Suez: Answers to water shortage challenges Thierry MALLET CEO of Degrémont Mario SAVASTANO CEO of the Companies formed or acquired for the Barka Phase II - Rusail Projects. February 7, 2007
Information Meeting February 5-8, 2007 2 2 Disclaimer This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person. 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Information Meeting February 5-8, 2007 3 Agenda Water shortage 2 alternative water solutions Desalination Reuse
Information Meeting February 5-8, 2007 4 4 Water shortage: a worldwide situation 2.5 billion people are facing water stress or scarcity: Water stress < 1 700 m3/p/year of resource renewable Water scarcity < 1 000 m3/p/year of resource renewable Example Australia: No National scarcity but local scarcity opportunities: Western & Southern face chronic water shortages.
Information Meeting February 5-8, 2007 5 Water shortage: 2 alternative water solutions Complementary resources Drinking water Desalination Irrigation REUSE Industry 2.4 Billion people live near the sea Desalination, already an alternative for more than 200 million people 368 km3/year wastewater collected in the world Only 160 km3/year wastewater are treated and 7,1 km3/year (4,5%) recycled.
Information Meeting February 5-8, 2007 6 Agenda Water shortage 2 alternative water solutions Desalination - Technologies - Middle East specificities Reuse
Information Meeting February 5-8, 2007 7 Two major families: Reverse Osmosis and Thermal: Leading desalination technologies Membrane technologies (Reverse Osmosis) Sea water is filtered, by applying pressure across a membrane separating permeate on one side, and brine on the other 32 to 80 bars from brackish to seawater Thermal technologies Sea water is evaporated, and condensed to form a salt-free distillate Multi-Stage-Flash (MSF) Multi-Effect-Distillation (MED)
Information Meeting February 5-8, 2007 8 Reverse Osmosis and Thermal: Leading desalination technologies Thermal process: Separate water and dissolved salts by evaporation Reverse Osmosis: Retain by a filter membrane the salts dissolved in water Installed capacity (million m3/day) 70 60 50 40 30 20 10 World RO CAPEX (2005 2015): 17 billion USD Reverse Osmosis Thermal process 0 1980 1985 1990 1995 2000 2005 2010 2015 Reverse Osmosis: a a competitive technology, supplanting the the thermal solution
Information Meeting February 5-8, 2007 9 Gas price increase favors less energy intensive technologies As gas costs increase to international levels, RO clearly becomes more competitive Under high gas price scenarios, fuel becomes the dominant cost component in an MSFproduced m3 of water MSF and MED technologies require more capex than RO 100 90 80 70 60 50 40 30 20 10 0 Water cost vs Fuel prices ( cents/m 3 ) Capital cost O&M Chemicals cost O&M Renewal cost O&M Manpower cost Electricity cost Fuel cost RO MSF 0.8$/Mmbtu MSF 2$/Mmbtu MSF 3$/Mmbtu MSF 4$/Mmbtu RO RO is is the the most competitive technology and and even better in in a a context of of high energy cost
Information Meeting February 5-8, 2007 10 Reverse Osmosis technical advantages Versatility: For the treatment of all types of water: brackish water sea water Adapted to all sizes of installations and any sources of energy: steam, electricity Setting up in all geographic zones possible Curacao, Caribbean Sea water 18 000 m3 Flexibility: Plant sizing according to the present needs (possibilities to increase production capacity) Operating cost is proportional to flow variations El Atabal, Spain Brackish water 165 000 m3
Information Meeting February 5-8, 2007 11 Reverse Osmosis: a competitive solution optimized by DEGREMONT as a BUILDER Index price Mature solution Key factors masterised: Standardization Short delay completion. Perth plant was built in 18 months
Information Meeting February 5-8, 2007 12 Reverse Osmosis: a competitive solution optimized by DEGREMONT as an OPERATOR Electrical consumptions / kwh/m 3 12 10 8 6 4 2 0 Beginning of RO story 11,8 Pelton turbine 8 High efficiency pump and motors 5 Low energy RO element with salt rejection improved 3.2 Total water cost (CAPEX + OPEX): 0.5 0.8 USD/m 3 Efficiency energy recovery device General optimisation : Better engine efficiency Better membrane permeability 2.3 < 2 1970 1980 1990 2000 2006 2010 Evolution of of electrical consumption for for sea sea water first first pass RO RO
