1. Microchannel Fischer-Tropsch for Biomass-to-Liquids Green Chemistry Conference June 25, 2008 Jeff S. McDaniel

2. Agenda Velocys Introduction Microchannel Process Technology Modular Fischer-Tropsch Technology 2

3. Velocys Incorporated Battelle Memorial Institute spin-out company in 2001 64 employees Commercializing microchannel process technology 78 U.S. Patents Over $100 million of funding from industrial partners

4. A Better Biofuel 4 FeedstockProcessDistributeUse Modular technology Distributed processing Compatible with existing infrastructure Geographically widespread available feedstocks Superior diesel and jet fuels Wood waste Municipal Solid Waste

5. 5 FeedstockProcessDistributeUse Modular technology Distributed processing Compatible with existing infrastructure Geographically widespread available feedstocks Superior diesel and jet fuels Wood waste Municipal Solid Waste Lower Cost Non-Food Feedstocks Superior Fuel Product Enabling Velocys ® Technology Velocys Focus: Biomass-to-Liquids (BTL)

6. Microchannel Process Technology Accelerates chemical reactions Many obstacles have been overcome

7. ~ 25-150 mm ~ 0.1- 1.0 mm Conventional Characteristic dimension Microchannel Microchannel Technology

8. 88 Impact of Technology Velocys ® Technology systems outperform conventional reactors Accelerates chemical processes by 10 – 1,000 fold Enables smaller, more productive reactors Allows use of new, novel, more active catalysts Controls reactions at optimal conditions

9. Fouling: Potential Issue with Microchannels Vaporizer after 2000 hours operation Significant performance degradation over 2000 hours Solids at 15 ppm, 80% initial vapor quality

10. Fouling: Demonstrated Success for >1 Year Vaporizer after 9600 hours operation No performance degradation over 9600 hours

11. Catalyst: Demonstrated Success AspectPrimary ChallengeStatus LoadingEvenly distributing and packing catalyst particles in microchannels Demonstrated. Successfully loaded multiple devices and identified commercial vendors RegenerationAchieving long, steady runs Removing wax which blocks catalyst sites Demonstrated. Current device at 1,500+ hours Multiple regenerations demonstrated in earlier devices UnloadingRemoving wax build-up Removing catalyst after extended operation Demonstrated. Process developed and demonstrated on multiple devices AspectPrimary ChallengeStatus LoadingEvenly distributing and packing catalyst particles in microchannels Demonstrated. Successfully loaded multiple devices and identified commercial vendors RegenerationAchieving long, steady runs Removing wax which blocks catalyst sites Demonstrated. Recent device at ~1,800 hours Multiple regenerations demonstrated in earlier devices AspectPrimary ChallengeStatus LoadingEvenly distributing and packing catalyst particles in microchannels Demonstrated. Successfully loaded multiple devices and identified commercial vendors AspectPrimary ChallengeStatus

12. Modular Fischer-Tropsch Excellent performance Demonstrations with U.S. Air Force and others forthcoming

13. 13 FT Technology Today Slurry Bubble Zone (small catalyst particles) Vapor product Liquid product Catalyst/ Wax Separator Catalyst Return Syngas Boiler Feed Water Slurry bubble FT Reactors among the largest in the world FT Reactor during shipping Capacity = 15,000 bpd Weight = 2,200 tons Height = 60 m Outer Diameter = 10m

14. 14 Microchannel Fischer-Tropsch Reactor Concept -(CH 2 )n- + H 2 O CO + 2 H 2 Water Water/Steam Close integration of the exothermic Fischer-Tropsch synthesis and steam generation 0.2 – 5.0 mm

15. FT Reactor Comparison Technology Characteristics Fixed Bed (Shell) Slurry (Sasol, Rentech) Microchannel (Velocys)Velocys Advantage Gas-phase Reaction Time required, sec ~10 0.2 – 0.3Smaller reactor for same throughput Temperature Uniformity, o C ~25 o C~5 o C Use of more active catalysts Catalyst Productivity kg/m 3 /hr 700-8003501,700Lower catalyst costs Minimum Economic Facility, bpd 5,00010,000500Enables BTL and Offshore GTL applications Technology Characteristics Fixed Bed (Shell) Slurry (Sasol, Rentech) Microchannel (Velocys)Velocys Advantage Gas-phase Reaction Time required, sec ~10 0.2 – 0.3Smaller reactor for same throughput Temperature Uniformity, o C ~25 o C~5 o C Use of more active catalysts Catalyst Attrition Rate MinorSevereMinorFixed bed architecture Catalyst Productivity kg/m 3 /hr 700-8003501,700Lower catalyst costs Technology Characteristics Fixed Bed (Shell) Slurry (Sasol, Rentech) Microchannel (Velocys)Velocys Advantage Gas-phase Reaction Time required, sec ~10 0.2 – 0.3Smaller reactor for same throughput Temperature Uniformity, o C ~25 o C~5 o C Use of more active catalysts Catalyst Attrition Rate MinorSevereMinorFixed bed architecture Technology Characteristics Fixed Bed (Shell) Slurry (Sasol, Rentech) Microchannel (Velocys)Velocys Advantage Gas-phase Reaction Time required, sec ~10 0.2 – 0.3Smaller reactor for same throughput Temperature Uniformity, o C ~25 o C~5 o C Use of more active catalysts Technology Characteristics Fixed BedSlurry Microchannel (Velocys)Velocys Advantage Gas-phase Reaction Time required, sec ~10 0.2 – 0.3Smaller reactor for same throughput Technology Characteristics Fixed BedSlurry Microchannel (Velocys)Velocys Advantage

16. Cross Flow Design Partial Boiling Water Coolant Process length ~ 0.6 m Process microchannels = 40 Coolant Length ~ 0.3 m Coolant microchannels = 425 Pilot Scale Demonstration Unit Coolant In Coolant Out Process Out Process In Capacity = ~2 gallons/day Conversion of CO: ~70% Selectivity to CH 4 : ~15% 3,000+ operating hours with integrated devices

17. Manufacturing Scale-Up Scale-up complete through one-quarter scale Device: 24” x 24” x 6” Capacity if operated: ~8 barrels/day

18. Commercial FT Reactor Assembly Capacity = 300 – 500 barrels/day 1.5 M 8 M

19. FT Reactor Assembly

20. U.S. Air Force Demonstration Project Assured Aerospace Fuels Research Facility Wright Patterson Air Force Base (Dayton, OH) Phase I - Under construction -Steam reformer + Fischer Tropsch + Hydrocracker -~25 gallons/day of FT capacity Velocys supplying microchannel FT reactor system Initial operation in January 2009 with biomass gasifier Air Force demonstration in mid-2009 Velocys participating in key U.S. Air Force fuel demonstration

21. Summary Microchannel technology greatly improves FT synthesis Velocys FT technology unlocks BTL opportunities 21

22. 22 Contact Information Jeff McDaniel Business Development Mgr. mcdaniel@velocys.com Velocys Inc 7950 Corporate Blvd. Plain City, OHIO 43064 USA Phone: 614/733-3300 Web: www.velocys.comwww.velocys.com

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