KLORIGENKLORIGENKLORIGENKLORIGEN™™™™

On-site Generation of

Chlorine & Sodium Hypochlorite

“Bringing Technology to Life……”

DISCUSSION TOPICS

Section I Disinfection Practices Comparison

Section II Klorigen™ Technical Overview

Section III Advantages & BenefitsSection III Advantages & Benefits

Section IV Chlor-Alkali Industry Trends

Section V Organization

Section I

Comparison of Chlorine Based Disinfection Practices

CHLORINE BASEDCHLORINE BASEDDISINFECTION OPTIONSDISINFECTION OPTIONS

• Pressurized Chlorine Gas

• Bulk Delivered Sodium Hypochlorite

• On-site Low-strength Hypo Production

• On-site Chlorine Gas Generation

• On-site High-strength Hypo Production

PRESSURIZED CHLORINE GAS

• An effective and efficient broadband disinfectant

• Low operating cost

• 100 years of experience

• Generally accepted worldwide• Generally accepted worldwide

• Hazard to local community due to possibility of large scale toxic release

• Risk management requirements and insurance increasingly add to total operating costs

• Pending U. S. legislation is expected to restrict use and require specific training and licensing

• Chlorine cylinders subject to damage and theft

BULK DELIVERED BULK DELIVERED SODIUM HYPOCHLORITESODIUM HYPOCHLORITE

• Safer alternative to pressurized chlorine gas

• Liquid is easier to contain & manage

• Higher and more volatile cost• Higher and more volatile cost

• Degrades with time and temperature

• Injection system different than chlorine gas

• Special transportation & storage concerns

• Reliance on third party suppliers

• Increasingly subject to supply interruptions

LOW STRENGTH LOW STRENGTH ONON--SITE HYPO PRODUCTIONSITE HYPO PRODUCTION

• Less dependence on third party suppliers

• Weak concentration: 0.4 to 0.8% (household bleach is 5.25% )

• Lower degradation rate is better for long storage periods• Lower degradation rate is better for long storage periods

• Maintenance can be complex and frequent

• High capital and operating costs

• Outputs all un-reacted brine with the sodium hypochlorite

• Low grade salt results in impurities entering the water supply

• Excessive fouling of electrodes common and dangerous

• Requires significant product storage

• Metering equipment is specific to low-strength hypo

ONON--SITE CHLORINE GAS SITE CHLORINE GAS GENERATIONGENERATION

• Elemental chlorine gas delivered on-demand

• System operates at or below atmospheric pressure

• Safe – no storage and no cylinder handling

• Cost effective – incorporates proven chlor-alkali technology

• Reliable - same process as used by major chlor-alkali

companies (PPG, Olin, Clorox, Dow, Pioneer, Monsanto)

• Addresses the “political cost” of keeping chlorine gas

• Exclusively KLORIGEN™

HIGH STRENGTH HIGH STRENGTH ONON--SITE HYPO PRODUCTIONSITE HYPO PRODUCTION

• Reliable - same process used by major chlor- alkali companies

• Membranes eliminate routine anode fouling and acid washing• Membranes eliminate routine anode fouling and acid washing

• Hypo generated operator selectable 5% to 12.5% (trade)

• Eliminates need for bulk transport and excessive storage

• High purity sodium hypochlorite equal to or better than bulk

• Very stable cost structure, subject only to salt and electrical price

• Exclusively KLORIGEN™

EFFICIENCY COMPARISON(per lb of equivalent chlorine generated)

15Klorigen

Low strength on-site hypo

0.951.75 1.65

3.0

2.2

Power

(kWh)

Salt

(lbs)

Water

(gallons)

