DME Methanol Outlook for gas conversion Amoco 2000

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Gas to Liquids
Amoco’s Competitive Advantage in the 21st
Century
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“... a strategic inflection point is a time in the life of a business when its fundamentals are about to change.”
Andrew S. Grove, President and CEO of INTEL Corporation
The Changing Energy World: A strategic inflection point (SIP), the likes of which the energy
industry has not experienced since the shift from coal to oil, is upon us. The energy choice for the next
millennium is gas! Environmentally it’s the right thing to do. Customers want cleaner, environmentally
friendly fuels and chemical feedstocks. Government regulations are being set to ensure they get it. It’s
decision time. Each energy company must choose, like the coal companies before them, whether to stay
with what made them successful in the past, or to respond to the full-scale changes in the emerging
global natural gas business that will be driven by Gas-to-Liquids technology. Amoco can choose to be a
driving force behind the SIP, or reactive once others cause it to occur... but we cannot avoid it.
Wood Coal Oil Gas Hydrogen

2
Gas-to-Liquids: The Industry’s Next Mega-Trend
Natural gas is increasing in popularity as an alternative fuel where market links exist via pipeline or LNG. Gas-to-liquids (GTL)
represents the next phase in transforming gas into a truly global commodity. The commerciality
of GTL has become the hottest topic in the energy industry. It is now economically feasible to
manufacture clean liquid fuels, fuel additives, and chemical feedstocks from natural gas, capable
of displacing petroleum based products in traditional markets. No single technology has affected
as many segments of the energy industry as GTL will in the future. The implications to the E&P
sector alone are huge. Worldwide natural gas resources are estimated to exceed 14,000 TCF
proved and possible. Over 50% of the current proved resources, 900 TCF, are considered
stranded due to inaccessibility to market. Successfully linking these resources to markets is like
discovering several hundred billion barrels of new clean oil.
The implications for the chemical and refining and marketing sectors could be even greater. Oil
refining produces products from crude oil by breaking (cracking) very large hydrocarbon molecules,
whereas GTL starts with the basic methane molecule and custom builds the desired product. This
fundamental shift in technology will lead to totally new ways of doing business.
New studies, partnerships, and projects are announced monthly. Construction of the first
commercial world-scale GTL plant will set off a major scramble for position. Being first counts!
Once established, GTL will become a serious game of haves and have nots. Those with access to
competitive GTL technology and natural gas resources are in and will be preferred partners to those
trying to catch up.
Companies possessing GTL capabilities will be competitively advantaged to:
1. Capture and monetize new E&P opportunities (gas and oil) previously deemed off limits via non-conventional approaches.
2. Market value-added products in existing and new transportation fuel markets, e.g., clean diesel, diesel and gasoline additives and
fuel cells.
3. Control fundamental building blocks in the chemical value chain, e.g., methanol and DME.
4. Introduce options to address environmental, regulatory and production problems facing customers and governments.
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0
50
100
150
200
250
300
350
400
1980
1982
1984
1986
1988
1990
1992
1994
1996
Liquids
Gas
MBOE/D
Amoco’s International
Oil and Gas Production
“Stranded” Natural Gas Reserves
Amoco Reserves
BP Reserves
Competitor’s Reserves

3
The GTL Game: Technologies, Approaches and Challenges
Major oil and technology companies have invested hundreds of millions of dollars since 1980 on the development of GTL technologies.
Ongoing industry investments have led to several process improvements that substantially
reduced the cost of these technologies over the last several years. Recent breakthroughs
have resulted in smashing through the historical cost barrier of $30,000/bbl of daily
capacity. The long term goal is to push GTL capital costs down to $12,000/bbl of daily
capacity, which is on par with a world-scale crude oil refinery. As cost continues to decline
below $30,000/bbl of daily capacity, new markets in transportation and power fuels, and
expanded chemical feedstock applications will develop and grow, and gas will compete as
a true global commodity.
Today, there are two fundamentally different GTL approaches, Fischer-Tropsch (F-T) and oxygenates. Common to both is the production
of syngas, the process by which natural gas is chemically converted to a reactive intermediate which is in turn converted to the final liquid
product. The syngas step accounts for over 60% of the total capital cost of manufacturing GTL. Amoco established a technical
consortium (Oxygen Transport Membrane - OTM) with BP,
Phillips, Statoil, Praxair and Sasol that is focused on reducing
the cost of syngas production by 20-30%.
