Slide 1

EUROGIA 2020 & RHC-Platform Joint Event, Paris, 16 September 2013

Presenter: Michael Mugerwa, Technip Claremont, California

Low Temperature Geothermal Resource Exploitation in USA

Key Messages - Geothermal

Global Collaboration Technology and Geothermal Expertise Feasibility Studies Resource Viability, Project Viability, Technology Selection; Economic Analysis Low temperature, high volume geofluid opportunities in Western USA Technologies Flash Steam, Binary, Advanced Cycles (Kalina; Kalex) Front End Engineering Design (FEED); Capital Cost Estimates Technip Capabilities, Financial Strength to offer EPC wrap Local USA; New Zealand; Indonesia; France; Germany; Chile (GTN LA)

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Technip Global Energy Company Recognized leader in the execution of EPC energy projects

A leading global provider of engineering, technologies and project management services, on land and at sea, serving the energy industry for 50 years

Multi-local: 38,000 team members in 48 countries

Industrial assets on all continents, a fleet of 32 vessels (with 4 under construction)

Three business segments: Subsea, Offshore & Onshore; One Technip

2012 revenue: 8.2 billion

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Mannvit

Iceland's Premier Consulting & Engineering Service Provider

Geothermal Consulting Engineers since 1960s

Experienced in all Stages of Geothermal Development

Well Positioned to Advise on Resource Risks

Technip

Project Execution Excellence

Highly Experienced EPC Contractor

Global Procurement Network

Construction Management Solutions

Financial Strength

Undertakes Execution Risk

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Mannvit and Technip Collaboration Since 2009, the collaboration offers geothermal project developers and financers with a single point source of responsibility for geothermal development services

Geothermal Project Timeline

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year

Exploration Phase

Pre-Feasibility

Feasibility

Detailed Design &

Construction

Operation & Maintenance

Data collection &

Analysis

Geological survey

Geochemistry

Geophysical surveys

Temperature gradient

drilling

GIS

Exploration

Data collection & Analysis

Focused exploration

Drilling of slim wells

Drilling of deep

exploration wells

Resource evaluation

Simple modelling

Pre-feasibility

Drilling of the first

successful full-sized

production well

Confirmation wells

Resource testing

Resource power

potential assessment

Preliminary plant design

Feasibility

Drilling and testing of

remaining wells

Final plant design

Plant construction

Design & Construction

Monitoring system

Resource management

Detailed modelling

Plant maintenance

Drilling of make up wells

Operation & Maint.

Project start up

Legal work

Concession

Permitting

Typical 50 MW power project 5 Development Phases

The time needed to complete each phase is dependent on the geothermal resource and project related factors and thus varies between projects

Project Examples Mannvit

Hellisheidi

Geothermal Power Plant in Iceland

Size 300 MWe, 400 MWt

Project Cost 1.000 m

Year 2002 -

Role Lead design

Nesjavellir

Geothermal Power Plant in Iceland

Size 120 MWe, 300 MWt

Project Cost 600 m

Year 1986 - 2004

Role Lead design

Theistareykir

Geothermal survey and research

Size 150 MWe

Project Cost 190 m

Year 2007

Role Project supervision and

execution, model

installation

Focus Market United States 9 GW (conservative estimate) geothermal resource potential

3.4 GW of online capacity (2013)

o 81% in CA; 15% in NV; 4% in HI, UT, OR, ID, AK, WY

o 47% dry steam; 27% flash steam; 24% binary technology

~ 2.5 GW of confirmed projects in pipeline (2013)

o 125 confirmed projects (Geothermal Energy Association criteria)

o ~ 800 MW in Advanced Stages i.e. Permitting & Initial Dev. / Resource Prodn. & Power Plant Constr.)

