Oxy-Coal Project Promises Economic, Environmental Benefits For Upstate New York

Oxy-Coal Project Promises Economic, Environmental Benefits For Upstate New York

July 31, 2007

The oxy-coal and related CCS global market has the potential to generate 3,500 jobs,

$900 million in annual economic impact for New York State over 2012-2020

BUFFALO, N.Y., July 31, 2007 — The Jamestown Board of Public Utilities (BPU), Praxair, Inc., Ecology & Environment, Inc. (E&E), University at Buffalo School of Engineering and Applied Sciences, and Dresser-Rand Group, Inc. announced today a potential carbon capture and sequestration (CCS) demonstration project that could become an international model for future energy development. This world-class project development team, which also includes Foster Wheeler and Battelle Labs, will assess the application of Praxair's oxy-coal technology to BPU's proposed circulating fluidized bed (CFB) clean coal base project. If successful, this will be the first demonstration project of its kind in the U.S.

An initial study conducted by E&E, a Buffalo-based environmental consulting firm, projects that the Jamestown oxy-coal initiative could have the potential to grow into one of the most significant economic development opportunities in upstate New York. "New York State already hosts leading globally-integrated companies that for many years have supplied industrial technologies, power-generation equipment and components to European, South American and Asian markets impacted by the Kyoto protocol and carbon-management initiatives," said George Rusk, vice president E&E. "By leveraging their well established business relationships in the power sector, several local western New York companies are well positioned to benefit from the developing oxy-coal global market and the carbon sequestration initiatives that would be showcased in the Jamestown demonstration project."

According to E&E, economic forecasts indicate that the global demand for oxygen supply systems, CCS and compressors will generate $900 million in annual economic impact and 3,500 new jobs in future years (2012-2020) throughout New York State. Direct annual spending could potentially total $573 million annually. Initially, the Jamestown base project will create 300 construction jobs and generate $29 million in short-term economic impact for the western New York region.

The Jamestown BPU is the largest municipally-owned energy-generating utility in New York State, providing service to the City of Jamestown and the surrounding area for more than 115 years. A final environmental impact study for a new CFB clean coal base plant was approved by the BPU board in May. The study concluded that the proposed project would significantly reduce emissions from its existing coal-fired generation facility. The proposed cost for the CFB clean coal base project is $145 million.

"The BPU has been committed to developing and executing a plan to replace our aging plant facilities in a way that would meet or exceed environmental requirements, striving for carbon- neutral or negative emissions," said John Zabrodsky, BPU chairman. "The environment is a main focus and that is why we continue pursue innovative carbon control technologies that will maximize the efficiency of our operations. The addition of Praxair's technology could take the project's environmental performance to a whole new level, drawing national and international attention to this initiative."

"We are thrilled that the Jamestown CFB project is in a position to play a key role in the demonstration and deployment of advanced CCS technology while continuing to provide low-cost power," said City of Jamestown Mayor Sam Teresi. "Jamestown has historically played a pioneering role on many fronts with respect to providing public power, deployment of hydropower, natural gas and district heating. We are now poised to play a significant role in development of worldwide energy technologies."

Praxair, a Fortune 300 company and the largest industrial gas supplier in North and South America, holds 200 patents relating to oxy-fuel combustion. The company's largest technology center, with 1,400 employees, is located in Tonawanda, N.Y.

"This is an excellent opportunity to demonstrate new, world-class technology right in our own community," said Charles McConnell, Praxair's vice president for gasification and oxy-coal technology. "Demonstration projects are fundamental to building a road map to commercial implementation of carbon-dioxide capture technology in the future."

Oxy-coal technology involves the efficient combustion of coal in a mixture of oxygen and recirculated flue gas. Oxy-coal technology lowers the cost to capture carbon dioxide, a by-product of combustion linked to global warming. Once captured, the carbon dioxide is compressed and transported by pipeline to an underground storage site. Air emissions are reduced by a factor of 10 compared to the best air-based coal-burning technology currently available.

Houston-based Dresser-Rand, with 2,300 employees in New York's Allegany, Cattaraugus and Steuben Counties, could realize an increase in employment ranging from 200 to 500 jobs resulting from the Jamestown base project and other potential oxy-coal projects worldwide. The company is a recognized leader in custom-engineered steam turbines and centrifugal and reciprocating compressors.

"Dresser-Rand is a leading suppler of carbon dioxide compression equipment with nearly one million horsepower of installed capacity globally," said Brad Dickson, Dresser-Rand's vice president and chief marketing officer. "We're excited to be part of this groundbreaking technology that will contribute to our nation's energy independence and environmental stewardship."

From the academic perspective, the University at Buffalo School of Engineering and Applied Sciences envisions the establishment of a UB Education and Research Center in CCS. The Center would cluster a core group of research and education faculty and staff with CCS expertise to study carbon dioxide separation, byproduct utilization, sequestration methods and outcomes and the optimal production of alternative fuels.

"The Center would become an internationally recognized destination where state of the art low-carbon-emission technology can be shared, displayed and disseminated to an international technical community and the general public," said Dr. Harvey Stenger Jr., dean, UB School of Engineering and Applied Sciences. "New senior staff members with doctorates in mechanical and chemical engineering, support staff and undergraduate and graduate students will be recruited for the Center, adding to the career opportunities generated from the project. This is a once-in-a life-time opportunity for our region that we need to bring to the forefront, and collectively make happen."

Contact
Media Contact:
Jason Stewart

Email: jason_stewart@praxair.com

Phone: 1-203-837-2448

Investor Relations Contact:
Kelcey Hoyt

Email: kelcey_hoyt@praxair.com

Phone: 1-203-837-2118