Coal Gasification - It's A (Syn) Gas Gas Gas

Coal Gasification.
qxd 9/14/2005 9:02 AM Page 1
September 14, 2005
Coal Gasification
It’s a (Syn) Gas, Gas, Gas
Sam Kanes, CA, CFA – (416) 863-7798

Matthew Protti, MBA – (416) 863-7846
Materials – Chemicals Research
Utilities – Gas & Electric Utilities Research
1
Contents
Coal Gasification – It’s a (Syn) Gas, Gas, Gas ......................................................................2
Conclusions...............................................................................................................................2
Investment Highlights .............................................................................................................3
Coal-based Syngas................................................................................................................3
Why Coal-based Syngas .......................................................................................................3
Fixed/Variable IGCC Plant Economics................................................................................4
Typical IGCC Plant Cost ......................................................................................................4
Coal Gas History......................................................................................................................5
How IGCC Units Work...........................................................................................................5
2005 U.S. Energy Bill Supports More U.S. IGCC Plants .....................................................6
China’s IGCC Gas for Methanol and Ammonia/Urea Plants Exploding...........................7
China’s Variable Coal Costs for IGCC Plants......................................................................9
China IGCC Conclusions ...................................................................................................10
Europe’s IGCC Gas-to-Methanol Plants.............................................................................11
Ruhr Oel IGCC Facilities ...................................................................................................11
BASF IGCC Facilities ........................................................................................................12
Shell/DEA Mineraloel IGCC..............................................................................................12
Total IGCC .........................................................................................................................12
IGCC Poly-Production Plant Economics.............................................................................13
IGCC and GTL Technology Players....................................................................................14
Existing IGCC and GTL Technology Features...................................................................15
Shell Global Solutions ........................................................................................................ 15
Lurgi AG ............................................................................................................................16
General Electric ..................................................................................................................16
IGCC Plant Builders........................................................................................................... 17
Existing North American IGCC Plant Owners...................................................................18
Eastman/Air Products – Kingsport, Tennessee...................................................................18
Dynegy and PSI Energy – West Terre Haute, Indiana .......................................................18
Tampa Electric IGCC – Polk County, Florida....................................................................18
Coffeyville Resources – Coffeyville, Kansas .....................................................................18
Future IGCC Plant Owners in North America....................................................................18
Fischer-Tropsch (FT) Technology........................................................................................20
FT Technology Owners ......................................................................................................20
FT Technology Financial Thoughts – Rentech ...................................................................21
Conclusions.............................................................................................................................22
Appendix 1 – World Gasification Plants .............................................................................23
Appendix 2 – Energy Prices..................................................................................................26
Note: All values in U.S. dollars unless otherwise indicated.
For Reg AC Certification and important disclosures see Appendix A of this report.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
2
Coal Gasification –
It’s a (Syn) Gas, Gas, Gas
This report summarizes the key highlights of coal gasification technologies, which are back in
the limelight due to record oil and gas prices.
Conclusions
By some measures, overall coal consumption worldwide (up 6.9% in 2004) is growing faster
than the use of any other source of energy, including oil, gas, hydro, and nuclear. In addition,
the use of coal by China, India, and other coal-rich countries like the United States to produce
synthetic gas (syngas) related products, displacing the use of expensive oil or natural gas, is
Sam Kanes, CA, CFA about to sharply accelerate. Hurricane Katrina has also shown how vulnerable U.S. and world
(416) 863-7798 energy markets are to weather disruptions at offshore oil and gas facilities.
sam_kanes@
scotiacapital.com An acceleration of thermal coal-based syngas plants will have negative impacts on
natural gas-based U.S. and European methanol and ammonia/urea producers, whose
variable cash costs are spiralling deep into fourth quartile status on record oil and gas costs.
U.S. and European methanol and ammonia producers are the most vulnerable in the short
term, as gas costs represent the highest percentage of their variable cash costs. We therefore
continue with our 3-Sector Underperform ratings on methanol-based Methanex Corporation
and nitrogen-based Agrium Inc., preferring NOVA Chemicals Corporation and/or Potash
Corporation of Saskatchewan.
Longer term, European, U.S., and Japanese ethylene producers using either natural gas-based
liquids or naptha may also be negatively affected, as coal-based syngas to ethylene (MTO)
and/or propylene (MTP) technologies are proven in countries like China via joint ventures
like Dow Chemicals’.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
3
Investment Highlights
We continue to prefer ethylene-based NOVA Chemicals and potash-based Potash Corp. over
methanol-based Methanex and ammonia/urea-based Agrium. Our relative preferences are due
partly to China’s ramp-up of its coal-based gasification plants, which we believe will disrupt
world methanol and ammonia/urea markets first.
Coal-based Syngas
Thermal coal-based syngas (not to be confused with synthetic natural gas) is produced from
integrated gasification combined cycle (IGCC) plants, gas-to-liquids (GTL) plants, and other
Fischer-Tropsch (FT) technology plants. Coal-based syngas production could have negative
implications for some of Canada’s gas-based chemical and fertilizer companies. Investors
interested in the economics of coal gasification as it relates to the use of coal and the
production of methanol, ammonia/urea, power, and/or other gas-based production
applications should find some value-added information in this Scotia Capital coal gasification
research effort.
Why Coal-based Syngas
The explosion in global oil prices has led to an explosion in regional natural gas prices,
particularly in North America and Europe. Natural gas prices have also risen due to natural
gas’s clean burning properties and recent increased use for power generation. These price
increases have led oil importing countries such as China, India, and now the United States to
support more coal gasification projects, which chemically transform coal’s BTU content into
syngas via sublimation techniques. Because this can be done at a cheaper price per BTU than
the direct use of higher-cost natural gas, there has been a recent boom in the number of
gasification plants being designed and constructed, mostly in China and, more recently, the
Middle East, United States, India, and Australia. As shown in Exhibit 1, there is significant
new world gasification capacity coming on stream in the next five years (see Appendix 1 for a
complete list of projects).
Exhibit 1 – World Gasification Capacity
Source: U.S. National Energy Technology Laboratory.
Scotia Capital’s China analyst has observed that the current percentage of methanol and
nitrogen production in China is approximately 62% coal based, 26% gas based, and 12% oil
based. The coal-based percentage of methanol and nitrogen production will only rise,
based on the number of coal-based nitrogen and methanol plants coming on stream
(see pages 7-8 for details).
4
U.S. natural gas costs have more than quadrupled in the past five years from $2.30/mmBtu to
$11.00+/mmBtu at Henry Hub, increasing the U.S. cost for natural gas and electricity by
more than $150 billion per year. In Europe, industrial gas costs are typically set using
residual fuel oil #6 prices with a four- to six-month time lag. The gas costs in Europe have
more than doubled over the past five years as well, to $5.50/mmBtu currently from
$2.65/mmBtu, using Zeebrugge, Belgium, as a price point (see Appendix 2).
We attended a coal gasification conference during Q1/05 in Denver, Colorado, that attracted
about 120 people and included Canadian representation from TransCanada Corp., Manitoba
Hydro, Environment Canada, and Natural Resources Canada. Our interest was piqued by the
rapid increase of coal gasification project announcements on the world scene, particularly in
China, where a majority of its new methanol and ammonia capacity is being built using
coal gasification technologies owned by General Electric (acquired from ChevronTexaco)
and Royal Dutch Shell. This has led to our cautious stance on methanol-based Methanex and
nitrogen-based Agrium.
Fixed/Variable IGCC Plant Economics
For fixed capital costs, AEP (AEP-N) estimated on March 18, 2005, that a new IGCC unit in
the United States built by 2010 would cost $1.72 million per MW of power capacity, about
15%-20% more than for a conventional pulverized coal unit. IGCC units produce only half of
the pollution of a pulverized unit.
In the Wabash River, United States, IGCC plant project, non-fuel operating and maintenance
costs for the syngas facility, including the power block at a mature IGCC, was estimated at
5.2% of installed capital.
The variable cash cost of converted coal BTUs to coal
Exhibit 2 – On-site IGCC Economics gas can be as low as $1.05/mcf if gasification plants are
Assume: $10/tonne coal mine site located at or beside a coal mine. If the coal gasification
@ 10,000 BTU/tonne facility is surrounded by methanol, ammonia, clean
= 10 mcf (@ 1:1) diesel, and other applicable plants (i.e., power), an
= $1/mcf optimum configuration can raise full energy conversion
Coal Gas Conversion Efficiency 95% - 97% efficiency up to 60%. The $1.75/mcf full conversion gas
Coal Gas/mcf = $1.05/mcf price is what is stimulating so many new coal
gasification projects in China and, to a lesser degree,
Final Energy Conversion Efficiency up to 60%
India, Australia, and the United States to-date (see
Final Gas Cost/mcf = $1.75/mcf
(depends on how many co-products or poly-products are added Exhibit 2).
and variable sulphur extraction, water removal, air separation and
other clean-up costs)
Typical IGCC Plant Cost
Source: Scotia Capital estimates. The typical turnkey cost for a coal IGCC plant is about
$1.7 million per MW ($1.033 billion for 600 MW), split
30% for gasification, 15% for syngas cleanup, 40% for
the power island, and 15% for cryogenic air separation. The size of an IGCC plant is
comparable to that of a conventional coal-fired power boiler plant. An IGCC plant does not
require additional area for scrubber sludge treatment or ash dewatering. The cost is up to 25%
greater than conventional units when adding methanol and/or ammonia/urea production.
Industry experts estimate that 30%-50% of the fixed cost per tonne to build these plants is
solely to transform natural gas into syngas, depending on their syngas usage configuration;
therefore, ammonia and methanol plants built beside coal gasification plants only require
50%-70% of the capital cost per tonne that natural gas feedstock plants require. This offsets
the larger up-front cost for coal gasification units.
5
Coal Gas History

