2014 Gas/Electric Partnership

Strategies for Utilizing/Monetizing Wellhead Gas

Brian Cody – February 5

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 FT; backed by a strong balance sheet

• First class partners offering a complete GTL solution

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Leaders in smaller scale GTL

Many applications

• Shale gas: monetizing low prices in North America

• Stranded gas: estimated over 30% of world reserves are uneconomic to bring to market

• Associated gas: 5% of natural gas production is flared

• GTL allows valuable products to be created and shipped— Ultra low-sulfur diesel (70 cetane) & jet — Waxes, lubricants and solvents

• Not just gas: also biomass and coal

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From low-value gas to high-value fungible products

The gas-to-liquids (GTL) process

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Chemical conversion of gas to refined products

Reforming

LNG / CNG = physical compression Product remains natural gas

GTL = chemical conversion into refined products (petroleum equivalent)

Fischer-Tropsch (FT)

Nat

ural

Gas

Syncrude(syntheticcrude oil)

Hydro-processing

Syngas(carbon monoxide

+ hydrogen)

Clean syntheticfuels & chemicals

(diesel, jet fuel,lubricants etc.)

Smaller scale GTL: gas-based mini-refinery

Velocys microchannel technology

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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 modularizationVelocys FT reactor

Microchannel scale up = numbering up

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Equivalent to conventional fixed bed reactors

Key dimensions do not change• Laboratory reactor

— Channel dimensions same as commercial reactor

• Pilot reactor — Full size repeating layer

• Demonstration reactor— >1 full size repeating layer

• Commercial reactor — Many full size repeating layers

• Micro-macro interface ensures consistent results in pilot and commercial installations

COMMERCIAL

DE

MO

NS

TR

AT

ION

PILOT

Gas flowL

AB

OR

AT

OR

Y

Number of channels increases, size does not

Super-active FT catalyst

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Velocys catalyst is 10x more active than conventional

(Shell) (Sasol)

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200

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1000

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1600

Fixed Bed Slurry Bed Velocys

Cat

alys

t Pro

duct

ivity

(kg/

m3/

hr)

Exceptional FT catalyst stability

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Operated for 2 years without regeneration

CO conversion

CH4 selectivity

TemperatureCurrent operation approaching 3 yrs

High productivity (single stage with recycle)

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>90% overall conversion with minimal recycle

Equal to 91-92%overall conversion

Equal to 94.5%overall conversion

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10%

20%

30%

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100%

0 50 100 150 200 250 300 350

Tem

pera

ture

, oC

% C

onve

rsio

n, %

Sel

ectiv

ity

Time on Stream (days)

Regeneration

Loss of cooling system - high t.

CO conversion

Temperature

Methane selectivity

Reactor design

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Optimized for serviceability

Manways size and location designed with Mourik for optimum access for catalyst handling

Diameter ~4.5 ftLength ~12 ft (15 ft for a 4-core)

Bottom manways have elliptical heads to allow liquid phase product draining. Removable for catalyst change-out

Reactor size optimized for weight / crane limits

Weld locations optimized for mass manufacturing

Integrated modular GTL facility

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Site-specific client designs underway

Velocys enables winning economics

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Base case

$0

$25

$50

$75

$100

$125

$150

Costs of Velocys enabledGTL plant

Proceeds from production ofliquid fuels

Cos

ts &

pro

ceed

s ($

/bar

rel o

f liq

uid

prod

ucts

)

Premium from sale of dieselOil (WTI)OPEXDepreciationNatural gas

Key financial assumptions

• Facility producing 80% diesel & 20% naphtha

• Gas price = $4/mmbtu

• 9,500 scf gas per barrel

• Capital cost = $100k per bpd for 2,500 bpd stand-alone Gulf coast plant

• Operating cost = $15/bbl

• 20 year plant life

Pilot plant and training facility

• Integrated GTL pilot plant at the Velocys Ohio, USA site

• Provides— 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

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Supporting sales and delivery

Add pilot plant photo

Pilot plant

Complete GTL solution

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Together with world-class partners

Modular GTL

Technology

Engineering

Fabrication

Catalyst

Field services

Resource holders