Technology Economics: Propylene via Metathesis

Propylene via Metathesis

#TEC001B Technology Economics Propylene Production via Metathesis 2013 AbstractPropylene is the raw material for a wide variety of products, and has established itself as the second major member of the globalolefins business, only after ethylene.Globally, the largest volume of propylene is produced in steam crackers and through the fluid-catalytic cracking (FCC) process.The propylene is typically considered a co-product in these processes, which are primarily driven by ethylene and motor gasolineproduction respectively.As a result, new and novel lower-cost chemical processes for on-purpose propylene production technologies are of high interestto the petrochemical marketplace. Such processes include: Metathesis, Propane Dehydrogenation, Methanol-to-Olefins/Methanol-to-Propylene, High Severity FCC, and Olefins Cracking.In this report, the production of propylene via metathesis from ethylene and butenes is reviewed. Included in the analysis is anoverview of the technology and economics of a process similar to the CB&I Lummus OCT process. Both the capital investmentand the operating costs are presented for a plant constructed in 2011 in the US Gulf and Germany.Also, alternative ways to produce propylene via butenes-only metathesis, called self-metathesis, as well as via ethylene-onlymetathesis, through the use of an ethylene dimerization unit together with a metathesis plant, were presented. Discussionsregarding the integration of a metathesis unit with an olefin plant are also presented.Copyrights © 2013 by Intratec Solutions LLC. All rights reserved. Printed in the United States of America.

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Contents About this Study .............................................................................................................................................................. 8 Object of Study.............................................................................................................................................................................................................................8 Analysis Performed ....................................................................................................................................................................................................................8 Construction Scenarios ..............................................................................................................................................................................................................8 Location Basis ...................................................................................................................................................................................................................................9 Design Conditions......................................................................................................................................................................................................................9 Study Background ........................................................................................................................................................ 10 About Propylene ......................................................................................................................................................................................................................10 Introduction.................................................................................................................................................................................................................................... 10 Applications.................................................................................................................................................................................................................................... 10 Manufacturing Alternatives ..............................................................................................................................................................................................11 Licensor(s) & Historical Aspects......................................................................................................................................................................................13 Technical Analysis......................................................................................................................................................... 14 Chemistry.......................................................................................................................................................................................................................................14 Raw Material ................................................................................................................................................................................................................................14 Ethylene ............................................................................................................................................................................................................................................ 15 2-Butenes ......................................................................................................................................................................................................................................... 15 Technology Overview...........................................................................................................................................................................................................16 Detailed Process Description & Conceptual Flow Diagram.......................................................................................................................17 Area 100: Purification & Reaction ......................................................................................................................................................................................17 Area 200: Separation ................................................................................................................................................................................................................. 17 Key Consumptions ..................................................................................................................................................................................................................... 18 Technical Assumptions ........................................................................................................................................................................................................... 18 Labor Requirements.................................................................................................................................................................................................................. 18 ISBL Major Equipment List.................................................................................................................................................................................................20 OSBL Major Equipment List ..............................................................................................................................................................................................21 Other Process Remarks ........................................................................................................................................................................................................22 Typical Complete Process Scheme..................................................................................................................................................................................22 Other Process Scenarios .........................................................................................................................................................................................................22 Economic Analysis........................................................................................................................................................ 252 FREE SAMPLE

General Assumptions............................................................................................................................................................................................................25 Project Implementation Schedule...............................................................................................................................................................................26 Capital Expenditures..............................................................................................................................................................................................................26 Fixed Investment......................................................................................................................................................................................................................... 26 Working Capital............................................................................................................................................................................................................................ 29 Other Capital Expenses ...........................................................................................................................................................................................................30 Total Capital Expenses ............................................................................................................................................................................................................. 30 Operational Expenditures ..................................................................................................................................................................................................30 Manufacturing Costs................................................................................................................................................................................................................. 30 Historical Analysis........................................................................................................................................................................................................................ 31 Economic Datasheet .............................................................................................................................................................................................................31Regional Comparison & Economic Discussion.................................................................................................... 34 Regional Comparison............................................................................................................................................................................................................34 Capital Expenses.......................................................................................................................................................................................................................... 34 Operational Expenditures......................................................................................................................................................................................................34 Economic Datasheet................................................................................................................................................................................................................. 34 Economic Discussion ............................................................................................................................................................................................................35References....................................................................................................................................................................... 37Acronyms, Legends & Observations....................................................................................................................... 38Technology Economics Methodology................................................................................................................... 39 Introduction.................................................................................................................................................................................................................................39 Workflow........................................................................................................................................................................................................................................39 Capital & Operating Cost Estimates ............................................................................................................................................................................41 ISBL Investment............................................................................................................................................................................................................................ 41 OSBL Investment ......................................................................................................................................................................................................................... 41 Working Capital............................................................................................................................................................................................................................ 42 Start-up Expenses ....................................................................................................................................................................................................................... 42 Other Capital Expenses ...........................................................................................................................................................................................................43 Manufacturing Costs................................................................................................................................................................................................................. 43 Contingencies ............................................................................................................................................................................................................................43 Accuracy of Economic Estimates..................................................................................................................................................................................44 Location Factor..........................................................................................................................................................................................................................44Appendix A. Mass Balance & Streams Properties............................................................................................... 46Appendix B. Utilities Consumption Breakdown ................................................................................................. 48 FREE SAMPLE 3

Appendix C. Process Carbon Footprint ................................................................................................................. 49 Appendix D. Equipment Detailed List & Sizing................................................................................................... 50 Appendix E. Detailed Capital Expenses................................................................................................................. 54 Direct Costs Breakdown ......................................................................................................................................................................................................54 Indirect Costs Breakdown ..................................................................................................................................................................................................55 Appendix F. Economic Assumptions...................................................................................................................... 56 Capital Expenditures..............................................................................................................................................................................................................56 Construction Location Factors ...........................................................................................................................................................................................56 Working Capital............................................................................................................................................................................................................................ 56 Other Capital Expenses ...........................................................................................................................................................................................................56 Operational Expenditures ..................................................................................................................................................................................................57 Fixed Costs ...................................................................................................................................................................................................................................... 57 Depreciation................................................................................................................................................................................................................................... 57 EBITDA Margins Comparison...............................................................................................................................................................................................57 Appendix G. Released Publications ........................................................................................................................ 58 Appendix H. Technology Economics Form Submitted by Client ................................................................. 594 FREE SAMPLE

List of TablesTable 1 – Construction Scenarios Assumptions (Based on Degree of Integration) ......................................................................................9Table 2 – Location & Pricing Basis ....................................................................................................................................................................................................9Table 3 – General Design Assumptions .......................................................................................................................................................................................9Table 4 – Major Propylene Consumers......................................................................................................................................................................................10Table 5 – Metathesis Reactions for Propylene......................................................................................................................................................................14Table 6 – Isobutene Side Reactions .............................................................................................................................................................................................14Table 7 – Typical Crude C4 Stream from an Olefins Plant ............................................................................................................................................15Table 8 – Raw Materials & Utilities Consumption (per ton of Product)...............................................................................................................18Table 9 – Design & Simulation Assumptions.........................................................................................................................................................................18Table 10 – Labor Requirements for a Typical Plant ...........................................................................................................................................................18Table 11 – Main Streams Operating Conditions and Composition.......................................................................................................................20Table 12 – Inside Battery Limits Major Equipment List...................................................................................................................................................20Table 13 – Outside Battery Limits Major Equipment List ..............................................................................................................................................21Table 14 – Integration of a Metathesis Unit with a Naphtha Steam Cracker ..................................................................................................22Table 15 – Butenes Auto-Metathesis Reactions ..................................................................................................................................................................24Table 16 – Base Case General Assumptions...........................................................................................................................................................................25Table 17 – Bare Equipment Cost per Area (USD Thousands).....................................................................................................................................26Table 18 – Total Fixed Investment Breakdown (USD Thousands) ..........................................................................................................................26Table 19 – Working Capital (USD Million) ................................................................................................................................................................................29Table 20 – Other Capital Expenses (USD Million) ...............................................................................................................................................................30Table 21 – CAPEX (USD Million)......................................................................................................................................................................................................30Table 22 – Manufacturing Fixed Cost (USD/ton) ................................................................................................................................................................30Table 23 – Manufacturing Variable Cost (USD/ton)..........................................................................................................................................................31Table 24 – OPEX (USD/ton)................................................................................................................................................................................................................31Table 25 – Technology Economics Datasheet: Propylene via Metathesis at US Gulf..............................................................................33Table 26 – Technology Economics Datasheet: Propylene via Metathesis in Germany ...........................................................................36Table 27 – Project Contingency......................................................................................................................................................................................................43Table 28 – Criteria Description.........................................................................................................................................................................................................43Table 29 – Accuracy of Economic Estimates .........................................................................................................................................................................44Table 30 – Detailed Material Balance Stream Properties...............................................................................................................................................46Table 31 – Detailed Material Balance Stream Properties...............................................................................................................................................47Table 32 – Utilities Consumption Breakdown ......................................................................................................................................................................48 FREE SAMPLE 5

Table 33 – Assumptions for CO2e Emissions Calculation.............................................................................................................................................49 Table 34 – CO2e Emissions (ton/ton prod.)............................................................................................................................................................................49 Table 35 – Reactors..................................................................................................................................................................................................................................50 Table 36 – Heat Exchangers ..............................................................................................................................................................................................................50 Table 37 – Pumps......................................................................................................................................................................................................................................51 Table 38 – Columns.................................................................................................................................................................................................................................52 Table 39 – Utilities Supply...................................................................................................................................................................................................................52 Table 40 – Vessels & Tanks Specifications ................................................................................................................................................................................53 Table 41 – Indirect Costs Breakdown for the Base Case (USD Thousands) ......................................................................................................55 Table 42 – Detailed Construction Location Factor............................................................................................................................................................56 Table 43 – Working Capital Assumptions for Base Case................................................................................................................................................56 Table 44 – Other Capital Expenses Assumptions for Base Case...............................................................................................................................56 Table 45 – Other Fixed Cost Assumptions ..............................................................................................................................................................................57 Table 46 – Depreciation Value & Assumptions ....................................................................................................................................................................576 FREE SAMPLE

List of FiguresFigure 1 – OSBL Construction Scenarios .....................................................................................................................................................................................8Figure 2 – Propylene from Multiple Sources .........................................................................................................................................................................12Figure 3 – Process Block Flow Diagram.....................................................................................................................................................................................16Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram.....................................................................................................................19Figure 5 – Typical Integration Between Olefin Plant and Metathesis Unit.......................................................................................................23Figure 6 – Metathesis Technology Alternatives ..................................................................................................................................................................24Figure 7 – Project Implementation Schedule.......................................................................................................................................................................25Figure 8 – Total Direct Cost of Different Integration Scenarios (USD Thousands) ......................................................................................28Figure 9 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) .......................................................................28Figure 10 – Total Fixed Investment Validation (USD Million).....................................................................................................................................29Figure 11 – OPEX and Product Sales History (USD/ton) ................................................................................................................................................32Figure 12 – EBITDA Margin & IP Indicators History Comparison..............................................................................................................................32Figure 13 – CAPEX per Location (USD Million).....................................................................................................................................................................34Figure 14 – Operating Costs Breakdown per Location (USD/ton) .........................................................................................................................35Figure 15 – Methodology Flowchart...........................................................................................................................................................................................40Figure 16 – Location Factor Composition...............................................................................................................................................................................44Figure 17 – ISBL Direct Costs Breakdown by Equipment Type for Base Case ................................................................................................54Figure 18 – OSBL Direct Costs Breakdown by Equipment Type for Base Case..............................................................................................54Figure 19 – Historical EBITDA Margins Regional Comparison ...................................................................................................................................57 FREE SAMPLE 7

About this Study This study follows the same pattern as all Technology Economics studies developed by Intratec and is based on Analysis Performed the same rigorous methodology and well-defined structure (chapters, type of tables and charts, flow sheets, etc.). Construction Scenarios This chapter summarizes the set of information that served The economic analysis is based on the construction of a as input to develop the current technology evaluation. All plant partially integrated to a petrochemical complex, in required data were provided through the filling of the which feedstock is locally provided but propylene product Technology Economics Form available at Intratec’s website. must be stored to be sent outside the complex. Therefore, storage is only required for the product. Utilities supply You may check the original form in the “Appendix H. facilities must also be built, since there is no utility supply Technology Economics Form Submitted by Client”. from the existing petrochemical complex. Since the Outside Battery Limits (OSBL) requirements– Object of Study storage and utilities supply facilities – significantly impact the capital cost estimates for a new venture, they may play a This assignment assesses the economic feasibility of an decisive role in the decision as to whether or not to invest. industrial unit for propylene production via metathesis from Thus, in this study three distinct OSBL configurations are ethylene and butenes implementing technology similar to compared. Those scenarios are summarized in Figure 1 and the CB&I Lummus OCT process. Table 1. The current assessment is based on economic data gathered on Q3 2011 and a chemical plant’s nominal capacity of 350 kta (thousand metric tons per year). Figure 1 – OSBL Construction Scenarios Non-Integrated Partially Integrated Fully Integrated Products Storage Products Storage Products Consumer ISBL Unit ISBL Unit ISBL Unit Raw Materials Raw Materials Raw Materials Storage Provider Provider Petrochemical Complex Petrochemical Complex Grassroots unit Unit is part of a petrochemical complex Most infrastructure is already installedIntratec | About this Study Source: Intratec – www.intratec.us 8 FREE SAMPLE