The first crude IGCC units began making “town gas” for lighting street lamps in the 1890s.
Once natural gas was discovered and gas pipelines were built, the use of town gas was phased
out throughout most of the world. In the 1970s, interest in coal gasification revived as
crude oil moved from $3/bbl to $40/bbl. This led to the first U.S. IGCC plant in Beulah,
North Dakota, which was built with U.S. government support in the early 1980s. Southern
California Edison followed with a 100 MW plant near Barstow, California. The next two
IGCCs were built as greenfield sites in Florida and Indiana with financial support from the
Department of Energy’s (DOE) Office of Fossil Energy.
How IGCC Units Work
IGCC gasification has been proven at more than 100 global sites (see Exhibit 3 for a diagram of
GE’s gasification technology). IGCC technologies can convert a wide range of resources,
including coal, lignite, bio-mass, petroleum residues, and petroleum coke, from refineries to
produce a very clean gas called syngas. This in turn can be used to produce power, clean diesel,
chemicals, and/or fertilizer by-products. Syngas is unique because it can be used for both
power production and chemical/fertilizer applications. Coal gasifiers blast coal with steam
and either air or oxygen to break it down into a rich mix of carbon and hydrogen gases
(sublimation). The most common technique partially oxidizes the coal feedstock (preferably
high BTU-content anthracite) with pure oxygen inside a reactor. The carbon and hydrogen from
the feedstock are converted into a mixture composed primarily of hydrogen and carbon
monoxide. The resulting mixture is commonly called synthetic gas or syngas. This is the first
major step in the chemical process used to make methanol and ammonia.
Exhibit 3 – General Electric’s Integrated Gasification Combined Cycle System
Source: General Electric.
Syngas has a heating value of only 125-350 mBTU per mcf, which is 3x-8x lower than that
of natural gas. It must be cleaned before it can be used as a gas turbine fuel. This requires
removing sulphur compounds, ammonia, metals, alkylates, ash, and particulates. To make
IGCC units more economically attractive, additional plants that can produce methanol,
ammonia, and/or other chemicals that work directly from syngas are typically pursued,
particularly in China.
6
2005 U.S. Energy Bill Supports More U.S. IGCC Plants

The vast majority of the 100 plus IGCC plants and projects built and being planned are
located in China. The United States has only five relatively small but commercially successful
coal gasification units. They are located in Healy, Alaska; Kingsport, Tennessee; Tampa,
Florida; West Terre Haute, Indiana; and near Kansas City, Kansas (Coffeyville).
The finalized 2005 U.S. Energy Bill, which was passed in early August 2005, has allocated
$1.3 billion over five years to support new U.S. coal gasification plants for up to 50% of the
total project cost. The Energy Bill also provides loan guarantees to those IGCC units that are
at least 400 MW in size. Section 1703 “Eligible Projects” of the Energy Bill states that the
U.S. Energy Secretary may guarantee gasification projects using coal, biomass, petroleum
coke, or a combination thereof where at least 65% of the net useful annual energy output must
be from electricity. The IGCC plant must also have a technology that is capable of
sequestering the coal’s CO2 content. Additionally, Section 413 “Western Integrated Coal
Gasification Demonstration Project” spells out the standards for a new project to demonstrate
an IGCC project, dictating all types of economically feasible western U.S. coal.
The U.S. Energy Bill states that the eligible entity that applies for support to employ domestic
coal gasification should apply the non-electricity portion of the coal energy to be transformed
into chemicals, fertilizers, glass, steel, petroleum residues, forest products, and agriculture,
including feedlots or dairy operations.
The Energy Bill subsidies and guarantees may support 5,000 MW of clean coal technology,
but proposals by others suggest the U.S. government could expand its support for
35,000-50,000 MW of coal gasification capability by 2015 and an additional 35,000
MW by 2020. Since the United States currently consumes 20% and produces 21% of the
world’s coal supplies and has approximately 27% of the world’s recoverable coal reserves
(U.S. EIA), we consider it likely that coal gasification technologies will continue to be
advanced in the United States. We do not believe that any Canadian chemical or fertilizer
company will likely benefit from this effort, while some U.S. chemical and fertilizer
companies, like Eastman (EMN-N), Air Products (APD-N), and Coffeyville (existing users
of U.S. coal gasification), will.
7
China’s IGCC Gas for Methanol and Ammonia/Urea

Plants Exploding
By year-end 2005, we estimate that China will have 6 million tonnes of methanol production
capacity or about 16% of world capacity, based on January-July 2005 production of 3 million
tonnes and new plants coming on stream. Based on the announcements for capacity additions,
we estimate China will have about 15 million tonnes or 28%-29% of world capacity by 2010.
Currently, Chinese urea capacity is around 35 million tonnes or 35% of the world market, and
we estimate that it will likely rise to 42 million-43 million tonnes or 40% of global capacity by
2010. See Exhibit 4 for a list of over 9 million tonnes of IGCC-fed Chinese ammonia/urea
projects that are under construction or have been finished since 2004.
Exhibit 4 – Chinese Ammonia/Urea Coal Gasification Capacity Additions

Capacity Addition
Project Location (tonnes) Start-up Commissioning Type
Jinchen Coal Chemical Shanxi, Jinchen 900,000 2004 Coal
Huajing Liaoning 536,000 2004 Coal
Haolianghe Heilongjiang 300,000 2004 Coal
TianJi Shanxi, Jinchen 600,000 2005 Coal
Fengxi Shanxi, Jinchen 520,000 2005 Coal
Lanhua Shanxi, Jinchen 300,000 2005 Coal
Hensheng Jiangsu 150,000 2004 2005 Coal
Sinopec Qingan Qing'an 585,400 2005 2005 Coal
Benxi Benxi 680,000 2004 2005 Coal
Huajing 1 Xinjiang 520,000 2004 2005 Coal
Wulashan Inner Mongolia 160,000 2006 Coal
HK Jingxin Inner Mongolia 800,000 2005 2006 Coal
Xingyi Guizhou 300,000 2005 2007 Coal
Huajing 2 Xinjiang 520,000 2006 2007 Coal
Yunwei Yunnan 500,000 2007 2008 Coal
Hegang Heilongjiang 1,000,000 2006-2010 Coal
Erduosi/Sigma Inner Mongolia 1,040,000 2005 n.a. Coal
Total 9,411,400
Source: Chinese media reports; Beijing Oriental Agri-Business Consultant (BOABC).
For methanol production sourced from IGCC coal specifically, China has about 9,600,000
tonnes per year in potential capacity additions between now and 2009, or about 25% of world
capacity (see Exhibit 5). However, the economics of many of these projects are unknown to us.
Also, the location of these IGCC plants relative to the location of coal supplies will have a huge
impact on feedstock costs.
China has announced about 500 coal-fired power plants to produce 100,000 MW of coal-fired
capacity at a cost of about US$120 billion. Some of these will be coal gasification oriented
(IGCC), where multiple co-products (poly-products) will be made, including power,
methanol, ammonia, clean diesel, and/or distillates.
8
Exhibit 5 – Chinese Coal Gasification to Methanol Capacity Additions

Year Country Plant 000 Tonnes/Year Coal or Gas
2005 China Jiaohua Group, Shanxi 120 Coal

2005 China Xingjiang United Chemicals 100 Coal
2005 China Hebei Qi'an Chemical 200 Coal
2005 China Shenmu Shaanxi 1 200 Coal
620
2006 China Yongchen Coal & Power 500 Coal

2006 China Henan Anyang 200 Coal
2006 China Dalian Huafeng/Hegang 1 600 Coal
2006 China Shaanxi Xianyang 1 200 Coal
2006 China Huayi Group (Shanghai Coking) 300 Coal
1,800
2007 China Pingzhuang Coal Group & Zekai Group, Inner Mongolia 1 600 Coal
2007 China Zhongzhu Aluminium 200 Coal
2007 China Yanzhou, Shandong Zoucheng 1 500 Coal
2007 China Henan Zhongyuan 400 Coal
2007 China Huaibei Coalmine/Anhui 1 200 Coal
2007 China Shenmu Shaanxi 2 400 Coal
2,300
2007-2008 China Anhui Huaibei/Minmetals/Shanghai Coking 400 Coal

2007-2008 China Anhui Shengyuan 1 500 Coal
2007/2008 China Gansu Huating Coal 1 600 Coal
2008 China Dalian Huafeng/Hegang Mining 2 600 Coal
2008 China Inner Mongolia, South Austrailian Resources 1 200 Coal
2008 China Xinjiang Tianfu 200 Coal
2,500
2009 China Hainan/CNOOC 2 1,200

2009 China Huaibei Coalmine/Anhui 2 400 Coal
2009 China URUMQI/Xinjiang 800
2,400
Total Methanol Capacity Additions 2005-2009 9,620
Source: CMAI; Chinese Web sites; Scotia Capital.
Methanol-specific IGCC plants are not the only source of incremental new methanol capacity
coming on stream in China. Poly-product plants, where multiple co-products such as ethylene
(MTO) and propylene (MTP) are produced from methanol using coal-gas feedstock also
appear to have attractive economics, as well as the benefit of low-cost syngas supply (see
Exhibit 6). Most coal-producing Chinese provinces have realized that coal-based chemical
production would be a relatively easy way to use their abundance of coal and expand their
position on the value chain, especially when the current high energy price environment makes
IGCC plant economics very attractive. The actual total capacity additions from these poly-
product plants are uncertain, as the Chinese government has only approved a few pilot poly-
product projects up to this point.
9
Exhibit 6 – Proposed Chinese Coal Gasification to Poly-Product Capacity Additions