o 71% in CA; 14% in NV; 26% in OR, ID, UT, NM

Majority are binary cycle projects (medium to low enthalpy resources)

o Typical project sizes: 10 - 50 MW

Project Drivers

o Renewable Portfolio Standards: CA 33% in 2021; NV 20% 2015; OR 25% 2025; UT 20% 2025 (voluntary)

o Utilities need baseload, dispatchable power. The current excess of intermittent solar and wind power impacts grid stability / quality

o US Treasury Incentives: Investment Tax Credit (thru 31/12/2013 for start of construction); Renewable Energy Production Incentive (2.1 US /kWh before 10/1/2016)

Challenges

o Short term oversupply of renewable power in biggest market, CA, is driving down renewable PPA prices to below $90/MWh. Demand for geothermal power expected to pick up again from early 2015.

o Weakening support policies Expiration of most attractive incentives

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Current Technology Binary Cycles

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Organic Rankine Cycle / Kalina Cycle Low & Medium Temperature Reservoirs

ENEL Stillwater, NV Hybrid Geothermal / Solar Power Plant

Source: Geothermal Resources Council

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Kalex Geothermal Systems Technology

Global, exclusive license agreement Dr. Alexander Kalina

o 2nd generation Kalex Cycle technology under new patents

Maximized power production

o Current target temperature range: 90 150C

o Target capacity range: Up to 20 MWe Gross (multiple trains possible)

Improved efficiencies at competitive capital costs

o 20 50% higher than ORC Cycles, especially below 120C

o Reduced heat rejection needs => lower parasitic loads

Reduced number and depth of wells

o Minimized specific brine consumption

Robust operating performance

o Ammonia-water working fluid

o Ambient temperature changes => self adjusts to diurnal and seasonal temperature changes

o Brine temperature degradation => wide operating range

Superior Net Power Performance

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Low Temperature Resource Exploitation Drilling Risk Mitigation

o 20 50% reduction in drilling equity requirements prior to financial close

o Reduces funding gap between initial seed capital and project financing

o Preserves more value for the developer by minimizing need for high cost capital drilling equity

o Fewer production wells increase investor IRRs

By reducing subsurface risk profile

Improving development timelines

Financing Risk Mitigation

o Raising project debt with increased lender confidence

Technip strong balance sheet

Technip performance guarantees and warranties

o Dynamic geothermal reservoir risk

Aggressive temperature declines over time can occur after Commercial Operation Date

Kalina technology mitigates risk with higher efficiencies over wider operating range than ORC

Translates into better project borrowing terms from lenders

Reduced Equity Needs / Bankable EPC Guarantees

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Entiv Organic Energy, Oregon

Project Summary

o High volume, low temperature geofluids from low cost surficial wells up to 700 feet in depth

o 5+ MWe Lower Klamath Lake Project ,CA: Uniquely located within a National Wildlife Refuge (NWR) managed by US Fish & Wildlife Service. Project to supply water for migratory birds on the Pacific Flyaway

o 10 MWe Klamath Hills Project, OR. On private land 10 miles North of NWR

Status

o US DOE grant award

o Conceptual reservoir model

o Project cost estimating (AACE Class III) is complete

o Detailed value engineering effort is complete

o 10 MW Kalina Cycle license

o Negotiated PPA sale to California utility

o Permitting underway

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Geothermal Energy Economics Costs

o Greenfield Flash Plant: $2,000/kWe $4,000/kWe (IEA, 2008)

o Binary $2,400/kWe $5,900/kWe (IEA, 2010)

Highest costs in Europe (a few MWe) in low/medium temp. resources

O&M costs (including make-up wells)

o $19/MWh $24 / MWh (IEA, 2011)

o As low as $10/MWh $14 /MWh in New Zealand

Production Costs / Capacity Factors

Financing

o Typical capital structure for geothermal project developers is 55% - 70% debt & 45% - 30% equity

o US debt lenders (typically charge interest rates from 6% to 8%) & require 25% of resource capacity proven

o Large utilities using balance sheet / cash flows have different equity / loan cost structures