cbm0 intro presentation new 5-16-14
TRANSCRIPT
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CMM Project Templeton
May 14, 2014
CBM Project Services Overview
Logo
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CBM Project ExampleCoal Bed Methane Operating Company, LLC
Tom Hite – an unrivaled record of Illinois Basin CBM achievement
1. Over four decades Illinois Basin CBM experience 2. Recognized CBM authority – US DOE CBM representative to UN 3. 1st commercial production of CBM in the Illinois Basin 4. 1st utility to generate electricity from their own renewable mineral assets 5. Extensive oil & gas industry experience as business leader
Achieving consistent success through:
Efficient project management & reporting
Alignment with clear mission priorities
1. Safety
2. Environment
3. Production
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CBM Project ExampleOwnership & Corporate Structure
Hite Coalbed Methane LLCMembershipThomas M. Hite
51%
Templeton Coal Company Inc.49%
Pulse Energy LLC50% equity and
Operator of JerichoMembership
Other Members55%
Hite Coalbed Methane LLC45%
Majority in Interest60%
Jericho ProjectIn operations since
1999.Sold 9 Billion Cubic Feet (bcf) of natural gas and we expect another 9 bcf out of
a single coal seam.
Current production 1.3 Million Cubic
Feet per Day
Investco50% equity partner in
Jericho Project
Coalbed Methane Operating Company LLC
Hite Coalbed Methane LLC80%
Others20%
Hoosier EnergyOsprey Point
RFP Contract AwardedDrilling and Stimulation 4/1/13
O & M 5/17/13 Current engines four (4)
GE-620 Jenbacher
Note: 100 year oldCoal Company
partner
Note: 100 year oldCoal Company
partner
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Gas VS Coal Generation
•Political & Public Opinion• Our opinion is that gas can not replace the base load for electricity.
• Our partners opinion is that coal is the most reliable source of energy for generating electricity. They have seen Political and Public opinions sway back and forth over the
past 100 years.• CBM coming from coal is seen as the most predictable and reliable source of gas.
• CBM is seen by our partners as a bridge between current Political and Public opinions not in favor of coal to when either rolling balckouts occur or technology allows Political
and Public opinion to return to coal.
•Economical• Current experience show we are delivering 90 KW/hr./net mineral acre from one coal
seam @ 8,300 BTU/KW/HR.
3.3 MW/day One J620 Jenbacker 0.363Aux. load/hr. 11%2.937Net MW/day
70.488Net MW/day One J620 Jenbacher
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Economics of CBM• Current experience show we are delivering 90 KW/hr./net mineral acre from one coal
seam @ 8,300 BTU/KW/HR
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CBM Project ExampleCBMO Services
1. Project Suitability Evaluation a. Determine if CBM-to-Power project is a good fit
b. Include assessment of geological, cost, regulatory, etc. aspects
2. Project Planning a. Full spectrum cost, schedule and technical
3. Project Implementation
a. Integrate all activities in coordination with your team
4. Project Operation a. Ongoing management and reporting
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CBM Project ExampleJericho Project & HE Merom Station Locations
Hoosier EnergyMerom Generating Station
Contract AwardedDrilling and Stimulation 4/1/13
O & M 5/17/13 Current engines four (4) GE Jenbacher 620
Jericho ProjectIn operations since
1999.Sold 9 Billion Cubic Feet (bcf) of natural gas and we expect another 9 bcf out of
a single coal seam.
Current production 1.3 Million Cubic
Feet per Day
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CBM Project Example
• One of the 18 stimulated vertical wells
Stimulated Well
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CBM Project ExampleProcessing Facility
• Separation / Compression / Dehydration
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CBM Project ExamplePower Generation
• 4 Jenbacher J620 Gas Generator Sets.
