WA Parish Carbon Capture and Enhanced Oil Recovery Project. September 9, 2014

Transcription

1 WA Parish Carbon Capture and Enhanced Oil Recovery Project September 9, 2014

2 Safe Harbor Statement This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Forward-looking statements are subject to certain risks, uncertainties and assumptions and typically can be identified by the use of words such as expect, estimate, should, anticipate, forecast, plan, guidance, believe and similar terms. Such forward-looking statements include our future growth and financial performance, Company operations, developments in renewables, and project development. Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale and retail power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale and retail power markets, changes in government regulation of markets and of environmental emissions, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify or successfully implement acquisitions and repowerings, the inability to implement value enhancing improvements to plant operations and companywide processes, our ability to realize value through our commercial operations strategy, and our ability maintain successful partnering relationships. NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The foregoing review of factors that could cause NRG s actual results to differ materially from those contemplated in the forward-looking statements included in this Investor Presentation should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at Statements made in connection with the exchange offer are not subject to the safe harbor protections provided to forward-looking statements under Private Securities Litigation Reform Act. NRG Energy 2Q14 1

3 NRG The Energy Company for the 21 st Century NRG is a different kind of energy company. We re at the forefront of delivering safe, reliable energy in new and innovative ways. We not only care about how energy is made, we also care about how it s used, how it s managed and how it s changing life. 2

4 Our Strength in Numbers GENERATION CAPACITY JOB CREATION 53,000 megawatts generated natural gas, coal, oil, nuclear, wind and solar 8,000 new jobs created through repowering and solar projects M 53K 42M 8K 3B Largest competitive electricity company in the U.S. Fortune 250 and S&P 500 Index company Serving almost 3 million customers with NRG retail brands Generating more than 53,000 MW of global, diverse energy Providing enough generation capacity to power 42 million homes Created or supported more than 8,000 clean economy jobs from Invested more than $3 billion on environmental improvements 3

5 One of the Nation s Largest and Most Diverse Generation Portfolios Solar Natural Gas Oil Wind Nuclear Coal Combined Scale Gas 25,358 MW 48% Coal 16,922 MW 32% Oil 6,004 MW 11% Nuclear 1,176 MW 2% Renewables 3,078 MW 6% International 749 MW 1% Total 53,287 MW NRG Yield: Conventional 1033 MW (included) Renewable 414 MW (included) Thermal 1,346 MWt (not included) Diversity of fuel-type, dispatch level, and geographic region help mitigate risk and moderate market demand cycles 4

6 Delivering Safe, Reliable Energy in New and Innovative Ways Developed solar canopies to provide renewable energy with style Providing customized emergency back-up energy solutions Developing an onsite natural gas-fueled energy appliance that can provide grid independence Launched the nation s first privately funded, comprehensive electric vehicle charging ecosystem Combined solar power and district cooling to aircondition seating areas of Phoenix light rail system Expanding renewable energy at largest scale 5

7 One Partner Delivering a Full Suite of Energy Solutions Combined heat & power systems District Energy Systems Diverse generation resources Retail electric providers Energy Services Smart energy solutions for home and business Distributed solar and wind installations Backup generation Electric vehicle charging infrastructure Micro-grid Fuel Cells Empowering businesses with efficient and reliable energy solutions 6

8 Addressing Customer Concerns with Cleaner and Smarter Energy Solutions NRG producing safe, affordable clean energy Investments in solar, wind and EV charging infrastructures Leading the industry with innovative postcombustion carbon capture technologies Environmentally sound thermal Zero emission nuclear Back up and reliability services and providing solutions to manage energy costs in a sustainable manner Mitigate Risk Product options for managing volatile energy costs Analyze Smart Energy tools providing insights into how energy is consumed Manage & Control Tools to identify sources of energy waste Tools to control and optimize energy costs Operational services for increased efficiency Demand response solutions 7

9 NRG is Investing in America s Future Delivering safe, reliable energy in new and innovative ways Repower Revolutionize Expand Cedar Bayou Station, Texas Investing $3 billion since 2000 in efficient, clean and innovative power sources Launched the foundation for a transportation revolution by building the first privately funded electric vehicle charging infrastructure Expanding renewable energy at record scale and investing in smart energy solutions to manage and control costs Creating a more sustainable future for us, our customers and the communities we serve 8

