coal gasification - it's a (syn) gas gas gas

September 14, 2005

Coal GasificationIt’s a (Syn) Gas, Gas, Gas

Sam Kanes, CA, CFA – (416) 863-7798Matthew Protti, MBA – (416) 863-7846

Materials – Chemicals ResearchUtilities – Gas & Electric Utilities Research

Coal Gasification.qxd 9/14/2005 9:02 AM

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Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005

Contents Coal Gasification – It’s a (Syn) Gas, Gas, Gas ......................................................................2 Conclusions...............................................................................................................................2 Investment Highlights .............................................................................................................3 Coal-based Syngas................................................................................................................3 Why Coal-based Syngas .......................................................................................................3 Fixed/Variable IGCC Plant Economics................................................................................4 Typical IGCC Plant Cost ......................................................................................................4 Coal Gas History......................................................................................................................5 How IGCC Units Work ...........................................................................................................5 2005 U.S. Energy Bill Supports More U.S. IGCC Plants .....................................................6 China’s IGCC Gas for Methanol and Ammonia/Urea Plants Exploding...........................7 China’s Variable Coal Costs for IGCC Plants......................................................................9 China IGCC Conclusions ...................................................................................................10 Europe’s IGCC Gas-to-Methanol Plants.............................................................................11 Ruhr Oel IGCC Facilities ...................................................................................................11 BASF IGCC Facilities ........................................................................................................12 Shell/DEA Mineraloel IGCC..............................................................................................12 Total IGCC .........................................................................................................................12 IGCC Poly-Production Plant Economics.............................................................................13 IGCC and GTL Technology Players....................................................................................14 Existing IGCC and GTL Technology Features...................................................................15 Shell Global Solutions ........................................................................................................15 Lurgi AG ............................................................................................................................16 General Electric ..................................................................................................................16 IGCC Plant Builders...........................................................................................................17 Existing North American IGCC Plant Owners...................................................................18 Eastman/Air Products – Kingsport, Tennessee...................................................................18 Dynegy and PSI Energy – West Terre Haute, Indiana .......................................................18 Tampa Electric IGCC – Polk County, Florida....................................................................18 Coffeyville Resources – Coffeyville, Kansas .....................................................................18 Future IGCC Plant Owners in North America....................................................................18 Fischer-Tropsch (FT) Technology........................................................................................20 FT Technology Owners ......................................................................................................20 FT Technology Financial Thoughts – Rentech ...................................................................21 Conclusions.............................................................................................................................22 Appendix 1 – World Gasification Plants .............................................................................23 Appendix 2 – Energy Prices ..................................................................................................26

Note: All values in U.S. dollars unless otherwise indicated.

For Reg AC Certification and important disclosures see Appendix A of this report.

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September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas

Coal Gasification – It’s a (Syn) Gas, Gas, Gas This report summarizes the key highlights of coal gasification technologies, which are back in the limelight due to record oil and gas prices.

Conclusions

By some measures, overall coal consumption worldwide (up 6.9% in 2004) is growing faster than the use of any other source of energy, including oil, gas, hydro, and nuclear. In addition, the use of coal by China, India, and other coal-rich countries like the United States to produce synthetic gas (syngas) related products, displacing the use of expensive oil or natural gas, is about to sharply accelerate. Hurricane Katrina has also shown how vulnerable U.S. and world energy markets are to weather disruptions at offshore oil and gas facilities.

An acceleration of thermal coal-based syngas plants will have negative impacts on natural gas-based U.S. and European methanol and ammonia/urea producers, whose variable cash costs are spiralling deep into fourth quartile status on record oil and gas costs.

U.S. and European methanol and ammonia producers are the most vulnerable in the short term, as gas costs represent the highest percentage of their variable cash costs. We therefore continue with our 3-Sector Underperform ratings on methanol-based Methanex Corporation and nitrogen-based Agrium Inc., preferring NOVA Chemicals Corporation and/or Potash Corporation of Saskatchewan.

Longer term, European, U.S., and Japanese ethylene producers using either natural gas-based liquids or naptha may also be negatively affected, as coal-based syngas to ethylene (MTO) and/or propylene (MTP) technologies are proven in countries like China via joint ventures like Dow Chemicals’.

Sam Kanes, CA, CFA (416) 863-7798 sam_kanes@

scotiacapital.com

mailto: sam_kanes@ scotiacapital.com

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Investment Highlights

We continue to prefer ethylene-based NOVA Chemicals and potash-based Potash Corp. over methanol-based Methanex and ammonia/urea-based Agrium. Our relative preferences are due partly to China’s ramp-up of its coal-based gasification plants, which we believe will disrupt world methanol and ammonia/urea markets first.

Coal-based Syngas

Thermal coal-based syngas (not to be confused with synthetic natural gas) is produced from integrated gasification combined cycle (IGCC) plants, gas-to-liquids (GTL) plants, and other Fischer-Tropsch (FT) technology plants. Coal-based syngas production could have negative implications for some of Canada’s gas-based chemical and fertilizer companies. Investors interested in the economics of coal gasification as it relates to the use of coal and the production of methanol, ammonia/urea, power, and/or other gas-based production applications should find some value-added information in this Scotia Capital coal gasification research effort.

Why Coal-based Syngas

The explosion in global oil prices has led to an explosion in regional natural gas prices, particularly in North America and Europe. Natural gas prices have also risen due to natural gas’s clean burning properties and recent increased use for power generation. These price increases have led oil importing countries such as China, India, and now the United States to support more coal gasification projects, which chemically transform coal’s BTU content into syngas via sublimation techniques. Because this can be done at a cheaper price per BTU than the direct use of higher-cost natural gas, there has been a recent boom in the number of gasification plants being designed and constructed, mostly in China and, more recently, the Middle East, United States, India, and Australia. As shown in Exhibit 1, there is significant new world gasification capacity coming on stream in the next five years (see Appendix 1 for a complete list of projects).

Scotia Capital’s China analyst has observed that the current percentage of methanol and nitrogen production in China is approximately 62% coal based, 26% gas based, and 12% oil based. The coal-based percentage of methanol and nitrogen production will only rise, based on the number of coal-based nitrogen and methanol plants coming on stream (see pages 7-8 for details).

Exhibit 1 – World Gasification Capacity

Source: U.S. National Energy Technology Laboratory.

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U.S. natural gas costs have more than quadrupled in the past five years from $2.30/mmBtu to $11.00+/mmBtu at Henry Hub, increasing the U.S. cost for natural gas and electricity by more than $150 billion per year. In Europe, industrial gas costs are typically set using residual fuel oil #6 prices with a four- to six-month time lag. The gas costs in Europe have more than doubled over the past five years as well, to $5.50/mmBtu currently from $2.65/mmBtu, using Zeebrugge, Belgium, as a price point (see Appendix 2).

We attended a coal gasification conference during Q1/05 in Denver, Colorado, that attracted about 120 people and included Canadian representation from TransCanada Corp., Manitoba Hydro, Environment Canada, and Natural Resources Canada. Our interest was piqued by the rapid increase of coal gasification project announcements on the world scene, particularly in China, where a majority of its new methanol and ammonia capacity is being built using coal gasification technologies owned by General Electric (acquired from ChevronTexaco) and Royal Dutch Shell. This has led to our cautious stance on methanol-based Methanex and nitrogen-based Agrium.

Fixed/Variable IGCC Plant Economics

For fixed capital costs, AEP (AEP-N) estimated on March 18, 2005, that a new IGCC unit in the United States built by 2010 would cost $1.72 million per MW of power capacity, about 15%-20% more than for a conventional pulverized coal unit. IGCC units produce only half of the pollution of a pulverized unit.

In the Wabash River, United States, IGCC plant project, non-fuel operating and maintenance costs for the syngas facility, including the power block at a mature IGCC, was estimated at 5.2% of installed capital.

The variable cash cost of converted coal BTUs to coal gas can be as low as $1.05/mcf if gasification plants are located at or beside a coal mine. If the coal gasification facility is surrounded by methanol, ammonia, clean diesel, and other applicable plants (i.e., power), an optimum configuration can raise full energy conversion efficiency up to 60%. The $1.75/mcf full conversion gas price is what is stimulating so many new coal gasification projects in China and, to a lesser degree, India, Australia, and the United States to-date (see Exhibit 2).

Typical IGCC Plant Cost

The typical turnkey cost for a coal IGCC plant is about $1.7 million per MW ($1.033 billion for 600 MW), split 30% for gasification, 15% for syngas cleanup, 40% for

the power island, and 15% for cryogenic air separation. The size of an IGCC plant is comparable to that of a conventional coal-fired power boiler plant. An IGCC plant does not require additional area for scrubber sludge treatment or ash dewatering. The cost is up to 25% greater than conventional units when adding methanol and/or ammonia/urea production. Industry experts estimate that 30%-50% of the fixed cost per tonne to build these plants is solely to transform natural gas into syngas, depending on their syngas usage configuration; therefore, ammonia and methanol plants built beside coal gasification plants only require 50%-70% of the capital cost per tonne that natural gas feedstock plants require. This offsets the larger up-front cost for coal gasification units.

Exhibit 2 – On-site IGCC Economics

Assume: $10/tonne coal mine site@ 10,000 BTU/tonne= 10 mcf (@ 1:1)= $1/mcf

Coal Gas Conversion Efficiency 95% - 97%Coal Gas/mcf = $1.05/mcf

Final Energy Conversion Efficiency up to 60%Final Gas Cost/mcf = $1.75/mcf(depends on how many co-products or poly-products are addedand variable sulphur extraction, water removal, air separation andother clean-up costs) Source: Scotia Capital estimates.

