August 6, 2020

MSAR® - a clean solution to a global problem

PRESENTATION TO SPE ECUADOR

2

A UNIQUE

SOLUTION

Quadrise supply MSAR® technology & fuel for

upstream and downstream applications.

Proven blending technology is deployed for viscosity control and can be applied to produce a lower cost fuel oil for steam

and power and/or for mobilising stranded assets .

Stable water-based fuel oil or synthetic crude can be

shipped & used in the conventional systems with

only minor changes.

3

PRESENTING

Matthew Bridgeman MEng CEng MIChemEProject EngineerMatthew works as a Project Engineer for Quadrise Fuels, responsible

for projects including process optimization, operational support &

RDI, as well as business development. Matthew has previously worked

for Amec Foster Wheeler on refinery FEED projects and for Tata Steel

working on blast furnace process improvement projects. Matthew is a

Chartered Chemical Engineer with a First Class Master’s degree in

Chemical Engineering from the University of Birmingham.

August 6, 2020

Overview of MSAR® Emulsion Fuel Technology

PRESENTATION TO SPE ECUADOR

5

A UNIQUE

SOLUTION

MSAR® technology eliminates the need for oil diluents

✓ Reducing HFO oversupply by ~30% using water

✓ Saving distillates, providing cheaper energy

✓ Cleaner to use, burns very efficiently with no soot

… through the innovative use of proven emulsion

systems and surface chemistry, building on over a

decade of commercial experience (Orimulsion®)

6

QUADRISE

OVERVIEW

▪ Quadrise team were responsible for commercialising

PDVSA Orimulsion® fuel.

▪ Quadrise developed MSAR® alongside major companies

such as Maersk, Cepsa, GE Alstom, Wärtsilä & MAN.

▪ IP and additives are supplied exclusively by Quadrise and

(formerly AkzoNobel Specialty Chemicals).

Global Alliance

QFI plc is listed

on the London

Stock Exchange

under AIM

companies

>60,000,000

tons of

Orimulsion has

been consumed

worldwide

Al KhafrahHolding Group

Experienced Quadrise Team

7

TECHNOLOGY

6

FUEL

EMULSIONS

ECONOMIC

DRIVERS

Traditional Heavy Oil

MSAR® technology reduces hydrocarbon

viscosity using water and additives,

removing the need to use expensive,

and often imported, distillate fuel.

HFO

Expensive distillate fuels are used to

dilute viscous hydrocarbons in the

production of conventional fuel oil or in

upstream applications to dilute crude to

meet pipeline or engine specifications.

20-40% high

value diluent

60-80%

bitumen

residue

70%

bitumen

residue

30% Water

&

<1% additives

Price of MSAR® < Heavy Oil on a per unit of energy basis

MSAR® Synthetic Fuel

9

PRODUCTION

✓ Viscous crude oils

✓ Refinery residue streams from

VR to SDA pitch

✓ Unstable residues✓ 1,000 – 100,000,000 cSt @ 100°C

Water ~29%Viscous Hydrocarbons ~70%

Additives <1%

✓ Can be derived from

several utility or

wastewater sources

The blending

hardware is based

on proven asphalt

emulsion systems.

100 units+

worldwide.

An MSAR®

Manufacturing

Unit (MMU) is

delivered inside

a 40’ container.✓ <250 cSt @ 50°C✓ A cheaper, cleaner

alternative to HFO.

10

CHEMISTRY

OIL–in–WATER

EMULSIONS (OIW)

OIL

WATER

WATER–in–OIL

EMULSIONS (WIO)

Hydrocarbon

phase

Hydrocarbon

phaseAqueous

Phase pH<5

▪ Primary surfactant –

good rapid placement

and key to interface

during emulsification

▪ Secondary surfactant –

large bulky molecule,

time provides high

dynamic stability, possible

time effects to

equilibrate at interface

▪ Interaction between

surfactant components

▪ Polymer acting to increase

density of aqueous phase,

interactions with other

surfactant components to

achieve complex ‘gel’ phase▪ Formation of

surfactant bi-layer

at interface (over

time)

▪ WIO emulsions regularly occur at oilfields. They can

cause several operational problems in wet-crude

handling facilities and gas/oil separating plants.