10 NRG: Recognizing Several Distinct Value Propositions NRG Group of Companies Leading retail energy platform with ~2.8 million residential customers Smart energy management, home solutions, and personal power Rapidly growing residential solar business Largest US competitive generation portfolio with over 50 GW of capacity Full suite of energy management services and retail energy supply for commercial and industrial customers Unique range of on-site generation offerings through dgen business Leading renewable development and operations platform Commercialized renewable microgrid solutions and green B2B initiatives Innovative focus on sustainable and distributed energy future Creating the Foundation for Future Growth, Value Creation, and Value Recognition 9

11 Pressure On Coal Really Ramping UP August 22,

12 Wall Street Journal 11

13 Why Did NRG Invest In This Project? And what s the Value Proposition Commodity Diversification Through Oil / Natural Gas Price Arbitrage Illustrative Oil Price for Target Return 1 ($/bbl) $90 $75 $70 $65 Carbon Price Hedge CCS-EOR: Initial Field CCS-EOR: W/ Expansion Fields Petra Nova Parish Project $20 Carbon Price $20 Carbon Price + 10 Yr Life Extension 2 Coal Generation Enhancement Enhance Value and Useful Life of Coal Fleet $120 $110 $100 Historical WTI Crude Oil Prices ($/bbl) 1,3 Fight Climate Change While Preserving Critical System Fuel Diversity $90 $80 $70 Oil Price to Achieve Target Return (W/ Expansion) $ Petra Nova Should Be a Value Multiplier for NRG 1 Represents after-tax 10% unlevered return; Oil prices represent today s dollars adjusted for annual inflation; Quality of oil produced at West Ranch field trades at a premium to WTI 2 Illustrative $20 Carbon Price Scenario assumes $20/ton carbon price beginning in 2020, oil field expansion post-west Ranch, 90% CO 2 removal rate on 240 MW, 1 ton/mwh baseline carbon emissions, 80% capacity factor, and $0.53/MWh uplift in power prices for every $1/ton carbon price; Illustrative 10 Year Life Extension assumes a $20/MWh dark spread 3 Source: EIA Historical Spot Prices; Market data as of 7/30/

14 WA Parish Project: Overview Project Advantage Process Overview Demonstrated, Superior Technology Post-combustion carbon capture (PCCC) is a simple, mature, and proven technology Similar to back-end controls being used for SO 2 and NO X today Well-understood and proven technology with experienced OEM Parish 8 Flue Gas 1 11% CO 2 Solvent w/ CO % Pure CO 2 Absorber Regenerator Compressor Enhanced CO 2 Capture Strong Project Partners 90% carbon capture target for 240 MW flue gas slip stream Experienced project partners Hilcorp Energy and JX Nippon Oil & Gas $167 MM Department of Energy grant Solvent w/o CO 2 Steam Peaker Power 82-mile CO 2 Pipeline Leverages Existing Power Plant No new baseload power needed; Utilizes existing WA Parish plant Crude Oil West Ranch No Reliability Impact No impact on plant operations; Capture unit is independent CO 2 Flood Cost Protections Timing Protections Fixed price under lump-sum turn-key (LSTK) EPC agreement Guaranteed completion with liquidated damages through EPC agreement Target COD for CCS by end of 2016 Expected to capture 1.6 million tons of CO 2 /year West Ranch field holds reserves of ~60 million barrels 2 Projected production increase from 500 bbl/d to 15,000 bbl/d Petra Nova: Leading the Market For Post-Combustion Carbon Capture 1 Flue gas conditioning occurs prior to absorption, which removes all residual SO X and cools the flue gas 2 Based on reserve report as of 12/31/2013; Reserves are proved and probable on a contingent basis subject to audit of final approved project 13

