carbon capture and storage eor in the rockies may 15, 2007 wyoming pipeline authority richard...
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Carbon Capture and StorageEOR in the Rockies
May 15, 2007
Wyoming Pipeline Authority
Richard Vaccari VP Mergers & Acquisitions(619) [email protected]
Michael Hollein Principal Financial Analyst(619) [email protected]
Page 2
San Diego Gas & Electric
SouthernCalifornia Gas
Sempra Global
Sempra Generation
Sempra Pipelines & Storage
Sempra Utilities
Sempra LNG
Sempra Commodities
Sempra Energy
Page 3
2006
Net Income $1.4 billion
Total Assets $28.9 billion
Market Value $17.2 billion*
CAPEX $2.6 billion
Cash Flow from Operations $1.6 billion
Credit Rating (Unsecured) BBB+/Baa1
* At 4/24/07
Sempra Energy Profile
Page 4
Leading developer of LNG receipt facilities
Rockies Express is the largest pipeline built in 20 years
No. 1 non-E&P, natural gas marketer in North America
Largest gas utility in the U.S.
NEW SUPPLIESTRANSPORTATION
& STORAGEMARKETING DISTRIBUTION
150 Bcf of natural gas storage
Serving 29 million consumers
Growing Leadership Position
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Energia Costa Azul2006 Accomplishments
– Construction 68% complete and initial capacity fully sold (100% ownership and 1.0 Bcf/d capacity)– Completed open season and filed for expansion permits
2007 Goals– Prepare for commissioning by Q1 2008– Obtain capacity commitments and permits for expansion (Expansion operational beyond 2012)
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Liquefaction Capacity
Source: Internal Assessment
Uncommitted
0
50
100
150
200
2007 2008 2009 2010 2011 2012 2013 2014 2015
mtp
a
0
5
10
15
20
25
Bcf
/d
Total Capacity
0
100
200
300
400
2007 2008 2009 2010 2011 2012 2013 2014 2015
mtp
a
0
10
20
30
40
50
Bcf
/d
Committed
Uncommitted
Middle East
Atlantic
Pacific
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Source: NYMEX, 1 bbl = 5.82 MMbtu
NYMEX Oil
NYMEX Gas
$0
$2
$4
$6
$8
$10
$12
$14
1990 1995 2000 2005 2010 2015
US
$ /
MM
btu
Global Pricing
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Infrastructure requirements in North America
Globalization of energy markets
Supply-demand imbalances in energy markets
Climate change agenda
Fundamental Drivers
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The Perfect Storm for EOR in the Rockies
Policy, legislative and public opinion are driving companies to reduce their
CO2 footprint
Prices for CO2 credits will rise dramatically
High, sustained oil prices are a reality
Rocky Mountain reserve base is increasing providing a strong foundation
Electric prices are relatively low/reserve margins are good
Numerous research groups such as Big Sky Regional Partnership, Enhanced Oil
Recovery Institute, etc. provide valuable support
Clean coal projects are moving forward – huge reliable CO2 sources
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Mitigation - Targets, Measures and Costs
1Gt: giga-ton (billion tons)2 €1 = $1.25Source:World Resources Institute; McKinsey & Co.; American Academy for the Advancement of Science
42
68
25
2000 2030 BAU Neededreduction
Global GHG emissionsBillion metric tons CO2-equivalent
Reduction target Measures and costs
150
100
50
0
-50
-100
-150
Global GHG abatement cost in 2030€/metric ton CO2-equivalent
Abatement potentialBillion metric tons CO2-equivalent per year
Average = ~4
• Typical “business-as-usual” (BAU) forecasts project a doubling of GHG emissions from today’s 42 Gt1 CO2e over the next 50 years. This corresponds to ~68 Gt in 2030
• The atmospheric concentration of CO2 needed to prevent most damaging climate change is generally believed to be 500±50 ppm, or less than double the pre-industrial level of 280 ppm. The current concentration is 375 ppm. Very roughly, stabilization at 500 ppm requires emissions to be held near the present level
• Typical “business-as-usual” (BAU) forecasts project a doubling of GHG emissions from today’s 42 Gt1 CO2e over the next 50 years. This corresponds to ~68 Gt in 2030
• The atmospheric concentration of CO2 needed to prevent most damaging climate change is generally believed to be 500±50 ppm, or less than double the pre-industrial level of 280 ppm. The current concentration is 375 ppm. Very roughly, stabilization at 500 ppm requires emissions to be held near the present level
• The target reduction of ~25 Gt CO2e can be achieved with today’s technology at a marginal cost of ~$50/mt2
• Negative-cost energy efficiency accounts for ¼ of the reduction, significantly reducing the average cost to society to just $5/mt
