CO2 Capture and Utilization,

a Genuine Opportunity for Kansas

Operators

Martin K. Dubois
Improved Hydrocarbon Recovery, LLC
mdubois@ihr-llc.com
(email for copy)

In collaboration with
Kansas Geological Survey

1
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Why we are here today
45Q tax credits are a game changer, making a variety of
CCUS projects (CO2 EOR) technically and economically feasible.

Kansas operators are well-positioned

• Kansas candidate oil fields delineated
• Within pathway of possible large-scale CO2 pipeline system

CO2 captured in NE and KS ethanol plants could be

transported to Kansas oil fields for $14 per tonne ($0.75/mcf).
• Kansas oil production could increase by 28% (10 million BO/yr)
through EOR by injecting 4.3 Mt/yr (221 mmcf/d).

Hurdles yet to cross

• 45Q tax credit implementation rules resolution
• Aggregation of sufficient oil field assets (CO2 market) to justify

2
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Kansas Oil Production
140 8

Cumulative Production (Billion Barrels)

124 6.7 Billion
Annual Production (Million Barrels)

120
to date 7

Middle East
Single Pt Unrest 6
100
Seismic on
CKU 5
80 75
El Dorado Prices & CO2
Fracs 4
WWI EOR Oil?
60
50 3

40
2

3D Seismic
20 1

0 0
1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050
Year

3
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 So, how much is 10 million barrels
per year?
Top 8 Producers in Kansas
 28% of Kansas current
Rank Million % of
production in KS BO/yr Kansas
1 3.5 9.7
 27,000 BOPD
2 1.6 4.4
3 1.2 3.5
 Equals top 8 Kansas
4 1.1 3
producers combined
5 0.9 2.5
 $600,000,000 gross sales 6 0.7 1.8
@ $60/barrel 7 0.5 1.5
8 0.5 1.4
 $12 Billion over 20 years Total 9.9 27.8

4
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 And, what tax credits could be captured?
Hypothetical Scenarios

 Construction in 2020; Injection in 2022

 Tax credits average $33/tonne CO2 stored

(for EOR) over 12 year period
Kansas Potential Large-scale
ethanol Kansas pipeline to
plant Field Kansas
CO2 Volume
0.15 0.5 4.3
(Mt/yr)
Annual Tax
Credits $5M $17M $142M
($Million)
12-years of
Credits $59M $198M $1,703M
($Million)
5
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Outline
1. CO2 Basics
• The magical fluid
• CO2 EOR for 40+ years
• Expansion of industrial CO2 for EOR

2. Kansas Readiness
• Industry-Kansas Geological Survey collaborations
• Integrated CCS for Kansas (current)
• Kansas CO2 EOR oil resources

3. 45Q tax incentives expansion and extension

• 45Q tax credits discussion
• Economics for capture, transportation, injection
4. Wrap-up and Q&A

6
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 CO2 conversions, scales and “green” oil
Units/volumes
• 1 tonne (metric ton) 1.1 tons
• 1 tonne CO2 19 mcf
• 1 million tonnes 19 bcf

CO2 production at varying scales

• Small Ethanol plant (55mgy) 8.3 mmcfd 0.17 Mt/yr
• Large Ethanol plant (313mgy) 50 mmcfd 0.94 Mt/yr
• Jeffrey Energy Center 650 mmcfd 12.5 Mt/yr
• CO2 delivered for EOR 3500 mmcfd 66.3 Mt/yr

How “green” is anthropogenic CO2 EOR?

• Combustion of 1 barrel of oil yields 8 mcf CO2
• For every barrel produced ~8 mcf CO2 is permanently left in the reservoir
• Stores as much CO2 as is released upon combustion

7
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 CO2 – the magical fluid
CO2 Phase Diagram

SW KS Morrow and Chester

CKU L-KC and Arbuckle
• Miscible floods must
operate at greater than
supercritical (1073 psi)
and MMP (>1200 psi)
Kansas
(147 psi) Reservoirs • Kansas reservoirs
“Window” ambient properties
range: 400 psi and 85F
at 1000 ft and 1600 psi
and 125 F at 6000 ft.

