Feedstocks of the Future: The Case for Syngas

Dr. Theo H Fleisch and Dr. Ron A Sills BP America Presented at: Innovation Day 2005 Philadelphia, September 7, 2005

BP Confidential For Internal Use Only

Theo Fleisch & Ron Sills 2005

Outline
Context: World Supplies of Natural Gas Gas Refinery for Fuels and Chemicals based on Syngas Large-Scale Methanol Production Economics Methanol-to-Olefins: an Example of a Key Emerging Technology BPs University Programs Key Messages

World primary energy consumption

205 million BOE per day in 2004

Coal (27%)
Hydroelectricity Nuclear

Gas (24%)

Oil (37%)

BP Statistical Review of World Energy 2005

Natural gas production by area

Rest of World * Asia Pacific Europe & Eurasia **

North America

* Primarily Middle East, Africa and S. America ** Europe and Former Soviet Union

BP Statistical Review of World Energy 2005

World gas resources are plentiful

Gas Reserves (2004) = 6,300 TCF (180 TCM) Equivalent to almost 70 years supply

Additional gas from Yet to Find Gas and Unconventional Gas are estimated to be many times todays gas reserves
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Remote gas: an inexpensive feedstock

Location $/million BTU

Remote 0.5 1.0 1.5 U.S.** 6.1

$/BOE*
3 6 9 35

* Barrel of oil equivalent = 5.8 million BTU ** average gas price at Henry Hub in 2004; average oil price about $40/bbl.

Todays gas to chemicals production

World consumption of natural gas is 260 bcfd.

Natural Gas

CO and H2 Syngas

HYDROGEN

METHANOL
Acetic acid

Ammonia Refinery Products

Natural Gas Consumption Ammonia production -12 bcfd Hydrogen for Refinery Products 6 bcfd

Formal -dehyde DME Fuel Additives

Natural Gas Consumption Methanol production 3 bcfd

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Gas refinery for fuels and chemicals

GTL-FT
Natural Gas

CO and H2 Syngas Synthetic Crude

HYDROGEN

METHANOL
Acetic acid

Ammonia Refinery Products

Clean Naphtha Diesel Jet Fuel Lubricants

n-paraffins Other chemicals

Formal -dehyde DME Fuel Additives

Olefins

Natural Gas Consumption GTL-FT production 0.7 bcfd by 2006, and Increasing to 4 bcfd by 2012
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Gas refinery for fuels and chemicals

Large-scale Methanol/DME Production

Natural Gas

CO and H2 Syngas Synthetic Crude

HYDROGEN

METHANOL
Acetic acid

Ammonia Refinery Products

Clean Naphtha Diesel Jet Fuel Lubricants

n-paraffins Other chemicals

Formal -dehyde Fuel DME Fuel Additives Fuel Gasoline Aromatics

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Olefins

Alternative feedstocks for syngas production

Coal
Feedstock diversification Coal-based plants in China R&D, pilots in biomass gasification.

Natural Gas

Biomass

CO and H2 Syngas Synthetic Crude

HYDROGEN

METHANOL
Acetic acid

Ammonia Refinery Products

Clean Naphtha Diesel Jet Fuel Lubricants

n-paraffins Other chemicals

Formal -dehyde Fuel DME Fuel Additives Fuel Gasoline Aromatics

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Olefins

Methanol plant costs are decreasing

Trends in methanol capex
600 M$/Mtpa 400 200 0 1 2 3 4 5 6 7 8 9 10 11 12 Atlas

BP and Methanex announced that the industry pacesetter 5,000 TPD Atlas plant started-up on June 2, 2004.

Projects over last 15 years

Titan: 0.9MMtpa (2500tpd) Atlas: 1.8MMtpa (5000tpd)

Titan

The Atlas and and Titan Atlas Methanol Plants in Trinidad produce Titan Methanol Plants about 8% of todays methanol

Trinidad, Early 2004

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Lets go back a few years

Transition: Chemical to Fuel/Chemical Methanol
Illustrative Economics based on $20/bbl oil

Past
6 $/MMBTU
Conventional Fuels at $20/bbl crude

Atlas Today

Future?
2

50

100 Methanol Cost, $/ton

150

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Methanol to Olefins (MTO) Technology

Technology Developers
MTO

UOP/Norsk Hydro ExxonMobil

MTP (methanol to propylene)

Lurgi/Statoil

UOP/Norsk Hydro Technology

Reaction
CH3OH C2H4 C3H6 75-80% carbon yield

SAPO-34 Catalyst 425-500 C Reaction by-products: Exothermic 99,5% conversion Butenes, C5+,C1-C4 paraffins, Water, oxygenates, coke, H2, COx

Fluidized bed reactor First plant planned for Nigeria

Lurgi MTP announced in Iran

Eurochem/Nigeria Gas to Polymers 7,500 tpd methanol, MTO
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Drivers for the gas refinery

Ample Gas Resources:
Low-cost Suitable location

Technology Developments
Learning and on-going developments Economies of scale Reduce technology risk

Higher Oil Prices Other

Gas monetization Large fuels market Environmental benefits Improve economics

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University programmes: MC2 and CEFTF

BP is working with Berkeley, Caltech and Chinese Academy of Sciences in China (Dalian and Tsinghua). Over 60 researchers and faculty focus on creating breakthrough technologies.