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Coal Gas History The first crude IGCC units began making “town gas” for lighting street lamps in the 1890s. Once natural gas was discovered and gas pipelines were built, the use of town gas was phased out throughout most of the world. In the 1970s, interest in coal gasification revived as crude oil moved from $3/bbl to $40/bbl. This led to the first U.S. IGCC plant in Beulah, North Dakota, which was built with U.S. government support in the early 1980s. Southern California Edison followed with a 100 MW plant near Barstow, California. The next two IGCCs were built as greenfield sites in Florida and Indiana with financial support from the Department of Energy’s (DOE) Office of Fossil Energy.

How IGCC Units Work

IGCC gasification has been proven at more than 100 global sites (see Exhibit 3 for a diagram of GE’s gasification technology). IGCC technologies can convert a wide range of resources, including coal, lignite, bio-mass, petroleum residues, and petroleum coke, from refineries to produce a very clean gas called syngas. This in turn can be used to produce power, clean diesel, chemicals, and/or fertilizer by-products. Syngas is unique because it can be used for both power production and chemical/fertilizer applications. Coal gasifiers blast coal with steam and either air or oxygen to break it down into a rich mix of carbon and hydrogen gases (sublimation). The most common technique partially oxidizes the coal feedstock (preferably high BTU-content anthracite) with pure oxygen inside a reactor. The carbon and hydrogen from the feedstock are converted into a mixture composed primarily of hydrogen and carbon monoxide. The resulting mixture is commonly called synthetic gas or syngas. This is the first major step in the chemical process used to make methanol and ammonia.

Syngas has a heating value of only 125-350 mBTU per mcf, which is 3x-8x lower than that of natural gas. It must be cleaned before it can be used as a gas turbine fuel. This requires removing sulphur compounds, ammonia, metals, alkylates, ash, and particulates. To make IGCC units more economically attractive, additional plants that can produce methanol, ammonia, and/or other chemicals that work directly from syngas are typically pursued, particularly in China.

Exhibit 3 – General Electric’s Integrated Gasification Combined Cycle System

Source: General Electric.

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2005 U.S. Energy Bill Supports More U.S. IGCC Plants

The vast majority of the 100 plus IGCC plants and projects built and being planned are located in China. The United States has only five relatively small but commercially successful coal gasification units. They are located in Healy, Alaska; Kingsport, Tennessee; Tampa, Florida; West Terre Haute, Indiana; and near Kansas City, Kansas (Coffeyville).

The finalized 2005 U.S. Energy Bill, which was passed in early August 2005, has allocated $1.3 billion over five years to support new U.S. coal gasification plants for up to 50% of the total project cost. The Energy Bill also provides loan guarantees to those IGCC units that are at least 400 MW in size. Section 1703 “Eligible Projects” of the Energy Bill states that the U.S. Energy Secretary may guarantee gasification projects using coal, biomass, petroleum coke, or a combination thereof where at least 65% of the net useful annual energy output must be from electricity. The IGCC plant must also have a technology that is capable of sequestering the coal’s CO2 content. Additionally, Section 413 “Western Integrated Coal Gasification Demonstration Project” spells out the standards for a new project to demonstrate an IGCC project, dictating all types of economically feasible western U.S. coal.

The U.S. Energy Bill states that the eligible entity that applies for support to employ domestic coal gasification should apply the non-electricity portion of the coal energy to be transformed into chemicals, fertilizers, glass, steel, petroleum residues, forest products, and agriculture, including feedlots or dairy operations.

The Energy Bill subsidies and guarantees may support 5,000 MW of clean coal technology, but proposals by others suggest the U.S. government could expand its support for 35,000-50,000 MW of coal gasification capability by 2015 and an additional 35,000 MW by 2020. Since the United States currently consumes 20% and produces 21% of the world’s coal supplies and has approximately 27% of the world’s recoverable coal reserves (U.S. EIA), we consider it likely that coal gasification technologies will continue to be advanced in the United States. We do not believe that any Canadian chemical or fertilizer company will likely benefit from this effort, while some U.S. chemical and fertilizer companies, like Eastman (EMN-N), Air Products (APD-N), and Coffeyville (existing users of U.S. coal gasification), will.

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China’s IGCC Gas for Methanol and Ammonia/Urea Plants Exploding By year-end 2005, we estimate that China will have 6 million tonnes of methanol production capacity or about 16% of world capacity, based on January-July 2005 production of 3 million tonnes and new plants coming on stream. Based on the announcements for capacity additions, we estimate China will have about 15 million tonnes or 28%-29% of world capacity by 2010. Currently, Chinese urea capacity is around 35 million tonnes or 35% of the world market, and we estimate that it will likely rise to 42 million-43 million tonnes or 40% of global capacity by 2010. See Exhibit 4 for a list of over 9 million tonnes of IGCC-fed Chinese ammonia/urea projects that are under construction or have been finished since 2004.

For methanol production sourced from IGCC coal specifically, China has about 9,600,000 tonnes per year in potential capacity additions between now and 2009, or about 25% of world capacity (see Exhibit 5). However, the economics of many of these projects are unknown to us. Also, the location of these IGCC plants relative to the location of coal supplies will have a huge impact on feedstock costs.

China has announced about 500 coal-fired power plants to produce 100,000 MW of coal-fired capacity at a cost of about US$120 billion. Some of these will be coal gasification oriented (IGCC), where multiple co-products (poly-products) will be made, including power, methanol, ammonia, clean diesel, and/or distillates.

Exhibit 4 – Chinese Ammonia/Urea Coal Gasification Capacity Additions

Capacity AdditionProject Location (tonnes) Start-up Commissioning TypeJinchen Coal Chemical Shanxi, Jinchen 900,000 2004 CoalHuajing Liaoning 536,000 2004 CoalHaolianghe Heilongjiang 300,000 2004 CoalTianJi Shanxi, Jinchen 600,000 2005 CoalFengxi Shanxi, Jinchen 520,000 2005 CoalLanhua Shanxi, Jinchen 300,000 2005 CoalHensheng Jiangsu 150,000 2004 2005 CoalSinopec Qingan Qing'an 585,400 2005 2005 CoalBenxi Benxi 680,000 2004 2005 CoalHuajing 1 Xinjiang 520,000 2004 2005 CoalWulashan Inner Mongolia 160,000 2006 CoalHK Jingxin Inner Mongolia 800,000 2005 2006 CoalXingyi Guizhou 300,000 2005 2007 CoalHuajing 2 Xinjiang 520,000 2006 2007 CoalYunwei Yunnan 500,000 2007 2008 CoalHegang Heilongjiang 1,000,000 2006-2010 CoalErduosi/Sigma Inner Mongolia 1,040,000 2005 n.a. CoalTotal 9,411,400

Source: Chinese media reports; Beijing Oriental Agri-Business Consultant (BOABC).

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Methanol-specific IGCC plants are not the only source of incremental new methanol capacity coming on stream in China. Poly-product plants, where multiple co-products such as ethylene (MTO) and propylene (MTP) are produced from methanol using coal-gas feedstock also appear to have attractive economics, as well as the benefit of low-cost syngas supply (see Exhibit 6). Most coal-producing Chinese provinces have realized that coal-based chemical production would be a relatively easy way to use their abundance of coal and expand their position on the value chain, especially when the current high energy price environment makes IGCC plant economics very attractive. The actual total capacity additions from these poly-product plants are uncertain, as the Chinese government has only approved a few pilot poly-product projects up to this point.

Exhibit 5 – Chinese Coal Gasification to Methanol Capacity Additions

Year Country Plant 000 Tonnes/Year Coal or Gas

2005 China Jiaohua Group, Shanxi 120 Coal2005 China Xingjiang United Chemicals 100 Coal2005 China Hebei Qi'an Chemical 200 Coal2005 China Shenmu Shaanxi 1 200 Coal

620

2006 China Yongchen Coal & Power 500 Coal2006 China Henan Anyang 200 Coal2006 China Dalian Huafeng/Hegang 1 600 Coal2006 China Shaanxi Xianyang 1 200 Coal2006 China Huayi Group (Shanghai Coking) 300 Coal

1,800

2007 China Pingzhuang Coal Group & Zekai Group, Inner Mongolia 1 600 Coal2007 China Zhongzhu Aluminium 200 Coal2007 China Yanzhou, Shandong Zoucheng 1 500 Coal2007 China Henan Zhongyuan 400 Coal2007 China Huaibei Coalmine/Anhui 1 200 Coal2007 China Shenmu Shaanxi 2 400 Coal

2,300

2007-2008 China Anhui Huaibei/Minmetals/Shanghai Coking 400 Coal2007-2008 China Anhui Shengyuan 1 500 Coal2007/2008 China Gansu Huating Coal 1 600 Coal2008 China Dalian Huafeng/Hegang Mining 2 600 Coal2008 China Inner Mongolia, South Austrailian Resources 1 200 Coal2008 China Xinjiang Tianfu 200 Coal

2,500

2009 China Hainan/CNOOC 2 1,2002009 China Huaibei Coalmine/Anhui 2 400 Coal2009 China URUMQI/Xinjiang 800

2,400

Total Methanol Capacity Additions 2005-2009 9,620 Source: CMAI; Chinese Web sites; Scotia Capital.