Sodium Contribution Comparison - 12.5% Klorigen Hypo, 0.8% Hypo

14

16

18

20

pp

m N

a i

n T

rea

ted

Wa

ter

Klorigen 12.5% Hypo

0.8% Hypo

Sodium Contribution Comparison

12.5% Klorigen™ Hypo vs. 0.8% Low Strength

0

2

4

6

8

10

12

14

1 2 3 4 5 6 7 8 9 10

mg/L Cl2 Dosage Per MGD Water

pp

m N

a i

n T

rea

ted

Wa

ter

GENERATION COST COMPARISONS

Klorigen™

Material Cost Material Usage

Operating Cost

Salt 0.09 / lb 1.65 pounds 0.1485

Water 0.003/gallon 0.95 gallons 0.0285

Power 0.06 / kWhr 1.75AC kWhr 0.105$0.32 / pound

0.8%

Life-cycle 0.037/ lb various 0.037

Material Cost Material Usage

Operating Cost

Salt 0.09 / lb 3.0 lbs 0.27

Water 0.003/gallon 15 gallon 0.045

Power 0.06 / kWhr 2.5 kWhr 0.15

Life-cycle 0.020/ lb various 0.02

$0.49 / pound

Hypo Generating Costs

DRIVING FORCES FORDRIVING FORCES FOR

ONON--SITE HYPO PRODUCTIONSITE HYPO PRODUCTION

•Safety - Reduce or eliminate truck traffic and large quantity storage of hazardous chemical

- Consistent with efforts to eliminate stored chlorine- Consistent with efforts to eliminate stored chlorine

• Good Community Relations- No off-site consequences- No worst case emergency planning- Reduced threat from accidents or terrorism

Secure, Low Cost Raw Material Supply- Salt instead of chlorine and caustic soda- Stable pricing

DRIVING FORCES FORDRIVING FORCES FORONON--SITE HYPO PRODUCTIONSITE HYPO PRODUCTION

•Reduced Cost to the City - On-site high-strength generation costs less thanbulk delivered chemical

• Solution Flexibility- Hypo can be generated in one central facility or in distributed modular plants

- Generation can be by City personnel or private sector contract

- Various capital cost recovery options available

• On-Demand Facilitates “Steady-State” Process

- Hypo is always pure, and similar concentration

Section II

Klorigen™

Technical Overview

KLORIGEN™ DEVELOPMENT

• Operating concept based on conventional chlor-alkali membrane cell process technology, as used by major chlor-alkali companies today

• Process very similar to large scale chlor-alkali plants that typically produce in excess of 1000 tons of chlorine per day

• Equipment re-engineered by ETC for commercial and water utility markets using NSF-certified materials, robust membranes and advanced electrode technology (DSA) for on-site applications

KLORIGEN™

Electrolyzer Module

KLORIGEN™ PROCESS FLOW CHART

POSITIVEVENTILATION

HYPOCONVERSION

UNIT

Safely Diluted HydrogenDischarge To Atmosphere

EDUCTOR

EDUCTOR

Klorigen System Limits

Chlorine

Backup Eductor LineWater Supply

Sodium HypochloriteTo Storage

VENTILATIONUNIT

xxx CFM

MAKE-UPUNIT

50% NaOH

MAKE-UPUNIT

50% NaOH

UNIT

DCRECTIFIER

DCRECTIFIER TREATMENT

UNITTREATMENT

UNIT

ELECTROLYZERUNIT

ELECTROLYZERUNIT

480 VACPower

SALTDISSOLVER

SALTDISSOLVER

DCCurrent

Potable Water

Recirculating(Cooling)

Water

SoftenedWater

SoftenedWater

Food GradeSalt

Klorigen System Limits

PurifiedBrine

SaturatedBrine

DepletedBrine

Caustic

KLORIGEN™ ELECTROLYZER

CL–

H+

Chlorine GasHydrogen Gas

Sodium Hydroxide

DC Power

Depleted Brine

OH–

H+

Anode

Membrane

CathodeNa+

OH–

BrineWater

KLORIGEN™ MODEL K6 (1500 gpd)

KLORIGEN™ MODEL K6

KLORIGEN™ MODEL K6

WATER & BRINE TREATMENT MODULE

KLORIGEN™ 40,000 ppd

Salt Handling System

Heated

Salt Supply Types

Type of salt NaCl Mg Ca SO4 BrAnticaking

AgentsInsolubles

wt% wt% wt% wt% ppm wt%

Morton Culinox 999 Morton Culinox 999

Food grade99.98 0.0001 0.002 (5 - 20 ppm) <0.02 50 ppm none trace

Pure Vacuum

Evaporated salt99.95 0.0001 0.002 (5 - 20 ppm) 0.04 50 - 500

SiO2, or

Sodium

Ferricyanide

trace

Solar salt* 96 - 99 0.01 - 0.17 0.04 - 0.30 0.11 - 2.0 100 - 2,000 1.0 - 4.0

Rock salt* 90 - 99 0.01 - 0.17 0.04 - 1.1 0.2 - 1.31000 -

10,0001.0 - 8.0

* Arsenic, copper, lead, mercury?

