Genoil Inc. www.genoil.net
INTRODUCTION & OVERVIEW
MARKET OVERVIEW • Decreasing supply of light, sweet (low sulphur content) crude and increasing supply of heavy, sour (high sulphur content) oil. • Refinery system worldwide built around light, sweet oil. • Increasing global oil demand growth (particularly in Asia) driving substantial investment in heavy sour reserve development and production volumes: – Large scale heavy sour oil reserves in Middle East, Russia, Latin America – Less significant reserves in China and Asia • Tighter environmental regulations for desirable oil grades and sulfur content. • Industry need for low cost highly efficient solutions to growing volumes of heavy sour production runs. 4
HEAVY-TO-LIGHT CONVERSION TECHNOLOGY • Two most popular technologies for converting heavy crude into light oil • Coking – removing carbon molecules from heavy oil • 20% of product is converted to low-value carbon coke • Requires high temperature and pressure to convert the oil • Low desulphurization • Hydrotreating / Hydroconversion / Hydrocracking – adding hydrogen molecules to heavy oil • Produces a higher conversion rate because molecules are being added, not removed as in coking. • Requires relatively low temperatures and pressures • High desulphurization
INTRODUCTION TO GENOIL AND GHU • Genoil’s technologies represent breakthrough and innovative approaches to existing oil and gas production or refinery problems. Genoil’s solutions can be readily integrated into conventional systems to increase productivity, at moderate capital and operating costs, thereby providing a rapid payback. Genoil currently owns numerous technologies and intellectual property that are protected under patents or patents pending. Genoil’s primary technology is the Hydroconversion Upgrader (GHUTM). • The GHUTM is a proprietary upgrading process that converts low margin heavy crude oils, that are typically sold as ashphalt or heating oil, into ligther low sulfur crude oil that can be sold as gasoline and jet fuel. In addition to dramatically increasing the profitability, thru producing more barrels of useable oil, the Genoil process dramatically reduces the sulfur, metals, nitrogen, asphaltenes and heavy residuum of the crude oil. • Genoil’s patented hydrogenation process converts heavy oil fractions into lighter fractions, resulting in a 15-20% greater output of light oil from refineries and significant cost savings, while helping a refiner meet worldwide government mandates for low sulfur and ultra-low sulfur diesel fuels that are needed to protect the environment. With global refineries running at capacity, together with finite world oil supplies the GHUTM technology could be one of the most valuable innovations of the century.
COMPETING TECHNOLOGIES AND THE GHU’S ADVANTAGES GHU Competing Hydroconversion Delayed Coking Technologies (Hydrogen Addition) (Carbon Rejection) Residue Conversion Up to 90% 65%-75% 70-85% Temperatures Low/Medium Medium High Volume Output 100-104% 100-104% 75-80% Coke production 0% 0% 20-25% Desulfurization (1) >90% >90% 37% Hydrotreating Process includes hydrotreating Process includes hydrotreating Needs further hydrotreating Capital Cost $ 7,000 – 12,000 per barrel $ 9,000 – 17,000 per barrel $ 8,000 – 14,000 per barrel Equipment Fewer Processes Fewer Processes More Processes Water usage 15-20% less than Coking or 15-20% less than Coking or Air Cooled Air Cooled Natural gas usage Optional or None Optional or None Yes IRR (2) 28% Unknown 18% 4 (1) Source: The American Oil & Gas Reporter, January 2006 / Genoil test results (2) Source: The American Oil & Gas Reporter, January 2006
GENOIL HYDROCONVERSION UPGRADER (GHU) - TECHNOLOGY PROFILE • Applications – Downstream – GHU unit installed in refineries, converts low-value atmospheric and vacuum bottoms (residual product from refining process) into high value, light oil which can be further refined into high value consumer oil products, increasing production by as much as 15-20%. – Upstream – GHU unit operated at oil producing fields, increasing value of the product, as well as, converting heavy oil so that it meets specifications of oil pipelines, without using the current expensive and wasteful process of adding diesel fuel to heavy oil to meet viscosity requirements for piping oil. • Advantages – GHU operates at lower temperatures and pressures than competing Hydroconversion technologies, which translates to lower capital and operating costs. – The GHU produces higher conversion rates of the residual bottoms than competing technologies, and therefore a better return on investment. – Lower Licensing and/or Royalty fees than competing technologies
