EXECUTIVE SUMMARY · Geotex Industries LLC and Frontera 1 Refinery recently commissioned the Directors of Geotex Industries to carry out a conceptual study for the design, engineering,

FRONTERA REFINERIES PROJECT

January 2019

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EXECUTIVE SUMMARY

ISSUED BY: Geotex Industries LLC

REVISION: 4

APPROVED BY: Juan Carrera / Manuel Castro FECHA: Enero 2019

Geotex Industries LLC presents alternative solutions for modular refineries for 5,000, 10,000, 15,000 and up to 20,000 barrels per day. The first proposal is in a distillation column, in which the crude oil is separated by heating (the gases are burned in the kilns or / and part is released into the atmosphere), producing the following products: naphtha; kerosene, diesel and residuals. The second option is a modular refinery for 10,000 and up to 15,000 barrels per day adding a diesel and naphtha hydrotreater, hydrogen unit and separator of refined products to generate the production of jet fuel, ultra low sulfur diesel and gasoline. The basis of this proposal is a third option and optimal alternative, a modular refinery of 20,000 barrels per day with diesel and naphtha hydrotreater, reformer unit and separators of refined products, which provides the best investment, profitability and economies of scale, increasing production capacity

Capacity Gas Naphta Diesel Kerosene Gasoline Residuals Cost

Option 1 10,000 Y* Y Y** Y $110 MM

Option 2 10,000-15,000

Y* Y Y*** Y Y Y $160 MM

Option 3 20,000 Y* Y Y*** Y Y Y $220 MM

*Gas is burnt or disapear in the atmosphere **Diesel with a high content of sulfur ***Ultar Low Sulfur Diesel


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EXECUTIVE SUMMARY


REVISION: 4


Geotex Industries LLC and Frontera 1 Refinery recently commissioned the Directors of Geotex Industries to carry out a conceptual study for the design, engineering, procurement, construction, project execution and commissioning of three (3) mini refineries on the Mexican border. / EE. UU. Each refinery will have a crude oil distillation unit installation capacity of between 10,000 and up to 20,000 bpd with diesel and naphtha hydrotreater and with its respective separator of refined products. Geotex Industries has identified Diamond Rogers Blue USA - Permian Basin (Intertek) 2018 as the raw material for conducting studies and simulations using Hysys technology to determine the most optimal refining process and take the results to design the Frontera Refinery project. Refinery main components:

Summary

Description Capacity

Crude Destillatiion Unit (bpd) 20,000

Desalter (bpd) 20,000

Diesel Hydrotreater (bpd) 8,000

Naphta (bpd) 6,800

Sulfur Recovery Unit – short ton/ day 0.23


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Design Base

Plant Capacity:

DAILY DESIGN CAPACITY

20,000 bpd

Production Requirement:

PRODUCTION DISTRIBUTION Fuel Gas, Naphtha, Diesel, AGO & ATB / Option 2: Gas, Naphtha, Diesel

& ATB

Investment Highlights


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Geotex Industries and Frontera 1 Refinery Inc have allocated two adjacent areas for the refinery which is envisioned in two phases build-out in case we would like to expand the refinery capacity to 50,000 bpd. Each area is 200 m x 150 m within 100 acres property. Three plant layouts are presented (see FEL 1 report), and the area required for the plant amounts to 34 acres. The plant locations was based on recommendations from Geotex Industries, and based on a combination of environmental risk, raw material availability and plant accessibility, a plant location in proximity to the crude supply in the border of Mexico & USA. Which shows many advantages, both in the refining process and in the quality of the distilled products. The efficiency and quality of distillate products processed by the refinery are intimately linked to the quality of the crude oil. The higher the API grade with lower sulfur content, the higher the product quality and process efficiency. See graph below

Geotex has reached the following capital estimates for the case studied, which are described below These estimates are of a budgetary nature (± 30% accuracy). Estimates include expenses, and exclude taxes or any other legal expense that may be applied during the construction of the plant. It is important to bear in mind that the greatest uncertainty in the development of the estimates are the initial contributions and in the construction phase, which represents almost 70% of the total capital of the project. This uncertainty is the result of the prices of the equipment and the current refineries that were commissioned and built on the US-Mexico border. Estimated Capital Costs:

Case Description Eatimated Capital Cost (USD)

1 Crude Distillation Unit (CDU) plus hydrotreater & separator (20,000 barrels per day) $220 M


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The estimated financial factors for this project will be based on the prices of the basic products provided by others. These evaluations are based on 8,4000 programmed hours per year with a utilization factor of 90% that represents 7,400 available hours per year and the prices of the products will be made as the project progresses and the projections can be made with the most recent information (will be confirmed during the studies of FEL 2 & 3). It should be noted that the timing of this estimate (Q4 2018) coincides with a peak in market conditions, which is driving a very high capital cost estimate. Crude impact on project economics is very difficult to pre-judge. It can be said, however, that major projects constructed during peak periods may have the potential to be impacted by higher costs (e.g. labor, capital, etc.) resulting from an increased demand for industrial goods and services. The next step in moving this project forward would be to commission a Pre-Feasibility (FEL2 level) Study. During the FEL2 study: ● Project parameters would be better defined. Technology selection would be completed and further data

from the technology suppliers would therefore be available. With this information in-hand, more detailed Process Flow Diagrams would be completed.

