Ticker: VLS.L
15 November, 2013
Zeus Capital Conference
New Energy Technologies
Velocys
Leaders in smaller scale GTL
• 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
BA’s GreenSky London
Ashtabula GTL
• Well capitalised with strong commercial and technical teams
Facilities in Oxford, UK, Columbus, Ohio and Houston, Texas
2
The gas-to-liquids (GTL) process
Chemical conversion of gas to refined products
Natural gas
Reforming
Fischer-Tropsch (FT)
Syngas
(carbon monoxide
+ hydrogen)
LNG / CNG = physical compression.
Product remains natural gas
GTL = chemical conversion into
refined products (petroleum
equivalent)
Syncrude
(synthetic
crude oil)
Hydro-processing
Clean synthetic
fuels & chemicals
(diesel, jet fuel,
lubricants etc.)
Smaller scale GTL:
gas-based minirefinery
3
Market environment
Ripe for GTL
• Shale revolution ushering age
of “gas surplus”
• Long-term stability of gas-oil
arbitrage expected
• Other favorable drivers
Growing demand for middle
distillate (diesel and jet)
Energy security
Environmental benefits e.g. flare elimination and carbon
footprint reduction (biomass-to-liquids)
Strong location-specific economic and strategic factors
• Shell and Sasol plants in Qatar showcase viability of GTL
4
Growing US demand for distillate fuels
Transportation energy consumption by fuel (quadrillion btu)
History
Projections
2011
30
25
22%
Diesel
11%
4%
2%
20
CNG/LNG
Jet fuel
Other
15
E85
Pipeline fuel
29%
4%
13%
1%
4%
3%
10
60%
Motor gasoline
47%
5
Increased demand for diesel and jet fuel favours GTL
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2013 Early Release
5
Large-scale economics at smaller scales
Velocys enables smaller plants
Velocys FT reactor
Cost advantage
$k/bpd capacity
Conventional slurry reactor
Velocys microchannel reactor
Conventional FT Reactor
Velocys microchannels − cost range
0
2000
2,000
4000
6000
6,000
8000
10000
10,000
12000
14000
15,000
Plant capacity (bpd)
Conventional FT e.g. Sasol
Microchannel technology offers strong benefits at smaller scales
6
GTL for the mainstream of the industry
Velocys modular GTL
• Broader range of sites
1,000-15,000 barrels per day
Suitable for remote locations
• Lower risk
Smaller investments
Less risk of cost over-runs
• Reduced costs
Modules and reactors ‘designed once’
Possible integration with existing facilities
• Easier to execute and expand
Quicker plant construction (18-24 months)
Easier to permit, supply, build and operate
Additional trains can be added later
1,400 bpd FT process unit
designed by Ventech Engineers
90 ft L x 46 ft H x ~40 ft W
7
Many applications
From low-value gas to high-value fungible products
• 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
8
Huge market opportunity
Shale, associated and stranded gas
• Much shale gas is distributed scale / remote. Estimated at as much as 3,300
TCF in North America and over 6,500 TCF worldwide
• 4.9 TCF of gas flared every year + 6.5 TCF reinjected to avoid flaring alone
• Only 5% of the world’s conventional stranded gas fields can
be monetised by large scale GTL / LNG; distributed
Conventional
LNG / GTL
scale could unlock up to 50% of remaining fields
• Distributed scale GTL opportunity size
Unconventional gas*:
18 million bpd
Associated gas:
2.7 million bpd
Stranded conventional gas*: 4.8 million bpd
>25 million bpd
4 >50 (in tcf)
73
337
Velocys
GTL
347
719
5-50
1-5
0.5-1
0.25-0.5
1,043
3,922 gas fields
0.1-0.25
<0.1
Field size
Distribution of conv. gas fields outside US
* Assumes monetisation over 100 yrs
9
Velocys enables winning economics
Base case
Costs & proceeds ($/barrel of liquid
products)
$150
$125
$100
Premium from sale of diesel
Oil (WTI)
OPEX
Depreciation
Natural gas
Key financial assumptions
• Facility producing 80% diesel &
20% naphtha
• Gas price = $4/mmbtu
• 9,500 scf gas per barrel
$75
$50
• Capital cost = $100k per bpd
for 2,500 bpd stand-alone Gulf
coast plant
• Operating cost = $15/bbl
$25
• 20 year plant life
$0
Costs of Velocys enabled Proceeds from production of
GTL plant
liquid fuels
10
Velocys enables winning economics
Site-specific opportunities
Costs & proceeds ($/barrel of liquid
products)
$150
$125
Premium from sale of diesel
Oil (WTI)
OPEX
Depreciation
Natural gas
$100
$75
$50
$25
Co-location reduces
capex & opex e.g.
