1. Southeast Regional Carbon Sequestration Partnership Southeast Regional Carbon Sequestration Partnership Project Number: DE-FC26-05NT42590 Presented to: Regional Carbon Sequestration Partnerships 2011 Peer Review Arlington, Virginia March 17, 2011 Presented by: Susan Hovorka Research Scientist Bureau of Economic Geology The University of Texas at Austin Vello A. Kuuskraa President Advanced Resources International, Inc.

2. Acknowledgements This material is based upon work supported by the U.S. Department of Energy National Energy Technology Laboratory. Cost share and research support provided by SECARB/SSEB Carbon Management Partners. 2

3. Presentation Outline 3 1.Introduction (Hovorka) 2.Technical Discussion: Early Test (Hovorka) 3. Technical Discussion: Anthropogenic Test (Kuuskraa) 4. Wrap Up (Kuuskraa)

4. Early Test Denbury Resources’ Cranfield Field Near Natchez, Mississippi SECARB Phase III SECARB Early Test was recognized by DOE for furthering CCS technology and meeting G-8 goals for deployment of 20 similar projects by 2010. The Early Test is the fifth project worldwide to reach the CO 2 injection volume of one million tonnes and the first in the U.S. - (DOE Techline, 11/05/2009) 4 Anthropogenic Test Capture: Alabama Power ‘s Plant Barry, Bucks, Alabama Transportation: Denbury Onshore LLC Geo Storage: Denbury’s Citronelle Field, Citronelle, Alabama

5. RCSP Program Goals – Early Test Predict storage capacities within +/- 30% Well known based upon production history; Early Test advanced the understanding of efficiency of pore-volume occupancy (E factor). Success metrics: Measure saturation during multiphase plume evolution (completed). Increase predictive capabilities (modeling underway). Evaluate protocols to demonstrate that 99% of CO 2 is retained Permanence of geologic system well understood prior to test because of retention of large volumes of methane. Retention uncertainties lie in well performance. Early Test is evaluating methods to assess well performance. Success metrics: Measure changes above the injection zone along well, above zone monitoring interval (AZMI), and at surface (P-site) over long times (underway). Contribute to development of Best Practices Manuals Early Test researchers have contributed to Best Practices Manuals on MVA, characterization, risk and modeling. Assistance has been provided on related protocol development, including IOGCC (U.S.), Pew Center accounting study (U.S.), IPAC-CO 2 (Canada), and CO 2 -Care (EU). 5

6. RCSP Project Goals – Early Test Goal 1 - Adequate Injectivity and Capacity Advanced the understanding of efficiency of pore-volume occupancy (E factor) by measuring the saturation during multiphase plume evolution. Anticipate increasing predictive capabilities through modeling. Goal 2 - Storage Permanence Although well understood prior to test, assessed methods for documenting well performance, which include: – Measure changes above the injection zone along well, above zone monitoring interval (AZMI), and at surface (P site) over long times (underway) Goal 3 - Areal Extent of Plume and Potential Leakage Pathways Measured down-dip extent of plume via VSP and 4-D seismic to improve the uncertainty regarding the radial flow (down dip/out of pattern) in the 4-way closure. Increase predictive capabilities through modeling Goal 4 -Risk Assessment Saline storage site is located in EOR field with operator owning CO 2. Use Early Test to advance risk assessment techniques and share information. Completed certification framework assessment of leakage risk. Confirmed well performance as highest uncertainty and focus of monitoring research. 6

7. RCSP Project Goals – Early Test Goal 5 - Develop Best Practices Participated in developing BPMs for MVA, characterization, risk and reservoir modeling. Goal 6 - Public Outreach and Education On-site outreach handled by Landmen. SSEB and Early Team focus on O&E in public and technical arenas. Hosted site visits, responses to local and trade media, Fact Sheets, and website postings of project information. Goal 7 - Improvement of Permitting Requirements Permits obtained by site operator. Project team focus is on development of regulatory framework for GHG. Provided experience with monitoring instruments and well performance to decision makers. 7