● Input from supplier and discipline engineers (e.g. piping, electrical, instrumentation, civil, structural,

etc.), logistics, construction and geotechnical specialists would be obtained in order to more accurately estimate capital costs for the project. The completion of FEL2 would lead to another “stage-gate” decision. If the project still appears viable after this more detailed investigation, then a full Feasibility Study (FEL3) would be commissioned. FEL3 would be followed by another stage-gate and if successful, the project would proceed to the Execution Phase (FEL4). Important note: The fact that most of the parameters have been defined during FEL 1 and the

technology selection is almost completed; resulting that most of the technical data (production and

process calculation) has been received from the technology providers: there is great opportunity to

combine FEL 2 & 3 resulting in saving and advancing engineering to have more detailed Process Flow

Diagrams.


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January 2019

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EXECUTIVE SUMMARY


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STATES FUEL CONSUMPTION

BAJA CALIFORNIA GASOLINE 1,676,630

DIESEL 511,286

JET FUEL 441,793

SONORA GASOLINE 991,525

DIESEL 835,881

JET FUEL 554,571

CHIHUAHUA GASOLINE 1,494,978

DIESEL 564,794

COAHUILA GASOLINE 1,494,978

DIESEL 564,794

NUEVO LEON GASOLINE 2,246,314

DIESEL 828,386

TAMAULIPAS GASOLINE 1,644,065

DIESEL 690,810

MULTICRITERIA EVALUATION TO DETERMINE LOCATION OF MINI REFINERY

LOCATION/CRITERIA

FEEDSTOCK: CLOSE

ACCESS TO LIGHT

AND SWEET CRUDE

ACCESS TO SOURCES OF

NATURAL GAS

ACCES TO ABUNDANT

SOURCES OF WATER

ACCESS TO MAIN ROADS,

RAILWAYS AND PIPELINES

ACCESS TO LARGE FUEL

MARKETS SCORE

CIUDAD JUAREZ 2 2 1 2 2 9

OJINAGA 2 2 2 3 2 11

CIUDAD ACUNA 1 2 0 1 1 5

PIEDRAS NEGRAS 1 2 0 1 1 5

NUEVO LAREDO 2 2 0 2 2 8

CIUDAD MIGUEL ALEMAN 2 2 2 1 2 9

REYNOSA 2 2 1 2 2 9

MATAMOROS 2 2 2 2 1 9

AGUA PRIETA 1 1 0 1 0 3

8,885,012

3,905,555

996,364

GASOLINE

DIESEL

JET FUEL

PEMEX NATIONAL INFORMATION SYSTEM:

Internal Sales Volumes (cubic meters)


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EXPERIENCE

REPRESENTATIVES MEGA PROJECTS

1. Petronius Oil Platform, Gulf of Mexico - $850 MM 2. Yoho Field 6 Oil Platform, Nigeria - $1.4 B 3. Saudi Petrochemical Company (SIPCHEM):

3.1 Vinyl Acetate Plant, Al Jubail Saudi Arabia - $500 M 3.2 Acetic Acid, Al Jubail Saudi Arabia - $450 M 3.3 Acetic Acid, Al Jubail Saudi Arabia - $550 M 3.4 Ethyl / Butyl Acetate, Al Jubail Saudi Arabia - $475 M

4. Ma’aden / Alcoa - $14 B refinery complex in Raz Al Khair, Saudi Arabia 5. Petrobras Power Plant 1,200 MW - $1.2 B in Macae, Brazil 6. Axion (Ex-Exxon) Refinery, $1.2 B in Campana, Argentina 7. Equatorial Guinea, Oil Platforms $1.4 B

REPRESENTATIVES PROJECTS

1. Cabinda, Angola – Oil Platform fabrication & installation 2. Tulsa, Oklahoma – Sinclair Refinery: new coker unit 3. Ponca City, Oklahoma – Conoco Refinery: New Hydrotreater 4. Gulf of Mexico, Anadarko – Gunnison Project 5. Sacramento, California, GE Power Project 500 MW 6. Lyondell Refinery, Houston, Texas – New unit to process heavy, high sulfur crude.

REPRESENTATIVES CONSULTING PROJECTS

1. Jaguar Land Rover, Birmingham, England for JLR Project in Jazan, Saudi Arabia. FEL2 2. Alcoa – Aluminum project in Hungary. FEL 1 & 2 3. Panama Canal – third set of locks project. FEL 3

NOTE: Financial analysis ready to be presented at a confidential and private meeting. Gross

benefits around $ 30 MUSD per year according to oil quality and equipment configuration

Documents

EXECUTIVE SUMMARY · Geotex Industries LLC and Frontera 1 Refinery recently commissioned the Directors of Geotex Industries to carry out a conceptual study for the design, engineering,