WELL POWER ENERGY LLCRe-Completing Gas Wells

In Mississippi and Texas

Using Linear Driver Technology

Frank Smith, PresidentSologen Systems LLC

January 12, 2010

WHY IS THE INTERNATIONAL PRESS INTERESTED IN A GEOTHERMAL PROJECT IN TEXAS?

GENERATION TECHNOLOGY COMPARISON

Traditional Generation Renewable Generation

NUCLEAR COAL GAS WIND SOLAR THERMAL

GEO THERMAL

Targeted Generatio

n

Baseload Baseload Baseload & Peak

Variable Variable Baseload

Total CostPer MW

$4.8 M $3.2 M $0.9 M $2.5 M $11.4 M $0.75 M

Fuel Cost /MM

Btu

$0.80 $2.40 $8.60 $0.00 $0.00 $0.00

Capacity Factor

85% 85% 50% 34% 41% 90%

Cost of Electricity

8.5¢ 10.5¢ 10.5¢ 12.5¢ 21.0¢ 9.0¢

Emissions None High Medium None None None

Water Use High High Low – Medium

None High None

Source: CPS Energy, August 10, 2009 (geothermal added)

TEXAS ENERGY FACTS:

Texas consumes almost 12% of the energy used in the United States

California is second; 38% lower than Texas Electricity accounts for over 30% of energy use

Source: Texas Renewable Energy Resource Assessment, Dec 2008

TEXAS ELECTRICITY FACTS: 1995-2006

Peak demand has increased by 33.6 %, from 46,668 MW to 62,339 MW

The population of Texas has increased by approximately 28%, from 18.7 million to 24 million.

Retail sales of electricity in Texas have increased by 30.2%, from 263,278,592 MWh to 342,724,213 MWh

Retail electricity cost has increased by 221.8%, from $16.0 billion to $35.5 billion

The average retail price of electricity in Texas has increased by 70%, from $0.061 per kWh to $0.104 per kWh.

Source: Texas Renewable Energy Resource Assessment, Dec 2008

TEXAS GEOTHERMAL FUN FACTS Since 1960 there have been over 534,000 oil

and gas wells drilled in Texas The ground water temperature around San

Antonio has temperatures as high as 118ºF Geopressure wells in the Texas Gulf Coast are

able to flow with pressure up to 15,000 psi to the surface and if not controlled would shoot hundreds of feet into the air.

The hottest well recorded is 510ºF @ 23,800 ft east of Victoria, Texas

BUT, there is no significant geothermal electricity development in Texas!

TEXAS RENEWABLE ENERGY POTENTIAL

Resource Total Physical Resource

(quads*/yr)

Accessible Resource

(quads*/yr)

Energy Density

(MJ/m2/yr)

SOLAR 4,300 250 8,000

WIND 22 7 500

BIOMASS 9 1 500

WATER 0.10 0.02 10

GEOTHERMAL 400,000 81,000 600

*1 quad = 293,071,000,000 KWh or about 8 BILLION gallons of gasoline

Source: Texas Renewable Energy Resource Assessment, Dec 2008

ORGANIC RANKINE CYCLE – BINARY CYCLE

Works on the principle of thermodynamics Hot liquid is brought to the surface from a

well The hot liquid enters a heat exchanger to boil

a “working fluid” to create steam to turn a turbine

The turbine is connected to a generator The cooled liquid is either pumped back into

the ground or separated at the surface An efficient system if there is a significant

temperature difference between the hot liquid and the working fluid.

ENHANCED GEOTHERMAL SYSTEMS

Linear Drive Engine aka “Free Piston” Engine Patented Systems Exclusive North America License Combines existing technologies for a new

application High efficiency

How is it different from traditional Geothermal?

Captures Kinetic Energy EARTH PROVIDES THE SYSTEM ENERGY

(GEOPRESSURE and GEOTHERMAL)

LINEAR DRIVER TECHNOLOGY Works on the principle of Kinetic Energy, not

thermodynamics Kinetic Energy = ½ Mass times Velocity2

Uses Organic Rankine Cycle, but uses the wellbore as the heat exchanger as follows:

Liquid CO2 is pumped down to the bottom of the well where hot brine is. CO2 instantly flashes to gas creating high pressure and water “lift”

When velocity of the brine increases linearly, the power increases exponentially

The high velocity brine enters the Linear Driver where it drives a piston and creates energy

WELL CONVERSION Our principal strategy is to convert existing

oil and gas wells and turn them into electrical power producers using our proprietary Linear Power Technology.

Converting wells to electric producers does not present any significant challenges.

EARLY LINEAR DRIVER – “BIG BLUE”

REENGINEERED LINEAR DRIVER

ELECTRICITY PRODUCTION PER MW

Power Purchase Agreement with utility company $90/MWh (9¢/kWh)

24 hours/day * 365 days = 8,760 hours per year

8,760 hours * $90/MWh = $788,400/year

GOVERNMENTAL ASSISTANCE

Production Tax Credits (“PTC”) = $21 / MWh PTCs continue for 10 years!

8,760 hours * $21 / hour = $183,960 PTC/MW/yr

$183,960 * 10 years = $1,839,600 in PTCs/MW

5-year MACRS Depreciation – depreciate project cost over a five year period

ANNUAL WELL PRODUCTION

Per MW 2 MW Well 5 MW Well

Electric Production

$788,400 $1,576,800 $3,942,000

Tax Credits $183,960 $367,920 $919,800

TOTAL $972,360 $1,944,720 $4,861,800

Capital Cost $750,000 $1,500,000 $3,750,000

INITIAL OPPORTUNITY

Special Purpose Entity for Investment 4 wells in Mississippi

High power wells – estimates 5-10 MW / well 5 wells in Texas

Typical wells – estimate 2.0 MW / well Offer to include Production Tax Credits Offer to include Depreciation Offer to include Electricity Sales