▪ OIW emulsions are deployed at the oil refinery for

viscosity control to reduce fuel production costs.

Customers get cheaper energy and lower emissions

(NOx, PM). MSAR® is an OIW emulsion.

11

TECHNOLOGY

12

PROJECT

CASE STUDY;

CEPSA RGSR

▪ A 6 KBPD MSAR® system was installed at CEPSA’s 240 KBPD Refinery Gibraltar San Roque

▪ Modular design based on ISO containers; process units, ancillary, additive storage, laboratory

▪ Quadrise responsible for MSAR® system installation, commissioning, operations & quality control

▪ MSAR® system designed to supply Marine or Power end users, installed in 9 months for <$5m

▪ Processing visbreaker residue from LS and HS opportunity crudes

▪ Proven, reliable, 24/7, continuous operation

Fast-Track, Projects; Cepsa RGSR.

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PROJECT

EVOLUTION

ScopingHeavy oil stream

identified.

Conceptual design and feasibility

study.

Pilot Testing

Pilot testing at QRF*, additive

formulation optimized

based on end-use application

and product specs.

FEED

Scope developed and design

prepared for implementation.

Quadrise provide client training and experience.

EPC

Implementation/ integration of MSAR® project

in modular, scalable,

containerised units.

OperationsOngoing

support from Quadrise to

maintain optimum

performance.

1-2 months 3-4 months 6-12 months

*QRF = Quadrise Research Facility MSAR® installation at Cepsa Refinery Gibraltar San Roque

A 6KBPD MSAR®

refinery project

costs ~$5m and is

implemented

within 12

months.

Reducing Emissions with MSAR®

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FUEL

EMULSIONS

COMBUSTION

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COMBUSTION &

ENVIRONMENTAL

BENEFITS

MSAR® enables

affordable

compliance with

modern

environmental

standards

Reducing Emissions with MSAR®

▪ Lower NOx Emissions

30% less NOx emitted as water reduces the combustion temperature.

▪ Efficient Combustion

When fuel combusts the burn occurs on the droplet surface. MSAR®’s 5-10µm droplets

have ~17x the surface area per mass of hydrocarbon = Complete Carbon Burnout =

Lower dust emissions = less Black Carbon / Soot.

▪ Energy Savings

Minimal heating as MSAR® is stored & transported at ambient temperatures (>25°C).

▪ Lower CO2 Impact

6% CO₂ emission savings of using scrubbers/FGD vs. making <0.5%S fuel in the refinery.

80-100

micron

HFO

80-100

micron

droplet

August 6, 2020

Commercial Experience

PRESENTATION TO SPE ECUADOR

17

REFERENCES

&

EXPERIENCE

Global HFO Applications For MSAR®.Thermal plant references for oil-in-water emulsion fuel use:

Steam Boilers (Power & Utilities)

▪ Significant OIW emulsion fuel experience

with >60 million tons used: 50MWth to

770MWe.

▪ MSAR® proven with “scrubbers”/FGD.

Diesel Engines (Power & Transport)

▪ MSAR® is proven in Wärtsilä medium

speed (4-stroke) diesel engines, >150,000

hours of commercial use.

▪ 2-stroke MAN & Wärtsilä Proof of Concept

trials. Interim LONO on Wärtsilä Flex.

Industrial Applications

▪ MSAR® applications include; refining,

upstream, mining and cement.

▪ Clients; Total/Deer Creek, PetroCanada, Conoco-Phillips,

Paramount Resources.

▪ Portable 18 MM Btu/hr steam generator with equivalent Fuel

oil No.6 burner system; 100 bpd MSAR® for 6 months.

▪ 3,000bpd MSAR® Manufacturing Unit = 350MMBtu/hr steam.