Methanol
Year Country Plant 000 Tonnes/Year Oil, LNG, Other Coal or Gas Process
2006 China Shanxi Lanhua/Shandong Jiutai 1 500 300 Coal DME
2007 China Shenhua Coal, Mongolia 3,200 Coal Direct Liquidization
2008-2010 China Shanxi Lanhua/Shandong Jiutai 2 1,000 700 Coal DME
n.a. China Anglo, Shaanxi Yulin 2,400 Coal MTO
n.a. China Huabei coal power group, Inner Mongolia 1,200 150 Coal MTO
n.a. China China Chemical Engineering/HK YiYe, Shaanxi Yulin 2,400 Coal MTO
n.a. China Chongqin Jiantao2 900 Gas MTP
n.a. China Inner Mongolia, South Austrailian Resources 2 800 Coal CTL
n.a. China Anhui Shengyuan 2 1,500 Coal MTP
n.a. China Yanzhou, Shandong Zoucheng 2 440 Coal CTL
n.a. China Xianfeng Coal, Yunnan 1,023 Coal Direct Liquidization
n.a. China Yanzhou Coal, Shandong 3,200 Coal Direct Liquidization
n.a. China Shenhua Coal/Sasol, Shaanxi Yulin 3,000 Coal CTL
n.a. China Shenhua Coal/Sasol, Ninxia 3,000 Coal CTL
n.a. China Xinghe Coal/Sasol, Shanxi Jingchen 3,000 Coal CTL
n.a. China U.S. Lemai/Longtai, Shanix Yangquan Coal CTL
n.a. China Shenhua/HK Jiali/Baotou Mintian, Inner Mongolia, Baoto 1,800 Coal MTO
n.a. China Torch Investment/Anhui Huaibei 500 Coal MTP
n.a. China Yunnan Yujing 2,500 Coal MTP
n.a. China Yusen Coal Chemical, Shanxi 2,000 Coal MTP
n.a. China Yuheng Coal Chemical, Shanxi 2,400 Coal MTP
n.a. China Binchang Coal Chemical, Shanxi 1,500 Coal MTP
2008-2015 China Gansu Huating Coal 2 1,200 Coal MTP
2008-2015 China Gansu Huating Coal 3 2,000 Coal CTL
Total Poly-Capacity Additions 23,040 19,573
Source: CMAI; Chinese Web sites; Scotia Capital.
China currently produces 35% of the world’s coal (Industrial Information Resources Inc.),
consumes 28%, and has 13% of world recoverable coal supplies (U.S. EIA). In inner China’s
Shanxi Province, numerous projects are underway to turn coal, natural gas, and oil into
chemicals. In a July 25, 2005, Reuters article, Mayor Wang of Yulin, China, called the region
“the Kuwait of China” due to generous proven reserves of oil, natural gas, and coal. There are
6 major and 30 minor petrochemical projects in this area alone. In the article, Guohua was
featured as an integrated electricity plant and coal mine that will feed a 600,000 tonne per
year coal-to-methanol plant.
According to the official China Daily, Chinese domestic prices for coal have recently
declined slightly due to “moderate oversupply” in the fragmented sector and could be
expected to continue to decline through 2007 due to better rail transportation, increased
capacity, and declining demand from industries such as steel. The China Daily also cited
industry sources as stating that coal prices in production areas such as Shanxi and Shandong
have declined to RMB50/tonne from RMB80/tonne in July. Similarly, Forbes reported that
Guo Yuntao, director of the China Coal Industry Development Research Centre, stated in a
July coal conference in Beijing that China is expected to produce an additional 200 million
tons of coal in 2006 year over year, while demand will likely rise by some 150 million tons
year over year, causing some downward pressure in prices.
China’s Variable Coal Costs for IGCC Plants
Coal prices are heavily manipulated by provincial and local authorities in China. After rising
about 100% in 1H/05 versus 1H/04, China’s coal costs have been easing lately on double-
digit production increases and declining freight costs that can easily be triple that of coal
production costs. The Asian Chemical News publication has made references to new
methanol and ammonia/urea plants that will work from syngas and have typically pointed to
coal prices in the $10/tonne area at the coal mine site (RMB80/tonne) used for validating
the economics of the IGCC and related facility projects. According to Fang Dewei,
consultant for the China Chemical Industry Productivity centre (CCIPC), Yulin, Erdos in
Inner Mongolia, and Luliang in Shanxi are good locations for IGCC, methanol-to-olefins,
and methanol-to-propylene plants. Currently, the cost of coal in Yulin is estimated at
RMB60/tonne or $7.50/tonne. Production costs per tonne for methanol were estimated
between $74.17-$105.22/tonne, with coal prices ranging from RMB60-RMB170/tonne or
$7.42-$21/tonne for various locations (see Exhibit 7).
10
Exhibit 7 – Chinese Coal Gasification to Poly-Product Capacity Additions

Relative Coal Price Coal Price Methanol Cash Cost Methanol Cash Cost
Location Location RMB US$ RMB/tonne US$/tonne
Tengzhou, Shandong East Coast 150 18.54 850.00 105.07
Jincheng, Shanxi North 100 12.36 851.22 105.22
Jinzhong, Shanxi North 70 8.65 808.22 99.90
Jingxi, Beijing Northeast 170 21.01 835.20 103.24
Chongqing, Sichuan Southwest 150 18.54 766.84 94.79
Yulin, Shaanxi Northwest 60 7.42 600.00 74.17
Note: RMB/US$ exchange rate used = 8.09.

Source: China Chemical Industry Productivity Centre; Asian Chemical News; Scotia Capital.
The longer-term direction for China’s mine site coal prices has to be upwards. On
August 31, 2005, the BBC noted that China is suspending production at 7,000 of its 24,000
coal mines, of which 1,324 have been specifically earmarked for closure. Most are private
and small coal mines that have abysmal safety records. About 3,400 Chinese miners have
been killed from January 1 to August 15, 2005, in fires, floods, and other work-related
accidents. Li Wenge from the Coal Industry Group of Shanxi province stated that coal
supplies were unlikely to be seriously affected by these shutdowns, as most of the pits to
close are relatively small.
China IGCC Conclusions
Since China is not a Kyoto signatory, its rapidly expanding use of coal for power and coal
gasification (IGCC) for chemicals and fertilizers continues unabated. Its new methanol and
ammonia urea plant economics based on IGCC syngas appear to have cash costs that would
be placed in the second quartile of the methanol cost curve. Shortly, China will be in a net
surplus position to export both methanol and urea to high-cost areas like the United States
and Europe.
11
Europe’s IGCC Gas-to-Methanol Plants

Western Europe has numerous gasification plants that make methanol, ammonia, electricity,
and hydrogen. A large number of these multi-product IGCCs are located in Germany. While
growth of European IGCC plants is not on the same scale as in China, many of the poly-
products plants that are located in huge industrial complexes will likely continue to run and
create methanol even after natural gas feedstock methanol plants, such as those in the
Netherlands (Methanor), are priced out of the cost curve. These IGCC plants are also very
flexible between methanol, hydrogen, and ammonia production (see Exhibit 8). Other natural
gas-based European methanol plants, such as Statoil’s plant in Norway, which produces
900,000 tonnes per year and is in the planning process for a 300,000 tonne per year
expansion, are subject to unusual plant economics. Norway punishes its offshore oil
producers that flare associated natural gas production with a flare gas tax; thus, the decision to
make methanol or not for companies like Statoil is dependent on the cost of the gas flare tax.
We have not seen Statoil decrease its methanol plant production due to economics at any
methanol price since it was built in the 1990s.
Exhibit 8 – Poly-Product Flexibility
800
700 3
Hydrogen: 30 Nm /h H 2
Ammonia Tonnes/day
Flexible Production
600
500 3
Hydrogen: 50 Nm /h H 2
400
550 600 650 700 750 800
Methanol Tonnes/day
Source: Veba Oel; Scotia Capital.
Ruhr Oel IGCC Facilities

The Ruhr Oel facility built in 1972 is run by BP/Ruhr Oel (Veba Oel). It produces methanol
at the Gelsenkirchen-Scholven industrial complex in Germany. The facility also has an
ethylene, aromatics, and ammonia plant on site. The high flexibility in swing production of
hydrogen ammonia and methanol allows for relatively attractive production economics.
Production of methanol there is approximately 260,000 tonnes per year. The methanol is
used in combination with rapeseed methyl ester (RME) to create a bio-fuel. The plant uses
Lurgi’s gasification technology. Methanol is created from syngas using petroleum by-
products (refinery residues). We do not know the allocated cost of these residues to the
methanol plant.
12
BASF IGCC Facilities

BASF runs the Ludwigshafen “Verdun” complex, which has 250 different chemical plants.
BASF creates economies of scale by linking these plants so that by-products from one plant
can be used in another. The feedstock for most of these plants is naptha or liquefied
petroleum gas. The methanol plant’s feedstock is sourced from an IGCC plant using GE’s
technology, which uses refinery residue and heavy fuel oil. Methanol production from this
complex is about 430,000 tonnes per year, which is used as feedstock for further value-added
chemical products. BASF’s methanol production is also likely somewhat isolated from the
methanol production cost curve, as it is an integral step in the creation of further value-added
chemicals and a user of refinery residues/heavy fuel oil.
Shell/DEA Mineraloel IGCC
The Shell/DEA Mineraloel facility produces 450,000 tonnes of methanol per year using
syngas as feedstock. Part of the gas feedstock used in the Shell/DEA Mineraloel methanol
plant is from a coal gasification plant at Berrenrath, Germany, which was a pilot plant for
using the Winkler high-temperature gasification process. That IGCC plant produces syngas
from lignite coal. The other part of the gas feedstock used for the methanol facility comes
from an IGCC plant that uses residual fuel oil and cracked refinery residue as a feedstock.
One of the plants uses GE’s technology and one uses Shell’s technology.
Total IGCC
The Total facility in Germany produces 600,000 tonnes of methanol per year. Previously this
facility was known as the Mitteldeutsche Erdoel Raffinerie (MIDER) project, a joint venture
led by Elf (now Total) to test the IGCC concept. Using Shell’s gasification technology, the
facility produces methanol, hydrogen, and electricity from a petroleum gasifier that uses
residual fuel oil as its feedstock.
13
IGCC Poly-Production Plant Economics

The following exhibits give an appreciation of the complexity, flexibility, and evolution of
Veba Oel’s IGCC facilities (now also owned by Ruhr Oel and British Petroleum), which
make it difficult to position this type of methanol production on the global cost curve.
Exhibit 9 – Hydrogen and Industry-Gas Production
Source: Veba Oel.
Exhibit 10 – Gasification and Refiners Partner Well
Source: Veba Oel.
14
IGCC and GTL Technology Players

