Smaller scale GTL The roll-out Neville Hargreaves SMi Gas-to-Liquids London, 30
Neville Hargreaves SMi Gas-to-Liquids London, 30th October 2014 Smaller scale GTL The roll-out Velocys Leader in smaller scale GTL • Leader in smaller scale gas-to-liquids technology — 15 years and >$300 million invested in product development — Exhaustive global patent protection (>7,500 granted GTL patent claims) • First class partners offering a complete GTL solution — E.g. Haldor Topsøe, Ventech, Hatch, Toyo, Mourik, SGS, Shiloh • Commercial roll-out underway, first plant committed Solena GreenSky London GTL JV Ashtabula GTL • Well capitalised with strong resources — Facilities in Houston, Texas and Columbus, Ohio, USA and Oxford, UK — Permanent pilot plant in operation 2 The historical face of GTL Mega-scale projects Conventional Fischer-Tropsch reactor 3 Think Smaller TM Smaller is bringing GTL to the mainstream Conventional Fischer-Tropsch reactor Velocys Fischer-Tropsch reactor 5 Think Smaller means... Nothing wasted Smaller scale GTL makes the most of the resources available • Convert undervalued gas into higher value liquid fuels • Unlock stranded or associated gas • Produce oil without flaring gas • Use any type of gas available • Not just gas but biomass and coal 7 Better options Smaller scale GTL offers more companies access to higher value markets • Creates opportunities for producers to diversify and increase revenues • Choose from a range of high value products • Greater breadth of customers, locally and globally • Smaller, lower cost plants need less gas to be profitable (e.g. 150 mmscfd) 8 Moving faster Smaller scale GTL realises profits faster • Shortens the time between concept and being operational • Build plants where the opportunity is – even in remote areas • Accesses markets faster – no need for pipelines • Enables products to be sold locally 9 Velocys smaller scale GTL... Improves the economics Our design leverages standardisation, unlocking opportunities that were previously uneconomic • Typically from 1,500 to 15,000 barrels per day (15 – 150 mmscfd) Reactor manufacture • Our design is specific for smaller scale plants, not just a scaled down large plant • Our components are standardised, reducing costs • Our strategic partnerships allow us to deliver at volume 11 Works anywhere Our plants are modular, so they are easier to ship and easier to install, even in the most remote or challenging locations • Velocys reactors are significantly smaller and lighter than conventional technology • 70% of a plant can be factory-built before installation • Modular components fit in standard containers for ease of shipping 1,400 bpd FT process unit designed by Ventech Engineers 27m L x 14m H x ~12m W • Building is fast, we have reduced the risk of delays, and plants can even be integrated with existing facilities 12 Works for anyone Velocys unlocks more business by working flexibly – allowing companies to capitalise on more opportunities • Smaller projects means more opportunities, accessible to more companies Ashtabula GTL • We have strong partnerships with key players throughout the value chain • Velocys can support all aspects of project development and execution 13 Supply chain Partnership with Shiloh • N. America’s supplier of engineered metal products to automotive industry • Shiloh contributing — Several $M in manufacturing resources — Dedicated team of engineers — Strategic investment in Velocys • Implementing multi-million dollar state-of-the-art production cell — Cost effective mass production — Consistent high quality — In place by year end — Initial capacity supports 10,000 bpd/yr of orders — Plans in place to support a 4x capacity increase Reactor manufacture • Expected lead times are <12 months 14 Catalyst change-out Mourik – certified catalyst service partner • Catalyst change-out in situ — Simple process, little down-time • Mourik trained and certified — Over 30 years experience in catalyst handling — FT catalyst handling provider for Shell’s Bintulu and Pearl FT plants — Completed successful load & unload of a commercial reactor with Velocys catalyst Catalyst loading – Catalyst in inactive, inert state when handled – Protocols finalised and approved for commercial operation by Mourik, meeting their safety standards. – Spent catalyst removed from site by Mourik — Process “fit for commercial application” 15 Velocys In-house capabilities Pilot plant and training facility Supporting sales and delivery • Integrated GTL pilot plant at the Velocys Ohio, USA site • Will provide — Performance data to support differing client designs — Product for client studies — Permanent training facility for plant operators • Platform for — Developing our own field support staff — Demonstrating future product generations Add pilot plant photo Pilot plant 17 Velocys pilot plant 1,500+ hours of