Table 1 – Construction Scenarios Assumptions (Based on Degree of Integration)Storage Capacity (Base Case for Evaluation) Feedstock & Chemicals 20 days of operation Not included Not included End-products & By-products 20 days of operation 20 days of operation Not includedUtility Facilities Included All required All required Only refrigeration units Control room, labs, gate house, Control room, labs,Support & Auxiliary Facilities maintenance shops, maintenance shops, Control room and labs(Area 900) warehouses, offices, change warehouses house, cafeteria, parking lotSource: Intratec – www.intratec.usLocation Basis The assumptions that distinguish the two regions analyzed in this study are provided in Table 2.Table 2 – Location & Pricing Basis Design ConditionsBasis: Q3-2011 US Gulf Germany The process analysis is based on rigorous simulation modelsLocation Factor 1.00 1.32 developed on Aspentech Aspen Plus and Hysys, whichPricing support the design of the chemical process, equipment and OSBL facilities.PG Propylene USD/ton 1690 1294Raffinate-2 USD/ton 1043 962 The design assumptions employed are depicted in Table 3.Ethylene USD/ton 1304.7 1246.7Cooling Water USD/m3 0.0005 0.0016 Table 3 – General Design AssumptionsLP Steam USD/ton 15.4 50.2Inert Gas USD/Nm3 0.10 0.15 Cooling water temperature 24 °CElectricity USD/kWh 0.07 0.12 Cooling water range 11 °CFuel USD/MMBtu 4.4 14.4 Steam (Low Pressure) 7 bar absOperator Salaries USD/man-hour 56.8 75.8 Refrigerant (Propylene) -45 °CSupervisor Salaries USD/man-hour 85.3 113.7 Wet Bulb Air Temperature 25 °CSource: Intratec – www.intratec.us Source: Intratec – www.intratec.usRegional specific conditions influence both constructionand operating costs. This study compares the economic Intratec | About this Studyperformance of two identical plants operating in differentlocations: the US Gulf Coast and Germany. FREE SAMPLE 9

Study Background About Propylene While CG propylene is used extensively for most chemical derivatives (e.g., oxo-alcohols, acrylonitrile, etc.), PG propylene is used in polypropylene and propylene oxide Introduction manufacture. Propylene is an unsaturated organic compound having the PG propylene contains minimal levels of impurities, such as chemical formula C3H6. It has one double bond, is the carbonyl sulfide, that can poison catalysts. second simplest member of the alkene class of hydrocarbons, and is also second in natural abundance. Thermal & Motor Gasoline Uses Propylene has a calorific value of 45.813 kJ/kg, and RG propylene can be used as fuel if more valuable uses are unavailable locally (i.e., propane – propene splitting to Propylene 2D structure chemical-grade purity). RG propylene can also be blended into LPG for commercial sale. Propylene is produced primarily as a by-product of petroleum refining and of ethylene production by steam Also, propylene is used as a motor gasoline component for cracking of hydrocarbon feedstocks. Also, it can be octane enhancement via dimerization – formation of produced in an on-purpose reaction (for example, in polygasoline or alkylation. propane dehydrogenation, metathesis or syngas-to-olefins plants). It is a major industrial chemical intermediate that Chemical Uses serves as one of the building blocks for an array of chemical The principal chemical uses of propylene are in the and plastic products, and was also the first petrochemical manufacture of polypropylene, acrylonitrile, oxo-alcohols, employed on an industrial scale. propylene oxide, butanal, cumene, and propene oligomers. Commercial propylene is a colorless, low-boiling, Other uses include acrylic acid derivatives and ethylene – flammable, and highly volatile gas. Propylene is traded propene rubbers. commercially in three grades: Global propylene demand is dominated by polypropylene Polymer Grade (PG): min. 99.5% of purity. production, which accounts for about two-thirds of total propylene demand. Chemical Grade (CG): 90-96% of purity. Refinery Grade (RG): 50-70% of purity. Table 4 – Major Propylene Consumers Applications Polypropylene Mechanical parts, containers, fibers, films Acrylonitrile Acrylic fibers, ABS polymers The three commercial grades of propylene are used for different applications. RG propylene is obtained from Propylene glycol, antifreeze, Propylene oxide refinery processes. The main uses of refinery propylene are polyurethaneIntratec | Study Background in liquefied petroleum gas (LPG) for thermal use or as an Oxo-alcohols Coatings, plasticizers octane-enhancing component in motor gasoline. It can Cumene Polycarbonates, phenolic resins also be used in some chemical syntheses (e.g., cumene or isopropanol). The most significant market for RG propylene Coatings, adhesives, super absorbent Acrylic acid is the conversion to PG or CG propylene for use in the polymers production of polypropylene, acrylonitrile, oxo-alcohols and Source: Intratec – www.intratec.us propylene oxide. 10 FREE SAMPLE

phases. This process converts heavy gas oil preferentiallyManufacturing Alternatives into gasoline and light gas oil.Propylene is commercially generated as a co-product, either The propylene yielded from olefins plants and FCC units isin an olefins plant or a crude oil refinery’s fluid catalytic typically considered a co-product in these processes, whichcracking (FCC) unit, or produced in an on-purpose reaction are primarily driven by ethylene and motor gasoline(for example, in propane dehydrogenation, metathesis or production, respectively. Currently, the markets havesyngas-to-olefins plants). evolved to the point where modes of by-product production can no longer satisfy the demand for propylene.Globally, the largest volume of propylene is produced inNGL (Natural Gas Liquids) or naphtha steam crackers, which A trend toward less severe cracking conditions, and thus togenerates ethylene as well. In fact, the production of increase propylene production, has been observed in steampropylene from such a plant is so important that the name cracker plants using liquid feedstock. As a result, new and“olefins plant” is often applied to this kind of manufacturing novel lower-cost chemical processes for on-purposefacility (as opposed to “ethylene plant”). In an olefins plant, propylene production technologies are of high interest topropylene is generated by the pyrolysis of the incoming the petrochemical marketplace. Such processes include:feed, followed by purification. Except where ethane is usedas the feedstock, propylene is typically produced at levels Olefin Metathesis. Also known as disproportionation,ranging from 40 to 60 wt% of the ethylene produced. The metathesis is a reversible reaction between ethyleneexact yield of propylene produced in a pyrolysis furnace is a and butenes in which double bonds are broken andfunction of the feedstock and the operating severity of the then reformed to form propylene. Propylene yields ofpyrolysis. about 90 wt% are achieved. This option may also be used when there is no butene feedstock. In this case,The pyrolysis furnace operation usually is dictated by part of the ethylene feeds an ethylene-dimerizationcomputer optimization, where an economic optimum for unit that converts ethylene into butene.the plant is based on feedstock price, yield structures,energy considerations, and market conditions for the Propane Dehydrogenation. A catalytic process thatmultitude of products obtained from the furnace. Thus, converts propane into propylene and hydrogen (by-propylene produced by steam cracking varies according to product). The yield of propylene from propane iseconomic conditions. about 85 wt%. The reaction by-products (mainly hydrogen) are usually used as fuel for the propaneIn an olefins plant purification area, also called separation dehydrogenation reaction. As a result, propylenetrain, propylene is obtained by distillation of a mixed C3 tends to be the only product, unless local demandstream, i.e., propane, propylene, and minor components, in exists for the hydrogen by-product.a C3-splitter tower. It is produced as the overheaddistillation product, and the bottoms are a propane- Methanol-to-Olefins/Methanol-to-Propylene. Aenriched stream. The size of the C3-splitter depends on the group of technologies that first converts synthesis gaspurity of the propylene product. (syngas) to methanol, and then converts the methanol to ethylene and/or propylene. The process alsoThe propylene produced in refineries also originates from produces water as by-product. Synthesis gas isother cracking processes. However, these processes can be produced from the reformation of natural gas or by thecompared to only a limited extent with the steam cracker steam-induced reformation of petroleum productsfor ethylene production because they use completely such as naphtha, or by gasification of coal. A largedifferent feedstocks and have different production amount of methanol is required to make a world-scaleobjectives. ethylene and/or propylene plant. Intratec | Study BackgroundRefinery cracking processes operate either purely thermally High Severity FCC. Refers to a group of technologiesor thermally – catalytically. By far the most important that use traditional FCC technology under severeprocess for propene production is the fluid- catalytic conditions (higher catalyst-to-oil ratios, higher steamcracking (FCC) process, in which the powdery catalyst flows injection rates, higher temperatures, etc.) in order toas a fluidized bed through the reaction and regeneration maximize the amount of propylene and other light products. A high severity FCC unit is usually fed with FREE SAMPLE 11

gas oils (paraffins) and residues, and produces about These on-purpose methods are becoming increasingly 20-25 wt% propylene on feedstock together with significant, as the shift to lighter steam cracker feedstocks greater volumes of motor gasoline and distillate by- with relatively lower propylene yields and reduced motor products. gasoline demand in certain areas has created an imbalance of supply and demand for propylene. Olefins Cracking. Includes a broad range of technologies that catalytically convert large olefins molecules (C4-C8) into mostly propylene and small amounts of ethylene. This technology will best be employed as an auxiliary unit to an FCC unit or steam cracker to enhance propylene yields. Figure 2 – Propylene from Multiple Sources Naphtha Steam Cracker NGL Gas Oil Refinery FCC Unit RG Propylene CG/PG Propylene Propane PDH Ethylene/ Metathesis Butenes Methanol MTO/MTP Gas Oil High Severity FCCIntratec | Study Background C4 to C8 Olefins Cracking Olefins Source: Intratec – www.intratec.us 12 FREE SAMPLE

Licensor(s) & Historical AspectsBy the 1960s, Phillips Petroleum developed the firstcommercial process of olefin metathesis. The focus, at thattime, was to convert propylene into ethylene and 2-butene.This technology was developed in an effort to increaseethylene and butene production from “low value” cracker-derived propylene to meet the growing market demand forpolyethylene and polybutadiene. A plant based on thePhillips Triolefin technology was operational from 1965 to1972 by Shawinigan Chemicals, in Canada, until itsshutdown due to economic reasons. The plant had thecapacity to process 50 thousand tons of propylene per year(kta), that was obtained from a naphtha steam cracker,producing 15 kta of ethylene and 30 kta of butenes.The fact that metathesis is a reversible reaction, and that thedemand for polymer grade (PG) propylene grew from the1970s on, led to the use of the Phillips Triolefin process in areverse way. This reverse process is known as OlefinConversion Technology (OCT), and is now offered forlicense by Lummus Technology, a CB&I Company. LummusOCT was first used in 1985 by Equistar (now a wholly ownedsubsidiary of LyondellBasell industries), in the United States,to produce propylene by using ethylene and butenes. Theunits capacity was expanded in 1992.The Institut Français du Pétrole (IFP) and the ChinesePetroleum Corporation (CPC) have jointly worked todevelop a process for the production of propylene, calledMeta-4. This technology is currently being developed byFrance’s Axens, a subsidiary of IFP, formed in 2001 throughthe merger of IFP’s licensing division with ProcatalyseCatalysis & Adsorbents; however, until April 2012 Meta-4was not commercialized. Intratec | Study Background FREE SAMPLE 13

Technical Analysis Chemistry Metathesis is a general term for a reversible reaction between two olefins, in which the double bonds are broken Table 6 – Isobutene Side Reactions and then reformed to form new olefin products. In order to produce propylene by metathesis, a molecule of 2-butene and a molecule of ethylene are combined in the presence Isobutene + 2-butene propylene + 2-methyl 2- of a tungsten oxide catalyst to form two molecules of Fast butene propylene. Isobutene + 1-butene ethylene + 2-methyl 2- Slow pentene Source: Intratec – www.intratec.us Ethylene 2-Butene Propylene The reaction of isobutene with ethylene is also non- The following table summarizes the reactions that occur in productive. If neglected, the concentration of this non- the metathesis reactor. All reactions are essentially reactive species in the metathesis unit builds up, due to isothermal. process recycles, reducing capacity. Raw Material Table 5 – Metathesis Reactions for Propylene As previously explained, the raw materials for the production of propylene via metathesis reaction are ethylene and 2-butenes. Both components are mainly 2-butene + ethylene 2 propylene Fast supplied from steam cracker units (olefins plants). FCC units 1-butene + 2-butene propylene + 2-pentene Fast can also be used as a source of such olefins. 1-butene + 1-butene ethylene + 3-hexene Slow Steam cracker units are facilities in which a feedstock such Source: Intratec – www.intratec.us as naphtha, liquefied petroleum gas (LPG), ethane, propane or butane is thermally cracked through the use of steam in a bank of pyrolysis furnaces to produce lighter hydrocarbons. The reaction of 1-butene with ethylene is non-productive, occupying catalyst sites but producing no product. So a The products obtained depend on the composition of the magnesium oxide co-catalyst is added to the metathesis feed, the hydrocarbon-to-steam ratio, and on the cracking reactor to induce double bond isomerization reaction temperature and furnace residence time. causing the shift from 1-butene to 2-butene and allows Light hydrocarbon feeds such as ethane, LPGs, or light continued reaction. naphtha produce lighter products, mainly ethylene, When isobutene is present in the metathesis reactor, side propylene, and butadiene, with smaller amounts of heavierIntratec | Technical Analysis reactions occur, as presented in Table 6 – Isobutene Side by-products. Heavier hydrocarbon feeds such as naphtha Reactions. produce these lighter products, but also produce aromatic hydrocarbons, and hydrocarbons suitable for inclusion in gasoline or fuel oil. 14 FREE SAMPLE