8. SECARB Organizational Chart SECARB Organizational Chart 8 DOE/NETL Program Management Project Management & Budget/Administrative Oversight Southern States Energy Board (SSEB) Early Test Continued Characterization TX BEG/GCCC, EPRI, ARI Offshore Study (Collaborators: SSEB, TX BEG/GCCC, Geological Survey of Alabama, and IOGCC) TX BEG /Gulf Coast Carbon Center (Collaborators outlined in Early Test section) Regional Activities Electric Power Research Institute (Collaborators outlined in Anthropogenic Test section) Anthropogenic Test Outreach SSEB Environmental Information Volumes Cardno ENTRIX, Steve Walden Consulting Environmental Information Volumes Steve Walden Consulting Legal & Regulatory SSEB

9. Federal collaborators Vis FWP Separately funded Stanford, Princeton, U Edinburgh, UT PGE & ICES (CFSES), U. Tennessee, USGS RITE, BP Early Test Organization Chart Early Test Organization Chart 9 Gulf Coast Carbon Center Bureau of Economic Geology Jackson School of Geosciences The University of Texas at Austin Sandia Technologies Monitoring Systems Design, Installation, HS&E Denbury Resources Field owner and injection system design, management, 4-D survey, HS&E LBNL Well-based geophysics, U-tube and lab design and fabrication LLNL ERT ORNL PFT, Stable isotopes NETL Rock-water interaction USGS Geochemistry Environmental Information Volumes Walden Consulting SSEB 50Vendors e.g. Schlumberger Vendors e.g. local landman Vendors e.g. equipment MSU Umiss Hydro & hydrochem Core Lab UT DoG Anchor QEA NRAP VSP

10. Project Overview: Scope of Work Task 1.0: Continued Characterization of Regional Sequestration Opportunities – Assessment of regionally significant formations (saline); update of CO 2 sources; regional/national Atlas updates; participation in RCSP capacity work group. Task 2.0: Public Outreach and Education – Local (field test), regional, national, and international public outreach and education. Task 3.0: Site Permitting – Identification and submittal of required site permitting (EQs, EAs, drilling and injection permits from Miss. Oil and Gas Board). Task 4.0: Site Characterization and Modeling – Detailed site characterization (existing data and new data collection) Task 5.0: Well Drilling and Completion – Design and completion of observation and injection wells (Sandia Tech/Denbury) 10

11. Project Overview: Scope of Work Task 6.0: Infrastructure Development – Mostly provided by Denbury. Enlarge well pad, electricity for MVA Task 7.0: CO 2 Procurement – Procure additional CO 2 to meet project metric. Task 8.0: Transportation and Injection Operations – Transportation and injection operations provided by Denbury Task 9.0: Operational Monitoring and Modeling – Early Test surface and subsurface monitoring, data collection, and modeling. Task 10.0: Site Closure – Early Test discontinuation plan: Denbury continue commercial injection for decades Task 11.0: Post-Injection Monitoring and Modeling – Time lapse monitoring and model updates to history match; RCSP MVA Work Group participation. 11

12. Project Overview: Scope of Work Task 12.0: Project Assessment – Site-specific, regional and Partnership-wide findings. Task 13.0: Project Management – Local project management for field sites and overall project management and oversight. Task 14.0: Does Not Exist – A pipeline study was proposed for Phase III but was later added to the Phase II program instead. Task 15.0, which was proposed at the same time, was added to the Phase III program. The task numbers were not changed, so there is no Task 14.0 in the Phase III SOW. Task 15.0: Preliminary Evaluation of Offshore Transport and Storage of CO 2 – Resource mapping offshore Gulf of Mexico (state and federal waters); infrastructure inventory; legal and regulatory analysis; outreach and education regarding findings. 12

13. Project Overview: Schedule and Cost Project Schedule – Early Test adjusted to match Denbury’s field development plan Project Cost 13 Phase III Early Test DollarsPercent DOE Share$34,186,22659.53% Non-DOE Share$23,240,58040.47% Total Value$57,426,806* Expenditures as of 12/31/2010 $37,796,045 *Does not include the Anthropogenic Test, continued characterization (Task 1), offshore study (Task 15), or regional activities (outreach, project assessment, project management). The total SECARB Phase III Program budget is $111,413,431.