successful operations at commercial conditions 18 Resource build-up Rapid growth at the company’s commercial centre Milton Park, UK • 30 employees • Catalyst development Plain City, OH • 65 employees • Reactor design Houston, TX • 14 employees • Process engineering 19 In-house capabilities UK technology centre - catalyst development team • 12 scientists working on FT catalyst development and testing in the UK • Well-resourced laboratory — High throughput screening rig (16 catalyst samples tested in parallel) — 5 rigs for long term performance tests — Nearly 400 FT catalyst samples tested in-house in the last 12 months — On-line gas chromatographs — Range of instruments for physical and chemical analysis of prepared catalysts e.g. porosimetry & chemisorption — Custom equipment to mimic commercial catalyst manufacturing practice 20 In-house capabilities Plain City, Ohio technology centre 21 Intellectual property Largest IP position of its kind • World’s largest microchannel patent portfolio — >26,000 claims in >900 patents — 75 patents granted in 2013 — Over half of patents cover GTL United States Europe/Russia Canada China Granted claims Japan Australia Pending claims South Korea South Africa • High quality — IP cited over 3,000 times in others’ patents — 100% success rate to date defending challenges / re-exams of own patents Other 0 2000 4000 6000 8000 Number of patents expiring 140 120 • IP portfolio has years to run – continually being renewed and extended 100 80 60 Foreign filling and divisional applications yet to come 40 • Pursuing infringers; won UK High Court case and injunction against CompactGTL 20 0 22 Field demonstration • Offshore GTL partners: Toyo Engineering, MODEC and Petrobras • 6 bpd plant mimics complete FPSO-mounted GTL facility 23 Well capitalised To kick-start adoption • Cash placing – September 2014 — £52 million (before expenses); significantly oversubscribed — Priced at 225p per share – a slight premium to market price • Strong shareholder base — Substantial support from existing shareholders; new blue-chip institutional investors • Use of funds — Strengthen balance sheet to support sales (credibility and technology guarantees) — Accelerate market adoption (e.g. project development) — Working capital 24 Commercial projects Commercial plant under construction Oklahoma City, USA • First of its kind in North America • Fully funded by JV between — Waste Management (Fortune 500) — NRG Energy (Fortune 500) — Ventech Engineers — Velocys • Construction underway — Permits received — Major contracts signed — Mechanical completion end of 2015 — Full operation Q1-Q2 2016 26 Healthy pipeline of opportunities For example, Ashtabula GTL Lake Erie • 4,200 bpd plant supplied from Marcellus Ashtabula GTL • Future expansion planned to 10,000 bpd • Initial engineering complete • FID expected end H1 2015 27 GreenSky London Renewable jet fuel in London • Velocys selected by Solena Fuels as FT supplier for commercial 2,500 bpd wastebiomass-to-liquids plant • GreenSky London plant in partnership with British Airways • Competitive selection process after technology evaluation advised by Fluor • BA to provide off-take for jet fuel • Pre-Front End Engineering completed • Site selection announced April 2014 — Site of former Coryton oil refinery in Thurrock, Essex, UK Picture courtesy of British Airways 28 Red Rock Biofuels US DoD sponsored BTL • Velocys selected for 1,100 bpd biomass-to-liquids (BTL) plant — Located in Oregon, USA — Using forestry waste feedstock • Supported by US Department of Defense and US Department of Energy — Received $4.1m phase 1 grant for engineering in July 2013 — FEED study complete — Received a $70m construction grant in September 2014 • Targeting final investment decision H1 2015 • Southwest Airlines to offtake 3 million gal/yr of aviation fuel from the plant 29 Summary Right product, right place, right time • The time has come for smaller scale GTL — Gas arbitrage, shale gas reserves, flare gas, stranded gas, remote locations, energy security, cleaner fuels legislation • Huge market opportunity — 25 million bpd of synthetic fuel could be made by distributed scale GTL • Velocys, the company at the forefront of smaller scale GTL technology — 15 years and >$300 million invested in its unique innovative technology — Exhaustive global patent protection (>7,600 granted GTL claims) — Broad & deep in-house capabilities. With first class partners will deliver a complete GTL solution • Commercialisation underway — Waste Management JV, Ashtabula, GreenSky/BA, Red Rock Biofuels 30 Thank you Neville Hargreaves Business Development Director [email protected] UK office +44 1235 841700 Houston office +1 713 275 5840 www.velocys.com ® "Velocys“, “Think Smaller” and the Velocys logo are trademarks of Velocys 31 Think Smaller
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