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KBR Technology Business Tanya Niu ------ Director, Chemicals

2013 Ethane to Ethylene Global Summit, Houston, TX Oct 30th

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KBR Technology Portfolio

Refining ROSE

Visbreaking

Hydrocracking

Hydrotreating

Olefins Catalytic Olefins

SCORE

Chemicals

Ammonia and Syngas

Phenol Advanced TransAlkylation Parafin Olefin Separation C4 Acetylene Converter

Power applications Industrial applications

Advanced Chemical Engineering

OTS

OMS

Technical Services

Proprietary Equipment

Refining

Coal Monetization

Olefins

Chemicals

Ammonia and Syngas

Ammonia

Fertilizers

Syngas

Hydrogen

Coal Monetization FCC

VCC

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Capabilities

Providing Technology since 1986

More than 30 percent of global greenfield ethylene capacity

Catalytic Olefins Flexible light hydrocarbon feed

Achievable P:E Ratio 1:1 to 2:1

Olefins

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Shale Gas Boom Brings Surplus NGL

Ethane and Propane profoundly changed NA petrochemical feedstocks structure with its cost advantage and availability

Source: EIA

US NGL production, Million Barrels/Day

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Impact to Olefins Production

Ethane and propane cracking produces less propylene than naphtha cracking

Propane can be used as feedstock for on purpose propylene production

Typical olefins plant product yields

Source: public literatures

020406080

100120

EthylenePropylene

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Export Balances NA Propane

Ample propane supply after retail and petrochemical feedstock use

US recently becomes the leading propane exporter, topping Middle East

Propane export capacity expanded with matching gas processing, pipeline, and storage

Possible US propane global price parity concerns PDH economics

Source: EIA

US Propane/Propylene Import/Exports (MM Barrels/Day)

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Global Propylene Supply Demand Gap Widens

Propylene demand keeps growing: organic growth;; new applications

Propylene demand to go from 80 to 100MM ton in 5 years

Crackers propylene: ethylene driven;; lighter feedstocks

Refinery propylene: gasoline driven;; slow growth

Cracker 55%

Refinery 31%

PDH 5%

Metathesis 4%

MTO 1%

Others 4% Other

14%

Global Propylene Production 2012

Source: IHS

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NA Propylene Production

02468

1012141618

2000 2007 2012 2017

PDHMetathesisRefineryCracker

Cracker production declines further until new projects come up

Refinery propylene battles declining fuel consumption

On purpose production fills the gap

Million Metric Ton

Source: IHS

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New NA On Purpose Propylene Projects

On Stream Capacity (KTA) Technology Company

2015 750 PDH Dow

2015 750 PDH Enterprise

2016 600 PDH FPC

2016 500 PDH Williams

2017 1000 PDH Ascend

2018 750 PDH Dow

Petrologistics started up their 500 KTA PDH plant in 2010.

Six upcoming PDH projects with a total capacity of 4.35 MM Ton per year

LyondellBasell called off their 225 KTA metathesis project

Feedstock stability important to downstream players in addition to cost

Source: company press releases

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Impact to NA propylene Derivatives

Reduced PP export for a few years

Impact less prominent to other propylene derivatives

7.5 9.0 7.6 8.4

0

2

4

6

8

10

12

14

16

2000 2007 2012 2017

OthersPropylene OxidePolypropyleneButanols2-Ethyl HexanolIsopropanolCumeneAcrylonitrileAcrylic Acid

Source: IHS

NA propylene demand, Million Ton

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Impact to Global Propylene Derivatives

Propylene demand growth sensitive to macroeconomics Most propylene derivatives tied to durable goods

China Strong desire for self sufficiency, building on coal supply

Favorable tax structure to encourage propane import

PDH and MTO to make up 1/3 production by the decade end

Gap remains, despite reduced import

Middle East

Continue to export, yet slower growth

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US Propylene Price High Yet Volatile

Tight supply-demand brings price volatility

Strength of derivatives demand and inventory management

Operational outages and seasonal turn around

Alternative RG propylene value and on purpose production economics

Arbitrage opportunity for import

Source: Argus

0

500

1000

1500

2000

2500

2006 2007 2008 2009 2010 2011 2012

Ethylene, $/MTPropylene, $/MT

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On-purpose Propylene Production

Traditionally demand driven in regions with shortages New Norm: supply driven to take cost advantage of feedstocks Technologies

Propane Dehydrogenation (PDH) Metathesis Methanol to Olefins (MTO / MTP) Catalytic Cracking High Severity FCC

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Propane to Propylene (PDH)

High selectivity, >80% propylene yield from propane

Hydrogen typically used as fuel for the process

Fixed bed, fluid bed, and moving bed reactors, all commercialized

Propane/Propylene pricing differentials drives project economics

Market considerations: feedstocks security;; derivative competitiveness

Propane Propylene + Hydrogen

Source: Argus

US Pricing

0

500

1000

1500

2000

2500

2006 2007 2008 2009 2010 2011 2012

Propylene, $/MT Propane, $/MT

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Metathesis (Re-arrangement of Olefins)

Requires high purity ethylene and high purity butene

Commercially proven operation in fixed bed reactors, cyclic operation

Unique set of requirements for positive project economics

Positive propylene to ethylene price ratio

Availability and low cost of C4 or

Ethylene dimerization unit when C4 is not available

Ethylene 2-Butene

Propylene Ethylene

Metathesis

Butenes Isomerize to 2-Butene

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Methanol to Olefins

Primarily a coal play in China

Capital intensive, especially with syngas and methanol plant

No economic direct methane to propylene route exists

Economics depend low cost feedstocks or methanol

Environmental concerns

Syngas production

Syngas to Methanol MTO Coal or

Natural Gas

Ethylene Propylene

Methanol Synthesis

Methanol to Olefins

MTO/MTP

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Light Hydrocarbon Catalytic Cracking

Feedstocks flexibility

No need for pre-treatment

Either fluidized or fixed beds, using catalysts

Catalytic cracking Various refinery and cracker light streams

Ethylene Propylene

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KBR - Catalytic Olefins

High propylene yields, with ethylene and aromatic-rich gasoline byproducts

Typical P/E ratio = 2:1 for olefin-rich feed

Typical P/E ratio = 1:1 for straight run naphtha

Well proven KBR FCC reactor technology

Product treatment and separation follow ethylene plant technology

Both Grassroots and Revamp opportunities

Light olefinic paraffinic feeds

Propylene ethylene aromatic-rich streams

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High Severity FCC

Propylene yield improvement from FCC

Improvement achieved by Catalyst and additive modifications

Process condition changes: pressure, temp, catalyst/oil ratio

Hardware change

A variety of technology offerings

KBR offers MaxofinTM process

2 - 8% FCC propylene yield

15 -25%

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On Purpose Technologies Comparison

Process Metathesis PDH Catalytic Olefins

MTO/MTP

Feedstocks Ethylene & Butene

Propane C4-C10 Olefins or Straight Run

Methanol (or coal/methane)

Ethylene price sensitivity Negative Neutral Positive Positive (MTO)

Feed Pretreatment Significant Significant None to little None

Major Byproducts None None Ethylene BTX gasoline

Ethylene (MTO) Water

Economic plant size Small to moderate

Large Small to large Large

Commercial proven Yes Yes Yes Yes

Capital Investment Low to moderate

Moderate Moderate Moderate to Large

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