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China currently produces 35% of the world’s coal (Industrial Information Resources Inc.), consumes 28%, and has 13% of world recoverable coal supplies (U.S. EIA). In inner China’s Shanxi Province, numerous projects are underway to turn coal, natural gas, and oil into chemicals. In a July 25, 2005, Reuters article, Mayor Wang of Yulin, China, called the region “the Kuwait of China” due to generous proven reserves of oil, natural gas, and coal. There are 6 major and 30 minor petrochemical projects in this area alone. In the article, Guohua was featured as an integrated electricity plant and coal mine that will feed a 600,000 tonne per year coal-to-methanol plant.

According to the official China Daily, Chinese domestic prices for coal have recently declined slightly due to “moderate oversupply” in the fragmented sector and could be expected to continue to decline through 2007 due to better rail transportation, increased capacity, and declining demand from industries such as steel. The China Daily also cited industry sources as stating that coal prices in production areas such as Shanxi and Shandong have declined to RMB50/tonne from RMB80/tonne in July. Similarly, Forbes reported that Guo Yuntao, director of the China Coal Industry Development Research Centre, stated in a July coal conference in Beijing that China is expected to produce an additional 200 million tons of coal in 2006 year over year, while demand will likely rise by some 150 million tons year over year, causing some downward pressure in prices.

China’s Variable Coal Costs for IGCC Plants Coal prices are heavily manipulated by provincial and local authorities in China. After rising about 100% in 1H/05 versus 1H/04, China’s coal costs have been easing lately on double-digit production increases and declining freight costs that can easily be triple that of coal production costs. The Asian Chemical News publication has made references to new methanol and ammonia/urea plants that will work from syngas and have typically pointed to coal prices in the $10/tonne area at the coal mine site (RMB80/tonne) used for validating the economics of the IGCC and related facility projects. According to Fang Dewei, consultant for the China Chemical Industry Productivity centre (CCIPC), Yulin, Erdos in Inner Mongolia, and Luliang in Shanxi are good locations for IGCC, methanol-to-olefins, and methanol-to-propylene plants. Currently, the cost of coal in Yulin is estimated at RMB60/tonne or $7.50/tonne. Production costs per tonne for methanol were estimated between $74.17-$105.22/tonne, with coal prices ranging from RMB60-RMB170/tonne or $7.42-$21/tonne for various locations (see Exhibit 7).

Exhibit 6 – Proposed Chinese Coal Gasification to Poly-Product Capacity Additions Methanol

Year Country Plant 000 Tonnes/Year Oil, LNG, Other Coal or Gas Process2006 China Shanxi Lanhua/Shandong Jiutai 1 500 300 Coal DME2007 China Shenhua Coal, Mongolia 3,200 Coal Direct Liquidization2008-2010 China Shanxi Lanhua/Shandong Jiutai 2 1,000 700 Coal DMEn.a. China Anglo, Shaanxi Yulin 2,400 Coal MTOn.a. China Huabei coal power group, Inner Mongolia 1,200 150 Coal MTOn.a. China China Chemical Engineering/HK YiYe, Shaanxi Yulin 2,400 Coal MTOn.a. China Chongqin Jiantao2 900 Gas MTPn.a. China Inner Mongolia, South Austrailian Resources 2 800 Coal CTLn.a. China Anhui Shengyuan 2 1,500 Coal MTPn.a. China Yanzhou, Shandong Zoucheng 2 440 Coal CTLn.a. China Xianfeng Coal, Yunnan 1,023 Coal Direct Liquidizationn.a. China Yanzhou Coal, Shandong 3,200 Coal Direct Liquidizationn.a. China Shenhua Coal/Sasol, Shaanxi Yulin 3,000 Coal CTLn.a. China Shenhua Coal/Sasol, Ninxia 3,000 Coal CTLn.a. China Xinghe Coal/Sasol, Shanxi Jingchen 3,000 Coal CTLn.a. China U.S. Lemai/Longtai, Shanix Yangquan Coal CTLn.a. China Shenhua/HK Jiali/Baotou Mintian, Inner Mongolia, Baoto 1,800 Coal MTOn.a. China Torch Investment/Anhui Huaibei 500 Coal MTPn.a. China Yunnan Yujing 2,500 Coal MTPn.a. China Yusen Coal Chemical, Shanxi 2,000 Coal MTPn.a. China Yuheng Coal Chemical, Shanxi 2,400 Coal MTPn.a. China Binchang Coal Chemical, Shanxi 1,500 Coal MTP2008-2015 China Gansu Huating Coal 2 1,200 Coal MTP2008-2015 China Gansu Huating Coal 3 2,000 Coal CTL

Total Poly-Capacity Additions 23,040 19,573 Source: CMAI; Chinese Web sites; Scotia Capital.

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The longer-term direction for China’s mine site coal prices has to be upwards. On August 31, 2005, the BBC noted that China is suspending production at 7,000 of its 24,000 coal mines, of which 1,324 have been specifically earmarked for closure. Most are private and small coal mines that have abysmal safety records. About 3,400 Chinese miners have been killed from January 1 to August 15, 2005, in fires, floods, and other work-related accidents. Li Wenge from the Coal Industry Group of Shanxi province stated that coal supplies were unlikely to be seriously affected by these shutdowns, as most of the pits to close are relatively small.

China IGCC Conclusions Since China is not a Kyoto signatory, its rapidly expanding use of coal for power and coal gasification (IGCC) for chemicals and fertilizers continues unabated. Its new methanol and ammonia urea plant economics based on IGCC syngas appear to have cash costs that would be placed in the second quartile of the methanol cost curve. Shortly, China will be in a net surplus position to export both methanol and urea to high-cost areas like the United States and Europe.

Exhibit 7 – Chinese Coal Gasification to Poly-Product Capacity Additions

Relative Coal Price Coal Price Methanol Cash Cost Methanol Cash CostLocation Location RMB US$ RMB/tonne US$/tonneTengzhou, Shandong East Coast 150 18.54 850.00 105.07Jincheng, Shanxi North 100 12.36 851.22 105.22Jinzhong, Shanxi North 70 8.65 808.22 99.90Jingxi, Beijing Northeast 170 21.01 835.20 103.24Chongqing, Sichuan Southwest 150 18.54 766.84 94.79Yulin, Shaanxi Northwest 60 7.42 600.00 74.17 Note: RMB/US$ exchange rate used = 8.09.

Source: China Chemical Industry Productivity Centre; Asian Chemical News; Scotia Capital.

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Europe’s IGCC Gas-to-Methanol Plants

Western Europe has numerous gasification plants that make methanol, ammonia, electricity, and hydrogen. A large number of these multi-product IGCCs are located in Germany. While growth of European IGCC plants is not on the same scale as in China, many of the poly-products plants that are located in huge industrial complexes will likely continue to run and create methanol even after natural gas feedstock methanol plants, such as those in the Netherlands (Methanor), are priced out of the cost curve. These IGCC plants are also very flexible between methanol, hydrogen, and ammonia production (see Exhibit 8). Other natural gas-based European methanol plants, such as Statoil’s plant in Norway, which produces 900,000 tonnes per year and is in the planning process for a 300,000 tonne per year expansion, are subject to unusual plant economics. Norway punishes its offshore oil producers that flare associated natural gas production with a flare gas tax; thus, the decision to make methanol or not for companies like Statoil is dependent on the cost of the gas flare tax. We have not seen Statoil decrease its methanol plant production due to economics at any methanol price since it was built in the 1990s.

Ruhr Oel IGCC Facilities The Ruhr Oel facility built in 1972 is run by BP/Ruhr Oel (Veba Oel). It produces methanol at the Gelsenkirchen-Scholven industrial complex in Germany. The facility also has an ethylene, aromatics, and ammonia plant on site. The high flexibility in swing production of hydrogen ammonia and methanol allows for relatively attractive production economics. Production of methanol there is approximately 260,000 tonnes per year. The methanol is used in combination with rapeseed methyl ester (RME) to create a bio-fuel. The plant uses Lurgi’s gasification technology. Methanol is created from syngas using petroleum by-products (refinery residues). We do not know the allocated cost of these residues to the methanol plant.

Exhibit 8 – Poly-Product Flexibility

400

500

600

700

800

550 600 650 700 750 800

Methanol Tonnes/day

Am

mon

ia T

onne

s/da

y

Hydrogen: 50 Nm3/h H2

Hydrogen: 30 Nm3/h H2

Flexible Production

Source: Veba Oel; Scotia Capital.

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BASF IGCC Facilities

BASF runs the Ludwigshafen “Verdun” complex, which has 250 different chemical plants. BASF creates economies of scale by linking these plants so that by-products from one plant can be used in another. The feedstock for most of these plants is naptha or liquefied petroleum gas. The methanol plant’s feedstock is sourced from an IGCC plant using GE’s technology, which uses refinery residue and heavy fuel oil. Methanol production from this complex is about 430,000 tonnes per year, which is used as feedstock for further value-added chemical products. BASF’s methanol production is also likely somewhat isolated from the methanol production cost curve, as it is an integral step in the creation of further value-added chemicals and a user of refinery residues/heavy fuel oil.

Shell/DEA Mineraloel IGCC

The Shell/DEA Mineraloel facility produces 450,000 tonnes of methanol per year using syngas as feedstock. Part of the gas feedstock used in the Shell/DEA Mineraloel methanol plant is from a coal gasification plant at Berrenrath, Germany, which was a pilot plant for using the Winkler high-temperature gasification process. That IGCC plant produces syngas from lignite coal. The other part of the gas feedstock used for the methanol facility comes from an IGCC plant that uses residual fuel oil and cracked refinery residue as a feedstock. One of the plants uses GE’s technology and one uses Shell’s technology.

