Producing High Value Synthetic from Heavy Oilfluidoilcorp.com/wp-content/uploads/2017/07/170728-Fluid...Producing High Value Synthetic from Heavy Oil Corporate Presentation FLUIDOIL

Increasing the Value of Heavy Oil

Producing High Value

Synthetic from Heavy Oil

Corporate Presentation

FLUIDOIL | PAGE

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

Disclaimer and Conditions of Disclosure

2

• 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 to

update 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.

FLUIDOIL | PAGE


Company Overview

3

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, experienced management team with track record of 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 & Concurrently Raising up

to CAD$10m

• Merged company to be listed on TSX-V with CAD $40m initial

valuation and 160m shares outstanding

• Shares from concurrent investment will be freely traded

• Investment will take Company to cash flow break even through

commercialization of VHTL / commercial partnerships

FLUIDOIL | PAGE


VHTL® Technology Development Key Milestones

4

FLUIDOIL | PAGE


Experienced Board and Management

5

• Gerald Malone, Chairman and Director – An investment director

at 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 FluidOil

technology behind VHTL®, has been CTO since 2012

• Simon Anderson, CFO – A chartered account with extensive

experience working with public companies

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

• Bijay R. Singh – Independent Director with in-depth corporate

finance experience working with both public and private companies

• Jean-Xavier Morin, Head of Research – Former Director of Alstom,

Boilers and a leading expert in fluidised bed technology having

commissioned numerous plants across oil & gas, nuclear and biofuel

• Howard Simons, Engineering Consultant – Ex head of KBR heavy

oil and refining as well as the ex CTO of Sunhoe

FLUIDOIL | PAGE


Heavy Crude Oil Demand and Supply

6

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

He

avy O

il D

em

an

d

Th

ou

sa

nd

barr

els

per

day ~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

FLUIDOIL | PAGE


Worldwide Sources of Heavy Crude Oil Demand

7

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®

FLUIDOIL | PAGE


Heavy Crude Oil Opportunities for VHTL®

8

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

FLUIDOIL | PAGE


VHTL® – Superior Technology with Substantial Benefits

9

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-fractionationAtm. & Vac. Distillation

Product Quench & Recovery

Pre-fractionation

Distillate to SCO

Bottoms

to Reactor

Reactor Liquid

Product to SCO

C4- Gas

Reactor & Reheatercirculates hot sand

Reactor Product

Vapor

Bitumen

Upgraded Gaseous Oil

FLUIDOIL | PAGE


VHTL® – How It Works

10

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

FLUIDOIL | PAGE


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

11

• 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)

Diluent

Supply

Refinery

OilBlend

External Supply

of Energy

Coke

Refinery

Upstream operations

+

Energy from

burning coke

~30 API Oil

80% 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

FLUIDOIL | PAGE


HTL® Engineering Purchased from Ivanhoe Energy

12

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.

FLUIDOIL | PAGE


VHTL® Economic Benefits are Superior to Full Upgrading

13

0

10

20

30

40

50

60

70

80

90

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

($’0

00

per

bp

d c

ap

ac

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

bb

l th

rou

gh

pu

t)

Upgrading Capacity (bpd)

Upgrading OPEX Upgrading Capital Intensity

FLUIDOIL | PAGE


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

14

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

FLUIDOIL | PAGE


VHTL® Increases Net Return Per Barrel for Producers

15

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

FLUIDOIL | PAGE


Corporate Strategy – $85 Billion Market Opportunity

16

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 Demon 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 East

Potentials 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 Africa

Potentials Customers: Proxion, ROST, and Hamilton

Feedstock testing facility,

San Antonio, Texas

Example Mini refinery

FLUIDOIL | PAGE


Case Study – Economics of On-Site Upgrading in Canada

17

OPEX – $3 to $5 / bbl

Manpower

• Significant costs for operators on site

• Shared operations with production

• Remote operations of equipment with local

supervision

Maintenance

• Significant scale advantages due to

manpower

• Shared maintenance with producer

• Maintenance friendly design

Steam

• 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 capacity

Tie-ins

• Largest CAPEX cost – dependant on site

• Mitigated through minimal tie in’s

Installation and Commissioning

• Modular skid mounted design

• Minimal inter module connections

• “One design” methodology reduces

commissioning times

FLUIDOIL | PAGE


Six Month Testing Program – SwRI (Texas)

18

Proving the commercial case for our patented VHTL® technology

Feedstock testing facility in action Upgraded heavy crude oil

FLUIDOIL | PAGE


Contact Information

19

FluidOil Corp. – Canada

24 West 4th Avenue, Vancouver

BC Canada V5Y 1G3

John Anderson, Director • M: +1 604 218 7400

E: [email protected]

FluidOil Corp. – United Kingdom

Eastlands II, London Road, Basingstoke

RG25 4AW United Kingdom

Charles 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

mailto:[email protected]

mailto:[email protected]

FLUIDOIL | PAGE


20

Documents

Producing High Value Synthetic from Heavy Oilfluidoilcorp.com/wp-content/uploads/2017/07/170728-Fluid...Producing High Value Synthetic from Heavy Oil Corporate Presentation FLUIDOIL