xtl: opportunities and challenges

XTL: Opportunities and Challenges

Jan van Schijndel, Shell Global SolutionsJornadas Latinoamericanas de Refinación – Instituto Argentino de Petróleo y

del Gaz

Mendoza, 1 November 2006

2

Presentation Overview

What is XTL

Industry Overview

XTL Products

Potential Impact of XTL Products

Overview of Pearl GTL Project in Qatar

3

What is ‘XTL’ ?

Identical High Quality

Synthetic Products

Natural Gas

Biomass

Coal Fischer-Tropsch process

Syngas

GG

BB

CC

GTL

Shell Gasification

Process

CTL

Shell Coal Gasificatio

n Process

BTL

Gasifier

XTL = GTL, CTL or BTL “The synthetic fuels XTL = GTL, CTL or BTL “The synthetic fuels

continuum”continuum”

Low temperature (Co) Middle Distillates

High temperature (Fe) Lighter products

4

Worldwide GTL Capacity Announcements

Source: Purvin&Gertz

5


What is XTL

Industry Overview

XTL Products



6

Shell XTL Technology & Fischer Tropsch

Hydrogen Carbon monoxide

+

Fischer-Tropsch Distillates

Catalyst

+

Water

7

NaphthaKeroseneGasoilWaxy Raffinate

WaxesSolventsDetergent feeds

HydrocarbonProducts

Byproducts: Nitrogen, Water, Bio-sludge

Air

Air Separation

Natural Gas

Gasification

Oxygen

Synthesis Gas

FT Synthesis

Raw FT products

Conversion

Separation

Shell XTL Technology

8

Characteristics of the XTL Industry

Capital intensive

Technology based

High complexity

Value chain integration

High entry hurdles Few large players

GTL led by Qatar

Long lead times from concept to start-up

9

Shell GTL from

Laboratory Bench to

World Scale Plant

Amsterdam Laboratory – 1970’s

Amsterdam Pilot Plant - 1983

Bintulu Commercial Plant - 1993

Pearl GTL, Qatar World Scale Plant- FID July 2006- End decade start-up

10

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Cap

acit

y (

bb

l/d

ay)

BintuluOryx

EscravosPearlExxonMobil

Oryx II

ConocoPhilipsSasolChevronMarathon

Algeria

Pearl II

1,000,000

2010

Potential XTL Capacity Build-up

+ Potentially ~300,000 bpd CTL

+ Potential projects in Iran, Egypt, Indonesia, Bolivia & other locations

11

Equivalent Crude Oil price [$/bbl]

0

50

100

GTL CTL BTL

Production Costs Differs for GTL, CTL & BTL

(Indicative figures only)

12

XTL Capacity Build-up Factors

Markets for bulk materials and equipment – capacity & costs?

EPC market – capacity & costs?

Technical scale-up – risks?

Oil price – remaining high?

Financing – capacity & appetite?

Qatar: end of ‘moratorium’?

Specialities markets – saturation?

CTL - CO2 issue?

Assumption:

0.8 mln bpd ~ 33 mln ton/a by 2015

13


What is XTL

Industry Overview

XTL Products



14

XTL Products

LPG Commodity

XTL Naphtha Paraffinic – excellent cracker yields

XTL Base Oil Highest quality - lowest cost

Normal Paraffins Detergents feedstock - cost competitive

XTL Gasoil Cleaner burning - emission benefits

Specialities

Core

IndicativeRelativeVolumes

15

XTL Products: Unique Properties

‘Standard’XTL

Gasoil:Cetane number75 - 80 46 - 50

Kerosene:Smoke Point 110 25

Naphtha:% paraffins ~100 ~70

Base Oils:Viscosity Index 130-145 125 -130

Density

Oxid. Resist. 13,500 9,500

(Gr. III)

~0.78 0.82 – 0.845

Clear, clean burning products, biodegradable, virtually free of sulphur

and aromatics

16


What is XTL

Industry Overview

XTL Products



17

XTL Naphtha

The projected XTL Naphtha production by 2015 (~ 8,000 ktpa) is insignificant compared with current world demand and projected demand growth

The quality of the XTL naphtha (100 % paraffinic) will offer higher yields in crackers and/or allow blending with inferior quality naphtha

GTL Naphtha from ME projects will predominantly be consumed in the Asia Pacific region

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2005 2015 XTL by2015

World Demand (ktpa)

18

XTL Gasoil

The projected XTL Gasoil production by 2015 (~ 20,000 ktpa) is insignificant compared with current world demand and projected demand growth

The low density/high cetane XTL gasoil will be an attractive blending component for refineries with gasoil pool density / cetane constraints

GTL gasoil for the Middle East will primarily flow to the gasoil deficient European market

World Demand (ktpa)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2005 2015 XTL by2015