F-T is often used interchangeably with GTL, and is by far the
most popular GTL process in terms of dollars invested. The F-T
process generates long, straight-chain hydrocarbons of varying
lengths. This syncrude is sold into global oil markets at a price premium (+30-45% over crude oil) due to it’s added value as a diesel
blending agent and specialty wax. Shell, Exxon, and Sasol are the industry leaders in this technology. All three have proprietary
technologies, however Shell and Exxon regard them as competitive advantage and are unwilling to offer their GTL technologies for
license. The majority of the other big players (Chevron, Texaco, Arco) have pursued this technology via partnerships with either Sasol or
Syntroleum (a relatively new technology provider). Amoco is positioned to pursue F-T, if it chooses to do so, via a cooperative
agreement with Sasol.
Amoco made the strategic decision to pursue GTL by focusing on oxygenate products (e.g., methanol, DME, DMM). This decision was
based on a combination of commercial and technical advantages for oxygenate manufacturing including:
1. Lower capital cost and smaller gas resource requirements
2. Higher conversion efficiency at lower energy consumption
3. The potential breadth of new and existing market applications
4. Opportunity to control technology via patents and exclusivity contracts versus trying to play catch up with Shell and Exxon’s F-T research
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PLANTCAPITALCOST,
$M/DAILYBBLCRUDEOILEQUIV.
Mobil, MTG, NZ, 1985
Shell, FT, Malaysia, 1993
0
20
40
60
80
100
1985 1990 1995 2000 2005
II
Exxon, FT, Qatar, 1996
Phillips-Sasol, FT
Qatar, 1997
Amoco, DME, 1997
III
“Economic” GTL ($30000)
Crude Refinery Target ($12000)
+
Catalyst
+
Natural
Gas
Oxygen
Syn Gas
Carbon MonoxideHydrogen
Catalyst
Methane
Syn Crude
Dimethoxymethane
(DMM)Methanol
Dimethylether
(DME)
Oxygenates
Fischer-Tropsch

4
Methanol is currently the largest (by volume) oxygenate produced and is used primarily in manufacturing MTBE, formaldehyde and
acetic acid. In addition, there is a wide range of untapped oxygenate markets which include chemical feedstocks, transportation fuels, and
power generation. While certainly smaller than the global oil market available to F-T, these oxygenate markets offer tremendous growth
potential and higher margins. For example, “low cost” methanol currently sells for $100/ton ($5.25/mmbtu) compared to $21/bbl
syncrude ($3.60/mmbtu) in a $15/bbl ($2.60/mmbtu) crude oil market. Amoco’s Vision 2010 (Addendum 1), is to focus in the near term
to establish a commercial position in methanol and DME.
The primary hurdle to developing an oxygenate-based GTL business
will be to establish new market applications and grow existing markets.
Amoco is well positioned in many of these markets and value chains to
cause future SIPs with the introduction of next generation oxygenates
and/or new market applications. For example, using methanol or DME
as the basic building blocks in the manufacture of olefins and/or
aromatics. In transportation fuels, DMM (or derivatives) could be the
key to clean diesel, a diesel additive, an improved substitute for MTBE
in gasoline, and along with methanol, the fuel of choice for fuel cells.
Unlike Shell and Exxon, our strategy to access GTL technology was a
balance of in-house proprietary work and partnering with key
technology developers. Taken as a whole, Amoco’s competitive
advantage is now greater than the sum of the specific partnerships and
agreements listed below, and provides us the option to respond quickly to customer needs.
 Exclusivity in the near term with key DME technology
provider - Haldor Topsoe
 Partnership with methanol marketer and engineering
company - Saturn and Lurgi
 Proprietary DMM technology
 Cooperative relationship with key turbine manufacturers -
GE and Westinghouse
 GM clean diesel partnership
 Two economic projects, Titan and Atlas - establishes a
Caribbean platform for low cost methanol
 Cooperative agreement in India - GAIL, IOCL, IIP
 Joint DME study in Japan and Far East - EPDC
 F-T technology sharing agreement - Sasol
 OTM consortium
 Partnership with AVL, the worlds largest engine testing lab,
in the development of DME as diesel alternative
The result is that Amoco is poised to jump ahead of the competition in the GTL game. However, there is a limited window of
opportunity in which to act. While the balanced approach has allowed us to leverage our research dollars to gain tremendous capability in
a short time frame, continued exclusivity with these key technology partners requires performance - use it or lose it.
