UPGRADER FOR HEAVY, EXTRA-HEAVY CRUDE/BITUMEN AND RESIDUAL ... · VTB’s / ATB’s residues and other heavy oils) to lighter products • Combination of guard bed and fixed bedreactor

UPGRADER FOR HEAVY, EXTRA-HEAVY CRUDE/BITUMEN AND RESIDUAL FRACTIONS

Refiners face tremendous pressures to maintain profits, while

TABLE OF CONTENTS

Section A General Introduction and Market Overview

Section B Introduction Genoil GHU & Hydroconversion

Section C Genoil GHU Pilot Plant Two Hills, Alberta

Section D Introduction Genoil GHU Hydroconversion Complete Process Facility

Section E Genoil GHU Hydroconversion Technical Section

Section F Financial Data & Business Model


Section A General Introduction and Market Overview


Access to light, sweet crude is costly due to diminishing supplies

Refinery Crude Runs For Selected Markets Source: Purvin & Gertz Inc. Regional Upgrading Report

GROWING NECESSITY FOR RESIDUAL UPGRADING

Residual fuel supplies continue to increase as demand for residual fuels continues to decline

Figure 4. World Residual Supply / Demand Source: Pervin & Gertz Regional Upgrading Report


Demands for high quality transportation fuels continue to rise, requiring additional crude processing or investments in residual upgrading


Figure 3. Global Consumption, Transportation Sector

Process Temperatures Conversion

Visbreaking 425- 500 (oC)797-932 (o F)

Low

Delayed Coking 435- 480 (oC)815-896 (o F)

High

Fluid Coking 510- 540 (oC)950-1004 (o F)

High

Ultrapyrolysis > 600 (oC)>1,112 (o F)

High

Fluid Catalytic Cracking (FCC)

470 –510 (oC)878-950 (o F)

High

Hydroprocessing(Hydrocracking)

380 – 480 (oC)716-898 (o F)

FlexibleMedium to High

RESIDUE UPGRADING PROCESSES

Section B Introduction Genoil GHU & Hydroconversion

Process FixedBed

SwingFixed Bed

MovingBed

EbullateBed

SlurryBed

Number of units 40 1 3 9 3 demo

Pressure, bars 100-200 100-200 100-200 100-200 100-300

Temperature, oC 380-420 380-420 380-420 400-440 420-480

LHSV, h-1 0.1-0.5 0.1-0.5 0.1-0.5 0.2- 1.0 0.2-1.0

Operability Good Good Medium Medium Difficult

Ni + V in feed, wppm <200 500 500-700 >700 >700

Conversion to 550C-, % 50-60 60-70 60-70 70-80 80-95

Product Residue Stability Good Good Good Medium Bad

Cycle length, months 6-12 >12 Continuous Continuous Continuous

Relative catalyst Consumption 1 1 0.55-0.7 1.4-2.0 N/A

Vol% catalyst in reactor ~60 ~60 ~60 ~40 ~1

FEATURES OF THE HDC RESIDUE UPGRADING PROCESSES

CONVERSION TECHNOLOGY DIFFERANCES

The 2 most popular ways of converting low-value sour heavy fractions of crude or residue oils are:

• Coking removing the carbon molecules or• Hydrotreating / Hydroconversion / Hydrocracking (removing Sulphur and

other contaminates by hydrogen addition)

Coker upgrading produces lighter fractions requiring hydrotreating in separate streams prior to recombining the method used to produce syncrude

• 20% of the coker feed oil is converted to low-value coke

Hydroprocessing / hydroconversion uses catalysts in a hydrogen rich environment to:

• Crack the heavy hydrocarbon molecules into lighter fractions• Remove the crude contaminants (sulphur, nitrogen, metals)

GENOIL HYDROCONVERSION UPGRADER (GHUTM) ADVANTAGES

Higher liquid yields than coking processes• Output of hydroconversion is 100 – 104% of liquid input volume versus

approximately 80% for upgrading using the coking process

Capability to adjust product slate to meet increasing demand for low sulphur petroleum products including diesel and gasoline

