NET Power Inc.

Greetings and welcome to the NetPower Third Quarter 2024 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Bryce Mendez, Director, Investor Relations. Thank you. You may begin.

Good morning and welcome to NetPower's Third Quarter 2024 earnings conference call. With me on the call today, we have our Chief Executive Officer, Danny Rice, our President and Chief Operating Officer, Brian Allen, and our Chief Financial Officer, Akash Patel. Yesterday, we issued our earnings release for the Third Quarter of 2024, which can be found on our Investor Relations website along with this presentation at .NetPower.com. During this call, our remarks and responses to questions may include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business. These risks and uncertainties are discussed in our SEC filings. Please note that we assume no obligation to update any forward-looking statements. With that, I'll now pass it over to Danny Rice, NetPower's Chief Executive Officer.

Good morning, everybody, and thanks for joining us. The team has some positive updates for you today. And as we've done on previous calls, I'll provide some overview comments before passing it over to Brian and Akash for the operational financial updates. We continue to focus our efforts on developing and improving our technology at the utility scale, which starts with Baker Hughes' validation testing at our LaPorte facility. We recently kicked off phase one of our equipment validation program with Baker at LaPorte, which will result in the down selection of the OxyFuel burner. I'd like to extend a big thanks to our site team and operational partners for their hard work in getting us to this point. We celebrate this milestone as it marks a critical step towards developing and improving our technology at the utility scale, and we look forward to progressing through our We're excited to announce the selection of Air Lockheed as our air separation supplier for Project Permian Feed, marking another significant milestone for the team. The air separation unit represents one of the major equipment components of a NetPower plant. We look forward to working alongside the Air Lockheed team on Project Permian and future opportunities as we continue to build out our standardized NetPower plant design. Shifting to the next step, we're excited to announce the selection of our air separation plant. In 15 years, we held an investor day in early September where we outlined a recent market study conducted in collaboration with Boston Consulting Group. In summary, the opportunity set for 24-7 low-carbon energy is immense, and our targeted North American competitive markets of MISO, ERCOT, PJM, KISO, and ASO review the serviceable opportunities as high as 2,000 NetPower plants, focusing on the areas with sufficient CO2 storage and infrastructure in place. And again, this opportunity set is before moving into regulated markets with utilities. In our view, by leveraging clean, cheap, and abundant natural gas, NetPower presents as the lowest cost, quickest to market option to provide clean, affordable, and reliable power. And we're focused on executing against our strategic pillars to ensure we can realize this massive opportunity set here in North America. On the market front, we continue to believe the world will be short clean-based load power, and NetPower will be well positioned to be the first to market with a proven and scalable clean power solution. We've seen a handful of announcements lately from tech firms with early-stage nuclear companies, but load growth will not wait a decade for new generation solutions to be proven out. With Project Permian coming online in 2027-2028, we'll be in excellent position to capture a meaningful portion of this demand nearly a decade ahead of other potential solutions. And it's not just getting to market sooner, but it's doing so with solutions without compromise. One of the dual challenges the grid is facing is filling large base load growth with new clean power while also supplying flexible peaking power to the grid. There's no solution today that can do both at the same time, but our oxycombustion cycle inherently can do this. One of the features we've been advancing more thoroughly is the application of our oxygen-based storage, which acts as a battery for our ASU auxiliary load. Our oxycombustion process utilizes oxygen to generate clean power, and storing excess oxygen on site enables us to utilize this oxygen in lieu of the air separation unit, which increases our net electric output. On slide six, we have illustrated this configuration, which we think is an entirely practical and economic way to provide power to co-located assets like data centers while simultaneously providing peaking power to the grid. So the data center complex always receives its 24-7 power, and the grid receives the peaking power of our oxygen-based storage. And in terms of storage and dispatch capacity, a day's worth of oxygen stored equates to 1.2 gigawatt hours, and dispatch can be anywhere from 15 to 80 megawatts. So we're talking extremely large energy storage potential, which we think can be far more economical than traditional battery storage. In commercial conversations, the early response to this hybrid application has been extremely positive, and it's something we're looking to incorporate into many of our originated projects. Additionally, we'll have a small oxygen storage at Project Permian to help validate this application. While the future clean energy mix will certainly require multiple technologies, it's a good time to reiterate what net power is focusing on today. We are actively progressing the financing and -off-take discussions for our first commercial scale plant, Project Permian, based on current market pricing and conditions. Getting our first utility-scale plant financed and operational with safe, reliable operations will change the world and catalyze our future fleet deployments. Meanwhile, we continue to push forward on the origination front. Our origination approach gives us total creative latitude over how we commercialize our technology and how we structure the financial and operational terms around future net power clean energy hubs. We're developing an extensive shadow backlog of projects by tackling the low-dollar early development work now, such that when our first utility-scale project is up and running, we have that visibility into where the next 10-plus originated hubs can go, with each hub with the ability to support 2 to 20 net power plants. At our first originated project in northern MISO, OP1, we continue to support the MISO interconnect process and are progressing through the site and permitting phase. Our interconnect there is sized for 300 megawatts, so our plan here is power from the first plant to the grid to bring reliable clean power to MISO, and any future plants can be connected to the grid for peaking while baseload is servicing co-located load from data centers. We're in a region that we believe could have total CO2 storage capacity for a dozen or more net power plants. Up in Alberta, we recently signed an MOU with a local partner and are jointly progressing through the project feasibility phase, and Alberta is quickly becoming a focus area for data center cooling, proximity to low-cost natural gas for energy, and favorable industry and regulatory environments that support economic growth. Back in the U.S., we're pursuing several MOUs in the western part of the country to establish net power hubs, again, a combination of providing clean power to the grid to restore reliability, plus providing co-located power for data centers. This is the right technology for what the world needs for the coming decades, and we look forward to sharing more information on these opportunities when appropriate. Quick reaction to the election, to the U.S. election, we're on the doorstep of commercializing a breakthrough solution that both sides can get behind, one that the power sector wants to succeed and one that the tech industry needs in order to meet their clean energy needs. We look forward to working with the new administration to facilitate broad commercialization of our clean, affordable, reliable power solution. So with that, I'll hand it over to Brian for the operational updates.

