Hesham Hussain Process Sales Engineer NG Products

Membrane Technology & Research Inc.39630 Eureka DriveNewark, CA 94560www.mtrinc.com

Membrane Fuel Gas Conditioning SystemsFor Rich Shale Gas / Sour Gases

1

Outline

Introduction to MTR

Technology Overview

Applications

Case Studies

Conclusion

2

Natural Gas:

Petrochemicals: Hydrogen (Refinery): H2/CH4, CO, CO2Propylene/Nitrogen

Fuel Gas Conditioning

N2 Removal

H2S Removal

MTR designs, manufactures, and supplies membrane systems for industrial gas separations

Introduction to MTR

3

20 Years of Commercial Success

A Leader in Membrane and Process Design

Over 160 Patents on Membrane Technology

Over 200 References in Various Applications Worldwide

Myth #1Membrane = Filter

Gas Composition Changed By Membrane

AerosolsFree-Liquid Droplets

Regular Filter Removes free liquids only

Methane 73.168

Ethane 13.534

Propane 9.065

Butanes 0.829

Pentanes 0.518

C6+ 0.614

Methane 84.760

Ethane 8.182

Propane 4.347

Butanes 0.264

Pentanes 0.142

C6+ 0.164

Heavy Hydrocarbons Removed

Methane 73.569

Ethane 13.558

Propane 9.020

Butanes 0.813

Pentanes 0.493

C6+ 0.480

Feed Gas

Fuel Gas

High Pressure

Low Pressure

4

Myth #2Membranes Require Pretreatment

Conventional Glassy Membranes (require pretreatment)

Used almost exclusively for CO2 removal from Natural Gas

CO2 Passes through Heavy Hydrocarbons Do NOT Pass

Prone to damage if Pretreatment is inadequate Liquid condensation on membrane surface

New Advanced Membranes (FuelSepTM/SourSepTM)

Counter-intuitive performance: Heavy hydrocarbons & sour gas preferentially permeate membrane.

Gas is Leaned out in the membrane

Condensation is NOT possible in the membrane

Pretreatment is ONLY a Filter Coalescer5

What Makes Membranes Work?

6

Membrane Structure and Packaging

7

MTR Fuel Gas Conditioning Applications

Fuel Gas Conditioning

HHC Removal FuelSepTM System

Acid Gas Removal (H2S, CO2) SourSepTM System

N2 Removal for Fuel Gas BTU Boost NitroSepTM System

8

Rich Feed Gas Lean Conditioned Gas

Even Richer Gas

Feed Pressure Range: 100 1000+ psig

Permeate Pressure: Lowest available/possible

Feed to Conditioned Gas differential Pressure: 10 20 psid

Scope of Supply

MTR: Manufactures Membranes & Spiral-Wound Modules.

Supplies Complete Skid-mounted Systems.

9

Compressed Gas To PipelinePipeline Compressor

And After-cooler

Slip Streamof Raw Fuel

Gas FromWellhead

Gas Engine

Condensate

Propane 4.60

i-Butane 1.97

n-Butane 1.53

Pentanes 1.74

Hexane 1.05

C6+ 0.91

Propane 1.48

i-Butane 0.52

n-Butane 0.30

Pentanes 0.28

Hexane 0.126

C6+ 0.078

HP

LP

Heavies Return To Suction

Membrane Placement Compressor Applications

10

Issues Raw Feed Gas Very Rich in HHC, especially C2, C3. Engines Cannot be Started Warranties maybe voided Detonation - Engine Knocking, Accelerated Parts Wear Emissions from Engines Exhaust

Alternatives Considered

Engines Drive Compression - CAT Engines Eagle Ford Shale, TX Client (FuelSepTM)

JT Process Refrigeration MembranesSeparated Heavies Phase Liquids Liquids GasLow Temps Hydrate Issues Yes Yes NoReduce Ethane (C2) No No YesLiquids Storage Yes Yes NoMoving Parts No Yes NoRaw Feed Gas BTU Variability Handled? No No Yes

Raw Feed Gas Pressure Variability Handled? No Likely Yes11

January 5th, 2011

Stream Feed GasConditioned

GasMethane Number 47 79LHV (BTU/scf) 1161 960HHV (BTU/scf) 1280 1063

Component (Mol %)N2 0.19 0.33CO2 0.36 0.23Methane (C1) 77.4 94.03Ethane (C2) 13.26 4.04Propane (C3) 5.19 0.88Butanes (C4) 2.46 0.34Pentanes (C5) 0.74 0.11Hexane plus (C6+) 0.40 0.05