SODIUM HYPOCHLORITE FEED PUMPS

Remote Monitoring (WonderWare example)

Klorigen™ M-Series SystemHypochlorite Process Footprint

Process Unit – Electrolyzer

Chlorine and NaOH Generation

Water SoftenerPackage with Filters

24”L x 24”Wx48”H

50% NaOH Drum w/PumpApproximate Dimensions(200 lb/day Cl2 System pictured)

48” Dia x 45” tall

300 gal Salt TankHDPE

85” L x 48” W x 76” H

500 gal NaOH TankHDPE

48” Dia x 68”H

Control Cabinet withPLC & Power Supply

24”L x 24”W x 60”H

14 ft

19.5 ft

Section III

Features & Benefits of the Klorigen™ System

FEATURES

• Automatic chlorine gas and/or hypo production

• Gas is generated on-demand at less than one

atmosphere (system is at negative pressure at all times)

• Adjustable output via local or remote SCADA control

• Low maintenance and operating costs with high NPVs

• Modularization facilitates future expansion as demand grows

• Operational turndown from 10 to 100 % of rated output capacity provides consistent operating efficiencies

BENEFITS

• Retain your current disinfection practice – either

chlorine (gas) or sodium hypochlorite (liquid)

• Safest on-site chemical production method

• Fully automated – minimum operator intervention • Fully automated – minimum operator intervention

• Highest salt and power efficiency of any on-site generation process

• Cost competitive with most treatment practices

• Chlorine gas process can simultaneously supply valuable sodium hydroxide at no additional cost

ANSI/NSF 60

“Required for Drinking Water Chemicals”

SAFETY

• Never more than 3 lbs of chlorine gas in the system

• Chlorine is at atmospheric pressure eliminating potential

for significant toxic release as with conventional one ton

cylinders and tank cars

• System is equipped with numerous safety devices designed to

shut down system if a malfunction occurs

• Membrane grade (very pure) sodium hydroxide is produced

at 15% concentration and is safer for personnel handling

• Chlorine gas and sodium hypochlorite are produced on-demand

• Safest chlorine-based water disinfection alternative available

• Transport, storage & handling of chlorine and hypo are eliminated

HYDROGEN BY-PRODUCT

• Naturally formed through electrolysis of brine

• Intrinsically safe moisture-laden H2 is further diluted through positive ventilation

• Less than 2% of Lower Explosive Limit (LEL) and safely vented to atmosphere

Other Differences Between

0.8% vs. 12.5%

Danger of Un-separated CellsEmployed in 0.8% Systems

Carbon FootprintComparing Low vs. High Strength Processes

Example: Equipment production capacity of 5 TPD of equivalent chlorine as sodium hypochlorite:

0.8% 12.5% Difference

Constituent Constituent (lbs CO2) (lbs CO2) (lbs CO2) %

_____________________________________________________________

Electricity 34,001 27,819 6,182 18%

Water 540 34 506 94%

Transport (salt 40 mi) 114 64 50 44%

Transport (salt 400 mi) 1,143 643 500 44%

• On-site electrolytic production equals significant savings

• State-of-the-art membrane electrolyzer and process technology

• Highest quality bleach at production costs lower than market

• Eliminates hazards related to pressurized chlorine handling & use

KLORIGEN ADVANTAGES

• Eliminates hazards related to pressurized chlorine handling & use

• Costs are controlled and predictable – dependent primarily on prevailing prices of salt and electricity as raw materials

• The Klorigen process resolves bromate issues in drinking water

• High concentration bleach provides savings in transport, storage while increasing product shelf life