14. Project Overview: Milestones 14

15. Gantt Chart All tasks are on schedule and budget. 15

16. Repetitive depositional units Results transferable to: older and younger units other parts of region Confining System Regionally significant sequestration target: Gulf Coast wedge

17. Early Test – large volumes of CO 2 17 Denbury Pipeline System

18. Update on Results of SECARB “ Early” Test of Monitoring Large Volume Injection at Cranfield Natchez Mississippi Mississippi River 3,000 m depth Gas cap, oil ring, downdip water leg Shut in since 1965 Strong water drive Returned to near initial pressure Illustration by Tip Meckel 18

19. Cranfield Source of large volumes of CO 2 via pipeline Source: Dutton and others 1993 Upper Cretaceous Tuscaloosa-Woodbine Trend – Cranfield in Mississippi Salt Basin 19

20. Phase III WE Phase II Oil-water contact Stacked Reservoirs at Cranfield Tip Meckel Cross section from 3-D seismic survey Middle Tuscaloosa confining System 20

21. Cranfield Progress Phase II Site development Characterization 2007 Phase II Site selection 20082009 First cored well, brine samples baseline seismic Soil gas baseline 2006 Phase II Phase III 201020112012 Phase III NEPA Phase III injection Phase II injection 1 million tons Phase III injection 10/2010 5/1/2009 million tonnes injected Phase II + III End SECARB Early 12/20/2009 Achieve 1 million tonnes/year rate Drill Phase III 3 DAS wells Commercial injection Monitoring Repeat geophysical monitoring 10/2010 21

22. Project Workflow 22 Reservoir characterization; 3-D, Production history Existing cores and logs Existing aquifer data GEM and TOUGH2 models for experiment design Well drilling Cross well seismic Multi-well hydro tests Logging, coring, Petrography, petrophysics Soil gas recon, Groundwater surveillance GEM, TOUGH2 Geochemist workbench models for Operations BHP BHT DTS ERT, RST, U-tube geochemistry Measurement Groundwater Surveillance P-site measurements GEM, TOUGH2 Geochemist workbench models for assessment Time-lapse Cross well, VSP, repeat 3-D Groundwater Surveillance P-site measurements GEM, TOUGH2 Geochemist workbench models for assessment

23. MVA Design 23 Soil gas Atmosphere Area tested Whole plume Focus study Not tested Time-lapse surveys at active and P&A well pads “P site” methodology assessment Groundwater Shallow production AZMI Injection zone Monitoring well at each injector Not tested EGL-7 UM cored test well. Push-pull test Not tested DAS pressure and EGL 7 pressure + fluids DAS multi-well multi tool array Not tested Geochemistry breakthrough Geo Mechanical test Not testedGMT-failed

24. Injector Producer (monitoring point) Observation Well High Volume Injection Test (HiVIT) Detail Area Study DAS GMT Phase II Five Study Areas Pipeline head& Separation facility 5km GIS base Tip Meckel Psite 24 EGL-7