U.S.-based General Electric (GE-N), Syntroleum (SYNM-N), Rentech (RTK-A),
ConocoPhillips (COP-N), and Exxon Mobil (XOM-N), Europe-based Shell (RDS-A-N) and
Lurgi AG, and South Africa-based Sasol (SSL-N) and MossGas are most of the companies
that have proprietary IGCC and/or GTL technologies. In Europe, British Gas (BG-L)/Lurgi
(BGL JV) are involved in gasification of not just coal but other biomass and low-cost fuels
like asphaltenes. Its pilot project near Berlin, Germany, produces power and methanol using
coal and various wastes. South Africa-based Sasol has historically been the world’s leading
player in coal gasification to liquid technologies since the 1950s. Both Shell and Syntroleum
attended the January 2005 Denver Coal Gasification Conference (see Exhibit 11).
Exhibit 11 – Gasification Plants by Technology
35,000
30,000 Planned
25,000 Operating
MWth Syngas
20,000
15,000
10,000
5,000
Other
Shell
Sasol/Lurgi
GE
ConocoPhillips
Source: U.S. National Energy Technology Laboratory (2004); Sasol (2005).
15
Existing IGCC and GTL Technology Features

Shell Global Solutions
As of early 2005, Shell’s IGCC gasification process was being used in 26 coal gasification
plants in China, Japan, Indonesia, India, Europe, the United States, and the Caribbean. Shell
Global Solutions has 12 active projects in China as of late 2004 that it had won, including
those in Exhibit 12.
Exhibit 12 – Recent Projects in China Using Shell’s SCGP Technology

Owner Location Feedstock Syngas 106 Final Contract Start-up
t/d m3/d Product Signed date
Shuanghuan Chem. Yingcheng, Hubei 900 1.4 Ammonia 2000 2004
Liuzhou Chem. Liuzhou, Guanxi 1200 1.7 Ammonia 12/2001 2005
Sinopec/Shell Dongting, Hubei 2000 3.4 Ammonia 3/2001 2005
Sinopec Hubei, Hubei 2000 3.4 Ammonia 2002 2005
Sinopec Anqing, Hubei 2000 3.4 Ammonia 2002 2005
Dahua Chem. Dalian, Liaoning 1100 1.7 Methanol 1/2003 2006
Yuntianhua Anning, Yunnan 2700 3.4 Ammonia 8/2003 2006
Yunzhanhua Huashan,Yunnan 2700 3.4 Ammonia 8/2003 2006
Shenhua Majiata, Mongolia 4500 6.3 Hydrogen 2/2004 2006
Yongcheng Chem. Yongcheng, Henan 2150 3.1 Methanol 3/2004 2007
Source: Shell Global Solutions.
Shell Global Solutions’ IGCC technology process has the following features (see Exhibit 13):
1. It uses a dry coal feedstock versus a slurry coal feedstock, so less water is used, with less
wastewater treatment required.
2. Its availability is claimed to be over 90% due to a low-maintenance gasifier wall that
protects the vessel.
3. Its overall net efficiency to produce power using thermal plant conversion exceeds 43%,
while competitor technologies are about 38%.
4. It provides greater coal feedstock flexibility, as it can handle coal with high ash content.
Exhibit 13 – Shell’s SCGP Technology – Typical Process Line-up
Source: Shell Global Solutions.
16
Lurgi AG
The latest LP methanol synthesis process (MegaSyn) developed by Lurgi is used to produce
crude methanol (MegaMethanol) from synthesis gas (H2, CO, and CO2). Lurgi’s new
MegaSyn syngas units could be 30%-40% cheaper per tonne due to scale. This will keep
down the cost per tonne for new methanol facilities ($0.5 billion for 1.8 million tonnes/year).
In the downstream distillation, crude methanol is processed to high-purity methanol. It has led
to six orders to date for gas-based 5,000 tonne/day methanol plants with the latest from
Malaysia (two in Thailand, one in Iran, and two in Saudi Arabia). See Exhibit 14 for the
simplified process flow diagram, which shows the process variant Combined Converter
Synthesis. With this process, a water-cooled reactor is combined with a gas-cooled reactor,
yielding a higher methanol yield at a lower cost than conventional Lurgi methanol synthesis.
That makes Lurgi’s new technology suited to high-capacity methanol production
facilities that double production levels, to 5,000 tonnes/day versus 2,500 tonnes/day.
Lurgi’s technology has also doubled the average size of future ammonia plants to
4,000 tonnes/day from 2,000 tonnes/day (called MEGAMMONIA). It will also be used for
GTL, MTO, MTP, and other chemical/fertilizer applications.
Exhibit 14 – Lurgi’s Technology
Source: Lurgi.
General Electric
General Electric (GE) advertises its IGCC plant technology features versus existing
pulverized coal technologies as follows over a 25-year life span:
2 million tons less CO2.
67,000 tons less sulphur.
26,000 tons less nitrogen oxide.
If 100% of U.S. conventional coal plants operated today on GE’s IGCC technology, it would
save 320 million tons of CO2 or 25% of U.S. greenhouse gas reduction proposed for the
United States under the Kyoto Protocol. It would also save about 390 billion gallons of
water because the process uses 30% less water. Also, GE’s IGCC can reduce mercury
emissions by 50%. GE’s IGCC process is the most widely used in China.
17
IGCC Plant Builders

GE entered a global joint venture with Bechtel in 2004 to pursue building IGCC plants. The
alliance will integrate the development, marketing, commercialization, and implementation of
GE’s IGCC process with Bechtel’s engineering, procurement, and construction expertise. GE
and Bechtel are studying a commercial IGCC unit for Cinergy (CIN-N), likely for Indiana.
GE and Bechtel worked on the 100 MW Cool Water IGCC plant demonstration in California
in 1984 and Tampa Electric’s 250 MW Polk power plant in Florida, which began operations
in 1996. GE Energy is the leading supplier of gas turbines for IGCC applications, having
provided gas turbines for more than 60% of the world’s operating IGCC plants.
Other alliances providing similar turnkey contract solutions in IGCC include Black & Veatch
with Uhde GmbH, and Flour (FLR-N) with ConocoPhillips. Canada’s SNC-Lavalin (SNC-T)
is also pursuing building these IGCC and related chemical plants, with recent bidding
successes in China with building coal gasification-based methanol plants.
The possibility of carbon constraints and their future environmental cost per tonne of
CO2 are critical in the commercial deployment of IGCC in the United States. Plant
developers there will also need to consider the geological sequestration opportunities for CO2
capture in siting IGCC facilities. The AEP IGCC plant could be located in the Ohio River
Valley, where geological formations are amenable to CO2 injection.
18
Existing North American IGCC Plant Owners

There are no Canadian IGCC plants or owners. In the United States, the following IGCC
plants have been built with the following U.S. owners:
Eastman/Air Products – Kingsport, Tennessee
Both of these publicly traded U.S. companies have relatively small U.S. methanol plants that
are running on coal-based gas in Kingsport, Tennessee. The U.S. Energy Department
provided $92.7 million, while the Air Products (APD-N) and Eastman partnership provided
$121 million to demonstrate a liquid phase methanol plant technology that would operate on
gas derived from coal. This was one of 38 joint government and industry projects that were
initiated under the Reagan administration to demonstrate clean coal technologies. The plants
have operated since April 1997 with a remarkable on-stream availability of 97.5%, the
highest of all the demonstration clean coal technologies supported in the 1980s and 1990s in
the United States. Prior to this project, Eastman Chemical also made methanol using synthesis
gas from its coal gasification facility.
Dynegy and PSI Energy – West Terre Haute, Indiana
At Dynegy’s (DYN-N) and PSI Energy’s Wabash River Coal Gasification re-powering
project in West Terre Haute, Indiana, coal is gasified and the gases are used to generate
electricity. Coal is sourced from the Illinois basin, with petroleum coke also used. The
associated power plant’s capacity is 296 MW. It cost $438 million in 1994 to build the IGCC
unit. This was evenly split between the Department of Energy and the owners. GE supplied
the frame gas turbine. The SO2 capture was over 99%, with particulate emissions below
detectable levels.
Tampa Electric IGCC – Polk County, Florida
Suppliers to this 1996-built IGCC plant project included GE for the gas turbine, Texaco for
the coal gasification technology, and Air Products for the air separation unit. Bechtel was the
architect and engineer. The 315 MW plant is in Mulberry, Polk County, Florida. Coal used
came from Illinois (#5 and #6), Pittsburgh (#8), West Kentucky (#11), and Kentucky (#9).
Petroleum coke, petroleum coke blends, and bio-mass are also used. The DOE contributed
$151 million (49%) and Tampa Electric contributed $152 million (51%). The plant heat rate
is 9.65 mmBTU/MWh. It removed 97% of sulphur, while particulate matter emissions were
0.04lb/MWh or 95% lower than for conventional coal plants.
Coffeyville Resources – Coffeyville, Kansas
In late 1996, Farmland moved forward with Texaco on an ammonia/UAN plant complex
using petroleum coke-based slurry for feedstock. Coffeyville bought this asset from Farmland
out of Farmland’s bankruptcy proceedings. Coffeyville, a U.S. nitrogen producer and refiner,
would have gone public in Q3/05 via a $300 million New York IPO. It was instead bought by
a group of private investors led by Goldman Sachs. Coffeyville makes 350,000 tons of
ammonia and 500,000 tons of UAN nitrogen products per year. It estimated in its IPO
prospectus that its variable gas costs are in the $1.50-$2.50/mcf range using petroleum
coke-based gas.
Future IGCC Plant Owners in North America
According to Stephen Johnson, President of American Clean Coal Fuels, there are at least
six credible U.S. IGCC/poly-product plant projects currently underway. One of the U.S.
Energy Department’s top priorities is to develop a poly-product coal plant that could co-
produce hydrogen and other chemical compounds simultaneously with the generation of
electricity. AEP is one of the most active U.S. energy utilities, soliciting the U.S. Energy
Department’s financial support for a new IGCC plant. AEP has short-listed several states for
its first IGCC plant site and is currently negotiating for final state and regulatory treatment.
19
AEP is the largest user of pulverized coal to make power

