THE SECARB ANTHROPOGENIC TEST The First U S

THE SECARB ANTHROPOGENIC TEST: The First U. S. Fully Integrated Commercial Prototype CO 2 Capture, Transportation and Storage Project Prepared by: Vello Kuuskraa, George Koperna, Jr. and David Riestenberg, Advanced Resources International, Inc. , Arlington, VA Richard Rhudy and Robert Trautz, Electric Power Research Institute, Palo Alto, CA U. S. Department of Energy National Energy Technology Laboratory Strategic Center for Coal’s FY 11 Regional Carbon Sequestration Partnerships Peer Review March 14 – 17, 2011 February 28, 2011

Presentation Outline 1. Introduction (Hovorka) 2. Technical Discussion: Early Test (Hovorka) 3. Technical Discussion: Anthropogenic Test (Kuuskraa) 4. Wrap Up (Kuuskraa) February 28, 2011

Presentation Outline: Anthropogenic Test 1. Introductory Materials 2. The Goals, Objectives and Plans for the Anthropogenic Test 3. Building on a Foundation of Success 4. Selecting a Safe, Secure, High CO 2 Storage Capacity Site 5. Investing in Detailed Reservoir Characterization 6. Conducting Rigorous Reservoir Modeling 7. Making Major Investments in CO 2 Monitoring 8. Addressing Risks and Mitigation Plans 9. Challenges, Lessons Learned and Accomplishments February 28, 2011

Introduction to SECARB Phase III Tests Anthropogenic Test Capture: Alabama Power ‘s Plant Barry, Bucks, Alabama Transportation: Denbury Onshore LLC Geo Storage: Denbury’s Citronelle Field, Citronelle, Alabama Early Test Denbury Resources’ Cranfield Field Near Natchez, Mississippi February 28, 2011

Anthropogenic Test Fully Supports RCSP Program Goals 1. Predict storage capacities within +/- 30% l Conducted high resolution reservoir characterization of the Paluxy saline formation key reservoir parameters for calculating CO 2 storage capacity. l Incorporated geologic model of the Citronelle Dome/Paluxy Formation CO 2 storage site into a state-of-the-art reservoir simulator to predict storage capacity and CO 2 plume. l Establishing extensive subsurface monitoring to measure areal extent of CO 2 plume and actual CO 2 storage capacity. 2. Demonstrate that 99% of CO 2 is retained l Selected CO 2 storage site with 4 -way closure, multiple confining units and secondary storage horizons. l Reservoir characterization underway to identify residual CO 2 phase (pore space trapping), CO 2 dissolution in water; completed seismic- and log-based assessment of the integrity of the reservoir caprock. l Establishing within and above zone pressure monitoring systems, CO 2 tracer programs, multiple cross-well seismic shoots and repeated use of cased hole neutron logging. 3. Contribute to development of Best Practices Manuals l Served on the Review Board of the DOE/NETL Drilling Manual; edited the DOE/NETL Reservoir Simulation Manual; and wrote chapter on CO 2 leakage mitigation for California report on CCS. February 28, 2011

RCSP Project Goals – Anthropogenic Test Goal 1 - Adequate Injectivity and Capacity l Conducted detailed reservoir characterization and log porosity versus permeability cross-plots from sidewall cores to establish key values for CO 2 injectivity and storage. Goal 2 - Storage Permanence l Selected site with 4 -way closure, multiple confining units and secondary storage compartments; evaluated seismic to establish lack of major faults or features. Goal 3 - Areal Extent of Plume and Potential Leakage Pathways l In order to limit the areal extent of the CO 2 plume and avoid potential for CO 2 leakage, the reservoir architecture and injection design were used to limit areal extent of CO 2 plume. l Conducted testing of older wells to assure well integrity at storage site. Goal 4 -Risk Assessment l Although the saline storage site is located in EOR field with operator owning CO 2, we conducted risk reviews and develop a risk registry for a fully integrated CCS field test. l Participated in DNV’s risk registry for CO 2 leakage and other risks. l Will install above and in zone pressure sensors to monitor CO 2 plume and storage security. Goal 5 - Develop Best Practices l Participated in developing BPMs for well drilling and reservoir modeling. February 28, 2011

RCSP Project Goals – Anthropogenic Test Goal 6 - Public Outreach and Education l On-site outreach handled by Landmen. l SSEB and Anthropogenic Team focus on O&E in public and technical arenas. l Hosted site visits, responses to local and trade media, Fact Sheets, and website postings of project information. Goal 7 - Improvement of Permitting Requirements l Permits obtained by site operator. l Project team focus is on development of regulatory framework for GHG. l Provided assistance to operator in preparing the UIC and state well permits. l Shared information on UIC permit preparation with other RCSPs. February 28, 2011