25. Scientific and Technical Activities Theory and lab Field experiments Hypothesi s tested Commercial Deployment CO 2 retained in-zone- document no leakage to air-no damage to water CO 2 saturation correctly predicted by flow modeling Pressure (flow plus deformation) correctly predicted by model Above-zone acoustic monitoring (CASSM) & pressure monitoring Contingency plan Parsimonious public assurance monitoring Toward commercial ization Surface monitoring: approach verification Groundwater program Gas variation over time Subsurface perturbation predicted Sensitivity of tools; saturated-vadose modeling of flux and tracers CO 2 saturation measured through time – acoustic impedance + resistivity Tomography and change through time, gravity Microseismic test, RITE pressure mapping 3- D time lapse surface/ VSP seismic Acoustic response to pressure change over time Dissolution and saturation measured via tracer breakthrough and chromatography Lab-based core response to EM and acoustic under various saturations, tracer behavior Advanced simulation of reservoir pressure field 25

26. CO2 Injection Zone Above-Zone Pressure Monitoring –powerful tool for leakage detection Fifteen Months of pressure data Tip Meckel E-W Stratigraphic Section E-W Stratigraphic Section Middle Tuscaloosa Confining System Tuscaloosa DE injection zone AZMI 26

27. 27 High quality but complex injection zone Channelerosion Channelerosion Channelerosion Point bar Channelerosion Galloway 1983 Meander fluvial model Stratal slicing of 3-D volume Hongliu Zeng

28. DAS Monitoring Injector CFU 31F1 Obs CFU 31 F2 Obs CFU 31 F3 Above-zone monitoring F1F2F3 Injection Zone Above Zone Monitoring 10,500 feet BSL Closely spaced well array to examine flow in complex reservoir 68m 112 m Petrel model Tip Meckel 28

29. Probabilistic realization of permeability Jong-won Choi and JP Nicot BEG 29 FI F2 F3

30. Modeled breakthrough time at well F2 for each of the 10 permeability fields Jong-won Choi and JP Nicot BEG Observed breakthrough 30

31. Measuring distribution of CO 2 in the reservoir Well-based methods – Wireline logs in time lapse -RST – Temperature Cross well methods – Time- lapse ERT – Time – lapse acoustic (seismic) Arial methods – Azimuthal and walk away VSP – Time-lapse 3-D seismic from surface 31

32. F3F3 F2F2 F1 (Injection) Inter-well Distance (ft) 0.0 140367 Baseline Sep. 2009 Prelim. Cross-well Seismic Change Nov. 2010 Ajo-Franklin and Daley LBNL

34. Edge effects CO 2 masked by methane Preliminary surface 3-D difference 2007 (pre injection)- 11/2010 Injector Producer Trevor Richards, Denbury

35. High frequency fluid sampling via U-tube yields data on flow processes BEG, LBNL, USGS, ORNL, UTDoG, data compiled by Changbing Yang BEG Breakthrough of of CO 2 No samples Additional flow paths – more methane extracted Double injection rate Small diameter sampler with N 2 drive brings fluids quickly to surface with tracers intact CO 2 dissolution into brine liberates dissolved CH 4 Originally brine methane saturated 35

36. 36 P site Tests Effects of Vadose-Zone Carbon Cycling on Leaked Gasses Romanak and Yang, BEG

37. Modeling Underway SIMSEQ – interpartnership model development test GEM models – DAS and HiVIT LBNL – TOUGH2 DOE BES EFRC program - CFSES NRAP 37 GEM modeled CO 2 plume evolution HiVIT Nicot and Choi BEG Dec 2009March 2010 TOUGH2 DAS Doughty LBNL

38. Risk Assessment – Certification Framework Nicot, (BEG) Oldenburg (LBNL) and others, 2011 38

39. 39 Nicot, (BEG) Oldenburg (LBNL) and others, 2011 Risk Assessment – Certification Framework

40. Florida USGS SECARB Early Knowledge Sharing U.S. and International Programs Building from past experiences Exchange with sister projects Sharing results with future projects Frio Test 1&2 Plant Daniel GEO-SEQ Nagaoka Mountaineer SECARB Early Test SECARB Anthro Test Otway Decatur In Salah BIG CCS (Norway) Univ. Oslo (Norway) Scottish Center CCS RITE Microsesmic Florida Polk Co NRG CCPI SIM- SEQ More commercial CFSES IPAC-CO2 Examples Monitoring approaches Field experience Resistivity Residual gas InSAR Power plant site Monitoring approaches ERT Industrial Commercial integration 40 Ketzin NRAP AP/Leucadia /Hastings

