Bitumen Upgrader Residue Conversion to Incremental Synthetic Fuel Products

Organized by:

March 5-7, 2014 NEW ORLEANS, LOUISIANA, USA

HYATT REGENCY NEW ORLEANS

Steve Kresnyak, P.Eng

Jan Wagner, P.Eng

WHOC14-110 1

This presentation contains forward looking statements based on management’s assessments of future plans that involve engineering, operational and financial estimates of future production, capital expenditures, cash-flow and earnings. A number of risks and uncertainties that may or may not be within control of the company and may cause these results to vary materially from those predicated herein and the reader is therefore cautioned that such information is speculative in nature.

Legal Disclaimer

2

• Current State & Outlook Alberta Hydrocarbon Industry

• Introduction to FTCrude® Technology

• Review FTCrude® Process Configurations • FTCrude® Partial Upgrader to produce 20° to 24° API PUB

• FTCrude® Full Upgrader to produce 30° to 38° API Sweet SCO

• FTCrude® Refinery to produce ULSG, ULSD, ULSJ

• Basic FTCrude® Economics

• Summary – Why FTCrude®?

Introduction

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Surplus of Natural Gas in North America – Alberta Gas not competitive in US markets - prices very low and Alberta Royalty recovery 30% of peak

Disconnect between North American NG Price and Oil Price

Alberta Oil Markets Restrained due to lack of Pipelines

Alberta Oil (Non–diluted Bitumen) discounted by 40% from WTI Price

Potential shortage of low cost Diluent to transport Alberta Bitumen

Alberta Oil (Bitumen) has no access to Foreign Markets and cannot enjoy favourable world “Brent” pricing

Alberta Oilsands Image low – “dirty oil”, high GHG emissions

Alberta at risk of NOT achieving GHG emission reduction goals for 2020

Current State of Alberta Hydrocarbon Industry

4

Long Term View of Energy Pricing?

5

Forecasted Growth of Alberta Oilsands

6

TCPL Energy East 850,000 BPD

Enbridge Northern Gateway 525,000 BPD

TCPL Keystone XL 830,000 BPD

Kinder Morgan Exp 590,000 BPD

Future Canadian Oilsands Production = 2,800,000 BPD

Proposed Solution to Alberta Oilsands Market

7

Outlook for Hydrocarbon Industry NG (AECO) Price expected to be less than $4.00 per GJ long term

World Oil price expected to be greater than $100 per BBL long term

Market pressure on Alberta Bitumen reducing value to less than $50

per BBL

Future high growth crude markets will be Asia; China, India

Production of Petcoke facing rising public opposition

Rising public pressure to reduce GHG emissions

Need for more efficient way to create value for 100% Alberta Oilsands Resources without diluent or Petcoke and produce highest quality transportation fuels and lowest GHG emissions to earn respect in world market!

8

Solutions for Alberta

Current Natural Gas Solutions Export gas to high value market – LNG Add value to Natural Gas – GTL, Methanol, DME, Ammonia

Build east/west oil pipelines to tidewater to gain access to new

global markets

Add value to Bitumen through partial or full upgrading - Dilbit does not add value

Add value to Bitumen using “cheap” natural gas

“Convert Bitumen Residues to incremental Synthetic liquids”

FTCrude® concept can offer the solution

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FTCrude® converts asphaltenes and other residues to synthetic fuels

Residues are gasified to produce syngas for subsequent Fischer-Tropsch (FT) catalytic conversion to produce incremental synthetic liquids

Natural gas is used in a parallel syngas generator to provide high hydrogen content syngas to satisfy required stoichiometric ratio for the FT synthesis

This syngas generator also provides hydrogen for the upgrading operation

10

11

FTCrude® Concept Schematic

ADU & DRU

H2

Syngas Treatment

Liquid Residue/Asphaltene

POX Gasifier Unit

H2

Recovery Unit

FT Reactor & Product Upgrading

SMR/ATRReformer

FTCrude®Island

Fuel Gas Treatment

SDA

VDUHydroprocessing

Unit

Diluent

Diluted Bitumen

Naphtha

Diesel

Gas-Oil

Refinery Fuel Gas(RFG)