Exhibit 15 – IGCC Facility Emissions
in the United States. In late 2004, it announced that it
would build one or more commercial-scale base-load
3500
power IGCC plants as part of its future plans to mitigate
3000 the economic impacts of its emissions. IGCC plants
produce only about half the overall emissions of a
2500
pulverized coal fired power plant (see Exhibit 15).
2000
Tons/Yr
Cinergy, another major user of U.S. coal to produce

1500 power, has also stepped forward to endorse IGCC. It has
signed a letter of intent with GE Energy and Bechtel to
1000
study constructing a 500-600 MW commercial IGCC
500 plant, likely at Cinergy’s Edwardsport, Indiana, power
station. A final decision is expected in mid- to late 2006.
0
Existing Converted Southern Co. (SO-N) is looking at an IGCC unit in
Florida to produce power.
Note: Total emissions, including PM10, VO, CO,
NOx, SO2. The ERORA Group, a private U.S. development and
consulting company, decided to go with IGCC
Source: Rentech Inc. technology for a 2010 build in the United States. While
its primary purpose will be to produce 677 MW of
power, ERORA signed an agreement with Eastman Gasification Services to study the
feasibility of chemicals co-production. Combining two or more co-products into an IGCC
diversifies sources of revenue and helps reduce an IGCC’s cost towards pulverized coal unit
costs. Eastman produces methanol from coal gases in Kingsport, Tennessee, for its acetic acid
and UAM production requirements.
Calpine’s (CPN-N) CEO has stated that it is close to deals with refiners that will give it access
to petroleum coke. Calpine wants to add coal/petroleum coke gasification units at some of its
power stations if it is able to secure long-term supplies. The CEO also estimated that gasifying
petroleum coke into power could, over time, make up 10% of its fleet power capacity.
In Canada, Suncor (SU-T) has stated that it is studying using petroleum coke at or near its
Alberta Oil Sands operations for steam and power generation. This may have negative
implications for the Mackenzie Valley gas pipeline if Suncor pursues this avenue more
aggressively. A number of industry specialists have noted that initial Mackenzie Valley gas
flows would not get past the oil sands projects, as their demand for both steam and power is
enormous. Given the vast coal fields in Alberta and the high levels of CO2 emissions in
Alberta, it would not surprise us to see some form of IGCC plant development there.
In September 2004, the Canadian Clean Power Coalition (CCPC) completed phase 1 of a
feasibility study on retrofitting three existing coal-fired plants in Canada that use bituminous,
sub-bituminous, and lignite coal (likely SaskPower’s, which is a CCPC member). On August
24, 2005, the North Dakota-based Partners for Affordable Energy joined the CCPC. The
study to use low-grade coals should be completed in 1H/06. The primary purpose of these
retrofits will be power generation.
In Ontario, the head of the Ontario Power Authority stated that Ontario should not rule out
clean coal technologies, even though the objective of the current Liberal government is to
close 100% of the existing Ontario coal-fired power plants.
20
Fischer-Tropsch (FT) Technology

Fischer-Tropsch technology is similar to IGCC in that it can convert carbon-bearing materials
such as coal, natural gas, and petroleum coke into liquids via syngas. The rising cost of oil has
sparked a renewed interest in gas-to-liquids (GTL) production as well, according to SRI’s
Ronald Smith. Low-cost stranded gas below $1.00/mcf and a supportive fiscal regime make
GTL projects viable in today’s high oil price world (i.e., in Qatar).
The most popular technology for GTL is Fischer-Tropsch, with the most active company
using FT being Sasol. Its GTL plants are capable of producing 15%-25% paraffinic naptha,
50%-55% middle distillates (i.e., jet fuel, kerosene) and 0%-30% lubes and waxes. In
contrast, a typical refinery would produce 40% middle distillates, 27% gasoline, 20% light
oils, 10% naptha, and 3% LPG.
FT Technology Owners
South Africa-based Sasol’s and U.S.-based Rentech’s technologies are more focused on coal/
coke-based feedstock, while Conoco’s, Exxon’s, Shell’s, and Chevron/Sasol’s technologies
are more focused on gas-based feedstock (see Exhibit 16).
Exhibit 16 – Technology Comparison
Source: Rentech Inc.
Sasol has 45 years of commercial experience, with 160,000 bpd derived from coal feedstock.
MossGas (also from South Africa) has 11 years of experience and 22,500 bpd of FT liquids
that are derived from natural gas, while Shell (Malaysia) has nine years and 15,000 bpd
derived from natural gas. Rentech has nine active FT and GTL proposals underway, but none
have gone to construction yet. Tulsa-based Syntroleum announced on August 16, 2005, that it
had signed an agreement with Australian-based Linc Energy to evaluate a coal-to-liquids FT
project in Queensland, Australia. Linc has an underground gasification process that has the
potential to significantly reduce the capital cost of coal-to-liquids plants. Linc Energy has
more than 4 billion tons of coal reserves and intends to develop multiple coal-to-liquids
projects using its nitrogen-diluted syngas.
21
FT Technology Financial Thoughts – Rentech

Rentech had offered Royster-Clark (now a publicly traded Canadian income deposit security
– ROY.UN) about $52 million to buy Royster-Clark’s East Dubuque ammonia/urea complex
in Illinois. The agreement expired on March 15, 2005. The deal was conditional on
completing both debt and equity financing. Rentech was going to convert the Royster-Clark
natural gas-based nitrogen complex to coal gasification for about $400 million, to start
commercial operations in January 2009. Rentech and Royster-Clark have agreed to continue
the study regarding the conversion of the plant from the use of natural gas to Illinois coal
gasification. The conversion would have led to the following plant configuration
(see Exhibit 17).
Exhibit 17 – Poly-Generation Model – Plant Production Summary

Plant As Is Plant Converted to Coal
Feedstock
Natural Gas (mmBTU/day) 33,000 0
Coal (tons/day) 0 2,700
Products
Ammonia (tons/day) (Prod/Sales) 830 / 439 975 / 605
UAN (tons/day) 671 671
CO2 (tons/day) 502 502
Granular Urea (tons/day) 50 50
Urea Solutions (tons/day) 9 9
Nitric Acid (tons/day) 26 27
FT Liquids (bbls/day) 0 1,800
Sulphur (tons/day) 0 81
Power (MW/day) -14 17
Note: Assuming typical 830 tons per day ammonia facility.
The economics of using #2 Illinois coal delivered at $30/ton provide the following value-
added options for Rentech:
Revenue per coal ton
1. Electric power production $70
2. Electric power and syngas $109
3. FT fuels and electric power $124
4. Fertilizer, FT fuels, and electric power $149
The Rentech deal for Royster-Clark’s Illinois
Exhibit 18 – Proposed GTL Projects nitrogen complex failed, as Royster-Clark decided
instead to go public in Canada. Rentech has six
Bbl/day US$ Investment
other prospective coal-to-liquids projects in the
ExxonMobil 154,000 $7 billion
Shell 140,000 $5 billion
United States, one in Bolivia, one in Indonesia, and
Marathon 140,000 $5 billion joint ventures in China, Australia, and Papua New
Sasol 200,000 $6 billion Guinea.
ConocoPhillips 80,000 $2.5 billion In the past 18 months, more than $25 billion in
Note: Sasol 35,000 bbl/day by Q1/06. All others 2009. GTL investments has been announced. See Exhibit
18 for some highlighted projects.
22
Conclusions
Soaring oil and gas costs worldwide are leading to a revival of interest in coal-to-gas or coal-
to-liquids technology development and implementation. These technologies are receiving
increasing government support, as pressures on trade imbalances due to high oil and natural
prices continue to grow.
The applications of IGCC, GTL, and FT include converting coal to power, chemical,
nitrogen fertilizer, clean diesel, and other value-added products. Within our area of interest,
China is rapidly building out excess coal-based methanol and ammonia/urea capacity that
could be used to enter or re-enter global export markets for these products while they are still
being made in North America and Europe with record high oil and gas costs.
We therefore continue to recommend 3-Sector Underperform ratings on both methanol-based
Methanex and ammonia/urea-based Agrium. Our relative Canadian chemical and fertilizer
preferences remain ethylene-based NOVA Chemicals and potash-based Potash Corp.
Exhibit 1.1 – World Gasification Plants
Year
Plant Owner Plant Name Country Region Technology Name Started
BOC Gases Brisbane H2 Plant Australia Asia/Australia GE 2000
Ultrafertil S.A. Araucária Ammonia Plant Brazil Central & South America/Caribbean Shell 1979
Sistemas de Energia Renovavel Brazilian BIGCC Plant Brazil Central & South America/Caribbean TPS 2006
Opti Canada Canada North America Shell 2006
Beijing No. 4 Chemical Beijing Oxochemicals Plant China Asia/Australia GE 1995
China National Petrochemical Corp./Sinopec Daqing Oxochemicals Plant China Asia/Australia GE 1986
CNPC Ningxia Dayuan Refining & Chemical Ningxia Syngas Plant China Asia/Australia GE 1988
China National Petrochemical Corp./Sinopec Urumqi Ammonia Plant China Asia/Australia GE 1985
Dalian Chemical Industrial Corp. Dalian Ammonia Plant China Asia/Australia GE 1995
Lu Nan Chemical Industry (Group) Co./CNTIC Lu Nan Ammonia Plant China Asia/Australia GE 1993
Shanghai Coking & Chemical (Shanghai Pacific) Shanghai Coking & Chemical China Asia/Australia GE 1995
Weihe Fertilizer Co. Shaanxi Ammonia Plant China Asia/Australia GE 1996
Zhenhai Refining & Chemical Co. Zhenhai Ammonia Plant China Asia/Australia GE 1983
Henan Puyang Ammonia Plant China Asia/Australia Sasol Lurgi Dry Ash 2000
Nanjing Chemical Industry Co. Nanjing Ammonia Plant China Asia/Australia GE 2002
China National Technology Import Co. (CNTIC) Shaanxi Ammonia Plant China Asia/Australia Sasol Lurgi Dry Ash 1987
Shanghai Pacific Chemical (Group) Co., Ltd. Wujing Gas Plant No. 2 China Asia/Australia GTI (IGT) U-GAS 1994
Jilin Chemical Industrial Corp. Jilin Ammonia Plant China Asia/Australia GE 2001
Huainan General Chemical Works Hefei City Ammonia Plant China Asia/Australia GE 2000
Qilu Petrochemical Ind. Zibu Methanol/Oxochemicals Plant China Asia/Australia Shell 1987
Fushun Detergent Co. Fushun Oxochemicals Plant China Asia/Australia Shell 1991
Coal Gasification – It’s a (Syn) Gas, Gas, Gas