Modified after Condren www.cbu.edu/~mcondren/CO2_phase_diagram.jpg

8
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 CO2 Volume with Depth (P&T)
Source: IPCC Special Relative volume for CO2 under
Report on Carbon Dioxide
Capture and Storage, “normal” pressure and temperature
2005
conditions. Kansas is under-
pressure
1640 ft

3281 ft Relevance to storage capacity

SW KS Morrow and Chester
4921 ft • 6000 ft, 125F, 2100 psi
• CO2 - 0.5 bbl/mcf (9.5 bbl/tonne)
6562 ft
CKU L-KC and Arbuckle
• 3200 ft, 110F, 1200psi
0 0.2 0.4 0.6 0.8 1
• CO2 -1.2 bbl/mcf (22.8 bbl/tonne)

Conversions tool:
http://www.kgs.ku.edu/Magellan/Midcarb/co2_prop.html

9
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 CO2 Processing Styles

Horizontal (piston) flood

• Application: Follow waterfloods
• KS targets: L-KC, Morrow,
Chester
• Well documented

Kinder Morgan website

Gravity-stable flood
• Application: bottom-water
drive reservoirs
• KS targets: Arbuckle,
Simpson, Viola
• Fewer analogues 10
Kuuskraa,
KIOGA - CCUS 2008
Opportunities Kansas, 8-13-2018
 US CO2 Pipeline Infrastructure

66 Mt/yr
Delivered

Source:
A Review of the CO2 Pipeline
Infrastructure in the U.S. (2015)
DOE/NETL-2014/1681

11
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Permian Basin and (Added by Dubois)

OK-KS pipelines Bonanza

Ethanol Plant

Kansas
Oklahoma

Source:
PERMIAN A Review of the CO2 Pipeline
2600 miles total pipelines Infrastructure in the U.S. (2015)
1554 mi 16-30” trunk lines DOE/NETL-2014/1681
4 geologic sources
~40 Mt/yr CO2 sold
12
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Midwest 1546 miles total
755 mi. 16-20” trunk lines
Ethanol CO2 CO2 from 34 ethanol plants
~10 Mt/yr CO2
to the
Permian
Plausible?

Ethanol Plants
Other Sources
Existing CO2 Lines
Potential CO2 Lines

Gather CO2 from largest

ethanol plants in upper
Midwest.
2600 miles total Deliver 9.85 Mt/yr through
1554 mi 16-30” trunk lines Kansas to Permian Basin
4 geologic sources
~40 Mt/yr CO2 sold 13
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Questions on CO2 Basics?

Move on to Section 2:
Kansas Readiness
• Industry-Kansas Geological Survey
collaborations
• Integrated CCS for Kansas (current)
• Kansas CO2 EOR oil resources

14
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 CO2 EOR and CCUS Headlines KGS/industry
DOE announced partners land $1.5M
Kansas Ethanol Plants (2008) Phase II in DOE for Phase I in DOE
CarbonSAFE award CarbonSAFE
Blue – active, Tan - planned

2015 2018 2016

KCC denies pooling
request for commercial
Hall-Gurney flood

Petrosandtander :
Garden City Ethanol
KGS and five CO2 to Stewart field
industry
partners expand
CCS and EOR 2011
study with
another $5M
DOE grant. Berexco and KGS to
inject CO2 into
2010 Wellington field in DOE
study
2011, 2015

Berexco and KGS study

Chapparal buys Arbuckle CO2 storage potential
Liberal Ethanol CO2 with $5M DOE grant.
for Okla. EOR

2009 2009

15
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 KGS’ Current DOE-Funded Project(s)

U.S. DOE’s 4-Phase CarbonSAFE Program

Phase Program Topic Years Start Budget
Date
I Integrated CCS Pre-Feasibility 1.5 3-2017 $1.5M
Integrated CCS for Kansas (ICKan) nearing $1.2M
completion DOE

II Storage Complex Feasibility 2 10-2018 $13.3M

Proposed: Integrated Midcontinent Stacked $9.6M
Storage Hub – Battelle, KGS and EERC jointly DOE