Methanol
DME
Formaldehyde
MTBE
DMC
Olefins
DMM
Acetic Acid
Aromatics
Gasoline
Power Fuel
Natural Gas
Refinery
Polypropylene
Diesel Additive
Polycarbonate
PTA
Gasoline Additive
Cellulose Acetate
Vinylacetate
Fuel Cells
Natural
Gas
Oxygen
Polyethylene

5
Building Capability ===> Future Optionality
Uncertainty gives the GTL business tremendous upside potential.
To continue to make intelligent choices, we must develop flexibility
to respond to new information. Our strategy builds optionality in a
stepwise manner through individual project investments (Addendum
2) designed to secure potential upsides while insuring against the
downside and providing multiple exit points. Ultimately, the value
of the options we generate is recognized through the value of
learning (Addendum 3). The Titan methanol plant provided key
learnings and partnerships which contributed greatly to the
development of the Atlas mega-methanol plant. In turn, Atlas will
provide valuable learnings that enable the commercialization of
DME for the Qatar/India project with less risk.
Another key aspect to optionality is geographic presence - a
foothold in the region. By 2004, we will have established growth
platforms in the Caribbean and Middle East, with a third platform
currently envisioned in the Far East. In addition, there exists a
multitude of stranded gas supply and market development options
that could provide the next steps for continued growth of the GTL
business. To win in the long-term requires Amoco to utilize the
potential of GTL technology to capture large low cost natural gas
resources, NOW.
With low cost manufacturing and secured low cost resources, we
will be competitively advantaged to offer unique energy solutions to
customers with environmentally superior, high value-added
chemical feedstocks, fuels and fuel additives. This is not based
solely on internal perception. Potential customers have
demonstrated a strong interest (Addendum 4) and have confirmed,
“There are vast market opportunities for clean cost competitive
fuels.”
1999 2001 2003-4
Titan
Atlas
Qatar/India DME
Market:
1. Introduction to
MeOH business
2. Establish partner
network
Market:
1. Initiate new MTO
market
2. Initial exposure to
DME value chain
3. Positioned as low
cost producer of
MeOH
Technology:
1. Prove scale-up
mega-methanol
technology
2. DME logistics
Market:
1. DME end users
2. EstablishDME
marketing partners
3. Establish low cost
DME position
Technology:
1. Full scale DME
logistics
2. Optimize “on-purpose”
DME facility
Supply:
1. Capture supply via
tech & markets
Strategic:
1. DME value-chain doability
2. Establishes AN as a leader
in GTL business
MeOH / DME to Olefins
Chemical Feedstocks
Transportation Fuels
Fuel Cells
DME for LPG
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Methanol Supply Hub DME/Methanol Supply Hub
Potential Future Flows of GTL Products

6
Keys to Success
The bottom line... Amoco has a distinct competitive advantage to be a first mover - to move quickly and decisively to build capability,
secure low cost gas resources, create options and establish growth platforms before the competition has time to respond. The key to
success is to understand and respond quickly to external and internal forces.
Our external business challenges are to:
1. Be a first mover to establish credibility, capability and capture higher returns.
2. Utilize our knowledge of the potential of GTL to secure long-term low cost gas supplies before market forces drive up the
competition and gas owner expectations.
3. Manage partnerships with technology providers (i.e., Lurgi and Haldor Topsoe) to optimize speed and flexibility of execution that
results in wins for all parties.
4. Continue improving cost of technology - internally and with partners.
5. Develop next generation oxygenate and/or introduce new market applications to cause future SIPs.
 Leverage GM partnership for clean fuels and increased engine efficiency
 Partner with UOP to access MTO technology
6. Expand participation in the value chain to capture shifting margins.
Our internal challenges are to:
1. Establish a common mindset that the GTL business is ours to win.
2. Establish single point accountability.
3. Endorse a first mover mentality.
4. Manage as a cross-stream business.
5. Establish processes to enable effective communication and learning.
Amoco is at a very early stage in the overall development of GTL as a core business. A centralized, coordinated effort is needed to ensure
that individual projects realize the learning, capability and optionality objectives which go beyond the specific project scope and
economics. Historically, the industry has not been very successful in realizing the full potential of cross-stream businesses. Amoco is no
exception. As we move forward, this is our biggest challenge. With an effective organization and management structure, and well
defined accountability, we can establish a new core business with PV10 (1/1/98) > $.5 billion by 2010 (Addendum 5).
