Kick-starting adoption - September 2014 Ticker: VLS.L
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Ticker: VLS.L Kick-starting adoption September 2014
Important notice
This company presentation (the “Presentation”) has been prepared by its advisors assume no obligation to update any forward-looking
Velocys plc (“Company”). The Presentation has not been reviewed or statements or to conform these forward-looking statements to the
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future accuracy of the opinions expressed in this Presentation or the
actual occurrence of the forecasted developments. The Company and
2
Velocys
Leader in smaller scale GTL
• Leader in smaller scale gas-to-liquids technology
— 15 years and >$300 million invested in product development
— Exhaustive global patent protection (>7,500 granted GTL patent claims)
• First class partners offering a complete GTL solution
— Haldor Topsøe, Ventech, Hatch, Toyo, Mourik, SGS, Shiloh
• Commercial roll-out underway
Solena GreenSky London
GTL JV Ashtabula GTL
• Well capitalised with strong resources
— Commercial center in Houston, Texas; technical centers near Columbus,
Ohio and Oxford, UK
— Permanent pilot plant in operation
3
The gas-to-liquids (GTL) process
Chemical conversion of gas to refined products
Reforming Fischer-Tropsch (FT) Hydro-processing
Natural gas
Syncrude Clean synthetic
Syngas
fuels & chemicals
(carbon monoxide (synthetic (diesel, jet fuel,
+ hydrogen) crude oil) lubricants etc.)
e.g. e.g.
LNG / CNG = physical compression.
Product remains natural gas Smaller scale GTL:
gas-based mini-
GTL = chemical conversion into refinery
refined products (petroleum
equivalent)
4
Market environment
Ripe for smaller scale GTL
• Shale revolution ushering age
of gas surplus
• Growing demand for liquid
fuels, especially diesel and jet
• Long-term stability of gas-oil
arbitrage expected
• Decentralized production
underpinned by poor
transportability of gas
• Environmental benefits e.g. lower emissions, flare elimination and
carbon footprint reduction (bio-to-liquids)
• Strong location-specific economic and strategic factors
• Shell and Sasol plants in Qatar showcase viability of GTL
5
Large-scale economics at smaller scales
Velocys enables smaller plants
Velocys FT reactor
Conventional slurry reactor
Velocys microchannel reactor
$k/bpd capacity
Cost advantage
Conventional FT Reactor
Velocys microchannels − cost range
0 2000 4000 6000 8000 10000 12000 14000
2,000 6,000 10,000 15,000
Plant capacity (bpd)
Conventional FT e.g. Sasol
Microchannel technology offers strong benefits at smaller scales
6
GTL for the mainstream of the industry
Velocys modular GTL
• Broader range of sites
— 1,500-15,000 barrels per day
— Suitable for remote locations
• Lower risk
— Smaller investments
— Less risk of cost over-runs
• Reduced costs
— Standardised modules and reactors
— Possible integration with existing facilities
• Easier to execute and expand
— Quicker plant construction (18-24 months) 1,400 bpd FT process unit
— Easier to permit, supply and build designed by Ventech Engineers
90 ft L x 46 ft H x ~40 ft W
— Additional trains can be added later
7
Many applications
From low-value gas to high-value fungible products
• Source of new demand for abundant shale
gas in North America
• Economic route to market for stranded
gas
• Solution to problem of associated gas
• Valuable products for existing and new
applications
— Ultra low-sulfur diesel (70 cetane) & jet
— Waxes, lubricants and solvents
• Not just gas: also biomass and coal
8
Huge market opportunity
Shale, associated and stranded gas
• Much shale gas is distributed scale / remote. Estimated at as much as 3,300
TCF in North America and over 6,500 TCF worldwide
• 4.9 TCF of gas flared every year + 6.5 TCF reinjected to avoid flaring alone
• Only 5% of the world’s conventional stranded gas fields can
be monetised by large scale GTL / LNG; distributed
Conventional 4 >50 (in tcf)
scale could unlock up to 50% of remaining fields LNG / GTL
73 5-50
337 1-5
• Distributed scale GTL opportunity size Velocys 0.5-1
347
GTL
— Unconventional gas*: 18 million bpd 719 0.25-0.5
1,043 0.1-0.25
— Associated gas: 2.7 million bpd
3,922 gas fields 25 million bpd Distribution of conv. gas fields outside US
* Assumes monetisation over 100 yrs
9
Velocys enables winning economics
Taking the plant to the opportunity
$150
Premium from sale of diesel
Oil (WTI) Increased
OPEX product value
Costs & proceeds ($/barrel of liquid
$125 if specialties
Depreciation e.g. lubricants /
Natural gas waxes or if
$100 producing
refined products
Co-location reduces
in remote
products)
capex & opex e.g.
locations
downstream
$75
Lower gas
costs if
stranded or
$50 associated Added value
from unlocking
restrained oil
$25 production
$0
Costs of Velocys enabled Proceeds from production of
GTL plant liquid fuels
10Complete GTL solution
Together with world-class partners
Catalyst supply partners
FT reactor not yet announced
and catalyst
suppliers Customer’s choice.
Recommended partners:
Smaller
Engineering
Technology scale Procurement
licensors &
GTL - Construction
onshore
Field
services
Catalyst change out Reactor inspection
11JV with Waste Management, NRG Energy and Ventech
Monetising renewable gas with natural gas through GTL
• WM (Fortune 500)
— North America’s leading provider of
comprehensive waste management
services
— Role: renewable gas and certain locations
• NRG (Fortune 500)
— Owns largest independent power generation
portfolio in US
— Role: project development and management
• Ventech
— Global leader in design and construction of
modular refineries
— Role: engineering, fabrication, EPC
12First JV project ‒ Go-ahead received
Adjacent to WM East Oak landfill in Oklahoma City, USA
Existing pilot plant and lab
Site of GTL plant
Landfill
• Final Investment Decision made to proceed (July 2014):
— Upfront engineering complete; permits received; all major contracts
signed; Velocys technology supply at market rates
— Construction begun; fully operationalOther public-domain commercial projects announced
Pipeline growing and progressing
Solena GreenSky London
Ashtabula GTL Red Rock Biofuels
• 2,800 bpd plant supplied • 1,100 bpd biomass-to- • 2,500 bpd waste-to-liquids
from Marcellus; future liquids plant in Oregon, plant at former Coryton oil
expansion planned to USA refinery in Thurrock,
10,000 bpd Essex, UK
• FEED study complete
• Pre-FEED complete, now
• Initial engineering entering FEED
complete; permits received • DOD decision on $70
million construction
grant expected shortly • BA signed offtake for all jet
• FID expected 2015 fuel from facility (worth
$500m)
14Summary
Right product, right place, right time
• The time has come for smaller scale GTL
— Gas arbitrage, shale gas reserves, flare gas, stranded gas, remote
locations, energy security, cleaner fuels legislation
• Huge market opportunity
— 25 million bpd of synthetic fuel could be made by distributed scale GTL
• Velocys: leaders in advanced smaller scale GTL technology
— 15 years and >$300 million invested in its unique innovative technology
— Exhaustive global patent protection (>7,500 granted GTL claims)
— First class partners
• Commercialisation underway
— Waste Management JV, Ashtabula, GreenSky/BA, Red Rock Biofuels
15Changing the way fuels are made
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