Stability of upgraded crude produced in hydroconversion process is superior to coked products such as the syncrude processed today

Moderate operating conditions, temperatures and pressures allowing for simple reactor design with lower CAPEX and OPEX

Lower operating and capital costs per barrel when compared to known hydrogen addition processing schemes using like technology

Process Fundamentals

The Challenges we faced: Hydrocracking processes break larger molecules into fragments of

various sizes Mild cracking conditions create high yields of middle distillates Full Hydrocracking requires longer residence time while Hydrotreating is not sever enough to upgrade sour heavy oils or residue To minimize coking at high pressures & by hydrogen addition

Factors Affecting Reactions

Mass transfer characteristics (diffusion barriers Genoil’s focus) Catalyst, type, shape, etc. Fluid dynamics factors geometry of reaction vessel, reactor internals Temperature and pressure Hydrogen / Oil ratio

HYDROCONVERSION USING GHU PROCESS

HYDROCONVERSION USING GHU PROCESS

MILD HYDROTREATING PROCESSES

SEVER HYDROCRACKINGPROCESSES

GHU HYDROCONVERSION

GENOIL TECHNOLOGY PROFILE

Hydroconversion Upgrading Technology

• Upstream:GHU upgrading facility in oil producing field to convert high sulphur, heavy oils to lighter fraction oil increasing the value and product slate of each barrel of oil

• Downstream:GHU in refineries is used for the conversion of atmospheric and vacuum tower bottoms, increasing the product slate and volumes of distillates per barrel and unload existing coker to increase capacity

Patented Technology - US patent February 21, 2006 No. 7,001,502 B1, Canadian patent pending and World Wide PCT coverage

Genoil Hydroconversion Upgrader Commercialization • Downstream (Refineries): Test Completed for new 1,250 bpd HVGO/VTB

hydroprocessing unit, LOI for 20,000 BPD in China and MOU signed for refinery in Romania

• Upstream: Easter Europe Heavy Oil Field & Surge Energy Tar Sands

HYDROCONVERSION USING GENOIL’s GHU PROCESS

GHU Upgrading facility is a total process solution that

• Targets conversion of high sulphur heavy feedstocks (sour heavy crude, VTB’s / ATB’s residues and other heavy oils) to lighter products

• Combination of guard bed and fixed bed reactor designs to maximize processing of crude or residual oils.desulphurisation (>90%)demetallization (>70%) denitrogenation (>50%)API increase to sweeter and lighter oils during the conversion process

Proprietary process design and mixing devices

• Produce very high mass and heat transfer between hydrogen, the feedstock and the catalyst

• Partial conversion Hydrocracking is achieved at moderate severity operating pressures and temperatures

Section C Genoil GHU Pilot Plant Two Hills, Alberta

GHUTM DEMONSTRATION FACILITY IN TWO HILLS, ALBERTA

Genoil owns and operates a 10 bpd hydrotreating upgrader complete with an independent water electrolysis unit for high purity hydrogen supply, hydrogen compressor, electrical substation, fired heater, low-pressure separator for vapour-liquid separation, and a PLC for automated operational control.

The GHU is equipped with online gas chromatograph, hydrogen analyzer, and mass flow/density meters. PLC and process data are monitored and recorded in real time.

GHUTM DEMONSTRATION FACILITY IN TWO HILLS, ALBERTA

Section D Introduction Genoil GHU Hydroconversion

Complete Process Facility

GHU UPGRADING FACILITY COMPLETE PROCESS SCHEME HYDROCONVERSION FACILITY

Genoil has continued to improve our technology while looking at the larger picture of what is required for a stand alone facility or better utilization of resources to lower operation cost, produce hydrogen, power and steam in a cost effective manor.

Working with clients to meet their needs we have combined our technology with others to offer a complete process solution and a bottomless barrel of upgraded crude of residual oil.

COMPLETE PROCESS SCHEME

• The heavy residue fraction that is not upgrade is used for production of syntheses gas, then hydrogen production as required by the process, and finally integrated with a IGCC process for the production of power and steam.

