Nuclear%20Energy:%20Hedging%20Option%20for%20the%20oil%20sands

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Nuclear Energy Hedging Option for the oil sands

• Presentation to Canadian Heavy Oil Association,
  Calgary
• November 2, 2006
• Presentation by
• David McColl
• Business Development davidm_at_energyab.com 403.451
  .4479

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Our Mission

• Energy Alberta Corp. (EAC) will be a profitable
  energy provider, at the lowest cost, utilizing
  proven nuclear technology to supply low cost
  steam, electricity and hydrogen to oil sands
  operators

3
Declining Natural Gas Supplies

• Oil sands production, and its cogeneration based
  natural gas demand, is expected to increase
  fourfold over the next decade, straining Canadian
  natural gas supplies
• Given current projections for Canadian natural
  gas supply and oil sands demand, Canada may need
  to import natural gas by 2015
• Assumption
• Mackenzie Valley Pipeline online post 2012
• Alberta CBM production 2 bcf/d by 2010, 4 bcf/d
  by 2025

4
Our Strengths
Nuclear as a Natural Hedging Tool

• Environmentally Superior Alternative
• Near zero emissions
• Ensure continued compliance with future
  environmental legislation

• Annual Revenue Requirements
• Nuclear 550 million dollars
• Natural Gas gt 650 million dollars
• Assumed 7.04 / GJ AECO-C ARC Financial
  forecast, date October 23, 2006
• 200,000 barrel a day SAGD steam equivalent

• Energy off-taker agreements (25 years)
• Fixed Price

Business Plan

• Partnered with Leading Nuclear Vendor
• CANDU Technology
• Turnkey (fixed price) EPC process
• Risk Mitigation Insurance Plan
• Energy for in situ (SAGD, Carbonate), Upgraders,
  and others
• Open Season (November 2007)

5
Uncertain Environmental Regulations

• Government of Canadas Green Plan
• Bill C-30 Canadas Clean Air Act
• Greenhouse gas (GHG) reductions
• 65 of 2003 levels by 2050
• Emission intensity targets
• Lower emissions per unit of output

• Nuclear Energys Proposed Contribution to the
  Clean Air Act for the oil sands
• Eliminates
• 3.3 Million tonnes CO2

• Includes emissions from the mining of uranium
• Reduce emissions intensity
• A barrel of bitumen can be produced or upgraded
  with a near zero emissions energy source

6
Hedging Tool Long-term Price StabilityAnnual
Revenue Requirements80,000 m3 100 quality
steam / day 200,000 barrel a day SAGD
Nuclear vs. Natural Gas
7
Nuclear Renaissance

• 442 reactors operating today
• 28 more reactors under construction
• 62 reactors being planned
• Ontario, USA, Europe, China, and Southeast Asia
• 160 reactors proposed around the world

• Public opinion
• EAC commissioned Longwoods International to
  conduct a public opinion survey (Alberta,
  November 2005) on the idea of using nuclear to
  power oil sands development
• 40 of respondents in favour
• 36 of respondents were neutral

8
Atomic Energy of Canada Limited

• Partnered with world leader in new build nuclear
  reactors Atomic Energy of Canada Ltd. (AECL)
• 10 of World Market
• Crown Corporation, employees based in Ontario
• Exclusivity Agreement
• CANDU 6 Best in Class Performance
• Online refuelling
• Highest plant uptime vs. competition
• Latest CANDU 6 performance uptime exceeds 90

9
Energy Alberta Corp.s Business Model

• AECL and Partners will provide
• Design
• Turnkey construction for a guaranteed fixed price
• On-time On-budget Track record
• Romania (1996, and 2007)
• China (2002 and 2003)
• South Korea (1997, 1998, and 1999)

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Spent Fuel

• Spent Fuel
• AECL would provide EAC with proven Waste
  Management Solutions
• Dry fuel storage technology - MACSTOR
• In use in Canada, Korea, Romania
• Long-term storage likely outside of Alberta,
  based on recommendations by Federal Nuclear Waste
  Management Organization
• Energy off-takers would not be responsible for
  any spent fuel

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Risk MitigationOptions

• Turnkey EPC Contract
• AECL, federal Crown Corporation, takes the risk
  associated with potential cost over-runs

• Nuclear Insurance
• Risk Mitigation Concept
• A retrospective risk premium would be paid to
  governments for insurance.

• Lloyds of London, Syndicate 1176 Nuclear
  Insurance 1107

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Stable Steam Supply

• CANDU 6 Single or Cousins could provide the
  steam and electrical needs for a SAGD project

• Each facility can support 200,000 barrels a day
  SAGD
• Share common operations and maintenance
  facilities of single nuclear power plant location

• Various SteamElectric generation configurations
  possible for either nuclear power plant

13
Stable Electricity Supply

• CANDU 6 nuclear power plants could provide the
  electricity to meet the requirements of in situ
  carbonate plays and upgraders

• Each facility can support up to 670 MW
  Electricity
• Located either close to the source, or at a
  reasonable distance limit line losses

• Various ElectricElectrolytic hydrogen
  generation configurations possible for either
  nuclear power plant

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Corporate Milestones

• July 2005
• Concept formulated
• July 2005 to July 2006
• Discussions with industry
• August 2006
• EAC-AECL Exclusivity Agreement
• November 2007
• Open Season process begins
• January 2008
• Capacity is contracted
• March 2008
• Regulatory Process commences
• March 2011
• Construction commences
• December 2016
• Nuclear power plant is fully operational
• December 2041 / 2066
• Retrofit or Decommission
• December 2046 / 2051