Total IGCC

The Total facility in Germany produces 600,000 tonnes of methanol per year. Previously this facility was known as the Mitteldeutsche Erdoel Raffinerie (MIDER) project, a joint venture led by Elf (now Total) to test the IGCC concept. Using Shell’s gasification technology, the facility produces methanol, hydrogen, and electricity from a petroleum gasifier that uses residual fuel oil as its feedstock.

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IGCC Poly-Production Plant Economics The following exhibits give an appreciation of the complexity, flexibility, and evolution of Veba Oel’s IGCC facilities (now also owned by Ruhr Oel and British Petroleum), which make it difficult to position this type of methanol production on the global cost curve.

Exhibit 9 – Hydrogen and Industry-Gas Production

Source: Veba Oel.

Exhibit 10 – Gasification and Refiners Partner Well

Source: Veba Oel.

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IGCC and GTL Technology Players

U.S.-based General Electric (GE-N), Syntroleum (SYNM-N), Rentech (RTK-A), ConocoPhillips (COP-N), and Exxon Mobil (XOM-N), Europe-based Shell (RDS-A-N) and Lurgi AG, and South Africa-based Sasol (SSL-N) and MossGas are most of the companies that have proprietary IGCC and/or GTL technologies. In Europe, British Gas (BG-L)/Lurgi (BGL JV) are involved in gasification of not just coal but other biomass and low-cost fuels like asphaltenes. Its pilot project near Berlin, Germany, produces power and methanol using coal and various wastes. South Africa-based Sasol has historically been the world’s leading player in coal gasification to liquid technologies since the 1950s. Both Shell and Syntroleum attended the January 2005 Denver Coal Gasification Conference (see Exhibit 11).

Exhibit 11 – Gasification Plants by Technology

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000S

hell

Sas

ol/L

urgi

GE

Oth

er

Con

ocoP

hilli

ps

MW

th S

ynga

s

Planned

Operating

Source: U.S. National Energy Technology Laboratory (2004); Sasol (2005).

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Existing IGCC and GTL Technology Features

Shell Global Solutions

As of early 2005, Shell’s IGCC gasification process was being used in 26 coal gasification plants in China, Japan, Indonesia, India, Europe, the United States, and the Caribbean. Shell Global Solutions has 12 active projects in China as of late 2004 that it had won, including those in Exhibit 12.

Shell Global Solutions’ IGCC technology process has the following features (see Exhibit 13):

1. It uses a dry coal feedstock versus a slurry coal feedstock, so less water is used, with less wastewater treatment required.

2. Its availability is claimed to be over 90% due to a low-maintenance gasifier wall that protects the vessel.

3. Its overall net efficiency to produce power using thermal plant conversion exceeds 43%, while competitor technologies are about 38%.

4. It provides greater coal feedstock flexibility, as it can handle coal with high ash content.

Exhibit 12 – Recent Projects in China Using Shell’s SCGP Technology

Owner Location Feedstock Syngas 106 Final Contract Start-upt/d m3/d Product Signed date

Shuanghuan Chem. Yingcheng, Hubei 900 1.4 Ammonia 2000 2004Liuzhou Chem. Liuzhou, Guanxi 1200 1.7 Ammonia 12/2001 2005Sinopec/Shell Dongting, Hubei 2000 3.4 Ammonia 3/2001 2005Sinopec Hubei, Hubei 2000 3.4 Ammonia 2002 2005Sinopec Anqing, Hubei 2000 3.4 Ammonia 2002 2005Dahua Chem. Dalian, Liaoning 1100 1.7 Methanol 1/2003 2006Yuntianhua Anning, Yunnan 2700 3.4 Ammonia 8/2003 2006Yunzhanhua Huashan,Yunnan 2700 3.4 Ammonia 8/2003 2006Shenhua Majiata, Mongolia 4500 6.3 Hydrogen 2/2004 2006Yongcheng Chem. Yongcheng, Henan 2150 3.1 Methanol 3/2004 2007 Source: Shell Global Solutions.

Exhibit 13 – Shell’s SCGP Technology – Typical Process Line-up

Source: Shell Global Solutions.

16


Lurgi AG

The latest LP methanol synthesis process (MegaSyn) developed by Lurgi is used to produce crude methanol (MegaMethanol) from synthesis gas (H2, CO, and CO2). Lurgi’s new MegaSyn syngas units could be 30%-40% cheaper per tonne due to scale. This will keep down the cost per tonne for new methanol facilities ($0.5 billion for 1.8 million tonnes/year). In the downstream distillation, crude methanol is processed to high-purity methanol. It has led to six orders to date for gas-based 5,000 tonne/day methanol plants with the latest from Malaysia (two in Thailand, one in Iran, and two in Saudi Arabia). See Exhibit 14 for the simplified process flow diagram, which shows the process variant Combined Converter Synthesis. With this process, a water-cooled reactor is combined with a gas-cooled reactor, yielding a higher methanol yield at a lower cost than conventional Lurgi methanol synthesis. That makes Lurgi’s new technology suited to high-capacity methanol production facilities that double production levels, to 5,000 tonnes/day versus 2,500 tonnes/day. Lurgi’s technology has also doubled the average size of future ammonia plants to 4,000 tonnes/day from 2,000 tonnes/day (called MEGAMMONIA). It will also be used for GTL, MTO, MTP, and other chemical/fertilizer applications.

General Electric

General Electric (GE) advertises its IGCC plant technology features versus existing pulverized coal technologies as follows over a 25-year life span:

2 million tons less CO2.

67,000 tons less sulphur.

26,000 tons less nitrogen oxide.

If 100% of U.S. conventional coal plants operated today on GE’s IGCC technology, it would save 320 million tons of CO2 or 25% of U.S. greenhouse gas reduction proposed for the United States under the Kyoto Protocol. It would also save about 390 billion gallons of water because the process uses 30% less water. Also, GE’s IGCC can reduce mercury emissions by 50%. GE’s IGCC process is the most widely used in China.

Exhibit 14 – Lurgi’s Technology

Source: Lurgi.

17


IGCC Plant Builders

GE entered a global joint venture with Bechtel in 2004 to pursue building IGCC plants. The alliance will integrate the development, marketing, commercialization, and implementation of GE’s IGCC process with Bechtel’s engineering, procurement, and construction expertise. GE and Bechtel are studying a commercial IGCC unit for Cinergy (CIN-N), likely for Indiana. GE and Bechtel worked on the 100 MW Cool Water IGCC plant demonstration in California in 1984 and Tampa Electric’s 250 MW Polk power plant in Florida, which began operations in 1996. GE Energy is the leading supplier of gas turbines for IGCC applications, having provided gas turbines for more than 60% of the world’s operating IGCC plants.

Other alliances providing similar turnkey contract solutions in IGCC include Black & Veatch with Uhde GmbH, and Flour (FLR-N) with ConocoPhillips. Canada’s SNC-Lavalin (SNC-T) is also pursuing building these IGCC and related chemical plants, with recent bidding successes in China with building coal gasification-based methanol plants.

The possibility of carbon constraints and their future environmental cost per tonne of CO2 are critical in the commercial deployment of IGCC in the United States. Plant developers there will also need to consider the geological sequestration opportunities for CO2 capture in siting IGCC facilities. The AEP IGCC plant could be located in the Ohio River Valley, where geological formations are amenable to CO2 injection.

18


Existing North American IGCC Plant Owners

There are no Canadian IGCC plants or owners. In the United States, the following IGCC plants have been built with the following U.S. owners:

Eastman/Air Products – Kingsport, Tennessee

Both of these publicly traded U.S. companies have relatively small U.S. methanol plants that are running on coal-based gas in Kingsport, Tennessee. The U.S. Energy Department provided $92.7 million, while the Air Products (APD-N) and Eastman partnership provided $121 million to demonstrate a liquid phase methanol plant technology that would operate on gas derived from coal. This was one of 38 joint government and industry projects that were initiated under the Reagan administration to demonstrate clean coal technologies. The plants have operated since April 1997 with a remarkable on-stream availability of 97.5%, the highest of all the demonstration clean coal technologies supported in the 1980s and 1990s in the United States. Prior to this project, Eastman Chemical also made methanol using synthesis gas from its coal gasification facility.

Dynegy and PSI Energy – West Terre Haute, Indiana

At Dynegy’s (DYN-N) and PSI Energy’s Wabash River Coal Gasification re-powering project in West Terre Haute, Indiana, coal is gasified and the gases are used to generate electricity. Coal is sourced from the Illinois basin, with petroleum coke also used. The associated power plant’s capacity is 296 MW. It cost $438 million in 1994 to build the IGCC unit. This was evenly split between the Department of Energy and the owners. GE supplied the frame gas turbine. The SO2 capture was over 99%, with particulate emissions below detectable levels.

Tampa Electric IGCC – Polk County, Florida

Suppliers to this 1996-built IGCC plant project included GE for the gas turbine, Texaco for the coal gasification technology, and Air Products for the air separation unit. Bechtel was the architect and engineer. The 315 MW plant is in Mulberry, Polk County, Florida. Coal used came from Illinois (#5 and #6), Pittsburgh (#8), West Kentucky (#11), and Kentucky (#9). Petroleum coke, petroleum coke blends, and bio-mass are also used. The DOE contributed $151 million (49%) and Tampa Electric contributed $152 million (51%). The plant heat rate is 9.65 mmBTU/MWh. It removed 97% of sulphur, while particulate matter emissions were 0.04lb/MWh or 95% lower than for conventional coal plants.