The higher cracking temperature (also referred to asseverity) favors the production of ethylene and benzene, Table 7 – Typical Crude C4 Stream from an Olefins Plantwhereas lower severity produces higher amounts ofpropylene, C4-hydrocarbons and liquid products.After the pyrolysis process, the olefins are separated from C4 acetylenes Tracesthe other by-products by distillation. Butadiene 33 1-butene 15Ethylene 2-butenes 9High-purity ethylene (min. 99.5 wt% purity) can be obtained Isobutene 30from olefins plants. The use of PG ethylene in metathesisprocesses is desired because it requires minimal Iso-/normal- butanes 13pretreatment for trace components, while other sources of Source: Intratec – www.intratec.usethylene typically require more rigorous pretreatment.Although PG ethylene prices are higher, capital expenditurefor the metathesis unit is lower because no investment in Before feeding a metathesis process, the C4 stream frompretreatment is required. olefins plants must be treated.Besides steam crackers, other common sources of ethylene Usually, the butadiene and C4 acetylenes are removed firstare FCC off-gas and vents from polyethylene units. FCC off- to produce the designated raffinate-1. Such removal can begas is an inexpensive source of ethylene, because this accomplished through either hydrogenation or extractivestream is usually valued at fuel gas cost. Pretreatment, distillation.fractionation and refrigeration are necessary for recovery ofthe ethylene product; however, an FCC off-gas recovery The components remaining in the mixture consist of 1-system typically has an attractive internal rate of return (IRR). butene, 2-butene, isobutene, and iso-/n-butanes from the original feed, in addition to what was produced in thePolyethylene unit vents may not normally provide the hydrogenation steps, as well as a small quantity ofquantity of ethylene necessary to supply metathesis units; unconverted or unrecovered butadiene.consequently, other sources of ethylene would supplementany deficit. These vents must be treated to remove water Isobutene can be removed through fractionation ofand oxygen and a compressor is usually required to boost raffinate-1, reaction with methanol, reaction with water, orthe vent streams to a metathesis processing pressure. reaction with itself. In all cases, the resulting mixture may contain both normal and iso-paraffins.2-Butenes The product from isobutene removal is designatedThe 2-butenes used as feedstock for the metathesis process raffinate-2, and it consists primarily of normal olefins andare obtained from the crude C4 stream produced in olefins paraffins and minimal iso-olefins and iso-paraffins.plants. This C4 stream consists of C4 acetylenes, butadiene, Raffinate-2 is the most common source of butenes used iniso-/n-butenes, and iso-/n-butane. A typical composition is metathesis reactions.provided in Table 7. The paraffin components present in raffinate-2 areThe desired C4 stream in a metathesis process consists of n- essentially inert and do not react in the metathesis process.butenes (mainly 2-butenes), low amounts of isobutene (to Such paraffins are typically removed from the process via aavoid excess capacity due to excess recycling) and is almost purge stream in the separation system that follows the Intratec | Technical Analysisdevoid of butadiene (to avoid rapid catalyst fouling) and metathesis reactor.acetylenes. Iso-/n-butanes are inert to the metathesisprocess. 1 The components in a refinery or FCC based C4 cut are similar, with the exception that the percentage of paraffins is considerably greater. FREE SAMPLE 15

Technology Overview The reactor product is cooled and fractionated to remove The Lummus OCT process for propylene consists of two ethylene for recycle. A small portion of this recycle stream is main areas: purification & reaction, and separation. The purged to remove methane, ethane, and other light simplified block flow diagram in Figure 3 summarizes the impurities from the process. The ethylene column bottom process. is fed to the propylene column where butenes are separated for recycle to the reactor, and some is purged to Ethylene feed plus recycled ethylene are mixed with the remove butanes, isobutylenes, and heavies from the butenes feed plus recycled butenes and heated prior to process. The propylene column overhead is high-purity, PG propylene product. The catalyst promotes the reaction of ethylene and butene- This process description is for a stand-alone metathesis unit 2 to form propylene, and simultaneously isomerizes butene- 1 to butene-2. A small amount of coke is formed on the complex. The utility requirements – which include cooling catalyst, so the beds are periodically regenerated using water, steam, electricity, fuel gas, nitrogen, and air – are nitrogen-diluted air. The ethylene-to-butene feed ratio to typically integrated with the existing complex. and maintain the per-pass butene conversion above 60%. Typical butene conversions range between 60 to 75%, with about 90% selectivity to propylene. Figure 3 – Process Block Flow Diagram Ethylene Recycle Light Ends Fuel Gas Ethylene Feed Area 100 Area 200 Purification & PG Propylene Separation Reaction Butene Feed Heavy Ends Fuel Gas Butene Recycle Source: Intratec – www.intratec.usIntratec | Technical Analysis 16 FREE SAMPLE

(WO3/SiO2). Also, the co-catalyst magnesium oxide (MgO)Detailed Process Description & is used to perform a double bond isomerization of 1-buteneConceptual Flow Diagram to 2-butene.This section describes the process for production of The raffinate-2 stream used in the metathesis unit ispropylene via metathesis in detail. This description refers to typically free of butadiene and has low isobutene content.a process similar to Lummus OCT process; however, some Butadiene is typically removed below 50 wt ppm level anddifferences may be found, as all of the information herein it is done to minimize fouling of the catalyst. Isobutene ispresented is based on publicly available information. removed to reduce the size of the metathesis unit. Isobutene is not a poison to the catalyst, but it reacts in theFor the purpose of this report, n-butenes, with a purity of metathesis reactor at low conversion, which results in build-80%, will be considered raffinate-2. The process is divided up of this molecule in the internal butenes recycle streaminto two main areas: purification & reaction, and separation. and increases hydraulic requirement and sizes of the equipment. Commercial units are in operation with about 7For a better understanding of the process, please refer to wt% isobutene in the raffinate-2 feed stream.the Inside Battery Limits Conceptual Process Flow Diagram;the Main Streams Operating Conditions and Composition; Coke, a by-product of the reaction, is deposited on theand the Inside Battery Limits Major Equipment List, catalyst throughout the process. During regeneration thepresented in the next pages. coke is burned in a controlled atmosphere. Systems required for regeneration include a fired regeneration gasArea 100: Purification & Reaction heater and a supply of inert gas (usually nitrogen), compressed air, and hydrogen. Each reactor can run forFirst, fresh ethylene from ISBL storage tank and recycled about 30 days before requiring regeneration.ethylene are mixed with fresh and recycled butenes, andare fed through reactor feed treaters. The treaters consist of Area 200: Separationguard beds to remove potential catalyst poisons for themetathesis reaction, such as oxygenates, sulfur, alcohols, The reactor exit stream contains a mixture of propylene,carbonyls, and water. The guard beds have a cyclic unconverted ethylene and butenes, butane, and some C5+operation. One is normally in operation, while the other is components from side reactions.regenerating. Propylene purification is carried out in two columns. TheAfter treating, the stream is vaporized in a heat exchanger first column separates unreacted ethylene for reuse in theand superheated in a fired heater to the reaction reactor. The second column produces PG propylene as antemperature, typically between 280-320°C. overhead product and a bottom heavies stream.The reactor feed contains ethylene and n-butenes, mainly 2- The stream leaving the reactor is first cooled against thebutenes, at the desired reaction ratio. reactor feed stream in an exchanger, and then cooled against cooling water before being sent to theAlthough the theoretical molar ratio between ethylene and deethylenizer column.butenes is 1:1, it is common to employ significantly greaterethylene/butene ratios to minimize undesirable side The column is re-boiled by low pressure (LP) steam, andreactions, and to minimize C5+ olefin formation. The per- uses propylene refrigeration in the top condenser.pass butene conversion is between 60 and 75%. Cryogenic temperatures exist due to the presence of unconverted ethylene in the top of the column. Pressure ofThe metathesis reaction occurs in a fixed bed catalytic the column is dependent upon the available refrigeration. Intratec | Technical Analysisreactor. The main reaction that occurs is between ethyleneand 2-butenes, to produce propylene. Side reactions also The deethylenizer column overhead (unconvertedoccur, producing by-products, primarily C5-C8 olefins. The ethylene) is recycled back to the reaction area through thereactor exit stream is cooled prior to the separation area. column reflux pumps. The recycled ethylene stream is mixed with fresh ethylene, fresh butenes (raffinate-2) streamThe process selectivity to propylene is typically about 90%. and recycled butenes stream. A small vent streamThe catalyst used is tungsten oxide supported on silica containing light paraffins and a small amount of FREE SAMPLE 17

unconverted ethylene leaves the overhead of the deethylenizer reflux vessel as a lights purge stream. This Table 9 – Design & Simulation Assumptions stream can be returned to the ethylene cracker for recovery. The bottom stream of the deethylenizer column is sent to the depropylenizer column for propylene recovery. The Simulation Software Aspen Hysys depropylenizer column separates PG propylene in the Thermodynamic Model Peng-Robinson overhead from a heavies product stream (C4+) in the bottoms. PG propylene and heavies streams are sent to the product ISBL storage tank and C4+ purge storage tank Ethylene 99.9 wt% respectively. LP steam is used in the reboiler and cooling Butenes on C4 stream 80 wt% water in the top condenser. A side-stream from the bottoms of the column is sent back Temperature 304 oC as butenes recycled stream to the fresh/recycle C4 tank. This rate is set to maintain a high overall n-butenes Pressure 30 bar abs conversion in the metathesis reactors. The column’s Conversion (of Butenes) 67% bottoms can be sent to another column for recovery of Selectivity (Butenes to Propylene) 90% gasoline and fuel oil. Ethylene: Butene Molar Feed Ratio 2 Key Consumptions MgO and Catalyst WO3/SiO2 Source: Intratec – www.intratec.us Table 8 – Raw Materials & Utilities Consumption (per ton of Product) Labor Requirements Raffinate-2 0.97 ton Ethylene 0.32 ton Table 10 – Labor Requirements for a Typical Plant Cooling Water 68.3 m3 LP Steam 1.0 ton Non-Integrated Plant 5 1 Inert Gas 32.1 Nm3 Partially Integrated Plant 5 1 Electricity 286 kWh Fully Integrated Plant 3 1 Fuel 0.5 MMBtu Source: Intratec – www.intratec.us Fuel By-Product 12.8 MMBtu Source: Intratec – www.intratec.us Technical AssumptionsIntratec | Technical Analysis All process design and economics are based on world-class capacity units that are competitive globally. Assumptions regarding the thermodynamic model used, reactor design basis and the raw materials composition are shown in Table 9. All data used to develop the process flow diagram was based on publicly available information. 18 FREE SAMPLE

Figure 4 – Inside Battery Limits Conceptual Process Flow Diagram Ethylene from OSBL 19 For Disposal 1 T-102 2 7 11 P-101A/B 10 Butenes V-101B (Raffinate-2) F-101 from OSBL P-102A/B 6 V-101A R-102A R-102B E-101 4 8 9 Fuel 5 Nitrogen, P-103A/B Hydrogen, F-102 T-101 Air Fuel 13 23 Butenes Ethylene Recycle Recycle CW E-201 CW E-203 14 RF (C3=) CR-201 CW CR-202 Lights 24 Purge CV-201 CV-202 CP-201A/B CP-202A/B #1 #1 18 PG Propylene P-202A/B #30 C-202 16 C-201 to OSBL #34 P-201A/B T-201 #60 #62 #65 LP ST LP ST CC-201 CC-202 15 21 25 CW T-202 E-202 Heavies Purge P-203A/B Intratec | Technical AnalysisSource: Intratec – www.intratec.us FREE SAMPLE 19

Table 11 – Main Streams Operating Conditions and Composition Phase L L G L/G L L G L Temperature (°C) -29 30 304 53 -25 107 -25 113 Pressure (bar abs) 22 6.0 30 30 22 17 22 17 Mass Flow (kg/h) 12,940 38,950 161,520 161,490 33,820 75,800 120 11,760 Ethylene (wt%) 99.9 21.0 21.0 100.0 100.0 Ethane (wt%) 0.1 traces traces traces traces Propene (wt%) 24.9 24.9 traces 0.5 0.1 Butane (wt%) 20.0 40.1 39.9 75.1 63.5 C5+ (wt%) 5.0 5.1 7.4 22.4 Source: Intratec – www.intratec.us Table 11 presents the main streams composition and operating conditions. For a more complete material ISBL Major Equipment List balance, see the “Appendix A. Mass Balance & Streams Table 12 shows the equipment list by area. It also presents Properties.” a brief description and the construction materials used. Information regarding utilities flow rates is provided in Find main specifications for each piece of equipment in “Appendix B. Utilities Consumptions Breakdown.” For “Appendix D. Equipment Detailed List & Sizing.” further details on greenhouse gas emissions caused by this process, see “Appendix C. Process Carbon Footprint.” Table 12 – Inside Battery Limits Major Equipment List Area 100 E-101 Feed Vaporizer CS Area 100 F-101 Reactor Feed Heater Cr-Mo Area 100 F-102 Regeneration Gas Heater Cr-Mo Area 100 P-101A/B Ethylene Feed Pumps CS Area 100 P-102A/B Raffinate-2 Feed Pumps CS Area 100 P-103A/B C4 Tank Pumps CS Area 100 R-102A/B Metathesis Reactor SSIntratec | Technical Analysis Area 100 T-101 Fresh/Recycle C4 Tank CS Area 100 T-102 Ethylene ISBL Storage CS Area 100 V-101A/B Reactor Feed Treaters CS Area 200 C-201 Deethylenizer Column CS Source: Intratec – www.intratec.us 20 FREE SAMPLE

