Ppt131022 Oil Council N America 2013

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Smaller scale GTLThe Oil Council N. America Assembly

Roy Lipski, CEOOctober 22, 2013



Velocys

• Leader in smaller scale gas-to-liquids technology— 15 years and >$300 million invested in technology development

— Exhaustive global patent protection (>7,500 granted GTL patent claims)

• First class partners offering a complete GTL solution

— Onshore: Haldor Topsøe, Ventech, Petrofac, Hatch, Toyo Engineering

— Offshore: MODEC, Toyo Engineering

• Commercial roll-out underway

• Well capitalized with strong commercial and technical teams

— Operating from 3 main facilities in Texas, Ohio and the UK

2

Leaders in smaller scale GTL

BA’s GreenSky London

Ashtabula GTL



Market environment

• Shale revolution ushering ageof “gas surplus”

• Long-term stability of gas-oilarbitrage expected

• Other favorable drivers— Growing demand for middle

distillate (diesel and jet)

— Energy security

— Environmental benefits e.g. flare elimination and carbonfootprint reduction (biomass-to-liquids)

— Strong location-specific economic and strategic factors

• Shell and Sasol plants in Qatar showcase viability of GTL

3

Ripe for GTL



Large-scale economics at smaller scales

4

Velocys enables smaller plants

Microchannel technology offers strong benefits at smaller scales

Plant capacity (bpd)

0 2000 4000 6000 8000 10000 12000 14000

$ k / b p d c a p a c i t y

2,000 6,000 10,000 15,000

Conventional FT Reactor

Velocys microchannels − cost range

C o s t a d v a

n t a g e

Conventional slurry reactorVelocys microchannel reactor

Velocys FT reactor

e.g. Sasol



GTL for the mainstream of the industry

5

Velocys modular GTL

1,400 bpd FT process unitdesigned by Ventech Engineers

90 ft L x 46 ft H x ~40 ft W

• Broader range of sites – 1,000-15,000 barrels per day

– Suitable for remote locations

• Lower risk

– Smaller investments – On site construction reduced

– Additional trains can be added later

• Reduced costs

– Modules and reactors ‘designed once’ – Quicker plant construction (18-24 months)

– Less strain on supply chains

– Possible integration with existing facilities



Smaller scale GTL

6

Upstream

• Solution to flaring – 5% of natural gas produced is flared

– Regulation, royalties and taxation

increasing

• Unlock constrained oil production• Increase revenues and reserves

– High value product created from

zero value input

• No separate transportationinfrastructure needed

– Co-blend and transport with existing

crude production



Smaller scale GTL

• Get more gas to market— Where no gas pipeline exists

— Where potential production exceedsavailable infrastructure

• Increase gas demand withoutimpacting price

— Gets gas into transportation

— Local production for local demand

• More choices for producers

— Diversify from gas into oil pricing

— Access global markets

• Capture the gas / oil spread

7

Midstream

Not all gas is discovered at Henry Hub…

Interstate and

intrastate pipelines



Velocys enables winning economics

9

Base case

$0

$25

$50

$75

$100

$125

$150

Costs of Velocys enabledGTL plant

Proceeds from production ofliquid fuels

C o s t s & p

r o c e e d s ( $ /

b a r r e l o f l i q u i d

p r o d u c t s )

Premium from sale of dieselOil (WTI)

OPEX

Depreciation

Natural gas

Key financial assumptions

• Facility producing 80% diesel &20% naphtha

• Gas price = $4/mmbtu

• 9,500 scf gas per barrel

• Capital cost = $100k per bpdfor 2,500 bpd stand-alone Gulfcoast plant

• Operating cost = $15/bbl

• 20 year plant life



Velocys enables winning economics

10

Site-specific opportunities

$0

$25

$50

$75

$100

$125

$150

Costs of Velocys enabledGTL plant

Proceeds from production ofliquid fuels

C o s t s & p

r o c e e d s ( $ /

b a r r e l o f l i q u i d

p r o d u c t s )

Premium from sale of dieselOil (WTI)

OPEX

Depreciation

Natural gas

Lower gascosts ifstranded orassociated

Co-location reduces

capex & opex e.g.downstream

Increasedproduct value

if specialties

e.g. lubricants /waxes or ifproducingrefined productsin remote

locations

Added valuefrom unlocking

restrained oil

production



Why smaller scale GTL?

• GTL “for the mainstream”— More opportunities; open to more players

• Practical

— Easier to finance, permit, supply, build and operate

• Manageable risks

— Smaller investments, can be phased; reduce in-field construction;reduce overall construction time

• Profitable

— Unlock resources; increase gas demand; capture gas / oil spread;access global markets; leverage existing infrastructure

• Available now

— Velocys and partners

11

Right product, right place, right now



Thank you

Roy LipskiCEO, Velocys

+1 713 275 5840

[email protected]

12



Changing the way fuels are made



Appendix



About us

• Unique innovative technology solution for smaller scale GTL*

• World-class pedigree − 20 yrs of research and development

— University of Oxford: top global research centre;largest chemistry department in Western World

— Battelle: world’s largest independent science and

technology organisation• Global leader

— World’s largest and strongest microchannel IP portfolio (>800 patents)