III Site Characterization 2 ~2020 TBD

IV Permitting and Construction 3.5 ~2022 TBD

16
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Project Partners and Participants

Industry Partners and Research Team

Supporters
CO2 Sources Westar Energy Kansas Geological Survey
Kansas City Board of Public Improved Hydrocarbon Recovery
Utilities
The Linde Group
Sunflower Electric Power
Great Plains Institute
Corporation
Depew Gillen Rathburn & McInteer
CHS, Inc.
Research team
Oil& Gas Berexco, LLC 1. Investigated CO2 capture
Operators at CO2 Sources
Casillas Petroleum Corp. 2. Evaluated geologic
Knighton Oil Co. Inc. structures for capacity to
Blake Production Co. Inc. store 50Mt CO2
Stroke of Luck Energy 3. Legal, regulatory and
public policy issues 17
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Storage Site Evaluations:
North Hugoton Storage Complex
Analyze storage capacity on four structures
• Build 3D geologic model Four structures in the North Hugoton
• Run reservoir simulation to determine capacity
• 3 of 4 structures capable of storing 50 Mt CO2
Rupp
Patterson Structure Simulation Example
 Inject 5,800 metric tonnes/day
 60.6 Mt in 30 yrs
 Four wells, three zones Patterson Holcomb Station
(349 Mwe)

CO2 Plumes simulated in Patterson Structure

Lakin

Meramec Structure
CI = 50 ft
Grid = TWP = 6 mi
25 mi Pleasant
Prairie
32 km
KIOGA - CCUS Opportunities Kansas, 8-13-2018 18
 CO2 Sources & Transportation Assessment
Preliminary Conclusions
• Davis Ranch and John Creek lack 50 Mt capacity.
SW Kansas exceed 50Mt capacity
• Cost for Capture/Compression at JEC is $46 -
$78/tonne
• Transportation (pipeline) to SW Kansas cost is
~$14/tonne
• Too high even with $50/tonne 45Q credits

Jeffrey Energy
Jeffrey
Energy Center, St. Marys, KS
Jeffrey
Center • 3 x 800 MWe plants
Holcomb – still under Nearman
-12.5 million
study: 1 Mt/yr max, but Creek tonnes/yr CO2
close to storage sites CHS Davis Ranch
Davis
and John
• Partial capture (~350
Refinery
CHS Ranch &
Holcomb Creek Oil
John Creek
Mwe) yield 50 Mt
Fields
Station
Holcomb
over 20 years (2.5
CHS Refinery Mt/yr)
• Maximum recovery
Pleasant 0.75 Mt/yr
North
Prairie
Hugoton
Oil Field • More costly than
Sites JEC
19
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Phase II: Midcontinent Stacked Carbon Storage Hub

Phase II proposal
• Capture CO2 from
Ethanol plants
• Transport to SW
Nebraska and SW
Kansas
• Inject for storage
(saline aquifer)
• Sell for EOR to offset
costs
• Monetize 45Q credits

Participants / Supporters (Kansas affiliated in red)

Agency NGO/Association Ethanol Producer Electric Utility Oil Producer Other
KS Gov. Colyer Clean Air Task Force ADM NPPD Berexco ION Engineering
NE Ethanol Board Great Plains Institute Cargill Westar Energy Merit Energy MV Purchasing
NE Dept. of KIOGA Trenton Agri Products Sunflower Electric Great Plains Energy The Linde Group
Agriculture Power
NE Dept. of NE Petroleum Producers Valero Renewables Kansas City Board of Casillas Petroleum
Environmental Association Public Utilities
Quality
NE Corn Board Renew Kansas Pacific Eth. Central Operating
NE Energy Office Kansas Ethanol
20
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Switch gears to Kansas
CO2 EOR oil resources

21
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Oil-rich state, but no appreciable CO2 available

6.7 Billion barrels total

Now at 36 mmbo/yr
+10 mmbo/yr possible
from CO2 EOR?