41. Education and Outreach 41 GCCC Outreach: press, conferences, publications, testimony www.gulfcoastcarbon.com ARRA Funded Projects –STORE: sequestration training outreach research and education www.storeCO2now.comwww.storeCO2now.com –SECARB-Ed www.secarb-ed.org (led by SSEB)www.secarb-ed.org

42. Interim Conclusions of Study at Cranfield 1 million metric ton/year rate achieved Dec 20, 2009, 2.6 Million metric tons monitored since July 2008 Injection maintained >30 months Monitored with standard and novel approaches – History match pressure response – Above-Zone Monitoring Interval (AZMI) – Fluid flow measured/monitored with multiple tools in complex flow field – Quantification of dissolution – Knowledge sharing, outreach, risk assessment Export to commercial EOR/sequestration projects 42

43. SECARB Early Test Future Plans Extensive modeling Continue monitoring Downhole, P&T, AZMI P site, groundwater, Mine existing Cranfield data and share with others to increase predictive capabilities (e.g., SIM- SEQ inter-partnership model development program). 43

44. Attachment A 44

45. SECARB Phase II Stacked Storage Project Cranfield Test Site Host Company: Denbury Resources, Inc. near Natchez, Mississippi Coal Seam Project Host Company: CNX Gas Russell County, Virginia Coal Seam Project Host Company: El Paso E&P near Tuscaloosa, Alabama Mississippi Test Site Mississippi Power’s Plant Daniel Escatawpa, Mississippi 45

46. SECARB Phase III: Total Program Budget 46

47. Project Overview: Scope of Work Structure Organization (Tasks 1, 15 are unique) Organization (Tasks 2-13) – Task Level (Activity) Subtask Level (Field Test Site or Regional Effort) – Early Test is X.1 – Anthropogenic Test is X.2 – Regional Efforts are X.3 Organization (Tasks 1, 15 are unique) Organization (Tasks 2-13) – Task Level (Activity) Subtask Level (Field Test Site or Regional Effort) – Early Test is X.1 – Anthropogenic Test is X.2 – Regional Efforts are X.3 Example – Task 2.0: Public Outreach and Education Subtask 2.1: SECARB Early Test Public Outreach and Education Subtask 2.2: SECARB Anthropogenic Test Public Outreach and Education Subtask 2.3: Regional and Partnership Public Outreach and Education 47

48. SECARB Phase III: Tasks & Schedule All tasks are on schedule and budget. TaskStartEnd Continued Characterization of Regional Sequestration Options (TASK 1.0)10/1/073/31/17 Subtask 1.1: Improved Geologic Characterization of Regionally Significant Tuscaloosa/Woodbine Saline Formations1/1/0812/14/09 Subtask 1.2: Information for Use in the Update to the Regional Atlas10/1/079/25/08 Subtask 1.3: Participation in Capacity Subgroup10/1/079/25/08 Subtask 1.4: Further Geologic Characterization of Regionally Significant Large Capacity Saline Formations1/1/0912/31/12 Subtask 1.5: Updated Assessment of the CO2 Storage Potential of the SECARB Coals and the Organic Shales1/1/0912/17/10 Subtask 1.6: Reservoir Characteristic Data for Other SECARB Saline Reservoirs10/1/099/30/12 Subtask 1.7: Update of CO2 Sources in the SECARB Region10/1/099/30/12 Subtask 1.8: Provide Information for Use in the Updates to the Regional Atlas10/1/129/30/15 Subtask 1.9: Provide Information on Subsequent Updates to Regional Atlas10/1/153/31/17 Public Outreach and Education (TASK 2.0)10/1/079/30/17 Subtask 2.1: SECARB Early Test Public Outreach and Education10/1/079/30/17 Subtask 2.2: Anthropogenic Test Public Outreach and Education1/1/099/30/15 Subtask 2.3: Regional and Partnership Public Outreach and Education10/1/079/30/17 48

