Wandoan Power: a carbon solution

GTC Conference Chris Walker – Wandoan Power Commercial Manager2 November 2010

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� Queensland Government owned power generator

� Set world benchmark for automation of coal-fuelled power stations in 1993

� Built Australia’s first wind farm in 1997

� Actively pursued coal fuelled CCS since 2004

Stanwell Corporation

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Queensland: coal and electricity

SOURCES - Coal data: Australian Bureau of Statistics, Australian Mineral statistics, June Quarter 2010 and earlierElectricity demand data sourced from Powerlink Annual Planning Report 2010 and earlier editions

Queensland Coal Production and Electricity Peak Sum mer Demand

0

50

100

150

200

250

1998/99 2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19

Coa

l pro

duct

ion

- m

illio

n to

nnes

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Ele

ctric

ity d

eman

d -

MW

Saleable coal (MT)

Actual Peak summer demand (MW)

Forecast Peak summer demand (MW)

Queensland Coal Production and Electricity Peak Sum mer Demand

0

50

100

150

200

250

1998/99 2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 2018/19

Coa

l pro

duct

ion

- m

illio

n to

nnes

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Ele

ctric

ity d

eman

d -

MW

Saleable coal (MT)

Actual Peak summer demand (MW)

Forecast Peak summer demand (MW)

Options for new generation projectsEnablers/constraints Government Policy and Legislation

Abundant resources but LNG demandCO2 ~ 400kg/MWh

Queensland Gas Scheme requires from 2000 at least 15% of electricity retailed to be generated from gas

Gas

Australian Government legislation requires 20% renewable energy by 2020

Opportunities butlimited size and dispersedCO2 0kg/MWh

Wind Hydro

Biomass

Cost of technologyCO2 0kg/MWh

Funding support: Australian Government Solar Flagships Program (2009)

Solar PV Thermal

Promising CO2 storage Cost of technologyCO2 ~ 200kg/MWh

Clean Coal Technology …Act 2007 (Qld)Greenhouse Gas Storage Act 2009 (Qld)Some funding support from Aust. Govt, Qld Govt & ACALET

Coal with CCS

Abundant resources butenvironmental impactCO2 >800kg/MWh

Queensland Government policy precludes new conventional coal fuelled power stations, from 2007

Coal (NO

CCS)

Australian Government opposed to nuclear power generationNuclear Facilities Prohibition Act 2007 (Qld)

Community attitudesNuclear

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Our power station wish list

Stanwell would like a new power station that:

� Complies with regulatory requirements� Is economically competitive, over the project life� Can be deployed quickly to meet market needs� Is easy to procure (single EPC contract)� Has a risk profile that allows debt funding� Very low water intensity (ML/GWh)� And very low CO2 emission intensity (kg/MWh)

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Integrated IGCC with CCS Project

Stanwell Corporation & GE EnergyPower Plant & CO 2 Capture

• Investigate 400MW power project development• Near proposed Wandoan Coal mine• Using GE’s IGCC technology, and• GE’s CO2 capture technology

CTSCo: Xstrata Coal subsidiaryCO2 Transport & Storage

• Investigate geological storage of at least 2.5 MT/year of CO2

• Investigate CO2 transport to storage site• Secure tenements for CO2 storage• Undertake CO2 storage field exploration

2008 2010-112009 2013-152011-12Project definition and scoping Pre-feasibility Feasib ility &

engineeringConstruction Start-up

2016/17

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Pre-feasibility study

Site study

Objectives :

• Gain increased confidence in project costs and performance

• Understand the project development approval requirements

• Develop a strategy for project delivery

Standard:

• Class 4 AACE (Association for the Advancement of Cost Engineering)

Key activity areas:

• Gasification and power block engineering

• Balance of plant engineering and infrastructure requirements

• Site evaluation and environmental approvals strategy

• Project scheduling and financial modelling

• Stakeholder and community education planning

• CO2 storage exploration and appraisal by CTSCo

Objectives :

• Gain increased confidence in project costs and performance

• Understand the project development approval requirements

• Develop a strategy for project delivery

Standard:

• Class 4 AACE (Association for the Advancement of Cost Engineering)

Key activity areas:

• Gasification and power block engineering

• Balance of plant engineering and infrastructure requirements

• Site evaluation and environmental approvals strategy

• Project scheduling and financial modelling

• Stakeholder and community education planning

• CO2 storage exploration and appraisal by CTSCo

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Pre-feasibility study activities

Sulphur

recovery

CO2

separation

Tail

gas

treatm

ent

Thermal

oxidiser

CO2 for

storage

Steam

turbine/generator

Heat recovery steam

generatorGas

turbine/generator

Air separation unit

Radiant syngas

cooler

Oxygen

Slurry pumpSlurry tank

Coal

Syngas scrubber

Acid gas

removal

Site studySite study

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Pre-feasibility study issues

1. Coal specification• Wandoan coal has been evaluated and found suitable for gasification • Coal specification will be washed coal with ~ 10% ash

2. Water intensity• Design ambient temperature of 28°C is a cooling cha llenge• Steam turbine dry cooled but other processes require wet cooling• Project demand is estimated at ~ 3,500 to 4,000 ML per year

3. CO2 emission intensity• Choice between Day 1 CO2 capture rates of 65% and 90%

� 65% capture gives ~ 500 kg CO2 / MWh� 90% capture gives < 200 kg CO2 / MWh

• The higher capture rate appears to be the better choice based oneconomic analysis and for its demonstration value

4. CO2 storage• Viability of storing 2.5 MT/year of CO2 will need to be confirmed

by CTSCo before Wandoan Power Project can reach financial close

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Suitability evaluation of IGCC with CCS

Project water needs can be met but further reductions are sought

� Low water intensity (ML/GWh)

Stanwell’s assessmentWishlist criteria

< 200 kg/MWh is pretty good:• 75% better than supercritical black coal • 50% better than gas fuelled CCGT

� Very low CO2 emission intensity (kg/MWh)

Initial indications are that some limited recourse funding may be obtainable

� Risk profile that allows debt funding

We are working to achieve this� Easy to procure (single EPC contract)

Coal with CCS will take longer to deploy than CCGT or wind

� Deployed quickly to meet market needs

Needs first of a kind support and a strong carbon price signal

� Economically competitive

Seems OK� Complies with regulatory requirements

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2008 2010-112009 2013-152011-12

Project definition and scoping Pre-feasibility Feasibility & engineering

Construction Start-up

2016/17

2010–11

Project stages

Progress made to end 2010:

� Defined concept & scoped pre-feasibility work

� Aligned with CTSCo CO2 storage project

� Secured fuel supply and site

� Secured pre-feasibility phase funding

� Defined regulatory approval requirements

� Substantially completed pre-feasibility engineering studies by GE and WorleyParsons

� Built financial model of project

� Planned scope, schedule and delivery strategy for the next phase

From 2011 onwards:� Secure funding for future phases of work

� Clarify regulatory issues including carbon pricing and CO2 storage

� Firm up arrangements for fuel, water, grid connection etc

� Firm up CO2 offtake by CTSCo

� Seek project development approvals

� Engage GE and prospective EPC contractor to undertake engineering for definitive feasibility study and FEED phases

� Share the learning with project funders

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Acknowledgement

� This project acknowledges the prefeasibility funding support received from the Australian Government (as part of the Clean Energy Initiative) and the Australian Coal Association Coal 21 Fund :

– and the cooperation and assistance received from Xstrata Coal (CTSCo) who are also receiving prefeasibility funding and support from the parties above and, in addition, the Queensland Government.