Potential for Oil Shale Development in the United States INTEK Potential for Oil Shale Development in the United States Khosrow Biglarbigi Hitesh Mohan Marshall Carolus July 15, 2009 Calgary, Canada

America’s Oil Shale Resource Technology Economics Environmental Path Forward

What is Oil Shale? 700 - 800 °F Upgrade Kerogen Pyrolysis Syn- Crude Naphtha Jet Fuel Diesel Nat. Gas Hydrogen Rock Kerogen 700 - 800 °F Pyrolysis

10 Trillion Barrels of Shale Oil Worldwide Russia Canada Estonia France Italy United States Israel China Morocco Jordan Egypt Zaire Brazil Australia Countries With Oil Shale Deposits

Most Concentrated Hydrocarbon Deposit 2 Trillion Barrels 6 Trillion Barrels Source: US DOE, 2004

The Mahogany Zone The Most Prolific Up to 1000 Ft Thick Up to 75 Gal/Ton Source: Redleaf Resources, 2008

Oil Shale Production Approaches Surface Process Choke Point Resource Mining Retort Upgrading Refinery In Situ Process Resource Drilling Heating Upgrading Refinery Source: US DOE, 2004

Shell In-Situ Conversion Process High Value Products Pilot Test (Colorado) Light Surface Processing PRODUCER HEATER OVERBURDEN Source: US DOE, 2008

Other Examples of In-Situ Pilot Tests (Colorado) Chevron Process Fractures Injector Producer IDT–EGL Resources Process Source: US DOE, 2004

Ecoshale In-Capsule Technology Pilot Test (Utah) COOL GAS HOT GAS Source: Redleaf Resources, 2008

Alberta Taciuk Processor (ATP) Pilot Test (Utah) Preheat tubes Vapour tube Combustion zone Retort Cooling Oil shale feed 750°C 500°C 250°C Source: US DOE, 2006

Gas Combustion Retort (GCR) Raw Shale Raw Shale Oil Mist Australia (Project Scale Up) Brazil (In Production) China (In Production) Estonia (In Production) USA (In Pilot) Extractors PREHEATING PREHEATING PREHEATING MIST FORMATION PYROLYSIS PYROLYSIS PYROLYSIS STRIPPING STRIPPING STRIPPING COMBUSTION COMBUSTION COMBUSTION RESIDUE RESIDUE RESIDUE COOLING COOLING COOLING Spent Shale Spent Shale Source: US DOE, 2007

First Generation Project Costs Item Unit Range Capital Cost $/BPD * 40K - 55K O&M Cost $/Bbl 12 - 20 * Barrel of Daily Capacity Source: INTEK, Inc., 2006

Economic Price for Oil Shale Technology $70 Rate of Return – 15% $57 $60 $47 $50 $38 2007 Dollars Per Bbl $40 $35 $30 $20 $10 $0 True In-Situ Surface Mining Underground Mining In-Capsule Source: INTEK, Inc., 2008

Breakdown of Economic Price for Generic Surface Mining Taxes 19% Transfer Payments 14% Risk Premium 9% $47/Bbl Operating Costs 38% Cost of Capital 19% Source: INTEK, Inc., 2008

Oil Shale Environmental Impacts Air Quality Oil Shale Processing HC Gas CO2 SOx NOx CO2 Enhanced Oil Recovery Sequestration Other Industrial Uses Capture and Clean Existing Technology Process Plant Use Source: SPE #110590, 2007

Land Use 1 MMBbl/D Production for 40 Years Surface: 31 Square Miles In-Situ: 14 Square Miles A Small Footprint for a 2.5 MMBbl/D Industry: Source: SPE #110590, 2007

Water Requirements 1-3 Barrels of Water per Barrel of Shale Oil Challenges: Water rights Ground water protection Water runoff Source: US DOE, 2007

Development Hurdles Access to Land RD & D Environmental Permitting 70% on Federal Land RD & D Environmental Permitting Fiscal Regime

The Prize @ Total Resource Reserves High Quality Resource 6 Trillion Barrels High Quality Resource 2 Trillion Barrels Technical Recovery 1 Trillion Barrels Reserves 600 – 750 Billion Bbls @ $50 - $65 / Bbl Source: INTEK, Inc., 2008

Production Potential (Shale Oil in the U.S.) 2,500 Accelerated Scenario 2,000 RD&D Measured Scenario 1,500 Thousand Bbl/D Business as Usual 1,000 Tax Incentives 500 Base 2005 2010 2015 2020 2025 2030 2035 Year Source: US DOE, 2007

Summary Over 6 trillion barrels of in place resource The most concentrated hydrocarbon deposits on Earth Conversion technologies are advancing rapidly Sustained production potential of up to 2.5 MMBbl/Day Substantial economic benefits Requires concerted effort by the private sector, governments, and local communities