49. SECARB Phase III: Tasks & Schedule All tasks are on schedule and budget. TaskStartEnd Site Permitting (TASK 3.0)7/7/076/30/11 Subtask 3.1: Permitting for the Early Test Site7/7/075/15/09 Subtask 3.2: Permitting for the Anthropogenic Test Site1/1/096/30/11 Site Characterization and Modeling (TASK 4.0)10/1/0712/15/11 Subtask 4.1: Site Characterization and Modeling for the Early Test Site10/1/0712/15/11 Subtask 4.2: Site Characterization and Modeling for the Anthropogenic Test Site1/1/097/31/11 Well Drilling and Completion (TASK 5.0)10/1/079/30/11 Subtask 5.1: Early Test Site Well Drilling and Completion10/1/075/21/10 Subtask 5.2: Anthropogenic Test Well Drilling and Completion10/1/099/30/11 Infrastructure Development (TASK 6.0)10/1/079/30/11 Subtask 6.1: Early Test Site Infrastructure Development10/1/071/30/11 Subtask 6.2: Anthropogenic Test Site Infrastructure Development10/1/109/30/11 CO2 Procurement (TASK 7.0)9/28/082/28/11 Subtask 7.1: Early Test CO2 Procurement9/28/081/30/11 Subtask 7.2: Anthropogenic Test CO2 Procurement10/1/102/28/11 Transportation and Injection Operations (TASK 8.0)9/30/093/31/14 Subtask 8.1: Early Test CO2 Transportation and Injection Operations9/30/091/30/11 Subtask 8.2: Anthropogenic Test CO2 Transportation and Injection Operations1/1/113/31/14 Operational Monitoring and Modeling (TASK 9.0)11/15/073/31/15 Subtask 9.1: Early Test Operational Monitoring and Modeling11/15/071/30/11 Subtask 9.2: Anthropogenic Test Operational Monitoring and Modeling4/1/103/31/15 49

50. SECARB Phase III: Tasks & Schedule All tasks are on schedule and budget. TaskStartEnd Site Closure (TASK 10.0)10/1/073/31/17 Subtask 10.1: Cranfield Test Discontinuation10/1/0710/30/13 Subtask 10.2: Anthropogenic Test Site Closure10/1/153/31/17 Post-Injection Monitoring and Modeling (TASK 11.0)6/15/093/31/17 Subtask 11.1: Early Test Post-Injection Monitoring and Modeling6/15/099/30/14 Subtask 11.2: Anthropogenic Test Post-Injection Monitoring and Modeling6/1/153/31/17 Project Assessment (TASK 12.0)10/1/077/30/17 Subtask 12.1: Early Test Project Assessment4/1/089/15/15 Subtask 12.2: Anthropogenic Test Project Assessment10/1/107/30/17 Subtask 12.3: Regional Project Assessment10/1/077/30/17 Project Management (TASK 13.0)10/1/0710/31/17 Subtask 13.1: Project Management - GCCC10/1/077/30/17 Subtask 13.2: Project Management - EPRI10/1/077/30/17 Subtask 13.3: Project Management - SSEB10/1/0710/31/17 Preliminary Evaluation of Offshore Transport and Storage of CO2 (TASK 15.0)10/1/099/30/11 Subtask 15.1: Offshore Gulf of Mexico Resource Mapping - Federal Waters10/1/099/30/10 Subtask 15.2: Offshore Gulf of Mexico Resource Mapping - State Waters - Florida Panhandle, Alabama, Mississippi, and Louisiana10/1/099/30/10 Subtask 15.3: Legal and Regulatory Structures and Opportunities10/1/099/30/11 50