Lignite R&D Update...North Dakota Lignite Energy Industry’s Contribution to the State Economy in 2017; Agribusiness and Applied Economics, NDSU (report forthcoming). Total Business

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Lignite R&D UpdateCarbon Management, Emerging

Markets, & Transmission

WDEA Annual Meeting

Minot, North Dakota

October 31, 2019

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Topics of Presentation

• Background

• Carbon Management Updates• Regional Impact Study• Carbon SAFE• Allam Cycle• Project Tundra

• Emerging Markets– Value Added Opportunities– Future Opportunities

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Historical Successes

▪ Thriving with high-sodium coal

Optimized operations and cleanability

▪ Meeting regulations for primary pollutants

Addressing potential future NOx challenges

▪ Addressing Hg and trace elements

Costs reduced by more than 20X

▪ Support of only US coal-to-synfuels plant

DGC adding urea to product suite

▪ Spiritwood – industrial complex

▪ DryFining – coal upgrading

▪ Lignite mining, use, and reclamation advances through data, instrumentation & controls

Basin Electric Antelope Valley Station and DGC Synfuels Plant www.dakotagas.com

…. to highlight a few

44EPA Air Trends (U.S.) - https://www.epa.gov/air-trends/air-quality-national-summary#air-quality-trends

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Research & Development

Priorities for the LEC

• Support continued options to enhance performance of the existing fleet

• Invest in transformational research (Next generation of Lignite conversion systems that integrate CO2 capture)

• Focus on Carbon Capture Utilization & Storage (CCUS)

• Leverage international R&D breakthroughs

• Renewed Focus– Additional value propositions for lignite

– Polygeneration opportunities

66BP Statistical Review of World Energy 2019

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If the largest coal-fired power plants in North Dakota captured 90% of the CO2 and targeted near-term enhanced oil recovery (EOR) opportunities, what would be the economic impact?

Regional Impacts Case Study

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STUDY INPUTS

Existing Infrastructure

CO2 Capture and Compression Facilities

Existing Infrastructure

Conventional Oil Fields

CO2 Pipelines

New Construction

Coal MinesCoal Power

Plants

CO2

Compression and Recycle

Facilities

CO2 Injection Wells

Linking the Industries

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• Studies released every 2 years by NDSU1 highlight the economic impact the lignite industry has on the state.

• Approximately $5.7 billion in business activity and ~14,000 total jobs.

1Bangsund, D.A and N.M. Hodur. 2018. North Dakota Lignite Energy Industry’s Contribution to the State Economy in 2017; Agribusiness and Applied Economics, NDSU (report forthcoming).

Total Business Activity

$5,734,000,000

Direct Jobs3820

Secondary Jobs

10,200(Indirect + Induced)

Lignite Industry Impacts Today

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• If additional conventional oil fields were added to the study, up to 1 billion barrels of additional oil recovery would be possible.

• Estimating the additional severance taxes and royalties collected on EOR barrels of oil at $65/barrel, this could add $300,000,000/year to annual revenue.

• Over 30 years, this could result in $45 billion in economic impact and 15,000 long-term jobs per year.

Full Potential for Conventional EOR

Carbon Solutions Needs

EOR

Partners

Existing Plant Solutions New/Replacement Solutions

Project Tundra Allam Cycle

CO2 Utilization and

Storage Solutions

PCOR and

CarbonSAFE

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Key Technology Improvements

Addressing the key technical challenges

Pilot Testing & Pre-FEED

Technology demonstration at plant site

Initial design for capture system

CO2 for EOR and Sequestration

Identify locations & partners; design and permit CO2 and EOR opportunities

CarbonSAFE and EOR studies

FEED Study

FEED for full project and agreements for offtake and sequestration

Finalize federal and state support

Permit corridor for CO2

pipeline and infrastructure for EOR and sequestration

Commercial Application

Detailed engineering, procurement, & construction

Operation and affirmation of capture, EOR, and sequestration solutions for industry

Time Line and Cost Estimate

2015‒2017$1 million

2017‒2020$48 million

2019‒2021 $30 million

2021‒2023 ≈$1.3 billion

Project Tundra Road Map

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INDUSTRIAL COMMISSION OF NORTH DAKOTA

LIGNITE RESEARCH COUNCIL

• Address technical and nontechnical

challenges specific to commercial-scale

deployment of a CO2 storage project in

central North Dakota.

• Long-term goal: develop a certified

(permitted) geologic storage

opportunity should a business case for

CO2 storage emerge.