Methane Conversion Cooperative

Clean Energy: Facing the Future

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Key Messages

Gas will remain the dominant feedstock for syngas generation due to ample supply, low price, moderate capital cost for steam reforming and other syngas generation technologies. The Gas Refinery for Fuels and Chemicals of the future will be based on syngas conversion via GTL-FT and large-scale methanol/DME production. Methanol-to-Olefins (MTO) is a key emerging technology. Key university programs are important sources, for BP, of innovative technologies for the Gas Refinery.

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Back-up

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Topic Questions

What is the optimum common process steps to commercialize innovative technology, particularly to reduce the risks associated with new technology. Generally syngas-derived fuels/chemicals have a lower carbon efficiency than oil-derived chemicals. How can this adverse affect on global warming be mitigated. As more and more scientists and engineers are educated in China and India, how can companies and universities in developed countries best collaborate to expedite the development of new technologies.

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Conclusion

Syngas becomes an increasingly important feedstock Portfolio of technologies Continuous improvements in efficiency and cost Many efforts in gasification and syngas clean-up

Methanol/DME become low cost, versatile fuels and feedstocks Large fuel markets lower cost Olefins, aromatics, paraffins

GTL-FT products Co based: diesel, naphtha, linear alkylbenzene, waxes, base oils Fe based: diesel, ethylene/propylene, alpha-olefins, alcohols, acetone

Integration into Gas refinery

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The Gas Economy

Natural Gas: Step-child in 20th century Dominant fuel of the 21st century Abundant supplies but ~40% stranded Resource Push Need novel gas transportation options (beyond pipelines/LNG) Need new markets for gas Market Pull Need for clean, improved liquid fuels Need for low cost chemical feedstocks and improved processes

Need for Gas To Products, GTP

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Crude oil prices since 1861

BP Statistical Review of World Energy 2005

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Large Methanol/MTO/DME plants (built, proposed)

Iran Methanol 1- 5 5,000 TPD
Oman Methanol - 5,000 TPD Qatar Methanol - 6,750 TPD
Qatar/PetroWorld >12,000 TPD

Iran/Lurgi MTP 2500TPD

Trinidad (2) 5,000 TPD Atlas Methanol Holdings Nigeria/Eurochem MTO 7,500 TPD
PetroWorld/Starchem >12,000 TPD

Methanol Methanol for Power/Olefins

Proposed Supply for New Methanol/DME Markets: 23 MMTPA methanol (70% of current capacity) (Equivalent to 200,000 bpd GTL-FT)

Memo: Not including <5,000 MTPD methanol plants

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Qatar: The birth of the GTL business

Sasol Oryx 35kb/d; 2006 start-up Shell Pearl 140kb/d (Nov. 2003) Colombia Condor BP ExxonMobil AGC 21 160kb/d (July, 2004) SasolChevron 100kb/d (March, 2004)

Nigeria SasolChevron 35kb/d

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Today, the primary feedstock for light olefins is naphtha

Source: Hydro Presentation by Henning Reier Nilsen at EFI Conference in Norway, May 2005

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BP Annual Report 2004

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Synthesis gas is the fuel of the future

Synthesis gas is a mixture of carbon monoxide (CO) and hydrogen (H2). Synthesis gas can be manufactured from natural gas and coal using conventional technology, and from biomass using emerging technologies. World supplies of natural gas and coal can support increased future demand. World supplies of oil are mature and not as ample. The location of world supplies of natural gas is remote from markets. Future synthesis gas refineries that convert remote natural gas and coal to large-volume conventional fuels will provide an economical supply of synthesis gas as a petrochemical feedstock. Conventional and emerging technologies can convert synthesis gas to broad range of petrochemical feedstocks.

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Good stuff
World consumption of natural gas is 260 bcfd (2004). LNG trade is 17 bcfd (2004). 49 bcfd traded across country borders by pipeline. Ammonia is largest user of hydrogen. Hydrogen demand (2004) from natural gas for chemicals manufacture (mostly ammonia) is about 32 billion scfd for ammonia (12 bcfd natural gas) and 5 bcfd for methanol (2.7 bcfd natural gas) Current worldwide on-purpose hydrogen production for refineries is about 15 billion scfd (5.5 bcfd natural gas), growing at 5% per year. 79% from steam methane reforming, 17% from steam naphtha reforming. 4% from gasification. Natural gas will remain the dominant feedstock for syngas generation due to ample supply, low price, moderate capital cost for steam reforming and other syngas generation technologies. Todays chemical uses of syngas include ammonia, methanol and oxo chemicals (addition of syngas to olefins to form ketones and aldehydes. Gas reserves are equivalent to oil reserves. (1.11 vs 1.15 trillion boe) Gas production rose in every region except North America, where US output continued to decline. In Europe, growth in the Netherlands, Russia and Norway more than offset the ongoing decline of UK output.

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Key Message

The feedstock of the future is syngas (carbon monoxide and hydrogen) derived from geographically-remote natural gas resources.

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