Thanks, Danny. I would like to echo Danny's sentiment and congratulate our LEPOR team and our partners that have worked tirelessly this last year to upgrade the facility and begin plant and combustor test grid commissioning for phase one of the Baker Hughes validation campaign. Thanks to the Baker Hughes team and thanks to Constellation site staff and leadership team that supported us. Together, we managed a set of highly skilled contractors and craft that worked over 140,000 hours to complete these upgrades, all while working safely with no recordable injuries. They installed several new pieces of major equipment, welded over 2,000 feet of stainless steel piping, and installed approximately 80 new instruments and over a dozen new valves to improve the facility's operational flexibility for the upcoming campaigns. It is worth noting that while the initial validation campaigns are targeted towards Baker Hughes combustion system, net power will benefit immensely from the overall plant operation. We have incorporated lessons learned from prior testing, not only in the physical facility design, but in the control system and way we collect and utilize our plant data. The additional plant data will allow us to further improve our plant operations and to celebrate our process simulation models that were the original basis of the plant design. Our goal is to develop highly accurate digital twin virtual models of our demonstration plant of the port and our utility scale plants like Project Permian. We can then apply AI machine learning algorithms to the digital twin to help our engineers more rapidly improve our plant design and performance. Turning to slide 10, the operations team is executing on schedule against our highlighted equipment validation campaigns with Baker Hughes. The first two phases of equipment validation are being conducted in a Baker Hughes combustor test rig shown on the bottom right of this slide. The test rig was assembled in Baker Hughes Florence, Italy facility and installed in Net Powers of the Port demonstration facility during the third quarter of 2024. We recently commenced commissioning of the first phase of Baker Hughes equipment validation at La Porte on schedule. This first phase will ultimately result in the down selection of the combustor burner that will be used in future validation phases at La Porte as well as Project Permian and beyond. In the past couple of weeks, we have been flowing CO2 and oxidant streams through the test rig and dialing in the upgraded plant equipment and controls to ensure the conditions required by Baker Hughes specification are being achieved. It is great to see the plant operating as intended and embarking on this multi-year campaign. Upon successful completion of phase one testing, we will roll into phase two taking the selected oxy-fuel burner and testing it alongside a combustion liner and other hardware to form a single demonstrator size combustion can. The next slide shows some of the Baker Hughes hardware currently in manufacturing in Florence or at their supplier's facilities. As we have mentioned in previous communications, the Baker team is dual tracking the development of the demo scale turboxpander for La Porte and utility scale turboxpander for Project Permian. The left-hand side of this slide shows some of the demonstrator turboxpander components including a single bucket, also known as a blade, a nozzle segment, also known as a vane segment, and the casting of their primary outer casing that will house the combustion cans. On the right-hand side, you can see the utility scale turboxpander's external casing, along with a simplified 3D utility scale turboxpander model. It is great to see hardware in production to meet our Project Permian schedule and demonstrates the concurrent engineering approach that NetPower and Baker Hughes are taking in our turboxpander joint development program. On slide 12, we provide a few updates on Project Permian. We remain on track for initial power generation in the latter half of 2027 to first half of 2028. Yesterday, we announced our selection of Air Lequide as the air separation unit supplier for the Project Permian feed. Air Lequide has been an outstanding partner for years at La Porte, where their adjacent ASU facility supplies us industrial gases and other services. We are excited to continue our relationship with a company that shares our values of technology innovation and focus on sustainability. Regarding the ASU design, we are progressing the feed for a 2 by 50 percent configuration for Project Permian. This configuration entails construction of two separate adjacent ASUs, each one delivering approximately 2,000 tons per day of oxygen, to meet our total requirements of approximately 4,000 tons of oxygen per day. ASUs of this smaller size are easier to transport to Project Permian and the majority of the sites we anticipate building NetPower plants. It is also a more prevalent size in the industrial gas industry and will allow us to leverage a more robust supply chain as we scale into manufacturing mode in the future. During Q3, we publicly announced the signing of our third limited notice to proceed with Baker Q's for a total of approximately $90 million of purchases for long lead materials required to meet schedule for the utility scale turbo spanner and related key process equipment. Additionally, to preserve our schedule, purchase orders were placed for identified long lead electrical equipment denoted here on this slide. The feed for Project Permian with Zachary Group remains on schedule to conclude in the fourth quarter of this year, which will include the cost estimates, schedule, and overall plant design deliverables for the project. Moving into next year, we plan for Zachary's engineering team to roll out of the feed phase and write into continued engineering work with substantially the same team. This work will include detailed design, value engineering where feasible and not impacting schedule, and incorporation of air lequids ASU feed into the overall plant EPC contract. We are underway with Zachary preparing the contract and execution plan for the kickoff of the EPC phase and beginning of construction for the second half of 2025. I will now pass it to Akash for the financial updates.

