Entropy Announces Glacier Phase 2 Final Investment Details

Source: www.gulfoilandgas.com 7/9/2024, Location: North America

Entropy Inc. ("Entropy" or the "Corporation"), a subsidiary of Advantage Energy Ltd. ("Advantage"), is pleased to provide a corporate update including the recent final investment decision ("FID") at Glacier Phase 2 and Entropy's first investment into the clean power generation market.

Glacier Phase 2 Investment Details
Entropy is pleased to announce FID of our second post-combustion carbon capture and storage ("CCS") project, with an onstream date expected in the second quarter of 2026. Highlights of the project include:

All material unabated emissions sources at the Glacier Gas Plant will be captured using Entropy's industry-leading modular CCS ("MCCS™") technology, targeting over 90% efficiency.
Total CO2 capture capacity will be 160,000 tonnes per annum ("tpa"), from nine gas-fired engines plus one gas-fired power generation turbine. This is in addition to the existing Phase 1 capacity of 32,000 tpa.
Total cost of Glacier Phase 2 capture equipment, compression, transportation and storage wells is $127 million, resulting in a capital efficiency of $800/tpa, or $600/tpa for capture only excluding compression, transportation and storage.
All capital expenditures are expected to be eligible for the recently legislated federal investment tax credit of up to 50%, plus the upcoming Alberta carbon capture incentive program of 12%.
All CCS process heat will be supplied from waste heat recovery (0 GJ/tonne external heat).
Parasitic power load is expected to be 10% for capture and 10% for disposal compression.
All CO2 will be permanently disposed of into a saline aquifer approximately two kilometers below the surface, strictly regulated by the Alberta government.
Revenue from the project is contractually underpinned 75% by a 15-year Carbon Credit Offtake ("CCO") agreement with Canada Growth Fund ("CGF") and 25% by a 15-year Power Purchase Agreement ("PPA") with Advantage.

Glacier Phase 2 technology integrates multiple industry-first innovations developed since 2022 while operating Glacier Phase 1, including process design refinements, standardized procedures, enhanced operational strategies identified using EntropyIQ™ data analysis, solvent enhancements, and customized original equipment facilitated by manufacturers.

To achieve commerciality, Entropy has advanced several carbon policy and revenue models including contractually guaranteed offtake via the world's first 15-year CCO. Entropy's investment in Glacier Phase 2 will have no material exposure to potential changes in federal and provincial carbon pricing.

Entropy Entering Independent Power Producer Market with Clean Baseload Power at Glacier
Entropy is pleased to announce its first investment in clean power generation. In conjunction with the Glacier Phase 2 CCS project, Entropy will repower Advantage's Glacier Gas Plant by installing a 15 MW gas-fired turbine and selling power to Advantage via a 15-year PPA while capturing approximately 90% of the CO2 emissions from the turbine. Details of the project include the following:
Entropy will install the modular power plant at a cost of $47 million, providing power and heat for the Glacier plant and Entropy's CCS equipment.
Advantage will receive higher-reliability base-load power at a cost below or equal to the existing on-site generators.
Entropy will install one iCCS Turbine™ module on the gas turbine, capturing CO2 from its exhaust (3.5% CO2 concentration) at no cost to Advantage.
With the more efficient turbine power source, the existing generators will be shut-in, eliminating prior CO2 and methane emissions.
Entropy will compress, transport and dispose of the captured CO2 in an Entropy-owned disposal well.

Injectivity Results from Recently Drilled CO2 Disposal Well for Glacier Project
Injectivity testing at the recently-drilled Glacier 16-15-076-12W6 CO2 disposal well has been completed, indicating an initial capacity of up to 3 million tpa. The well was drilled to 2,115 meters vertical depth with a horizontal length of 2,700 meters for a total cost of $6.7 million. All Glacier Phase 1 CO2 volumes are currently being sequestered in the well, operating at 18% of allowable injection pressures, and Entropy expects the well will accommodate Phase 2 CO2 volumes once commissioned.

Clean Power Data Center Project
Entropy has signed an agreement to jointly develop a data center powered by gas-fired turbines and decarbonized by iCCS Turbine™ technology. The project involves construction of base-load power generation for the data center, while capturing and storing CO2 at an Entropy-developed CO2 storage hub.

Current Outlook for Remaining Unallocated CCO Volumes
With the advancement of Glacier Phase 2, Entropy will allocate approximately a quarter of CGF's initial 600,000 tpa commitment (please refer to Entropy press release dated December 20, 2023). For the remaining offtake volumes, Entropy will seek to optimize the allocations by selecting the highest quality projects with the lowest cost structures and the most committed emitting partners. Engineering design work continues to advance on several projects in Alberta as well as two projects in the United States, although projects which are outside of Canada are unable to benefit from the CCO structure.

Glacier Phase 1 Operational Update
Glacier Phase 1A (16,000 tpa capacity) was commissioned in July 2022 with industry-leading performance. Glacier Phase 1B (16,000 tpa capacity) was commissioned in December 2023, on-schedule and on-budget, integrating several engineering and operational enhancements and doubling the facility's capacity. The expertise that Entropy has gathered while operating this commercial CCS plant has been critical in establishing a competitive advantage and foundational knowledge that was essential for the Glacier Phase 2 FID.

Organizational Update
Entropy is pleased to announce the promotion of Mr. Chris Hooper to the position of Chief Financial Officer ("CFO"). Previously serving as Vice President of Capital Markets, Mr. Hooper has been an integral part of the team, demonstrating leadership and strategic insight in multiple aspects including the CGF investment. In his new role, Mr. Hooper will oversee the financial operations of the Corporation, ensuring effective fiscal management and contributing to ongoing growth initiatives.

Entropy would like to express our great appreciation to Mr. Craig Blackwood, our founding CFO, for his substantial efforts in creating, leading and incubating Entropy within Advantage over the last 4 years. While continuing in his role as CFO of Advantage, Mr. Blackwood will act as an advisor to Entropy, providing valuable guidance, support, and direction to the Corporation.

We are also pleased to announce Mr. Adam Bedard is joining Entropy as Vice President, United States. Mr. Bedard's background in CCS development throughout the United States will be a welcome addition as Entropy advances several projects in California, the Rockies and the Midwest.


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