IH2 Technology Economics Update

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IH2 Technology Economics Update

  1. 1. IH2 Technology Economics UpdatePat Leung, CRI Catalyst Company, 910 Louisiana, Houston, TX 77002ARTC Presentation6 March 2013
  2. 2. Disclaimer This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2011 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 6 March 2013 Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation.3/21/2013 2
  3. 3. Main Points• Introduce Gas Technology Institute (GTI) and CRI Catalyst (CRI)• What is the IH2 process?• Why does IH2 technology transform renewable fuels processing?• IH2 process economics• Where is IH2 in the commercial deployment?3/21/2013 3
  4. 4. Technology Heritage - GTI Snapshot• Not-for-profit gas research & services organization founded as IGT in 1941• Capabilities that span the natural gas value chain• Current focus is in diversified energy solutions• Facilities – 18 acre Chicago campus – 28 specialized labs totaling 200,000 ft2• Staff of 250• >1,200 patents and 750 licenses• ~500 products commercialized with partners Offices& Labs CRI is the partner for IH2 Pilot Scale Gasification Campus Energy & Environmental Technology Center3/21/2013 4
  5. 5. Technology Heritage - CRI Snapshot• Catalyst Business with 50+ year history• Houston based global business – Houston (One Shell Plaza) – London (Fareham) – Singapore (Tiong Bahru)• Research & Technology Facilities – Amsterdam – Bangalore – Houston• Manufacturing Facilities – US (3) – Germany – Belgium3/21/2013 5
  6. 6. What is the IH2 Process?• The IH2 process uses catalysts, hydrogen and heat to cost-effectively convert a wide variety of biomass directly into high purity hydrocarbon “drop in” fuels (i.e. B100) and/or high quality blend stock (e.g. >B50)• The IH2 process takes only minutes to convert biomass to hydrocarbons—Nature requires millions of years…• The IH2 process can be integrated into existing refinery, mill, ethanol plant, agricultural, or recycling operations to create higher value from biomass than afforded by heat and electrical power sales (NA basis)• The IH2 process is NOT Gasification/Fischer Tropsch3/21/2013 6
  7. 7. IH2 Process (Simplified, Stand Alone) Products Process Biogenic CO2 Feed City Waste Renewable H2 4) SMR C1-C3 Gas Hi Pressure Steam HDO’d Vapors Crop Residue Distilled 2) Fluidized Bed Hydrocarbon 3) Fixed Bed Wood/Forest Gasoline, Jet and Diesel Range HCs Residue Proprietary Proprietary B100 Regular Gasoline (Wood) Catalyst Catalyst Clean Water B100 Intermediate Gasoline (Wood) Renewable H2 Renewable H2 B60 + Diesel (Wood) Energy Crops 340-470C 370-400C <500psig <500psig Fertilizer Algae 1st Stage 2nd Stage BioChar 1) Feed Conditioning Sizing , Drying & Feeding Not Gasification / Fischer Tropsch!3/21/2013 7
  8. 8. Technology Differentiators• Fungible, high purity hydrocarbon fuel and/or blend stock products - Gasoline produced from wood passes ASTM specs (i.e. B100) for economy & mid octane - Diesel produced from wood too aromatic, currently ~B60, target is to get to B100 - Diesel produced from whole algae likely B100 (in testing)• Nearly carbon neutral*• Feedstock flexible with high product yields (67-157 US gal/US ton MAF)• Attractive economics (~ $2/gal for 500 dry MT/day wood feed USGC pricing) - Low capex (only 4 major process steps, low pressure, non corrosive) - Low opex (predominated by feedstock)• Exothermic process with 72% - 86% bioenergy recovery (wood)• No engineering miracles required! Ready for market *93% - 98% GHG reduction per Professor David Shonnard at MTU: http://services.lib.mtu.edu/etd/THESIS/2012/ChemicalEng/maleche/thesis.pdf3/21/2013 8
  9. 9. Techno-economic Analysis by NREL• NREL (National Renewable Energy Laboratory) is a primary laboratory of the US Department of Energy (DOE) for Renewable Energy and Energy Efficiency research & development• Comparing economics of different technologies on a similar set of assumptions such as: - nth plant - 2000 mt of dry biomass per day - 30-year plant life - 40% equity financing with 10% IRR - 60% debt financed at 8% interest rate• MFSP (Minimum Fuel Selling Price) can then be used to assess the cost-competitiveness of each technology3/21/2013 9
