1. Energy Related Business Opportunities in India Jeffrey C. Dawson June 29, 2006

2. The Energy Industry Today 4 Oil Prices at All Time High –Exceeding $60/bbl –Total Proven Reserves ~1.12 Trillion Bbl 4 Natural Gas Regarded as Fuel for 21st Century –Total Proven Reserves ~ 183.8 Trillion m 3 4 India’s Contribution ~10 Billion BOE –2.1 Billion Bbl Oil Production in 2005 –32 Billion m 3 Production in 2005 –~0.5% Reserves and 15% of Global Population

3. Indian Strategies to Meet Demand 4 Exploration of Conventional Reservoirs 4 Production from Unconventional Reservoirs –CBM and Gas Hydrates 4 Enhanced Oil Recovery in Aging Fields –MEOR and CO 2 Injection –Alkaline - Polymer - Surfactant Sweeps 4 Indirect Participant as Product Supplier –Supporting the Global Energy Infrastructure

4. Infrastructure Support of Energy Industry 4 Oilfield Chemicals ~$4 Billion Annual Market 5.4% Annual Growth –Well Construction Chemicals –Drilling Fluid Chemicals –Cementing Chemicals –Completion –Heavy Brine & Sand Control -Unconsolidated Formations –Stimulation - Fracturing and Acidizing Chemicals –Production Chemicals –Corrosion Control - H 2 S and CO 2 –Inorganic Deposition (Scale) Removal –Organic Deposition (Wax) Removal –Water Management (9 bbl water : 1 bbl oil)

5. Infrastructure Support of Oil and Gas Industry 4 Chemicals Enhanced Oil Recovery -Preparing for the Future –Speciality Polymers –Speciality Surfactant Blends 4 Equipment Drilling Rigs Tubulars and BOP Speciality Pumps Compressors Motors and Generators Downhole Tools

6. Case History 4 Guar Gum –Primary Viscosifier for Hydraulic Fracturing Hydraulic Fracturing is a Stimulation Process ~32,000 metric ton per year –~40% Global Production from western India –Most Domestic Suppliers Import Guar Splits Convert Splits to Flour in the US Plants Manufacture Guar Derivatives Cost Fluctuations for Questionable Reasons Number of Suppliers Declining

7. Guar Gum Pod Seed SplitPowder

8. Case History 4 Connect with Indian Suppliers –Objective: Locate Reputable Indian Guar Suppliers that will Supply Sufficient Quantities of Quality Product at Lower Costs –Initiated in 2000 –Requirements Low Cost of Product High Quality Potential Large Capacity (MM lb/yr)

9. Case History –Quality Control Long Term Quality Assurance –Expected deterioration in quality –Expected large variation between shipments –Either would be intolerable Emphasis on Quality –Placed Burden on “Distributing” Company (PfP) Product Undergoes Four Levels of QC/QA –Oil Dispersion Viscosity –Water Dissolving Rate –Solution Viscosity –Gel Viscosity –Fracture Damage Potential

10. Case History 4 Distributing Company Responsibilities –Communication w/in Both Cultures –Quality Assurance –Scheduling and Inventory Management –Cost Management Multiple Indian Suppliers –Continuous Improvement

11. Case History 4 Advantages –Low Cost Product –Continuous Quality Improvement Exceeded Expectations –Higher Quality Products –High Consistency Created “New” Premium Grade of Guar Gum –Lower Concentration of Guar Required Success Induced Effort to Source Other Products –High Strength Proppants and Other Polymers –Completion Brines and Specialty Surfactants

12. Case History 4 Disadvantages –Forecasting Requirements Excessive Transportation Time Excessive Quality Control Testing Emphasis on Scheduling and Planning Local Inventory Build-Up –Preventing “Out of Spec” Material Unable to Return Stress on Pre-shipment Sampling –Performance Verified before Shipment Leaves India Stress on Scheduling

13. Questions

14. Private Research Entities

15. 4 Global Economy and Market Pressures –Stiff Competition –Company Structure to be more Competitive –Research Regarded as Necessary Evil Cost –Research - Minimize Time to Commercialization 4 Fundamental Understanding of Technology –No Direct Income –Multi-Tasking Responsibilities - No Time Allowed –Expensive - 4 Answer - Various Forms of Out-Sourcing

16. Private Research Entities 4 India’s Contribution –Large Population of Technically Skilled People 112,000 Engineering Graduates in 2004 2001 Census - 2.6 MM Engineers/Scientists 4 Research Factories??? –Western Company/Customer Indian Technocrats –Managing Company Provide Skilled People (Temporary Agency) Provide Physical Assets –Laboratory Space –General Lab Furniture and Basic Equipment –Telecommunications to Support Project Review Conducts Marketing and Sales for Concept

17. Private Research Entities 4 Research Factories??? –Managing Company Understands Both Cultures Affiliated to Existing Educational Institutions –Tap into Technical Population –Company Customer Enter into Contract Agreements (People/Physical Assets) People become Temporary Employees to Company Customer Provide Specialty Equipment Company Customer Owns all IP Benefit - Low Cost Research –Fundamental Research –New Product Development

18. Oil and Gas Production Opportunities

19. Oil and Gas Production 4 India’s Energy Status –15% of World Population –3% of Global Energy Consumption 6th Largest Consumer –33 Million ton/yr Oil Production –40 Million scmd –Energy Deficient

20. New Discoveries 4 Current Focus - Exploration and Production 4 Latest Finds –Reliance - 300 BCM Gas Krishana Godavari –Cairn - 100 BCM Gas Rajasthan – Cairn/Tata/ONGC - 80 MMSCD/5 yr Gas Offshore Gujaret –Cairn - 200 MM BOE Gas and Oil K.G. Basin –GAIL India - 60 MMSCD/20 yr –CBM 4 Demand Outpacing Domestic Supply

21. Enhanced Oil Recovery 4 Recent Agreements w/ China –Develop and Share EOR Technology 4 Benefits of EOR –Primary Production 10-15% Recovery –Secondary Recovery (Waterfloods) 10-30% Additional –Tertiary Recovery (EOR) 45-80% Additional 4 Requires Individualized Approach –Formation composition and Lithography –Aqueous Phase Composition –Crude Oil Composition

22. Current Methods 4 MEOR –Microbial Enhanced Oil Recovery –Inject Specific Live Bacteria/Food to Produce CO 2 4 CO 2 Injection –Reduces Oil Viscosity and Re-Pressurizes Reservoir 4 Alkaline - Surfactant - Polymer Flooding –BJ Services Preparing for the Next Phase - EOR –BJ Services Investing in Biosurfactants Specifically Designed to Match Reservoir Requirements –BJ Services Offers AquaCon Polymer System Relative Permeability Modifier for Water Control Core Flow Testing Suggest Excellent Polymer Flood Product

23. Thank You