Summit Power and Blue Source Announce Agreement On CO2 Management for One of the World’s Largest Carbon Capture and Storage Projects

Project Will Sequester Nearly 3 Million Tons of CO2 per year

HOUSTON & DALLAS--()--Summit Texas Clean Energy, LLC, a Summit Power Group company and leading power developer, today announced that an agreement has been reached with Blue Source, a leading emissions reduction project developer, to market nearly 3 million tons of carbon dioxide (CO2) expected to be captured annually from Summit’s West Texas power project.

Summit’s Texas Clean Energy Project (TCEP), dubbed a “NowGen” plant by national environmental group the Clean Air Task Force, will be a new 400 mw coal gasification plant that begins construction in 2010. It is a first-of-a-kind integrated gasification combined cycle (IGCC) project located in Penwell about 15 miles west of Odessa, Texas.

TCEP is designed to achieve an industry-leading 90 percent capture rate. The related carbon capture and storage efforts (CCS), which Blue Source will manage, will primarily focus on meeting the robust demand for reliable sources of CO2 for use in enhanced oil recovery (EOR) in West Texas’ Permian Basin. CO2 for EOR operations boosts oil production while allowing permanent sequestration of CO2 from the atmosphere. The project’s location will also allow the alternative CCS technique of CO2 injection into deep saline formations, if national carbon policies ultimately favor that technique.

In CCS projects such as this, carbon dioxide is captured and permanently and safely stored instead of being released into the atmosphere. In EOR, the captured CO2 is transported and permanently sequestered in mature oil fields, with the benefit of producing additional supplies of crude oil. In deep saline injection operations, the CO2 is stored in much deeper geological formations containing brines. TCEP’s capture rate will facilitate the capture of nearly 3 millions tons of carbon dioxide annually.

TCEP’s capture of annual CO2 emissions – equivalent to those generated by 525,000 automobiles annually - is a key step forward in the national and international movement toward sequestration of carbon dioxide from industrial and power sources. Siemens, which is warranting the performance and reliability of its equipment, is the primary provider for TCEP’s gasifiers, power island and controls. Design engineering is by Fluor.

Under the agreement announced today, Blue Source will market both TCEP’s captured CO2 and the resulting greenhouse gas emissions reductions. Blue Source will oversee the monitoring and verification of the geological sequestration of the project’CO2 in Texas’s Permian Basin oil fields.

The agreement highlights the confidence that both companies have that CO2 demand in the Permian Basin will continue to outstrip supply. Summit and Blue Source expect to sell all of TCEP’s captured CO2 over the 30-year life of the plant.

“We believe this project - and its ability to capture 90 percent of its carbon emissions - has enormous national and global significance,” said Blue Source Executive Vice-President Russell Martin. “This project has significant potential as a model in the voluntary emissions reduction market. We anticipate tremendous demand from oil producers to purchase the captured CO2, and we are confident of our ability to sell it all. We will, of course, preserve other CCS options as well.”

“The development of a NowGen project like this is a clear sign of confidence from industry leaders that it is time for new coal-fueled plants in Texas to capture and sequester their carbon and to do so predictably, safely and economically,” said Laura Miller, Summit’s Director of Projects for Texas. “We are extremely pleased that Blue Source is our ally for handling and marketing the CO2 that our project will capture for commercial use in the West Texas oil fields.”

The Permian Basin has been the nation’s leader in EOR activity for more than 30 years. Traditionally, oil producers use naturally-occurring, underground CO2 that is removed from natural deposits in New Mexico and Colorado, which is then pressurized, piped to Texas, and injected into depleted oil wells to generate new oil production.

TCEP is unique among the nation’s proposed carbon-capture projects that rely on coal gasification. Thanks to a new Texas state law, House Bill 469, TCEP will be required to contract with the University of Texas Bureau of Economic Geology (TBEG) which, in conjunction with Blue Source, will design and perform monitoring activities to assure that the project’s captured CO2 satisfies the State of Texas’s progressive carbon sequestration standard, which specifies that 99 percent of all geologically injected CO2 should remain sequestered from the atmosphere for at least 1,000 years.

Summit recently applied for a Clean Coal Power Initiative Round 3 grant from the U.S. Department of Energy. TCEP will be a privately owned, conventionally project-financed facility that produces a number of highly marketable commodities including: electricity, CO2, sulfuric acid, non-leachable slag, and other derivatives of TCEP-produced synthesis gas, including ammonia/urea.

About Summit Power Group Inc.

Founded in 1989, Summit's primary business consists of developing low- and zero-carbon power projects. Summit specializes in high-efficiency natural gas-fired projects, wind power projects, and coal gasification projects with carbon capture to reduce carbon dioxide emissions (including integrated gasification combined cycle, or IGCC, projects). Recently Summit entered into a joint venture with a leading global solar equipment manufacturer to develop photovoltaic (PV) solar energy projects for utilities throughout the West and Southwest. Summit also works with technology companies pursuing financing and commercial development of next-generation clean energy technologies, such as dispatchable (firm) wind power and the capture of CO2 directly from the atmosphere. More information about the Texas Clean Energy Project can be found at http://texascleanenergyproject.com/ For more information on Summit Power Group, please visit www.summitpower.com

About Blue Source, LLC

Blue Source offers multiple approaches for reducing and, where practical, beneficially using greenhouse gas emissions to create environmental and economic value. We provide experience and access to capital for project development across all industries, including the technical resources to produce high quality carbon offsets for North America’s voluntary and compliance markets, and have projects listed on all of North America’s leading public registries, including the Climate Action Reserve, the Voluntary Carbon Standard, the American Carbon Registry, and the Alberta Emissions Offset Registry. For more than 10 years, Blue Source has been a climate change solution for leading businesses and has offices in Salt Lake City, Calgary, Houston, Denver, Raleigh, San Francisco and New York. www.bluesource.com

Contacts

for Summit
Laura Miller, 214-763-0600
Director of Projects, Texas
lmiller@summitpower.com
or
for Blue Source
Joe McGurk, 203-378-1152, ext. 121
media relations
jmcgurk@cjpcom.com.

Contacts

for Summit
Laura Miller, 214-763-0600
Director of Projects, Texas
lmiller@summitpower.com
or
for Blue Source
Joe McGurk, 203-378-1152, ext. 121
media relations
jmcgurk@cjpcom.com.