It’s time to choose to be a have or a have not! We are positioned to influence the inevitable Strategic Inflection Point.
As first movers, we can have the competition chasing us.
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Addendum 1: Vision 2010
Our Purpose: Create and build a new core business for the Corporation in gas-to-liquids. Initially, we will focus on the
commercialization of distinctive technologies and the development of new markets, to manufacture and sell DME and methanol. Our
approach to GTL will change the rules governing the methanol business and develop the rules for the DME and oxygenate businesses.
Mission - “What our business is”
The identification and capture of markets for products manufactured from the chemical conversion of natural gas to fuels and chemicals
to optimize short term profitability and promote long term growth.
Vision 2010 - “ What we want to be”
The preferred partner for providing oxygenate fuels and low cost chemical feedstocks from natural gas.
Philosophy - “Underlying concepts, attitudes and general beliefs”
Build the GTL business by taking focused and deliberate project steps to steadily increase capability and establish an advantaged position
for future opportunities.
 Each project should stand on its own economically
 Analyze individual project scope decisions within the frame of the greater business to enhance the range and quality of future
investment options for growing the business
 first to identify and capture new markets
 first to realize the potential and capture new technology
 Align with partners to grow the business - technology, supply and markets
 gain capability and competitive advantage (i.e., exclusivity)
 mitigate risk
 Realize current technical competitive advantage to create and grow optionality to sustain competitive advantage in the future
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Addendum 1: Vision 2010 Continued
Goals - “2010”
Financial (Capture 4 platform projects):
 NPV10 (1/1/98) > $300 mm
 Net Income > $100 mm
 ROACE > 15%
Environment, Health and Safety:
 Maintain a healthy and accident free business based on a fully
implemented EHS Management System.
 Demonstrate improved environmental quality of produced products.
Stationary sources utilizing our fuel products will achieve a 95%
SOx reduction and a 20% reduction in greenhouse gases (CO2
equivalents, lb/MW-hr) as compared to distillates. Oxygenates used
as diesel additives (10% blend) will achieve 30% reduction in
particulate emissions (soot) over #2 diesel.
Technology:
 Reduce the GTL capital cost of daily plant capacity by 25% from
1998 levels.
Markets:
 50% of all sales (by volume) will be to new markets created after
1998.
Supply:
 Monetize 700 MMCFD gross, 300 MMCFD net of natural gas.
 Capture 15 TCF gross of low cost natural gas resources
Organizational Effectiveness / Capability:
 Ensure necessary systems and capabilities are in place to qualify as a
world class organization by 2010 (i.e., attain a score of +700 based
on Amoco’s ABA)
Strategies - “How we will accomplish our goals”
Marketing: MARKETS IN A CHANGING WORLD
We will capture growth in existing methanol markets as low cost provider
and create new markets that are awaiting a lower cost oxygenate material.
Supply: GETTING THE BEST SEAT IN THE HOUSE
We will identify, prioritize and capture targeted gas resources in regions that
allow us to best service near-term markets and sustain long-term growth.
External Focus: LIVING IN THE REAL WORLD
We will utilize knowledge from across Amoco and the external world to
identify the most promising market opportunities, to lead their development,
and to capture value from that growth.
Best Cost: UP THE LEARNING CURVE
We will establish and maintain a low cost position via economy of scale,
continuous technology improvements with our partners, and rapid
implementation of learnings across our business.
Environmental: GREEN POWER
We will define the applications of our products that can reduce emissions,
publicly advocate these advantages to our customers, and achieve other
quality of life goals of the communities in which we operate.
Organizational Capability: HONING OUR SKILLS
We will sustain competitive advantage by developing capabilities within
Amoco and with our partners. We will continually identify our most critical
capability gaps and implement plans to fill them.