Most prolific:
Arbuckle
L-KC
22
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 The Big Picture
From the Midwest Governor’s Association and ARI (2009)
• Kansas holds > 750 million barrels of technical CO2-
EOR potential.
• Kansas has the largest oil resources in the MGA region.

Byrnes et al., 1999 (Kansas Geological Survey)

250 to 1,000 million barrels

23
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 What’s required for 250 mmbo?
4.3 M tonne / yr CO2 (220 mmcfd) for 25 yrs
Ethanol CO2 gathering scenario
 4.3 Mt/yr from 15 plants
 To Kansas for EOR/storage

Ethanol Plant
Oil Field

 4.3 Mt/yr for EOR

 8 mcf/BO net utilization
 10 mmbo per year
(28% of current KS production)
 250 mmbo in 25 years
24
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Kansas First CO2 EOR Project KGS Digital Petroleum Atlas

• Bonanza ethanol plant (Garden City) to

PetroSantander’s Stewart Field
• 100-130 k tonnes/yr (5-7 mmcfd) CO2
• Increased production from 250 to 750 bopd
• Has not performed as expected – multiple
reasons
Stewart Field Production
Production chart from KGS website Cumulative
11.7 Million BO
10,000,000

Conestoga CCUS report, 2016

Oil Production (barrels)

1,000,000 Monthly Field
Production

100,000 Waterflood CO2 Flood

Atokan IVF
discovered
10,000
Mississippian
1st Inj. 2012
1,000 Peak 2015
1970

1980

1990

2000

2010

2020
Bonanza Bioenergy, Garden City
25
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Hall-Gurney Field Investigations
Murfin’s Hall Gurney (Russell)
Pilot (2005)
• Trucked CO2 from USEP
Russell ethanol plant
• Injected 140 mmcf (7400 tonnes
CO2)
• Produced an estimated 27.9
mbo incremental oil
• SUCESSFUL demonstration

Oil Production in Proposed C12 Unit

1.5 30
Cumulative (million BO)
Annual (million BO)

1.0 L-KC Primary From C12 20

testimony to
KCC C12 Energy (2015)
L-KC Waterflood 10
0.5 • Projected 10.7 MBO recovery from
proposed Unit
0 0 • KCC denied pooling application
26
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Berexco’s (and KGS) Wellington Pilot (2016)
DOE-FE-006821

• Injected 374 mmcf CO2 (19,700 tonnes) Projected

Production
over 165 days through June 2016
1000
• 83% CO2 still in reservoir (6/1/2018)
BO/month

• 16 mbo through June 1, 2018

• Projected Incremental oil - 32.4 mbo
6 mos CO2 Injection
100
• Projected Gross utilization: 11.5 mcf/BO

2020

2025
2010

2015

10
27
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Four fields in KGS/DOE study “CO2 Ready”
(2012-2015 ) Could take 2 Mt/yr + 13.2 mmbo from EOR

Pleasant P&S
Prairie combined
South 25 mmbo

Meramec Eubank
Structure incised valley

Pleasant Prairie South

50 miles

Eubank

all views at same scale

Shuck

5 mi
Cutter
(Morrow)

Seismic depth-
Shuck converted Meramec
surfaces (by Hedke)

6 mi
28
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Pleasant Prairie So.
Chester IVF
Primary + Secondary
4.7 mmbo

Incised
Valley

29
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Eubank North Unit
Chester IVF
CI: 20ft
VE: 7.5X

1370 ft wide
140 ft deep

200 ft
deep
8 mi

Primary + Secondary
7.4 mmbo
CI: 20ft
30
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Here’s the upside potential: Arbuckle

Gravity-stable process successful in Canadian reefs

Kansas Arbuckle?