Thanks, Brian. As mentioned in Brian's comments, Zachary's estimating team is hard at work preparing the total cost roll up for Project Permian, which we expect to receive in December. This initial estimate will be subject to review and negotiation prior to the EPC contract being executed. Similar to other market participants, we expect to see continued inflation in capital equipment and construction costs compared to our previously provided guidance of $1.1 billion for Project Permian. Importantly, we also expect this inflation will be offset by the continued improvement in the market price for clean, reliable power. We are in active negotiations for Project Permian's key supply and off-takes and look forward to sharing more information as they are finalized. Additionally, we continue to work with our existing owner group on the capital formation for Project Permian, which we expect to finalize after fee conclusion and supply and off-take agreements. Moving to slide 14, NetPower continues to prudently deploy our capital, ending the third quarter of 2020-24 with approximately $580 million of cash and investments. In the third quarter, our cash flow use and operations was approximately $8 million, which included a cash payment of approximately $5 million under the Baker Hughes JDA. As mentioned previously, we expect cash flow use and operations to continue increasing as we build out the organization, progress the joint development program with Baker Hughes, and ramp up activity at La Porte. For the quarter, our total capital expenditures were approximately $22 million, comprised of approximately $10 million of capitalized costs associated with ongoing Project Permian development activities and approximately $13 million spent on the Porte modifications and upgrades out of testing. NetPower's fully diluted share count was approximately 249 million shares as of September 30. This was comprised of approximately 215 Class A and Class B vested shares, 19.5 million shares issueable upon the exercise of outstanding public and private warrants, which if exercised would give NetPower an additional $225 million of cash, 2.7 million shares subject to earn-outs or vesting requirements, and approximately 11.5 million authorized shares issueable pursuant to the joint development agreement with Baker Hughes. For a detailed breakdown of our diluted share count, please refer to our annual and quarterly financials on file with PSCC. That concludes our prepared remarks. I'll now pass it back to the operator to open up the line for Q&A. Thanks.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for your questions. Our first questions come from the line of Thomas Merrick with Jani Montgomery Scott. Please proceed with your questions.