Table 12 – Inside Battery Limits Major Equipment List (Cont.)Area 200 C-202 Depropylenizer Column CSArea 200 CC-201 Deethylenizer Condenser CSArea 200 CC-202 Depropylenizer Condenser CSArea 200 CP-201 Deethylen. Reflux Pumps CSArea 200 CP-202 Depropylen. Reflux Pumps CSArea 200 CR-201 Deethylenizer Reboiler CSArea 200 CR-202 Depropylenizer Reboiler CSArea 200 CV-201 Deethylenizer Accumulator CSArea 200 CV-202 Depropylen. Accumulator CSArea 200 E-201 Deethylenizer Feed Cooler CSArea 200 E-202 C4+ Purge Cooler CSArea 200 E-203 Butenes Recycle Cooler CSArea 200 P-201A/B Propylene Pumps CSArea 200 P-202A/B Ethylene Recycle Pumps CSArea 200 P-203A/B C4+ Pumps CSArea 200 T-201 Product ISBL Storage CSArea 200 T-202 C4+ Purge Storage CSSource: Intratec – www.intratec.usOSBL Major Equipment List Table 13 shows the list of tanks located on the storage area and the energy facilities required in the construction of a non-integrated unit.The OSBL is divided into three main areas: storage (Area700), energy & water facilities (Area 800), and support &auxiliary facilities (Area 900).Table 13 – Outside Battery Limits Major Equipment ListArea 700 T-701 Ethylene Storage CSArea 700 T-702 Raffinate Storage CSArea 700 T-703 Propylene Storage CSArea 700 T-704 Demin. Water Tank CS Intratec | Technical AnalysisArea 700 T-705 Clarified Water Tank CSArea 800 U-802 Refrigerator CSArea 800 U-803 Cooling Tower CSArea 800 U-804 Steam boiler CSArea 800 U-805 Water Demineralizer CSSource: Intratec – www.intratec.us FREE SAMPLE 21

steam crackers. The lower energy consumption also Other Process Remarks improves the operating margin. Typical Complete Process Scheme Currently, most of the propylene produced is a by-product Table 14 – Integration of a Metathesis Unit with a from steam cracking units that primarily produce ethylene, Naphtha Steam Cracker or a by-product from FCC units that primarily produce gasoline. With the maturity of olefin plants technology, improvements downstream of the steam cracker are more economically promising than improvements in the cracking technology itself. Cracker C3=/C2= ratio 0.67 0.47 Overall C3=/C2= ratio 0.67 0.67 In this context, the use of a metathesis unit downstream of an olefin plant can bring benefits such as reducing the Material balance (1,000 ton/year) energy used and the carbon emissions, as well as increasing Naphtha feed 3,094 3,047 propylene production. Net ethylene 1,000 1,000 The impact of a metathesis unit to an olefin plant material Net propylene 670 670 balance to achieve a conventional, low severity, propylene- Benzene 207 312 to-ethylene ratio of 0.67 is analyzed in Table 14. Two cases are presented: a standalone steam cracker unit, without Pyrolysis gasoline 654 396 metathesis, and a steam cracker integrated with a Energy consumption Base = 100 87 metathesis unit. As shown in the table, at a constant overall Total investment Base = 100 94 net ethylene and propylene production of 1 million ton/year and 670,000 ton/year respectively, the steam Source: Intratec – www.intratec.us cracker integrated with a metathesis unit considerably improves the overall plant material balance. Investment costs are also lower. As shown in Table 14, Compared to the standalone steam cracker, the integrated capital costs are reduced by about 6%. The investment case consumes about 2% less fresh feedstock, while costs associated with the ISBL ethylene plant are reduced producing 50% more benzene and only 60% of the due to lower plant throughput (individual ethylene plant remaining, lower-valued pyrolysis gasoline. In addition, the system loadings), lower fired duty, and a significant energy consumption of the integrated case is about 13% reduction in the size of the propylene fractionator system, lower. The reason for this reduction is that fewer olefins are which is the single most costly tower system in the ethylene produced by thermal cracking in the integrated case, plant. thereby lowering the fired duty of the cracking heaters and the energy consumed in the recovery area. Finally, OSBL costs are reduced due to the minimization in energy consumption. The savings associated with these In the standalone steam cracker case, 1.67 million ton/year units more than offset the investment costs associated with of ethylene and propylene are produced by thermal the metathesis unit. cracking. In the integrated case, 1.49 million ton/year of ethylene and propylene are produced by thermal cracking, Figure 5 shows the most typical integration arrangement with the remaining propylene (0.18 million ton/year) being between a metathesis unit and a naphtha steam cracker. produced by the metathesis unit. The 13% reduction in energy consumption results in a 13% reduction inIntratec | Technical Analysis Other Process Scenarios greenhouse gas emissions. Figure 6 illustrates propylene production alternatives via This level of reduction is significant and, as such, could be metathesis using only one feedstock: ethylene or butenes. one of the major contributing routes to meeting olefin industry goals of lower greenhouse gas emissions from 22 FREE SAMPLE

Ethylene as the Only Feedstock Butene as the Only FeedstockIn some cases, there is not enough butene to use in a In some regions, the supply of ethylene is tight and/ormetathesis unit to achieve the desired propylene ethylene is expensive, making the building of aproduction, as in the case when the feedstocks producer is conventional metathesis unit unfeasible without subsidies.an ethane steam cracker, which, while it makes largevolumes of ethylene, makes insufficient butene for the Other disadvantages of conventional metathesis are:metathesis reaction. Ethane crackers are the most commoncrackers used in the Middle East. Intensive Use of Energy. Conventional metathesis reactions take place with ethylene, which requires anFor such cases an ethylene dimerization unit can be added intensive use of energy in the ethylene recirculationupstream of the metathesis process as a butene-2 source. loop by using cryogenic refrigeration.Dimerization of ethylene to butenes occurs in a liquid phase Feedstock Loss. Removing butadiene byloop reactor according to the following reaction: hydrogenation from the butenes feed before its use in a conventional metathesis results in the hydroisomerization of the butenes to paraffins, representing a feedstock loss of 10%+. Furthermore, removing isobutene by fractionation of the butenes feed before its use in a conventional metathesis results Ethylene 2-Butene in an additional loss of butenes, since 1-butene is difficult to separate from isobutene without an expensive fractionation tower.Figure 5 – Typical Integration Between Olefin Plant and Metathesis Unit PG Propylene PG Ethylene PG Propylene Naphtha Steam Naphtha Metathesis Unit C4+ Purge Cracker Crude C4s Raffinate-2 Butadiene Raffinate-1 Isobutene Extraction Extraction Intratec | Technical Analysis Butadiene IsobuteneSource: Intratec – www.intratec.us FREE SAMPLE 23

Although the yield of propylene is high in the conventional In 2003, a semi-commercial unit owned by Sinopec in metathesis process, the aforementioned disadvantages Tianjin (China), was built to demonstrate auto-metathesis motivated the development of a different process, in which and 1-hexene production. This facility maximizes the 1- a metathesis reaction occurs with butenes as the only butene/1-butene metathesis reaction to produce 3-hexene, feedstock. This process is called butenes auto-metathesis, and then isomerizes the 3-hexene to 1-hexene. The plant or self-metathesis. has the capacity to produce 2 kta of 1-hexene. In the process, a stream comprised of 1-butene plus 2- butene is admixed with recycled butenes and pentenes in the metathesis reactor. The stream leaving the reactor is Table 15 – Butenes Auto-Metathesis Reactions sent to a separation unit, composed of distillation columns. (1) 1-butene + 2-butene propylene + 2-pentene The stream can contain C4 paraffins, but the amount of isobutene should not exceed 2% of the feed mixture. Table (2) 1-butene + 1-butene ethylene + 3-hexene 15 shows the reactions that can occur in the process. (3) 2-pentene + 1-butene propylene + 3-hexene (4) 2-pentene 1-pentene (isomerization) The reactions (1) and (2) are the main auto-metathesis reactions. Reactions (3), (4) and (5) occur while the 2- (5) 1-pentene + 2-butene propylene + 2-hexene pentenes formed through the main reaction are recycled Source: Intratec – www.intratec.us back to the reactor. Figure 6 – Metathesis Technology Alternatives Butenes Metathesis Ethylene Dimerization Metathesis CG/PG Propylene Source: Intratec – www.intratec.usIntratec | Technical Analysis 24 FREE SAMPLE

Economic AnalysisGeneral Assumptions In Table 16, the IC Index stands for Intratec chemical plant Construction Index, an indicator, published monthly by Intratec, to scale capital costs from one time period toThe general assumptions for the base case of this analysis another.are outlined below. This index reconciles prices trends of fundamental components of a chemical plant construction such as labor,Table 16 – Base Case General Assumptions material and energy, providing meaningful historical and forecast data for our readers and clients.Engineering & Construction Location US Gulf The assumed operating hours per year indicated does notAnalysis Date Q3 2011 represent any technology limitation; rather, it is anIC Index 158.1 assumption based on usual industrial operating ratesOSBL Scenario Partially Integrated Additionally, Table 16 discloses assumptions regarding theNominal Capacity 350 kta project complexity, technology maturity and data reliability,Operating Hours per Year 8,000 which are of major importance for attributing reasonableAnnual Production 320 kta contingencies for the investment and for evaluating the overall accuracy of estimates. Definitions and figures forProject Complexity Simple both contingencies and accuracy of economic estimatesTechnology Maturity Licensed can be found in this publication in the chapter “Technology Economics Methodology.”Data Reliability HighSource: Intratec – www.intratec.usFigure 7 – Project Implementation Schedule Basic Engineering Detailed Engineering Procurement Construction Total EPC Phase Intratec | Economic Analysis Start-up 0 1 2 3 4 5 6 7 8 QuartersSource: Intratec – www.intratec.us FREE SAMPLE 25

Project Implementation “Appendix E. Detailed Capital Expenses” provides a detailed breakdown for the direct expenses, outlining the share of Schedule each type of equipment in total. The main objective of knowing upfront the project After defining the total direct cost, the TFI is established by implementation schedule is to enhance the estimates for adding field indirects, engineering costs, overhead, contract both capital initial expenses and return on investment. fees and contingencies. The implementation phase embraces the period from the decision to invest to the start of commercial production. Table 18 – Total Fixed Investment Breakdown (USD This phase can be divided into five major stages: (1) Basic Thousands) Engineering, (2) Detailed Engineering, (3) Procurement, (4) Construction, and (5) Plant Start-up. Bare Equipment 92,990 The duration of each phase is detailed in Figure 7. Equipment Setting 330 Piping 7,060 Capital Expenditures Civil 3,930 Steel 3,610 Fixed Investment Instrumentation & Control 2,590 Table 17 shows the bare equipment cost associated with Electrical 2,140 each area of the project. Insulation 2,360 Paint 670 Table 17 – Bare Equipment Cost per Area (USD Thousands) Engineering & Procurement 5,840 Construction Material & Indirects 18,140 ISBL G & A Overheads 4,020 Area 100 6,440 Contract Fee 3,620 Area 200 5,400 OSBL Area 700 67,910 Area 800 8,760 Project Contingency 22,095 Process Contingency 4,480 Other - Scaling Exponent Source: Intratec – www.intratec.us Up 0.87 Down 0.79 Source: Intratec – www.intratec.us Table 18 presents the breakdown of the total fixed investment (TFI) per item (direct & indirect costs and process contingencies). For further information about the Indirect costs are defined by the American Association ofIntratec | Economic Analysis components of the TFI please see the chapter “Technology Cost Engineers (AACE) Standard Terminology as those Economics Methodology”. "costs which do not become a final part of the installation but which are required for the orderly completion of the Fundamentally, the direct costs are the total direct material installation." and labor costs associated with the equipment (including installation bulks). The total direct cost represents the total bare equipment installed cost. 26 FREE SAMPLE

The indirect project expenses are further detailed in“Appendix E. Detailed Capital Expenses.”Alternative OSBL ConfigurationsThe total fixed investment for the construction of a newchemical plant is greatly impacted by how well it will beable to take advantage of the infrastructure already installedin that location.For example, if there are nearby facilities consuming a unit’sfinal product or supplying a unit’s feedstock, the need forstorage facilities significantly decreases, along with the totalfixed investment required. This is also true for supportfacilities that can serve more than one plant in the samecomplex, such as a parking lot, gate house, etc.This study analyzes the total fixed investment for threedistinct scenarios regarding OSBL facilities: Non-integrated Plant Plant Partially Integrated Plant Fully IntegratedThe detailed definition, as well as the assumptions used foreach scenario is presented in the chapter “About this Study”The influence of the OSBL facilities on the capitalinvestment is depicted in Figure 8 and in Figure 9. Intratec | Economic Analysis FREE SAMPLE 27

Figure 8 – Total Direct Cost of Different Integration Scenarios (USD Thousands) Area 100 Area 200 Area 700 Area 800 Area 900 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Non-Integrated Partially Integrated Fully Integrated Source: Intratec – www.intratec.us Figure 9 – Total Fixed Investment of Different Integration Scenarios (USD Thousands) Direct Expenses Indirect Expenses Project Contingency 300,000 250,000 200,000 150,000 100,000 50,000 0 Non-Integrated Partially Integrated Fully IntegratedIntratec | Economic Analysis Source: Intratec – www.intratec.us 28 FREE SAMPLE

Fixed Investment Discussion Working CapitalFigure 10 compares and validates the total fixed investment Working capital, described in Table 19, is another significantestimated in the previous section. Each point depicted in investment requirement. It is needed to meet the costs ofthe chart represents a different plant TFI value announced labor; maintenance; purchase, storage, and inventory ofin the international press during the last few years. All of field materials; and storage and sales of product(s).the total fixed investments announced are adjusted to thesame basis (date and location of the analysis) and compared Assumptions for working capital calculations are found into the TFI curves estimated by Intratec for different OSBL “Appendix F. Economic Assumptions.”integration scenarios.TFI differences are primarily driven by how integrated the Table 19 – Working Capital (USD Million)plant will be with respect to raw material suppliers andproduct consumers. Raw Materials Inventory 0.7In fact, the metathesis unit is usually constructed near a Products Inventory 30.4steam cracker or FCC unit not only because of synergistic In-process Inventory 1.5economies in their capital costs, but for the easy access tofeedstock. Supplies and Stores 0.3 Cash on Hand 22.1 Accounts Receivable 45.6 Accounts Payable (44.2) Source: Intratec – www.intratec.usFigure 10 – Total Fixed Investment Validation (USD Million) 500 450 400 350 300 250 200 150 100 50 0 0 100 200 300 400 500 600 700 Plant Capacity (kta) Intratec | Economic Analysis TFI (Announced in Press) Fully Integrated Partially Integrated Non-IntegratedSource: Intratec – www.intratec.us FREE SAMPLE 29

