Press Room

Press Release

August 2005

Terra Systems, Inc Acquires Mountain Island Energy, LLC

Price, Utah - Terra Systems, Inc. (Pink Sheets: TSYI - News) -- The Board of Directors of Terra Systems, Inc. (TSYI) has announced that Terra Systems, Inc. has acquired Mountain Island Energy, LLC (MIE).

Following the acquisition, Mountain Island Energy, LLC has become a wholly owned subsidiary of Terra System, Inc.

Mountain Island Energy, LLC brings to Terra Systems, Inc. a number of projects that will contribute significantly to the growth of TSYI. MIE's flagship project is the Soda Springs Power Project.

The Soda Springs Power Project (SSPP) is an independent energy development project dedicated to ultimately building a high efficiency, clean coal power plant in the Soda Springs, Idaho area to meet the growing needs of residential, commercial, industrial, municipal and cooperative power in Eastern Idaho and Western Wyoming.

With the acquisition of Mountain Island Energy, LLC (MIE) by Terra Systems, Inc. (TSYI) comes 423 acres of land which MIE purchased as the proposed site of the Soda Springs Power Plant Project. The land is strategically located near existing industrials and through which high voltage transmission and distribution lines cross.

A feasibility assessment of the proposed power plant site has been completed by Ecology and Environment (www.ene.com) in which no permitting fatal flaws were identified.

Terra Systems, through its new Mountain Island Energy, LLC subsidiary, is focused on planning, permitting, licensing, constructing and ultimately operating the West's first Integrated Gasification Combined Cycle (IGCC) power plant or similar clean coal technology. The Soda Springs Power Project may use state-of-the art advanced Integrated Gasification Combined Cycle (IGCC) technology. The project calls for up to 660 MW of base load power, built in three identical "trains" or sets of gasification equipment of up to 220 MW each. The three trains, together with a fourth spare train for added reliability, will supply synthesis gas ("syngas") produced from coal to three combustion turbine sets to generate electricity. In turn, the waste heat from the combustion turbines is directed to a heat recovery boiler in a combined cycle configuration that uses a single steam turbine to generate additional quantities of electricity. This combined cycle arrangement captures more of the heat content of the fuel and turns it into more electricity than is possible in a conventional coal-fired power plant.

Leading energy analysts predict that IGCC will become the base load technology of choice over the next decades, because coal-fueled IGCC plants are cleaner than the cleanest conventional coal-fueled technology, supercritical pulverized-coal (SCPC) plants, and they generate energy at lower, more stable prices than plants that depend on an increasingly expensive supply of natural gas.

Demand for electric power is increasing. Over the next 3 decades, the domestic power generation market is expected to be driven primarily by the need to add base load generating capacity while replacing aging conventional-coal plants. In order to meet the forecasted need for power, coal must not only continue to meet the current demand for base load power generation, it must also meet the demand for new energy resources. While natural gas was once expected to meet most of the projected new generation capacity, it is now clear that rising costs, dwindling supplies, and priority of use for homes and businesses have made that an impossibility.

According to the Energy Information Administration ("EIA"), domestic coal plant capacity is projected to grow at a rate of 1.1% a year from approximately 300 GW in 2004 to 371 GW in 2025. During this period, it is expected that 75 GW of coal-fueled generating capacity will be retired. It is expected to take 146 GW of new coal-fueled generating capacity to compensate for this projected demand growth and plant retirement expectation.

Coal gasification has been a reliable industrial application in the petrochemical industry for many years. With regard to the use of IGCC for power generation, the Wabash River facility in Terre Haute, Indiana has successfully demonstrated the dependability of IGCC technology on a commercial basis since 1995. Through a process that can produce power from fuel feedstocks with sulfur content up to 7% with virtually no sulfur air emissions, the 262 MW facility powers approximately 250,000 homes. As a result of the success at Wabash and other IGCC plants, such as the Tampa Polk County Florida facility, gasification technologies are now established as a viable technology for power generation.

In addition to the Soda Springs Power Project, through its Mountain Island Energy subsidiary, Terra Systems, Inc. will focus on other energy, carbon and mineral related projects.

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About Terra Systems, Inc.
Terra Systems, Inc. is a clean energy technology company incorporated in 1996 focused on advanced clean coal power generation, enhancement and utilization of waste coal and upgrading of specialty carbon products.

Contact
George Ford
Terra Systems, Inc.
gford3648@msn.com

Note: Certain statements contained herein may be forward-looking statements within the meaning of federal securities laws and Terra Systems, Inc. intends that such forward-looking statements be subject to the safe-harbor created thereby. Forward-looking statements include Terra Systems, Inc. expectations as to the managing and marketing of its businesses within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and our future results that are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Actual results may vary materially from such expectations. Words such as "expects," "anticipates," "targets," "goals," "projects," believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking. Although Terra Systems, Inc. believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that our results of operations will not be adversely affected by such factors. Unless legally required, we undertake no obligation to revise or update any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement.

Company Profile

Terra Systems, Inc. is a development stage company focused on advanced, clean and renewable energy technology applications and projects. TSYI is engaged in the development and commercialization of it's patented pneumatic accelerator system technology and the upgrading of specialty and waste carbon products. Terra Systems was founded in 1996 and is headquartered in Salt Lake City, Utah with a satellite office in Price, Utah.