Project Overview: Scope of Work l Task 1. 0: Continued Characterization of Regional Sequestration Opportunities – l Task 2. 0: Public Outreach and Education – l l Identification and submittal of required site permitting for both Phase III sites (EQs, EAs, UIC permits, drilling permits). Task 4. 0: Site Characterization and Modeling – Detailed site characterization (existing data and new data collection) and modeling activities for both Phase III sites. – Access to and operational safety for both Phase III sites. Includes CO 2 pipeline for Anthropogenic Test. Task 5. 0: Well Drilling and Completion – l Local (field test), regional , national, and international public outreach and education. Task 3. 0: Site Permitting – l Assessment of regionally significant formations (saline, coal, shale); update of CO 2 sources; regional/national Atlas updates; participation in RCSP capacity work group. Design and completion of observation and injection wells for both Phase III sites. Task 6. 0: Infrastructure Development – Access to and operational safety for both Phase III sites. Includes CO 2 pipeline for Anthropogenic Test. February 28, 2011

Project Overview: Scope of Work l l l l Task 7. 0: CO 2 Procurement – Plan to procure CO 2 for both sites to meet project objectives. Task 8. 0: Transportation and Injection Operations – Development and implementation of transportation and injection operations plans for both sites. Task 9. 0: Operational Monitoring and Modeling – Early Test surface and subsurface monitoring, data collection, and modeling; Anthropogenic Test modeling and pipeline, surface, near-surface, and in-situ monitoring. Task 10. 0: Site Closure – Early Test discontinuation plan; Anthropogenic Test site closure activities, including integrity testing. Task 11. 0: Post-Injection Monitoring and Modeling – Monitoring and model updates for both sites; RCSP MVA Work Group participation. Task 12. 0: Project Assessment – Site-specific, regional and Partnership-wide findings. Task 13. 0: Project Management – Local project management for field sites and overall project management and oversight. February 28, 2011

Project Overview: Schedule and Cost l Project Schedule – l Anthropogenic Test schedule has been matched to construction and start-up of Plant Barry CO 2 capture unit. Project Cost – Current Anthropogenic Test budget includes $8 million of additional funds for 12 mile pipeline to transport CO 2 captured from Plant Barry to Citronelle Dome for storage. Phase III Anthropogenic Test Dollars Percent DOE Share $28, 691, 330 76. 14% Non-DOE Share $8, 990, 057 23. 86% Total Value Expenditures as of 12/31/2010 $37, 681, 387* $2, 274, 513 *Does not include the Early Test, continued characterization (Task 1), offshore study (Task 15), or regional activities (outreach, project assessment, project management). The total SECARB Phase III Program budget is $111, 413, 431. February 28, 2011

Gantt Chart for Anthropogenic Test All tasks are on schedule and budget. Project Milestone February 28, 2011

Project Overview: Milestones for Anthropogenic Test February 28, 2011

2. The Anthropogenic Test Is Pursuing Ambitious Goals and Objectives In support of SECARB’s overall goal - - test and demonstrate safe, secure CO 2 injection and storage in regionally significant saline reservoirs - - the Anthropogenic Test has four objectives: 1. Support a fully integrated, commercial prototype CCS project (capture, transport and storage). 2. Test the CO 2 flow, trapping and storage mechanisms of the Paluxy Fm. , a regionally extensive Gulf Coast saline formation. 3. Demonstrate how a saline reservoir’s architecture can be used to maximize CO 2 storage and minimize the areal extent of the CO 2 plume. 4. Test the adaptation of commercially available oil field tools and techniques for monitoring CO 2 storage (e. g. , VSP, cross-well seismic, cased-hole neutron logs, tracers, pressure, etc. ). February 28, 2011

2. SECARB’s Phase III Anthropogenic Test Key Anthropogenic Test Partners and Organizations Capture Transportation Storage MVA Activities February 28, 2011

2. SECARB’s Phase III Anthropogenic Test Washingto n County Alabama Mississippi Core Area of Citronelle Dome CO 2 Injection Site CO 2 Pipeline Mobile County Plant Barry Project Schedule and Milestones The 25 MW CO 2 capture unit at Alabama Power’s (Southern Co. ) Plant Barry will become operational in 3 Q 2011. A newly built 12 mile CO 2 pipeline (3 Q 2011) will transport CO 2 from Plant Barry to the Citronelle Dome. From 100 to 300 thousand metric tons of CO 2 will be injected into the Paluxy saline formation over 2 to 3 years. Advanced Resources and supporting researchers will conduct 3 years of monitoring after CO 2 injection and then close the site. Mobile February 28, 2011