DOWNSTREAM MARKET
GROWING DEMAND FOR RESIDUAL REFINING MARKET • Refiners continue to search for ways to increase output capabilities and profitability: Demands for high quality transportation fuels continue to rise, requiring additional crude processing or investments in residual upgrading Global Consumption, Transportation Sector
INCREASING DEMAND FOR LOW-SULFUR CRUDE Environmental 2,000 ppm regulations 500 ppm of sulfur content in 50 ppm 10 ppm Gas Oil 1992 1997 2005 2007 • Refining capacity worldwide not able to process heavy sour oil. • High sulphur crude can severely damage refineries built to handle sweet, light crude: - Sweet refineries would require substantial and expensive equipment upgrades to handle high sulphur crude • Need to meet WTI standards for crude imports to refineries. • Sour crude sells at a relative discount to sweet crude: - WTI (API 39º, Sulfur 0.3%) = $ 60.85 - Lloyd Blend (API 22º, Sulfur 2.2%) = $ 40.39 (Dec 29, 06) Source: EIA – Energy Information Administration
SEPARATION – HEAVY ON THE BOTTOM, LIGHT ON TOP • Heat is used to separate (vaporize) the different crude components (fractions) according to weight and boiling points in a distillation tower. • Heaviest fractions with the highest boiling points and highest concentration of contaminants settle at the bottom of the tower: – Sulfur, Nitrogen – Asphaltenes – Metals • The heaviest fractions are called residuals – the bottom of the barrel. Source: Energy Information Administration (EIA) Simplified Drawing of Separation
GROWING NECESSITY FOR RESIDUAL REFINING MARKET • Refiners face tremendous pressures to maintain profits, while: Residual, low- value fuel supplies continue to increase as demand for residual fuels continues to decline Refinery Crude Runs For Selected Market Source: Purvin & Gertz Inc. Regional Upgrading Report
DOWNSTREAM REFINERY MARKET • Genoil’s hydroconversion upgrader can be utilized in refineries to: – Increase light oil production by 15-20 % (volume output) – Meet growing demand for low sulphur, light fuels – Increase the value of the oil – Increase refining profit margins – Desulfurize oil over 90% to help refiners to comply with 2006 environmental regulations – Increase buying power and profitability by allowing refineries to buy a cheaper, heavy crude oil, while maintaining a light product slate • Genoil’s global refinery market opportunities: – 13 million barrels per day of residual heavy oil can be converted into light oil for making gasoline, diesel and jet fuel – Increasing flowage of heavy API feedstocks • Bottom of the barrel management is increasingly important to maintaining refinery viability and desire to enhance feedstock yields will drive adoption of Genoil’s Hydroconversion technology
UPSTREAM MARKET
GROWING NECESSITY FOR REFINING CAPABILITIES OF HEAVY, SOUR OIL • Production of heavy crude continue to increase: Diminishing supply of light sweet crudes is forcing development of heavier sour crudes throughout the world 3 Refinery Crude Runs For Selected Markets Source: Purvin & Gertz Inc. Regional Upgrading Report
UPSTREAM UPGRADER MARKET • Genoil’s hydroconversion upgrader can be utilized in heavy oil fields to: – Upgrade the oil to meet pipeline specifications (viscosity, sulfur) – Desulfurize the oil to above 90% – Decrease oil production and transportation costs: no need for expensive diluents often added to heavy oil in order to move them to the pipeline – Increase the value of the oil • Genoil’s hydroprocessing technology market for upstream heavy crudes estimated in 9 million bpd – Increasing as more of oil discovered becomes heavy. – Markets include heavy oil producers in countries such as Venezuela, Russia, Middle East, China, as well as the Canadian tar sands
FINANCIAL ASSUMPTIONS & BUSINESS MODELS
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