Natural Gas as Feedstock for the Industry Israel Energy and Business Convention Tel Aviv, November 2014 Uwe Zwiefelhofer, The Linde Group This Presenation will... 1. ... introduce current and emerging technologies for conversion of natural gas into petrochemicals, 2. ... discuss the potenial for Israel to develop gas based petrochemical industries and 3. ... explain, why Linde has experience to talk about these topics. 2 The Natural Gas Value Chain (excl. energy) There is more to come …. Proven technologies Ammonia Fertilizer Chemicals Emerging technologies Classic chemicals MTBE, Formaldehyde MTO Syngas Methanol MTG First projects outside China in preparation DME Ethanol MEG Fischer Tropsch Direct Conversion* Direct Fermentation GTL large/medium scale proven, small scale under development Higher Alcohols Ethylene * Siluria in cooperation with Linde 3 The Natural Gas Value CHain Value creation of different products Todays market prices of NG based products Higher Alc. GTL Feedstock Cost Fixed Opex LNG Capital (10% recovery) Ammonia Margin Methanol Urea assumes $6 mmBtu NG price 0 500 1.000 1.500 USD per ton Emerging technologies are more efficient. Its economics are less depend on gas price. 4 This Presenation will... 1. ... introduce current and emerging technologies for conversion of natural gas into petrochemicals, 2. ... discuss the potenial for Israel to develop gas based petrochemical industries and 3. ... explain, why Linde has experience to talk about these topics. 5 Developing a Natural Gas based Petrochemical Industry Investment criteria What do investors look for? 1. 2. 3. 4. Feedstock availability Feedstock price Proximity to markets Local investment conditions (risk profile) 6 Natural Gas based Industries Feedstock Prices and availability today and in future Figures in USD/MMBTU Russia USA 8 8 6 6 4 4 2 2 0 0 Today Forecast 2025 8 Trinidad Venezuela Today Forecast 2025 MENA 8 6 6 4 4 2 2 0 0 Today Today Forecast 2025 Floor price with formula Forecast 2025 Gas prices in existing hubs are predicted to stay below 6 USD/MMBTU in 10 years from now. Scource: Fertecon 7 Natural Gas based Industries (excl. energy) Regions of Growth in NG based commodities (excl LNG) Figures in mil. tons installed capacity 60 50 40 30 20 10 0 USA Others Ammonia Methanol 60 50 40 30 20 10 0 Russia Today Today Forecast 2020 60 50 40 30 20 10 0 South America 60 50 40 30 20 10 0 MENA Today Today Forecast 2020 Forecast 2020 Forecast 2020 Investment in NG based commodities happens in regions with high feedstock availability, low price and low risk profile Scource: Fertecon, ICIS 8 Global Ammonia Capacity Increase Capacity expansions driven by either low cost feedstock (<5$/ mmBtu) or captive markets Regional NH3 capacity changes based on NG, 2012-2025 (MTPA) Oceania Low cost feedstock Africa Low cost feedstock Middle East Europe Brazil: Import substitution Latin America Low cost feedstock North America Low cost feedstock CIS Indonesia: Low cost feedstock Asia 0 2 4 6 8 10 Large scale projects relying on export of ammonia compete in a market based on low-cost natural gas. 9 9 Developing a Natural Gas based Petrochemical Industry Israel's challenge Investors choices: In export driven commodity markets, investors have the choice to select the most favorable location globally. Israel's choice – leverage on its advantages: 1. Use gas to replace imports with domestic production. national interest. 2. Develop new industry for high value gas based products. 3. Refrain from competing in commodity driven markets due to high gas price and low logistics costs. 10 This Presenation will... 1. ... introduce current and emerging technologies for conversion of natural gas into petrochemicals, 2. ... discuss the potenial for Israel to develop gas based petrochemical industries and 3. ... explain, why Linde has experience to talk about these topics. 11 The Linde Group Overview Founded 1879 Sales € 16,7 billion Employees ~63,500 Countries >100 Linde Engineering Linde Gas Technology-focused EPC World-class operations Air Separation Global #1 Global #2 Olefins Global #2 12 HyCO Tonnage Plants Hydrogen/Syn Gas Natural Gas Global #3 Leveraging Synergies >100 plants CO2 Plants >100 plants ASU Tonnage Plants >300 plants ECOVAR Std Plants >1,000 plants 6500 engineers - Assets in operation US$ 20 bn - 5,500 operating staff 12 Linde Group in the Natural Gas Value Chain More than 500 process plants engineered and constructed Well Feedstock Methane Natural Gas Base Products Value Add Products LNG Ammonia Syngas/H2 Methanol Power Fuels (GTL) Plastics NGLs (C2+) Ethylene Chemicals Linde's technologies and EPC capabilities Linde builds, owns and operates plants 13 Linde Group in the Natural Gas Value Chain A glimpse of references 600 tpd Ammonia Australia Syngas/Methanol USA 900 tpd LNG Norway NGL, 2x390 tm³/h feed gas Thailand 14 Linde Ammonia Concept (LAC) Comparison of LAC process with conventional scheme Conventional Ammonia Plant CO2 Air Feed Desulfurization Primary Reformer Secondary Reformer HT Shift LT Shift CO2 Removal Methanation Ammonia Synthesis NH3 Inertgas Unit Purgegas Separation Linde Ammonia Concept (LAC) Feed Air Desulfurization Primary Reformer Isothermal Shift PSA Ammonia Synthesis NH3 Nitrogen Unit 15 Linde Ammonia Concept (LAC) The solution for Israel Linde Ammonia Concept (LAC) Feed Air Desulfurization Primary Reformer Isothermal Shift PSA Ammonia Synthesis NH3 Nitrogen Unit The most economic solution for smaller ammonia plants (< 500 ktpy): Less process units, less catalyst, lower gas volume result in simpler plant design, lower CAPEX and lower OPEX, higher plant reliability. 16 Linde Ammonia Concept (LAC) Some key figures Phosphate Hill, Australia - 600 mtpd NH3 Cooling Water System Offsites, Utilities Flare System Process Plant Emergency Fire Fighting Power System System Ammonia Storage & Loading Construction period: • 3 years Instrument Air Waste Water System Treatment Employment effect: • during construction: up to 2000 workers on site • during operation: approx 100 on site (80% engineers/ technicians) approx 200 - 300 in adjacent service industries (maintanence, logistics, catering, etc) 17 Summary • Natural gas as feedstock for fuels and petrochemicals will continue to grow. • Israel has potential to add value to its NG resources but needs to make the right choices. • "Small is beautiful" – Linde Ammonia Concept suits Israel needs. 18
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