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Addendum 2: The Projects - Titan, Atlas, and Qatar/India
Amoco entered the GTL business with the Trinidad Titan methanol plant, currently under construction. The primary business driver was
the monetization of equity gas resources - supply push - with an eye toward understanding the methanol business through partnership
with Saturn. This JV created a powerful alliance by combining Amoco’s natural resources with Saturn’s methanol marketing and
technological expertise. Amoco has a 15% working interest and will supply 100% of the gas (80 mmcfd gas sales) to the 2500 TPD Lurgi
designed plant. When operational, Titan will represent one of the lowest capital cost per ton of capacity plants, in the world.
Approximately 80% of production capacity is already sold under take-or-pay contracts to markets in the United States and western
Europe.
The capabilities developed with Titan facilitated the next project step to the 5000 TPD
mega-methanol Atlas plant. Amoco will again supply 100% of the gas (160mmcfd) and
have a 35% working interest in the plant. The Lurgi designed mega plant represents a
manufacturing cost breakthrough (20% overall reduction) and positions Atlas as the low
cost provider in the methanol business. Lurgi has offered Saturn an exclusive license in
Trinidad for its technology, providing the Saturn-Amoco JV a first mover advantage.
Saturn is currently negotiating with Exxon to supply them 500M tons per year of methanol
to feed their Baytown, Texas, methanol-to-olefins (MTO) facility scheduled for start-up in
2002. The results of this pilot could open a new methanol market and provide further
option value as described in Addendum 3.
In addition, the Lurgi technology allows for DME production through a dehydration step at the end of the process at minimum
incremental capital cost and maximum flexibility (0 - 100% DME). The capability to produce DME is critical to initializing several
emerging markets in the Caribbean and United States, e.g., chemical, olefin, power and transportation, where producers and markets have
been at loggerhead with each unwilling to be the first to make the commitment to enable the other to proceed.
DME production at Atlas will also develop capabilities, i.e., logistics and marketing, that will significantly mitigate some of the risks
associated with the Qatar/India and Japan/Far East (EPDC) DME projects, both currently under evaluation. The potential India markets
are huge. With a population approaching one billion, the projected deficit in power generation is 12,000 MW by 2001-02. The
application of LNG is limited and the alternative fuel is naphtha. Diesel consumption exceeds gasoline 7:1 in the transportation market
and is growing at 9%/year. Pollution is a major concern and cleaner fuels are needed. The Qatar /India project scope assumes a 17.5%
WI plant located in Qatar. This will be Amoco’s first on-purpose DME plant employing Haldor-Topsoe technology to manufacture 7000
TPD (MeOH equivalent) DME. Amoco’s partners would be the Qatar General Petroleum Company (QGPC), Gas Authority of India
(GAIL), Indian Oil Corporation Limited (IOCL), and Indian Institute of Petroleum (IIP).
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Qatar/India DME
1999 2001 2003-4
Titan
Atlas
 Equity Gas
 WI=100%
 Lurgi Technology
 WI=15%
 2500 MTPD
 Methanol
 Saturn Markets
 Methanol
T-O-P
 Price Floor
 Equity Gas
 WI=100%
 WI=35%
 5000 MTPD
 MeOH
 Dme Option
 Process & EPC
Cost guarantee
 Saturn Markets
 Methanol
 T-O-P
 Price Floor
 Niche DME market
 Captured Supply
 WI=17.5%
 Partners:
QGPC,
India combine
 H-T Technology
 WI=17.5%
 7000 MTPD (MeOH eqv)
 5300 MTPD DME
 Indian DME Markets
 Power

10
Addendum 3: Optionality
What is optionality? Optionality is additional value derived from an investment over and above the financial returns directly attributable
to that investment. The option value generally impacts future opportunities in the form of reduced risk, preserving existing or creating
new opportunities, reduced chase cost, and increased probability of capture. The value of optionality is real and measurable in post
appraisal. However, it is very difficult to quantify point forward because it’s based on the holders perception of the future. By example,
on Wall Street, an option to buy a share of stock at a predetermined price and future date, is sold at a premium above the strike price. The
cost of the option is determined by the market. The buyers final value won’t be determined until he exercises the option or time runs out
and it expires.
Optionality has real value in the GTL business as well. Our
strategy builds optionality in a stepwise manner through individual
project investments. Because much of the strategy is based on
future projects it is difficult to represent the value optionality
creates. However, to illustrate the potential, consider the
optionality created by the Trinidad Atlas project. As a stand-alone
project, Atlas has a PV(10)=$80mm. Once the Atlas plant is built,
three options are created for the disposition of methanol: 1) sell
methanol as methanol, 2) sell methanol as a transportation fuel
additive via DMM, or 3) sell methanol as olefins (MTO). The latter
two options result in an expanded gas value chain.