Yeah, good morning. Thanks for the time. A couple questions. I'll start with kind of integrating multiple NetPower plants on a single site. Just curious if you can walk through both the opportunities for cost savings and just the challenges of integrating multiple plants, things like shared control rooms, CO2 export compression, ASU, those types of things, and then have a follow-up on the capital equipment inflation.

Hey, Thomas. This is Danny. Good to have you on today. I think I'll cover sort of just the economic proposition, and then Brian can cover some of just the technical operational nuances of it. I think as we look at Project Permian, the first plant, it's going to be first of a kind, the most expensive plant we ever built, and it's going to be a single unit. I think as we look at just getting down the cost down curve, the capex curve for all future plants, those capital improvements are really going to come from a combination of just getting into manufacturing mode and deploying more of these plants, just continuous improvement and iterations from one generation to the next. But we really do see the largest cost savings in terms of overnight cost of a new NetPower plant is really going to come from being able to deploy multiple plants together in a fleet configuration. So I think the nice thing for us sitting here today is not only is it more economic for us to deploy multiple plants together, but it's also what the market's looking for in terms of just new load growth, and not just load growth across an entire region, but load growth at a concentrated site where one location could see demand for a gigawatt or a couple of gigawatts of power. And so what we're really doing now on the origination side is it's really increased that filter level of the scope and the size of the sites that we're looking for are becoming a little bit bigger. I think the nice thing for us is we're starting with such a small footprint. We're talking about 15 acres for each of these plants, and so we're really not starting to look for locations where we have 100 or 200 acres of land, which is not a lot of land, I think, especially when you compare it to the other clean- and alternatives that need a couple thousand acres. So we're talking about being able to have a gigawatt scale sort of fleet deployment on 60 acres. And that's a pretty incredible setup for us that allows us to really start looking at a lot of areas and opportunities that I think most other potential solutions aren't able to look at. So the fleet sort of deployments are really what we're starting to look at. And I think just kind of part and parcel of that is if we're looking at just the sequencing of those deployments, what does it look like? And I think I kind of alluded to it with what we're looking to do up in MISO, and we'll probably do in some of these other regions, which is the first plant or two are going to be going into the grid. The grid needs that power right away. I think a lot of folks on the data center side, especially because this technology is a new type of gas power generation technology, they're going to want to have that redundancy on the power, but they're also going to want to see it active in that area. And so I think just naturally the way you're going to see it play out is the first batch of plants go onto the grid. That also then starts to become the backup power for future deployments. And then those future deployments can be co-located behind that meter. So you have the redundancy of the plant going into the grid. You have the co-located power behind the meter. And like we mentioned in the prepared remarks, you're always going to have that peaking storage capability of the oxygen ox load storage. So we're always able to provide that peaking power back to the grid, even when we're servicing that base load behind the meter co-located. But maybe I'll turn it over to Brian a little bit to give you guys some color on how we're thinking about just the operational side.