downstream
Lower gas
costs if
stranded or
associated
Increased
product value
if specialties
e.g. lubricants /
waxes or if
producing
refined products
in remote
locations
Added value
from unlocking
restrained oil
production
$0
Costs of Velocys enabled Proceeds from production of
GTL plant
liquid fuels
11
Complete GTL solution
Together with world-class partners
Technology
Resource
holders
Engineering
Modular
GTL
Field
services
Fabrication
Catalyst
12
Revenue streams
Reactors
5%
License
3% Catalyst: 1st charge
3%
Rest of FT island
12%
GTL total installed cost:
~$100,000/bpd
Rest of plant
77%
Example: 2,500 bpd plant
Order
6m
3-6m
Plant start-up
18-24m
2 yr
Every 2 yrs
$4.3m
$8.5m
$8.5m
Payments
over course of
construction
$6.3m
$6.3m
$5
Catalyst
License
Reactors
Catalyst
replacement
$3.8m
$4.3m
Site study
Construction
$3.8m
$10
Eng. study
Velocys revenue ($m)
$15
$0
13
Sales
Growing and maturing pipeline
• Paid Velocys engineering hours growing fast
• Due diligence complete with several customers
• Depth and variety of sales pipeline encouraging
We do not announce projects by name until clients have made
them public – our pipeline is greater than what is announced
• Most opportunities are GTL in North America
Interest from Russia / CIS increasing (3 in engineering)
BTL growing; some interest in CTL
Strategic drivers underpin many opportunities
• Partners provide global reach across different applications
14
Summary
Right product, right place, right time
• The time has come for smaller scale GTL
Gas arbitrage, shale gas reserves, flare gas, stranded gas, remote
locations, energy security, cleaner fuels legislation
• Huge market opportunity
25 million bpd of synthetic fuel could be made by distributed scale GTL
• Velocys: leader in advanced smaller scale GTL technology
15 years and >$300 million invested in its unique innovative technology
Exhaustive global patent protection (>7,500 granted GTL claims)
First class partners
• Commercial roll out underway
GreenSky/BA, Calumet, Red Rock Biofuels,
Pinto Ashtabula
Growing pipeline of opportunities
15
Changing the way fuels are made
Appendix
About us
About us
Leaders in smaller scale GTL
• 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
• Commercial roll-out underway
* Target range 1,000-15,000 bpd
18
Board of directors
Industry expertise, technical and commercial experience
Pierre Jungels, PhD, CBE –
Chairman
Andrew Jamieson, PhD, OBE –
Non-executive Director
30+ yrs in oil industry: was CEO
Enterprise Oil; ED PetroFina; MD
British Gas
30+ yrs with Shell including Pearl GTL
plant. Leading GTL figure
Roy Lipski – Chief Executive
Officer
Sandy Shaw – Non-executive
Director
17 yrs managing growing technology
businesses. Led the company since
2006
30+ yrs in oil & gas industry including
as legal counsel. Founder of Valiant
Petroleum
Susan Robertson, FCA – Chief
Financial Officer
Jan Verloop, PhD – Non-executive
Director
17 yrs with BOC: was CFO and VP of
Japan Air Gases (now known as Air
Liquide Japan)
30+ yrs with Shell. Responsible for
Shell’s strategic innovation and
technology vision
Paul Schubert, PhD – Chief
Operating Officer
Julian West – Non-executive
Director
30+ yrs in technical & management
roles: SGS, Syntroleum, Phillips
Petroleum & Englehard
40+ yrs experience of energy policy,
in the private and public sectors.