Lower Dew Point

Performance Data Compressor StationReduced Heavy Hydrocarbon Content

Engines Drive Compression - CAT Engines Eagle Ford Shale, TX Client (FuelSepTM)

12

Feed GasHeavy Hydrocarbons Recycled To Suction

Compressor Station

Economic Analysis of Membrane InstallationIncreased Condensate Recovery

450 gpd C3+ Additional Condensates Recovered

Fuel

Raw Fuel GasConditioned

Fuel Gas

Total

Condensates

Sent to NGL

Plant

$$ $

Additional

Revenues

per year

C3+ Burned in Fuel

(gpd)532 82 450 $ 200,000

1. Fuel Consumption 0.2 MMscfd2. NGL pricing - $ 50 bbl/d

To NGL Recovery Plant

Raw Natural Gas

Engines Drive Compression - CAT Engines Eagle Ford Shale, TX Client (FuelSepTM)

13

To Summarize..Membrane Impact

Reduced Heavy Hydrocarbons & BTU Content

Increased Methane Number

Added Revenues Condensate Recovery - $$$

Emissions Reductions

Potential to Increase the Total Compressor HP Capacity

Engines Drive Compression - CAT Engines Eagle Ford Shale, TX Client (FuelSepTM)

14

Purpose of test - determine quantities NOx, CO, and VOCs as defined by the Code of Federal Regulations

Engine ran on fuel gas with and without membranes total gas compressed via the engines kept constant @ 4.5 MMscfd in both scenarios.

Caterpillar G3516ULB Reciprocating Internal Combustion Engine (RICE)

Emissions were tested pre and post catalyst to interpret the effect that the fuel conditioning has on both the unit parameters and the catalyst performance

Emissions Field Test - Agave Energy Company

15

Emissions Field Test - Agave Energy Company

16

Rich Fuel Lean FuelParameter Pre-Catalyst Post-Catalyst Pre-Catalyst Post-CatalystNOx ppm 83.85 92.72 84.08 89.54

lb/hr 1.30 1.43 1.30 1.35Permit Limit (lb/hr) 3.04

CO ppm 591.18 28.76 553.19 25.94lb/hr 5.57 0.27 5.20 0.24

Permit Limit (lb/hr) 0.49VOC ppm 115.56 49.00 57.98 21.97

lb/hr 1.71 0.73 0.86 0.33Permit Limit (lb/hr) 0.67

Acknowledgement: Data Provided by Ivan Villa and Jennifer Knowlton, Agave Energy Company

Emissions Field Test - Agave Energy Company

17Acknowledgement: Data Provided by Ivan Villa and Jennifer Knowlton, Agave Energy Company

Parameter Raw Fuel GasNO MembranesConditioned Fuel Gas

With MembranesNo of engines tested 1 x CAT 3516 1 x CAT 3516Total gas compressed per engine (MMscfd) 4.5 4.5

Max capacity per engine (hp) 1,380 1,380Engines HP Load Data 951 951% Load utilized by the engine 72% 62%% increase in compressor capacity due to conditioned fuel gas (Membranes)

- 10%

Increase in compressor capacity due to conditioned fuel gas (Membranes)

-

138 hp(1,380 hp x 10%)

Additional gas which potentially be compressed (per compressor)

-

0.97 MMscfd(XX MMscfd x 10%)

Additional Revenues generateddue to additional gascompressed (per unit)

-

$ 1.2 MM per year(.97 x 1000 x 3.5 x 365)

CAT Engines Fuel Gas ConditioningEQT Marcellus Shale (FuelSepTM)

Stream Feed GasConditioned

Gas

Methane Number 51.9 65.7

LHV (BTU/scf) 1121 994HHV (BTU/scf) 1235 1099

Component (Mol %)Nitrogen 2.509 3.709

Methane71.21

0 79.680

Ethane16.33

0 11.289

Propane 5.877 2.821

Isobutane 0.356 0.156

n-Butane 1.321 0.390

Isopentane 0.083 0.019

n-Pentane 0.266 0.048

Hexane 0.154 0.027

Moisture 1.740 1.740

CO2 0.150 0.121

Acknowledgement: Data Provided by Sherman Smith, EQT Midstream18

CAT Engines Fuel Gas ConditioningEQT Marcellus Shale (FuelSepTM)

