1. Haroon S. Kheshgi, ExxonMobil Research and Engineering Company Commercialization Process for CCS on Natural Gas Power Systems Economics of Natural Gas CCS USEA Workshop on Technology Pathways Forward for Carbon Capture & Storage on Natural Gas Power Systems 22 April 2014, Washington DC

2. 2 NG-CCS an Important Option in Second Half of Century in Least-Cost Climate Policy Scenarios Source: IPIECA (2013) Models show CCS to be an important option along with demand reduction, renewables, and nuclear power Models assume –Future cost of options –Global price on carbon –Technology availability worldwide –Public acceptance –No significant barriers to implementation Mandating high-cost CCS Bypasses lower cost options Endangers public support

3. 3 Operating Large Scale CCS Projects: Zero Experience with NG-Power-CCS Source: GCCSI 2014 The Global Status of CCS LocationAnthropogenic CO 2 Source Storage Economic Driver AlgeriaGas processingsaline formation Demo Brazil - Lula FieldGas processingEOR Norway - SleipnerGas processingoffshore saline formation C tax Norway - SnohvitGas processingoffshore saline formation C tax United States (TX) - CenturyGas processingEOR United States (TX) - Val VerdeGas processingEOR United States (WY) - LaBargeGas processingEOR United States (WY) - Lost Cabin Gas processingEOR United States (KS) - CoffeyvilleCoke to fertilizerEOR United States (ND)/ Canada - Weyburn-Midale Coal to syngasEOR Demo/EOR United States (OK)- EnidGas to fertilizerEOR United States (TX) – Port Arthur Methane to hydrogenEOR

4. 4 Cost Estimation: Perspectives on Cost Assumptions Lack of technology maturity –Affects cost, and adds uncertainty First-of-kind plant raises cost Capital charges –Total erected cost: M & L +installation + offsites + contingencies… +Retrofits raise complexity and installation + offsites +Indirect cost rise in proportion to direct costs –Potential for innovation to decrease cost –Cost of capital (financing) must be assumed to estimate cost of emissions avoided

5. 5 Electricity Cost from Gas and Coal Generation Chart shows zones of lowest levelized cost of electricity (LCOE) for gas vs. coal generation –Lowest cost depends on fuel prices and CO 2 cost

6. 6 Electricity Cost from Gas and Coal Generation with CCS Chart shows zones of lowest LCOE including CCS options –Boundaries represent avoided CO 2 cost between generation technologies –Gas CCGT and CCGT-CCS lower LCOE than coal-CCS over a wide range of gas prices

7. 7 Studies Confirm Broad Economic Window for Gas: Gas-CCS Only Attractive Above ~$100/t CO 2 Source: IPIECA (2013)

8. 8 Summary Current operating facilities rely on a combination of –low cost (e.g. gas processing) –co-benefits (e.g. EOR) –high CO 2 cost (e.g. Norway’s carbon tax) Broad economic window for gas and gas-CCS, therefore, an attractive long-term option Current gas-power-CCS technology –not demonstrated successfully –not attractive until CO 2 costs above ~$100/t CO 2 Recommendations: Advance capture technologies through RD&D to lower cost for power- gen Address barriers to CCS that raise costs or risks to CCS investments –Sound regulatory framework for CCS –Clear and equitable rules on CCS long-term responsibility

9. 9 Electricity Cost including Nuclear Nuclear Chart overlays nuclear zone of lowest LCOE on gas and coal zones Nuclear dominates coal-CCS, with lower LCOE at all CO 2 costs Gas CCGT-CCS Gas CCGT Nuclear Supercritical Coal Supercritical Coal-CCS $28/tCO 2