VERDIS Presentation - APR 2015 - CUSTOMER

WE CONVERT FLARED GAS

INTO ULTRA-CLEAN DIESEL

THE VERDIS ALTERNATIVE CONVERT WASTED GAS INTO ULTRA-LOW SULFUR DIESEL

Our Gas to Diesel (GTD) conversion units will provide a profitable alternative to gas-flaring |

Operators can reduce carbon footprint & generate significant cash-flows from valuable

commodity | Produce Diesel, naphtha, aviation fuel

CAPITAL REQUIREMENTS

$5-10 million to get first units manufactured and fielded with companies already strongly

interested | If closer to $10 million: could start parallel work on larger units | Projected

revenues: +$40 million revenue, EBITA +$35 million, within 5 years.

EXECUTIVE SUMMARY

GLOBAL GAS FLARING A MASSIVE CHALLENGE

Oil and Gas operators annually flare or vent $30 billion worth of natural gas worldwide |

Precious energy wasted | 400 million tons of damaging CO2 emitted

OUR PATENTED CATALYST A DISTINCTIVE COMPETITIVE ADVANTAGE

Our Fischer-Tropsch process and cobalt-ruthenium catalyst boost diesel yield from 50 to 94% |

By-products: usable water, co-generated electricity | Customer breakeven point – 3 year

average based on wholesale value of diesel and water produced | Environmental benefits add

further value

ISSUE & OPPORTUNITYVERDIS & ITS TECHNOLOGYGTD UNIT SIZES & VALUE CREATIONCOMPETITIVE LANDSCAPE

Every day Oil & Gas operators are flaring and venting natural gas

The Greenhouse Gases emitted cause severe environmental

damage and have significant worldwide economic impact

THE FACTS: Flaring of Associated Gas. . .

• Releases 400M tonnes of Carbon Dioxide (CO2)

• Wastes $30.6B worth of natural gas (Methane, CH4) , equivalent to 8% of total

world supply

• Disproportionately impacts world’s most delicate areas – 42% of black

carbon in the Arctic comes from global gas flaring

Imagine if we could reduce those

emissions…and monetize that “waste”!

GAS FLARING A MASSIVE CHALLENGE

WHAT IS FREE ASSOCIATED PETROLEUM GAS?

Petroleum

(Complex mixture of liquid

hydrocarbons)

Free associated

petroleum gas

(Mixed gaseous hydrocarbons

mainly Methane, CH4)

Drilling rig

Anticline

Impervious rock

Gas flare stack

WHY IS GAS

FLARED?

• When crude oil

extracted from onshore

or offshore oil wells,

raw natural gas

produced as well

• When pipelines and

other transportation

infrastructure are

lacking, vast amounts

of such gas is deemed

unusable and is flared

or vented

• Flaring may occur at

top of a vertical flare

stack (as shown) or at

ground-level in an

earthen pit

Source Financial Times, Jan 2013: http://goo.gl/MXulda

• From a low base, US now fifth largest gas-flaring nation

• In North Dakota, USA: major spike in production due to shale gas boom and 30% of

associated gas now burned off at wellhead

• Gas flaring in this “Bakken formation” now visible from Space: burning $1B worth of

gas a year (enough energy to power all the homes in Chicago and Washington

combined

• Number of flaring permits issued in Texas has gone up six times from 2010 to 2012

GAS FLARING HAS TRIPLED IN THE US (SINCE 2008)

STOP FLARING. MONETIZE YOUR WASTE!

WHY DO COMPANIES STILL FLARE?

VERDIS SYNTHETIC FUELS

GAS-TO-LIQUIDS MOBILE PROCESSING UNITS

CONVERT NATURAL GAS TO

MARKET-READY ULTRA-CLEAN DIESEL

This is the VERDIS poster From the ADIPEC 2012 Oil & Gas Show in Abu Dhabi, UAE

They lack a profitable, practical, alternative . . .

. . . So VERDIS is going to give them one!

