Producing High Value Synthetic from Heavy Oilfluidoilcorp.com/wp-content/uploads/2018/01/20180124...2018/01/24 · Energy, Tatneft, Enefit, CDT Group, PEMEX, PdVSA, and Husky Midstream

Increasing the Value of Heavy Oil

Producing High ValueSynthetic from Heavy Oil

Corporate Presentation

FLUIDOIL | PAGE

Increasing the Value of Heavy Oil www.fluidoil.co.uk

Disclaimer and Conditions of Disclosure

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• This Presentation does not purport to be all-inclusive or necessarily contain all the information that a prospective investor may desire in investigating the Presentation and may be subject to updating, revision or amendment. This Presentation is not intended to form the basis of any investment decision by a prospective investor. Interested parties should carry out their own investigations and analysis of the Presentation and of the data referred to in the Presentation and should consult their own advisers before proceeding with any investment. The information contained in this Presentation will not constitute or form any part of any offer for subscription nor will any such information form the basis of any contract in respect thereof. Any investor must rely on the terms and conditions contained in such a contract subject to such limitations and restrictions as may be specified therein.

• The opinions and information contained in this Presentation has not been verified by FluidOil Limited (“FluidOil”) or its advisers nor has it been independently verified as to its accuracy. No representation or warranty, express or implied, is given by FluidOil or any of their respective directors, officers, affiliates, employees, advisers or agents (and any warranty expressed or implied by statute is hereby excluded) as to the accuracy or completeness of the contents of this Presentation or any other document or information supplied at any time or any opinions or projections expressed therein, nor is any such party under any obligation toupdate the Presentation or correct any inaccuracies or omissions in it which may exist or become apparent.

• The summary projected financial illustrations contained in this Presentation are based on judgmental estimates and assumptions made by FluidOil about circumstances and events, which have not yet taken place. Accordingly, there can be no assurance that the projected returns will be attained. In particular, no representation or warranty whatsoever is given in relation to the reasonableness or achievability of any illustrations contained in this Presentation or in relation to the bases and assumptions underlying such illustrations and you must satisfy yourself in relation to the reasonableness, achievability and accuracy thereof.

• No responsibility or liability is accepted for any loss or damage howsoever arising that you may suffer as a result of this Presentation and any and all responsibility and liability is expressly disclaimed by FluidOil and their respective directors, officers, affiliates, employees, advisers and agents.

• This presentation is made available under the condition that the reader has read and agrees to be bound by the full disclaimer, confidentiality clauses, and conditions that are contained within the FluidOil Investment Memorandum.

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Company Overview

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Independent International Heavy Oil Technology Company• Developed advanced proprietary and patented VISCOSITOR Heavy-to-Light (VHTL®) technology • Core operations in USA and UK – business development opportunities worldwide• Strong management team with track record in delivering shareholder value in the resource and

technology sectors

VHTL® Significantly Increases Heavy Oil Economic Viability• Onsite upgrading allows >$30 / bbl to be unlocked by:

– Creating non-viscous light oil similar in value to WTI from bitumen/ heavy oils– Significantly reducing operating costs for producers

• Increases the usable energy from a barrel of oil thus reducing effective CO2 emissions• Low CAPEX / OPEX means project ROCE target is >50%• $85 Billion market with Upstream and Midstream partners

FluidOil merging with Dawson Gold and Concurrently Raising up to CAD$10m• Merged company will be public with CAD $50m initial valuation and 160m shares outstanding• Shares from concurrent investment will be free trading• Investment being used to take the Company to cash flow break even

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VHTL® Technology Development Key Milestones

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Experienced Board and Management

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• Gerald Malone, Chairman and Director – An investment directorat Aberdeen Asset Management

• Charles Parker, CEO and Director – A mechanical engineer, ex-Boston Consulting Group and tech Venture Capital

• Olav Ellingsen, CTO – Founder and inventor of the FluidOiltechnology behind VHTL®, has been CTO since 2012

• Howard Simons, Head of Engineering – Ex Head of KBR heavy oil and refining as well as the ex CTO of Sunhoe

• Jean-Xavier Morin, Head of Research – Former Director of AlstomBoilers and a leading expert in fluidised bed technology havingcommissioned numerous plants across oil & gas, nuclear and biofuel

• Simon Anderson, CFO – A chartered accountant with extensiveexperience working with public companies

• John D. Anderson, Director – Extensive capital markets experience

• Bijay R. Singh – Independent Director with in-depth corporatefinance experience working with both public and private companies

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Heavy Crude Oil Demand and Supply

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~15MMbbls/d heavy oil by 2030 which is 17% of global crude oil demand

Hea

vy O

il D

eman

dTh

ousa

nd b

arre

ls p

er d

ay

~7 million bpd of new heavy oil development needed to satisfy future demand

Development needed to supply growth in demand

Development needed to supply production decline

Heavy oil resources already in production

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Worldwide Sources of Heavy Crude Oil Demand