RO: the choice of flexibility and versatility Pioneer of the reverse osmosis technology: first installation in 1972 in Houat Island, France 250 references worldwide 1,9 million m3/d desalinated water 8 plants operated by DEGREMONT, 450 000 m3/day Information Meeting February 5-8, 2007 13 13
Information Meeting February 5-8, 2007 14 14 Agenda Water shortage 2 alternative water solutions Desalination - Technologies - Middle East specificities Reuse
Information Meeting February 5-8, 2007 15 In the Gulf, desalination market is linked to energy one Gulf countries today have a 53,500MW installed capacity in 2006 Capacity due to expand by 24,000 MW by 2010, of which circa 15,000 MW accounting for IPPs and IWPP Installed generating capacity in 2006 (MW) Additional capacity by 2010 (MW) 3 069 2 200 Saudi Arabia 1 000 30 000 Oman 3 500 UAE 10 500 16 226 Qatar Bahrein 7 250 2 060 1 600 Desalination plants in the Gulf + Red Sea: Total CAPEX forecast 2005-2015: 14 billion USD
Information Meeting February 5-8, 2007 16 Combining power generation and desalination: a significant booster to energy efficiency Stand alone CCGT (Gulf ambient conditions) 2.22 Gwh gas 1.00 Gwh electricity 1.22 GWh losses Stand alone MSF 0.45 GWh gas 10249 m3 Water Total=2.67 GWhgas gas used per per day day
Information Meeting February 5-8, 2007 17 Combining power generation and desalination: CCGT + MSF Dual purpose plant: CCGT+MSF combined 2.533 GWh gas 1.00 GWh13.2 Electricity GWh electricity 1.5 GWh loss 10249 m3 Water Total=2.5 GWhgas gas used, i.e i.e 6.5% energy savingsin in the the overall system
Information Meeting February 5-8, 2007 18 Combining power generation and desalination: CCGT + RO Dual purpose plant: CCGT+RO combined 2.33 GWh gas 1.00 GWh13.2 Electricity GWh electricity 1.35 GWh loss 10249 m3 Water Total=2.3 GWhgas gas used, i.e i.e 12% energy savingsin in the the overall system => => Combining RO RO and CCGT is is the the most fuel efficient solution
Information Meeting February 5-8, 2007 19 Combining power generation and desalination: RO takes advantage of local seasonality of electricity consumption Address simultaneously two key issues in this region: power and water production within one facility Significant synergies and economies of scale in development costs, financing, and operation Less gas consumption Significant energy savings Additional flexibility of system usage with RO by taking advantage of seasonality and peak/off-peak periods (use RO during off-peak periods, taking advantage of low-cost electricity).
Suez masters key technologies to provide robust solutions to power & water issues in the Middle East High growth of electricity consumption Scarcity of water resources Prime access to oil and gas Increased importance of private investment a combination of factors matching Suez competencies A leading power player, mastering cogeneration technology A leader in desalination technologies A competent and reputable developer and operator of complex infrastructure projects Proven track-record in large project-financed developments Optimize best solution for local market conditions Information Meeting February 5-8, 2007 20
Information Meeting February 5-8, 2007 21 Agenda Water shortage 2 alternative water solutions Desalination - Technologies - Middle East specificities Reuse
Information Meeting February 5-8, 2007 22 Reuse: three applications REUSE Domestic use (watering ) Irrigation Industry Pimpama (Australia) 17 000 m 3 /d reused in domestic water uses (watering ) Lusail (Qatar) 60 000 m 3 /d reused in farm irrigation Sempra (Mexico) 22 500 m 3 /d for ICA Fluor / Sempra energy
Information Meeting February 5-8, 2007 23 Reuse: worldwide market trend Million USD v 20000 15000 10000 5000 5 year CAPEX Annual OPEX Today, the market is mainly new plants 0 2005 2006-10 2010 2011-15 2015 Year New wastewater treatment plants to be build can be designed for Reuse in water shortage countries Industrialised countries can upgrade their existing facilities, under the pressure of their population s environmental consciousness