• Control Room
• Power produced is sold to grid
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CBM Project ExampleSAFETY - the Top Priority
CBMO Mission priority Number One: SAFETY
Highlights of our Behavior Based Safety (BBS) Program: • ZERO RECORDABLES since inception (TRIR: 0.0) • All employees participate in weekly focused safety meetings • All employees and subcontractors participate in documented job safety
meetings at shift changes & before commencing each job • Current employees & all sub-contractors have been through customer
safety program before being allowed on customer property • PPE: Hard hats, hearing & eye protection, steel toed boots required • Uniforms are all fire retardant • Current employees have been through 10-hour OHSA training • All employees are background checked before employment • All employees must pass drug test before being employed and subject
to random drug tests • CBMO currently has $25 Million dollar liability Insurance • All Subs of CBMO are required to have proof of insurance
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CBM Project ExampleSAFETY - Culture
CBMO Mission priority Number One: SAFETY
Situational AwarenessLOTO
Discipline
Proper PPE
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CBM Project ExampleDedication to ENVIRONMENTAL Protection
CBMO – a responsible steward of our natural resources• ZERO ENVIRONMENTAL ISSUES since inception • Strong partnership with environmental regulatory authorities • Have acquired the only NPDES issued by IDEM for CBM production • Have secured Air Quality Permit from IDEM • Worked and complied with DNR (Oil and Gas) for Permits • Worked with and complied with IURC gathering and transport
regulations • Worked successfully with customer’s environmental group to meet or
exceed their requirements • MISSION: ZERO - Developed procedures to eliminate as much as
humanly possible the escape of methane and water during development and operations
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CBM Project ExampleENVIRONMENT – a Proactive Approach
CBMO – a responsible steward of our natural resources
Saltwater Disposal System
HAZMAT Control
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CBM Project ExamplePRODUCTION – Maximizing Results
CBMO – works in partnership to exceed expectations
RESULTS
• Jericho - exceeded Estimated Ultimate Recovery (EUR) by 65%
• HE Osprey Point - power plant generator productive up time more than doubled; running 24/7 operations
• HE Osprey Point - reduced CH4 cost well below market• HE Osprey Point - well pump infrastructure function
improved to allow effective well production on previously non-productive wells
• HE Osprey Point - utilized Maximo to optimize project inventory and work over management
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CBM Project ExamplePRODUCTION – Staying Ahead of the Game
Processing & Production Facilities
• Increased Output • Reduced Commodity Cost • Improved Reliability
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CBM Project ExampleKeys to CBMO Success
Coal Bed Methane Operating Company, LLC (CBMO)
• Keys to Success– Detailed and comprehensive analysis & planning up front
– Geological and historical analogs compared – Detailed and extensive knowledge of local coal formations
• Management approach– Proactive – Open / Partnership– Detailed
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CBM Project ExampleCBMO Project Reporting
Coal Bed Methane Operating Company, LLC (CBMO)• Cost, Schedule & Technical reporting
– Clear • Fosters effective communication
– Forward Looking • Allows proactive risk management
– Accurate • Reliable information reinforced by quantifiable data
– Timely • Provided to effectively support project activities
– Customized • To meet your unique reporting and review requirements