15 Our Partners and the Transaction Structure Project Ownership Structure Partner Summary One of the largest privately-held oil and natural gas E&P companies in the US WA Parish Power Plant Petra Nova Cogen 50% 1 50% Petra Nova Parish Holdings LLC CO 2 Capture Block 50% 50% Texas Coastal Ventures, LLC Hilcorp Energy JX Nippon Oil & Gas Exploration Strong track record of implementing new production techniques into mature reservoirs Specialized team that has extensive experience implementing CO 2 floods Currently conducting oil and natural gas business in 14 countries Parent company, JX Holdings, is a leading integrated energy, resources, and materials company Pipeline West Ranch Oil Field Sources $MM Uses $MM NRG Equity 2 $300 Parish Site Capital 3 $637 JX Nippon Equity 300 Oilfield and Pipeline Capital 300 Project Financing 250 Initial O&M, G&A, Fees, Other 80 DoE Grant 167 Total $1,017 Total $1,017 Japan Bank for Int l Cooperation US DoE Policy-based financial institution Wholly-owned by the Japanese government Over 25,000 loan and equity commitments valued at over $479 billion Awarded $167 MM grant Funded through Clean Coal Power Initiative Well-Structured Project with Strong and Experienced Partners 1 Petra Nova will be deconsolidated from NRG s financial statements 2 Includes investments already incurred during development of the project 3 Includes costs associated with CCS system and contribution of Parish peaker 14

16 DOE Funding Moving the project forward while protecting taxpayer interest $167M Grant (not a loan) $7 MM received by NRG during Phase I $158.5 MM allocated to Phase 2 and $1.5 MM allocated to Phase 3 $3 MM DOE holdback to be reimbursed upon submission of final deliverables following Phase 3 Environmental Impact Statement (EIS) required per NEPA Record of Decision (ROD) was received on May 8, Requires a comprehensive site specific CO 2 Monitoring Plan over-and-above traditional CO 2 -EOR accounting There are numerous DOE requirements that the project must comply with: Prevailing Wages (Davis-Bacon Act) Procurement regulations (SSJ, AFV) Reporting Obligations (Monthly, Weekly) Technical Reports (w/ IP classifications of data) E.O (Affirmative Action)

17 Project Facilities Overview 99.9% Pure CO 2 Parish 8 Flue Gas 11% CO 2 A b s o r b e r Solvent w/o CO 2 Solvent with CO 2 S t r i p p e r Compressor 82-mile CO 2 Pipeline Oil Sales Cogen Steam Electricity WA Parish Plant West Ranch Oilfield W.A. Parish Plant Site and CCS Configuration Pipeline Route

18 Artist s Rendering Compressor Regenerator Absorber DCC Flue Duct CHP and Cooling Tower

19 Construction contracting It s a 3-in-1 structure 99.9% Pure CO 2 Parish 8 Flue Gas 11% CO 2 A b s o r b e r Solvent w/o CO 2 Solvent with CO 2 S t r i p p e r Compressor 82-mile CO 2 Pipeline Oil Sales Pipeline Cogen Steam Electricity CCS/BOP Production of Oil

20 Environmental aspects 1.6 million tons per year of existing CO 2 emissions captured and sequestered University of Texas Bureau of Economic Geology providing world-class CO 2 monitoring program No undisturbed land impacted since we re using existing sites: power plant, right of way, and oilfield Leading edge energy efficiency from CHP power and steam supply and CO 2 capture system is cutting edge efficiency Full Environmental Impact Statement concluded with a finding of no significant impacts

21 Parish CO 2 -EOR Project Timeline to complete development Signed Purchase and Sale Agreement (PSA) with JX Peaker construction complete; unit operational NRG submits application for, and DOE approves, FEED study for larger project up to 250 MW Final Environmental Impact Statement (EIS) and DOE Record of Decision received; Nat l Environmental Policy Act (NEPA) process complete Petra Nova signs joint venture (JV) agreement with Hilcorp and acquires interest in West Ranch Negotiated Engineering, Procurement, and Construction (EPC) contract COD DOE awards NRG $167 MM grant for 60 MW Parish Project Closed on $54 MM Ike Bond issuance for Peaker construction Issue Limited Notice to Proceed in March 2014 Cooperative Agreement signed; Frontend Engineering & Design (FEED) study begins Commenced Peaker construction Signed Letter of Intent with JX Obtain NRG Board approval Close the MIPSA with JX Memorandum of Understanding (MOU) signed with Hilcorp Oil field diligence prompts team to evaluate upsizing project Selected MHIA as technology provider Initiated engineering work with MHIA and JX Finalize JBIC/NEXI financing Financial Close Issued Final Notice to Proceed (FNTP) July 15, years 200+ agreements 20

22 Petra Nova Opportunities for CO 2 -EOR Legend Oil fields favorable for CO 2 EOR nrg coal plants favorable for CCS nrg west coast gas-fired Over 15 billion barrels of oil recoverable with CO 2 -EOR in US

23 Thank you. 22