Engine Related Shutdowns Pre vs. Post-Installation of the Membrane FGCU

Acknowledgement: Data Provided by Sherman Smith, EQT Midstream19

CAT Engines Fuel Gas ConditioningEQT Marcellus Shale (FuelSepTM)

Feed GasHeavy Hydrocarbons Recycled To Suction

Compressor Station

Economic Analysis of Membrane InstallationIncreased Condensate Recovery

1,640 gpd C3+ Additional Condensates Recovered

Fuel

Raw Fuel GasConditioned

Fuel Gas

Total

Condensates

Sent to NGL

Plant

$$ $

Additional

Revenues

per year

C3+ Burned in Fuel

(gpd)3,222 1,584 1,638 $ 682,000

1. Fuel Consumption 1.0 MMscfd2. NGL pricing - $ 50 bbl/d

To NGL Recovery Plant

Raw Natural Gas

20

Issues Associated With Sour Gas

Sour gas (at remote locations) CANNOT BE USED as fuel due to poor quality & inability to meet vendor specifications

H2S may causes corrosion in the engine components

H2S can Compromise Continuous Operation & Increase Downtime

Emissions (sulfur) Out of Compliance dependent on location.

Health & Safety issues with emission of SOx components from the combustion.

21

H2S Reduction in Fuel Gas BC, Canada (SourSepTM)

Issues 3400 ppm H2S in the Fuel Gas Need to meet Engine Specs Higher Emissions - typical Allowable Sulfur emissions/site.

Amine Unit Scavenger MembranesCost High CAPEX and Installation Costs High OPEX Cost-effective Solution

Reduce C2/C3 No No Yes

Moving Parts Yes Yes No

Footprint Large Moderate Compact

Weight High Moderate LowReplacement Costs Moderate High OPEX Low

Other Issues

Does not remove HHC Does not work for CO2 Permeate recycle

Fouling Concerns Chemical disposal required Acid gas permeate disposal

Not for high Acid gas loads Ideal for Bulk Separation22

Acknowledgement: Data Provided by Mr. Brett Kimpton, Dominion Exploration

H2S Reduction in Fuel Gas BC, Canada (SourSepTM)

23

HYBRID Membrane + Scavenger

Potential For Reduction Of High OPEX For Existing Scavengers

Membranes For Bulk Removal of H2S

Scavenger for Final Fine Polishing of H2S

Existing Compressor Stations with Scavengers

Scavenger

Bulk Removal of H2S Fine Polishing of H2S

High H2SIntermediate

H2S Low H2SMembranes3,000 ppm H2S 100 ppm H2S 10 ppm H2S

24

Existing Compressor Stations with Scavengers

0 2 4 6 8 10 12

Membranes + Scavenger

Total Cost

($)

No. of Years

Scavenger Only

4X

5X

6X

7X

8X

Results

Scavenger H2S Loading Reductions More Than 95%

Less than 1 year Return on Investment

Note:-Total Cost = OPEX + CAPEX- Partial Membrane Replacement assumed every 5 years.

Economic Analysis for HYBRID Scheme

2X

3X

Assumptions

Fuel Consumption 0.4 MMscfd ONE (1) 3608 CAT engine 3,000 ppm H2S in Fuel Gas TARGET Fuel Gas 10 ppm H2S level

25

Far East Early Production Facility Fuel Gas for Reinjection Compressors (SourSepTM)

Stream Name Membrane

Inlet

Conditioned

Fuel

Permeate

Recycle

Temp F 120 93 107

Pres psia 292 282 30

Vapor mole fraction 1 1 1

Component mole %

Hydrogen Sulfide 1.46 0.06 2.03

Carbon Dioxide 43.97 12.27 56.84

Nitrogen 0.19 0.54 0.05

Methane 47.33 83.56 32.62

Ethane 3.14 2.31 3.48

Propane 1.36 0.77 1.60

I-Butane 0.29 0.10 0.37

N-Butane 0.42 0.15 0.53

I-Pentane 0.16 0.04 0.21

N-Pentane 0.14 0.03 0.18

N-Hexane 0.97 0.15 1.30

Water 0.57 0.02 0.79

HYBRID SchemeMembrane + Scavenger

Membrane - BULK Removal1.46% - 600 ppm H2S

Scavenger Final Polishing600 ppm 50 ppm H2S

> 98% Reductions in Scavenger H2S Loading

26

Far East Early Production Facility Fuel Gas for Reinjection Compressors (SourSepTM)