• The upgraded crude will have no residual fraction making the each barrel processed through the facility a bottomless barrel for sale to the refiner.

GENOIL HYDROCONVERSION PROCESS FACILITY PLAN

GENOIL HYDROCONVERSION BASIC FLOW DIAGRAM

COMPARISON COKER UPGRADER BASIC FLOW DIAGRAM

GHU FACILITY INTERGRATED WITH PETROCHEMICAL COMPLEX

New GHU Upgrading Section

Section E Genoil GHU Hydroconversion

Technical Section

HEAVY HIGH SULPHUR CRUDE UPGRADING RESULTS WITH GHUTM

In a pilot plant program with a HEAVY OIL FEED of 12.5° API and 3.26% sulphur, the GHUTM upgraded the product to:

• A 30.4°API gravity with:– 92% desulphurisation– 60% denitrogenation– 63% Conradson Carbon (CCR) conversion

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HEAVY HIGH SULPHUR CRUDE UPGRADING RESULTS WITH GHUTM

OPERATING RESULTS FROM GHUTM BITUMEN UPGRADING

OPERATING RESULTS FROM GHUTM BITUMEN UPGRADING

OPERATING RESULTS FROM GHUTM HEAVY OIL UPGRADING

In another extensive pilot plant program with a Heavy Oil Feed of 17.5°API and 1.2% sulphur, Genoil was asked to upgrade to a product with:

• A gravity of 32.0 °API • 0.6 wt% sulphur (50% desulphurisation)• Maximum vacuum residue conversion


Genoil conducted a series of 12 pilot plant runs to confirm the required operating conditions to meet the product objectives (Upgrade crude gravity to minimum of 32.0 ºAPI and sulphur content below 0.6 wt%).

Tests were conducted at pressures between 120 and 128 kg/cm2 (1,700 to 1,825 psig) with standard available catalyst

Temperatures between 377 and 430ºC (711 to 806ºF).

Overall catalyst space velocity (LHSV) of 0.40 to 1.0 for a one to two year catalyst cycle.


At the previous temperatures and pressures:

Desulphurization: 75 to 97%

Denitrogenation: 37 to 53%

Demetallization: 76 to 98%

Conradson Carbon reduction: 47% to 87%

Pitch conversion: 37 to 88%


At the selected operating conditions

Heavy OilFeed

ProducedCrude Product

API Gravity 17.5 32.0Specific Gravity 0.9497 0.8498Sulphur, wt% 1.22 0.038Metals, wppm 77 <1.5Conradson Carbon, wt% 7.4 <1Nitrogen, wt% 0.286 0.135Aromatics, % 42.4369+C, wt% (vol%) 75.75 (77.9)509+C, wt% (vol%) 50.92 (51.8)535+C, wt% (vol%) 41.74 (42.1) 5.04 (4.23)


At the selected operating conditions:

Desulphurization: 97%

Denitrogenation: 53%

Demetallization: 98%

Conradson Carbon reduction: 87%

Pitch conversion: 88%


Crude Product Yields

Full Range

Naphtha

Kerosene Heavy Diesel

Vacuum Gas Oil

Vacuum Residue

TBP, C IBP to 200 200 to 300 300 to 350 350 to 535 535+

TBP, F IBP to 392 392 to 572 572 to 662 662 to 995 995+

Weight, % 20.18 30.89 16.45 27.44 5.04

Volume,% 22.77 31.32 16.01 25.67 4.23


Full Range Naphtha Properties

TBP, C (F) IBP – 200 (IBP – 392)

API Gravity 52.0Specific Gravity 0.7711Sulphur, wppm 15Nitrogen, wppm 110RON/MON 46/52

Smoke Point, mm 22


Kerosene Properties

TBP, C (F) 200 –300 (392 – 572)

API Gravity 33.4Specific Gravity 0.8581Sulphur, wppm 20Nitrogen, wppm 410Cetane Index 42.1

