2018-06-01_REVISION - C1980007 (3)

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Table 3: Economic Indicators - 10 Year Flaring Project Economic Indicators - 10 -yr Project Evaluation Scenario Flaring Gas Forecast - p50 (billion cubic feet) 6.7 Total Capital Expenditures (CAPEX in million USD) $12.54 Total Operational & Maintenance Costs (OPEX in million US $3.50 Project Emission Reductions with GWP of 25 (million tCO2e) 2.64 Project Emission Reductions (thousand tonnes Carbon) 720.32 CAPEX/Tonnes CO2e $6.07 CAPEX/Tonnes of C $1.66 Total Cost of Carbon Reductions ($/tonne of CO2e) $20.90 Total Cost of Carbon Reductions ($/tonne of C) $5.70 Carbon Price (USD/tCO2e) $14.75 Net Present Value (p50 NPV value in million USD) $6.51 Internal Rate of Return (p50 I RR value in %) 121.5% Return On Investment (p50 ROI value in %) 80.6% The project shows a very positive economic outcome under the current scenario, paying out before the end of the first year, meaning that revenue generated from the sale of carbon credits is greater than the sum of the initial investment and operating expenses in the initial year, and every year thereafter during the project life. With a carbon price of $14.75, the project returns pso values of $6.51 million USD for the NPV, 121.5 percent for the IRR, and 80.6 percent for the ROI. Even considering the very conservative p90 values, the project returns a favorable NPV of $4.5 million USD, an IRR of 96.7 percent and an ROI of 54.4 percent. Recommendations for Improving Economic Performance of a Flaring Project The available GVB production does not include any contribution from production from existing GVBs put into operation prior to project start-up. The current design of the flare can handle a 20 percent increase in gas without reconfiguring, thus transporting additional gob gas from these existing GVBs to the flare site to be destroyed would increase the economic outcome of the project. The largest single capital expenditure is the flare system; however, it only represents three percent of total capital costs. Other remaining costs include the wellheads, gas gathering, monitoring equipment and controls. The operating and maintenance costs used in our analysis were just 17 percent of the operating and maintenance costs used by the firm hired by MCC in their analysis, which is the primary reason that our results are much more favorable; the reasons for this difference are our cost estimate calls for a significant reduction in all labor categories, the lack of need for the larger 10 inch SDR pipe 19