Masanori Abe General Manager Technology and Planning Dept. CCS Co., Ltd. JCCS

‹ Who is JCCS ?

‹ What we have done in FY2009 – 2010.

‹ What we will do in FY2010.

‹ Financial Issues

‹ Wrap-up

2 JCCS

‹ At the G8 Hokkaido Toyako Summit in July 2008 , leaders declared, “We strongly support the launching of 20 large-scale CCS demonstration projects globally by 2010, taking into account various national circumstances, with a view to beginning broad deployment of CCS by 2020.”

‹ Since around the summit, the Japanese Government accelerated developing innovative energy technologies for mitigating glbllobal warming. CCS is a key tec hno logy for this purpose.

‹ Private companies of Japan gathered and established a company to support this Government with conducting CCS demonstrations.

‹ Japan CCS Co., Ltd. is the first private company specialized in CCS in the world.

3 JCCS

KEY OBJECTIVES OF JCCS INCORPORATION ♦ Accomplish comprehensive investigations for carrying out CCS total system demonstrations ♦ Integrate opinions from the private sector for early establishment of laws, regulations and technical standards applicable to CCS in Japan ♦ Conduct promoting activities for CCS deployment in Japan ♦ Cooperate with foreign organizations for CCS deployment overseas ♦ Collect and exchange the latest information on CCS with overseas research organizations

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Name: JAPAN CCS Co., Ltd. Date of Incorporation: May 26, 2008 Business Description: A comprehensive investigation for Carbon-dioxide Capture and Storage Projects in Japan Capital: 243 mm yen (ca. US$2.3mm) Shareholders: 37 companies 11 electric pp,power, 5 petroleum ,g, 5 engineerin g, 4 petroleum resource developing, 4 general trading, 2 iron and steel, 2 city gas, 1 chemical, 1 non-ferrous metal and cement, 1 steel pipe, 1 special trading President: Shoichi Ishii, Japan Petroleum Exploration Co., Ltd. (JAPEX) Directors: 8 representing the shareholders’ industries AditAuditor: TkTakashi HHjonjo, Research IItittnstitute of Innovati ve Technologies for the Earth (RITE)

5 Who is JCCS -4/5- JCCS

Hokkaido Electric Power Co., Inc. Engineering Co., Ltd. Tohoku Electric Power Co., Inc. TOYO ENGINEERING CORPORATION The Tokyo Electric Power Co., Inc. Arabian Oil Company Ltd. Chbhubu El ectri c Power Co., Inc. CORPORATION Hokuriku Electric Power Co., Inc. Japan Petroleum Exploration Co., Ltd. The Kansai Electric Power Co., Inc. Oil Exploration Co., LTD. The Chugoku Electric Power Co ., Inc . JFE Steel Corporation Shikoku Electric Power Co., Inc. SUMITOMO METAL INDUSTRIES, LTD. Kyushu Electric Power Co., Inc. Tenaris NKK Tubes The Okinawa Electric Power Co., Ltd. Corporation Electric Power Development Co., Ltd. Corporation COSMO OIL CO., LTD. Idemitsu Kosan Co., Ltd. JAPAN ENERGY CORPORATION Marubeni-Itochu Steel Inc. NIPPON OIL CORPORATION Co., Ltd. SHOWA SHELL SEKIYU K. K. Co., Ltd. CHIYODA CORPORATION MITSUBISHI GAS CHEMICAL JGC Corporation COMPANY, INC. JFE Engineering Corporation Corporation 6 Who is JCCS -5/5- JCCS PROJECT FRAMEWORK - FUNCTIONS OF JCCS -

Ministry of Economy, Trade and Industry (METI)

Commissioning NEDO* Research Commissioning organizations, Technical domestic and Private overseas cooperation Investment JAPAN CCS Co., Ltd. Companies Personnel Cooperative Universities Research Subcontract CCS relatinggp companies , domestic and EtiExecution overseas Execution

Investigation and relating works for CCS demonstration

*New Energy and Industrial Technology Development Organization 7 JCCS

Fiscal Year 08 09 10 11 12 -

METI Development of Assessment Technologies Subsidized Project and Site Screening

METI Commissioned Project “Demonstration of CO2 Reduction Technology”

NEDO Commissioned Project

Feasibilit y Stu dy – CCS To tal Sys tem CO2 capture at IGCC and store at an offshore depleted gas field *Fiscal Year : April - March 8 JCCS METI Subsidized Project in FY 2008

WORK FLOW

WO Supporting Work

R Marine Environmental Investigation

K Site Evaluation Basic Research for Leakage Risk Analysis Economic Effect Analysis S ITE 115 7 4

Integrated WORK Evaluations

Engineering Fault Screening (15 Models) Assessment - Demonstration Models and Plans

PROD - Well Completion Study Fault - CO2 Simulation Study Assessment - Monitoring Techniques