Yeah, thanks, Danny. I think you covered it well. Just a few other points is it's not always, if you're doing multiple plants side by side, it's not always necessarily scaling up the equipment. So we would foresee, of course, it's the same turbo standard, it's the same compressors, pumps, but there is significant construction savings just for the EPC to do duplicate power trains. And this plays out in the power industry when you do a, let's say, a combined cycle plant and you're doing multiple turbines that are the same. And there's just significant learnings on the site and spreading of, let's say, your overhead indirect construction costs across a larger facility. And then as you said in the question, there are some items that don't duplicate. You're still going to have one control room and one set of water treatments. So there are pure savings by combining multiple plants with the same site. And then in other cases, it's savings on construction, doing project over project.

Thanks, helpful for both of us. And then on the inflation of capital equipment, just curious on a couple of things. First is, is it electrical equipment and broad based across other components that you need, pipes, valves, fittings, etc. And then are you seeing it more on manufactured finished products or are you also seeing it on the upstream materials for those goods? And that's it for me. Thank you.

Yes, and I'll take that. I mean, right now, what we're getting quotes for directly is the large engineered equipment. So definitely we're seeing it there. If you look at heat exchangers, turbo machinery, electrical equipment, those are the things that we've been either purchasing long leads or getting indicative quotes with our partners. In terms of the bulk, all of that will be coming through really the Zachary feed. So we anticipate, you know, whether it's pipe fittings, valves, all the smaller commodities that will come through that feed estimate. We do anticipate increases, but can't really put a exact number on that at this point.

Yeah, the only other thing I'd add to that is we do have a playbook on negotiating for these things. So we're, you know, we have received indicators. We have still to go through the negotiating process. So even more that we can really say on that point.

Thank you. Our next questions come from the line of Betty Jones with Barclays. Please proceed with your questions.

Hi, good morning. So I want to ask about this oxygen storage opportunity here. One, just help us bring, you talked about one day of extra oxygen storage is equating to 1.2 gigawatt hour. Just how much like, how much spare capacity is currently baked into the base power plant design to generate that excess oxygen currently? Or is that a separate design decision that you have to make from the get go to add in the optionality initially?

Yeah, Betty, thanks for the question. Let me turn it over to Brian to give you just some of the high level things. I would say before I do, you know, it really does become a very customizable sort of decision of how much storage do you want to have on site and how much excess oxygen do you want to be able to produce in order to recharge the battery storage. So it really is going to be on an application by application basis. How quickly do you want to recharge and how quickly do you want to, how much, how many hours or days of storage do you want to have? Brian, any new ideas you want to add to it?

Yeah, sure. So the oxygen storage is inherent in our cycle. You know, we use gaseous oxygen, but we would store liquid oxygen as, let's say, backup. So there always will be some liquid oxygen tank at the site. It's just a question of how do you size it for the minimum we would need just for backup redundancy for startup and so forth. Or do you oversize it for this storage mechanism? And that's why we put a range on the slide that you saw of 10 to 25% of base load. So as Danny said, we'll work with each application, including on Permian. We're considering this right now in our feed, how much we would potentially want to oversize the LOX tank. But yeah, it really comes down to how you would treat a battery, how you would look at the economics and payback of charging and discharging. So it can be oversized. Of course, it takes energy to fill it, which would affect your base load capacity. So this will be something we look at application by application.