PRIORITY 1 - GAS FLARING

Current solutions target only extremely large gas deposits…

… leaving $20B+ market for S/M sized flares practically unexploited!

Our technology will provide Oil & Gas producers a profitable way to:

• Optimize their value chains as profit driver

• Reduce emissions to lighten environmental foot print

• Promote corporate image/CSR

• Comply with emissions reduction targets

PRIORITY 2 - STRANDED GAS RESERVOIRS / REMOTE LOCATIONS

• Large reserves remain unexploited for economic or technical reasons

• VERDIS units can do it, on land, offshore platforms, or boats & barges

PRIORITY 3 - GOVERNMENT OR NON-GOVERNMENT STAKEHOLDERS

• A less expensive fast-track to domestic diesel production (Israel, Leviathan field)

• To provide fuel, water & electricity to isolated communities with gas supplies

(Arctic region, desert communities)

• Provide an in-country supply of fuel for expeditionary, deployed, military forces

UNTAPPED MARKETS

REGULATORY TRENDS

• International efforts to curb carbon emissions began with 1990 Kyoto agreement. Attempts to set

global, binding, emission reduction targets continue to fail (2009 Copenhagen Climate Change

Summit)

• Some non-binding initiatives (2010 UN Global Climate Change Convention) to encourage emissions

trading gaining traction. EU, individual countries taking action domestically

• 2009 EU Energy Directive: binding participation in the Emissions Trading Scheme. Enables EU-

based companies with foreign subsidiaries to claim EU tax bill credits for foreign reductions

• US EPA to tighten air quality and diesel content standards. Some individual US states and

Canadian provinces looking to set up regional emissions trading schemes. Canada: in wake of

Keystone, promising new regulations within 2 years.

• Australia: carbon tax, emitters charged amount per ton of emissions. Others, like Mexico and

Colombia, are taking hybrid approaches.

ISSUE & OPPORTUNITYVERDIS & ITS TECHNOLOGYGTD UNIT SIZES & VALUE CREATIONCOMPETITIVE LANDSCAPE

VERDIS Synthetic Fuels, FZE

VERDIS Synthetic Fuels was founded in Sharjah, UAE,

in 2010

Subsidiary of our Calgary-based parent, Canada

Chemical Corporation (CCC)

Dedicated to commercializing CCC’s

groundbreaking Gas to Diesel (GTD) technology

Canada Chemical Corporation

CCC has long track record of oil & gas sector

innovation and R&D excellence

Recognized that within Gas to Liquids, no

technologies were producing market-ready diesel

It’s R&D staff, led by noted scientist Dr. Conrad

Ayasse, began work on GTD in the late 1990s

Filed the first set of patents

VERDIS FUELS & IT’S TECHNOLOGY

WHO ARE WE?

Rob AYASSE, MBACEO

Agata MATABUENA, MBA

Operations & Logistics

Renaud CLAUSSE, MBAFinance

Alan AYASSE, P.ENG

Engineering

Jorge GOMEZ, MBAStrategy & IT

Dr. Conrad AYASSEChief Scientist

We have gathered an experienced international management

team, and combined it with top-notch technical experts and scientists

VERDIS AMERICAS

R&D Lab | Canada

VERDIS EMEA

HQ in Sharjah | United Arab Emirates

VERDIS APAC

Finance | China

TEAM VERDIS

1998 THROUGH 2008

• Extensive R&D efforts, development of numerous

bench-scale units for concept validation

• Developped deep expertise in traditional syngas

creation (steam and autothermal)

• Worked on proprietary Fischer-Tropsch catalyst

• 2006: watershed deployment of a 25 MSCFD

prototype on landfill in Oklahoma City with partner

Alchem Field Services (actual photos on right)