Smoke Point, mm 13

Freeze Point, C (F) -41 (-42)


Heavy Diesel Properties

TBP, C (F) 300 –350 (572-662)

API Gravity 26.7Specific Gravity 0.8944Sulphur, wppm 300Nitrogen, wppm 1,090Cetane Index 42.0

Pour Point, C (F) -24 (-11)

Freeze Point, C (F) -10 (14)


Vacuum Gas Oil Properties

TBP, C (F) 350 –535 (662-995)

API Gravity 20.6Specific Gravity 0.9303Sulphur, wppm 650Nitrogen, wppm 2190Metals, wppm <1

Asphaltenes, wt% 0.11

Conradson Carbon, wt% 0.02


Vacuum Residue Properties

TBP, C (F) 535+ (995+)

API Gravity 5.3Specific Gravity 1.034Sulphur, wppm 1590Nitrogen, wppm 5300Metals, wppm 8.5

Asphaltenes, wt% 4.4

Conradson Carbon, wt% 24.0

RESIDUE & HVGO UPGRADING IN A REFINERY WITH GHUTM

Testing has been completed for the first commercialrefinery retrofit of the GHUTM technology in a refinery

The Genoil Hydroprocessing Upgrader will process distillation residues from the refinery (bottoms of the barrel)

GHU test and preliminary design were for a 1,250 bpd of proposed facility processing atmospheric residues


Density, kg.m3 913API Gravity 23.4Sulphur, wt% 1.99Total Nitrogen, wppm 1,000Wax, wt% 22.5Pour Point, oF 102Carbon Residue, wt% 0.21

Distillation FractionsIBP to 200 oF 0.0200 to 360 oF 0.0360 to 530 oF 0.0530 to 750 oF 23.68750 oF + 76.32

Waxy Heavy Vacuum Gas Oil & VTB Feed Properties


In a recent client assessment, waxy ATB / VTB residue of 22.3° API with 1.63 wt% sulphur were upgraded using the GHUTM to a 38°API gravity product with just 91ppm sulphur.

Over 73% of the HVGO and heavier were converted into higher value products at moderate operating conditions

Hydroconversion of Waxy Residues

Feed %Product

%

Heavy Naphtha 0.0 9

Stove 1 22

Diesel 21 47

HVGO 78 21

Total 100% 100%

The sulphur component in the diesel cut was reduced to 50 ppm. This approaches the new ultra-low sulphur regulations.


Overall refinery yield changes after using a GHU for ATB, VTB and HVGO hydroprocessing;

Differential price between feed & product: $ 14 to $ 25 per barrel

Based on third party engineering calculations, the IRR of incorporating a GHU installation into this 11,000 bpd refinery would be 44%.

UPSTREAM PROJECT: SURGE ENERGY TAR SANDS PROJECT

First commercial 10,000 bpd GHU Upgrader in North America will be for a tar sands project

Upgrade bitumen gravity from 9 API to 34 API

Sawn Lake Alberta field contains 820 million barrels of heavy oil that the GHU will convert to light oil

Spread between heavy oil and light oil at $ 14 - $ 25 per barrel (Jan 2006)

Spread between tar sands feed and light oil closer to $ 25 to $ 35 per barrel

After costs, profitability estimated at well over $10 per barrel

DOWNSTREAM PROJECT: HEBEI ZHONGJIE PROJECT

Letter of Intent with Hebei Zhongjie PetroChemical Group, China, signed on September 2006 to proceed with Genoil GHUTM

upgrader installation. Previous MOU signed in February.

First major commercial 20,000 bbl/d upgrader to increase quality and quantity of crude entering the refinery will be constructed on the refinery property.

September 2006: representatives from Hebei Zhongjie visited the Genoil pilot facility in Two Hills.

