2 - EOR in the North Sea Potential delivery of CO2 for EOR through infrastructure at cost of ~ $35 /tCO2. Screening of the most mature EOR fields indicated poten- tial of > 30 mtCO2/yr for +20 year period. A combination of pipelines and ship transportation enhanced flexibility and economics for initial EOR projects. † Designated fields were “potential” CO2-floods. Tampen Gullfaks Area Brent Ekofisk Grane Brage Dan/Gorm Ninian Forties Fulmar Claymore Draugen Herøya Snøhvit CO2-sources Potential CO2 for EOR fields Kårstø CO2-hub Mongstad Sleipner Brae Brunsbüttel Antwerp Billingham Pernis Esbjerg CO2-hub

Barriers to Implementation Why has CO2-EOR not yet been adopted in the North Sea given it is so successful in other places? There are still no offshore CO2-EOR floods in operation –There is still no guaranteed supply –Equipment space on platforms is limited and expensive Geology is different from the Permian Basin. –Reservoirs need to be considered on an individual basis –Very limited scope for patterned injector / producers If operators showed an interest then political pressure to move ahead would increase significantly. Despite good chance of “up side” this remains a high- risk business development prospect.

Present Status - 1 Where is the CO2 business today …. Climate-Change is for real! –18-months ago there was still a scientific debate –9-months ago US public opinion was not onboard –Non-commitment of the USA is no-longer the issue! Market is already evolving –Credit-trading is already a $30 billion market –Post-2008 credits are targeting ~$20 per ton –Commodity CO2 has a $20-$30 per ton price

Present Status - 2 But …. Need to identify fundamentals! –There are projects being considered that will never happen! –There are market developments that are typical of an immature and start-up industry; Large uncertainty regarding project and corporate valuation. Regulators have yet to seriously arrive on the scene. Incentive mechanisms are still mostly “sweat” and high-risk. Taxation is still partially promoting “old” solutions. Media and PR is probably slightly hyper! –There will be a technology shakeout in next 1 – 3 years. –Health Warning: Investors (and taxpayer) beware!

Future Roadmap: CENS Phase-1 Early Projects (2011 – 2014) Progressive Coots Rotterdam Kårstø Hatfield Peterhead Mongstad Esbjerg Risavika Tampen Forties Sleipner

Future Roadmap: CENS Phase-2 Interconnections (2014 – 2020) Humberside Teeside Peterhead BeNeLux Kårstø Mongstad Denmark Grangemouth Grenland Tampen Forties Sleipner Ekofisk

Future Roadmap: CENS Phase-3 System Looping (2020 – 2030) Humberside Teeside Peterhead North European Mainland Kårstø Mongstad Grangemouth Tampen Sleipner Forties Ekofisk East Norway Denmark Sweden

Concluding Remarks There are still significant barriers before investment in CCS Demonstration Projects can be made. –The power plants need to be of such size as to provide sufficient volumes of CO2 to specific EOR fields. –Transportation infrastructure needs to come into place. The established oil majors are still not comfortable with the overall economics and risk of CO2-EOR. –Need to have security of CO2 supply. –Long “lead time” is a major economic concern. –Handling recycled CO2 offshore is an extra complexity. Both industry and government appear to be motivated to seek constructive solutions. –Distribution of risk and “burden sharing” are key issues.