No, that's helpful. So maybe thinking through the economic side of this solution, would you be thinking about monetizing this separately? One as in a single net power plant, but the base load is being monetized separately from the peak power.

Right. Yeah, Betty, I think if you think about it through the lens of just selling a license to build a net power plant from our perspective, the customer is really going to look at what's the total intrinsic value of the net power plant. I think everything that we've really been doing internally today has really been focused on the base load power output of this facility. And we really haven't been trying to ascribe much value to this peaking supplement, which doesn't eat into the base load. It's really just supplemental to it. I think now that we kind of see what's kind of happening in the market where you're starting to see these data centers trying to put their power onto these grid systems, you're starting to see a lot of reluctance and just resistance from a lot of these system operators, both on front of the meter, but also on the behind the meter co-located situations. This sort of peaking capability that we can provide to the grid for their benefit, while at the same time servicing the co-located data center really is a solution where I think everybody gets what they want. The data center gets their 24-7 power 365 days a year for a set amount of power. And at the same time, their grid gets the dispatchable peaking power that it needs to be able to meet its nighttime power load, really, as you look at just the cycling of renewables from daytime to nighttime. That's what the grid needs is that sort of dispatchable response power. Right now, I think there's a little bit of a logjam with what's happening on the data center side, both within the RTOs, but also at FERC, where they're really trying to figure out how are we able to meet this load growth with new generation without compromising just the reliability of the grid system. So we're kind of just sitting here today with this inherent solution that's part of that oxycombustion process where we're kind of saying we can do both. We can provide the baseload co-located power that the data centers need, while also at the same time from the same asset meet the peaking capabilities and peaking demand that the grid needs. And so there's real value there, right? If you can provide peaking power to the grid at higher than just 24-hour -the-clock prices, there's real value there. And back to Brian's point in mine earlier on just how quickly you can recharge and dispatch. If that is like a nightly occurrence or if you're in an area where there's weather events, whether it's cold winters or hot summers, you can have those seasonal opportunities to be able to capture much, much higher prices. So there really is a ton of intrinsic value in this oxygen storage peaking capability. But again, it's going to be customized for each market. But I would say if you look at just like the intrinsic value of this oxygen piece relative to the cost to install oxygen storage tanks, our back of the envelope math suggests this is probably the cheapest form of long-duration energy storage. Granted, this energy storage is really in the form of auxiliary load, right, because you're able to turn down your ASU to pick up where that energy is coming from. But no matter how we slice it, this becomes probably the lowest cost long-duration energy storage in the world. So it's a really, really interesting one. And it's something that the market really needs given the struggle to be able to meet both grid demand for reliable power along with being able to meet this 24-7 large load that's coming down the pike from data centers.

Very interesting. Thank you very much for that, Coller.

Thank you. Our next questions come from the line of Pablo Molchanow with Raymond James. Please proceed with your question.

Yeah, thanks for taking the question. In your prepared remarks, you gave some thoughts kind of post-election. I wanted to zoom in specifically on 45Q. Obviously, there will be some conversations in Congress about making changes to the Inflation Reduction Act, potentially cutting some of the stuff out of there. Any concerns that 45Q might be on the proverbial chopping block?