U Screening Benchmark Model Potential Designs CTS Method Issues Fault Assessment

9 METI Subsidized Project in FY 2008 JCCS

15 models of CCS total systems for engineering and reservoir study

Source Capture Transport Injection Store IGCC Physical Land Pipeline ERD Depleted Gas Absorption (gas) (Extended Field Coal Pulverized Reach Power Plants Chemical Offshore Aquifer with Drilling) Well Absorption Pipeline (gas) closure Oil refineries Directional Lorry (liquid) Neogene Chemical Plants Drilling Well aquifer without Ship (liquid) Gas Field Subsea closure Completion Paper Mill Plant Paleogene Platform Cement Plant aquifer without closure Ironworks

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Conceptual Diagram of CCS

Plant B CO2 capture facilities •CO2 is captured at large CO2 compressor Plant A point sources, CO2 capture facilities CO2 compressor transported to CO2 transport (subsea pipeline) compressing facilities Less than 10km and injected into deep Subsea facilities saline aquifers or CO2 injection well

CO2 injection well depleted oil/gas Deeper than 1000m below reservoirs. seabed Seal •Sub-seabed storage is (Mudstone) practical in Japan CO2 Storage because long negotiations with many Reservoir (Sandstone) CO2 Storage land owners are not (Microscopic image) required. Saline water ERD: Extended Reach Drilling

Sand grain

(Microscopic image) 11 JCCS

‹ CO2 is assumed to be captured at th e Nak oso IGCC demonstrati on plant, transported to the Iwaki-oki Gas Field and stored in depleted gas reservoirs.

‹ IGCC, In tegra te d coa l Gas ifica tion Com bine d Cyc le, demonst ra tion p lan t is owne d and being operated by Clean Coal Power R&D Co., Ltd. (CCP).

‹ Iwaki-oki gas field was operated by Inpex (ex-Teikoku Oil).

‹ Term: July 2008 – 2010

Nakoso IGCC Offshore Pipeline Air-blown 250MW IkiIwaki-oki Gas Fi eld

Sub Sea Capture Compress Completion WD 150m

Fukushima Iwaki-oki Gas Field Iwaki ca.80km

TOKYO Depleted Gas Reservoir Nakoso N IGCC 2000mbMSL Ibaraki 12 JCCS

Tomakomai City October - November Population : 170,000 2009 Shallow Marine Type 苫小牧 - Ocean Bottom Cable

3D Seismic Survey Investigation Area (2.7×3 km)

Hokkaido Is .

Tomakomai 5km

TOKYO buoy

Guard Observation boat boats

Air gun boat 13 Assumed Flow at Tomakomai Site One of Examples

Capture Transport Injection Store Source <> <> Injection

Plant 1 CO2 Capture Land Pipeline 250,000t/yr Separate/Compress (SC-CO2) 200, 000t/yr Compress (Gas CO2) Injection Well

Compress/Heat Source <> Liquefied Plant 2 CO2 Capture Aquifer Tank Lorry Compress/Cool

Liq. CO2

50,000t/yr (Liq.CO2) JCCS

FY2009 (Apr. 2009 – Mar. 2010)

‹ 3D Seismic Survey @ Tomakomai candidate Site

‹ Offshore Pipeline Route Survey @ Iwaki-oki candidate Site

‹ Basic Designing @ several sites

FY2010 (Apr. 2010 – Mar. 2011)

‹ Investigation wells @ several candidate sites

‹ 3D Seismic Survey @ one candidate site

‹ Geol ogi cal evaluati on with these 3D and well ddtata

‹ Demonstration plan(s) to be presented to METI

‹ The Demonstration site(s) will be selected and the large- scale demonstration(s) will be launched

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‹ Shareholders of JCCS have been requesting METI to bear 100% cost for the demonstration projects in Japan.

‹ The national budget is a yearly basis.

‹ No guarantee in advance in writing to bear 100% cost for the entire project for almost 10 years.

‹ METI bore the 100% cost for the projects in FY2009.

‹ METI bears the 100% cost in FY2010.

‹ A risk of project suspension or cancellation in future if METI would decide not to bear 100% cost for the following years and shareholders would not bear the remaining cost.

*Fiscal Year : April - March 16 JCCS

‹ The Japanese Government has been accelerating promotion to develop Innovative Energy Technologies including CCS since the Hokkaido Toyako Summit in 2008 and set an aggressive CO2 reduction target in 2009. ‹ In order to deploy CCS widely in Japan, several demonstration ppjrojects are re quired. ‹ JCCS was established just before the Hokkaido Toyako Summit to support the Government by conducting comprehensive investigations for CCS demonstration in Japan for contributing to mitigate the global warming. ‹ JCCS carried out site selection and engineering / designing for CCS demonstrations in 2008, and field surveys in 2009. ‹ This year three appraisal and exploratory wells will be drilled in 3 candidate sites. ‹ After drilling these wells JCCS will present site evaluation reports to the government and demonstration site(s) will be select e d base d on the repor ts.

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Thank you for your attention!

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