• Provided Proof of Concept, prototype

decommissioned in 2008

2008 THROUGH 2014

• Data from protoype: filed updated patents in 2009

• VERDIS founded in 2010

• 2012: Partnered with Process Group International

(www.processgroupintl.com) to develop initial design

for 0.25 MMSCF/DAY mobile unit

• Result of design and costing: both autothermal &

steam reforming technically viable when paired with

VERDIS catalyst, BUT temps too high, efficiency too

low, to give excellence in customer value

• 2012-2014: intenisve search for optimal syngas

reformer solutions while further refining FT catalyst

• Focused on 2 emerging technologies: plasma &

CPOX

25 MSCF/day Prototype

Prototype Deployment


GTD TECHNOLOGY DEVELOPMENT BY CCC & VERDIS

http://www.processgroupintl.com/

We improved the Fischer-Tropsch process with our cobalt-rhenium

based patented catalyst: boosted diesel output from 45-50% to 94%!

(2n + 1) H2 + n CO → CnH(2n+2) + n H2O

METHANE DIESEL + WATER

FT CATALYTIC REACTION

PARAFFINIC SYNTHETIC DIESEL

0% Sulfur0% Aromatics

+

COMPETITIVE ADVANTAGE PROPRIETARY CATALYST

• Produces vehicle ready

diesel directly from FT

reactor

• No further refining

necessary

• Very high Cetane

number (78, versus

normal spec of 43)

• Zero sulfur or

aromatics content –

much cleaner

emissions

• Ideal blending stock

• Fischer-Tropsch based Gas to Liquids (GTL) process: key differentiation is

patented FT catalyst, potential pairing with novel Syngas production

• Only process on the market converting gas directly to ultra-clean diesel

at low-pressure, directly from the FT reactor, so no hydro-cracking or

further refining

• Significant savings in Capital & Operational cost (US DoE: up to 30%)

• By-products: industrial-use water (1.1:1 water to diesel), possibility of

surplus electricity, so units could provide surplus electricity after startup

(excellent for desert, arctic and offshore use)

• Process reviewed & endorsed by the World Bank Global Gas-Flaring

Reduction Partnership

VERDIS PROCESS ADVANTAGES

“The uniqueness and novelty lies in the . . . catalyst design and operation to realize the optimal, economic small-scale GTL process for production of a liquid fuel product containing high diesel and low wax yields. This is the type of process design for which the syngas conversion community has been searching. . .”

- Leading GTL Expert Prof. Calvin H. Bartholomew, Brigham Young University

PLASMA-BASED SYNGAS REFORMER VALIDATION: JULY 2014 CERAMATEC TEST

TEST OBJECTIVES

To validate potential of VERDIS catalyst combined with Ceramatec’s unique plasma-based

syngas reformer in a ¼ BBD GTL unit

TEST RESULTS

Exceeded all

expectations – best

Ceramatec has seen:

• 90% Diesel

(industry standard

45-55%)

• Only trace

amounts of wax

(0.08%)

• Predicted that

VERDIS 0.25

MSCFD unit would

achieve 10,000:1

conversion ratio,

beating even

Shell’s world-scale

‘Pearl’


VERDIS Mobile VERDIS Fixed VERDIS SPP

(4 MMSCFD)

400 US BBD (63,600 L)

Transported in several

trucks, fixed location

Medium-scale gas-flaring

or mid-sized stranded gas

deposits

(25+ MMSCFD)

2500 US BBD (397,500 L)

Small Petrochemical Plant

Large scale gas-flaring

sites, or to develop whole

stranded gas fields

(0.25 MMSCFD)

25 BBD (4000 L)

Fully mobile, designed for

truck/boat transport.

Small-scale gas flaring or

stranded gas deposits

PRODUCT ROADMAP

Synthetic Diesel (ULSD) is so clean

you can actually SEE the difference!

CUSTOMER VALUE PROPOSITION

Based on a gas to diesel conversion ratio of the smallest unit(10,000:1), for straight methane. Associated gas, with its mix ofhigher combustibles (ethane, propane) can yield up to 40% morediesel pr unit of gas converted.