Yeah, no, it's a great question, Pablo. It's good to have you on the call with us today. No, not really. You know, I think when we look at, you know, all of the things that are eligible for the IRA and what things really kind of become those bipartisan solutions, I would say carbon capture is probably near the top of that list because I think if you take a step back and look at what carbon capture enables us to do, one, we think it's the most impactful way to be able to decarbonize. And I think if you look at just what net power is able to offer, just being able to replace every existing coal-fired power plant and carbon-emitting natural gas power plant in the United States with a net power plant, you've eliminated total CO2 emissions from US power generation. And that is the largest source of emissions in the United States is from power generation. So it is the most impactful thing to be able to decarbonize. And so that's certainly one thing that pleases certainly one side of the aisle more than the other. But I think more importantly, especially within this new administration, you know, net power is a unique technology in that it actually leverages fossil fuels. And I think if you look at everything that Trump has been advocating for, increasing fossil fuel development in order to be able to lower energy prices to consumers. And so net power, you know, it's a natural gas-fired power plant. So we actually use that feedstock to our benefit. And certainly within the 45Q, you know, it's not just using natural gas, but it's developing new wells using the natural gas and the oil industry to be able to do that work for us. And so, you know, carbon capture really is a tool that's predicated on the success and the skills of the fossil fuel industry. So obviously, if there's really anything within the IRA that makes it through completely unscathed, it's going to be carbon capture for all the reasons that I just mentioned. And then obviously, you know, the other thing that would be really, really nice to see is an administration that actually supports the 45Q for EOR. You know, right now there's a $60 per ton 45Q credit. If you use the CO2 for EOR, does that go higher to be able to encourage and incentivize even greater oil production? Possibly. It's certainly not our focus area. Our focus area is Class VI permanent geologic sequestration. But I think as we're being able to demonstrate with Project Permian on West Texas, there's a ton of economic and industrial value for being able to take that CO2 and use it in a really, really de-risked way and enhance oil recovery applications. So that's what we're doing on Project Permian to be able to de-risk and catalyze our commercialization. And again, that plays right into the skill set and experience of the fossil industry that has allowed the U.S. to get to where it is today as an economic superpower. So we hope to see the 45Q continue for something like net power. And again, we think if anything makes it through completely unscathed, we think it'll be something like carbon capture.

I appreciate that. I guess in that same context, I'm sure there are kind of backup plans, Plan B for all eventualities. So maybe talk about the kinds of conversations you're having outside of North America. What kind of the international opportunity set looks like?

Yeah, I would say our primary effort, especially because we're really focused on the origination front. Origination really is focused around North America. And the reason is fairly simple. You know, North America is the market where these plants probably have the highest intrinsic value, and it's a function of access to the lowest cost natural gas in the world, access to great CO2 sequestration potential, where there is tangible value in the form of the carbon incentives from the programs like the 45Q or from a carbon tax like you have up in Alberta, Canada. And so North America is just a place where these plants have not just like the highest intrinsic value, but it's also like just the largest markets for us to be able to scale and go after. So North America is certainly our priority. But as we look at some of these other markets around the world that are really, really interesting to us, Australia is starting to pick up steam in terms of interest over there. Southeast Asia is a little bit interesting. I think the bigger challenge there right now is really figuring out where are they going to get access to really low cost natural gas, and what are they going to do on the sequestration side. And so as the market just continues to mature, we're really going to be focused on scaling up here in the United States. And then, you know, as we've mentioned before, you know, conversations in the Middle East are progressing. You know, the Middle East is an interesting place just because they really do have some of the lowest cost gas on the planet. And they do have major power ambitions that just continue to scale. The biggest thing over there is that if they're going to be an incentive on the sequestration side, you can get paid for the sequestration rather than just allowing the free market to go after. And so, you know, these are the markets to put a price on or a value on it. So these other markets are interesting. Europe just needs to get its energy act together altogether. But as they do that, you know, it will certainly, I think it will certainly lead people to see that. So the markets that are going to be looking at power are going to be the lowest cost 24-7 clean power solution. It's just taken a lot of these countries a little bit more time to be able to get there, really to be able to compete with the economics of projects here in the United States and Canada. So we're focused, we think, in the absolute right markets, the absolute biggest markets. And it's nice that this US-based technology is going to be, you know, not just commercialized here in the US, but it's going to be scaled here in the US and Canada really for the benefit of global deployments further down the line.

Thanks very much.

Thanks, Pavel.

Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. I am not showing any further questions. Sorry about that. Our next questions come from the line of Noel Parks with the Two E Brothers. Please proceed with your question.