31
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Geneseo-Edwards study
Kansas Ethanol, LLC (Lyons, KS)
and CAP CO2, LLC, with support
from Daystar and Scheck, 2010
• 55 MGY plant 15 miles to
Geneseo-Edwards oilfield
• Did not go forward
1. Not funded in DOE Phase II
2. Drop in oil prices
3. Geologic risk

32
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 “CO2 Ready” EOR candidates
Inject. CO2 Primary & CO2
Rate Stored Secondary EOR
(Mt/yr) (Mt) (mmbo) (mmbo Basis for Estimate
Shuck 0.4 1.5 7.9 3.6 DE-FE000256

Cutter 0.5 1.3 5.4 2.8 DE-FE000256

N Eubank 0.6 1.5 7.4 4.6 DE-FE000256

Pleasant Prairie 0.3 0.5 4.7 2.2 DE-FE000256

DE-AC26-00BC15124 PILOT C12
Hall-Gurney 1 11.3 62.5 26.8 Energy KCC Documents

Trapp 0.5 4.3 31.3 10.3 KGS reports

Wellington 0.6 2.2 16.2 5.3 DE-FE0002056 and PILOT

3.9 22.8 135.4 55.7
* P&S production is for portion of field that could be flooded

“CO2 Ready” fields could take

3.9 million tonnes /year (200 mmcfd)
And recover 56 mmbo
33
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Kansas Field Candidate Guidelines
1. Relatively large fields
• >20 million barrels recovered
• Or multiple smaller fields in close proximity adding to > 20 mmbo

2. High recovery rates on per-acre basis are most ideal

mbo/Acre Million BO/Section
SW KS Study (Chester/Morrow) 4-5 3
Hall-Gurney (L-KC) 8 5
Arbuckle (Geneseo-Edwards) 15 9.5

3. Large fields that were good waterfloods

• Hall-Gurney - (63 Mbo from L-KC waterfloods)
• Others possible (to name a few) – Huffstutter, Fairport, Trapp,
Wellington

34
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Questions?

Move on to Section 3:
45Q tax incentives expansion and extension
• 45Q tax credits discussion
• Economics for capture,
transportation, injection

35
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 45 Q Tax Credits Applied
Credit Values
45Q specifics*
($/tonne)
Enacted 2/9/2018 as part of a Federal budget bill
Credits (no inflation)
• Construction before February 9, 2025 EOR Saline
• Credits claimed 12 yrs from day capture begins 2017 $12.83 $22.66
• Claimed by capture facility, transferrable to
2018 $15.29 $25.70
storage site (field), but not directly to transporter 2019 $17.76 $28.74
2020 $20.22 $31.77
• 2017 tax: $12.83/tonne for EOR and
$22.66/tonne for saline storage. 2021 $22.68 $34.81
2022 $25.15 $37.85
• Escalates linearly through 2026 to $35 for EOR
and $50 for saline storage, flat thereafter.
2023 $27.61 $40.89
2024 $30.07 $43.92
• Adjusted for inflation.
2025 $32.54 $46.96
• Injected into a qualified EOR project in a secure 2026 - $35.00 $50.00
geologic storage. 2035
* Sources: NEORI (Kurt Walzer), CLATF, State CO2 EOR Inflation adjustment after
Workgroup (Brad Crabtree), and S. 1535 document 2026 not applied here

36
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Strings attached and/or
complexities
Rumblings regarding rules to qualify for credits
• Definition for “Secure geologic storage”
• Monitoring Verification and Accounting
requirements – for proof of injection and
storage

Complexity of business plan/contracts

• Credit transfer agreements from capture
facility to field operator
• Long term responsibility and liability

37
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Capture and Storage at Variable Scales
Project types and scales are nearly limitless in MidCon
Scenarios presented involve the highlighted boxes
Ethanol CO2
Range from Volume Volume
Source Type Description (Mg/yr) (Mt/yr)
• Simple: point-to-point Ethanol plants Single Small 55-110 0.15-0.3
(150,000 tonnes/yr) Single Large 300 0.8
Multiple - 15 plants 1575 4.3
• Somewhat complex: Multiple - 34 plants 3643 9.9
multiple sources to single Coal Power Single 1-4
Storage (Market)
market for EOR EOR Single field - small (KS) 0.15-0.3
Mutliple small fields (KS) 2-4
• Very complex: multiple
Large market (W. TX) 4-10
sources to multiple fields Saline aquifer Small local (KS) 0.15-0.3
for EOR Single structure (KS) 1.5-3
Multi-structure storage 6
complex (KS)