Coffeyville Resources – Coffeyville, Kansas

In late 1996, Farmland moved forward with Texaco on an ammonia/UAN plant complex using petroleum coke-based slurry for feedstock. Coffeyville bought this asset from Farmland out of Farmland’s bankruptcy proceedings. Coffeyville, a U.S. nitrogen producer and refiner, would have gone public in Q3/05 via a $300 million New York IPO. It was instead bought by a group of private investors led by Goldman Sachs. Coffeyville makes 350,000 tons of ammonia and 500,000 tons of UAN nitrogen products per year. It estimated in its IPO prospectus that its variable gas costs are in the $1.50-$2.50/mcf range using petroleum coke-based gas.

Future IGCC Plant Owners in North America

According to Stephen Johnson, President of American Clean Coal Fuels, there are at least six credible U.S. IGCC/poly-product plant projects currently underway. One of the U.S. Energy Department’s top priorities is to develop a poly-product coal plant that could co-produce hydrogen and other chemical compounds simultaneously with the generation of electricity. AEP is one of the most active U.S. energy utilities, soliciting the U.S. Energy Department’s financial support for a new IGCC plant. AEP has short-listed several states for its first IGCC plant site and is currently negotiating for final state and regulatory treatment.

19


AEP is the largest user of pulverized coal to make power in the United States. In late 2004, it announced that it would build one or more commercial-scale base-load power IGCC plants as part of its future plans to mitigate the economic impacts of its emissions. IGCC plants produce only about half the overall emissions of a pulverized coal fired power plant (see Exhibit 15).

Cinergy, another major user of U.S. coal to produce power, has also stepped forward to endorse IGCC. It has signed a letter of intent with GE Energy and Bechtel to study constructing a 500-600 MW commercial IGCC plant, likely at Cinergy’s Edwardsport, Indiana, power station. A final decision is expected in mid- to late 2006.

Southern Co. (SO-N) is looking at an IGCC unit in Florida to produce power.

The ERORA Group, a private U.S. development and consulting company, decided to go with IGCC technology for a 2010 build in the United States. While its primary purpose will be to produce 677 MW of

power, ERORA signed an agreement with Eastman Gasification Services to study the feasibility of chemicals co-production. Combining two or more co-products into an IGCC diversifies sources of revenue and helps reduce an IGCC’s cost towards pulverized coal unit costs. Eastman produces methanol from coal gases in Kingsport, Tennessee, for its acetic acid and UAM production requirements.

Calpine’s (CPN-N) CEO has stated that it is close to deals with refiners that will give it access to petroleum coke. Calpine wants to add coal/petroleum coke gasification units at some of its power stations if it is able to secure long-term supplies. The CEO also estimated that gasifying petroleum coke into power could, over time, make up 10% of its fleet power capacity.

In Canada, Suncor (SU-T) has stated that it is studying using petroleum coke at or near its Alberta Oil Sands operations for steam and power generation. This may have negative implications for the Mackenzie Valley gas pipeline if Suncor pursues this avenue more aggressively. A number of industry specialists have noted that initial Mackenzie Valley gas flows would not get past the oil sands projects, as their demand for both steam and power is enormous. Given the vast coal fields in Alberta and the high levels of CO2 emissions in Alberta, it would not surprise us to see some form of IGCC plant development there.

In September 2004, the Canadian Clean Power Coalition (CCPC) completed phase 1 of a feasibility study on retrofitting three existing coal-fired plants in Canada that use bituminous, sub-bituminous, and lignite coal (likely SaskPower’s, which is a CCPC member). On August 24, 2005, the North Dakota-based Partners for Affordable Energy joined the CCPC. The study to use low-grade coals should be completed in 1H/06. The primary purpose of these retrofits will be power generation.

In Ontario, the head of the Ontario Power Authority stated that Ontario should not rule out clean coal technologies, even though the objective of the current Liberal government is to close 100% of the existing Ontario coal-fired power plants.

Exhibit 15 – IGCC Facility Emissions

0

500

1000

1500

2000

2500

3000

3500

Existing Converted

Tons

/Yr

Note: Total emissions, including PM10, VO, CO, NOx, SO2.

Source: Rentech Inc.

20


Fischer-Tropsch (FT) Technology

Fischer-Tropsch technology is similar to IGCC in that it can convert carbon-bearing materials such as coal, natural gas, and petroleum coke into liquids via syngas. The rising cost of oil has sparked a renewed interest in gas-to-liquids (GTL) production as well, according to SRI’s Ronald Smith. Low-cost stranded gas below $1.00/mcf and a supportive fiscal regime make GTL projects viable in today’s high oil price world (i.e., in Qatar).

The most popular technology for GTL is Fischer-Tropsch, with the most active company using FT being Sasol. Its GTL plants are capable of producing 15%-25% paraffinic naptha, 50%-55% middle distillates (i.e., jet fuel, kerosene) and 0%-30% lubes and waxes. In contrast, a typical refinery would produce 40% middle distillates, 27% gasoline, 20% light oils, 10% naptha, and 3% LPG.

FT Technology Owners

South Africa-based Sasol’s and U.S.-based Rentech’s technologies are more focused on coal/ coke-based feedstock, while Conoco’s, Exxon’s, Shell’s, and Chevron/Sasol’s technologies are more focused on gas-based feedstock (see Exhibit 16).

Sasol has 45 years of commercial experience, with 160,000 bpd derived from coal feedstock. MossGas (also from South Africa) has 11 years of experience and 22,500 bpd of FT liquids that are derived from natural gas, while Shell (Malaysia) has nine years and 15,000 bpd derived from natural gas. Rentech has nine active FT and GTL proposals underway, but none have gone to construction yet. Tulsa-based Syntroleum announced on August 16, 2005, that it had signed an agreement with Australian-based Linc Energy to evaluate a coal-to-liquids FT project in Queensland, Australia. Linc has an underground gasification process that has the potential to significantly reduce the capital cost of coal-to-liquids plants. Linc Energy has more than 4 billion tons of coal reserves and intends to develop multiple coal-to-liquids projects using its nitrogen-diluted syngas.

Exhibit 16 – Technology Comparison


21


FT Technology Financial Thoughts – Rentech

Rentech had offered Royster-Clark (now a publicly traded Canadian income deposit security – ROY.UN) about $52 million to buy Royster-Clark’s East Dubuque ammonia/urea complex in Illinois. The agreement expired on March 15, 2005. The deal was conditional on completing both debt and equity financing. Rentech was going to convert the Royster-Clark natural gas-based nitrogen complex to coal gasification for about $400 million, to start commercial operations in January 2009. Rentech and Royster-Clark have agreed to continue the study regarding the conversion of the plant from the use of natural gas to Illinois coal gasification. The conversion would have led to the following plant configuration (see Exhibit 17).

The economics of using #2 Illinois coal delivered at $30/ton provide the following value-added options for Rentech:

Revenue per coal ton 1. Electric power production $70

2. Electric power and syngas $109

3. FT fuels and electric power $124

4. Fertilizer, FT fuels, and electric power $149

The Rentech deal for Royster-Clark’s Illinois nitrogen complex failed, as Royster-Clark decided instead to go public in Canada. Rentech has six other prospective coal-to-liquids projects in the United States, one in Bolivia, one in Indonesia, and joint ventures in China, Australia, and Papua New Guinea.

In the past 18 months, more than $25 billion in GTL investments has been announced. See Exhibit18 for some highlighted projects.

Exhibit 17 – Poly-Generation Model – Plant Production Summary

Plant As Is Plant Converted to CoalFeedstockNatural Gas (mmBTU/day) 33,000 0Coal (tons/day) 0 2,700

ProductsAmmonia (tons/day) (Prod/Sales) 830 / 439 975 / 605

UAN (tons/day) 671 671CO2 (tons/day) 502 502Granular Urea (tons/day) 50 50Urea Solutions (tons/day) 9 9Nitric Acid (tons/day) 26 27

FT Liquids (bbls/day) 0 1,800Sulphur (tons/day) 0 81Power (MW/day) -14 17

Note: Assuming typical 830 tons per day ammonia facility.


Exhibit 18 – Proposed GTL Projects

Bbl/day US$ InvestmentExxonMobil 154,000 $7 billionShell 140,000 $5 billionMarathon 140,000 $5 billionSasol 200,000 $6 billionConocoPhillips 80,000 $2.5 billion

Note: Sasol 35,000 bbl/day by Q1/06. All others 2009.


22


Conclusions Soaring oil and gas costs worldwide are leading to a revival of interest in coal-to-gas or coal-to-liquids technology development and implementation. These technologies are receiving increasing government support, as pressures on trade imbalances due to high oil and natural prices continue to grow.

The applications of IGCC, GTL, and FT include converting coal to power, chemical, nitrogen fertilizer, clean diesel, and other value-added products. Within our area of interest, China is rapidly building out excess coal-based methanol and ammonia/urea capacity that could be used to enter or re-enter global export markets for these products while they are still being made in North America and Europe with record high oil and gas costs.

We therefore continue to recommend 3-Sector Underperform ratings on both methanol-based Methanex and ammonia/urea-based Agrium. Our relative Canadian chemical and fertilizer preferences remain ethylene-based NOVA Chemicals and potash-based Potash Corp.

