Callide Oxyfuel Project

Facts:

This world-first, fully integrated demonstration of oxy-fuel pulverized coal technology includes retrofitting of a 30 MW unit at CS Energy Ltd.’s Callide A in Biloela in Central Queensland.

The first stage the project will include CO2 capture, while stage 2 includes transport, injection and storage of the captured and liquefied CO2 in deep geological formations. The project team is assessing potential geo-sequestration sites to the west of Biloela and plans to select the final location in 2009. The gas volumes are up to 60,000 ton CO2 over a 5 year period.

The project is headed by CS Energy Ltd (CSE) in partnership with IHI Corporation (Japan), J-Power (Japan), Mitsui & Co. (Japan), Schlumberger Oilfields Australia, and Xstrata Coal. Supporting parties are the Australian Coal Association and the Australian and Queensland Governments. JCoal (Japan) is providing man management support to the project.

The total estimated total project expenditure: approx A$ 206 million, including A$ 50 million from LETDF.

The contract for the project was signed on March 28, 2008 between Martin Ferguson, Minister for Resources and Energy and CS Energy347. Construction at Callide A Power Station commenced in November 2008, to be followed by electricity generation from the oxy-fuel process and geo-sequestration in 2011. The demonstration project will continue for up to five years, during which time the project team will assess the potential commercial applications of oxy-firing technology to other plant.

Storage:

Callide 'A' Power Station is situated about 300km from a geological area known as the Denison Trough. Extensive studies have confirmed this area as an ideal site to store carbon dioxide. Large volumes of gas have been securely trapped and stored here for millions of years.

The region also has a very low level of seismic activity. The liquid carbon dioxide will be pumped deep underground through rock strata into a seam of porous rock. It will be trapped in this formation with the cap rock above it providing a natural seal. This process is known as geosequestration.