What is "disruptive technology" in the GTL sector?

1. The GasTechno® Process:Bridging the Gap Between Supply and Demand™GTL Conference, London. October 2009

2. Management Walter Breidenstein, CEO - 20 years of entrepreneurship in more than 35 countries Nathan Pawlak, CFO & CTO - Master’s in Chemical Engineering & Process Inventor Board of Advisors Dr. Robert W. Carr, Professor Emeritus, Univ. of Minnesota - 45 years in chemical kinetics and chemical reactions Dr. Krishna K. Rao, Chemical Engineering Consultant - Former Technology Asset Manager for Exxon Chemical Jason J. VanBuren, Director of Business Development - Abraham Group LLC, Former U.S. DOE Secretary, Spencer Abraham Dr. Haiming Jin, Chemical Engineering Consultant - 20+ years in competing methanol commercialization 2

3. "After having performed my own extensive review of their process designs, reactor features and chemical reaction fundamentals, I can confidently state that this one step technology of converting natural gas to methanol, when verified for commercial readiness, will alter the technology view which currently exists in the major chemical and petroleum industry…" Dr. Krishna K. Rao Former Head of New Business Venture Technology (Process Division) & Technology Asset Manager, ExxonMobil Chemical

4. Problem: Supply & Demand Gap Methane is often produced far away from end markets Stranded Gas Flared Gas Shut-in Gas Methane is sometimes unsuitable for markets Biogas and landfill gas Requires pre-processing

5. Problem: Supply & Demand Gap Supplying methane to markets requires either pipelines, cryogenics, wire, compression, or chemical conversion All methods require proximity except chemical conversion Chemical conversion requires sufficient scale

6. Problem: Supply & Demand Gap If the distance is too great and the scale is too small, then you must: Flare Shut-in Leave stranded (i.e. don’t develop it at all)

7. Problem: Supply & Demand Gap Sometimes even when the proximity & scale is right, the market isn’t Electricity and pipelines require infrastructure CNG requires filling stations & logistical support LNG requires higher natural gas prices

8. Solution: Bridge the Gap! The GasTechno process provides two things: Scalability. Abundant sources of methane might be too small for syngas technologies, but not for GasTechno Conversion. Marketing is never a problem when you can make so many things out of methanol

9. Solution: Diverse Derivatives GasTechno “Add-on” technologies Gasoline Olefins Polypropylene Acetic Acid Formaldehyde Biodiesel Di-Methyl Ether

10. Gas Monetization Stranded Gas Increase accessible reserves by accessing reserves that are otherwise inaccessible GasTechno derivatives have strategic importance Flared Gas 150 billion cubic meters per year are flared GasTechno can monetize 80% of these profitably Biogas Perfect route from organic “waste” to fuels The renewable future will have biogas

11. What is the GasTechno® Process? Proven Chemistry Direct partial oxidation No syngas, no catalysts Decades of research Proven Engineering Recycle regime Heat and material integration Simple design Multiple Applications Stranded/flared gas Biogas/landfill gas Coal seam/coal bed methane Unconventional methane

12. Direct Partial Oxidation Basics Under certain conditions, CH4 and O2 react to directly produce oxygenates Reaction favors methanol, ethanol, and (optionally) formaldehyde The reaction requires no catalysts The reaction is indifferent to N2

13. Direct Partial Oxidation Basics Single step No need for syngas production Easier to scale down No catalyst Can use gas “as is” No fouling, less maintenance Carbon efficiency rivals traditional technology About the same amount of product per MCF Overall energy needs are comparable Produces methanol, ethanol, & formaldehyde

14. GasTechno® Reactor Nitrogen concentration does not affect the reaction Quenching allows for the maximum production of oxygenates Takes place before oxygenate products decompose Prior research has only measured production after decomposition Products can be easily recovered via the GasTechno® scrubber

15. The GasTechno® Process The GasTechno® process can be integrated with the gas source, eliminating nearly 90% of CO2 emissions The keys to the process are the proprietary reactor, scrubber, and integrated design Since all products are key intermediates, the GasTechno® process can utilize a number of add-on technologies

16. GasTechno® vs Syngas Advantages vs. syngas technologies Less complex (less capital and overhead) Highly scalable This will allow flared gas to be monetized More applications allow for modular designs Disadvantages vs. syngas technologies Base product selection is limited to methanol, ethanol, formaldehyde, and their derivatives Natural gas is the only viable feedstock

17. Heating the Recycle Loop Myth: Because the recycle loop is large, heating it will be very expensive Fact: Heating costs are ZERO The reaction is exothermic, heat is FREE (you just have to capture it) Heat integration Provides all process needs with heat left over for export Provides pre-cooling of product gases Only cost is for the heat exchanger (capital cost)

18. Cooling the Recycle Loop Myth:Because the recycle loop is large, cooling it will be very expensive Fact: Cooling is very affordable, even FREE For applications not targeting formaldehyde, air-fin cooling can be employed (small electrical cost) For applications with formaldehyde recovery, standard water cooling can be used Refrigeration is only needed for distillation

19. Compressing the Recycle Loop Myth: Because the recycle loop is large, compressing it will be very expensive Fact: No compression is required The scrubber operates at reaction pressure The only pressure loses are due to frictional forces of the piping and vessels (less that 35psi) Pressure losses can be recovered via blower

20. Cleaning the Recycle Loop Myth:Because the recycle loop is large, cleaning it will be very expensive Fact: Direct partial oxidation works with dirty gas and cleaning requirements are minimal Chemistry tolerates higher alkanes, N2, H2O, and CO2 Necessary to prevent accumulation of inert gases, but it’s NOT necessary to remove them completely Typically 1-5% CO2 available is removed per pass