• The gross total of $125 billion/year ($5/mt x 25 Gt) works out to ~0.2% of expected global GDP, or less than $15/person, before accounting for any potential benefits from GHG (and other) emission reductions
– Assuming 1.5% annual global per-capita GDP growth through 2030, per-capita income would be ~2% lower than in the absence of any climate-change regulation
• The target reduction of ~25 Gt CO2e can be achieved with today’s technology at a marginal cost of ~$50/mt2
• Negative-cost energy efficiency accounts for ¼ of the reduction, significantly reducing the average cost to society to just $5/mt
• The gross total of $125 billion/year ($5/mt x 25 Gt) works out to ~0.2% of expected global GDP, or less than $15/person, before accounting for any potential benefits from GHG (and other) emission reductions
– Assuming 1.5% annual global per-capita GDP growth through 2030, per-capita income would be ~2% lower than in the absence of any climate-change regulation
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California AB32 overview
• Reduce California’s GHG emissions to 1990 levels by 2020 (176 Mmt, or 14% from current; 30% from 2020 “business-as-usual”)
• Mandatory GHG emission reporting for significant emission sources
• Market mechanisms (e.g., cap-and-trade) allowed, but not required; if implemented, reductions required by law or regulation, or that would otherwise occur, are not creditable
• Regulations must achieve “maximum technologically feasible and cost-effective” emission reductions
• CARB to be lead regulatory authority
– Sector- and firm-level emission targets remain to be determined, but are not likely to be based on a sector-by-sector (or firm-by-firm) return to 1990 levels
• Governor may adjust deadlines for “extraordinary circumstances, catastrophic events or threat of significant economic harm”
0
100
200
300
400
500
600
700
1990 1995 2000 2005 2010 2015 2020
California GHG emissionsMillion metric tons CO2e
“Business-as-usual”
AB32 target
176 Mmt176 Mmt
Key provisions
• 6/30/07 Early-action measures released
• 1/1/08 Reporting rules adopted
• 1/1/09 Regulation scoping plan adopted
• 1/1/10 Early-action measures take effect
• 1/1/11 Emission-reduction regulations adopted
• 1/1/12 Emission-reduction regulations take effect
Timeline
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European CO2 Pricing
Source: Bloomberg
European Energy Exchange(CO2 Emission Pricing)
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.01/
2/20
06
2/2/
2006
3/2/
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4/2/
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5/2/
2006
6/2/
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7/2/
2006
8/2/
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9/2/
2006
10/2
/200
6
11/2
/200
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12/2
/200
6
1/2/
2007
2/2/
2007
3/2/
2007
4/2/
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($ /
met
ric
ton)
SPOT
Dec '08
Dec '10
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Steady source of relatively pure CO2 stream (pre-combustion sequestration)
Multiple sinks (miscible flood candidates) in Southern California
Sempra’s Role in the Carson Project
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CO2 —EOR: Sempra’s National Vision
* BP-CARSON project broadly overlays existing refineries (moved for pictorial clarity)
Page 16
Supply Growth in the Rockies
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Why Wyoming?
740 MMbbls2.96 TCF
1,090 MMbbls4.36 TCF
810 MMbbls3.24 TCF
1,050 MMbbls4.2 TCF
760 MMbbls3.0 TCF
20 MMbbls0.08 TCF
Significant Opportunity
4.5 Bbbls of technically recoverable reserves
18 TCF of sequestered CO2
Naturally Occurring CO2
CO2 reservoirs in CO, UT, WY, and MT
High concentration of CO2 in oil and gas reservoirs (anthropogenic CO2 from processing)
Industry Knowledge
Successful CO2 Operations in CO, ND, UT, and WY
4,470 MMbbls of Technically Recoverable through EOR17.9 TCF of CO2 Sequestration Potential
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Rocky Mountain Anthropogenic CO2 System
CO2 Sequestration
EOR Sinks
Anthropogenic Sources
Open Access Pipeline
CO2 SequestrationOn the Horizon
Best long-term CO2 mitigantLarge volumes possible
Most economic vehiclesNumerous opportunities in the Rockies
Only way to reduce footprintGasifiers most attractive but will take time to buildRefineries, chemical facilities, ammonia plants and large gas processing facilities attractive now!
Construct trunkline CO2 pipeline systemGather new sources over time
AB32Climate Action PartnershipEU StandardsNext election
Sempra Vision
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Why Sempra?
Financial Strength
Credibility
Anthropogenic Focus
CO2 Trading / Structuring
Vision