3. Building on a Foundation of Success SECARB’s Phase II Mississippi Test Site (Mississippi Power’s Plant Daniel) • Established viability of regionally significant and areally extensive Tuscaloosa Massive Sand for CO 2 injection and storage. Cooling water re circulation • Built experience and confidence for operating CO 2 storage at an operating power plant site. N MS Ash pond Test Site Obs Well – Drilled and characterized two deep wells – Injected 3, 027 tons of CO 2 at 180 tons per day (3 MMcfd), trucked to site. Inj Well Ash pond Image Source: Google Earth February 28, 2011

4. Selecting a Safe, Secure High CO 2 Storage Capacity Site CO 2 storage at the Citronelle Dome will be into the Lower Cretaceous fluvial Paluxy saline formation. Cretaceous-age fluvial deposition systems, while accounting for a significant portion of U. S. CO 2 storage capacity, pose numerous challenges (risks), particularly: l Providing sufficient sand continuity to provide an “open system” for favorable CO 2 storage capacity. l Ensuring adequate permeability to serve as an economically efficient CO 2 storage site. February 28, 2011

4. Selecting a Safe, Secure High CO 2 Storage Capacity Site (Cont’d) Gulf Coast Region Saline Reservoirs and Seals The Anthropogenic Test’s CO 2 Storage Site The saline formation selected for CO 2 injection has many favorable characteristics, is regionally significant, but is geologically challenging. l l Proven four-way closure at Citronelle Dome. Deep Lower Cretaceous Paluxy Fm (at 9, 400’). Numerous reservoir seals and confining units (at least 5). No evidence of faulting or fracturing, based on reinterpretation of existing 2 D seismic lines. Massive 1, 100 foot interval of stacked fluvial sands and shales. Confinin l g Zone However, prior to drilling the characterization Injectio n well, only limited data exist on the sand Zone continuity, porosity and permeability of the Paluxy Fm at Citronelle Dome. February 28, 2011

Citronelle SE Unit # D-9 -7 Log Depth (ft) 9400 Top of Paluxy 5. Investing in Detailed Reservoir Characterization 9500 9600 ‘Upper Paluxy’ Sand Layer 9620 https: //mail. sseb. org/exchange � 9700 Given the challenges posed by a thick, fluvial sequence of sands and shales, the project invested considerable time and effort on reservoir characterization: 9800 9900 10000 ‘Middle Paluxy’ 10100 10200 10300 10400 ‘Lower Paluxy’ 10500 Top of Mooringsport Establishing Reservoir Continuity l Detailed analysis of over 80 well logs for porosity and depositional style. l Sand continuity mapping of nearly 30 sand intervals to determine “open” or “closed” sand units. Sand Layer 10060 We also collected analyzed data on the Paluxy Fm in other parts of the Gulf Coast region. February 28, 2011

5. Investing in Detailed Reservoir Characterization (Cont’d) Cross-Plot of Porosity vs. Permeability Establishing Adequate Permeability Like most saline formations, no data existed on the permeability of the Paluxy Fm at the storage site. To provide a “first order” assessment of permeability, we compiled sidewall core data for the Paluxy Fm from numerous areas in Alabama to develop a cross-plot of porosity versus permeability: B l Lower trend line (A) represents assumed damaged sidewall core permeability. l Higher trend line (B) represents assumed nondamaged sidewall core permeability. l However, other geologic factors could also be influencing the porosity vs. permeability cross-plots. A February 28, 2011

5. Investing in Detailed Reservoir Characterization (Cont’d) Building the Geologic Model CO 2 Injector (Near Well D 9 -7) Based on detailed characterization of the thick Paluxy sand/shale interval, we selected 17 sand units for CO 2 injection: l 343 net feet of sand l Average porosity of 19. 3% l Average (non-damaged) permeability of 88 md l Normal pressure and temperature gradients Subsequent reservoir characterization (currently underway) will help confirm and update the key CO 2 injectivity and storage capacity parameters. February 28, 2011

5. Investing in Detailed Reservoir Characterization (Cont’d) Confirming and Refining Our Reservoir Characterization At the end of December 2010, we began drilling the Paluxy reservoir characterization well, D 9 -8 #2, at the Citronelle Dome. l Well drilled to 11, 800’ TD (spud to TD) in 30 days and under budget. l Recovered extensive whole core (98 feet in two intervals) plus 45 sidewall cores in the two confining units, the above primary seal zone and the remaining CO 2 storage zone. l Ran full set of logs (Triple Combo, MRI, Mineralogy, Dipole Sonic, CBL, etc. ). Well was cased and cemented in January, 2011 and will be used as an observation/monitoring well, particularly for working with the CO 2 Capture Project (CCP) to test their innovative modular borehole monitoring (MBM) system. February 28, 2011

