Tenaska Proposes Nation’s First New Conventional Coal-fueled Power Plant to Capture Carbon Dioxide

Captured CO2 would be sequestered in the Permian Basin and help recover more than $1 billion of West Texas oil annually

ARLINGTON, Texas−Tenaska, Inc. is developing a site near Sweetwater, Texas, upon which to construct a technologically advanced coal-fueled electric generating plant able to capture up to 90 percent of the carbon dioxide (CO2) that would otherwise enter the atmosphere. The carbon dioxide would be sold for use in enhancing oil production in the Permian Basin, resulting in geologic storage.

An air permit application, the first formal step in gaining approval to build the plant, was filed today with the Texas Commission on Environmental Quality (TCEQ), according to David Fiorelli, president and CEO of Tenaska’s Business Development Group.

The proposed construction site is a 1,919-acre tract east of Sweetwater and north of Interstate 20 in Nolan County. The more than $3-billion project will provide a significant boost to the local economy, providing up to 2,000 jobs at peak construction and more than 100 permanent well paying jobs during operation.

The final decision to proceed with the project will be made in 2009 based on a number of factors, including the availability of local, state and federal incentives; final project cost estimates; and projected market prices for electricity and CO2. Current estimates of these factors make the project appear to be economically feasible.

Speaking to a group of Sweetwater business leaders today, Bill Braudt, Tenaska’s general manager of business development, said that “the benefits of this proposed plant are many. It will provide a source of badly needed, environmentally sound electric generating capacity. This plant will use abundant and relatively low-cost coal and help keep Texas electricity prices in check.”

“It is exciting to see this innovation coming to West Texas,” said Texas State Senator Robert Duncan. “Tenaska’s approach to energy generation through the capture of 90% of carbon dioxide and reduced water consumption is unique, and we West Texans pride ourselves on seeking new ways to achieve better results. We expect a strong partnership with Tenaska that will revolutionize this industry.”

Tenaska is working with Sweetwater area officials to determine the feasibility of the project and to provide accurate and timely information to Sweetwater area residents.

Helen Manroe, manager of business development for Tenaska, meeting with Nolan County leaders, pointed out that the Tenaska Trailblazer Energy Center’s captured CO2 “will make a major contribution to the Sweetwater and West Texas economies.

“The carbon dioxide produced and captured by this product will enable Texas to increase oil production and thus reduce the nation’s dependence on foreign oil,” she added.

“Nolan County is home to more wind turbines than any other place in the United States,” said Nolan County Judge Tim Fambrough. “The Tenaska Trailblazer Energy Center builds on this area’s reputation as a location for progressive, environmentally responsible electric generation. We are delighted to welcome Tenaska to our community.”

If built, the plant will be the first new commercial coal-fueled power plant, other than small research projects, to capture and provide for storage of CO2, considered by many a greenhouse gas that contributes to global climate change. As such, it would be a first-of-its-kind breakthrough in environmentally responsible electricity production that has been sought by Texas civic and business leaders, environmentalists and energy consumers.

The CO2 would be captured and transported via pipeline to oil fields in the Permian Basin where it will be used in enhanced oil recovery and stored in the Basin’s geologic formations. CO2 has been used to increase oil production in West Texas for more than 30 years.

The volume of CO2 expected to be sold to oil producers could be used to recover enough oil to add more than $1 billion a year of oil production to the Texas economy.

The approximately 600-megawatt (MW) plant would provide enough electricity to power about 600,000 homes. Construction could begin in late 2009 and be completed in 2014.

Tenaska is a privately held energy company, based in Omaha, Nebraska, that develops, constructs, owns and operates numerous generating plants. The company has developed four generating plants in Texas and continues to own and operate two, Tenaska Frontier Generating Station near Shiro and Tenaska Gateway Generating Station near Mt. Enterprise. A third plant, the Tenaska Kiamichi Generating Station near Kiowa, Oklahoma, also supplies electricity into Texas. Tenaska’s power marketing company, Tenaska Power Services Co., is based in Arlington, along with Tenaska’s Business Development Group.

About Tenaska
Tenaska is an energy company, headquartered in Omaha, Nebraska, that develops, constructs, owns and operates non-utility generation and cogeneration plants. The company also markets natural gas, biofuels and electric power, and provides risk management services. Tenaska is involved in asset acquisition, fuel supply, gas transportation systems, and electric transmission development. Tenaska has developed approximately 9,000 MW of electric generating capacity across the United States. Tenaska’s affiliates own, operate and manage eight power plants in six states totaling more than 6,700 MW of generating capacity. Tenaska Capital Management, an affiliate, manages stand-alone private equity investments. In 2006, Tenaska was listed in benchmarking studies by the Natural Resources Defense Council as having the best record in the United States for fleet-wide average emissions of nitrogen oxides and carbon monoxide. For more information about Tenaska, visit the company’s Web site at www.tenaska.com.

More information about the Tenaska Trailblazer Energy Center and illustrations for press use may be obtained at www.tenaskatrailblazer.com.