23


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kler

1952

MSK

-Rad

naM

etha

nol P

lant

Form

er Y

ugos

l aEu

rope

GE

1987

Air L

iqui

de (R

hone

-Pou

lenc

)Po

nt-d

e-C

laix

Syn

gas

Plan

tFr

ance

Euro

peG

E19

89O

xoch

imie

S.A

.La

véra

Syn

gas

Plan

tFr

ance

Eur

ope

GE

1977

So

urce

: U.S

. Dep

artm

ent o

f Ene

rgy

– N

atio

nal E

nerg

y Te

chno

logy

Lab

orat

ory.

Appendix 1 – World Gasification Plants


24

Exhi

bit 1

.1 –

Wor

ld G

asifi

catio

n Pl

ants

(con

t’d)

Plan

t Ow

ner

Plan

t Nam

eC

ount

ryR

egio

nTe

chno

logy

Nam

eYe

arSt

arte

dBA

SF A

GLu

dwig

shaf

en H

2 Pl

ant

Ger

man

yEu

rope

GE

1968

Air L

iqui

de (D

ow S

tade

Gm

bH)

Stad

e Sy

ngas

Pla

ntG

erm

any

Euro

peG

E19

91M

ittel

deut

sche

Erd

öl-R

affin

erie

Gm

bHLe

una

Met

hano

l Anl

age

Ger

man

yEu

rope

Shel

l19

85R

hein

brau

nVi

lle M

etha

nol P

lant

Ger

man

yEu

rope

GE

1985

SAR

Gm

bHSA

R P

lant

-IIG

erm

any

Euro

peG

E19

86D

EA M

iner

aloe

l AG

Wes

selin

g M

etha

nol P

lant

-VI

Ger

man

yEu

rope

Shel

l19

69Ve

ba O

il R

efin

ing

& Pe

troch

emic

als

Gm

bHG

else

nkirc

hen-

Scho

lven

Am

mon

ia/M

etha

nol P

lant

Ger

man

yEu

rope

Shel

l19

73Se

kund

ärro

hsto

ff-Ve

rwer

tung

szen

trum

Schw

arze

Pum

pe P

ower

/Met

hano

l Pla

ntG

erm

any

Euro

peG

SP19

92BA

SF A

GLu

dwig

shaf

en O

xoch

emic

als

Plan

tG

erm

any

Euro

peG

E19

66C

hem

isch

e W

erke

Hül

s AG

Mar

l Oxo

chem

ical

s Pl

ant

Ger

man

yEu

rope

GE

1967

Che

mis

che

Wer

ke H

üls

AGM

arl O

xoch

emic

als

Plan

tG

erm

any

Euro

peG

E19

69BA

SF A

GLu

dwig

shaf

en M

etha

nol P

lant

Ger

man

yEu

rope

GE

1974

Cel

anes

e C

hem

ical

(Ruh

rche

mie

)O

xoch

emic

als

Plan

tG

erm

any

Euro

peG

E19

77Se

kund

ärro

hsto

ff-Ve

rwer

tung

szen

trum

Schw

arze

Pum

pe P

ower

/Met

hano

l Pla

ntG

erm

any

Euro

peSa

sol L

urgi

Dry

Ash

1964

Rüd

ersd

orfe

r Zem

ent G

mbH

Fuel

Gas

Pla

ntG

erm

any

Euro

peSa

sol L

urgi

CFB

1996

Seku

ndär

rohs

toff-

Verw

ertu

ngsz

entru

mSc

hwar

ze P

umpe

Pow

er/M

etha

nol P

lant

Ger

man

yEu

rope

BGL

1999

Seku

ndär

rohs

toff-

Verw

ertu

ngsz

entru

mSc

hwar

ze P

umpe

Pow

er/M

etha

nol P

lant

Ger

man

yEu

rope

Saso

l Lur

gi M

PG19

68H

ydro

Agr

i Bru

nsbü

ttel G

mbH

Brun

sbüt

tel A

mm

onia

Pla

ntG

erm

any

Euro

peSh

ell

1978

DEA

Min

eral

oel A

GW

esse

ling

Syng

as P

lant

Ger

man

yEu

rope

GE

2000

Uns

peci

fied

Ow

ner

Fond

otoc

e G

asifi

catio

n Pl

ant

Ger

man

yEu

rope

Ther

moS

elec

t19

99Fe

rtiliz

er C

orp.

of I

ndia

Ltd

.N

anga

l Am

mon

ia P

lant

Indi

aA

sia/

Aust

ralia

Shel

l19

78IB

IL E

nerg

y Sy

stem

s Lt

d. (I

ES)

Sang

hi IG

CC

Pla

ntIn

dia

Asia

/Aus

tralia

GTI

(IG

T) U

-GAS

2002

Guj

arat

Nar

mad

a Va

lley

Ferti

lizer

s C

o. L

td.

Nar

mad

a Am

mon

ia/M

etha

nol P

lant

Indi

aAs

ia/A

ustra

liaG

E19

82N

atio

nal F

ertil

izer

Ltd

.Pa

nipa

t Am

mon

ia P

lant

Indi

aAs

ia/A

ustra

liaSh

ell

1978

Nat

iona

l Fer

tiliz

er L

td.

Bath

inda

Am

mon

ia P

lant

Indi

aAs

ia/A

ustra

liaSh

ell

1979

Ney

veli

Lign

ite C

orp.

Ltd

.N

eyve

li Sy

ngas

Pla

ntIn

dia

Asia

/Aus

tralia

Shel

l19

79In

dian

Oil

Cor

p. L

td.

Para

dip

Gas

ifica

tion

H2/

Pow

er P

lant

Indi

aAs

ia/A

ustra

liaSh

ell

2006

api E

nerg

ia S

.p.A

.ap

i Ene

rgia

S.p

.A. I

GC

C P

lant

Italy

Euro

peG

E20

01IS

AB E

nerg

yIS

AB E

nerg

y IG

CC

Pro

ject

Italy

Euro

peG

E19

99SA

RLU

X s

rlSA

RLU

X IG

CC

Pro

ject

Italy

Eur

ope

GE

2000

PRA

OIL

Gel

a R

agus

a H

2 Pl

ant

Italy

Euro

peG

E19

63Pr

axai

r (En

iChe

m)

Rav

enna

Syn

gas

Plan

tIta

lyEu

rope

GE

1958

ATI S

ulci

sSu

lcis

IGC

C P

roje

ctIta

lyEu

rope

Shel

l20

06AG

IP R

affin

azio

ne S

.p.A

.Ag

ip IG

CC

Italy

Euro

peSh

ell

2005

Ube

Am

mon

ia In

dust

ry C

o. L

td.

Ube

City

Am

mon

ia P

lant

Japa

nAs

ia/A

ustra

liaG

E19

84M

itsub

ishi

Pet

roch

emic

als

Yokk

aich

i Syn

gas

Plan

tJa

pan

Asia

/Aus

tralia

Shel

l19

61N

ippo

n Pe

trole

um R

efin

ing

Co.

Neg

ishi

IGC

CJa

pan

Asia

/Aus

tralia

GE

2003

Ube

Am

mon

ia In

dust

ry C

o. L

td.

Ube

City

CO

Pla

ntJa

pan

Asia

/Aus

tralia

GE

1982

Mits

uiC

O P

lant

Japa

nA

sia/

Aust

ralia

GE

1961

Dai

cel

Met

hano

l Pla

ntJa

pan

Asia

/Aus

tralia

GE

1982

Shel

l MD

S (M

alay

sia)

Sdn

. Bhd

.Bi

ntul

u G

TL P

lant

Mal

aysi

aAs

ia/A

ustra

liaSh

ell

1993

Nuo

n Po

wer

Bug

genu

mBu

ggen

um IG

CC

Pla

ntN

ethe

rland

sEu

rope

Shel

l19

94Sh

ell N

eder

land

Raf

finad

erij

BVPe

rnis

She

ll IG

CC

/Hyd

roge

n Pl

ant

Net

herla

nds

Euro

peSh

ell

1997

EPZ

Amer

icen

trale

Fue

l Gas

Pla

ntN

ethe

rland

sE

urop

eSa

sol L

urgi

CFB

2000

Loto

s R

effin

ery

Gda

nsk

Pola

ndEu

rope

Shel

l20

08Q

uim

igal

Adu

bos

Barr

eiro

Am

mon

ia P

lant

Portu

gal

Euro

peSh

ell

1984

Portu

cel

Rod

ao A

CFB

G U

nit

Portu

gal

Euro

peFW

AC

FBG

1985

Qat

ar P

etro

leum

Pear

l GTL

Qat

arA

frica

/Mid

dle

Eas

tSh

ell

2009

Lind

e AG

Sing

apor

e Sy

ngas

Pla

ntSi

ngap

ore

Asia

/Aus

tralia

GE

2000

Esso

Sin

gapo

re P

ty. L

td.

Cha

wan

IGC

C P

lant

Sing

apor

eAs

ia/A

ustra

liaG

E20

01Sa

sol C

hem

ical

Indu

strie

s (P

ty.)

Ltd.

/Sas

ol L

td.

Saso

l-I F

-T S

ynga

s Pl

ant

Sout

h Af

rica

Afric

a/M

iddl

e Ea

stSa

sol L

urgi

Dry

Ash

1955

Saso

l (Pt

y) L

td.