6. Conducting Rigorous Reservoir Modeling Understanding CO 2 Flow and Optimizing Storage Capacity Modeling the CO 2 Plume X-Sectional View of CO 2 Plume CO 2 Injection Well 3 D View of CO 2 Plume CO 2 Injection Well The information from detailed reservoir characterization is being used to model and optimize the CO 2 plume and mitigate risk of lower permeability: l Areal extent of CO 2 (less than 1, 000’ in any direction) will be limited by injection into multiple sand layers (taking advantage of reservoir architecture). l Planning for a second CO 2 injection well, which would serve as a monitoring well if permeability is sufficiently high. We will conduct a series of additional reservoir simulations to calibrate the geologic model and support MVA as the project progresses and new information is gathered. February 28, 2011

7. Making Major Investments in CO 2 Monitoring Design CO 2 Injection and Storage Site CO 2 Injector Cased-hole neutron logging Crosswell seismic/VSP Groundwater sampling Well D-11 Cased-hole neutron logging Wells D-4 -13 and D-4 -14 In- and above-zone monitoring Crosswell seismic/VSP Fluid sampling Groundwater sampling Characterization Well Cased-hole neutron logging Crosswell seismic/VSP Observation Well Cased-hole neutron logging Fluid sampling The anthropogenic test will use five deep wells to track the CO 2 plume plus three shallow water monitoring wells: l Near-surface and deep reservoir fluid sampling. l In-zone and above-zone pressure and temperature monitoring. l Cased-hole neutron logging. l Crosswell seismic and VSP. We are indebted to SECARB’s Early Test/BEG for monitoring guidance and to Denbury Onshore LLC for contributing three of their existing wellbores for monitoring. February 28, 2011

8. Addressing Risks and Mitigation Plans The Anthropogenic Test has spent considerable effort to address risks and incorporate consideration of these risks into a project plan. 1. Detailed site selection and characterization l Four-way closure at Citronelle Dome. l No evidence of faults or major fractures (based on existing seismic). l Multiple (5) confining units and seals. l Thick package of sands and shales. 2. Rigorous reservoir modeling of the CO 2 plume l Incorporation of reservoir architecture to limit areal extent of CO 2 plume. l Understanding of CO 2 trapping and immobilization mechanisms. l Plans for calibrating the reservoir model with monitoring data. February 28, 2011

8. Addressing Risks and Mitigation Plans (Cont’d) 3. We participated with DNV on incorporating our test site procedures into the “risk registry”. (See Attachment for additional details. ) l Assessed habitat for potential wildlife l Prepared contingency plans for low CO 2 injectivity l Formulated procedures for temporary lack of CO 2 delivery. 4. Comprehensive program of monitoring l Multiple cross-well seismic and consideration of VSP. l Adaptation of oil field tools to monitor CO 2 (e. g. , cased-hole neutron log, fluid sampling, downhole P/T). l Collaboration with CO 2 Capture Project for testing innovative MVA technology. February 28, 2011

9. Challenges, Lessons Learned and Accomplishments Four “lessons learned” and accomplishments for the Anthropogenic Test. 1. Lessons Learned. Planning and operating a fully integrated, commercial prototype CO 2 capture, transportation and storage project requires extensive negotiations and flexibility in plans and schedules. Accomplishment. The Anthropogenic Test storage team has adapted its schedule and managed its activities to match the Alabama Power’s CO 2 capture schedule and Denbury Resource’s CO 2 transportation schedule. 2. Lessons Learned. Selecting and gaining approval for a high quality, regionally significant saline formation for storing CO 2 is a major challenge. Accomplishment. The Anthropogenic Test storage team identified and gained access to the regionally extensive, low risk but geologically challenging Paluxy saline formation for storing CO 2. February 28, 2011

9. Challenges, Lessons Learned and Accomplishments (Cont’d) 3. Lessons Learned. Investing significant up-front time and effort in problem identification and risk avoidance was crucial for securing a safe, secure CO 2 storage site. Accomplishment. The Anthropogenic Test storage team conducted extensive evaluation of the casing programs and cement integrity of the older wells surrounding the CO 2 storage site to assure an acceptable “area of review” for CO 2 injection and storage. 4. Lessons Learned. Investing in detailed site and reservoir characterization, particularly in a fluvial, complex formation such as the Paluxy, is essential for ensuring adequate CO 2 storage capacity, safe CO 2 injection operations, and effective CO 2 monitoring. Accomplishment. The Anthropogenic Test storage team conducted (and is now updating) flow unit by flow unit descriptions of reservoir continuity and injectivity to enable the team formulate a well design and completion scheme that would minimize the areal extent of the CO 2 plume. February 28, 2011

Attachment A February 28, 2011

Risk Management Framework February 28, 2011

Selected Examples of Potential Risks The SECARB Anthropogenic Test project team has completed a risk registry of potential risks, consequence severity, likelihood of occurrence and safeguards for mitigation. February 28, 2011