CO2 volume is 90% of calculated nameplate

38
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Sources for Economic Modeling and Resources

Pipeline CapEx and OpEx are derived from FE/NETL

CO2 Transport Cost Model
(Grant & Morgan, 2014), modified by Dubois and McFarlane (2017)

Capture and compression CapEx and OpEx are based

on cost data from three DOE-funded projects
(Details in White Paper: Capturing and Utilizing CO2 from Ethanol)

References:
Dubois, M.K., D. McFarlane, and T, Bidgoli, 2017, CO2 Pipeline Cost Analysis Utilizing and Modified FE/NETL
Cost Model Tool, poster presented at the Carbon Storage and Oil and Natural Gas Technologies Review
Meeting, Pittsburgh PA, August 3, 2017, Pittsburgh PA, August 3, 2017.
Grant, T., D. Morgan, and K. Gerdes, 2013, Carbon Dioxide Transport and Storage Costs in NETL Studies:
Quality Guidelines for Energy Systems Studies: DOE/NETL-2013/1614, 22 p.
Grant, T. and D. Morgan, 2014, FE/NETL CO2 Transport Cost Model. National Energy Technology Laboratory.
DOE/NETL-2014/1667. https://www.netl.doe.gov/research/energy-analysis/analytical-tools-and-data/co2-
transport.

39
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Three cases discussed today

1. Small-scale Point-to-Point for EOR (0.15 Mt/yr –

2.9 BCF/yr)

2. Aggregate 15 ethanol plants and transport to

multiple Kansas fields (4.3 Mt/yr – 82 BCF/yr)

3. Aggregate 34 ethanol plants and transport to

Permian Basin (9.9 Mt/yr – 188 BCF/yr)

40
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 1: Small-scale Point-to-Point for EOR,
Oil Operator Owns CCT System
Russell
Current Kansas example: Conestoga’s
(Garden City KS) to Stewart Oil Field since
2012: 55 mgy plant, 15 miles to field
Future EOR example? Russell Ethanol
to Hall-Gurney field via 10-mile line

Generic economic model assumptions Modified from Dubois etal. (2002)

• Capture and compress 150 kt CO2/yr
• 20-mile, 4” pipeline
• Owner equity and secured note (net 5% interest)
• 14-yr project, 2 yrs construction, 12 yrs operations
• Injection begins in 2022
• 45Q credits ($25-$35, avg. $33)
• No inflation is factored
• Pay Ethanol plant $10/tonne CO2
41
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 1: Economic Summary

Cost per tonne CO2 (credits applied) 45Q tax credits

make this case
economically viable

Tax credits applied

directly to CapEx in Market CO2 value
model to calculate with WTI = $60
price/tonne
$22.90/t
($1.20/mcf)
Costs
Cost without 45Q
$34/tonne
($1.80/mcf)
Compare

42
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 1: Risk and Benefit

Oil Operator Ethanol Plant

Risks Risks
1. Capital exposure 1. Almost none
• $30 M for CCT
• $5+M for field upgrade Benefit
2. Oil field flood failure 1. Revenue: $1.5 M/yr ($0.027/
3. CO2 source (ethanol plant gal) – for this case
failure) 2. Greatly reduced carbon
4. MVA and long-term liability intensity

Benefit
1. Low-cost CO2…………because of
$59 Million 45Q tax credits

43
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 2: Fifteen plants to Kansas oil fields
 4.3 Mt/yr CO2 (80.9 BCF/yr)
 737 miles of pipeline
 4 to12 inch diameter
 15 ethanol plants
(1575 MGY capacity)

Gather CO2 from the

largest ethanol plants
in NE and KS
Deliver 4.3 Mt/yr to
CO2-ready oil fields in Hufstutter
Kansas Westar
10 mmbo/yr possible JEC

increased production
Fairport
Hall-Gurney
Trapp
Sunflower
KEY:
Holcomb CHS Ethanol Plants
Refinery Other Sources
Pleasant Prairie
Eubank North Existing CO2 Lines
Cutter
Potential CO2 Lines
Shuck Unit
44
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 2 Economics
Estimated Project Costs
Plant Pipeline
Cost $million Capture Transport Total
Note: Rule of thumb
$100k/inch-mile yields $613
CapX $364 $642 $1,006
million CapX for pipeline
Annual OpX $37 $16 $53