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Total Recoverable Heavy Oil and Bitumen worldwide: 2.0 trillion bbls• Constrained by production technology or cost limits: 1.0 trillion bbls Recoverable with technology available by 2030: 1.0 trillion bbls• In politically or geographically unfavourable locations: 0.4 trillion bbls Available in accessible locations: 0.6 trillion bbls• Higher quality heavy oil which is more easily transported and refined: 0.2 trillion bbls Heavy Oil constrained by current supply chain limits: 400 billion bbls

The estimate of 400 billion bbls are the heavy oil opportunities for VHTL®

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Heavy Crude Oil Opportunities for VHTL®

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Current conventional solutions are cost intensive and include the following challenges

High viscosity limits transportability to

large refineries

Residual oil lowers refining value

Production is energy intensive and costly

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VHTL® – Superior Technology with Substantial Benefits

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Fluid catalytic cracking (FCC)• Understood and widely used in the petroleum refining industry

(450 FCC units globally)• Uses heat to break down long chain molecules into much shorter molecules• Essentially it removes the ‘heaviest’ compounds and leaves the user with a

lighter product

VHTL® is FCC “with a twist”• Uses a similar but improved mechanical configuration• Injects oil with steam and uses combustion gas as lift gas to get hydrogenation • Uses additional turbulence (similar to “sandblasting”) to create additional

mechanical cracking

Benefits over FCC• Smaller, less costly facilities• Operates economically in facilities as small as 400 to 20,000 bpd• Eliminates need for hydrogen in hydrotreating units• Converts by-products from upgrading process into onsite energy• Does not use advanced Catalysts• Considerable environmental benefitsFeed Pre-fractionation

Atm. & Vac. DistillationProduct Quench &

Recovery

Pre-f rac t ionat ionDis t i l la t e t o SCO

Bot t om st o Reac t or

Reac t or L iqu idProduc t t o SCO

C4- Gas

Reactor & Reheatercirculates hot sand

Reac t or Produc tVapor

Bitumen

Upgraded Gaseous Oil

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VHTL® – How It Works

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LP Steam

Flue / Condenser Gas mixCollision pipes

• Feed is pre-flashed to remove light ends

• Residue is injected with steam into the reactor and contacted with hot turbulent sand

• Thermal and mechanical cracking lays down coke on sand and vaporises oil

• Steam combines with CO to form H2 for hydrogenation of oil

• Oil gas separated in cyclone from solids including coke and heavy metals

• Coke burnt in regenerator

• Oil gas condensed to form SCO

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VHTL® – Substantial Cost Benefits vs. “Dilute & Ship”

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• Small scale of operations suited for field upgrading

• Virtual elimination of external energy requirements

Conventional Upgrading

8-16 API Heavy Oil Field

19-21 API Blend(Heavy Oil + Diluent)

DiluentSupply

Refinery

OilBlend

External Supply of Energy

Coke

RefineryUpstream operations

+

Energy from burning coke

~30 API Oil80% less residue

8-16 API OilIn-field upgrading

VHTL® Upgrading

• Elimination of need for diluent or blend oils for transport

• Capture of majority of heavy vs. light oil value differential

SCO

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HTL® Engineering Purchased from Ivanhoe Energy

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Significant feasibility work has been inherited from Ivanhoe Energy resulting in substantial future costs savings:

• The FEED package for Tamarak, a 20,000bpd upgrading facility planned in Canada by Ivanhoe Energy (designed by AMEC Foster Wheeler)

• A feasibility study for Dos Bocas, a 50,000bpd upgrading facility in Tabasco, Mexico, to service the Ku Maloop Zaap field (by AFW)

• A feasibility study for a 60,000bpd floating production, upgrading, storage and offloading facility to be delivered in conjunction with SBM, a specialist FPSO company.

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VHTL® Economic Benefits are Superior to Full Upgrading

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0

10

20

30

40

50

60

70

80

90

- 25,000 50,000 75,000 100,000

($’0

00 p

er b

pd c

apac

ity)

Upgrading Capacity (bpd)

VCC

Delayed CokerwithNaphtha HDT

VHTL

$0

$2

$4

$6

$8

$10

$12

- 25,000 50,000 75,000 100,000

($ p

er b

bl th

roug

hput

)

Upgrading Capacity (bpd)

Upgrading OPEX Upgrading Capital Intensity

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VHTL® Produces High-Value Synthetic Crude Oil (SCO)

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VHTL® SCO valued at refinery gate has a price on par with light crudes e.g. Brent

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VHTL® Increases Net Return Per Barrel for Producers

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At $50 WTI, VHTL® can increase margins by ~$20.00/bbl and make unprofitable production very viable.