19

Potential Applications of XTL Gasoil

Potential Market

Pote

nti

al V

alu

e

Commodity Gasoil

Neat XTL Fuel in Advanced engines

Refinery Blending

Premium Retail Fuel

20

Continued XTL Fuel Market Developments

GermanyFleet trial with Volkswagen

LondonToyota trial China

Michelin Bibendum Challenge

100% GTL Fuel

Diesel/GTL Fuel blend

GreeceShell Diesel 2004

LondonBus trial with Daimler-Chrysler

JapanFleet trial

JapanAichi hybrid bus

ChinaBus trial Shanghai

USADept. of TransportYosemite Water

Germany, Austria,Netherlands, Italy,

Switzerland

ThailandShell Pura Diesel

ChinaTaxi trial Shanghai

21

Emission Benefits of XTL Fuel

0%

50%

100%

NOx PM HC CO

Existing engines Optimised engines

% reduction 5-45% 25-40% 45-60% 40-85%

ConventionalS-free diesel

XTL Fuel will reduce criteria pollutants from new AND existing vehicles Engines optimized to run on XTL fuel can deliver further emissions reductions,

particularly for NOx Emissions benefits vary depending on vehicle type and technology level

22

XTL Fuel: Mega-cities Air Quality Solution

Growing importance of clean public transport

XTL Fuel most beneficial in Mega-cities where air quality is under strain

XTL Fuel is cost-effective in making use of existing infrastructure

Expression of interest:– China– Japan– US / California– EU (UK, Germany, Netherlands)

Mega-cities:

Population ~ 10 million

people

and with air quality issues

Number: 27 worldwide

Notional number of

vehicles:

~ 10,000 buses

~ 40,000 taxis

One world-scale XTL plant can supply neat XTL Fuel to buses and taxis in:

10 to 15 Mega-cities

23

XTL Normal Paraffin

If included in half of the projected XTL projects the XTL Normal Paraffin (NP) production by 2015 (~ 700 ktpa) is comparable with the projected world demand growth

NP from XTL would allow LAB plants to be located away from refineries and/or to be de-bottlenecked irrespective of refinery constraints

Manufacturing costs for XTL Normal Paraffin is well below that of conventional plants using kerosene as feedstock

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2005 2015 XTL by2015

World Demand (ktpa)

24

XTL Plants will offer highest quality (light) Base Oils at lowest costs

Base Oil production from one world-scale XTL plants nearly saturate the market demand for Group III+IV

Currently high growth rate for Group III+IV at the expense of Gr. I and this trend might be accelerated with the emergence of the XTL Base Oils

Heavier viscosity grades will continue to be produced from crude oil

XTL Base Oils World Demand (mln t/a)

0

5

10

15

20

25

30

35

40

2005 XTL

Gr I

Gr II

Gr III+IV

25


What is XTL

Industry Overview

XTL Products



26

North Field

Pearl GTL - Project Overview

Fully integrated project: “From Reservoir to Market’

1,600 MMscf/d well head gas

~120,000 b/d Condensate, LPG & ethane

140,000 b/d GTL products

Based on proprietary Shell GTL technology

Start-up: end of the decade in two phases

EthanePropaneButaneCondensateSulphur

GTL NaphthaGTL GasoilNormal ParaffinGTL Base Oils

27

Bintulu start-up in 1993, 12,500 bpd expanded to 14,700 bpd in 2003

~10 years of experiences resulting in world class operational excellence

Commercial scale Shell GTL Technology proven to be safe, reliable and profitable

World-wide experiences in the marketing of GTL Products

From Bintulu Shell MDS to Pearl GTL

Pearl GTL design is fully underpinned by the operational experiences of Bintulu

Only limited scale-up from Bintulu on equipment level

28

Pearl GTL Onshore: Huge Dimensions

1440 meters 1610 metersProcess:

Shaft power consumption 1,200 MW

Heat consumption 850 MW

Steam generation 8,000 tons/hr

Catalysts (5 processes) 5,630 tons

FEED:

Number P&IDs ~1000

Number documents~ 4,600

Number Volumes ~ 120

Construction:Plot area: 250 haEquipment number >3,000 itemsPiping 1.5 mln LMStructural steel105,000 tons Concrete490,000 m3 Cables 7,600 kmHeavy lifts > 1,200 tons > 24I/O: 45,000Field Instruments:50,000Manhours: >170 mlnPeak workforce:35,000

29


What is XTL

Industry Overview

XTL Products



Summary

30

Opportunities and Challenges from XTL

XTL = GTL, CTL and BTL

The growth of XTL capacity is likely to fall short of earlier projections

Potential volumes of ‘core’ XTL products (naphtha and gasoil) are insignificant relative to projected global demand growth

Naphtha and gasoil could offer attractive blending options to refiners

XTL specialties products (normal paraffin and base oils) will saturate projected demand growth

The Pearl GTL Project in Qatar is reality and will signify a step-change in XTL products entering the global oil products markets

xtl: opportunities and challenges

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