Summary:
Costs per Tonne of CO2 (credits applied)
• Total CapEx $1,006 M
Pipeline Capture & Combined
• 45Q tax credits $1,774 M Compress
• Cost of Capital = 10% CapEx ($/t) $1.71 $0.69 $1.90
OpEx ($/t) $3.80 $8.58 $12.39
• 2-yr construction and 20
yrs operations (operations Total ($/t) $5.02 $9.27 $14.29
begin 2024) Tax credits applied directly to CapEx
in model to calculate price/tonne $/mcf $0.75
• 12 yrs of 45Q credits - Without 45Q
Avg. $34.48/t $47 / tonne
Market CO2 value with WTI =
$60 $22.90/t ($1.20/mcf) ($2.46 / mcf)
45
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 3: Large-scale, 10 Mt/yr
 9.85 Mt/yr CO2 (187
BCF/yr, 513 mmcfd)
 1546 miles of pipeline
 4 to 20 inch diameter
 34 ethanol plants (32
locations)
(3643 MGY capacity)

Gather CO2 from

Westar largest ethanol plants in
JEC upper Midwest.
Deliver 9.85 Mt/yr
through Kansas to
Sunflower CHS
CHS
Holcomb Refinery
Refinery
Permian Basin

KEY:
Ethanol Plants
Other Sources
Existing CO2 Lines
Potential CO2 Lines

46
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Case 3 Economics
Estimated Project Costs
Note: Rule of thumb $100k/inch-
mile yields $1821 million CapX
for pipeline

Summary:
Costs per Tonne of CO2 (credits applied)
• Total CapEx $2.7 Billion
Pipeline Capture & Combined
• 45Q credits $4.1 Billion Compress
• Cost of Capital = 10% CapEx ($/t) $4.28 $1.86 $6.14
OpEx ($/t) $4.77 $8.58 $13.35
• 2-yr construction and 20 yrs
operations (ops in 2024) Total ($/t) $9.05 $10.44 $19.49
Tax credits applied directly to CapEx
• 12 yrs of 45Q tax credits, in model to calculate price/tonne $/mcf $1.03
Avg. $34.48/t Without 45Q
Market CO2 value with WTI = $47 / tonne
$60 $22.90/t ($1.20/mcf) ($2.46 / mcf)
47
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Summary
Challenge Remedy
Kansas Resource Adequate but disparate and Collaboration between
Base many operators. operators. Consortium?
Needs further analysis. Led by whom? (KGS,
KIOGA, other)

45Q tax credits Generous, but will Kansas Need clarification and
operators be able to partake? possible involvement in
final rules.

Complex business CO2 sources - Adequate but Need “Big Players” to

model disparate and many operators. get involved.
Anchor and secondary markets
(KS) need to be defined.

 Help shape the outcome.

 Make appropriate and timely investments to
participate in developing the opportunity at hand.
48
KIOGA - CCUS Opportunities Kansas, 8-13-2018
 Questions?

Acknowledgements:
Thanks to all of the operators that have participated in the KGS CO2-related
projects over the years, in particular:
Berexco Knighton Oil
Murfin Blake Production
Merit Energy Vess Oil
Casillas John O. Farmer
Cimarex And many others

Thanks also to the literally dozens of KGS staff and consultants to projects, portions of
which are contained in this presentation, with whom I have had the privilege to work,
in particular: KGS - W. Lynn Watney, Tandis Bidgoli, Eugene Holubnyak; Consultants &
Firms - Dane McFarlane (GPI), Krish Krishnamurthy (Linde), Dennis Hedke, Eugene
Williams, John Youle…. And many others

49
KIOGA - CCUS Opportunities Kansas, 8-13-2018