Director at CERA
19
Intellectual property
Largest IP position of its kind
• High quality
IP cited over 3,000 times in others’ patents
100% success rate to date defending
challenges / re-exams of own patents
• IP portfolio has years to run – continually
being renewed and extended
0
United States
Europe, Russia
Canada
China
Japan
Australia
South Korea
South Africa
Other
150
100
50
• Pursuing infringers e.g. CompactGTL
5000
10000
Granted
Claims
Pending
Claims
Number of patents expiring
Foreign filling
and divisional
applications
yet to come
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
• World’s largest microchannel patent portfolio
>25,000 claims in >800 patents
95 patents granted in 2012
Over half of patents cover GTL
20
Extensive and high quality patents
• World’s largest microchannel patent portfolio
• Group IP cited over 3,000 times in others’ patents, including patents from:
–
Air Liquide
–
Dainippon
–
Hitachi
–
Mitsubishi
–
–
–
–
Degussa
Dow
–
–
Honda
Honeywell
–
–
Motorola
Norsk Hydro
–
–
Air
Products
Alfa Laval
Sued
Chemie
–
–
–
BASF
Bayer
Eastman
Kodak
Evonik
–
–
IBM
KAO
–
–
Praxair
Raytheon
Sun
Microsystems
–
BP
Casio
Computer
–
–
–
Renault
Rhone
Poulenc
Texaco
Total / Fina
–
–
–
–
–
Kellogg
Brown &
Root
Linde
–
–
–
–
–
Chart
Chevron
–
–
–
Lonza
Mannesman
–
–
–
UOP
Vodafone
–
–
Clariant
Conoco
Phillips
–
Fuji Xerox &
Fuji Film
General
Electric
Rohm &
Haas
Samsung
Uhde
United
Technologies
GM Global
Tech
Operations
–
–
Marathon
Matsushita
–
–
Seiko Epson
Shell
–
Merck
(GMBH)
–
–
Siemens
Sony
–
Corning
–
–
–
Exxon
Mobil
FMC
21
Appendix
Technology
Awards: industry is recognising us
•
Kirkpatrick Chemical Engineering Achievement Award (2011)
Most noteworthy technology commercialized anywhere in the world
Only small company to win award since its inception in 1933
•
Rushlight Fossil Fuel’s Award and Energy Environment Award (2011)
Recognises leading energy, resource and environmental technologies / innovations
•
Institution of Chemical Engineers’ Innovative Product Award (2010)
Recognises the best product from the process industries
•
ChemInnovations’ Award (2010)
Organised by Chemical Engineering magazine
•
Chemical Industries Association’s Innovation Award (2010)
6 finalists including: Johnson Matthey; Eli Lilly; Huntsman
•
World XTL Award (2010)
Finalists included: ENI / IFP / Axens; Oryx GTL; Shell; Technip
•
Energy Institute’s Innovation Award (2009)
6 finalists including Shell UK; presented by Exxon Mobil
•
ICIS’ Innovation Award; SME(2009)
Sponsored by Dow Corning; 13 finalists
•
US National Academy of Sciences’ highest ranking (2009)
For Velocys’ successful $5 million hydro-processing grant proposal
•
TechColumbus’ Green Innovation Award (2008)
•
R&D 100’s Award (2008)
Known as the “Oscars of Innovation”
23
Velocys microchannel technology
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
Velocys FT reactor
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
24
Microchannel scale up = numbering up
Equivalent to conventional fixed bed reactors
•
•
•
PILOT
L A B O R AT O R Y
•
COMMERCIAL
D E M O N S T R AT I O N
•
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
Gas flow
Number of channels increases,
size does not
25
Super-active FT catalyst
Velocys catalyst is 10x more active than conventional
Catalyst Productivity (kg/m3/hr)
1600
1400
1200
1000
800
600
400
200
0
Fixed Bed
(Shell)
Slurry Bed
(Sasol)
Velocys
26
Exceptional FT catalyst stability
Operated for 2 years without regeneration
CO conversion
Current operation
approaching 3 yrs
Temperature
CH4 selectivity
27
High productivity (single stage with recycle)
>90% overall conversion with minimal recycle
100%
280
Equal to 91-92%
overall conversion
CO conversion
Equal to 94.5%
overall conversion
270
80%
260
70%
250
Regeneration
60%
Loss of
cooling
system
- high t.
