Ngts htc presentation 07 oct14 dp

Methaforming®

Production of high-octane

gasoline from low-octane

hydrocarbons and methanol

HTC Energy Screening Committee, October 09, 2014

2

Solution: Methaforming, One Step Conversion

of Hydrocarbons with Methanol into Gasoline

• Simple ONE STEP process;

• No precious metals in the catalyst;

• High yield of high-octane gasoline blendstock;

• Low capital and operating costs.

Methaforming

unit

3-10 atm

370-490 C

Stab

ilize

r

Methanol (~25%)

Naphtha (35-160°C)

H2, H2S

С1-С4

Gasoline blendstock High octane gasoline

10-30 ppm sulfur

<1.3% Benzene

Water

NGTS HTC presentation October 2014

3

Methaforming vs Reforming: Much Simpler

and Cheaper

Catalytic Reforming & Isomerization

Hydrotreatment*

Reforming

Isomerization

85 – 180 oС

35 - 85 oС

Naphtha

High octane

gasoline

Benzene reduction

• Most common technology

• Feed hydrotreatment required

• Several process units

* If sulfur <500ppm in naphtha

Catalytic reforming and isomerization:

Reducing cost of

gasoline production

over 50%

Methaforming:


4

Competition: Methaforming vs. Reforming

For 0.9 million tpa (20k BPD) unit

Methaforming Reforming ∆ Methaforming-

Reforming

Yields, $MM/yr 178 172 +6

OPEX, $MM/yr 10 18 -8

CAPEX, $MM 48 100 -52

Total NPV, $MM 1094 947 +147

Methaforming yields are $7/mt ($0.80/B) better than reforming:

Methaforming is better than reforming:

• $6 MM/yr better yields

• $8 MM/yr lower opex

• $52 MM lower capex

• Total value is $147 MM better


5

The Market – the World and the US

Replace reforming in new refineries and expansions

– Worldwide gasoline growth 2 %/yr

– Requires 77 million tpa (1.8 million BD) of reforming capacity

Other applications of the technology as specialty process:

– convert pyrolysis gasoline into higher valued aromatics

– convert LPG into gasoline blendstock

In the US, opportunity to convert condensate into high octane gasoline

– Condensate exports could reach 40 million tpa (1 million BD) by 2023

– Methaforming condensate gives $200/mt ($23/B) net margin.

Methaforming is the most economical known process to make high

octane gasoline from condensate.


6

Pilot Plant Results and Plan Laboratory plant

Pilot plant

Laboratory plant

• Reactor volume – 0.1 L

• Capacity – 0.63 t/year (0.14 bpd)

• Total test hours > 2000

• Typical hours per test – 200

Pilot plant

• Reactor volume – 2 L

• Capacity – 16 t/year (3 bpd)

• Start up – Oct 2014

• Confirm yields, catalyst life and scale

up – May 2015


7

240 BPD Demo Plant

• Based on an idle existing naphtha

to BTX* converter;

• Reactor volume – 2 m3

• Capacity – 10 ktpa (240 bpd)

• Start up – 2015

• Status: negotiations are in process.

Idle naphtha to BTX converter

NGTS HTC presentation October 2014 * Benzene-Toluene-Xylene mix.

8

2-3 k BPD Commercial Demo Plant

• Based on an idle existing naphtha reformer

or hydrotreater;

• Reactor volume – 20 m3

• Capacity – up to 100 ktpa/year (2.4 k bpd)

• Start up – 2017

• Status: Looking for idle units in Russia and

the US.

Idle hydrotreater


9

Business Model: Early Licensing, then Exit

Potential licensees or acquirors of the

company:

Technology providers, licensors

• UOP, Axens

• KBR, Air Liquide-Lurgi, Technip, CBI

End users

• Oil & gas majors & national oil companies

(NOCs)

• Methanol producers:

Methanex, DuPont.

74%

19%

7%

Licensing

Catalyst

sales

Engineering


10

Core Team: Solid Skills in All of the Key Areas

Denis Pchelintsev – CEO

Co-founder of several successful technology startups,

previously - CEO NIPTIEP Institute. Ph.D in engineering.

Joseph Lischiner – Technologist

Co-inventor, author of the first Russia gas-methanol-gasoline

and oligomerization plants. PhD in chemical engineering.

Olga Malova – Head of catalysis

Co-inventor of the catalyst, experience in catalytic refining

processes, exp. in projects with Bayer, Eni. Ph.D.

Alexei Beltyukov– Chairman of the Board of Directors

Entrepreneur, several profitable exits. Started Brunswick Rail

(now >$2bn); managed a portfolio of underperforming

assets, IRR>42% over 9 years. Previously at McKinsey&Co.


11

Road map

Venture value

Revenue 0 0 0 0 $0.1 MM $0.8 MM $7.9 MM $4.1 MM

Funding Grant $1,0 MM $6.8 MM $0.6 MM 0 0

Year 2012 2013 2014 2015 2016 2017 2018 2019

Catalyst design

Lab plant Pilot plant

0.24 kbpd Demo plant

2 kbpd Com. plant

start-up

Development Stage Commercialization stage

Potential exit points

2 kbpd Com. plant

constr.