— >$300 million invested, much by commercial partners

• Critical mass — ~100 employees focused on GTL with a strong balance sheet

• First class partners offering a complete GTL solution

• Commercial roll-out underway

15

Leaders in smaller scale GTL

* Target range 1,000-15,000 bpd



Board of directors

16

Industry expertise, technical and commercial experience

Pierre Jungels, PhD, CBE –

Chairman

30+ yrs in oil industry: was CEOEnterprise Oil; ED PetroFina; MDBritish Gas

Roy Lipski – Chief ExecutiveOfficer

17 yrs managing growing technologybusinesses. Led the company since2006

Susan Robertson, FCA – ChiefFinancial Officer

17 yrs with BOC: was CFO and VP ofJapan Air Gases (now known as AirLiquide Japan)

Paul Schubert, PhD – ChiefOperating Officer

30+ yrs in technical & managementroles: SGS, Syntroleum, PhillipsPetroleum & Englehard

Andrew Jamieson, PhD, OBE –

Non-executive Director

30+ yrs with Shell including Pearl GTLplant. Leading GTL figure

Sandy Shaw – Non-execut iveDirector

30+ yrs in oil & gas industry including

as legal counsel. Founder of ValiantPetroleum

Jan Verloop, PhD – Non-executiveDirector

30+ yrs with Shell. Responsible forShell’s strategic innovation andtechnology vision

Julian West – Non-executiveDirector

40+ yrs experience of energy policy,in the private and public sectors.Director at CERA



Intellectual property

• World’s largest microchannel patent portfolio— >25,000 claims in >800 patents

— 95 patents granted in 2012

— Over half of patents cover GTL

• High quality

— IP cited over 3,000 times in others’ patents

— 100% success rate to date defendingchallenges / re-exams of own patents

• IP portfolio has years to run – continuallybeing renewed and extended

• Pursuing infringers e.g. CompactGTL

17

Largest IP position of its kind

0

50

100

150

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

2 0 1 9

2 0 2 0

2 0 2 1

2 0 2 2

2 0 2 3

2 0 2 4

2 0 2 5

2 0 2 6

2 0 2 7

2 0 2 8

2 0 2 9

2 0 3 0

2 0 3 1

2 0 3 2

Number of patents expiring

Foreign filling

and divisional

applications

yet to come

0 5000 10000United States

Europe, Russia

Canada

China

Japan

Australia

South Korea

South Africa

Other

GrantedClaimsPendingClaims



Velocys microchannel technology

18

Compact, robust, efficient and economic

• Principles of design and operation— Particulate catalyst in small channels— High catalyst volume fraction— Syngas downflow, products exit bottom— Cross-flow coolant water / steam generation— Heat removal by steam generation

• Strengths

— High per pass conversion (75%+)— Isothermal behavior – thermally stable— Extremely robust to upsets— Strong economy of mass manufacturing—

Accommodates high activity catalysts— Installed spares relatively cheap— High on-stream factor— Tail gas recycle only to achieve high conversion— Extremely high volumetric productivity— Ease of modularization



Pilot plant and training facility

• Integrated GTL pilot plant at the VelocysOhio, USA site

• Provides

— Performance data to support differingclient designs

—Product for client studies

— Permanent training facility for plantoperators

• Platform for

—Developing our own field support staff

— Demonstrating future productgener ations

19

Supporting sales and delivery

Add pilot plant photo

Pilot plant



Petrobras demonstration

20

Integrated microchannel FT and SMR

• Offshore GTL partners: Toyo Engineering, MODEC and Petrobras

• 6 bpd plant mimics complete FPSO-mounted GTL facility

• One of 3 field demonstrations



Complete GTL solution

21

Together with world-class partners

ModularGTL

Technology

Engineering

Fabrication

Catalyst

FieldServices

ResourceHolders



Integrated modular GTL facility

22

Site-specific client designs underway

Catalyst loading



Engineering partners

• Placed reactor order for 1,400 bpdcapacity in April 2013

— 8 commercial scale reactors

— Kick-started supply chain

—Production underway– Delivery 18-20 months

• Several GTL plants in engineering

— Considering investing in some of these

• Progressing own GTL project in Texas,USA

23

Example: Ventech Engineers



Manufacturing

• Implementing multi-million dollar state-of-the-art production cell at chosen supplier

— Cost-effective mass production

— Consistent high quality

— In place by year 2013

— Initial capacity supports 10,000 bpd/yr of orders

• Production cell is replicable and scalable

— Cost effectively

—Lead-time within plant order duration

• Plans in place to support a 4x capacityincrease

24

Ramping up for mass production

Reactor manufacture

Designed for production



Growing US demand for distillate fuels

25

Transportation energy consumption by fuel (quadrillion btu)

Source: EIA, Annual Energy Outlook 2013 Early Release

0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

ProjectionsHistory 2011

60% Motor gasoline

E85Jet fuel

CNG/LNG11%

13%4%

29%

47%

2%

Pipeline fuel 3%

4%

Other4%

Diesel22%

1%

Increased demand for diesel and jet fuel favours GTL

Ppt131022 Oil Council N America 2013

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