Methanol for Gasoline Blending from Petroleum Coke

1. Methanol forGasoline BlendingfromPetroleum Coke David Netzer & Chris Wallsgrove (Speaker) MeOH

2. The Premise Upgrading Heavy Oil Normally Produces Petroleum Coke (Petcoke) Petcoke is Often Sold as Low-Cost Fuel Petcoke Can be Gasified to Syngas (Proven Technology) Methanol (MeOH) is Produced from Syngas MeOH Can be Blended with Gasoline 7% to 10% Blend of MeOH in Gasoline Can Fuel Existing Cars (Proven Technology)

3. Other Methanol Uses Methanol to Gasoline (MTG) – but WHY? If We Can Use Methanol AS Gasoline Methanol to DME – Diesel and/or LPG Subtitute Methanol to Propylene (MTP) or Ethylene (MTO) – Compete with Steam Crackers? Methanol to Acetic Acid & Derivatives – Limited Market Methanol to Formaldehyde & Derivatives – Same

4. Process Units Gasification – To Produce Raw Syngas Air Separation (ASU) – To Produce Oxygen for the Gasification Shift – With Control of CO/H2 Ratio Rectisol – Remove H2S/COS and Recover CO2 Methanol Synthesis – Makes 50,000 BPSD Methanol Purification (Distillation) Units to Recover H2 and Sulfur

5. Process Units Selection Quench Gasifiers – Operate at High Pressure to Avoid Syngas Compression Unconverted Carbon to Boilers Gas Cooling Produces Steam Rectisol (Two Trains) Uses Methanol Solvent Two Methanol Synthesis Reactors (Large, Heavy Vessels) in Parallel Conventional PSA for H2 Recovery, and Claus- Type Sulfur Units

6. Petcoke 7,400 tpd Air CO2 130 bar 11,700 tpd CO2 Compression Air Separation Nitrogen Oxygen CO2 6,600 tpd Gasification 87 bar Coke Preparation And Slurrying Shift & Gas Cooling Rectisol Units Unconverted Carbon Syn- Gas Water, Fluxing Agent Acid Gases Steam EHP, HP, MP, LP Methanol Synthsis 78 bar Steam & Power Systems Sulfur Plants Steam HP, LP Tail Gas Purge Gas Methanol 6,400 tpd Sulfur Product Hydrogen Product 16 MMscfd PSA Hydrogen Recovery Methanol Purification Reactor Purge Gas 50,000 bpsd Block Flow Diagram – Petcoke to Methanol

7. Energy Systems Totally Self-Sufficient in Steam and Power Fluidized Bed Boilers, for Petcoke and Coal Plus Unconverted Carbon from Gasification MP Steam Superheating in a Fired Heater, Using PSA Purge Gas as Fuel Steam Driven ASU Compressors – 63 MW Balance of Steam to a Generator – Excess Power Exported (About 80 MW Export) All Other Drivers Electric

8. 130 Bar Steam From Shift Air Pre- Heat Lime Scrub DeNOx Econo SRU Tail Gas PSA Purge Gas 125 bar Steam 125 bar Steam To ASU Drivers MeOH Bottoms Unconverted Carbon Petcoke ~ Turbine Generator 3 x 55% Fluidized Bed Boilers Limestone Coal (& Biomass) 25 bar Spent Gypsum 3.5 bar Steam From Process D / A PSA Purge Gas ~80% 27 bar Steam From Process Steam & Energy Block Diagram – Petcoke to Methanol

9. Capital Cost Savings • Quench Gasification vrs High Efficiency with 130 Bar Steam – Saves ~$200 Million • 320 MW Fluidized Bed Boilers vrs IGCC – Saves ~$450 Million • 67% CO2 Capture vrs 95% (Shift + H2 Power Cycle + Parasitic Mw) - Saves ~$250 Million • Avoid 25 MW Methanol Synthesis Compressor – Saves ~$50 Million • Other Miscellaneous Rational Savings ~$135 Million

10. Carbon Dioxide Disposal • If Underground Sequestration, Costs $$$ • If Sold for Enhanced Oil Recovery (EOR), is Revenue $ • In Either Case, CO2 Must Be Compressed to At Least ~125 Bar • Modest (67%) CO2 Recovery • Mine-To-Wheel CO2 Release is ~Equal to Ethanol Blend

11. Methanol in Gasoline • 7% to 10% Blends – Equivalent to Current Ethanol Blends – RVP Increase Manageable • Methanol is Biodegradable - Half-Life in the Environment is ~24 Hours • M-10 (10% Methanol) and Higher in Current Use in China • Toxicity – Gasoline is Toxic. Adding 10% Methanol Does Not Change That! • Current E-10 Blend Infrastructure is Already In-Place

12. Methanol in Spark-Ignition Engines • Modern Engines Designed for E-10 Fuel • ECU/Fuel Injection Makes CLEAN Engines • Higher Octane but Lower Energy Content • NO CHANGES REQUIRED Then Now

13. Costs? • Estimated Total Capital Cost US $2.8 Billion • Makes 50,000 BPSD (Replacing Imported Oil) From Carbon Resource ALREADY Existing • Methanol Production Cost is ~$0.50 per US Gal IF CO2 is Sold for EOR • Methanol Production Cost is ~$0.88 per US Gal if CO2 is NOT Sold for EOR • Lower Cost Than Ethanol OR Gasoline • No Additional Vehicle OR Infrastructure Costs

14. Conclusions • No Obvious Renewability or “Greenhouse” Advantage of EtOH over MeOH • No Obvious Safety or Toxicity or Hazard Advantage of EtOHover MeOH • Obvious Economic Advantage of Methanol Over Ethanol • No Additional Vehicle OR Infrastructure Costs • No Vehicle Performance Issues

15. We Had Valuable Help From: • Air Liquide/Lurgi – Frankfurt, Germany • Linde – Munich, Germany • Haldor Topsoe – Houston, TX • HDR Inc., Ann Arbor, MI • Methanol Institute – Washington DC and Singapore • Don Koza, Marshal (Bud) Bell, John Lehman, Dennis Dembicki, Michael Murphy & Others Who Wish to Remain Anonymous…

16. Contact Information Chris Wallsgrove David Netzer Brinderson Engineers & Constructors Consultant Costa Mesa, CA Houston, TX chris@wallsgrove.comnetzerd@sbcglobal.net (713) 240 8633 (832) 251 1271

17. THE END Mercifully… Thanks to Pennwell Publishing, for publishing a synopsis of this paper in two parts, June and July 2011 Oil & Gas Journal