Other Capital Expenses Table 21 – CAPEX (USD Million) Start-up costs should also be considered when determining the total capital expenses. During this period, expenses are Total Fixed Investment 169 incurred for employee training, initial commercialization costs, manufacturing inefficiencies and unscheduled plant Working Capital 56 modifications (adjustment of equipment, piping, Other Capital Expenses 22 instruments, etc.). Initial costs are not addressed in most studies on estimating Source: Intratec – www.intratec.us but can become a significant expenditure. For instance, the initial catalyst load in reactors may be a significant cost and, in that case, should also be included in the capital estimates. Operational Expenditures The purchase of technology through paid-up royalties or Manufacturing Costs licenses is considered to be part of the capital investment. The manufacturing costs, also called Operational Other capital expenses frequently neglected are land Expenditures (OPEX), are composed of two elements: a fixed acquisition and site development. Although these are small cost and a variable cost. All figures regarding operational parts of the total capital expenses, they should be included. costs are presented in USD per ton of product. Table 22 shows the manufacturing fixed cost. Table 20 – Other Capital Expenses (USD Million) To learn more about the assumptions for manufacturing fixed costs, see the “Appendix F. Economic Assumptions.” Initial Catalyst Load 0.1 Start-up Expenses Operator Training 1.3 Table 22 – Manufacturing Fixed Cost (USD/ton) Commercialization Costs 5.4 Operating Labor Cost 7.1 Start-up Inefficiencies 5.4 Supervision Labor Cost 2.1 Unscheduled Plant Modifications 3.4 Maintenance Cost 8.5 Prepaid Royalties 1.7 Operating Charges 2.3 Land & Site Development 4.2 Plant Overhead 8.9 G and A Cost 30.1 Source: Intratec – www.intratec.us Source: Intratec – www.intratec.us Assumptions used to calculate other capital expenses are provided in “Appendix F. Economic Assumptions.” Table 23 discloses the manufacturing variable cost Total Capital Expenses breakdown.Intratec | Economic Analysis Table 21 presents a summary of the total Capital Expenditures (CAPEX) detailed in previous sections. 30 FREE SAMPLE

Economic DatasheetTable 23 – Manufacturing Variable Cost (USD/ton) The Technology Economic Datasheet, presented in TableRaffinate-2 1,015.3 25, is an overall evaluation of the technologys production costs in a US Gulf Coast based plant.Ethylene 422.2 The expected revenues in products sales and initialCooling Water 0.03 economic indicators are presented for a short-term assessment of its economic competitiveness.LP Steam 15.6Inert Gas 0.1Electricity 20.9Fuel 2.2Source: Intratec – www.intratec.usTable 24 shows the OPEX of the presented technology.Table 24 – OPEX (USD/ton)Manufacturing Fixed Cost 59.1Manufacturing Variable Cost 1,476.2Source: Intratec – www.intratec.usHistorical AnalysisFigure 11 depictures Sales and OPEX historic data. Figure 12compares the project EBITDA trends with IntratecProfitability Indicators (IP Indicators). The Basic Chemicals IPIndicator represents basic chemicals sector profitability,based on the weighted average EBITDA margins of majorglobal basic chemicals producers. Alternately, the ChemicalSector IP Indicator reveals the overall chemical sectorprofitability, through a weighted average of the IP Indicatorscalculated for three major chemical industry niches: basic, Intratec | Economic Analysisspecialties and diversified chemicals. FREE SAMPLE 31

Figure 11 – OPEX and Product Sales History (USD/ton) OPEX (Cash Cost) Product Sales 2,500 2,000 1,500 1,000 500 0 Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11 Source: Intratec – www.intratec.us Figure 12 – EBITDA Margin & IP Indicators History Comparison EBITDA Margin Basic Chemicals IP Indicator Chemical Sector IP Indicator 25% 20% 15% 10% 5% 0% Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11Intratec | Economic Analysis Source: Intratec – www.intratec.us 32 FREE SAMPLE

Table 25 – Technology Economics Datasheet: Propylene via Metathesis at US Gulf 2011 350 kta unit (Production: 320 kta) TFI Working Capital Other Capital Exp. IC Index: 158.1 169 57 22Raffinate-2 0.97 ton/ton prod. 1,043 USD/ton 324.9 1,015.3Ethylene 0.32 ton/ton prod. 1,304 USD/ton 135.1 422.2Cooling Water 68.3 m3/ton prod. 0.0005 USD/m3 0.01 0.03LP Steam 1.0 ton/ton prod. 15.3 USD/ton 5.0 15.6Inert Gas 32.1 Nm3/ton prod. 0.004 USD/Nm3 0.04 0.1Electricity 286 kWh/ton prod. 0.1 USD/kWh 6.7 20.9Fuel 0.5 MMBtu/ton prod. 4.4 USD/MMBtu 0.7 2.2Operating Labor Cost 5 operators/shift 56.8 USD/oper./h 2.3 7.1Supervision Labor Cost 1 supervisors/shift 85.3 USD/sup./h 0.7 2.1Maintenance Cost 2.7 8.5Operating Charges 25% of Operating Labor Costs 0.7 2.3Plant Overhead 50% of Operating Labor and Maint. Costs 2.8 8.9G and A Cost 2% of Operating Costs 9.6 30.1Depreciation Annual Value 10% of TFI 16.9 52.9PG Propylene 1 ton/ton prod. 1690 USD/ton 540.8 1,690Fuel By-Product 13 MMBtu/ton prod. 4.29 USD/MMBtu 17.6 54.9EBITDA Margin 12.0%Chemical Sector IP Indicator 15.5% Intratec | Economic AnalysisEBIT Margin 9.0%Source: Intratec – www.intratec.us FREE SAMPLE 33

Regional Comparison & Economic Discussion Regional Comparison Figure 13 summarizes the total Capital Expenditures (CAPEX) for the locations under analysis. Capital Expenses Operational Expenditures Variations in productivity, labor costs, local steel prices, Specific regional conditions influence prices for raw equipment imports needs, freight, taxes and duties on materials, utilities and products. Such differences are thus imports, regional business environments and local reflected in the operating costs. An OPEX breakdown availability of sparing equipment were considered when structure for the different locations approached in this study comparing capital expenses for the different regions under is presented in Figure 14. consideration in this report. Capital costs are adjusted from the base case (a plant Economic Datasheet constructed on the US Gulf Coast) to locations of interest by using location factors calculated according to the items The Technology Economic Datasheet, presented in Table aforementioned. For further information about location 26, is an overall evaluation of the technologys capital factor calculation, please examine the chapter “Technology investment and production costs in the alternative location Economics Methodology.” In addition, the location factors analyzed in this study. for the regions analyzed are further detailed in “Appendix F. Economic Assumptions.” Figure 13 – CAPEX per Location (USD Million) Total Fixed Investment Other Capital Expenses Working Capital 350 300 250 200Intratec | Regional Comparison & Economic Discussion 150 100 50 0 US Gulf Germany Source: Intratec – www.intratec.us 34 FREE SAMPLE

Figure 14 – Operating Costs Breakdown per Location (USD/ton) Net Raw Materials Costs Main Utilities Consumptions Fixed Costs 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1,200 US Gulf GermanySource: Intratec – www.intratec.usEconomic Discussion Historically, the US and Europe have exhibited low EBITDA margins and therefore projects of Lummus OCT units in such regions are less commonplace. However, installing aEthylene costs range from USD 400 to USD 420 per ton of metathesis unit inside a petrochemical complex requirespropylene representing about 27% of the total low capital investment. That, coupled with special marketmanufacturing expenses both at the US Gulf Coast and in and price conditions can make projects in these, and other,Germany, while butene costs, between USD 937 and 1,015 regions more economically appealing.per ton (as raffinate-2), represent from 62% to 66% of thosecosts. Together, these raw materials account for more than90% of the total manufacturing expenses.The values at which ethylene and butene feedstocks areacquired will consequently play a decisive role in theeconomic feasibility of a metathesis unit. While ethyleneprices are between USD 1,240 and 1,750 per ton, butene Intratec | Regional Comparison & Economic Discussionvalues range from USD 960 to 1,040.Furthermore, the process is fed with a butene-ethylenemass ratio of approximately 3:1 (butene as raffinate-2). As aresult, the valuation of butene becomes crucial in theoverall economics of the process.Producers that have access to cheap sources of suchmaterials can operate with improved competitiveness.Ethylene feedstocks for metathesis can be supplied fromeither steam crackers or off-gas extraction from FCC units.Butene feedstocks may be supplied from either steamcracker crude C4 or refinery FCC mixed butenes. FREE SAMPLE 35

Table 26 – Technology Economics Datasheet: Propylene via Metathesis in Germany 350 kta unit (Production: 320 kta) TFI Working Capital Other Capital Exp. IC Index: 158.1 223 56 25 Raffinate-2 0.97 ton/ton prod. 962 USD/ton 299.8 936.8 Ethylene 0.32 ton/ton prod. 1,247 USD/ton 129.1 403.4 Cooling Water 68 m3/ton prod. 0.0016 USD/m3 0.04 0.1 LP Steam 1.0 ton/ton prod. 50.2 USD/ton 16.4 51.4 Inert Gas 32.1 Nm3/ton prod. 0.15 USD/Nm3 1.5 4.7 Electricity 286 kWh/ton prod. 0.12 USD/kWh 10.9 34.1 Fuel 0.5 MMBtu/ton prod. 14.4 USD/MMBtu 2.3 7.1 Operating Labor Cost 5 operators/shift 75.8 USD/oper./h 3.0 9.5 Supervision Labor Cost 1 supervisors/shift 113.7 USD/sup./h 0.91 2.8 Maintenance Cost 3.6 11.2 Operating Charges 25% of Operating Labor Costs 1.0 3.1 Plant Overhead 50% of Operating Labor and Maint. Costs 3.8 11.8 G and A Cost 2% of Operating Costs 9.4 29.5 Depreciation Annual Value 10% of TFI 22.3 69.7Intratec | Regional Comparison & Economic Discussion PG Propylene 1 ton/ton prod. 1294 USD/ton 414.1 1,294.0 Fuel By-Product 12.8 MMBtu/ton prod. 14.4 USD/MMBtu 58.9 184.1 EBITDA Margin -1.9% Chemical Sector IP Indicator 15.5% EBIT Margin -6.6% Source: Intratec – www.intratec.us 36 FREE SAMPLE

ReferencesCarter, C. O., 1980. US, Patent No. Lummus Technology, 2010.4,242,531. s.l.:Provided by Lummus on August, 24th 2010.Carter, C. O., 1985. Lummus Technology, 2010. s.l.:Provided by Lummus on August, 24th, 2010.Chodorge, J. A., Cosyns, J., Commereuc, B. & Torck, B., 1997.Propylene Production from Butenes and Ethylene. Mol, J. C., 2004. Industrial Applications of Olefin Metathesis. , Spring. 213(1), pp. 39-45.Delaude, L. & Noels, A. F., 2007. Metathesis Section. In: Network China Industrial Information, n.d. s.l.:Wiley- [Online]Interscience. Available at: www.chyxx.com [Accessed 10 March 2012].Drake, C. A. & Reusser, R. E., 1986. US, Patent No. 4,575,575. Senetar, J. J. & Glover, B. K., 2010.Dwyer, C. L., 2006. Metathesis of Olefins. In: G. P. Chiusoli & P.M. Maitlis, eds. s.l.:Royal Society of Chemistry, pp. 201-217. Stanley, S., 2009. Cover Story – Ethylene Enhancement. , February.Eisele, P. & Killpack, R., 2002. Propene Section. In: s.l.:Wiley-Interscience. Sumner, C., 2009. US, PatentGartside, R. J. & Greene, M. I., 2007. No. 7,525,007 B2. US,Patent No. 7,214,841 B2. Takai, T. & Kubota, T., 2010. US, Patent No. 2010/0145126 A1.Gartside, R. J., Greene, M. I. & Jones, Q. J., 2004. Weidert, D. J., 2000.US, Patent No. 6,777,582 B2. s.l., AIChE 2000 Spring Meeting.Gartside, R. J. & Ramachandran, B., 2010. Zinger, S., 2005. One-purpose propylene production. , Q3.Hildreth, J. M., Dukandar, K. N. & Venner, R. M., 2009.Hydrocarbon Processing, 2005. s.l.:Gulf Publishing.Lummus Technology, 2009. Intratec | References [Online]Available at:www.cbi.com/images/uploads/tech_sheets/Olefins.pdf[Accessed 20 March 2012]. FREE SAMPLE 37

Acronyms, Legends & Observations AACE: American Association of Cost Engineers kta: thousands metric tons per year C: Distillation, stripper, scrubber columns (e.g., C-101 would LP ST: Low pressure steam denote a column tag) LPG: Liquefied petroleum gas C2, C3, ... Cn: Hydrocarbons with "n" number of carbon atoms MP ST: Medium pressure steam C2=, C3=, ... Cn=: Alkenes with "n" number of carbon atoms NGL: Natural gas liquids CAPEX: Capital Expenditures OCT: Olefin Conversion Technology CC: Distillation column condenser OPEX: Operational Expenditures CG: Chemical grade OSBL: Outside battery limits CP: Distillation column reflux pump P: Pumps (e.g., P-101 would denote a pump tag) CR: Distillation column reboiler PG: Polymer grade CV: Distillation column accumulator drum R: Reactors, treaters (e.g., R-101 would denote a reactor tag) CW: Cooling water RF: Refrigerant E: Heat exchangers, heaters, coolers, condensers, reboilers RG: Refinery grade (e.g., E-101 would denote a heat exchanger tag) ST: Steam EBIT: Earnings before Interest and Taxes Syngas: Synthesis gas EBITDA: Earnings before Interests, Taxes, Depreciation and Amortization T: Tanks (e.g., T-101 would denote a tank tag) F: Furnaces, fired heaters (e.g., F-101 would denote a TFI: Total Fixed Investment furnace tag) TPC: Total process cost FCC: Fluid-catalytic cracking V: Horizontal or vertical drums, vessels (e.g., V-101 wouldIntratec | Acronyms, Legends & Observations HP ST: High pressure steam denote a vessel tag) IC Index: Intratec Chemical Plant Construction Index WD: Demineralized water IP Indicator: Intratec Chemical Sector Profitability Indicator WP: Process water ISBL: Inside battery limits X: Special equipment (e.g., X-101 would denote a special equipment tag) K: Compressors, blowers, fans (e.g., K-101 would denote a compressor tag) Obs.: 1 ton = 1 metric ton = 1,000 kg 38 FREE SAMPLE