Under current project assumptions, Atlas will buy inlet gas for
$.90/mmbtu and sell methanol for $90/MT (w/ escalation) or $4.75/mmbtu. If ongoing work proves commercial, it will be possible to
convert methanol to DMM and Poly-DMM for blending with gasoline and/or diesel, thereby raising the value of the BTUs sold from
$4.75/mmbtu (as methanol) to $8.90-11.00/mmbtu as fuel additives. Granted, the value associated with this expanded value chain is
highly uncertain. However, the potential to triple the revenue received for each BTU sold suggests that this option has significant value.
Another alternative that may develop is to install an MTO plant in Trinidad to supply olefins to a future polyethylene plant. The
Government and Energy Ministry of Trinidad and Tobago are promoting private investment in an ethane cracker and polyethylene plant
to maximize value from their gas. If ongoing work on MTO technology proves commercial and the Trinidad Government’s plans
proceed, this option becomes real. Again, the additional revenue realized for each BTU (or lb) sold is substantial.
Admittedly, there is significant uncertainty associated with each of the alternatives described above. The point to remember is that the
Atlas project and other related GTL activities (DMM & MTO research) have a value, greater than that directly related to the specific
project, by positioning us to capture future growth opportunities once the economics are better understood.
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Atlas MeOHNatural
Gas
DMM plant Texas City
Refinery
Blended Gasoline
(MTBE substitute
= $.80 / gal)
Blended Diesel
(DMM additives
= $.65 / gal)
2000 TPD 10M BPD
IRR=13%
$90 / Ton
$4.75 / mmbtu
$.50 / gal
$6.85 / mmbtu
$.65 - .80 / gal
$ 8.90-11.00 / mmbtu$.90 / mmbtu
methanol market
FOB price $90 / ton
5000 TPD
2000 TPD
MTO plant
IRR=13%
150 MMCFD
Trinidad
Polyethylene Plant
$90 / Ton
$0.045 / lb
$0.18-23 / lb $0.35-50 / lb

11
Addendum 4: Customer Response
Customer response to DME and DMM has been extremely positive. Their message is... “There are vast market opportunities for clean
cost competitive fuels.”
General Electric: In 1996, GE did a test burn in their “E” class turbine using DME provided by Amoco. A comment by the lead
technician sums it up best, “... it took us years to fine tune this machine to burn natural gas. With DME, you guy hit it on the first try.”
Based on this test, GE engineers refined their burner design to virtually eliminate flashback. A second test with an “F” class machine is
scheduled to be completed by year end as part of the Amoco - EPDC (Japan Power Company) joint study agreement. EPDC has agreed
to finance the test.
EPDC: EPDC is one of the largest power producers in Japan. Amoco and EPDC have a joint study agreement to assess the economic
feasibility of DME as a power fuel in Japan and the Far East and a commitment to partner in future power projects. EPDC recognizes the
environmental benefits of DME over conventional fuels and the space benefits (requires smaller footprint) over LNG, and are considering
DME as the power fuel for an expansion project in 2004-6.
India: The Gas Authority of India (GAIL), Indian Oil Corporation Limited (IOCL), and Indian Institute of Petroleum (IIP) have all
expressed keen interest in DME as a potential solution to their growing power and transportation fuel needs. They have signed an MOU
with Amoco to complete a Technical Economic Feasibility Report by early 1999. Their primary message to Amoco has been, “... can we
do it any faster?” DME could prove to be an alternative fuel for naphtha in power as well as address the severe environmental situation
caused by diesel in transportation vehicles in major cities.
AVL Powertrain: AVL is very enthusiastic about DME as a diesel substitute. So much so that it has designed and tested a conversion
package to convert diesel vehicles to DME. They have worked the cost down to roughly $800/conversion and even less on new builds.
Partnership for New Generation Vehicles: In recent testing by the PNGV group (GM, Ford, Chrysler, Mobil, Arco, Amoco, Exxon, and
DOE) DMM was the clear winner of seven fuels tested. Blended 15% with diesel, DMM reduced particulate emissions 45%,
significantly better than F-T liquids, low-sulfur diesel, and biodiesel.