Light Ends

AGO

VGO

DAO

Light Ends

Natural Gas,

LPG,RFG,

Naphtha, CO2

FT-Naphtha

SynDiesel®SynJet®

FT-LPG

CO2

Oxygen

LiquidSulfur

Fischer-Tropsch (FT) Process

•Natural Gas

•Biomass

•MSW

•Vacuum Residuals

•Asphaltene

•Petroleum Coke

Carbon

Source

POX

Gasifier

•Carbon Monoxide (CO)

•Hydrogen (H2)

•H2:CO = 2

Syngas

Production

•Catalytic conversion

•CO + H2 = Synthetic Hydrocarbon

•FT WAX

Fischer-Tropsch

Conversion

FT Product Upgrading

Zero sulfur, No aromatics, High cetane (70+) Synthetic Fuels

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Conventional Crude Oil

20 to 40 API

12 to 20 API 6 to 12 API

Petcoke Solid Carbon

Carbon Content

Val

ue

in E

qu

ival

ent

Hea

t C

on

ten

t SynDiesel®

SynJet®

Hydrogen Content

Refinery Bottoms

Bitumen Heavy Oil Vacuum Bottoms Asphaltenes

Natural Gas LPG RFG Naphtha

13

Maximum Retention of Carbon

Maximum Conversion of Carbon

Minimum Carbon Rejection – low GHG emissions, high carbon efficiency (90+%)

Maximum Conversion of low value carbon to high value transport fuels

Bitumen

Natural Gas

SynDiesel® SynJet®

FTCrude®

50% to 80% Reduction

100% 90+%

Petc

ok

e / R

esi

d

CO

2

Carbon Management Story

14

FTCrude® Life Cycle GHG Emissions (Jacobs Figure E-6 FTCrude® Process and credit for excess Power Credit added)

AERI-Jacobs LCA Report for North American & Imported Crudes – July 2009

CONVENTIONAL CRUDE OIL

CONVENTIONAL CRUDE OIL

15

Significant Benefits from Integration of GTL Plant with Heavy Oil & Bitumen Production

Typical GTL Plant = 1000 BBL FT Liquid/10 MMSCF Natural Gas FTCrude® = 2000 BBL FT Liquid/10 MMSCF Natural Gas & NO Petcoke

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Integrated GTL Plant

Conventional Bitumen Upgrader or Refinery 60– 137,000 BOPD

Bitumen, Heavy Oil or Refinery Bottoms

High Value Sweet or Sour SCO or Refined Fuels

Synthetic Fuels

Natural Gas, LPG, RFG

30 – 300 MMSCFD

2000 – 30,000 BPD

50 – 100,000 BOPD

Oxygen

Wa

ter

Ste

am

Po

we

r

Op

tio

nal

BT

M B

BL

Hyd

rog

en

FTCrude® Additional Benefits

Process Water

Excess Power

17

FTCrude® Products and Application

All process units within the concept are proven technology and commercial licenses are available

Concept is patented & patent pending technology, licensed by Expander Energy Inc., Calgary, Alberta, Canada

The principal products are high value paraffinic naphtha and diesel/jet fuel

FTCrude® concept can be applied to wide range of applications including Partial and Full bitumen upgrading or bitumen refinery producing all light transportation fuels - gasoline, diesel/jet fuels

It can also be applied as a debottlenecking option to existing upgraders that use gasification of residues for hydrogen production