  10. 10. IH2 Process Estimates (USGC) NREL 06/11 Basis Installed Equipment Costs $112.6mln Operating Costs Total $1.60/gal* 4.7 Wood $71.97/dry ton Feed 17.7 29.6 Other Op Costs: Catalyst, 36.6 1st Stage HP/ 2nd Disposal, etc. Stage HC 5.9 Fixed Cost 6.8 Fractionation 17.3 91.31 Depreciation HMU 2.14 Avg Income Tax Utilities & Contingency 44.0 @ 35% 7.8 Avg ROI *Includes $0.093/gal coproduct credit Total Capital Investment $232.8mln • Stand Alone/Green Field (US Gulf Coast basis) • 2000mt/d wood (30% moisture fed, dried to 10% moisture at 1st stage) Installed Equipment Costs • Equipment cost - HMU is largest @ $44mln ~40% TIC Land/Develop • Feed Stock ~55% of Operating Cost 102.7 112.6 • No subsidies, tax, RIN or carbon credits included! Permits & S/U • Minimum Fuel Selling Price – $0.423/L (2007) $0.465/L (2012) Standard Project $1.60/gal $1.76/gal Add-Ins** • Refinery Synergy w/Refinery H2 Supply 11.7 5.7 • Estimated MFSP $0.359/L (2007) $0.394/L (2012) ** Prorated Expense (10%), H O & Construction (20%), Field $1.36/gal $1.49/gal Expense (10%), Working Capital (10%) , Project Contingency (30%) • NREL TIC validated by KBR pointing to higher HMU cost • Opex validated by prospective clientshttp://www.osti.gov/bridge/servlets/purl/1059031/1059031.pdf 3/21/2013 10
  11. 11. IH2 Process Estimates (USGC) NREL 09/12 BasisInstalled Equipment Costs $127.5mln Operating Costs Total $1.64/gal* 4.7 Feed Wood $71.97/dry ton 1st Stage/2nd Stage 17.7 29.6 Other Op Costs: Catalyst, 40.5 4.0 Fractionation Disposal, etc. 5.9 Fixed Cost HMU 17.3 91.31 Depreciation Ammonium Sulfate2.8 Absorption/Stripping 2.14 Avg Income Tax 2.8 55.0 Utilities & Contingency Avg ROI 7.8 @ 35% *Includes $0.1884/gal coproduct creditTotal Capital Investment $263mln • Stand Alone/Green Field (US Gulf Coast basis) Installed Equipment • 2000mt/d wood (30% moisture fed, dried to 10% moisture at 1st stage) Costs • Equipment cost - HMU is largest @ $55mln ~45% TIC 116.5 Land/Develop • Feed Stock ~55% of Operating Cost 127.5 • No subsidies, tax, RIN or carbon credits included! Permits & S/U • Minimum Fuel Selling Price – $0.433/L (2007) $0.476/L (2012) Standard Project • $1.64/gal $1.80/gal Add-Ins** • Refinery Synergy w/Refinery H2 Supply 13.2 6.3 • Estimated MFSP $0.359/L (2007) $0.394/L (2012) $1.36/gal $1.49/gal** Prorated Expense (10%), H O & Construction (20%), Field • KBR FEED underway (FEL-2 complete , FEL-3 underway)Expense (10%), Working Capital (10%) , Project Contingency (30%) • Opex validated by prospective clients3/21/2013 11
  12. 12. IH2 Technology Deployment• Bench Scale – Since 02/2009 @ 0.5kg/hr• Pilot Scale – Since 02/2012 @ 50kg/d – Confirmed bench scale results – Producing fuels for EPA Registration – Producing fuels for ASTM Qualification – Wood derived gasoline is B100!• Pre Commercial Scale – BDEP for 5mt/d cellulose done – 1st demonstration license awarded 12/2012, more expected in Q1 2013• Commercial Scale – KBR is CRI’s exclusive engineering partner for BDEP >330 t/d – BDEP 500 & 1000mt/d wood (FEL-2 and -3 underway) – Target Q1 2014 for full scale commercial deployment3/21/2013 12
  13. 13. Commercial Timeline, Current Status Demo Scale Units Only (11 units) Full Lab Scale Pilot Scale (Brownfield Construction; Date Basic Engineering Starts) Commercial 1Q10 Process 2Q10 Variables and Semi- Wood, 5-1000mt/d 3Q10 Continuous 4Q10 Operation Crop Residues, 5-10mt/d Construct 50kg/d 1Q11 Pilot Plant Micro Algae, 5mt/d 2Q11 Mixed Paper/OCC/Urban Wood, 5mt/d Receive Unit 3Q11 4Q11 Shake Down 1Q12 2Q12 Continuous Pilot Plant Operation 3Q12 Basic Engineering Began 1000m t/d 4Q12 Basic Engineering Began 500mt/dToday 1Q13 2Q13 Basic Engineering 5mt/d 3Q13 4Q13 1Q14 Basic/Detailed 2Q14 Engineering 3Q14 4Q14 Construction 3/21/2013 13
  14. 14. Executive SummaryThe IH2 technology is – a cost-effective process developed by GTI with US Dept of Energy co-funding that converts biomass directly to high purity hydrocarbon fuels and/or blend stocks using proprietary catalysts – self-sufficient and self-sustaining with little unsustainable impact on the surrounding environment needing only transport in/out of the site – feedstock agnostic, able to consume broad range of biomass straight, but feed can be mixed and changed routinely without process refinement – NOT gasification/Fischer-Tropsch – nearly carbon-neutral (LCA >93% GHG* reduction) – currently in basic engineering for multiple feed demonstrations – available exclusively from CRI3/21/2013 14
  15. 15. Thank You Learn more at www.cricatalyst.com/renewables3/21/2013 15

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