Saso

l Syn

fuel

sSo

uth

Afric

aAf

rica/

Mid

dle

East

Saso

l Lur

gi D

ry A

sh19

77Sa

sol (

Pty)

Ltd

.G

asifi

catio

n Ea

st P

lant

Sout

h Af

rica

Afric

a/M

iddl

e Ea

stSa

sol L

urgi

Dry

Ash

1982

Luck

y G

olds

tar C

hem

ical

Ltd

.N

aju

Amm

onia

Pla

ntSo

uth

Kore

aAs

ia/A

ustra

liaSh

ell

1969

Luck

y G

olds

tar C

hem

ical

Ltd

.Yo

chon

Oxo

chem

ical

s Pl

ant

Sout

h Ko

rea

Asia

/Aus

tralia

Shel

l19

96BP

Sam

sung

CO

Pla

ntSo

uth

Kore

aAs

ia/A

ustra

liaG

E19

97El

coga

s SA

Puer

tolla

no G

CC

Pla

ntSp

ain

Euro

pePR

ENFL

O19

97G

E Pl

astic

s Es

paña

Car

tage

na S

ynga

s Pl

ant

Spai

nEu

rope

GE

1997

Akzo

Nob

el/B

erol

-Kem

iSt

enun

gsun

d O

xoch

emic

als

Plan

tSw

eden

Euro

peG

E19

80Sy

dkra

ft AB

Värn

amo

IGC

C D

emon

stra

tion

Plan

tSw

eden

Euro

peFW

PC

FBG

1993

So

urce

: U.S

. Dep

artm

ent o

f Ene

rgy

– N

atio

nal E

nerg

y Te

chno

logy

Lab

orat

ory.

25


Exhi

bit 1

.1 –

Wor

ld G

asifi

catio

n Pl

ants

(con

t’d)

Plan

t Ow

ner

Plan

t Nam

eC

ount

ryR

egio

nTe

chno

logy

Nam

eYe

a rSt

arte

dAS

SIKa

rlsbo

rg A

CFB

G U

nit

Swed

enEu

rope

FW A

CFB

G19

84C

hine

se P

etro

leum

Cor

p.Ka

ohsu

ing

Syng

as P

lant

Taiw

anAs

ia/A

ustra

liaG

E19

84BP

/For

mos

aM

ai L

iao

Ref

iner

yTa

iwan

Asia

/Aus

tralia

GE

2004

BP C

hem

ical

s, L

td.

Hul

l Syn

gas

Plan

tU

nite

d K

ingd

o mEu

rope

GE

1989

Air P

rodu

cts

(ICI)

Billin

gham

Oxo

chem

ical

s Pl

ant

Uni

ted

King

dom

Euro

peG

E19

59Ai

r Pro

duct

s &

Che

mic

als,

Inc.

LaPo

rte S

ynga

s Pl

ant

Uni

ted

Stat

esN

orth

Am

eric

aG

E19

96D

akot

a G

asifi

catio

n C

o.G

reat

Pla

ins

Synf

uels

Pla

ntU

nite

d S

tate

sN

orth

Am

eric

aSa

sol L

urgi

Dry

Ash

1984

East

man

Che

mic

al C

o.Ki

ngsp

ort I

nteg

rate

d C

oal G

asifi

catio

n Fa

cilit

yU

nite

d St

ates

Nor

th A

mer

ica

GE

1983

Fron

tier O

il &

Ref

inin

g C

o. (T

exac

o In

c.)

El D

orad

o G

asifi

catio

n Po

wer

Pla

ntU

nite

d St

ates

Nor

th A

mer

ica

GE

1996

Prem

cor,

Inc.

Del

awar

e C

lean

Ene

rgy

Cog

ener

atio

n Pr

ojec

tU

nite

d St

ates

Nor

th A

mer

ica

GE

2002

Mot

iva

Ente

rpris

es L

LCC

onve

nt H

2 P

lant

Uni

ted

Sta

tes

Nor

th A

mer

ica

GE

1984

Glo

bal E

nerg

y, In

c.W

abas

h R

iver

Ene

rgy

Ltd.

Uni

ted

Stat

esN

orth

Am

eric

aE-

GAS

(Des

tec/

Dow

)19

95C

offe

yville

Res

ourc

es R

efin

ing

and

Mar

ketin

gC

offe

yville

Syn

gas

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

GE

2000

T &

P Sy

ngas

(Tex

aco/

Prax

air)

Texa

s C

ity S

ynga

s Pl

ant

Uni

ted

Stat

esN

orth

Am

eric

aG

E19

96Ta

mpa

Ele

ctric

Co.

Polk

Cou

nty

IGC

C P

roje

ctU

nite

d St

ates

Nor

th A

mer

ica

GE

1996

Dow

(for

mer

Uni

on C

arbi

de C

orp.

)Ta

ft Sy

ngas

Pla

ntU

nite

d St

ates

Nor

th A

mer

ica

GE

1995

Glo

bal E

nerg

y, In

c.Li

ma

Ener

gy IG

CC

Pla

ntU

nite

d S

tate

sN

orth

Am

eric

aE-

GA

S (D

este

c/D

ow)

2008

Mille

nium

(Qua

ntum

)La

Porte

Syn

gas

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

GE

1979

Hoe

chst

Cel

anes

eO

xoch

emic

als

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

GE

1979

Exxo

nMob

ilBa

ytow

n Sy

ngas

Pla

ntU

nite

d St

ates

Nor

th A

mer

ica

GE

2000

Hoe

chst

Cel

anes

eH

oust

on O

xoch

emic

als

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

Shel

l19

77Ex

xon

Che

mic

al C

o.Ba

ton

Rou

ge O

xoch

emic

als

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

Shel

l19

78Su

noco

Oxo

chem

ical

s Pl

ant

Uni

ted

Stat

esN

orth

Am

eric

aG

E19

83D

ow (f

orm

er U

nion

Car

bide

)Te

xas

City

Syn

gas

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

GE

1983

Texa

s Ea

stm

anO

xoch

emic

als

Plan

tU

nite

d St

ates

Nor

th A

mer

ica

GE

1998

Air L

iqui

de A

mer

ica

Cor

p.Lo

ngvi

ew G

asifi

catio

n P

lant

Uni

ted

Sta

tes

Nor

th A

mer

ica

GE

2002

Exce

lsio

r Ene

rgy

Mes

aba

Ene

rgy

Pro

ject

Uni

ted

Sta

tes

Nor

th A

mer

ica

E-G

AS

(Des

tec/

Dow

)20

09St

eelh

ead

Ener

gySt

eelh

ead

Ener

gyU

nite

d St

ates

Nor

th A

mer

ica

E-G

AS (D

este

c/D

ow)

2010

Vang

uard

Syn

fuel

sU

nite

d St

ates

Nor

th A

mer

ica

E-G

AS (D

este

c/D

ow)

2008

Lake

Cha

rles

Cog

ener

atio

n LL

CC

ITG

O L

ake

Cha

rles

Uni

ted

Stat

esN

orth

Am

eric

aE-

GAS

(Des

tec/

Dow

)20

09R

ente

ch D

evel

opm

ent

Ren

tech

& R

oyst

er C

lark

Uni

ted

Stat

esN

orth

Am

eric

aE-

GAS

(Des

tec/

Dow

)20

09

Sour

ce: U

.S. D

epar

tmen

t of E

nerg

y –

Nat

iona

l Ene

rgy

Tech

nolo

gy L

abor

ator

y.

26


Appendix 2 – Energy Prices

Exhibit 2.1 – WTI Crude Oil, European Fuel Oil and Henry Hub Natural Gas Prices

0

10

20

30

40

50

60

70

80

31-D

ec-9

9

5-M

ay-0

0

8-S

ep-0

0

12-J

an-0

1

18-M

ay-0

1

21-S

ep-0

1

25-J

an-0

2

31-M

ay-0

2

4-O

ct-0

2

7-Fe

b-03

13-J

un-0

3

17-O

ct-0

3

20-F

eb-0

4

25-J

un-0

4

29-O

ct-0

4

4-M

ar-0

5

8-Ju

l-05

USD/

Bbl

0

2

4

6

8

10

12

USD/

Mm

btu

Resid European Fuel Oil WTI Henry Hub Natural Gas

Source: Scotia Capital; Bloomberg.

27


Notes

28


Notes

29


Notes

30


Appendix A – Important DisclosuresCompany Ticker Disclosures*

Agrium Inc. AGU H6 NOVA Chemicals Corporation NCX H4, S Potash Corporation of Saskatchewan, Inc. POT T

I, Sam Kanes, certify that (1) the views expressed in this report in connection with securities or issuers that I analyze accurately reflect my personal views and (2) no part of my compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by me in this report.

The Research Analyst’s compensation is based on various performance and market criteria and is charged as an expense to certain departments of Scotia Capital Inc., including investment banking.

Scotia Capital Inc. and/or its affiliates: expects to receive or intends to seek compensation for investment banking services from issuers covered in this report within the next three months; and has or seeks a business relationship with the issuers referred to herein which involves providing services, other than securities underwriting or advisory services, for which compensation is or may be received. These may include services relating to lending, cash management, foreign exchange, securities trading, derivatives, structured finance or precious metals.

For Scotia Capital Research Analyst standards and disclosure policies, please visit http://www.scotiacapital.com/disclosures.

* Legend H4 The Canadian Index Analyst/Associate, in his/her own account or in a related account, owns securities of this issuer. H6 The Portfolio Strategist/Associate, in his/her own account or in a related account, owns securities of this issuer. S Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and

outstanding equity securities of this issuer. T The Research Analyst/Associate has visited material operations of this issuer.

http://www.scotiacapital.com/disclosures

We have a three-tiered rating system, with ratings of 1-Sector Outperform, 2-Sector Perform, and 3-Sector Underperform.Each analyst assigns a rating that is relative to his or her coverage universe.