21. GasTechno® Scalability One size fits a range of feed rates Process can be used with 2X or ½X feed rate High feed rate decreases carbon efficiency Low feed rate increases carbon efficiency No process modifications required Process simplicity allows downward scaling Currently scaled as low as 2,500 scfd Profitable at scales above 500,000 scfd

22. GasTechno® Versatility Design accepts a range of compositions CO2 in feed does not significantly affect process Increase feed compression expense Does not otherwise affect process Ethane improves reaction characteristics Reaction is indifferent to N2 levels Design has small footprint Offshore applications only require liquid storage “Truncated” process can fit under 5 meters

23. GasTechno® Autonomy Process complexity similar to JT NGL plants Providing feed pressure is the biggest issue The process itself is pumps, bottles, and pipes The process can be largely automated Only needs periodic checkups which can be done during product offloading No catalysts to monitor Feed variations handled easily by the recycle

24. The Ideal Stranded Gas Solution Has a simple, low-maintenance design Has a small footprint Has an easily transportable product Is affordable at small scales Can accept off-spec gas Can accept a variable feed rate

25. Methane Conversion Technologies

26. GasTechno® Process

27. Why is Gas Flared? There are three reasons that gas is flared: Can’t make any money Can’t make enough money Too much money to put at risk (i.e. capital costs)

28. Changing the Flaring Dynamic The GasTechno process addresses the issues that result in flaring Economic at small scale Liquid product can be transported easily Economic w/off-spec gas No disincentive, no flare New revenue stream Low capital risk

29. Putting Flaring in Perspective In 2007 about 150 billion cubic meters of gas were flared No alternative solutions GasTechno would be economical for 80% (est.) of this amount 150-200 million tons of liquid products $30-40 billion in sales

30. Biogas/LFG Applications What is biogas/LFG? Methane produced via anaerobic digestion Biogas and landfill gas have very similar profiles Typically 40-60% methane and 40-60% CO2 Typically produced at low pressures and small scales Sulfur and other contaminates are prevalent What is it used for? Mostly used as an onsite fuel Can be cleaned up and sold via pipeline Not large enough scales for chemical processing (also undesirable for catalytic processes due to contaminants)

31. GasTechno® Biogas & LFG Can handle biogas/LFG as-is The process can handle CO2 H2S contamination can be pretreated Because the end product is significantly more valuable than natural gas, this is not a major process expense Thoroughness of H2S removal is a function of product specifications, but GasTechno itself is not affected Pressures needed are comparable to pipelines

32. GasTechno® Algae Biodigester is used as a route to make methanol from cellulosic waste Algae technologies are hampered by low oil yields The ability to use the entire algae is an advantage GasTechno is a logical fit with almost all emerging algal production processes Can handle biogas without pretreatment Can be integrated with biodigester & bioreactor Product slate is an excellent fit for algal oils Fuels Chemicals

33. GasTechno® Methanol Pricing

34. Small Scale Technology Selection Assumptions Roads already in place 100% pure methane Capital costs Equipment cost + cost per mile (power lines and pipelines) Operational costs Free gas Includes debt service Revenue Methanol = $200 per ton Electricity = $0.04/kwh Gas Sales = $4.00/mmbtu

35. Small Scale Economics Process scalability is a function of economics: Minimum ROI Price of methanol …and of technical considerations: Feed pressure Feed composition Assumes 100% methane with methanol sales at $250/ton and feed pressure of 125 psi

36. Medium Scale Economics An Example 30 MMSCFD @ $1.50 per MCF

37. Capital Expenses Methanol

38. Operational Expenses Methanol

39. Annual Revenue Streams Methanol

40. Value Added per MCF Methanol

41. Methanol Technology Competitiveness Study “The Case I GasTechno® plant option, that which does not require additional product processing and can be viewed as primarily a methanol technology, is far superior to conventional methanol” Nexant ChemSystems, July 2006

42. GasTechno Technology Marketing and Viability Report “Based on MMSA estimates using conventional methanol production technology versus GasTechno design claims, employing the GasTechno technology would place the user among the most competitive suppliers of methanol to Asia, on firm competitive ground.” Methanol Market Services Asia, July 2007

43. Methanol Markets Chemicals 57% of market 5% annual growth Fuels 43% of market 5% annual growth (179% w/o MTBE)

44. Methanol Fuels “Flex” Fuels Di-Methyl Ether Biodiesel Fuel Cells Gasoline

45. Methanol Chemicals Formaldehyde Acetic Acid Olefins Polypropylene PET Plastics Resins Direct Uses www.methanex.com/products/methanollives.html

46. Typical Innovation Journey (Adapted from Carbon Trust Investments presentation to IFC)

47. Commercial Status Research and Development Extensive laboratory testing of reactor Development of rigorous kinetic model Modeling and process simulation of recycle Four US patents and five applications pending Five Nigerian patents approved 42 international PCTs filed and pending Steps to Commercialization Pilot plant is currently under construction Demonstration plant will be attached to an actual Michigan flare

48. Pilot Plant Vessels are installed and pressure tested Reactor fabricated and awaits pressure testing/coating Control system is complete and ready for installation Testing site has been selected, offer on the building has been accepted Need to go through QC of equipment

49. www.gastechno.com MICHIGAN MAIN OFFICE Gas Technologies LLC Post Office Box 640 Walloon Lake, MI 49796 Tel: 231.535.2914 INTERNATIONAL SUBSIDIARY GasTechno West Africa Limited Lagos, Nigeria