Exxon Mobil Far East

MTR Membrane For H2S/CO2 and Heavies Reduction

Installed 2009

DesignInlet 6 MMSCFDFuel: 1.6-2.0 MMSCFD

Onshore

Removal of 1.5% H2S45% CO2And HHCfrom NG for Fuel

600 ppm H2S/12% CO227

Membrane Placement Power Gen Applications

To Downstream plant

Conditioned Gasto Engine

Slip Streamof Sour Raw Fuel

Very Rich Sour Gas Return to Flare Header, compressor for recycle, or other use

Sour Gas From1st Separator

Fuel Users:Boilers

Gensets

Condensate

28

LP

HP

Stream NameInlet Feed

(Mol-%)Conditioned Fuel

Gas (Mol-%)Methane 72.94 86.95Ethane 9.73 5.68Propane 8.51 3.18Butanes 5.05 1.10Pentanes 1.63 0.30Carbon Dioxide 0.40 0.25Nitrogen 1.22 2.49N-Hexane 0.52 0.06Methane Number 32 65

Pressure (bar) 13.8 10.3Volume (MMSCFD) 5.5 1.8

3 Wartsila Engine GenSet on Petrojarl - I (FPSO)Statoil North Sea (FuelSepTM)

Genset on FPSO with 40% de-rate De-rate reduced to 5% No membrane replacement since installation in 2003

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Component

Gas Compositions

Feed Gas (mol %)

ConditionedFuel Gas (mol %)

Propane 2.000 1.489

C4+ 0.785 0.449

Pressure (psig)

700-900

Flow Rate (MMSCFD)

120 MMSCFD

Gas Conditioning for 500 MW Siemens Power Turbines Curitiba, Brazil (FuelSepTM)

30

Where Can These Membrane Skids be Used?

Remote or Offshore Compressor Stations Currently Derated Due to Raw Fuel Elimination of Engine Derate will Immediately Increase Gas Production/Transportation Volumes

Sour Gas Production Sites without access to clean gas - Elimination of Diesel or Expensive solvent/Scavenger systems.

Derated or High Maintenance GenSets Due to Fuel Quality Elimination of Derate will allow additional power generation for production activities

Offshore Platforms Reduced Power Generation or Compressor Utilization due to poor fuel gas would be eliminated resulting in higher volume gas and oil production

31

Conclusions

Reverse-Selective Membranes Have Been Successfully Proven in Well head Natural Gas Conditioning Applications

More than 200 combined Installations of these membranes Worldwide in Petrochemicals and Oil/Gas Industries.

Standardized Fuel Gas Conditioning Units Designed for Unattended Operation Reduce Deployment Time and Cost

NMHC Emissions Reductions Lowering of BTU value of Fuel Gas

32

Advantages of Membrane Systems

Simple passive system High on-stream factor (typically >99%) Minimal or no operator attention Small footprint, low weight (platforms, FPSO) Ambient operating temperatures in many applications Large turndown ratio Low maintenance Rapid start up and shut down Minimum on-site piping required Significantly lower installation cost as compared to alternatives Handles fluctuating feed gas compositions33

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Other Applications in Natural Gas

Nitrogen Reduction for Pipeline Sales Gas

Bulk Nitrogen Separation

N2 Trimming Applications

Others

Natural Gas Dehydration

Reduce HC & H2O Dew Point (Dry Seal Gas)

Biogas (CO2 removal)

LPG/NGL Recovery

MTR has worked with

Enogex/Enable Midstream Marathon Oil Chesapeake Equitable Starta Production Agave Whiting Petroleum Regency Gas Peregrine DCP Energy Transfer Dominion EQT BP35

Technip Foster Wheeler Worley Parsons Technimont Saipem Fluor

Exterran AG Equipment CSI Gas Services International (GSI) Kentz Caterpillar Kentz Wartsila