Genoil will work on engineering and design package, while Hebei Zhongjie will ship oil to be processed at pilot upgrader

REFINERY RETROFITS INCORPORATING A GHUTM

A residual upgrading strategy incorporating a GHUTM offers refiners greater opportunities to:

• Purchase heavier feedstocks and still maintain a light product slate while recovering valuable fuel stocks allowing for better bottom of the barrel management

• Meet growing demands for low sulphur, light fuels by removing over 90% of the sulphur and converting the heavy fraction of a barrel into lighter fuel product feedstock

• Increase profit margins on refining process

• Help comply with worldwide government mandates for low sulphur products

CLIENT TESTING

The Genoil pilot plant upgrader is ideal for demonstrating the benefits of incorporating a GHUTM either into an existing refinery, or for field upgrading

The feedstocks are shipped from the client operations to the Genoil upgrader site in Two Hills, Alberta

Genoil engineers complete the pilot plant tests, and establish the mass and heat balances for a GHUTM installation and supply customers with complete analysts of upgraded product and distillation curves for the product.

Feed and product analyses are done by accredited third party laboratories (Maxxam, NCUT or Core Lab)

A minimum of 75-100 barrels of feedstock (crude/bitumen or residue) is required for GHUTM testing

Section F Financial Data & Business Model

SALES CRUDE BLEND MIXED TO EXPORT HEAVY CRUDEMIXED CONDENSATE AND HEAVY CRUDE 100,000 BPD CAPACITY

50% Condensate (Distillate)

50% 12 API Heavy CrudeMixed for Export or used in ORC Refinery

Bases value for each of the component to blend Export Grade crude

50,000 BPD Condensate $ 57.00 = $ 2,850,00050,000 BPD Heavy Crude $ 35.00 = $ 1,750,000Blended Total Value $ 4,600,000

Value of Blended Crude Sales 100,000 BPD $ 54.00 = $ 5,400,000Net Gain in Value $ 800,000

$ 5,400,000Value of Blended Sales Crude 100,000 BPD X $ 54.00

Per day Net Sales

Genoil GHUUpgrading

Facility

Per day Net Sales

SALES CRUDE UPGRADED IN GHU UPGRADING FACILITY100,000 BPD CAPACITY WITH SEPARATE CONDENSATE SALES

50,000 BPD Condensate

50,000 x $ 57.00 per barrelCan be used a Chemical Feed Stock vs. used for Mixed Export Blend

$ 2,850,000

100,000 BPD Heavy Crude

$ 5,200,000

100,000 BPD Upgraded Crude100,000 x $ 52.00 per barrel

Total Net Sales $ 8,050,000Less Operating $ 850,000Sales Less Expenses $ 7,200,000

Total Net Gain Per Day $ 1,800,000Difference between Mixed Crude Sales and Upgraded Crude sales based on 100,000 BPD

Operating ExpensesLess Operating Cost 4.00 per barrel $ 400,000Less Cost of Capital 2.50 per barrel $ 250,000Less Hydrogen Cost 2.00 per barrel $ 200,000Total daily cost $ 850,000

RESIDUE & HVGO UPGRADING IN A REFINERY WITHOUT GHU

HVGO / Residue refinery output 1,250 BPD at $ 30.00 = $ 37,500 income sold as Cat Feed to Neighboring Refining

RESIDUE & HVGO UPGRADING IN A REFINERY WITH GHU

GenoilGHU

9% Naphtha

22% Kerosene

48% Diesel

21% VGO

1,250 BPD Reside Feed Upgraded and increased to 1,443 BPD Product Refined:

327.0 BPD Naphtha $ 157.00 = $ 59,339264.0 BPD Kerosene $ 105.00 = $ 27,720618.0 BPD Diesel $ 105.00 = $ 64,890 234.0 BPD VGO + $ 30.00 = $ 7,020Recoverable Product Dollars = $ 150,696

Refinery income after upgrade and recycle of HVGO / Residue by $ 150,969 Dollars Per Day vs. $ 37,500 Dollars Per Barrel sold as FCC Feed or an increase of $ 113,469 Dollars Per day in income

Project A – Description

A GHU unit will be located within the boundaries of an existing international petrochemical facility and tied into the existing refining side of the complex utilizing existing utilities and power grid.