Our risk ranking system provides transparency as to the underlying financial and operational risk of each stock covered. Statisticaland judgmental factors considered are: historical financial results, share price volatility, liquidity of the shares, credit ratings, analystforecasts, consistency and predictability of earnings, EPS growth, dividends, cash flow from operations, and strength of balancesheet. The Director of Research and the Supervisory Analyst jointly make the final determination of all risk rankings.

Definition of Scotia Capital Equity Research Ratings & Risk Rankings

Scotia Capital Equity Research Ratings Distribution*

Distribution by Ratings and Equity and Equity-Related Financings*

*As at August 31, 2005.Source: Scotia Capital.

35% 27%17%

26%

51%

22%

0%

10%

20%

30%

40%

50%

60%

1-Sector Outperform

2-Sector Perform 3-SectorUnderperform

Percentage of companies covered by Scotia CapitalEquity Research within each rating category.

Percentage of companies within each rating categoryfor which Scotia Capital has undertaken an underwriting liability or has provided advice for a feewithin the last 12 months.

Ratings

1-Sector OutperformThe stock is expected to outperform the average total return of theanalyst’s coverage universe by sector over the next 12 months.

2-Sector PerformThe stock is expected to perform approximately in line with theaverage total return of the analyst’s coverage universe bysector over the next 12 months.

3-Sector UnderperformThe stock is expected to underperform the average total returnof the analyst’s coverage universe by sector over the next 12 months.

Other RatingsTender – Investors are guided to tender to the terms of thetakeover offer.

Under Review – The rating has been temporarily placed underreview, until sufficient information has been received andassessed by the analyst.

Risk Rankings

LowLow financial and operational risk, high predictability offinancial results, low stock volatility.

MediumModerate financial and operational risk, moderate predictabilityof financial results, moderate stock volatility.

HighHigh financial and/or operational risk, low predictability offinancial results, high stock volatility.

Caution WarrantedExceptionally high financial and/or operational risk, exceptionallylow predictability of financial results, exceptionally high stockvolatility. For risk-tolerant investors only.

VentureRisk and return consistent with Venture Capital. For risk-tolerant investors only.

For the purposes of the ratings distribution disclosure the NASD requires members who use a ratings system with terms differentthan “buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our 1-Sector Outperform, 2-SectorPerform, and 3-Sector Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutraland sell ratings, respectively.

31


Head of Equity ResearchJames McLeod, CFA (assoc. Leslie MacDonald)................................................. (416) [email protected]

Supervisory AnalystClaude King, CFA (assoc. Leslie MacDonald)...................................................... (416) [email protected]

Director of AdministrationErika Osmond ....................................................................................................... (416) [email protected]

China StrategyEric Yan (assoc.)................................................................................................... (416) [email protected]

Consumer DiscretionaryAutomobiles & ComponentsDavid Tyerman (assoc. Caren Fields) .................................................................. (416) [email protected] Henderson, P.Eng. (assocs. Kevin Kaminski, Warren Hastings) ................ (416) [email protected] & LeisureMurray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) [email protected] Mitchell, CFA (assoc. Kent Crosland)...................................................... (416) [email protected] Balgopal, CFA (assoc. Daniel Eisen) .......................................................... (416) [email protected]

Consumer StaplesFood & BeveragesMurray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) [email protected] & Staples RetailingRyan Balgopal, CFA (assoc. Daniel Eisen) .......................................................... (416) [email protected]

EnergyEnergy Equipment & ServicesPeter Doig, CFA ................................................................................................... (403) [email protected] & GasGreg Pardy, CFA (assocs. Carl Landry, Gavin Wylie) ......................................... (403) [email protected] Doig, CFA ................................................................................................... (403) [email protected]

FinancialsBanks & Diversified FinancialsKevin Choquette, CFA ......................................................................................... (416) 863-2874(assocs. Deirdre Neary, Michael Fricker, Sarika Goel) [email protected] MacKinnon, FSA, FCIA, MAAA (assoc. Airan Friedman, CFA)........................ (416) [email protected]

Health CareCampbell Parry, PhD .......................................................................................... (416) [email protected] Maletic, BSc Pharm, CFA ............................................................................ (416) 863-7708 [email protected]

Income UnitsDiversified Income TrustsTony Courtright, CA (assoc. Manash Goswami)................................................... (416) [email protected] Ector, CFA (assoc. Kristian Schneck) ........................................................ (403) [email protected] Blake (assoc. Katie Tabesh, CA) ................................................................ (416) [email protected] Malik (assoc. Maggie Fanari, CA)......................................................... (416) [email protected] Quettawala, CFA (assoc. Matt Sheehan) ................................................... (416) [email protected] & Gas Royalty TrustsBrian Ector, CFA (assoc. Kristian Schneck) ........................................................ (403) [email protected] Hofer, CFA (assoc. Karma Roste-Hagen, CA) ...................................... (403) [email protected] Jain, CFA (assoc. Mario Saric, CA, CFA)............................................. (416) [email protected]

Equity research reports published by Scotia Capital are available electronically via: Bloomberg, First Call – Research Directand Multex. Institutional clients with questions regarding distribution of equity research should contact us at 1-800-208-7666.This report has been prepared by SCOTIA CAPITAL INC. (SCI), a subsidiary of the Bank of Nova Scotia. Opinions, estimates andprojections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinionscontained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express orimplied, is made as to their accuracy or completeness. Neither SCI nor its affiliates accepts any liability whatsoever for any lossarising from any use of this report or its contents. This report is not, and is not to be construed as, an offer to sell or solicitation ofan offer to buy any securities and/or commodity futures contracts. The securities mentioned in this report may not be suitable for allinvestors nor eligible for sale in some jurisdictions. This research and all the information, opinions, and conclusions contained in itare protected by copyright. This report may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor maythe information, opinions, and conclusions contained in it be referred to without the prior express consent of SCI. SCI is authorizedand regulated by The Financial Services Authority. U.S. Residents: Scotia Capital (USA) Inc., a wholly owned subsidiary of SCI,accepts responsibility for the contents herein, subject to the terms and limitations set out above. Any U.S. person wishing furtherinformation or to effect transactions in any security discussed herein should contact Scotia Capital (USA) Inc. at 212-225-6500.TORONTO MONTREAL CALGARY VANCOUVER NEW YORK BOSTON LONDON

TM

Scotia Capital Equity Research TeamIndustrials

Building Products & MachineryDavid Tyerman (assoc. Caren Fields) .................................................................. (416) [email protected] & AerospaceJames David (assoc. David Buma, CFA) ............................................................. (514) [email protected]

Information TechnologyHardware & EquipmentGus Papageorgiou, CFA (assoc. Geoff Darling)................................................... (416) [email protected] Moodley (assoc. Alexander Minatel) ......................................................... (416) [email protected] & ServicesPaul Steep (assoc. Kris Thompson) ..................................................................... (416) [email protected]

MaterialsChemicalsSam Kanes, CA, CFA (assoc. Matthew Protti) ..................................................... (416) [email protected] Durose, P.Geo. (assoc. Kevin Best) ....................................................... (416) [email protected] Metals & MiningOnno Rutten (assoc. Brian Mok, P.Eng.).............................................................. (416) [email protected] Kodatsky (assoc. Jasmit Gouri) .................................................................... (416) [email protected] & Forest ProductsBenoît Laprade, CA, CFA (assoc. Yuri Lynk) ....................................................... (514) [email protected] Tyerman (assoc. Caren Fields) .................................................................. (416) [email protected]

Portfolio StrategyVincent Delisle, CFA (assoc. Hugo Ste-Marie, CFA)............................................ (514) [email protected]

Quantitative StrategyDarwin McGrath, CFA (assoc. Greg Prazmo) ...................................................... (416) [email protected]

Real EstateHimalaya Jain, CFA (assoc. Mario Saric, CA, CFA)............................................. (416) [email protected]

Special SituationsMurray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) [email protected] Zicha (assocs. Vincent Perri, CA, CFA, Mark Neville) ........................... (514) [email protected]

Telecommunication ServicesJohn Henderson, P.Eng. (assocs. Kevin Kaminski, Warren Hastings) ................ (416) [email protected]

UtilitiesElectric Utilities/Gas UtilitiesSam Kanes, CA, CFA (assoc. Matthew Protti) ..................................................... (416) [email protected]

EconomicsChief Economist: Warren Jestin ........................................................................... (416) 866-6136Deputy Chief Economist: Aron Gampel............................................................... (416) 866-6259Vice-President & Senior Financial Markets Economist: Andrew Pyle.............. (416) 863-7707

Mark Chandler (416) 945-5252 Steve Malyon (416) 863-7719Patricia Mohr (416) 866-4210 Pablo Bréard (416) 862-3876Mary Webb (416) 866-4202 Adrienne Warren (416) 866-4315

Portfolio Advisory Group (ScotiaMcLeod)Managing Director: Derrick Strizic, CFA ............................................................. (416) 945-4980

TradingElliott Fishman (416) 863-7860 Dave Stephens (416) 862-3115Alex Jemetz, CFA (416) 863-7489Equity AdvisoryPaul Danesi (416) 863-7735 June Anne Reid (416) 863-7939Andrew Guy, CFA (416) 945-5332 Gareth Watson, CFA (416) 863-7604

TM Trademark of The Bank of Nova Scotia. The Scotia Capital trademark represents thecorporate and investment banking businesses of The Bank of Nova Scotia, Scotiabank Europeplc, Scotia Capital Inc. and Scotia Capital (USA) Inc. - all members of the Scotiabank Group

and authorized users of the mark. Scotia Capital Inc. is a member of CIPF.

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