Technology Economics MethodologyIntratec Technology Economics methodology From this simulation, material balance calculations are performed around the process, key process indicators areensures a holistic, coherent and consistent identified and main equipment listed.techno-economic evaluation, ensuring a clearunderstanding of a specific mature chemical Equipment sizing specifications are defined based onprocess technology. Intratecs equipment design capabilities and an extensive use of AspenONE Engineering Software Suite that enables the integration between the process simulation developedIntroduction and equipment design tools. Both equipment sizing and process design are prepared in conformance with generallyThe same general approach is used in the development of accepted engineering standards.all Technology Economics assignments. To know moreabout Intratec’s methodology, see Figure 15. Then, a cost analysis is performed targeting ISBL & OSBL fixed capital costs, manufacturing costs, and overall workingWhile based on the same methodology, all Technology capital associated with the examined process technology.Economics studies present uniform analyses with identical Equipment costs are primarily estimated using Aspenstructures, containing the same chapters and similar tables Process Economic Analyzer (formerly Aspen Icarus)and charts. This provides confidence to everyone interested customized models and Intratecs in-house database.in Intratec’s services since they will know upfront what theywill get. Cost correlations and, occasionally, vendor quotes of unique and specialized equipment may also be employed. One ofWorkflow the overall objectives is to establish Class 3 cost estimates 2 with a minimum design engineering effort.Once the scope of the study is fully defined andunderstood, Intratec conducts a comprehensive Next, capital and operating costs are assembled in Microsoftbibliographical research in order to understand technical Excel spreadsheets, and an economic analysis of suchaspects involved with the process analyzed. technology is performed.Subsequently, the Intratec team simultaneously develops Finally, two analyses are completed, examining:the process description and the conceptual process flowdiagram based on: a. The total fixed investment in different construction scenarios, based on the level of integration of the planta. Patent and technical literature research with nearby facilitiesb. Non-confidential information provided by technology b. The capital and operating costs for a second different plant location Intratec | Technology Economics Methodology licensorsc. Intratecs in-house databased. Process design skills .Next, all the data collected are used to build a rigoroussteady state process simulation model in Aspen Hysysand/or Aspen Plus, leading commercial processflowsheeting software tools. 2 These are estimates that form the basis for budget authorization, appropriation, and/or funding. Accuracy ranges for this class of estimates are + 10% to + 30% on the high side, and - 10 % to - 20 % on the low side. FREE SAMPLE 39

Figure 15 – Methodology Flowchart Study Understanding - Validation of Project Inputs Patent and Technical Literature Databases Intratec Internal Database Bibliographical Research Non-Confidential Information from Aspen Plus, Aspen Hysys Technology Licensors or Technical Validation – Aspen Exchanger Design & Suppliers Process Description & Rating, KG Tower, Sulcol Flow Diagram and Aspen Energy Analyzer Material & Energy Balances, Key Vendor Quotes Process Indicators, List of Equipment & Equipment Sizing Aspen Process Economic Pricing Data Gathering: Raw Capital Cost (CAPEX) Analyzer, Aspen Capital Materials, Chemicals, & Operational Cost (OPEX) Cost Estimator, Aspen In- Utilities and Products Estimation Plant Cost Estimator & Intratec In-House Database Construction Location Factor Economic Analysis (http://base.intratec.us) Analyses of Different Construction Scenarios and Plant LocationIntratec | Technology Economics Methodology Project Development Phases Final Review & Information Gathering / Tools Adjustments Source: Intratec – www.intratec.us 40 FREE SAMPLE

Capital & Operating Cost Process equipment (e.g., reactors and vessels, heat exchangers, pumps, compressors, etc.)Estimates Process equipment sparesThe cost estimate presented in the current study considersa process technology based on a standardized design Housing for process unitspractice, typical of a major chemical company. The specificdesign standards employed can have a significant impact Pipes and supports within the main process unitson capital costs. Instruments, control systems, electrical wires and otherThe basis for the capital cost estimate is that the plant is hardwareconsidered to be built in a clear field with a typical largesingle-line capacity. In comparing the cost estimate hereby Foundations, structures and platformspresented with an actual project cost or contractors Insulation, paint and corrosion protectionestimate, the following must be considered: In addition to the direct material and labor costs, the ISBL Minor differences or details (many times, unnoticed) addresses indirect costs, such as construction overheads, between similar processes can affect cost noticeably. including: payroll burdens, field supervision, equipment The omission of process areas in the design considered rentals, tools, field office expenses, temporary facilities, etc. may invalidate comparisons with the estimated cost presented. OSBL Investment Industrial plants may be overdesigned for particular The OSBL investment accounts for auxiliary items necessary objectives and situations. to the functioning of the production unit (ISBL), but which perform a supporting and non-plant-specific role. OSBL Rapid fluctuation of equipment or construction costs items considered may vary from process to process. The may invalidate cost estimate. OSBL investment could include the installed cost of the following items: Equipment vendors or engineering companies may provide goods or services below profit margins during Storage and packaging (storage, bagging and a economic downturns. warehouse) for products, feedstocks and by-products Specific locations may impose higher taxes and fees, Steam units, cooling water and refrigeration systems which can impact costs considerably. Process water treating systems and supply pumpsIn addition, no matter how much time and effort aredevoted to accurately estimating costs, errors may occur Boiler feed water and supply pumpsdue to the aforementioned factors, as well as cost and laborchanges, construction problems, weather-related issues, Electrical supply, transformers, and switchgearstrikes, or other unforeseen situations. This is partially Intratec | Technology Economics Methodologyconsidered in the project contingency. Finally, it must Auxiliary buildings, including all services andalways be remembered that an estimated project cost is not equipment of: maintenance, stores warehouse,an exact number, but rather is a projection of the probable laboratory, garages, fire station, change house,cost. cafeteria, medical/safety, administration, etc. General utilities including plant air, instrument air, inertISBL Investment gas, stand-by electrical generator, fire water pumps, etc.The ISBL investment includes the fixed capital cost of themain processing units of the plant necessary to the Pollution control, organic waste disposal, aqueousmanufacturing of products. The ISBL investment includes waste treating, incinerator and flare systemsthe installed cost of the following items: FREE SAMPLE 41

Working Capital Cash on hand. An adequate amount of cash on hand to give plant management the necessary flexibility to For the purposes of this study, 3 working capital is defined as cover unexpected expenses (estimated as a certain the funds, in addition to the fixed investment, that a period – in days – of manufacturing expenses). company must contribute to a project. Those funds must be adequate to get the plant in operation and to meet Start-up Expenses subsequent obligations. When a process is brought on stream, there are certain one- The initial amount of working capital is regarded as an time expenses related to this activity. From a time investment item. This study uses the following standpoint, a variable undefined period exists between the items/assumptions for working capital estimation: nominal end of construction and the production of quality product in the quantity required. This period is commonly Accounts receivable. Products and by-products referred to as start-up. shipped but not paid by the customer; it represents the extended credit given to customers (estimated as a During the start-up period expenses are incurred for certain period – in days – of manufacturing expenses operator and maintenance employee training, temporary plus depreciation). construction, auxiliary services, testing and adjustment of equipment, piping, and instruments, etc. Our method of Accounts payable. A credit for accounts payable such estimating start-up expenses consists of four components: as feedstock, catalysts, chemicals, and packaging materials received but not paid to suppliers (estimated Labor component. Represents costs of plant crew as a certain period – in days – of manufacturing training for plant start-up, estimated as a certain expenses). number of days of total plant labor costs (operators, supervisors, maintenance personnel and laboratory Product inventory. Products and by-products (if labor). applicable) in storage tanks. The total amount depends on sales flow for each plant, which is directly related to Commercialization cost. Depends on raw materials plant conditions of integration to the manufacturing of and products negotiation, on how integrated the plant product‘s derivatives (estimated as a certain period – in is with feedstock suppliers and consumer facilities, and days – of manufacturing expenses plus depreciation, on the maturity of the technology. It ranges from 0.5% defined by plant integration circumstances). to 5% of annual manufacturing expenses. Raw material inventory. Raw materials in storage Start-up inefficiency. Takes into account those tanks. The total amount depends on raw material operating runs when production cannot be availability, which is directly related to plant conditions maintained or there are false starts. The start-up of integration to raw material manufacturing inefficiency varies according to the process maturity: (estimated as a certain period – in days – of raw 5% for new and unproven processes, 2% for new and material delivered costs, defined by plant integration proven processes, and 1% for existing licensed circumstances). processes, based on annual manufacturing expenses. In-process inventory. Material contained in pipelinesIntratec | Technology Economics Methodology Unscheduled plant modifications. A key fault that and vessels, except for the material inside the storage can happen during the start-up of the plant is the risk tanks (assumed to be 1 day of manufacturing that the product(s) may not meet specifications expenses). required by the market. As a result, equipment modifications or additions may be required. Supplies and stores. Parts inventory and minor spare equipment (estimated as a percentage of total maintenance materials costs for both ISBL and OSBL). 3 The accounting definition of working capital (total current assets minus total current liabilities) is applied when considering the entire company. 42 FREE SAMPLE

Other Capital Expenses Uncertainty in process parameters, such as severity of operating conditions and quantity of recycles Prepaid Royalties. Royalty charges on portions of the plant are usually levied for proprietary processes. A Addition and integration of new process steps value ranging from 0.5 to 1% of the total fixed investment (TFI) is generally used. Estimation of costs through scaling factors Site Development. Land acquisition and site Off-the-shelf equipment preparation, including roads and walkways, parking, railroad sidings, lighting, fencing, sanitary and storm Hence, process contingency is also a function of the sewers, and communications. maturity of the technology, and is usually a value between 5% and 25% of the direct costs.Manufacturing Costs The project contingency is largely dependent on the plant complexity and reflects how far the conducted estimation isManufacturing costs do not include post-plant costs, which from the definitive project, which includes, from theare very company specific. These consist of sales, general engineering point of view, site data, drawings and sketches,and administrative expenses, packaging, research and suppliers’ quotations and other specifications. In addition,development costs, and shipping, etc. during construction some constraints are verified, such as:Operating labor and maintenance requirements have been Project errors or incomplete specificationsestimated subjectively on the basis of the number of majorequipment items and similar processes, as noted in the Strike, labor costs changes and problems caused byliterature. weatherPlant overhead includes all other non-maintenance (laborand materials) and non-operating site labor costs forservices associated with the manufacture of the product. Table 27 – Project ContingencySuch overheads do not include costs to develop or marketthe product. Plant Complexity Complex Typical Simple Project Contingency 25% 20% 15%G & A expenses represent general and administrative costsincurred during production such as: administrative Source: Intratec – www.intratec.ussalaries/expenses, research & development, productdistribution and sales costs. Intratec’s definitions in relation to complexity and maturity are the following:ContingenciesContingency constitutes an addition to capital costestimations, implemented based on previously available Table 28 – Criteria Descriptiondata or experience to encompass uncertainties that may Intratec | Technology Economics Methodologyincur, to some degree, cost increases. According to Somewhat simple, widely known Simplerecommended practice, two kinds of contingencies are processesassumed and applied to TPC: process contingency and Typical Regular processproject contingency. Complexity Several unit operations, extreme Complex temperature or pressure, moreProcess contingency is utilized in an effort to lessen the instrumentationimpact of absent technical information or the uncertainty ofthat which is obtained. In that manner, the reliability of the New & From 1 to 2 commercial plantsinformation gathered, its amount and the inherent Maturity Provencomplexity of the process are decisive for its evaluation. Licensed 3 or more commercial plantsErrors that occur may be related to: Source: Intratec – www.intratec.us FREE SAMPLE 43

Accuracy of Economic Estimates A properly estimated location factor is a powerful tool, both The accuracy of estimates gives the realized range of plant for comparing available investment data and evaluating cost. The reliability of the technical information available is which region may provide greater economic attractiveness of major importance. for a new industrial venture. Considering this, Intratec has developed a well-structured methodology for calculating Location Factors, and the results are presented for specific Table 29 – Accuracy of Economic Estimates regions’ capital costs comparison. Very Intratec’s Location Factor takes into consideration the Reliability Low Moderate High High differences in productivity, labor costs, local steel prices, equipment imports needs, freight, taxes and duties on + 30% + 22% + 18% + 10% Accuracy imported and domestic materials, regional business - 20% - 18% - 14% - 10% environments and local availability of sparing equipment. Source: Intratec – www.intratec.us For such analyses, all data were taken from international statistical organizations and from Intratec’s database. Calculations are performed in a comparative manner, taking The non-uniform spread of accuracy ranges (+30 to – 20 %, a US Gulf Coast-based plant as the reference location. The rather than ±25%, e.g.) is justified by the fact that the final Location Factor is determined by four major indexes: unavailability of complete technical information usually Business Environment, Infrastructure, Labor, and Material. results in under estimating rather than over estimating project costs. The Business Environment Factor and the Infrastructure Factor measure the ease of new plant installation in Location Factor different countries, taking into consideration the readiness of bureaucratic procedures and the availability and quality of ports or roads. A location factor is an instantaneous, total cost factor used for converting a base project cost from one geographic location to another. Figure 16 – Location Factor Composition Location Factor Business Environment Material Index Labor Index Infrastructure Factor FactorIntratec | Technology Economics Methodology Domestic Material Index Local Labor Index Ports, Roads, Airports Readiness of Relative Steel Prices Relative Salary and Rails (Availability Bureaucratic Labor Index Productivity and Quality) Procedures Taxes and Freight Expats Labor Communication Legal Protection of Rates Technologies Investors Spares Warehouse Taxes Imported Material Infrastructure Taxes and Freight Border Clearance Rates Local Incentives Spares Source: Intratec – www.intratec.us 44 FREE SAMPLE