Inner Mongolia Fertilizer Co. Hohhot Ammonia Plant China Asia/Australia Shell 1996
Lanzhou Chemical Industrial Co. Lanzhou Ammonia Plant China Asia/Australia Shell 1998
Juijiang Petrochemical Co. Juijiang Ammonia Plant China Asia/Australia Shell 1996
Sinopec/Shell Dong Ting Ammonia Plant China Asia/Australia Shell 2005
Sinopec/Shell Hubei Ammonia Plant China Asia/Australia Shell 2005
Shuanghuan Chemical China Asia/Australia Shell 2005
Liuzhou Chemical China Asia/Australia Shell 2005
Sinopec-Shell China Asia/Australia Shell 2005
Sinopec China Asia/Australia Shell 2005
Sinopec China Asia/Australia Shell 2005
Dahua Chemicals China Asia/Australia Shell 2006
Yuntianhua Chemicals China Asia/Australia Shell 2006
Yunzhanhua Chemicals China Asia/Australia Shell 2006
Liuzhou Chemicals China Asia/Australia Shell 2005
Shuanghuan Chemicals China Asia/Australia Shell 2005
Anqing Sinopec China Asia/Australia Shell 2005
Dahua Chemicals China Asia/Australia Shell 2006
Yuntianhua Chemicals China Asia/Australia Shell 2006
Yunzhanhua Chemicals China Asia/Australia Shell 2006
Shenhua China Asia/Australia Shell 2006
Yongcheng Chemicals China Asia/Australia Shell 2007
China 1 (Expansion) China 1 China Asia/Australia GE 2005
China 2 China 2 China Asia/Australia GE 2005
Jinling Jinling China Asia/Australia GE 2005
Appendix 1 – World Gasification Plants

Haolianghe Ammonia Plant Haolianghe Ammonia Plant China Asia/Australia GE 2004
Shanghai Chemical & Coking (Shanghai Pacific) Gas Plant No. 2 China Asia/Australia GE 1997
Chemopetrol a.s. Most Gasification Plant Czech RepublicEurope Shell 1971
Sokolovska Uhelna, A.S. Vresova IGCC Plant Czech RepublicEurope Sasol Lurgi Dry Ash 1996
Sokolovska Uhelna, A.S. Thermoselece Vresova Czech RepublicEurope GSP 2005
Falconbridge Dominicania Santo Domingo Syngas Plant Dominican Rep Central & South America/Caribbean Shell 1971
Nitrogen Works of Societé el Nasr d' Engrois Suez Ammonia Plant Egypt Africa/Middle East Koppers-Totzek 1966
Kemira Chemicals Oy Oulu Syngas Plant-I Finland Europe Shell 1965
Corenso United Oy Ltd. Varkaus ACFBG Plant Finland Europe FW ACFBG 2001
Lahden Lämpövoima Oy Kymijärvi ACFBG Plant Finland Europe FW ACFBG 1998
Oy W. Schauman Ab Mills Pietarsaari ACFBG Unit Finland Europe FW ACFBG 1983
Norrsundet Bruks Ab Norrsundet ACFBG Unit Finland Europe FW ACFBG 1984
Fabrika Azotnih Jendinjenja Gorazde Ammonia Plant Former YugoslaEurope LP Winkler 1952
MSK-Radna Methanol Plant Former YugoslaEurope GE 1987
Air Liquide (Rhone-Poulenc) Pont-de-Claix Syngas Plant France Europe GE 1989
Oxochimie S.A. Lavéra Syngas Plant France Europe GE 1977
Source: U.S. Department of Energy – National Energy Technology Laboratory.
September 14, 2005

23
24
Exhibit 1.1 – World Gasification Plants (cont’d)

Year
BASF AG Ludwigshafen H2 Plant Germany Europe GE 1968
Air Liquide (Dow Stade GmbH) Stade Syngas Plant Germany Europe GE 1991
Mitteldeutsche Erdöl-Raffinerie GmbH Leuna Methanol Anlage Germany Europe Shell 1985
Rheinbraun Ville Methanol Plant Germany Europe GE 1985
SAR GmbH SAR Plant-II Germany Europe GE 1986
DEA Mineraloel AG Wesseling Methanol Plant-VI Germany Europe Shell 1969
September 14, 2005

Veba Oil Refining & Petrochemicals GmbH Gelsenkirchen-Scholven Ammonia/Methanol Plant Germany Europe Shell 1973
Sekundärrohstoff-Verwertungszentrum Schwarze Pumpe Power/Methanol Plant Germany Europe GSP 1992
BASF AG Ludwigshafen Oxochemicals Plant Germany Europe GE 1966
Chemische Werke Hüls AG Marl Oxochemicals Plant Germany Europe GE 1967
Chemische Werke Hüls AG Marl Oxochemicals Plant Germany Europe GE 1969
BASF AG Ludwigshafen Methanol Plant Germany Europe GE 1974
Celanese Chemical (Ruhrchemie) Oxochemicals Plant Germany Europe GE 1977
Sekundärrohstoff-Verwertungszentrum Schwarze Pumpe Power/Methanol Plant Germany Europe Sasol Lurgi Dry Ash 1964
Rüdersdorfer Zement GmbH Fuel Gas Plant Germany Europe Sasol Lurgi CFB 1996
Sekundärrohstoff-Verwertungszentrum Schwarze Pumpe Power/Methanol Plant Germany Europe BGL 1999
Sekundärrohstoff-Verwertungszentrum Schwarze Pumpe Power/Methanol Plant Germany Europe Sasol Lurgi MPG 1968
Hydro Agri Brunsbüttel GmbH Brunsbüttel Ammonia Plant Germany Europe Shell 1978
DEA Mineraloel AG Wesseling Syngas Plant Germany Europe GE 2000
Unspecified Owner Fondotoce Gasification Plant Germany Europe ThermoSelect 1999
Fertilizer Corp. of India Ltd. Nangal Ammonia Plant India Asia/Australia Shell 1978
IBIL Energy Systems Ltd. (IES) Sanghi IGCC Plant India Asia/Australia GTI (IGT) U-GAS 2002
Gujarat Narmada Valley Fertilizers Co. Ltd. Narmada Ammonia/Methanol Plant India Asia/Australia GE 1982
National Fertilizer Ltd. Panipat Ammonia Plant India Asia/Australia Shell 1978
National Fertilizer Ltd. Bathinda Ammonia Plant India Asia/Australia Shell 1979
Neyveli Lignite Corp. Ltd. Neyveli Syngas Plant India Asia/Australia Shell 1979
Indian Oil Corp. Ltd. Paradip Gasification H2/Power Plant India Asia/Australia Shell 2006
api Energia S.p.A. api Energia S.p.A. IGCC Plant Italy Europe GE 2001
ISAB Energy ISAB Energy IGCC Project Italy Europe GE 1999
SARLUX srl SARLUX IGCC Project Italy Europe GE 2000
PRAOIL Gela Ragusa H2 Plant Italy Europe GE 1963
Praxair (EniChem) Ravenna Syngas Plant Italy Europe GE 1958
ATI Sulcis Sulcis IGCC Project Italy Europe Shell 2006
AGIP Raffinazione S.p.A. Agip IGCC Italy Europe Shell 2005
Ube Ammonia Industry Co. Ltd. Ube City Ammonia Plant Japan Asia/Australia GE 1984
Mitsubishi Petrochemicals Yokkaichi Syngas Plant Japan Asia/Australia Shell 1961
Nippon Petroleum Refining Co. Negishi IGCC Japan Asia/Australia GE 2003
Ube Ammonia Industry Co. Ltd. Ube City CO Plant Japan Asia/Australia GE 1982
Mitsui CO Plant Japan Asia/Australia GE 1961
Daicel Methanol Plant Japan Asia/Australia GE 1982
Shell MDS (Malaysia) Sdn. Bhd. Bintulu GTL Plant Malaysia Asia/Australia Shell 1993
Nuon Power Buggenum Buggenum IGCC Plant Netherlands Europe Shell 1994
Shell Nederland Raffinaderij BV Pernis Shell IGCC/Hydrogen Plant Netherlands Europe Shell 1997
EPZ Americentrale Fuel Gas Plant Netherlands Europe Sasol Lurgi CFB 2000
Lotos Reffinery Gdansk Poland Europe Shell 2008
Quimigal Adubos Barreiro Ammonia Plant Portugal Europe Shell 1984
Portucel Rodao ACFBG Unit Portugal Europe FW ACFBG 1985
Qatar Petroleum Pearl GTL Qatar Africa/Middle East Shell 2009
Linde AG Singapore Syngas Plant Singapore Asia/Australia GE 2000
Esso Singapore Pty. Ltd. Chawan IGCC Plant Singapore Asia/Australia GE 2001
Sasol Chemical Industries (Pty.) Ltd./Sasol Ltd. Sasol-I F-T Syngas Plant South Africa Africa/Middle East Sasol Lurgi Dry Ash 1955
Sasol (Pty) Ltd. Sasol Synfuels South Africa Africa/Middle East Sasol Lurgi Dry Ash 1977
Sasol (Pty) Ltd. Gasification East Plant South Africa Africa/Middle East Sasol Lurgi Dry Ash 1982
Lucky Goldstar Chemical Ltd. Naju Ammonia Plant South Korea Asia/Australia Shell 1969
Lucky Goldstar Chemical Ltd. Yochon Oxochemicals Plant South Korea Asia/Australia Shell 1996
BP Samsung CO Plant South Korea Asia/Australia GE 1997
Elcogas SA Puertollano GCC Plant Spain Europe PRENFLO 1997
GE Plastics España Cartagena Syngas Plant Spain Europe GE 1997
Akzo Nobel/Berol-Kemi Stenungsund Oxochemicals Plant Sweden Europe GE 1980
Sydkraft AB Värnamo IGCC Demonstration Plant Sweden Europe FW PCFBG 1993