50%
40%
240
230
220
Temperature
30%
Temperature, oC
% Conversion, % Selectivity
90%
210
20%
200
Methane selectivity
10%
190
0%
180
0
50
100
150
200
Time on Stream (days)
250
300
350
28
Appendix
Readiness
Supply chain
Ready for deployment
• Commercial FT reactor manufactured
Optimized final design for manufacture
at volume
Demonstrated and finalized service,
manufacture & quality protocols
• Catalyst service partner Mourik trained
and certified
Catalyst loaded
Process declared as “fit for commercial
application”
• Reactor approved as fit for deployment
by independent third party
Commercial reactor
Catalyst loading
30
Reactor design
Optimized for serviceability
Reactor size
optimized for
weight / crane
limits
Manways size and
location designed
with Mourik for
optimum access for
catalyst handling
Bottom manways
have elliptical heads
to allow liquid phase
product draining.
Removable for
catalyst change-out
Weld locations
optimized for
mass
manufacturing
Diameter 1. 5m
Length 4m (5m for a 4-core reactor)
31
Manufacturing
Ramping up for mass production
• Implementing multi-million dollar state-ofthe-art production cell at chosen supplier
Cost-effective mass production
Consistent high quality
In place by end 2013
Initial capacity supports 10,000 bpd/yr
of orders
Reactor manufacture
• Production cell is replicable and scalable
Cost effectively
Lead-time within plant order duration
• Plans in place to support a 4x capacity
increase
Designed for production
32
Pilot plant and training facility
Supporting sales and delivery
• 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
Add pilot plant photo
Pilot plant
33
Petrobras demonstration
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
34
Engineering partners
Ventech Engineers
• Placed reactor order for 1,400 bpd
capacity
8 commercial scale reactors ($8 million)
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
35
Integrated modular GTL facility
Site-specific client designs underway
36
Appendix
Announced projects
Calumet Specialty Products
Waxes in the Marcellus
• Selected to supply FT technology
for 1,400 bpd commercial GTL
plant integrated with existing
refinery
• Ventech completed plant design.
Provided fixed price quote for the
modules
• Third party due diligence by
Calumet’s owner's engineer
successfully completed
• Calumet progressing with the next
stage of detailed engineering
Site of GTL plant
Karns City, Pennsylvania
38
GreenSky London
Waste-to-fuels with British Airways
• Velocys selected by Solena
Fuels as FT supplier for
commercial waste-biomass-toliquids plant
• Solena GreenSky London plant
with partner British Airways
• Competitive selection process
after technology evaluation
advised by Fluor
• Pre-Front End Engineering in
final stages
• Expected to progress to FEED
by end of 2013
Picture courtesy of British Airways
39
Red Rock Biofuels
DOD sponsored biomass-to-liquids
• Selected as FT supplier to 1,100 bpd
biomass-to-liquids (BTL) plant
Plant site in Oregon
Forestry waste feedstock
• Supported by US Department of Defense
Received $4.1m phase 1 grant for
FEED
Eligible for $70m grant for construction
• FEED study underway
40
Pinto Energy
First project of several
• Velocys selected by Pinto Energy
Houston-based developer of GTL facilities in North America
Portfolio of sites for development of smaller scale GTL
• 2,800 bpd GTL plant in Ashtabula, Ohio, USA
Substantial existing infrastructure enhances economics
First phase of a multi-train facility
• Ventech began engineering in April 2013
• Air and water permits recently filed
41
Pinto Energy: Ashtabula project
Tapping into local shale gas (Marcellus & Utica)
Ashtabula
GTL Site
Will convert abundant
low-cost natural gas
into:
• Design complete end 2013
• Final notice to proceed H1 2014
• Plant start-up early 2016
• High value
specialty products
(solvents,
lubricants and
waxes)
• Ultra clean
transportation fuels
42
Pinto Energy: Ashtabula project
Substantial existing infrastructure
Lake Erie
Ashtabula GTL
Site benefits from access to substantial existing
infrastructure: waste water treatment; power plant;
cooling water pumping; air separation; gas pipeline; rail
and barge; local customers for by-products
43