Carbonsafe-North Dakota Integrated Carbon Storage Complex Feasibility Study

Value-Added Opportunities for

North Dakota Lignite

Lignite Energy Council (LEC) commissioned a study to assess additional uses of North Dakota’s immense coal resource.

The report is available at LEC’s Web site:https://cdn.lignite.com/wp-content/uploads/2019/01/LEC-value-added-executive-summary-2018-1_14_19-small.pdf

Coal Gasification for Fuels, Chemicals & Hydrogen

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Liquid Fuels and AdditivesGasoline Jet FuelDiesel

Syngas

CO2

Heat

Nitrogen Fertilizers

Chemicals

Electricity

EOR

Lignite

Direct or Indirect

Liquefaction

Carbon Based Products

• Activated Carbon• Facility in final design stages in Valley

City, North Dakota

• Carbon Black• Semi-continuous pilot unit at the

EERC, proof-of-concept complete

• Carbon Fiber• Coal-derived pitch has unique

properties• High value product with growing

market

• Carbon Nanotubes and graphite• High value product with growing

markets

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High Value Material Extraction

• Pioneering work by the North Dakota Geologic Survey has led to a number of funded projects investigating recovery of high value materials from coal and byproducts:• Characterization study of coal and byproducts across

North America

• Rare earth element extraction from ND lignite

• Rare earth element extraction from coal combustion byproducts

• Technology development is needed to optimize and improve economics of processes that extract and concentrate rare earth elements and other high value minerals.

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Leonardite

Leonardite is an oxidized form of lignite, rich in humic acid.

• Existing agricultural uses• soil conditioner to improve moisture retention and reduce toxins

• Animal feed additive, source of trace minerals

• Growing market in oil field fluids• Leonardite is used as an additive in water-based drilling fluids

• Global humic acid market was $325.6MM in 2014 (Leonardite Production, LLC)

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Resource Recovery from a Coal Fired Power Plant to Enhance

Agricultural Production in Open Field and Greenhouse Facilities

Plant Integration:▪ Waste heat used for greenhouse heating demands▪ CO2 & Flue gas used to enhance plant growth▪ Plant water / condensate can supplement irrigation

Updates:▪ First planting cycle complete (data analysis ongoing)▪ Low and intermediate concentrations of CO2

improved plant growth and highest level was antagonistic

▪ Second planting cycle to include varied levels of CO2

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Potential Technologies for Future Grant Rounds

• Next Phases of Carbon Management / CCUS

• Next Generation Power Cycles, including ALLAM

• DOE Emerging Markets

– Carbon Materials

– Rare Earth Elements Phase III

– Fertilizers from coal

• DOE Coal FIRST Program

• NOx Technology Solutions

• Continued Focus on Emerging Demand Opportunities

Others to be identified with industry and State guidance

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Major activities of North Dakota

Transmission Authority (NDTA)

2018 - 2019

• Update to the power demand forecast for the Bakken region of North Dakota

• Review of the generation interconnect requests that have been processed recently for connection to the transmission grid in ND

• Preparation of the Annual Report of NDTA thru June 30, 2019

• Support to ND Department of Commerce on potential development in ND

• Continued contact with stake holders in all aspects of the generation and transmission in North Dakota and surrounding states

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NDTA - Summary of key points

• Growth strong, but driven largely by developments in oil and gas production

• Downstream industry development could drive growth higher

• Growth rates manageable, but currently among highest in U.S.

• North Dakota utilities prepared to keep up with growth

• Transmission impacts will be felt largely in North Dakota

• No gaps identified in state government policy and regulation

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Results: study-wideSteady growth under both low and consensus scenario

10,000

11,000

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Ele

ctri

cal

En

erg

y C

on

sum

pti

on

(G

Wh

)

Year

Low Scenario: Total Forecasted Electrical Consumption (GWh)

Consensus Scenario: Total Forecasted Electrical Consumption (GWh)

Transmission interconnects may be “up against a wall”

• Emmons-Logan project last 100 MW interconnect triggered high cost in part due to affected system impact in SPP

• Ruso project high cost affected by the Minnesota / Wisconsin congestion for lack of transmission

• A South Dakota project suffered a similar fate• Next project is forecasted to trigger the same high cost

Why?Long term battle over who pays is now being pushed to the next generation interconnect. It happens to be wind, but would be triggered by any other generation source

Complexity

• Explosion of number of devices that need to be controlled by system operations

• More openings for cyber security risks

• Need to design against more failure modes

• Learn how to address system events that require immediate reaction to avoid system collapse, etc.

• With complexity comes cost

• CAISO information also reflects this complexity and cost with solar

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Questions??