Labor and material, in turn, are the fundamentalcomponents for the construction of a plant and, for thisreason, are intrinsically related to the plant costs. Thisconcept is the basis for the methodology, which aims torepresent the local discrepancies in labor and material.Productivity of workers and their hourly compensation areimportant for the project but, also, the qualification ofworkers is significant to estimating the need for foreignlabor.On the other hand, local steel prices are similarly important,since they are largely representative of the costs ofstructures, piping, equipment, etc. Considering thecontribution of labor in these components, workers’qualifications are also indicative of the amount that needsto be imported. For both domestic and imported materials,a Spare Factor is considered, aiming to represent the needfor spare rotors, seals and parts of rotating equipment.The sum of the corrected TFI distribution reflects the relativecost of the plant, this sum is multiplied by the Infrastructureand the Business Environment Factors, yielding the LocationFactor.For the purpose of illustrating the conducted methodology,a block flow diagram is presented in Figure 16 in which thefour major indexes are presented, along with some of theircomponents.. Intratec | Technology Economics Methodology FREE SAMPLE 45

Appendix A. Mass Balance & Streams Properties Table 30 – Detailed Material Balance Stream Properties Phase L L L L L L L G G G Temperature (°C) -29 -28 30 50 52 25 25 260 304 304 Pressure (bar abs) 22 30 6.0 6.0 30 30 30 30 30 30 Mass Flow (kg/h) 12,940 12,940 38,950 114,750 114,750 161,520 161,520 161,520 161,520 161,520 Ethylene (wt%) 99.9 99.9 28.9 28.9 28.9 28.9 21.0 Ethane (wt%) 0.1 0.1 traces traces traces traces traces Propene (wt%) 0.4 0.4 0.3 0.3 0.3 0.3 24.9 Butenes (wt%) 80.0 38.3 38.3 27.2 27.2 27.2 27.2 9.0 Butane (wt%) 20.0 56.4 56.4 40.1 40.1 40.1 40.1 40.1 C5+ (wt%) 4.9 4.9 3.5 3.5 3.5 3.5 5.0 Molar Flow (kmol/h) 461 461 689 1,988 1,988 3,654 3,654 3,654 3,654 3,654 MW 28.1 28.1 56.5 57.7 57.7 44.2 44.2 44.2 44.2 44.2 Mass Density 438.9 439.6 588.3 555.1 557.9 510.9 510.9 32.2 29.1 29.2 (kg/m3) Mass Enthalpy 335 335 -233 -392 -391 -180 -180 13 41 41 (kcal/kg) Volume Flow (m3/h) 29 29 66 207 206 316 316 5,015 5,546 5,538 Thermal 0.11 0.11 0.09 0.09 0.09 0.09 0.09 0.05 0.05 0.05 Conductivity (W/m K) Mass Heat Capacity 3.5 3.4 2.4 2.6 2.5 2.7 2.7 2.6 2.7 2.7Intratec | Appendix A. Mass Balance & Streams Properties (kJ/kg °C) Viscosity (cP) 0.06 0.06 0.14 0.12 0.12 0.10 0.10 0.02 0.02 0.02 Surface Tension 4.2 4.1 12.3 9.7 9.4 6.9 6.9 0.0 0.0 0.0 (dyne/cm) LHV (kcal/kg) 11,280 11,280 10,820 10,870 10,870 10,990 10,990 10,990 10,990 10,990 Source: Intratec – www.intratec.us 46 FREE SAMPLE

Table 31 – Detailed Material Balance Stream PropertiesPhase L/G L/G L L L L L L G LTemperature (°C) 53 45 89 39 -25 -24 107 60 -25 113Pressure (bar abs) 30 30 22 16 22 30 17 17 22 17Mass Flow (kg/h) 161,490 161,490 127,560 40,000 33,820 33,820 75,800 75,800 120 11,760Ethylene (wt%) 21.0 21.0 traces 0.1 100.0 100.0 100.0Ethane (wt%) traces traces traces traces traces traces tracesPropene (wt%) 24.9 24.9 31.5 99.5 traces traces 0.5 0.5 0.1Butenes (wt%) 9.0 9.0 11.4 0.1 16.9 16.9 14.1Butane (wt%) 39.9 39.9 50.6 0.3 75.1 75.1 63.5C5+ (wt%) 5.1 5.1 6.5 traces 7.4 7.4 22.4Molar Flow (kmol/h) 3,654 3,654 2,444 950 1,205 1,205 1,298 1,298 4 196MW 44.2 44.2 52.2 42.1 28.1 28.1 58.4 58.4 28.1 60.1Mass Density (kg/m3) 210.1 332.6 458.7 482.4 428.6 429.4 462.6 541.1 42.6 468.5Mass Enthalpy (kcal/kg) -152 -163 -285 35 339 340 -441 -474 413 -393Volume Flow (m3/h) 769 486 278 83 79 79 164 140 3 25Thermal Conductivity (W/m K) 0.00 0.00 0.07 0.10 0.11 0.10 0.00 0.08 0.02 0.06Mass Heat Capacity (kJ/kg °C) 2.9 2.9 3.4 3.0 3.7 3.6 3.4 2.6 2.2 3.4Viscosity (cP) 0.00 0.00 0.07 0.06 0.06 0.06 0.00 0.12 0.01 0.07Surface Tension (dyne/cm) 5.3 5.6 3.4 5.1 3.7 3.5 3.7 8.5 0.0 3.8LHV (kcal/kg) 10,990 10,990 10,910 10,950 11,280 11,280 10,900 10,900 11,280 10,870Source: Intratec – www.intratec.us Intratec | Appendix A. Mass Balance & Streams Properties FREE SAMPLE 47

Appendix B. Utilities Consumption Breakdown Table 32 – Utilities Consumption Breakdown Cooling Water Deethylenizer Feed Cooler 144 m3/h Cooling Water C4+ Purge Cooler 47 m3/h Cooling Water Butenes Recycle Cooler 193 m3/h Cooling Water Depropylenizer Condenser 773 m3/h Cooling Water Refrigeration System 1576 m3/h LP Steam Deethylenizer Reboiler 21 ton/h LP Steam Depropylenizer Reboiler 20 ton/h Inert Gas Catalyst Regeneration 1283 Nm3/h Source: Intratec – www.intratec.usIntratec | Appendix B. Utilities Consumption Breakdown 48 FREE SAMPLE

Appendix C. Process Carbon FootprintThe process’ carbon footprint can be defined as the total The assumptions for carbon footprint calculation and theamount of greenhouse gas (GHG) emissions caused by the results are provided inprocess operation.Although it is difficult to precisely account for the total Table 34 – CO2e Emissions (ton/ton prod.)emissions generated by a process, it is possible to estimatethe major emissions, which can be divided into: Direct emissions. Emissions caused by process waste Stream #24 0.009 streams combusted in flares. Indirect emissions. The ones caused by utilities Electricity Generation 0.163 generation or consumption, such as the emissions due Steam Generation 0.114 to using fuel in furnaces for heating process streams. Heat Generation 0.031 Fuel used in steam boilers, electricity generation, and any other emissions in activities to support process operation are also considered indirect emissions. Source: Intratec – www.intratec.usIn order to estimate the direct emissions, it is necessary toknow the composition of the streams, as well as the Equivalent carbon dioxide (CO2e) is a measure thatoxidation factor. describes the amount of CO2 that would have the same global warming potential of a given greenhouse gas, whenEstimation of indirect emissions requires specific data, measured over a specified timescale.which depends on the plant location, such as the localelectric power generation profile, and on the plant All values and assumptions used in calculations are basedresources, such as the type of fuel used. on data provided by the Environment Protection Agency (EPA) Climate Leaders Program.Table 33 – Assumptions for CO2e Emissions CalculationOxidation factor 100%Waste streams Stream #24 Intratec | Appendix C. Process Carbon FootprintElectric power profile TexasFuel used in steam boiler Natural GasSteam boiler efficiency 85%Fuel used in furnaces Natural GasFurnaces efficiency 85%Source: Intratec – www.intratec.us FREE SAMPLE 49

Appendix D. Equipment Detailed List & Sizing Table 35 – Reactors Description Metathesis Reactor Design gauge pressure (barg) 1.0 Design temperature (deg C) 340 Liquid volume (m3) 68 Shell material SS Source: Intratec – www.intratec.us Table 36 – Heat Exchangers Reactor Feed Regeneration Depropylenizer Deethylenizer C4+ Purge Description Feed Vaporizer Heater Gas Heater Condenser Feed Cooler Cooler Design gauge pressure (barg) 32.4 32.4 Design temperature (deg C) 334 334 Duty (MW) 6 6 Heat transfer area (m2) 2175 1978 158 36 Item type Furnace Furnace Shell & Tube Shell & Tube Shell & Tube Shell & Tube Material Cr-Mo Cr-Mo Shell design gauge pressure 32.4 16.7 32.4 25.4 (barg) Shell design temperatureIntratec | Appendix D. Equipment Detailed List & Sizing 334 125 125 144 (deg C) Shell material CS CS CS CS Tube design gauge pressure 32.4 10.8 21.3 16.6 (barg) Tube design temperature 334 125 125 144 (deg C) Tube material CS CS CS CS Source: Intratec – www.intratec.us 50 FREE SAMPLE

Table 36 – Heat Exchangers (Cont.) Butenes Recycle Deethylenizer Deethylenizer DepropylenizerDescription Cooler Condenser Reboiler ReboilerDesign gauge pressure (barg)Design temperature (deg C)Duty (MW)Heat transfer area (m2) 79 1245 195 270Item type Shell & Tube Shell & Tube Shell & Tube Shell & TubeMaterialShell design gauge pressure (barg) 17.6 24.4 24.4 17.7Shell design temperature (deg C) 137 -55 125 143Shell material CS CS CS CSTube design gauge pressure (barg) 11.4 16.0 16.0 11.5Tube design temperature (deg C) 137 -55 194 194Tube material CS CS CS CSSource: Intratec – www.intratec.usTable 37 – Pumps Ethylene Raffinate-2 C4 Tank Deethylen. Depropylen. PropyleneDescription Feed Pumps Feed Pumps Pumps Reflux Pumps Reflux Pumps PumpsCasing material CS CS CS CS CS CSDesign gauge pressure (barg) 32.4 6.7 32.4 24.4 16.7 25.4 Intratec | Appendix D. Equipment Detailed List & SizingDesign temperature (deg C) 18 125 125 18 125 125Liquid flow rate (m3/h) 32 73 227 313 307 91Source: Intratec – www.intratec.us FREE SAMPLE 51

Table 37 – Pumps (Cont.) Description Ethylene Recycle Pumps C4+ Pumps Casing material CS CS Design gauge pressure (barg) 32.4 25.4 Design temperature (deg C) 18 144 Liquid flow rate (m3/h) 87 28 Source: Intratec – www.intratec.us Table 38 – Columns Description Deethylenizer Column Depropylenizer Column Design gauge pressure (barg) 24.4 17.7 Design temperature (deg C) 125 140 Number of trays 60 65 Shell material CS CS Tray material CS CS Tray spacing (mm) 610 610 Vessel diameter (m) 2.7 2.6 Source: Intratec – www.intratec.us Table 39 – Utilities SupplyIntratec | Appendix D. Equipment Detailed List & Sizing Description Cooling Tower Refrigerator Steam boiler Water Demineralizer Boiler flow rate (kg/h) 47200 Material CS CS CS CS Water flow rate (m3/h) 3384 6 Source: Intratec – www.intratec.us 52 FREE SAMPLE

Table 40 – Vessels & Tanks Specifications Deethylenize Reactor Feed Depropylen. Ethylene ISBL Ethylene RaffinateDescription r Treaters Accumulator Storage Storage Storage AccumulatorDesign gauge pressure (barg) 32.4 24.4 16.7 25.5 25.5 6.7Design temperature (deg C) 125 18 125 -30 -30 125Liquid volume (m3) 35.6 30.0 30.0 370 5000 11200Shell material CS CS CS CS CS CSSource: Intratec – www.intratec.usTable 40 – Vessels & Tanks Specifications (Cont.) Propylene Demin. Water Clarified Product ISBL C4+ Purge Fresh/RecycleDescription Storage Tank Water Tank Storage Storage C4 TankDesign gauge pressure (barg) 26.5 0.004 0.004 26.5 3.5 17.6Design temperature (deg C) 120 20 20 125 120 125Liquid volume (m3) 13900 3 1700 1050 260 835Shell material CS CS CS CS CS CSSource: Intratec – www.intratec.us Intratec | Appendix D. Equipment Detailed List & Sizing FREE SAMPLE 53