12

Financial Summary


K bpd $MM

-400

-350

-300

-250

-200

-150

-100

-50

0

50

100

150

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

2013 2014 2015 2016 2017 2018 2019 2020 2021

Total negative cash flow $9MM

$6MM investment for reformer in 2016 returned in 2018

13

Technology:

• Methods for scaling fixed-bed reactors are

well known

• Catalyst is sulfur-tolerant. It’s sensitivity to

other impurities will be extensively tested.

• Using an experienced industrial catalyst

manufacturer.

Legislation:

• Use proven consultants to address local

environmental concerns.

• Four Russian patents received. Applying for

3 international (PCT) patents.

Addressing the Risks


14

Summary

• Reforming and isomerization are expensive

• Methaforming provides comparable yields at half the cost

• Large and growing market

• Attractive and realistic exit options.

Raising Funds:

• $ 1 MM now for process optimization, building 0.24 kbpd demo plant

• $ 6.8 MM in 2016-7 for 2 k bpd demo plant construction

• Exit in 2018.

Denis Pchelintsev, CEO

[email protected] +7 (903) 527 22 00 NGTS HTC presentation October 2014

15

BACKUP


16

US condensate Methaforming – over $200/t

value added

Southern Lights Diluent + Methanol balance spreadsheetPrice

Feed: t $ $/mt

Southern Lights Diluent 1,000 773 773

MeOH 0,207 83 400

Total 1,207 856

Product:

H2 0,020 33 1706

C1-C2 0,011 3 250

NGL 0,080 60 755

Reformate + iC5 0,950 1029 1084

Disel 40% wt naphtalenas 0,031 31 1000

octane -81 9

Total HC 1,091

Water 0,116 -1 -10

Total 1,207 1075

GROSS per mt 219

20k BPCD Plant:

GROSS MARGIN $MM/A: 195

OPEX 10

NET MARGIN $MM/yr 185

Methaforming


17

IP status and plan

1. Four Russian patents and registered trade

mark “Methaforming”

2. Three PCT international applications* :

• Aromatics production method from

hydrocarbons and methanol;

• Plant for hydrocarbons conversion to BTX

• Catalyst for hydrocarbons and oxygenates

processing

3. Next milestone is the catalyst optimization and

reactor scaling up.


*in process

18

Environmental Regulations in the US

• US gasoline specs allow 1.3% of benzene and 10 ppm of sulfur

• Methaforming reduces benzene content to 0.8 - 1.6%

• Methaforming reduces sulfur by 95% to 5-30 ppm.


19

Development plan

2010-2012

Catalyst developed

2013-2014

Lab tests of reactor and catalyst

2014 - Pilot Plant

tests

2015 - 0.2 k bpd Demo

plant start-up (projected)

2017 - 2 k bpd Demo plant

construction (projected)


20

Methaforming process chemistry

Four chemical reactions are integrated into one single process

Heat of reaction is controlled by feed ratio of methanol to raw feedstock.

R Me R

MeOH +

3 MeOH

CH3(CH2)4CH3

1.Aromatization of paraffins and olefins

2.Alkylation to aromatic ring

3.Aromatization of methanol via olefins

Exothermic

Exothermic

Endothermic

4.Izomerization of paraffins

n-СnH2n+2 iso-СnH2n+2

Exothermic


21

Applications: Pygas to BTX

Lab-scale Process optimization

Basic technical data Report

1. Catalyst characteristics

2. Chemistry, physical and chemical basis of technology:

3.1 Chemistry of basic reaction. Kinetic equations

3.2 Kinetics of coke formation and catalyst deactivation

3.4 Regenerations of the catalyst

3. Preliminary Technical Description

4.1. Typical PID

4.2. M&E Balance

4.3. List of equipment (inc. capacity)

Activity Results / Deliverables Activity Owner

Due diligence Report

1. Catalyst characteristics

2. Feasibility Study

3.1 Investment Cost Estimate of Novel Process

3.2 Investment Cost Estimate of Reforming

3.4 Economic Analysis of both case

3. Scale-up plan

4.1. Research plant

4.2. Budget estimation of the pilot-study

4.3. Assess risk and opportunity

4.4. Approach of commercialization

Valuation of technology

Demonstration Scale Study JV Agreement or partnership

1. BDP & BEP

• Basic Design of industrial plant

• Strong IP protection

• Commercial catalyst

Engineering|

partner/provider


22

Business Overview

Problem:

• Need for gasoline in developing

countries;

• High cost of traditional reforming

technology.

Solution

• Methaforming – an one step process

of joint conversion of low octane

hydrocarbons and methanol into high

octane gasoline;

Competitive advantages:

• ½ the CAPEX and OPEX;

• Simple process

Innovative core:

• Novel catalyst and proprietary reactor

equipment;

Seeking :

• Capital – for the process development

and commercialization

• Partners – for expertise and entry into

US, China, Middle East market;

• Engineering/licensing partner – for

global technical support and detailed

engineering.

Market:

• Tens of $ Bln in gasoline and

petrochemical market ;


Investor Relations

Ngts htc presentation 07 oct14 dp