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CBM Project ExampleManagement & Reporting - Cost
• CBMO provides results & tailored reporting– Quick reference to determine performance – Deeper visibility into costs – Proactive risk management
CPI
Cost Performance
Index
Cost Performance
Index
Planned vs.Actual Cost
Performance
Planned vs.Actual Cost
Performance
CommentaryCommentary
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CBM Project Example
Schedule Report Period EndingWell Drilling Density Log Cementing Set Stim Tanks Completing Total
# Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Complete12L 4/1 4/2 -1 4/2 4/3 -1 4/2 4/5 -3 4/8 4/7 1 4/22 4/22 0 25.0%15L 4/1 4/2 -1 4/2 4/3 -1 4/2 4/3 -1 4/8 4/8 0 4/22 4/22 0 90.0%14L 4/3 4/10 -7 4/5 4/10 -5 4/5 4/10 -5 4/8 4/8 0 5/1 5/2 -1 90.0%17L 4/3 4/8 -5 4/5 4/8 -3 4/5 4/8 -3 4/8 4/9 -1 4/26 5/7 -11 90.0%19L 4/8 4/4 4 4/9 4/5 4 4/9 4/6 3 4/10 4/8 2 5/6 5/7 -1 100.0%11L 4/8 4/12 -4 4/9 4/12 -3 4/9 4/16 -7 4/10 4/10 0 5/8 5/8 0 100.0%8L 4/10 4/9 1 4/12 4/11 1 4/12 4/11 1 4/18 4/17 1 5/14 5/14 0 79.0%3L 4/10 4/10 0 4/12 4/10 2 4/12 4/11 1 4/19 4/9 10 5/17 5/10 7 100.0%1L 4/15 4/16 -1 4/16 4/16 0 4/16 4/16 0 4/18 4/21 -3 5/22 5/22 0 54.0%2L 4/15 4/15 0 4/16 4/18 -2 4/16 4/18 -2 3 4/18 4/18 0 5/27 5/27 0 90.0%
20L 4/17 4/17 0 4/19 4/20 -1 2 4/19 4/20 -1 2 4/25 4/24 1 2 5/30 5/30 0 54.0%22L 4/17 4/16 1 4/19 4/16 3 4/19 4/17 2 4/25 4/24 1 6/4 6/4 0 90.0%21L 4/22 4/18 4 4/23 4/18 5 4/23 4/23 0 4/25 4/24 1 6/7 6/7 0 90.0%23L* 4/22 4/12 10 4/23 4/12 11 4/23 4/16 7 4/26 5/2 -6 6/12 6/12 0 54.0%26L* 4/24 4/22 2 4/26 4/23 3 4/26 4/24 2 4/26 4/24 2 6/17 6/17 0 89.0%28L* 4/24 4/16 8 4/26 4/16 10 4/26 4/17 9 4/30 5/2 -2 6/20 6/20 0 64.0%24L* 4/29 4/22 7 4/30 4/23 7 4/30 4/24 6 4/30 5/2 -2 6/25 6/25 0 64.0%
6L 5/1 5/1 0 1 5/6 5/6 0 5/11 5/11 0 5/16 5/16 0 6/5 6/5 0 0.0%Allocation 25.0% 5.0% 23.0% 1.0% 10.0% Total Allocated 100.0%Progress 23.6% 4.4% 20.4% 0.9% 1.7% Total Progress 73.5%
KeyPhase Status Schedule Performance Miscellaneous"Actual" column colors indicate phase status Perf (d) = Performance in days * Road Posted: 10 ton limit
Planned (not yet started) More than 3 days prior to planIn progress Up to 3 days prior to planCompleted Up to 3 days after planCancelled More than 3 days after plan
May 2, 2013Schedule Report Period EndingWell Drilling Density Log Cementing Set Stim Tanks Completing Total
# Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Plan Actual Perf (d) Notes Complete12L 4/1 4/2 -1 4/2 4/3 -1 4/2 4/5 -3 4/8 4/7 1 4/22 4/22 0 25.0%15L 4/1 4/2 -1 4/2 4/3 -1 4/2 4/3 -1 4/8 4/8 0 4/22 4/22 0 90.0%14L 4/3 4/10 -7 4/5 4/10 -5 4/5 4/10 -5 4/8 4/8 0 5/1 5/2 -1 90.0%17L 4/3 4/8 -5 4/5 4/8 -3 4/5 4/8 -3 4/8 4/9 -1 4/26 5/7 -11 90.0%19L 4/8 4/4 4 4/9 4/5 4 4/9 4/6 3 4/10 4/8 2 5/6 5/7 -1 100.0%11L 4/8 4/12 -4 4/9 4/12 -3 4/9 4/16 -7 4/10 4/10 0 5/8 5/8 0 100.0%8L 4/10 4/9 1 4/12 4/11 1 4/12 4/11 1 4/18 4/17 1 5/14 5/14 0 79.0%3L 4/10 4/10 0 4/12 4/10 2 4/12 4/11 1 4/19 4/9 10 5/17 5/10 7 100.0%1L 4/15 4/16 -1 4/16 4/16 0 4/16 4/16 0 4/18 4/21 -3 5/22 5/22 0 54.0%2L 4/15 4/15 0 4/16 4/18 -2 4/16 4/18 -2 3 4/18 4/18 0 5/27 5/27 0 90.0%
20L 4/17 4/17 0 4/19 4/20 -1 2 4/19 4/20 -1 2 4/25 4/24 1 2 5/30 5/30 0 54.0%22L 4/17 4/16 1 4/19 4/16 3 4/19 4/17 2 4/25 4/24 1 6/4 6/4 0 90.0%21L 4/22 4/18 4 4/23 4/18 5 4/23 4/23 0 4/25 4/24 1 6/7 6/7 0 90.0%23L* 4/22 4/12 10 4/23 4/12 11 4/23 4/16 7 4/26 5/2 -6 6/12 6/12 0 54.0%26L* 4/24 4/22 2 4/26 4/23 3 4/26 4/24 2 4/26 4/24 2 6/17 6/17 0 89.0%28L* 4/24 4/16 8 4/26 4/16 10 4/26 4/17 9 4/30 5/2 -2 6/20 6/20 0 64.0%24L* 4/29 4/22 7 4/30 4/23 7 4/30 4/24 6 4/30 5/2 -2 6/25 6/25 0 64.0%
6L 5/1 5/1 0 1 5/6 5/6 0 5/11 5/11 0 5/16 5/16 0 6/5 6/5 0 0.0%Allocation 25.0% 5.0% 23.0% 1.0% 10.0% Total Allocated 100.0%Progress 23.6% 4.4% 20.4% 0.9% 1.7% Total Progress 73.5%
KeyPhase Status Schedule Performance Miscellaneous"Actual" column colors indicate phase status Perf (d) = Performance in days * Road Posted: 10 ton limit