Appendix E. Detailed Capital Expenses Direct Costs Breakdown Figure 17 – ISBL Direct Costs Breakdown by Equipment Type for Base Case Vessels & Tanks Columns Heat Exchangers Pumps, Compressors & Turbines Reactors Furnaces 10% 14% 35% 10% 18% 13% ISBL Total Direct Cost: USD 21.2 Million Source: Intratec – www.intratec.us Figure 18 – OSBL Direct Costs Breakdown by Equipment Type for Base Case Vessels & Tanks Steam Boiler Refrigeration Units Cooling Tower Water Treatment Buildings 0.04% 1.42% 0.41% 9.28% 1.11%Intratec | Appendix E. Detailed Capital Expenses 87.76% OSBL Total Direct Cost: USD 94.5 Million Source: Intratec – www.intratec.us 54 FREE SAMPLE

Indirect Costs BreakdownTable 41 – Indirect Costs Breakdown for the Base Case (USD Thousands)Home Office Const Suppt 352Field Const Supv 1,533Start-up, Commissioning 129Fringe Benefits 1,209Burdens 1,381Consumables, Small Tools 173Misc (Insurance, Etc) 435Scaffolding 173Equipment Rental 1,308Field Services 439Temp Const, Utilities 96Other Freight 4,398Materials Taxes 6,871Basic Engineering 1,393Detail Engineering 3,366Material Procurement 731G and A Overheads 4,015Contract Fee 3,617 Intratec | Appendix E. Detailed Capital Expenses FREE SAMPLE 55

Appendix F. Economic Assumptions Capital Expenditures Working Capital For a better description of working capital and other capital expenses components, as well as the location factors methodology, see the chapter “Technology Economics Table 43 – Working Capital Assumptions for Base Case Methodology.” Raw Materials 0.5 days of raw materials cost Construction Location Factors Inventory Products days of raw materials cost + 20 Inventory depreciation Table 42 – Detailed Construction Location Factor In-process 1 day of total oper. cost Inventory Supplies and of total oper. labor and maint. Labor Index 5% Stores cost Local Labor Index 1.00 1.34 Cash on Hand 15 days of total oper. cost % of Local Labor 100% 100% Accounts days of total oper. cost + 30 Expats Labor Index 1.35 1.35 Receivable depreciation % of Expats 0% 0% Accounts 30 days of total oper. cost Payable Material Index Source: Intratec – www.intratec.us Domestic Material Index 1.00 1.30 % of Domestic Material 100% 90% Imported Material Index 1.00 1.13 Other Capital Expenses % of Imported Material 0% 10% Spare Factor 1.00 1.02 Table 44 – Other Capital Expenses Assumptions for Material & Labor Weights Base Case Labor 30% days of all labor Material 70% Operator Training 150 costs Infrastructure Factor 1.00 1 of annual oper. Commercialization Costs 1%Intratec | Appendix F. Economic Assumptions Business Environment Factor 1.00 1 costs of annual oper. Start-up Inefficiencies 1% Material/Labor Distribution in TFI costs Labor 30% 30% Unscheduled Plant 2% of TFI Modifications Material 70% 70% Prepaid Royalties 1% of TFI Source: Intratec – www.intratec.us Land & Site Development 3% of TFI Source: Intratec – www.intratec.us 56 FREE SAMPLE

Operational Expenditures The goal of depreciation is to allow a credit againstFixed Costs manufacturing costs, and hence taxes, for the non- recoverable capital expenses of an investment. TheFixed costs are estimated based on the specific depreciable portion of capital expense is the total fixedcharacteristics of the process. The fixed costs, like operating investment.charges and plant overhead, are typically calculated as apercentage of the industrial labor costs, and G & A expenses Table 46 shows the project depreciation value and theare added as a percentage of the operating costs. assumptions used in its calculation.Table 45 – Other Fixed Cost Assumptions Table 46 – Depreciation Value & AssumptionsOperating Charges (% of Operating Labor Costs) 25% Depreciation Method Straight LinePlant Overhead (% of Oper. Labor and Maint. Costs) 50% Economic Life of Project 10 yearsG and A Expenses (% of Subtotal Operating Costs) 2% Depreciation Annual Value 10% of TFISource: Intratec – www.intratec.us Source: Intratec – www.intratec.usDepreciation EBITDA Margins ComparisonDepreciation, while not a true manufacturing cost, is Figure 19 presents a 5-year analysis, comparing EBITDAconsidered to be a manufacturing cost for tax purposes. margins estimates for the regional scenarios presented in this study.Figure 19 – Historical EBITDA Margins Regional Comparison US Gulf Germany 25% 20% 15% Intratec | Appendix F. Economic Assumptions 10% 5% 0% Q4-06 Q2-07 Q4-07 Q2-08 Q4-08 Q2-09 Q4-09 Q2-10 Q4-10 Q2-11Source: Intratec – www.intratec.us FREE SAMPLE 57

Appendix G. Released Publications The list below is intended to be an easy and quick way to CONCEPTUAL DESIGN identify Intratec reports of interest. For a more complete and up-to-date list, please visit the Publications section on Membranes on Polypropylene Plants Vent Recovery: our website, www.intratec.us. The Report evaluates membrane units for the separation of monomer and nitrogen in PP plants, TECHNOLOGY ECONOMICS similar to the VaporSep® system commercialized by MTR. Propylene Production via Metathesis: Propylene production via metathesis from ethylene and butenes, Use of Propylene Splitter to Improve Polypropylene in a process similar to Lummus OCT. Business: The report assesses the opportunity of purchasing the less valued RG propylene to produce Propylene Production via Propane the PG propylene raw material used in a PP plant. Dehydrogenation: Propane dehydrogenation (PDH) process conducted in moving bed reactors, in a process similar to UOP OLEFLEX™. Propylene Production from Methanol: Propylene production from methanol, in a process is similar to Lurgi MTP®. Polypropylene Production via Gas Phase Process: A gas phase type process similar to the Dow UNIPOL™ PP process to produce both polypropylene homopolymer and random copolymer. Polypropylene Production via Gas Phase Process, Part 2: A gas phase type process similar to Lummus NOVOLEN® for production of both homopolymer and random copolymer. Sodium Hypochlorite Chemical Production: Sodium hypochlorite (bleach) production, in a widely used industrial process, similar to that employed by Solvay Chemicals, for example. Propylene Production via Propane Dehydrogenation, Part 2: Propane dehydrogenationIntratec | Appendix G. Released Publications (PDH) in fixed bed reactors, in a process is similar to Lummus CATOFIN®. Propylene Production via Propane Dehydrogenation, Part 3: Propane dehydrogenation (PDH) by applying oxydehydrogenation, in a process similar to the STAR PROCESS® licensed by Uhde. 58 FREE SAMPLE

Appendix H.Technology Economics Form Submitted by Client FREE SAMPLE 59

Chemical Produced by the Technology to be StudiedDefine the main chemical product of your interest. Possible choices are presented below.Choose a Chemical Acetic Acid Acetone Acrylic Acid Acrylonitrile Adipic Acid Aniline Benzene Butadiene n-Butanol Isobutylene Caprolactam Chlorine Cumene Dimethyl Ether (DME) Ethanol Ethylene Bio-Ethylene Ethylene Glycol Ethylene Oxide Formaldehyde HDPE Isoprene LDPE LLDPE MDI Methanol Methyl Methacrylate Phenol Polypropylene (PP) Polybutylene Terephthalate Polystyrene (PS) Polyurethanes (PU) Polyvinyl Chloride (PVC) Propylene Propylene Glycol Propylene Oxide (PO) Terephthalic Acid Vinyl Chloride (VCM)If the main chemical product of your target technology is not found above, please check the "Technology Economic Form - Specialties".Chemical Process Technology to be StudiedIdentify the mature chemical process technology you would like us to assess. Intratec considers mature technologies the ones alreadyused on a commercial scale plant. Technology Description Technology for propylene production via metathesis similar to CB&I Lummus OCT E. g. technology for propylene production from methanol - similar to Lurgi MTPCommercial Scale Unit. Inform the exact location of one commercial scale plant under operation. Plant Location: I dont know I know the location of a commercial plant: Borouges Metathesis Unit at Ruwais, Abu DhabiIf there is no commercial scale plant based on the technology of your interest, you are referred to Intratecs Research Potential advisory serviceat www.intratec.us/advisory/research-potential/overviewIndustrial Unit DescriptionPlant Nominal Capacity Operating HoursInform the plant capacity to be considered in the study. Provide Inform the assumption for the number of hours the plantthe main product capacity in kta (thousands of metric tons per operates in a year.year of main chemical product). Plant Capacity 150 kta Operating Hours 8,000 h/year 300 kta Other (h/year) Other (kta) 450

Analysis DateDefine the date (quarter and year) that will be considered in the analysis. Our databases can provide consolidated values from the year 2000up to the last closed quarter, quarter-to-date values are estimated. Quarter Q3 Year 2011Storage FacilitiesDefine the assumptions employed for the storage facilities design. Products 20 days By-Products 20 days Raw Materials 20 days Other Other 0 Other 0Utilities Supply FacilitiesThe construction of supply facilities for the utilities required (e.g. cooling tower, boiler unit, refrigeration unit) impacts the capital investmentfor the construction of the unit. Consider construction of supply facilities ? Yes NoGeneral Design ConditionsGeneral utilities and environmental conditions that may be relevant to the process simulation are presented below. Provide other assumptions ifyou deem necessary. Specification Unit Default Value User-specified value Cooling water temperature ºC 24 DSPEC1 Cooling water range ºC 11 DSPEC2 Steam (Low Pressure) Bar abs 7 DSPEC3 Steam (Medium Pressure) Bar abs 11 DSPEC4 Steam (High Pressure) Bar abs 35 DSPEC5 Refrigerant (Ethylene) ºC -100 DSPEC6 Refrigerant (Propane) ºC -40 DSPEC7 Refrigerant (Propylene) ºC -45 DSPEC8 Dry Bulb Air Temperature ºC 38 DSPEC9 Wet Bulb Air Temperature ºC 27 DS10Industrial Unit LocationThe location of an industrial unit influences in prices for both construction and operation of the unit. In this study, the economicperformances of TWO similar units erected in different locations are compared.The first plant is located in the United States (US Gulf Coast) and the second location is defined by YOU.Plant Location I would like to keep the plant location confidential. Country (or region) to be considered. Germany E.g. Louisiana (USA), China or Saudi Arabia. Please define only one location.Plant Location Data I will use Intratecs Internal Database containing standard chemical prices and location factorsProvider (only for Germany, Japan, China or Brazil). I will provide location specific data. Please fill the Custom Location topic below.

Custom Location Description. Describe both capital investment and prices at your custom location.A) Capital Investment. Provide the relative capital cost at your custom location in comparison to the United States (U.S. Gulf Coast) Custom Location Relative Cost (%) 130% means that the capital costs in the custom location are 30% higher than the costs in the United States.B) Raw Materials Prices. Describe the raw material prices to be considered in the custom location. Item Description Price Unit Price Raw1 RU1 RP1 Raw2 RU2 RP2 Raw3 RU3 RP3 E.g. Propane USD/metric ton 420C) Product Prices. Describe the products prices to be considered in the custom location. Item Description Price Unit Price Prod1 PU1 PP1 Prod2 PU2 PP2 Prod3 PU3 PP3 E.g. Polypropylene USD/metric ton 1700D) Utilities Prices. Describe the utilities prices to be considered in the custom location. Item Description Price Unit Price Electricity UP1 Steam (Low Pressure) UP2 Steam (High Pressure) UP3 Fuel UP4 Clarified Water UP5 Util6 UU6 YP6 Util7 UU7 UP7 Util8 UU8 UP8E) Labor Prices. Describe the labor prices to be considered in the custom location. Item Description Price Unit Price Operating Labor USD/operator/hour LP1 Supervision Labor USD/supervisor/hour LP1F) Others. Describe any other price you deem necessary to be considered in the custom location. Item Description Price Unit Price Other1 OU1 OP1 Other2 OU2 OP2 Other3 OU3 OP3 E.g. Catalyst USD/metric ton 5000

Other RemarksIf you have any other comments, feel free to write them below: Co m m en ts:Complementary FilesAlong with this form, you may also upload any other chemical document deemed relevant for the description of the project, such asarticles, brochures, book sections, patents, etc. Multiple files may be uploaded.If you are filling this form offline please upload this form and any complementary files atwww.intratec.us/advisory/technology-economics/order-commoditiesNon-Disclosure Period & PricingYou can keep your study confidential or get discounts, by allowing Intratec to disclose it to the market as a publication, after anagreed non-disclosure period, starting at the date you place your order.Choose an Option 6 months 24 months 36 months Never Disclosed Non-Disclosure Period Price 6 months $8,000 (9 x $899) Save 84% - Payment of our advisory service is conducted 24 months $28,000 (9 x $3,111) Save 44% automatically, in equal and pre-defined installments 36 months $40,000 (11 x $3,636) Save 20% - Every 15 days, an installment will be charged to your Never Disclosed $50,000 (13 x $3,846) credit card or PayPal account.Pay Less! Benefit From a 5% DiscountInform us the email address of the Intratec Agent that introduced you to our advisory services you will benefit from a 5% discount on the totalprice of your service. To know more about Intratec New Business Development Agents, please visit www.intratec.us/be-our-agent. Intratec Agent EmailEvaluate our Intratec Agent. Your opinion will be kept confidential. Unsatisfied Neutral Satisfied Knowledge about Intratec offerings and presentation skills Kindness and Helpfulness DOWNLOAD EXAMPLES OF FILLED FORMS HERE. DOWNLOAD A PDF VERSION OF THIS FORM HERE. NEED ASSISTANCE ? SEND AN EMAIL TO sales@intratec.us.

Technology EconomicsStandardized advisory services developedunder Intratec’s Consulting asPublications innovative approach.Technology Economics studies answermain questions surrounding processtechnologies:- What is the process? What equipment is necessary?- What are the raw materials and utilities consumption rates?- What are the capital and operating expenses breakdown?- What are the economic indicators?- In which regions is this technology more profitable?

Technology Economics: Propylene via Metathesis

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Technology Economics: Propylene via Metathesis Document Transcript