• Table shows the customer breakeven point for a single VERDIS mobile conversion unit

in a cross-section of markets based exclusively on the wholesale value of diesel and

water it will produce

• Breakeven point in most markets: 3 years

• Indirect or intangible benefits

could include:

o Tax breaks or carbon

credits

o Public relations

benefits of reduced

flaring and carbon

emissions

o Compliance with

corporate goals,

national laws or global

conventions

o Excess electricity

produced which may

be sold back to the

grid

• Ancillary benefits may

be as valuable as direct

economic benefits

-4

-2

0

2

4

6

8

10

12

Israel Australia China Canada Nigeria Russia UK Mexico USA UAE Qatar

BREAKEVEN YEARS - SELECTED MARKETSFlared Gas vs. Henry Hub FMV

Breakeven YR - AG Breakeven YR - FMV

Feed gas

heater

Reformer

CoolerAir

cooler

Water

Knock-

out

Feed gas

heater

FT

reactor

Compressed Air

Compressed HC

gas Steam

100-200 psia

800 C 50 CCO+2 H2

Dry

Syngas

Steam

200-215 C

Heat

removalGlycol

cooler

Gas

Oil

Water

Flare or

combustor

Tail gas recycle (2x

raw feed)

Separator

4 C

VERDIS PROCESS SCHEMATIC

• Higher combustibles (ethane,

propane, etc.) improve diesel

production

• Inerts have no effect

• H2S degrades catalyst

performance and must be

removed, to a level >1 PPM

• This requires a standard gas

scrubber (SulfaTreat or zinc

oxide possible)

• OR: Canada Chemical

Corporation has a proprietary

Batch Oxidation technology

to convert H2S to elemental

sulfur

VERDIS PROCESS STEP 1 – INPUT GAS SCRUBBING

• A small amount of

hydrocarbon raw gas is

burned in the reformer

• This is used to pre-

heat the entire train.

• As delivered, the

Fischer-Tropsch

catalyst contains

cobalt oxide (the

metallic form is

pyrophoric when

exposed to air and

would be dangerous to

handle).

• To activate the catalyst

for FT syngas

conversion: catalyst

reduced to metallic

cobalt inside FT

reactor using

hydrogen

VERDIS PROCESS STEP 2 – GTD UNIT STARTUP

25K SCF/day Prototype


• Feed gas moves into a highly-advanced plasma-based

Syngas Reformer

• Required temperature and pressure (50PSI) is

achieved

• Gas fully prepared for conversion in next stage:

H2:CO ratio sought 2.0

• (Includes compressor, coolers, water knockout,

piping to storage)

VERDIS PROCESS STEP 3 – SYNGAS PRODUCTION


• FT Reactor tubes have optimized fin

shape to dissipate heat, enhance

reaction efficiency

VERDIS PROCESS STEP 4 – DIESEL PRODUCTION


• High capacity Fischer-Tropsch

reactor comprised of 4 inch catalyst

tubes

• Pressure <200PSI, cobalt catalyst

crystallite size 16NM

• Syngas converted into diesel, water,

naptha, tail gasses

• (Includes FT reactor, Dowtherm ®

coolant condenser, coolant

circulation equipment, synthesis gas

recycle loop)

Close-Up: FT Reactor with tail-

gas recycle

• FT Reactor products are separated and captured in one

‘cold trap’ and one ‘hot trap’

• They are then directed to different storage tanks on site,

waiting tanker trucks, or possibly pipelines, for further

distribution to end-users

• The process continues once started and 350 days of

uptime per year is anticipated

VERDIS PROCESS STEP 5 – PRODUCT COLLECTION

10-25 BBD Layout – Footprint: 15m L x 7m w x

11m h

Can be Scaled Up to 100BBD by Adding More

Vertical FT Reactors in the Available Space

ISSUE & OPPORTUNITYTECHNOLOGY & BENEFITSGTD UNIT SIZES & VALUE CREATIONCOMPETITIVE LANDSCAPE

CieQual

Lagos, Nigeria

• Seeking mobile solution to reduce flaring in the Niger Delta

• Provided a proposal for a 0.25 MMSCFD unit using plasma-based reformer paired with the