▪ ~20,000 bbls of MSAR® produced and consumed over 6 months.

▪ Successful trial over 6 months. Didn’t proceed to commercial

phase due to low natural gas prices in Alberta.

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UPSTREAM

EXPERIENCE

Joslyn Creek,

Canada

MSAR® SAGD

Trial 2005-6

MSAR® solution for lower cost energy

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UPSTREAM

EXPERIENCE

BP Wolf Lake

Pipeline Tests

MSAR® pipeline solutions for viscosity reduction

Potential transport application for stranded

assets, main objective to save diluents or

remove requirement for heated pipeline.

Tested by BP in Wolf Lake (Transoil Project):

▪ Emulsion stability fine during Summer/Winter.

▪ Total of 1800m³ pumped.

▪ No problems with pipeline shut-ins.

▪ No problems seen with pigging.

▪ Interface behaviour established with DilBit.

▪ Water separated by conventional

heater/treater.

Since Transoil:

▪ Several projects assessed for heavy/paraffinic

crudes.

▪ Potential recovery of water/additives for

recycle to emulsion production.

▪ Tailored solution developed by QFI lab (at cost).

August 6, 2020

Potential Applications for Ecuador and Latin America

PRESENTATION TO SPE ECUADOR

▪ Client has licenses to extract sour crude oil (API

12-15°) from Block A and Block B.

▪ Crude oil from Block B is lighter and is used to

blend with Block A output to meet pipeline

specifications.

▪ 96% of the upstream production is associated water

and gas, and the high water cuts result in high

electrical demand from submersible pumps and

field facilities.

▪ A total of 150MWe of electricity generation is

installed at the two blocks, with 60% of demand in

Block A and 40% in Block B. Fuels used are

associated gas, diesel and diluted crude.

▪ Up to 2,000BPD of diesel is produced at a Topping

Unit, which is supplemented with further imports.

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CASE STUDY 1

Consumption

for upstream

energy

generation.

Base Case

100BPD of diesel is

required for dilution

of 1,000BPD of crude

oil to meet the

700cSt@50°C Wärtsilä

V32LN diesel engine

specification.

Crude Oil Topping Unit

▪ MSAR® can reduce diesel use by

emulsifying the crude to meet the

Wärtsilä viscosity specification,

displacing the 100BPD of diesel

blended into the crude oil.

▪ Costs of importing diesel to the

facility are high, potentially with

an environmental impact.

▪ Treated river water or associated

production water can be utilised

to make MSAR®.

22

CASE STUDY 1

Consumption

for upstream

energy

generation.

Potential

MSAR® Option

1

The Wärtsilä

V32LN model of

engine has been

successfully operated

on both Orimulsion®

and MSAR® with

150,000 hours of

experience.

Crude Oil Topping Unit

23

CASE STUDY 1

Consumption

for upstream

energy

generation and

crude quality

uplift.

Potential

MSAR® Option

2

This application

ensures that the

lowest value energy

source is used for

on-site power

generation.

▪ Another, potentially more profitable option is to produce

MSAR® from the 8-9°API bottoms of the Topping Unit to

supply the energy requirements of both blocks.

▪ This reduces costs and enhances the exported crude oil

value, as the blended crude oil would contain less

bottoms and more diesel, resulting in better refinery

yields and product qualities, e.g. sulphur.

Crude Oil Topping

Unit

24

CASE STUDY 2

MSAR® as a

Pipeline

Transportation

Solution

Base Case – Conventional FDP

▪ The crude oil is over 3,000cSt at 50°C and a heated 200km pipeline or truck option is uneconomic

(high CAPEX) circa 15-20% of MGO/LCO diluent is needed (to meet 300cSt at 50°C).

▪ To produce 12KB/D of low sulphur crude oil, 30% of the extracted crude is required for the steam

flood (to reduce the viscosity sub-surface).

▪ ~2KB/D MGO/LCO needs to be imported, no local sources are available.