Operating Detail

• The GHU unit will be designed and constructed to upgrade 20,000 BPD of heavy high sulphur Russian M380 feedstock and will be part of a planned capacity increase of 1.5 million tons per year to the existing petrochemical complex.

• The M380 feedstock will be upgraded in the GHU unit reducing the sulphur content and increasing the API to a level close to WTI (40 API and 0.50% or less sulphur.)

• This upgrade will allow the international petrochemical facility to utilize the lower cost heavier feedstock in a refinery that is designed for light sweet feed and allow the refinery to produce at least the same or, best case, a better product slate from the heavier low cost feed stock.

• The upgraded crude will be added in feed stock to the existing refining operation for now but may at a later date be diverted to a new ADU / VDU where it will processed into final product without having to be run through the existing refinery and added directly to the sales product pool.

• Tankage and utilities are available within the existing refining scheme to support the GHU installation.

• The facility will require an operations staff of 6-to-10 operators working shifts based on 24 hours per day of operation.

Project A – Description (continued)

Revenue

• Genoil’s revenue would be 20 million for license fees and total engineering package.

• Genoil will also oversee the installation at the international facility and will have additional revenue of $2-to-4 million for the ECM (engineering construction management) once the project moves to the field for erection. In addition to license and ECM revenue,

• Genoil will receive two-times the total capital investment made into the project as repayment of original investment that should occur with the first 5 years, and 10% of all profit generated based on the difference between the price of the M380 crude a low cost feed stock and the price of WTI which, at this time, appears to be $20-to-25 dollars per barrel.

• Based on this structure, Genoil will receive between $7.5 million-to-15 million dollars per year after repayment of capital for the life of the facility – which is estimated at a minimum of 20 years.

Project A – Description (continued)

Costs

• The total engineering package is estimated to be 20% of the total project cost at this time.

• Genoil will provide the process engineering, detailed engineering, fabrication and construction services for this project, working with an international engineering company.

• The operation cost are calculated to be $8.50-to-10.50 per barrel at this time, but may be 30% lower based on operating internationally.

Current Project Status

• The project is currently moving forward on schedule as Genoil is working on the feed study to narrow down the exact configuration of the facility and hone in on the capital cost once the preliminary design is complete.

• The international facility is in the process of sending oil to our pilot facility in Alberta for testing and our engineering staff will visit the refinery this February, 2007 to finalize the design conditions.

Project B – Description

Detail

• This project is based on a 50,000 barrel per day stand alone international facility.

• Units will be installed to remove the high sulphur content, lower acid and nitrogen content

• The units will also increase the API of high sulphur crude and heavy crude found in this internationalregion.

Project C – Description

Detail

• This proposed project is for a total of 60,000 barrels per day of upgrading capacity.

• The upgrading capacity is based on 3 each, 20,000 barrel per day trains and a complete stand alone facility with integrated syn-gas production, hydrogen production and recovery, and co generation to produce steam and power for the facility.

• Genoil will license the technology to the facility and provide a Schedule "A" engineering package to the EPC contract of the facility’s choice.

• Genoil will act as the facility’s engineer and oversee the construction, installation and start up of the new train.

• Genoil will have no responsibility for the supply of equipment or the construction of the facility.

Revenue Pipeline

Historical Cost Structure

Assumptions

6 new engineers per project $120-$170K per engineer (fully burdened) 1 project manager (engineer) 5 supporting engineers

2 new sales/marketing $70-$120K salary per (fully burdened) Plus commission

1 new finance/accounting $70-$120K salary per (fully burdened)

Contact:David K. Lifschultz

Chief Executive Officer2833 Broadmoor Blvd., Suite 120

Sherwood Park, Alberta, T8H 2H3, Canada Tel: (914) 393-5800Fax: (914) 373-3823

E-mail: [email protected]

Documents

UPGRADER FOR HEAVY, EXTRA-HEAVY CRUDE/BITUMEN AND RESIDUAL ... · VTB’s / ATB’s residues and other heavy oils) to lighter products • Combination of guard bed and fixed bedreactor