VERDIS FT catalyst

• Sent their COO to Salt Lake City to observe test at CERAMATEC

• Exploring how to import manufactured units withough punitive import tarrifs which

would erode customer value


CURRENT FOCUS & CUSTOMER ENGAGEMENTS – 0.25 MMSCFD

10-25 BBD Layout – Footprint: 15m L x 7m w x

11m h

Can be Scaled Up to 100BBD by Adding More

Vertical FT Reactors in the Available Space

Grenergy, LLC

Delaware, USA

• Seeking a large-scale, fixed, solution to convert some 15 MMSCFD of

Associated Gas in Iraq

• In December 2014 proposed a solution using 17 plasma-based

reformers (of 1 MMSCFD each) paired with the VERDIS FT catalyst

• Estimated CAPEX of USD112.5-135 million

• Waiting to hear if they wish to proceed to a feasibility/FEED study to

better assess potential, OPEX and CAPEX

• (Projections for the project as proposed follow)


CURRENT FOCUS & CUSTOMER ENGAGEMENTS – 15 MMSCFD

PROJECTIONS FOR 15 MMSCFD PLANT (Grenergy LLC)

COST: $112.5 Million

Breakeven Point: 19 months

Accumulated Profit & Loss (10 yrs): $607,173,750

Net Present Value (5% discount rate): $422,107,613

Internal Rate of Return: 63.5%

COST: $135 Million





1 2 3 4 5 6 7 8 9 10

$112.5M 60,717,37 121,434,7 182,152,1 242,869,5 303,586,8 364,304,2 425,021,6 485,739,0 546,456,3 607,173,7

$135M 58,467,37 116,934,7 175,402,1 233,869,5 292,336,8 350,804,2 409,271,6 467,739,0 526,206,3 584,673,7

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

Profit & Loss for 15MMSCFD GTD Plant

$112.5M

$135M

Aker Solutions

Tromso, Norway

• Flaring of Associated Gas on Norwegian Continental Shelf now illegal

• On behalf of 2 separate clients, Aker Solutions is seeking a solution to convert some 4

MMSCFD of Asssociated Gas on 2 new offshore oil platforms for the North Sea

• Provided a proposal for using using 5 plasma-based reformers (of 1 MMSCFD each)

paired with the VERDIS FT catalyst in a very tight configuration to minimze footprint

• 3 Aker process engineers fully assessed VERDIS technology for offshore use over 6

weeks

• For a sample of questions asked, please see the ‘Offshore’ Section of our Technology

FAQs (provided separately)

• In September 2014, Aker concluded its assessment: it fully endorsed VERDIS

technology as the optimum offshore solution to Associated Gas-Flaring in the North

Sea and recommended it to both their clients

• Both projects are currently working on more fundamental design issues at present but

expect to address Assosciated Gas treatment, and the VERDIS proposal, shortly


CURRENT FOCUS & CUSTOMER ENGAGEMENTS – 4 MMSCFD OFFSHORE OIL PLATFORMS

WHAT IS V-CPOX?

V-CPOX is Verdis’ catalytic partial oxidation

process designed for use on offshore platforms

1. Air blown, so do not need an oxygen plant

2. Low-pressure so just need air and gas blowers

3. Use of air versus oxygen increases spontaneous free gas

ignition temperature from 250 ºC to 582 ºC (safety)

