carbon capture and storage eor in the rockies may 15, 2007 wyoming pipeline authority richard...

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]

San Diego Gas & Electric

SouthernCalifornia Gas

Sempra Global

Sempra Generation

Sempra Pipelines & Storage

Sempra Utilities

Sempra LNG

Sempra Commodities

Sempra Energy

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

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

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)

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

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

Infrastructure requirements in North America

Globalization of energy markets

Supply-demand imbalances in energy markets

Climate change agenda

Fundamental Drivers

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

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

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

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/

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3/2/

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5/2/

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($ /

met

ric

ton)

SPOT

Dec '08

Dec '10

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

CO2 —EOR: Sempra’s National Vision

* BP-CARSON project broadly overlays existing refineries (moved for pictorial clarity)

Supply Growth in the Rockies

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

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

Why Sempra?

Financial Strength

Credibility

Anthropogenic Focus

CO2 Trading / Structuring

Vision

carbon capture and storage eor in the rockies may 15, 2007 wyoming pipeline authority richard...

Documents

sempra energy profile

leadership position

bcf of natural gas storage

natural gas marketer

storage eor

metric tons

liquefaction capacity

global ghg abatement