▪ The extracted crude oil has a limited value for conventional refining (poor quality specs).

25

CASE STUDY 2

MSAR® as a

Pipeline

Transportation

Solution

Base Case &

Potential

MSAR® Option

1

▪ A client wishes to transport crude oil that is over

3,000cSt at 50°C in pipelines that have been designed

for light/medium crude.

▪ A 200km heated pipeline and truck options are

uneconomic (high CAPEX), so 15-20% of MGO/LCO

diluent is needed (to meet 300cSt @ 50°C).

▪ ~2KBPD MGO/LCO needs to be imported, no local

sources are available.

▪ The extracted crude oil has a limited value for

conventional refining (poor quality specs).

Base Case – Conventional FDP Potential MSAR® option 1

▪ Crude is emulsified using MSAR® technology to

reduce its viscosity so that it can be transported in

the existing pipeline without the need for

expensive diluents or heating.

▪ MSAR® would also provide a solution if pipelines

have been designed for higher flowrates than is

required and minimum velocity is a constraint.

▪ MSAR® is an alternative to flow improvement via

expensive viscosity reducers.

26

CASE STUDY 2

MSAR® as a

Pipeline

Transportation

Solution

Potential

MSAR® Option

2

MSAR® Option 2 – Splitter + MSAR® Opportunity

▪ Install a modular crude oil “splitter” at the production site to process a proportion of crude.

▪ Blend the bottoms product to MSAR® for use in existing steam boilers and local power generation.

▪ Burn the lowest cost energy source (Residue = >500cSt @ 150°C) for steam and power generation.

▪ Blend the light-ends from the splitter into the remaining crude to reduce the viscosity and

improve fuel specifications for export purposes (<0.3% ULSFO, 300cSt @ 50°C).

27

Upstream,

Midstream &

Downstream

Opportunities

QFI expertise & MSAR® technology have a good “fit” with…

Planta

Arizona in

Guatemala

ran on

Orimulsion®

over three

years.

28

CASE STUDY 3

MSAR®

Downstream

Application

Quadrise and EP PetroEcuador are discussing MSAR® for Esmeraldas Refinery.

MSAR® would reduce, and potentially remove, fuel oil cutter imports, whilst supplying the refinery

and potentially domestic and export fuel oil users with a cheaper and cleaner alternative.

MSAR® technology

reduces a refinery’s

fuel oil production

costs by removing the

need to cut viscous

streams with

expensive diluents.1 Viscous residue streams are taken from refinery rundown lines

and transferred to the MMU.

Water and additives are added to the MMU simultaneously.

After cooling MSAR® is transferred to refinery tanks via existing

rundown lines for internal consumption or export.

2

3

Modular units allow for phased expansion as demand grows.

29

CASE STUDY 3

MSAR®

Downstream

Application

Quadrise and EP PetroEcuador are discussing MSAR® for Esmeraldas Refinery.

▪ Esmeraldas Refinery produces fuel from refinery streams and imported cutters.

▪ One potential stream for emulsification at the refinery is a heavy vacuum residue cut from

Oriente crude, with a viscosity of 2,300cSt @ 135°C and ~6°API.

▪ Conventional viscosity blending would require 40-45% cutter in the blend.

MSAR® is sufficiently stable and compatible for use in and supply from the refinery using

existing HFO bulk storage and transportation.

Internal Refinery Fuel Oil Consumers

External Fuel Oil Consumers

30

QUADRISE

SUMMARY

Cheaper, Cleaner Energy :

▪ MSAR® technology makes oil burn efficiently

▪ Reduces costs for consumers and producers

▪ Reduces NOx and CO2, eliminates black soot

Applications in Ecuador :

▪ Lower cost fuel and energy generation

▪ Crude quality uplift & pipeline viscosity solution

▪ Downstream; EP PetroEcuador discussions

Proven Technology :

▪ Produces stable oil-in-water emulsions

▪ Using proven modular, low-capex technology

▪ Industry leading team, IP & global partners