Exhibit 1.1 – World Gasification Plants (cont’d)
Year
ASSI Karlsborg ACFBG Unit Sweden Europe FW ACFBG 1984
Chinese Petroleum Corp. Kaohsuing Syngas Plant Taiwan Asia/Australia GE 1984
BP/Formosa Mai Liao Refinery Taiwan Asia/Australia GE 2004
BP Chemicals, Ltd. Hull Syngas Plant United KingdomEurope GE 1989
Air Products (ICI) Billingham Oxochemicals Plant United KingdomEurope GE 1959
Air Products & Chemicals, Inc. LaPorte Syngas Plant United States North America GE 1996
Dakota Gasification Co. Great Plains Synfuels Plant United States North America Sasol Lurgi Dry Ash 1984
Eastman Chemical Co. Kingsport Integrated Coal Gasification Facility United States North America GE 1983
Frontier Oil & Refining Co. (Texaco Inc.) El Dorado Gasification Power Plant United States North America GE 1996
Premcor, Inc. Delaware Clean Energy Cogeneration Project United States North America GE 2002
Motiva Enterprises LLC Convent H2 Plant United States North America GE 1984
Global Energy, Inc. Wabash River Energy Ltd. United States North America E-GAS (Destec/Dow) 1995
Coffeyville Resources Refining and Marketing Coffeyville Syngas Plant United States North America GE 2000
T & P Syngas (Texaco/Praxair) Texas City Syngas Plant United States North America GE 1996
Tampa Electric Co. Polk County IGCC Project United States North America GE 1996
Dow (former Union Carbide Corp.) Taft Syngas Plant United States North America GE 1995
Global Energy, Inc. Lima Energy IGCC Plant United States North America E-GAS (Destec/Dow) 2008
Millenium (Quantum) LaPorte Syngas Plant United States North America GE 1979
Hoechst Celanese Oxochemicals Plant United States North America GE 1979
ExxonMobil Baytown Syngas Plant United States North America GE 2000
Hoechst Celanese Houston Oxochemicals Plant United States North America Shell 1977

Exxon Chemical Co. Baton Rouge Oxochemicals Plant United States North America Shell 1978
Sunoco Oxochemicals Plant United States North America GE 1983
Dow (former Union Carbide) Texas City Syngas Plant United States North America GE 1983
Texas Eastman Oxochemicals Plant United States North America GE 1998
Air Liquide America Corp. Longview Gasification Plant United States North America GE 2002
Excelsior Energy Mesaba Energy Project United States North America E-GAS (Destec/Dow) 2009
Steelhead Energy Steelhead Energy United States North America E-GAS (Destec/Dow) 2010
Vanguard Synfuels United States North America E-GAS (Destec/Dow) 2008
Lake Charles Cogeneration LLC CITGO Lake Charles United States North America E-GAS (Destec/Dow) 2009
Rentech Development Rentech & Royster Clark United States North America E-GAS (Destec/Dow) 2009
September 14, 2005

25
26
Appendix 2 – Energy Prices
Exhibit 2.1 – WTI Crude Oil, European Fuel Oil and Henry Hub Natural Gas Prices
80
12
70
60 10
50 8
USD/Mmbtu
USD/Bbl
40
6
30
4
20
2
10
0 0
12-Jan-01
25-Jan-02
13-Jun-03
25-Jun-04
8-Jul-05
31-Dec-99
5-May-00
7-Feb-03
8-Sep-00
17-Oct-03
29-Oct-04
4-Mar-05
18-May-01
21-Sep-01
31-May-02
4-Oct-02
20-Feb-04
Resid European Fuel Oil WTI Henry Hub Natural Gas
Source: Scotia Capital; Bloomberg.
27
Notes
28
Notes
29
Notes
30
Appendix A – Important Disclosures

Company Ticker Disclosures*
Agrium Inc. AGU H6

NOVA Chemicals Corporation NCX H4, S
Potash Corporation of Saskatchewan, Inc. POT T
I, Sam Kanes, certify that (1) the views expressed in this report in connection with securities or issuers that I analyze accurately
reflect my personal views and (2) no part of my compensation was, is, or will be directly or indirectly, related to the specific
recommendations or views expressed by me in this report.
The Research Analyst’s compensation is based on various performance and market criteria and is charged as an expense to certain
departments of Scotia Capital Inc., including investment banking.
Scotia Capital Inc. and/or its affiliates: expects to receive or intends to seek compensation for investment banking services from
issuers covered in this report within the next three months; and has or seeks a business relationship with the issuers referred to
herein which involves providing services, other than securities underwriting or advisory services, for which compensation is or may
be received. These may include services relating to lending, cash management, foreign exchange, securities trading, derivatives,
structured finance or precious metals.
For Scotia Capital Research Analyst standards and disclosure policies, please visit http://www.scotiacapital.com/disclosures.
* Legend
H4 The Canadian Index Analyst/Associate, in his/her own account or in a related account, owns securities of this issuer.
H6 The Portfolio Strategist/Associate, in his/her own account or in a related account, owns securities of this issuer.
S Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and
outstanding equity securities of this issuer.
T The Research Analyst/Associate has visited material operations of this issuer.
31
Definition of Scotia Capital Equity Research Ratings & Risk Rankings
We have a three-tiered rating system, with ratings of 1-Sector Outperform, 2-Sector Perform, and 3-Sector Underperform.
Each analyst assigns a rating that is relative to his or her coverage universe.
Our risk ranking system provides transparency as to the underlying financial and operational risk of each stock covered. Statistical
and judgmental factors considered are: historical financial results, share price volatility, liquidity of the shares, credit ratings, analyst
forecasts, consistency and predictability of earnings, EPS growth, dividends, cash flow from operations, and strength of balance
sheet. The Director of Research and the Supervisory Analyst jointly make the final determination of all risk rankings.
Ratings Risk Rankings

1-Sector Outperform Low
The stock is expected to outperform the average total return of the Low financial and operational risk, high predictability of
analyst’s coverage universe by sector over the next 12 months. financial results, low stock volatility.
2-Sector Perform Medium
The stock is expected to perform approximately in line with the Moderate financial and operational risk, moderate predictability
average total return of the analyst’s coverage universe by of financial results, moderate stock volatility.
sector over the next 12 months.
High
3-Sector Underperform High financial and/or operational risk, low predictability of
The stock is expected to underperform the average total return financial results, high stock volatility.
of the analyst’s coverage universe by sector over the next
Caution Warranted
12 months.
Exceptionally high financial and/or operational risk, exceptionally
Other Ratings low predictability of financial results, exceptionally high stock
Tender – Investors are guided to tender to the terms of the volatility. For risk-tolerant investors only.
takeover offer. Venture
Under Review – The rating has been temporarily placed under Risk and return consistent with Venture Capital. For risk-
review, until sufficient information has been received and tolerant investors only.
assessed by the analyst.
Scotia Capital Equity Research Ratings Distribution*
Distribution by Ratings and Equity and Equity-Related Financings*
60% Percentage of companies covered by Scotia Capital

51% Equity Research within each rating category.
50%
40% Percentage of companies within each rating category
26% for which Scotia Capital has undertaken an
30% 22%
underwriting liability or has provided advice for a fee
20% within the last 12 months.
10%
35% 27%
0% 17%
1-Sector 2-Sector Perform 3-Sector
Outperform Underperform
*As at August 31, 2005.