Reuse: market trend in the gulf Treated wastewater can satisfy the water growing needs (demographic & economic) Reuse plants in the Middle East + North Africa Total CAPEX forecast 2005-2015 : 7 bn USD Doha West, Qatar 135 000 m 3 /d reused in farm irrigation Projects : UAE - Dubaï, Palm Water projects, Reuse plant, DBO - Abu Dhabi, reuse plant, 300 000 m3/d, BOT - Al Ain, reuse plant, 65 000 m3/d, BOT Qatar - Doha North, reuse plant and regional sludge treatment platform, 244 000 m3/d / 900 000 p.e. - Dhakhira, Reuse plant, 30 000 m3/d / 100 000 p.e. Information Meeting February 5-8, 2007 24
Reuse: Degrémont experience More than More than Almost 50 2,4 million m3/day installed 10% of the worldwide installed capacity references worldwide England 40 000 m3/d France Portugal 100 m3/d 8 000 m3/d Italy Spain 345 600 m3/d Qatar 265 415 m3/d 195 000 m3/d USA 114 000 m3/d Mexico 940 964 m3/d Saudi Arabia 2 745 m3/d China 400 000 m3/d India 1500 m3/d Venezuela 40 000 m3/d Australia 17 000 m3/d Information Meeting February 5-8, 2007 25
ANNEXES
Information Meeting February 5-8, 2007 27 Multi-Stage Flash (MSF) Sea water is heated by steam in a brine heater Boiling water evaporates (flash) under lower pressure than saturation pressure Evaporated water condensates to form distillate Evaporation and condensation are repeated in successive chambers under reduced pressure levels
Information Meeting February 5-8, 2007 28 Multi-Effect-Distillation (MED) Sea water Is sprayed on heated tubes circulated by steam Water vapor goes to the next effect vessel in the heating tubes Evaporated water is condensed in the heating tubes of next effect vessel cooled by spraying of sea water Successive effect vessels at lower pressures and temperatures Distillate is collected at each vessel from the heating tubes Generally operates at lower temperatures than MSF to reduce scaling (CaSO4)
Reverse osmosis technology (RO) Reverse osmosis phenomenon takes place through layers of membranes within each RO module For seawater, pressure ranges up to 80 bars To optimise the energy consumption, HP pumps are coupled to energy recovery systems Information Meeting February 5-8, 2007 29
Information Meeting February 5-8, 2007 30 Some references in the world 2008 Barka Oman 120 000 m 3 /d 2008 Barcelone Spain 200 000 m 3 /d 2007 Perth Australia 140 000 m 3 /d 2006 Cartagena Spain 65 000 m 3 /d 2006 Wadi Ma In Jordanian 129 000 m 3 /d 2006 Minera La Escondida Chili 45 000 m 3 /d 2006 Curaçao West Indies 18 000 m 3 /d 2004 Fujairah UAE 170 000 m 3 /d 2003 El Atabal Spain 165 000 m 3 /d 2003 Bredeah Algeria 29 000 m 3 /d 2001 Carboneras Spain 120 000 m 3 /d 1999 Bahia Spain 68 000 m 3 /d Under construction Completed Operated by DEGREMONT
Information Meeting February 5-8, 2007 31 Reuse: tailored processes depending on the final use Expertise of the water treatment specialist to define the adequat treatment line depending on the final use Domestic uses : golf irrigation, street cleaning, Agriculture irrigation Industry : cooling system, air cond, The implementation of membranes (UF / RO) secures Public Health and is to ensure the public acceptance especially for domestic uses.
DEGREMONT presence in the Middle East Information Meeting February 5-8, 2007 32 32 2008, Doha West, DBO, Reuse plant 10 years, 135 000 m3/d. 260 million USD 2006, Tripoli, WWTP & sludge treatment plant 1 million p.e., 77 million 2006, Amman, Wadi Ma In desal plant, 135 000 m3/d AMMAN RIYADH Bahrain United Arab Emirates 2007, Lusail, DBO Reuse plant 10 years operation, 60 000 m3/d. 188 million USD DOHA Gulf of Oman 2007, Amman, BOT As Samra WWTP, 267000 m3/d 150 million USD Red Sea Saudi Arabia Oman 2003, Fujairah, DB, RO plant within the first hybrid desal plant. 170500 m3/d. 100 million USD Arabian Sea 1983, Riyadh, DB, 200000 m3/d. First large RO desal plant in the region 2009, DB Barka, desal plant, 120000 m3/d