Current Netback

$50.WTI

Diluted Heavy Crude(24API)

-$5.00

Diluent Value Loss

($13.15) Shipping Cost

($15.70)

($12.00)

Production Opex Cost

($6.15)Energy Cost

Production Loss

Quality discount

($8.00)

VHTL®Netback

$50.WTI

$49.SCO(28 to 30API)

$15.64

VHTL® OPEX

($3.10)Shipping Cost

($11.90)

($15.00)

®Production Opex Cost

($3.36)

Yield LossProduction

Profit

Assumed discount($1.00)

Traditional Model of Dilute and Ship

VHTL® Model of Upgrading at the Well Head

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Corporate Strategy – $85 Billion Market Opportunity

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To commercialise the VHTL® technology through two different models:

On-site Upgrading – $75bn Opportunity• Create a “Packaged Proposition” for heavy oil producers• Engineer, build and commission Commercial Demonstration plant in Canada• Build reference plants up to 50,000bpd• Target 300,000bpd of capacity under a license model with a target

royalty of $3/bbl• Target 50,000bpd of capacity under a tolling fee service arrangement targeting a return of $6/bbl• Expand target markets to include Mexico, USA and Middle EastPotentials Customers: Cenovus Energy, MEG Energy, Grizzly Oil Sands, Connacher Oil, Andora Energy, Tatneft, Enefit, CDT Group, PEMEX, PdVSA, and Husky

Midstream Upgrading – $10bn opportunity • Create “Packaged Propositions” for small refineries and topping units• Target 30,000bpd of capacity under license fee / royalty targeting $5/bbl• Proposition to reduce heavy fuel oil fraction and allow heavier feedstocks• Target USA, Sub-continent and AfricaPotentials Customers: Proxion, ROST, and Hamilton

Feedstock testing facility, San Antonio, Texas

Example Mini refinery

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Case Study – Standalone Upgrader

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Overview• 50,000bpd stand-alone upgrader• 2,000bpd commercial demonstration unit• 8API crude to 21 API SCO• Power production mode with local PPA

• Co-located with refinery next to seaContract Details• JV Partner pays $12/ bbl processed• Operating costs ~$2.5/ bbl – Finance 10% coupon• Option to incorporate refining modules to product

refined product

15

350

3520

40

0

100

200

300

400

500Investment Use of Funds (USD$ Millions)

Contingency

Working capital (120days)

Engineering / Projectmanagement

Equipment /Infrastructure

Commercial Demo

(2)(23)

(52)

58 79 103 109 116 125 134

6 8

194 205 216

216 216 216 216

-50

0

50

100

150

200

250

1 2 3 4 5 6 7 8 9 10

USD$ Millions Profit & Loss Account (Years 1 to 10)

Operating Costs Finance CostsDepretiation Net Profit

-500

-250

0

250

500

750

1 2 3 4 5 6 7 8 9 10

USD$ Millions Project Cash Flow (Years 1 to 10)

Investment Operating Cash Flow Culmative Cash Flow

$460m

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Case Study – On-Site Upgrading in Canada

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OPEX – $3 to $5 / bbl

Manpower• Significant costs for operators on site• Shared operations with production• Remote operations of equipment with local

supervisionMaintenance• Significant scale advantages due to

manpower• Shared maintenance with producer• Maintenance friendly designSteam• OPEX sharing costs offset by sales of steam

to producer - ~70-100 KWh/bbl of excess energy

CAPEX $7,500 to $12,500 / bbl Capacity

Engineering• Costs mitigated through a “one design

approach”Equipment• Low capital cost due to simple approach• Core equipment only ~$3,000 / bbl capacityTie-ins• Largest CAPEX cost – dependant on site• Mitigated through minimal tie in’sInstallation and Commissioning• Modular skid mounted design• Minimal inter module connections• “One design” methodology reduces

commissioning times

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Six Month Testing Program – SwRI (Texas)

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Proving the commercial case for our patented VHTL® technology

Feedstock testing facility in action Upgraded heavy crude oil

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Contact Information

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FluidOil Corp. – Canada24 West 4th Avenue, VancouverBC Canada V5Y 1G3John Anderson, Director • M: +1 604 218 7400E: [email protected]

FluidOil Corp. – United KingdomEastlands II, London Road, BasingstokeRG25 4AW United KingdomCharles Parker, President & CEO • M: +44 20 7043 0720 E: [email protected]

VHTL® SCO is a high value feedstock for the global

refining industry

VHTL® is ready to implement

commercially

VHTL® is an effective way to monetize stranded

heavy oil

FLUIDOIL | PAGE


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Documents

Producing High Value Synthetic from Heavy Oilfluidoilcorp.com/wp-content/uploads/2018/01/20180124...2018/01/24 · Energy, Tatneft, Enefit, CDT Group, PEMEX, PdVSA, and Husky Midstream