Hi, good morning. Hey, Noel. Just a couple things. One was wondering about, you mentioned that, or one thing I've been thinking about is, of the various types of partnerships that you already have in place, and some of them extending to additional regions, is there any value in direct partnership with gas infrastructure or pipeline players? Because I'm assuming there are some sites with pretty ready access to the gas supply that you'd need, others where upgrades or expansions might be necessary. So just wondering if that fit into the picture where you are now.

Yeah, it totally does. I think when we create that picture of all of the potential strategic stakeholders that need to come together or that would want to come together as part of these net power hubs, certainly the gas supply piece is a big one. Right. I think one of the interesting things that you're seeing in this space is the folks that do a lot of the gas transportation, whether it's through existing long-haul interstate pipelines or just the regional gathering systems in some of these basins where we're looking to deploy these plants. A lot of those midstream companies are now starting to figure out, I have a tangential skill set in providing CO2 transportation in sequestration. So a lot of the conversations that we're having with folks on the gas supply that happen to have just that regional presence, they're also looking at how can we twin these lines with the CO2 line because it's a skill set they have with being able to construct and operate gas transportation facilities in some of these basins. And CO2 is not terribly different. So the conversations that we're having with folks on the gas supply side, I would say in many of those instances, we're also having similar conversations with them about being able to provide the transportation and sequestration of the CO2 as well. So it's that dual skill set that they provide to be able to do both. And it just becomes another way for them to be able to create value alongside us within some of these hubs. Does that make sense? It does. It's really interesting.

Is there the potential for any of those to sort of provide capital for those, for example, for twinning the lines or is it more of an arm's length sort of vendor situation that they'd be looking to do?

No, I think it would be more strategic with constructing new assets, upgrading, increasing the capacity of certain assets. And I think that's just one of the beauties of NetPower is our plants will be able to increase new demand for natural gas in certain areas that can justify increasing the size of the gas pipeline, while at the same time justifying and being able to underwrite the construction of a CO2 line, just given the volumes that we're talking about coming from our plants. I mean, it's a lot of CO2 that we're capturing, you know, nearly 900,000 tons for each of these plants. And so if you're talking, if we're talking about, you know, a fleet configuration of four to 10 NetPower plants, you're talking about three and a half to nine million tons of CO2 per year. And, you know, three and a half to nine million tons of CO2 per year, you can justify building a 200 to 500-mile pipeline, which is a really, really big pipeline. Obviously, if we do it right, we're putting these plants right on top of the sink. We're really not going to have to build that much CO2 infrastructure. But as we talked about deploying NetPower plants across like the southeast of the United States where there's no great place to store the CO2, you're going to have to build a CO2 pipeline to be able to get that CO2 either back to the Gulf Coast or to the Midwest. And so you're going to need volume to be able to underwrite those investments. And so, you know, NetPower is going to be one of those solutions that's going to be able to help catalyze new infrastructure to be able to decarbonize some of these areas that may not be right on top of these geologic sinks. So I think it does become very strategic and collaborative between us and the gas infrastructure players. They certainly want to see, you know, increased demand for natural gas. And we can provide not only that, but we can provide another revenue line for them, which is the CO2 transport and sequestration on the back end of the plant. So really, really, really strategic and symbiotic sort of relationship between us and the gas infrastructure players.

Thanks, Greta here. Thanks, Noel.

Thank you. I'm sure no further questions at this time. I'd now like to hand the call back over to Danny Rice for any closing comments.

Okay. Thank you, everybody, for joining us today. We're busy at work. We're excited with this testing that we're starting with Baker right now. A lot of things coming down the pike. The open book estimate from Zachary will be coming back later this year. So I look forward to getting back in with you in the beginning of next year to provide additional updates on our path towards commercialization of this -a-kind technology that we think will be coming to market way before anything else. So we have our heads down just focused on executing this plan, commercializing this technology and changing the world. So appreciate your support. Appreciate your participation. And we will chat soon. Thank you.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.