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0.5 to 1.2 MMSCF/KBBL SCO

Patent Issued & Pending

Conventional Upgrader •ADU/DRU •VDU •SDA •Amine/SRU, SWS

DILBIT

Sour SCO

• Resid Gasifier • FT Process • FT Upgrader • Syngas Generator

50,000 BPD Bitumen 21,500 BPD Diluent 8.5 API 4.5wt% S 17 wt% CCR

21,500 BPD Diluent

Natural Gas

Bit

um

en

Bo

tto

ms

Process CO2

Exce

ss L

PG

/ R

efin

ery

gas

FT L

iqu

ids

Ste

am/P

ow

er

Sulfur

Process Water

<20 Ton CO2/KBBL SCO

BOTTOMLESS PUB 54,500 BPD 20 to 24 API <3.3wt% S

109 vol% Yield

<300 cST @ 15 C <50 ppm metals

SG = 0.92 <4.0 wt% CCR

<1.0 TAN

Oxygen

FTCrude® Partial Upgrader

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Typical Bitumen Assay

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AthabascaBitumenBlend

AthabascaBitumen

Pe

rce

nt O

f C

rud

e S

late

Crude Oils

Naphtha

Distillate

VGO

Vac Residue

21

3.7

38

20

3.5

>40

8.5

4.3

-

API

% Sulfur

Cetane

FTCrude®

PUB Asphaltene Liquid

concentrated in Sulfur & metals

VG

O

DA

O

Vac R

esid

ue

20

Patent Issued & Pending

Conventional Upgrader •ADU/DRU •VDU •SDA •Mild Hydrocracker •Hydrotreater •Amine/SRU, SWS

DILBIT

Sweet SCO

• Resid Gasifier • FT Process • FT Upgrader • Syngas Generator

50,000 BPD Bitumen 21,500 BPD Diluent

21,500 BPD Diluent

Natural Gas

1.0 to 1.6 MMSCF/KBBL SCO

60,500 BPD 30 to 40 API <1000 ppm S 121 vol% Yield

Bit

um

en

Bo

tto

ms

Process CO2

Exce

ss L

PG

/ R

efin

ery

gas

FT L

iqu

ids

Ste

am/P

ow

er

Sulfur

Process Water

<20 Ton CO2/KBBL SCO

Hyd

roge

n

Optional SynDiesel® & SynJet®

Oxygen

FTCrude® Full Upgrader

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AthabascaBitumen

Blend

AthabascaBitumen

Perc

en

t O

f C

rud

e S

late

Crude Oils

Naphtha

Distillate

VGO

Vac Residue

21

3.7

38

>34 <0.09 >40

8.5

4.3

-

API % Sulfur Cetane

FTCrude®

SCO

Hydro

Cracker

Asphaltene Liquid concentrated in Sulfur & metals

VG

O

DA

O

Vac R

esid

ue

Typical Bitumen Assay

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High Product Yield

137% vol yield

68,500 BPD

Patent Issued & Pending

Conventional Refinery •ADU/DRU

•VDU

•SDA

•Full VGO Hydrocracker

•Gasoline Reformer /FCC

•Hydrotreater(s)

•SWS, Amine/SRU

DILBIT

ULSJ Jet Fuel

• Resid Gasifier

• FT Process

• FT Upgrader

• Syngas Generator

50,000 BPD Bitumen

21,500 BPD Diluent

21,500 BPD Diluent

Natural Gas

2 to 2.6 MMSCF/KBBL SCO

Ma

xim

um

Bit

um

en

Bo

tto

ms

Process CO2

Ex

ce

ss

LP

G/

Re

fin

ery

gas

FT

Liq

uid

s

Ste

am

/Po

wer

Sulfur

Process Water

<20 Ton CO2/KBBL SCO

Hyd

rog

en

ULSD Diesel

ULSG Gasoline

Oxygen

FTCrude® Refinery

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Typical Crude Assays

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

WTI AlaskaNorthSlope

ArabianMedium

AthabascaBitumenBlend

AthabascaBitumen

CanadianSweetSCO

FTCrudePUB

FTCrude®SCO (min)

FTCrude®SCO (max)

FTCrude®Refinery

Pe

rce

nt

Of

Cru

de

Sla

te

Crude Oils

Naphtha

Distillate

VGO

Vac Residue

39.6 0.49 45

30.