Source: Scotia Capital.
For the purposes of the ratings distribution disclosure the NASD requires members who use a ratings system with terms different
than “buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our 1-Sector Outperform, 2-Sector
Perform, and 3-Sector Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutral
and sell ratings, respectively.
Scotia Capital Equity Research Team
Head of Equity Research Industrials
James McLeod, CFA (assoc. Leslie MacDonald)................................................. (416) 863-7291 Building Products & Machinery
james_mcleod@scotiacapital.com David Tyerman (assoc. Caren Fields) .................................................................. (416) 863-7108
Supervisory Analyst david_tyerman@scotiacapital.com
Claude King, CFA (assoc. Leslie MacDonald)...................................................... (416) 863-7985 Transportation & Aerospace
claude_king@scotiacapital.com James David (assoc. David Buma, CFA) ............................................................. (514) 287-4535
Director of Administration james_david@scotiacapital.com
Erika Osmond ....................................................................................................... (416) 945-4529 Information Technology
erika_osmond@scotiacapital.com Hardware & Equipment
China Strategy Gus Papageorgiou, CFA (assoc. Geoff Darling)................................................... (416) 863-7552
Eric Yan (assoc.)................................................................................................... (416) 863-7714 gus_papageorgiou@scotiacapital.com
eric_yan@scotiacapital.com Devan Moodley (assoc. Alexander Minatel) ......................................................... (416) 863-7430
Consumer Discretionary devan_moodley@scotiacapital.com
Automobiles & Components Software & Services
David Tyerman (assoc. Caren Fields) .................................................................. (416) 863-7108 Paul Steep (assoc. Kris Thompson) ..................................................................... (416) 945-4310
david_tyerman@scotiacapital.com paul_steep@scotiacapital.com
Cable Materials
John Henderson, P.Eng. (assocs. Kevin Kaminski, Warren Hastings) ................ (416) 863-7780 Chemicals
john_henderson@scotiacapital.com Sam Kanes, CA, CFA (assoc. Matthew Protti) ..................................................... (416) 863-7798
Hotels & Leisure sam_kanes@scotiacapital.com
Murray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) 863-2899 Gold
murray_gainer@scotiacapital.com Michael Durose, P.Geo. (assoc. Kevin Best) ....................................................... (416) 945-4526
Media michael_durose@scotiacapital.com
Andrew Mitchell, CFA (assoc. Kent Crosland)...................................................... (416) 863-7268 Metals & Mining
andrew_mitchell@scotiacapital.com Onno Rutten (assoc. Brian Mok, P.Eng.).............................................................. (416) 863-7484
Retailing onno_rutten@scotiacapital.com
Ryan Balgopal, CFA (assoc. Daniel Eisen) .......................................................... (416) 863-7902 Alec Kodatsky (assoc. Jasmit Gouri).................................................................... (416) 863-7141
ryan_balgopal@scotiacapital.com alec_kodatsky@scotiacapital.com
Consumer Staples Paper & Forest Products
Food & Beverages Benoît Laprade, CA, CFA (assoc. Yuri Lynk) ....................................................... (514) 287-3627
Murray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) 863-2899 benoit_laprade@scotiacapital.com
murray_gainer@scotiacapital.com Steel
Food & Staples Retailing David Tyerman (assoc. Caren Fields) .................................................................. (416) 863-7108
Ryan Balgopal, CFA (assoc. Daniel Eisen) .......................................................... (416) 863-7902 david_tyerman@scotiacapital.com
ryan_balgopal@scotiacapital.com Portfolio Strategy
Energy Vincent Delisle, CFA (assoc. Hugo Ste-Marie, CFA)............................................ (514) 287-3628
Energy Equipment & Services vincent_delisle@scotiacapital.com
Peter Doig, CFA ................................................................................................... (403) 213-7331 Quantitative Strategy
peter_doig@scotiacapital.com Darwin McGrath, CFA (assoc. Greg Prazmo) ...................................................... (416) 863-7293
Oil & Gas darwin_mcgrath@scotiacapital.com
Greg Pardy, CFA (assocs. Carl Landry, Gavin Wylie) ......................................... (403) 213-7349 Real Estate
greg_pardy@scotiacapital.com Himalaya Jain, CFA (assoc. Mario Saric, CA, CFA)............................................. (416) 863-7218
Peter Doig, CFA ................................................................................................... (403) 213-7331 himalaya_jain@scotiacapital.com
peter_doig@scotiacapital.com Special Situations
Financials Murray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) 863-2899
Banks & Diversified Financials murray_gainer@scotiacapital.com
Kevin Choquette, CFA ......................................................................................... (416) 863-2874 Anthony Zicha (assocs. Vincent Perri, CA, CFA, Mark Neville) ........................... (514) 350-7748
(assocs. Deirdre Neary, Michael Fricker, Sarika Goel) anthony_zicha@scotiacapital.com
kevin_choquette@scotiacapital.com
Insurance
Telecommunication Services
John Henderson, P.Eng. (assocs. Kevin Kaminski, Warren Hastings) ................ (416) 863-7780
Tom MacKinnon, FSA, FCIA, MAAA (assoc. Airan Friedman, CFA)........................ (416) 863-7299 john_henderson@scotiacapital.com
tom_mackinnon@scotiacapital.com
Health Care Utilities
Campbell Parry, PhD .......................................................................................... (416) 863-7178 Electric Utilities/Gas Utilities
campbell_parry@scotiacapital.com Sam Kanes, CA, CFA (assoc. Matthew Protti) ..................................................... (416) 863-7798
sam_kanes@scotiacapital.com
John Maletic, BSc Pharm, CFA ............................................................................ (416) 863-7708 Economics
john_maletic@scotiacapital.com
Income Units Chief Economist: Warren Jestin ........................................................................... (416) 866-6136
Diversified Income Trusts Deputy Chief Economist: Aron Gampel............................................................... (416) 866-6259
Tony Courtright, CA (assoc. Manash Goswami)................................................... (416) 945-4536 Vice-President & Senior Financial Markets Economist: Andrew Pyle.............. (416) 863-7707
tony_courtright@scotiacapital.com Mark Chandler (416) 945-5252 Steve Malyon (416) 863-7719
Patricia Mohr (416) 866-4210 Pablo Bréard (416) 862-3876
Brian Ector, CFA (assoc. Kristian Schneck) ........................................................ (403) 213-7332 Mary Webb (416) 866-4202 Adrienne Warren (416) 866-4315
brian_ector@scotiacapital.com Portfolio Advisory Group (ScotiaMcLeod)
Chris Blake (assoc. Katie Tabesh, CA) ................................................................ (416) 863-7067 Managing Director: Derrick Strizic, CFA ............................................................. (416) 945-4980
chris_blake@scotiacapital.com
Navdeep Malik (assoc. Maggie Fanari, CA)......................................................... (416) 863-7499 Trading
navdeep_malik@scotiacapital.com Elliott Fishman (416) 863-7860 Dave Stephens (416) 862-3115
Alex Jemetz, CFA (416) 863-7489
Turan Quettawala, CFA (assoc. Matt Sheehan) ................................................... (416) 863-7065 Equity Advisory
turan_quettawala@scotiacapital.com Paul Danesi (416) 863-7735 June Anne Reid (416) 863-7939
Oil & Gas Royalty Trusts Andrew Guy, CFA (416) 945-5332 Gareth Watson, CFA (416) 863-7604
Brian Ector, CFA (assoc. Kristian Schneck) ........................................................ (403) 213-7332
brian_ector@scotiacapital.com
Grant Hofer, CFA (assoc. Karma Roste-Hagen, CA) ...................................... (403) 213-7345
grant_hofer@scotiacapital.com
REITs TM
Himalaya Jain, CFA (assoc. Mario Saric, CA, CFA)............................................. (416) 863-7218
himalaya_jain@scotiacapital.com
TM Trademark of The Bank of Nova Scotia. The Scotia Capital trademark represents the
corporate and investment banking businesses of The Bank of Nova Scotia, Scotiabank Europe
plc, Scotia Capital Inc. and Scotia Capital (USA) Inc. - all members of the Scotiabank Group
and authorized users of the mark. Scotia Capital Inc. is a member of CIPF.
Equity research reports published by Scotia Capital are available electronically via: Bloomberg, First Call – Research Direct
and Multex. Institutional clients with questions regarding distribution of equity research should contact us at 1-800-208-7666.
This report has been prepared by SCOTIA CAPITAL INC. (SCI), a subsidiary of the Bank of Nova Scotia. Opinions, estimates and
projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions
contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or
implied, is made as to their accuracy or completeness. Neither SCI nor its affiliates accepts any liability whatsoever for any loss
arising from any use of this report or its contents. This report is not, and is not to be construed as, an offer to sell or solicitation of
an offer to buy any securities and/or commodity futures contracts. The securities mentioned in this report may not be suitable for all
investors nor eligible for sale in some jurisdictions. This research and all the information, opinions, and conclusions contained in it
are protected by copyright. This report may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may
the information, opinions, and conclusions contained in it be referred to without the prior express consent of SCI. SCI is authorized
and regulated by The Financial Services Authority. U.S. Residents: Scotia Capital (USA) Inc., a wholly owned subsidiary of SCI,
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information or to effect transactions in any security discussed herein should contact Scotia Capital (USA) Inc. at 212-225-6500.
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Coal Gasification.

qxd 9/14/2005 9:02 AM Page 1

September 14, 2005

Sam Kanes, CA, CFA – (416) 863-7798

Note: All values in U.S. dollars unless otherwise indicated.

Exhibit 1 – World Gasification Capacity

Source: U.S. National Energy Technology Laboratory.

Coal Gas History

Exhibit 3 – General Electric’s Integrated Gasification Combined Cycle System

Source: General Electric.

2005 U.S. Energy Bill Supports More U.S. IGCC Plants

China’s IGCC Gas for Methanol and Ammonia/Urea

Exhibit 4 – Chinese Ammonia/Urea Coal Gasification Capacity Additions

Source: Chinese media reports; Beijing Oriental Agri-Business Consultant (BOABC).

Exhibit 5 – Chinese Coal Gasification to Methanol Capacity Additions

2005 China Jiaohua Group, Shanxi 120 Coal

2006 China Yongchen Coal & Power 500 Coal

2007-2008 China Anhui Huaibei/Minmetals/Shanghai Coking 400 Coal

2009 China Hainan/CNOOC 2 1,200

Total Methanol Capacity Additions 2005-2009 9,620

Source: CMAI; Chinese Web sites; Scotia Capital.

Exhibit 6 – Proposed Chinese Coal Gasification to Poly-Product Capacity Additions

Source: CMAI; Chinese Web sites; Scotia Capital.

Exhibit 7 – Chinese Coal Gasification to Poly-Product Capacity Additions

Note: RMB/US$ exchange rate used = 8.09.

Europe’s IGCC Gas-to-Methanol Plants

Exhibit 8 – Poly-Product Flexibility

Source: Veba Oel; Scotia Capital.

Ruhr Oel IGCC Facilities

BASF IGCC Facilities

IGCC Poly-Production Plant Economics

Exhibit 9 – Hydrogen and Industry-Gas Production

Source: Veba Oel.

Exhibit 10 – Gasification and Refiners Partner Well

Source: Veba Oel.

IGCC and GTL Technology Players

Exhibit 11 – Gasification Plants by Technology

Existing IGCC and GTL Technology Features

Exhibit 12 – Recent Projects in China Using Shell’s SCGP Technology

Source: Shell Global Solutions.

Exhibit 13 – Shell’s SCGP Technology – Typical Process Line-up

Source: Shell Global Solutions.

Exhibit 14 – Lurgi’s Technology

IGCC Plant Builders

Existing North American IGCC Plant Owners

AEP is the largest user of pulverized coal to make power

Cinergy, another major user of U.S. coal to produce

Fischer-Tropsch (FT) Technology

Exhibit 16 – Technology Comparison

Source: Rentech Inc.

FT Technology Financial Thoughts – Rentech

Exhibit 17 – Poly-Generation Model – Plant Production Summary

Coal Gasification – It’s a (Syn) Gas, Gas, Gas

China 3 China 3 China Asia/Australia GE 2005

Source: U.S. Department of Energy – National Energy Technology Laboratory.

September 14, 2005

Exhibit 1.1 – World Gasification Plants (cont’d)

September 14, 2005

Source: U.S. Department of Energy – National Energy Technology Laboratory.

Coal Gasification – It’s a (Syn) Gas, Gas, Gas

Coal Gasification – It’s a (Syn) Gas, Gas, Gas

Source: U.S. Department of Energy – National Energy Technology Laboratory.