4. Eliminates carbon formation by operating at low pressure

5. Catalyst is catalytically self-igniting so do not need feed

pre-heating, therefore

6. Do not need a tail gas heat exchanger (uses water quench)

7. Expected CO yield is 98% (2% CO2)30 Verdis Synfuels CONFIDENTIAL INFORMATION

1. Small footprint Yes

2. Low weight Yes

3. Low pressure 30 psig

4. High GHSV >100,000 hr-1

5. Low pressure drop Monolith with open flow channels

6. High gas conversion (>95%) 99%

7. High selectivity to CO (>95%) 99%

8. No water needed Only associated gas and air

9. No pure oxygen needed Uses air

10. No feed gas pre-heat needed Ignites at low temperature

11. No tail gas heat exchanger needed Water-Quench

12. Feasibility for some FT tail gas re-cycling Yes

V-CPOX: IDEAL SYNGAS PLANT FOR OFFSHORE PLATFORMS

V-CPOX

ALL 12 CRITERIA ARE MET BY V-CPOX

31

Verdis Synfuels CONFIDENTIAL INFORMATION32

Syngas

reactor

Water

Treatment

And

storage

Feed

Pre-

heat

Pressure Swing

Absorber

Air

Blower, 30

psig

CO2

recover

y

O2

H2O

O2, N2

Water

quench

UNIT OPERATIONS FOR V-CPOX

Tail gas

combustion

Air

compresso

r

CO2

Associated

gas

BLOWER, 30

psig

H2

removal

10MMSCFD OFFSHORE PLANT (MALAYSIAN FIELD)

COST: $70 Million





COST: $100 Million





125MMSCFD OFFSHORE PLANT (FPSO-Mounted)

COST: $875 Million


Accumulated Profit & Loss (10 yrs): $5,968,956,250

Net Present Value (5% discount rate): $4,199,734,860

Internal Rate of Return: 78%

COST: $1.25 Billion


Accumulated Profit & Loss (10 yrs): $5,593,956,250

Net Present Value (5% discount rate): $3,842,592,003

Internal Rate of Return: 54%

ISSUE & OPPORTUNITYTECHNOLOGY & BENEFITSGTD UNIT SIZES & VALUE CREATIONCOMPETITIVE LANDSCAPE

CARBON CAPTURE AND STORAGE (CCS)

THE PRIMARY ALTERNATIVE TO

GAS-FLARING

CC&S poses significant challenges

• Infrastructure Coal beds,

saline aquifers or appropriate oil

deposits must be close by and

available

• Expense Preparation of sites,

such as aquifers, can be costly,

as can the other piping and

process infrastructure to collect,

pump and inject CO2

• Output Reinjected CO2 can

boost yields and save some

modest costs, but CO2 injected

in aquifers incurs costs while

providing no revenue (unless

carbon credits are earned, or

carbon taxes avoided)

GAS TO LIQUIDS: UNIQUELY PLACED TO SAVE EMISSIONS

WHILE BOOSTING CASHFLOWS

• Plants are much smaller than those of

Shell and Sasol, but still not mobile

market space

• September 2013: selected by Pinto to

field 2800 BBD plant in Ohio, USA

• Pant will produce mix of waxes,

solvents and lubricants

• Outputs to make ultraclean

transportation fuels, will need further

refining

• 2006: partnership with Petrobas

• 2012: announced completion of

demonstration plant, processes 200,000

SCF/day of gas into around 20BBD

• According to World Bank Global-Gas Flaring

Reduction Partnership: they produce around

20BBD of crude oil with a heavy wax

content which must be further refined

through hydro-cracking.

• A few major oil & gas companies active in large-scale Gas to Liquids projects (Shell,

Sasol). Very few looking at smaller-scale, mobile solutions. VERDIS will target these.

• 2 main competitors. Competitive advantage: unlike them, we produce market-ready

diesel, with no need for further refining, in a single pass through our conversion unit,

which is low pressure and low temperature. Our process is therefore more efficient,

flexible, adaptable, and thus less expensive in both capital and operational costs.

COMPETITIVE ADVANTAGE: VERDIS

WE CONVERT FLARED GAS INTO ULTRA-CLEAN DIESEL

[email protected]://www.verdisfuels.com

Documents

VERDIS Presentation - APR 2015 - CUSTOMER