mini-GTL Project MONETIZATION OF FLARES BY TRANSFORMATION INTO - - PowerPoint PPT Presentation

Saint Petersburg, 21st – 23rd June, 2012

MONETIZATION OF FLARES BY TRANSFORMATION INTO OIL

mini-GTL Project

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

PROBLEM: over $10 bln venting annually

• No valuable solutions for gas

monetizing at remote areas;

• Huge

investments in infrastructure are required;

• Penalties

and political pressure are growing;

• Up to 40 bcm/year is flared

in Russia* (150 bcm abroad);

• More than 300 mln tons of

pollutants are vented;

• No value in gas, zero price,

a feed for flares…

make a great opportunity for monetization

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

mini-GTL SOLUTION: how to turn losses into profits?

Three main steps:

• 1. To buy mini-GTL fnd transform flares into synthetic

liquid (GTL products);

• 2. To compound GTL with mineral oil and to
• 3. To transport the mixture by the existing oil pipeline.

There are five main benefits:

• 1. 100% reduction of and energy wasting and penalties;
• 2. 3 - 4% growth of field’s yield;
• 3. No investments in unprofitable infrastructure;
• 4. Carbon economy benefits;
• 5. No risks of license withdraw.

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

Our Target Market – small remote fields

• The total market size (RF) – up to 40 bcm /year (up to $10 bln), over $20 bln abroad
• The target market niche – up to 20 bcm /year ( up to $5 bln).

Number of fields % of fields / % of APG BIG - 300 mln cm − Settled at good areas; − Very attractive for oil Co 3 – 5% 30 - 35% 5 – 10% 30-35%

85 - 95 30-35%

5 - 10 10- 15 >100

Size (mln cm/year) MEDIUM - 100 - 300 mln cm − Attractive if located at developed areas; SMALL< 100 mln cm − Remote areas, lack of consumers − Unprofitable, better to flare

Most of flares are located at small fields

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

Profitable mini-GTL plant is based

• n two innovative technologies:
• speed increase in 30 times;
• steel intensity reduction in 2

times;

• increase in specific productivity of

the reactor in 2 times;

• rejection of water treatment

and/or oxygen production

• САРЕХ reduction in 2 times;
• ОРЕХ reduction in 2 times.
• speed increase in 8 times;
• steel intensity reduction in 10

times;

• increase in specific

productivity in 7 times;

• increase in transfer of heat in

200 times;

• САРЕХ reduction in 5 times;
• ОРЕХ reduction in 3 times.

IRR of mini-GTL plant exceed 20%**

GazohimPOX technology* OCG/Velocys F-T technology *

*In comparison with SMR or traditional POX process (for GazohimPOX part) and with traditional reactors with fixed-bed catalyst for OCG F-T). ** taking into account the reduction in payments for gas flaring

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

Marketing strategy – getting through

• il majors…

Our key customers – big oil companies and majors:

• Own big amount of small and remote oilfields;
• Need a lot of mini-GTL plants (in case of pilot project success);
• Presented in all oil-producing regions in Russia and abroad;
• Clear business model – direct selling to oil companies.

Expected demand for mini-GTL plant Company 2015 2016 2017 2018 Total

Rosneft* 2 3 4 4 35 LUKOIL* 1 2 3 3 25 TNK-BP* 1 2 1 2 16 Others 3 4 5 5 40 Total 7 11 13 14 116

* working groups with Gazohim Techno LLC

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

IRR of mini-GTL plant exceed 20%

Estimation of economic efficiency by

• perating activities

NPV@15%, th.USD 1 809 IRR, % 15% DPBP, years 17,0 PBP, years 6,5 Estimation of economic efficiency, taking into account the effect of reduction of fines Estimation of economic efficiency, taking into account the effect of sales quota for the reduction of CO2 emissions (Kyoto Protocol) NPV@15%, th.USD 24 119 NPV@15%, th.USD 15 670 IRR, % 22% IRR, % 19% DPBP, years 7,3 DPBP, years 9,3 PBP, years 4,5 PBP, years 5,0 Estimation ofeconomic efficiency, taking into account the effect due to sales of quota for the reduction of CO2 emissions (Kyoto Protocol) and the effect of reduction

• f fines

NPV@15%, th.USD 37 980 IRR, % 26% DPBP, years 5,5 PBP, years 3,8

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

OUR TEAM: all competences are covered

Dolinsky Sergey - CEO, former Head of laboratory of synthetic fuels and nanotechnology of Russian Institute of Fossil fuels, PhD Chemistry - POx technology co-author. Pchelintsev Denis – Deputy CEO, former director of gas processing projects, CEO of Technology and designing institute, PhD Engineering – Project director; Nikolay Usachev - Institute of Organic Chemistry, Doctor of chemical sciences – catalysts science leader, realized a number of catalysts projects for Shell, Amoco, Amoco-BP, Cambrex, UOP. Аnna Lee Y. Tonkovich - Chief Technology Officer (CTO) of Velocys Inc (Oxford Catalysts Group PLC), Doctor of science in Chemistry, FT-technology co-author, Inventor of the year 2010, a consultant

• f the project.

Sergey Medvedev – Financial Director, partner, former Investment Director of TPG-Aurora, Alfa Assets Management , MBA LETI-Lovanium International school of management.

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XVI St. Petersburg International Economic Forum, 21st – 23rd June, 2012

Required capital

Uses of capital

Name mln.USD

Construction of pilot experimental mini-GTL plant

13

OPEX

4

Total

17

Name Amount, USD mln

Sk Foundation GRANT 5 Potential investor 12 Total 17

Sources of capital