3

2.5

32 0.9 38

21

3.5

>50

8.0 4.3 -

21 3.7 38

API % Sulfur Cetane

32.2

0.16

35

>35

<0.09

>50

>35

<0.09

>50

>50

<0.00

>50

24

FTCrude® Economic Feasibility Chart

0

5

10

15

20

25

30

50 60 70 80 90 100 110 120 130

Rat

e o

f R

etu

rn (

%)

WTI ($CDN/BBL)

NG-$3/GJ

NG-$6/GJ

NG-$12/GJ

Natural Gas

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FTCrude® Partial Upgrader Economics

CAPEX for 50,000 BPD FTCrude® Partial Upgrader

= $1,600 M total over 2 years

Revenues

• FTCrude® PUB Sales 54,500 BPD X $75/BBL X 347 day/yr = $1,418 M/yr

Estimated Operating Cost

• Bitumen Feed Cost 50,000 BPD X $50/BBL X 347 day/yr = $ 868 M/yr

• Oxygen Supply 1050 TPD X $50/Tonne X 347 day/yr = $ 18 M/yr

• Natural Gas Requirement 60 MMSCFD X $4/MSCF X 347 day/yr = $ 83 M/yr

• Additional Fixed Opex 4% X Capex = $ 64 M/yr

Net BT Revenue = $ 385 M/yr

Est BT IRR = 22% Est NPV@15% = $703 M 1 PUB

Value= $WCS +$5= $75 per BBL Note 2: Cost of Diluent Use – Cost Recovery = $

Note 1: PUB Value = $WCS + $5 = $75 /BBL

Note 2: Cost of Diluent Use = Cost Diluent + Handling – Cost Recovery = $20 / BBL Bitumen

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Est Capex for 50,000 BPD FTCrude® Refinery

= $4,600 M total over 2 years Revenues

• FTCrude® Synfuel Sales 68,500 BPD X $120/BBL X 347 day/yr = $ 2,852 M/yr

Estimated Operating Cost

• Bitumen Feed Cost 50,000 BPD X $50/BBL X 347 day/yr = $ 868 M/yr

• Oxygen Supply 1850 TPD X $50/Tonne X 347 day/yr = $ 32 M/yr

• Natural Gas Requirement 143 MMSCFD X $4/MSCF X 347 day/yr = $ 198 M/yr

• Additional Fixed Opex 4% X Capex = $ 180 M/yr

Net BT Revenue = $1,574 M/yr

Est BT IRR = 30% Est NPV@15% = $4,687 M

Note 1: Cost of Diluent Use = Cost Diluent + Handling – Cost Recovery = $20/BBL Bitumen

FTCrude® Refinery Economics

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Summary - Why FTCrude®? All process units are proven technology and commercial licenses

available – low technical risk

100% conversion of Alberta Bitumen to high value transportation fuels

Greater than 120% volume yield of refined products to bitumen supply

Greater than 50% GHG emission reduction through high carbon retention/conversion by the system

Concept is economically robust for a wide range of natural gas and crude oil prices (gas as high as $12/mmbtu)

Concept will benefit from long term pricing -natural gas (<$5/mmbtu) and high crude oil prices (~$100/bbl)

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QUESTIONS? Steve Kresnyak, P.Eng Chief Technology Officer Expander Energy Inc. s.kresnyak@expanderenergy.com (403)-819-4211 Jan Wagner, P.Eng Chief Process Engineer Expander Energy Inc. j.wagner@expanderenergy.com (403)-472-1280

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Thank you

Bitumen Upgrader Residue Conversion to Incremental Synthetic Fuel Products

Steve Kresnyak, P.Eng

Jan Wagner, P.Eng

WHOC14-110 30