Planned (not yet started) More than 3 days prior to planIn progress Up to 3 days prior to planCompleted Up to 3 days after planCancelled More than 3 days after plan
May 2, 2013
Management & Reporting - Schedule
• CBMO provides results & tailored reporting– Convenient and easy to read references– Deeper visibility into progress towards milestones– Proactive risk identification and management
Project PhasesProject Phases
Schedule Performance
Schedule Performance
PercentComplete
PercentComplete
Project ScheduleProject
Schedule
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CBM Project ExampleManagement & Reporting - Technical
• CBMO provides results & tailored reporting– Quick performance reference– Deeper technical visibility – Proactive risk management
Detailed Well
Status Diagrams
Detailed Well
Status DiagramsClear Key
Performance Indicator Reference
Charts
Clear Key Performance
Indicator Reference
ChartsCasing Pressure
& Slurry Rate Plots
Casing Pressure & Slurry Rate
Plots
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CBM Project Example
- Provides gas throughout generation project life- Utilizes local renewable resource
- Leverages proven technology
- Provides gas throughout generation project life- Utilizes local renewable resource
- Leverages proven technology
CBM-to-Power Project Concept
WellsWells Processing PlantProcessing PlantGathering LinesGathering Lines Transport LineTransport Line
Seam A
Seam B
Wells remove ~75% of CH4 and ~50% of H2OWells remove ~75% of CH4 and ~50% of H2O
GeneratorsGenerators
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CBM Project ExampleCBM-to-Power - Benefits to Power Company
1. Ability to idle power plant instead of shutting it down • Avoid full shutdown costs and community impacts • Buy time while technological & political environment evolves
1. Revenue stream • Defray plant idling costs
1. Reduced Cost of Generation • Use own (or nearby partner) natural mineral resources
– No (or minimal) royalty & transportation costs – Reduced Commodity Price Risk
• Methane sourced in house/locally; not subject to open market – Reduced Commodity Availability Risk
• No reliance on outside gas providers who are subject to Force Majeure, etc.• Winter ‘13/14: Gas storage fields w/in 5% of empty – TGT declared Force Majeure
– Reduced Project & Operations Risk • CBMO is an established CBM project planning and implementation expert • Leverage CBMO as experienced onsite gas operator
1. Possible Renewable Resource Status • Many states classify coalbed methane as renewable resource
1. Water Availability 1. Water from coal seams can be utilized (water quality dependent)
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CBM Project ExampleCBM-to-Power Project - Potential Organization
Structure & approach used successfully on Analogous Projects
CBMO , LLCEPC & Ops Mgr
Ops MgrDrilling Provider
Pumpers
Crew
Coal Bed Methane Operating Company, LLC
Legal
Gas Offtaker
EPC & Ops Contract
ProcessingSystem Builder
Crew Mgr
Power Company Project Manager and Project Coordinator
Offtake Agmt
Project Mgmt Agmt
Accounting & Billing
GatheringSystem Builder
Crew MgrCrew Mgr
Subcontracts
Crew Mgr
CBMO:Geological Analysis & Gas Production
Consultants
Service AgmtsService Agmts
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CBM Project ExampleCBMO – the right Gas-to-Power partner
CBMO – Ready to bridge the gap until coal’s return
1. Proven track record of natural gas-to-power success 2. Focused - CBM is a core competency 3. Demonstrated history of dedication to Safety, the
Environment, Compliance and Productivity 4. Industry knowledge - Coal and Power5. Network of top tier subcontractors 6. Relationships with regulatory entities 7. Efficient & effective project management team
The proof that our model works: A Coal Company is our Partner