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Addendum 5: The Size of the Prize
In realizing our Vision 2010 (Addendum 1), Amoco will have about $1 billion of assets with multiple GTL plants in operation and a
portfolio rich in growth opportunities. We will have established growth platforms in the Caribbean, Middle East, and Pacific Rim
providing methanol, and DME to chemical, olefin, power, and transportation fuel markets in the United States, India, and Far East.
The value of the GTL business starts with a platform of individual
projects upon which the value of future optionality is added.
These projects are generally limited to upstream development and
the GTL plant. However, optionality is created for future chemical
feedstock, olefin, power, and transportation fuel projects. With the
successful capture of the platform projects, the GTL business will
contribute about $200 MM in annual net income and $240 MM in
annual net cash flow by 2010. At that time, 80% of the capital
expenditures will have been spent, with the largest single year
expenditure of $270 MM spent in 2004. ROACE will reach and
remain over 15% by 2007. By 2005, the business will have
positive net cash flow and a payout by 2010. The full cycle PV10
(1/1/98) contribution from these projects is about $500 MM, with
an overall IRR of 18%.
The additional value from optionality comes as we expand the oxygenate
value chain to include projects such as DMM, MTO, and chemical
feedstocks. For example, 2,000 MTPD of methanol from the Atlas plant
could be converted to 10,000 BPD of DMM. The DMM could then be
shipped to our Texas City refinery and blended with gasoline to replace
MTBE for environmental reasons. The PV10 (1/1/98) created by the DMM
plant alone can range from $60-$100 MM. Expanding the value chain also
mitigates the price risk for methanol. The reduced returns at Atlas are shifted
and captured in the downstream segments. Since each of the projects in the
platform creates optionality, the total value created by the GTL business
could be well in excess of that described for the platform projects alone.
M
Monetize
Stranded Gas
Environmentally
Friendly
Power&
TransportationFuel
Chemical
Feedstock
GTL
GTL PlantNatural
Gas
Project Platform
1999 2001 2003-4 2005-6 2006-7 2009-10
Titan
Atlas
Qatar/India DME
Pacific Rim
Oxygenate
 Equity Gas
 WI=100%
 WI=15%
 2500 MTPD
 Methanol
 Saturn Markets
 Methanol
T-O-P
 Price Floor
 Equity Gas
 WI=100%
 WI=35%
 5000 MTPD
 MeOH
 Dme Option
 Process & EPC
Cost guarantee
 Saturn Markets
 Methanol
 T-O-P
 Price Floor
 Niche DME market
 Captured Supply
 WI=17.5%
 Partners:
QGPC,
India combine
 H-T Technology
 WI=17.5%
 7000 MTPD
(MeOH eqv)
 5300 MTPD DME
 Indian DME Markets
 Power
Pacific Basin
 NW Shelf
 Indonesia
 Alaska
 DME/MeOH
WI=35%
 5000 MTPD
 Japan power
 Far East chemical
feedstock
 DMM feedstock
 Expansion of
India 1 except:
 Indian Markets
 Power
 Diesel
 Blending stock
 H-T Technology
 WI=20%
 11,000 MTPD
(MeOH eqv)
 DME & MeOH
 Expansion of
India 2
Caribbean MeOH
 North Coast
 Trinidad
Venezuela
 MeOH
 WI=50%
 5000 MTPD
 USGC Olefins
2005-6
Qatar/India
DME II
Qatar/India
DME III
GTL
GTL Plant DMM Plant Refinery
Blended Diesel
and Gasoline
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Stranded
Gas
DME/
MeOH
Upstream Diesel
Additive
DMM Gasoline
Additive
$/MMBTU

13
Certainty Financials for the 7 Projects in the Platform:
Net Income
$0
$100
$200
$300 1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
$MM
Capital Expenditures
$0
$100
$200
$300
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
$MM Net Cash Flow
($200)
($100)
$0
$100
$200
$300
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
$MM
ROCE and Avg. Capital Employed
0%
5%
10%
15%
20%
25%
30%
35%
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
ROCE,%
$0
$200
$400
$600
$800
$1,000
$1,200
ACE,$MM

 Goal 2010
Goal 2010
GTL
M
T
S
Monetize
Stranded Gas
Environmentally
Friendly
Chemical
Feedstock
Power&Transport
Fuel

DME Methanol Outlook for gas conversion Amoco 2000

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