• Reliable supply of chlorine gas or hypo without depending on third-party suppliers of caustic soda and chlorine

KLORIGEN ADVANTAGES, continued

• Option to produce either sodium hypochlorite or chlorine gas

• Co-product NaOH can be employed to manage pH in chlorine gas applications

• Klorigen produced membrane-grade NaOH has less metal impurities and chloratesimpurities and chlorates

• Can produce up to 15% sodium hypochlorite concentration

• Materials of construction result in low chlorinated organics

• Utilization of food grade salt results in very low bromate levels

• Easily expandable, typically within original “footprint”

• Lowest carbon footprint of any chlorine-based alternative

Section IV

Chlor-Alkali Industry TrendsChlor-Alkali Industry Trends

North America Chlorine Supply/Demand

TiO2 4%

Water Treatment 6%

Pulp & Paper 2%

HCl 3%

Epichlorohydrin 3%

Solvents 2%

Packaging 3%

Fluorocarbons 3%

Total Demand = 15 Million TonsSource: CMAI 2003 World Chlor-Alkali Analysis

PVC, EDC 39%

Propylene Oxide 11%

Inorganic/Organic 11%

MDI, TDI 13%

Chlorine Outlook for 2008 -2012

• Long Term chlorine DEMAND outlook growth of 2 – 2.5%

• Forecasted North American capacity will fail to keep the SUPPLY of chlorine in line with expected growth

• Dow recently ceased merchant sales – along with Formosa • Dow recently ceased merchant sales – along with Formosa Plastics, Shintech, Bayer, Westlake and GE - all 100% captive

• Only 3 suppliers including PPG & Oxy primarily dedicated to VCM – merchant supply mostly from Olin

• Chlorine (and hypo) re-packagers left to deal with higher costs, hazards, regulations, insurance and community relations issues to serve a shrinking market – it’s no surprise that some are exiting the business

Chlorine Shipping Issues

• Federally mandated plan to reroute trains with hazardous cargoes around densely populated areas

• Higher freight rates = 100-200% increase

• Lower speeds, longer delivery times

• New rail car design = $147,000+ per car

• Not all rail sidings will accommodate larger (90 ton) tank cars

• Increasing supply interruptions and force-majeures

Chlor-Alkali Industry Operating Rate and Hypo Prices

90%

92%

94%

96%

Glo

bal C

hlo

r -

Alk

ali O

pera

tin

g R

ate

$1.10

$1.30

$1.50

Bu

lk H

yp

och

lori

te P

rice -

$U

SD

Comparison of Bulk Sodium Hypochlorite Pricing Versus Klorigen System Costs

Bulk Hypo

Cost

Note: Hypo Price - Left hand scale, Operating Rate - Right

hand scaleSource: UBS Warburg, SRI for Hypo Price

76%

78%

80%

82%

84%

86%

88%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Year

Glo

bal C

hlo

r -

Alk

ali O

pera

tin

g R

ate

$0.30

$0.50

$0.70

$0.90

$1.10

Bu

lk H

yp

och

lori

te P

rice -

$U

SD

Source: UBS Warburg, SRI for Bulk Hypo Pricing

Klorigen System

Hypo Cost

Est.

Section V

Organization

ORGANIZATION

• Company founded in 2001 by current management to develop and commercialize on-site electrolytic chlorine generators for water treatment and commercial sodium hypochlorite production

• Initially funded by private investors and management; most employees are shareholders

• Only company in industry building small to medium sized chlorine gas and high strength generators specifically for on-site applications – up to 25 tons per day

• Product offerings span municipal, commercial, industrial, maritime and export markets

MANUFACTURING

• All systems manufactured and assembled in U.S.

• 99% of components are American

• Thermo-welded plastic components

• Full machine and tool shop

• Customized electrical designs• Customized electrical designs

• FRP skid manufacture & assembly with 316 S/S fasteners

• Pre-delivery testing / certification

• ISO 9000-based quality control

• Installation support

• Operator Training

PROCUREMENT OPTIONS

• Capital Purchase

• Project financing

• Third Party Lease / Purchase

• Chemical Product Supply (Build/Own/Operate)

• Maintenance Contract