XTL: Opportunities and Challenges Jan van Schijndel, Shell Global Solutions Jornadas 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 G B C GTL Shell Gasification Process CTL Shell Coal Gasification Process BTL Gasifier XTL = GTL, CTL or BTL “The synthetic fuels continuum” Low temperature (Co)  Middle Distillates High temperature (Fe)  Lighter products

4 Worldwide GTL Capacity Announcements Source: Purvin&Gertz

5 Presentation Overview What is XTL Industry Overview XTL Products Potential Impact of XTL Products Overview of Pearl GTL Project in Qatar

6 Shell XTL Technology & Fischer Tropsch Hydrogen Carbon monoxide + Fischer-Tropsch Distillates Catalyst + Water

7 Naphtha Kerosene Gasoil Waxy Raffinate Waxes Solvents Detergent feeds Hydrocarbon Products 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 Bintulu Commercial Plant Pearl GTL, Qatar World Scale Plant - FID July End decade start-up

, , , , , , , , ,000 Capacity (bbl/day) Bintulu Oryx Escravos Pearl ExxonMobil Oryx II ConocoPhilips SasolChevron Marathon Algeria Pearl II 1,000, 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] GTLCTLBTL 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 Presentation Overview What is XTL Industry Overview XTL Products Potential Impact of XTL Products Overview of Pearl GTL Project in Qatar

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 Indicative Relative Volumes

15 XTL Products: Unique Properties ‘Standard’ XTL Gasoil: Cetane number Kerosene: Smoke Point Naphtha: % paraffins ~100~70 Base Oils: Viscosity Index Density Oxid. Resist. 13,5009,500 (Gr. III) ~ – Clear, clean burning products, biodegradable, virtually free of sulphur and aromatics

16 Presentation Overview What is XTL Industry Overview XTL Products Potential Impact of XTL Products Overview of Pearl GTL Project in Qatar

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 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)

19 Potential Applications of XTL Gasoil Potential Market Potential Value Commodity Gasoil Neat XTL Fuel in Advanced engines Refinery Blending Premium Retail Fuel

20 Continued XTL Fuel Market Developments Germany Fleet trial with Volkswagen London Toyota trial China Michelin Bibendum Challenge 100% GTL Fuel Diesel/ GTL Fuel blend Greece Shell Diesel 2004 London Bus trial with Daimler-Chrysler Japan Fleet trial Japan Aichi hybrid bus China Bus trial Shanghai USA Dept. of Transport Yosemite Water Germany, Austria, Netherlands, Italy, Switzerland Thailand Shell Pura Diesel China Taxi trial Shanghai

21 Emission Benefits of XTL Fuel 0% 50% 100% NOxPMHCCO Existing enginesOptimised engines % reduction5-45%25-40%45-60%40-85% Conventional S-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 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)

25 Presentation Overview What is XTL Industry Overview XTL Products Potential Impact of XTL Products Overview of Pearl GTL Project in Qatar

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 Ethane Propane Butane Condensate Sulphur GTL Naphtha GTL Gasoil Normal Paraffin GTL 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 meters Process: Shaft power consumption 1,200 MW Heat consumption 850 MW Steam generation8,000 tons/hr Catalysts (5 processes) 5,630 tons FEED: Number P&IDs~1000 Number documents~ 4,600 Number Volumes~ 120 Construction: Plot area:250 ha Equipment number>3,000 items Piping 1.5 mln LM Structural steel105,000 tons Concrete 490,000 m 3 Cables7,600 km Heavy lifts > 1,200 tons> 24 I/O:45,000 Field Instruments:50,000 Manhours:>170 mln Peak workforce:35,000

29 Presentation Overview What is XTL Industry Overview XTL Products Potential Impact of XTL Products Overview of Pearl GTL Project in Qatar 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

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