KBR Technology Business

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1 KBR Technology Business Tanya Niu Director, Chemicals 2013 Ethane to Ethylene Global Summit, Houston, TX Oct 30 th 2013 KBR, Inc. All Rights Reserved 1

2 KBR Technology Portfolio Refining ROSE Visbreaking Hydrocracking Hydrotreating Olefins Catalytic Olefins SCORE Ammonia and Syngas Ammonia Fertilizers Syngas Hydrogen FCC VCC Coal Monetization Power applications Industrial applications Chemicals Phenol Advanced TransAlkylation Parafin Olefin Separation C4 Acetylene Converter Advanced Chemical Engineering OTS OMS Technical Services Proprietary Equipment Refining Coal Monetization Olefins Chemicals Ammonia and Syngas 2013 KBR, Inc. All Rights Reserved 2

3 Olefins Capabilities Providing Technology since 1986 More than 30 percent of global greenfield ethylene capacity Catalytic Olefins Flexible light hydrocarbon feed Achievable P:E Ratio 1:1 to 2: KBR, Inc. All Rights Reserved 3

4 Shale Gas Boom Brings Surplus NGL US NGL production, Million Barrels/Day Ethane and Propane profoundly changed NA petrochemical feedstocks structure with its cost advantage and availability Source: EIA 2013 KBR, Inc. All Rights Reserved 4

5 Impact to Olefins Production Typical olefins plant product yields Ethylene Propylene Ethane and propane cracking produces less propylene than naphtha cracking Propane can be used as feedstock for on purpose propylene production Source: public literatures 2013 KBR, Inc. All Rights Reserved 5

6 Export Balances NA Propane Ample propane supply after retail and petrochemical feedstock use US recently becomes the leading propane exporter, topping Middle East US Propane/Propylene Import/Exports (MM Barrels/Day) Propane export capacity expanded with matching gas processing, pipeline, and storage Possible US propane global price parity concerns PDH economics Source: EIA 2013 KBR, Inc. All Rights Reserved 6

7 Global Propylene Supply Demand Gap Widens Propylene demand keeps growing: organic growth;; new applications Propylene demand to go from 80 to 100MM ton in 5 years Crackers propylene: ethylene driven;; lighter feedstocks Refinery propylene: gasoline driven;; slow growth Cracker 55% Global Propylene Production 2012 Refinery 31% Other 14% Metathesis 4% MTO 1% PDH 5% Others 4% Source: IHS 2013 KBR, Inc. All Rights Reserved 7

8 NA Propylene Production Million Metric Ton PDH Metathesis Refinery Cracker Cracker production declines further until new projects come up Refinery propylene battles declining fuel consumption On purpose production fills the gap Source: IHS 2013 KBR, Inc. All Rights Reserved 8

9 New NA On Purpose Propylene Projects On Stream Capacity (KTA) Technology Company PDH Dow PDH Enterprise PDH FPC PDH Williams PDH Ascend PDH Dow Petrologistics started up their 500 KTA PDH plant in Six upcoming PDH projects with a total capacity of 4.35 MM Ton per year LyondellBasell called off their 225 KTA metathesis project Feedstock stability important to downstream players in addition to cost Source: company press releases 2013 KBR, Inc. All Rights Reserved 9

10 Impact to NA propylene Derivatives NA propylene demand, Million Ton Others Propylene Oxide Polypropylene Butanols 2-Ethyl Hexanol Isopropanol Cumene Acrylonitrile Acrylic Acid Reduced PP export for a few years Impact less prominent to other propylene derivatives Source: IHS 2013 KBR, Inc. All Rights Reserved 10

11 Impact to Global Propylene Derivatives Propylene demand growth sensitive to macroeconomics Most propylene derivatives tied to durable goods China Strong desire for self sufficiency, building on coal supply Favorable tax structure to encourage propane import PDH and MTO to make up 1/3 production by the decade end Gap remains, despite reduced import Middle East Continue to export, yet slower growth 2013 KBR, Inc. All Rights Reserved 11

12 US Propylene Price High Yet Volatile Ethylene, $/MT Propylene, $/MT Tight supply-demand brings price volatility Strength of derivatives demand and inventory management Operational outages and seasonal turn around Alternative RG propylene value and on purpose production economics Arbitrage opportunity for import Source: Argus 2013 KBR, Inc. All Rights Reserved 12

13 On-purpose Propylene Production Traditionally demand driven in regions with shortages New Norm: supply driven to take cost advantage of feedstocks Technologies Propane Dehydrogenation (PDH) Metathesis Methanol to Olefins (MTO / MTP) Catalytic Cracking High Severity FCC 2013 KBR, Inc. All Rights Reserved 13

14 Propane to Propylene (PDH) Propane Propylene + Hydrogen US Pricing Propylene, $/MT Propane, $/MT High selectivity, >80% propylene yield from propane Hydrogen typically used as fuel for the process Fixed bed, fluid bed, and moving bed reactors, all commercialized Propane/Propylene pricing differentials drives project economics Market considerations: feedstocks security;; derivative competitiveness Source: Argus 2013 KBR, Inc. All Rights Reserved 14

15 Metathesis (Re-arrangement of Olefins) Metathesis Ethylene Ethylene 2-Butene Propylene Butenes Isomerize to 2-Butene Requires high purity ethylene and high purity butene Commercially proven operation in fixed bed reactors, cyclic operation Unique set of requirements for positive project economics Positive propylene to ethylene price ratio Availability and low cost of C4 or Ethylene dimerization unit when C4 is not available 2013 KBR, Inc. All Rights Reserved 15

16 Methanol to Olefins Methanol to Olefins Coal or Natural Gas Methanol Synthesis Syngas production Syngas to Methanol MTO/MTP MTO Ethylene Propylene Primarily a coal play in China Capital intensive, especially with syngas and methanol plant No economic direct methane to propylene route exists Economics depend low cost feedstocks or methanol Environmental concerns 2013 KBR, Inc. All Rights Reserved 16

17 Light Hydrocarbon Catalytic Cracking Various refinery and cracker light streams Catalytic cracking Ethylene Propylene Feedstocks flexibility No need for pre-treatment Either fluidized or fixed beds, using catalysts 2013 KBR, Inc. All Rights Reserved 17

18 KBR - Catalytic Olefins Light olefinic paraffinic feeds Propylene ethylene aromatic-rich streams High propylene yields, with ethylene and aromatic-rich gasoline byproducts Typical P/E ratio = 2:1 for olefin-rich feed Typical P/E ratio = 1:1 for straight run naphtha Well proven KBR FCC reactor technology Product treatment and separation follow ethylene plant technology Both Grassroots and Revamp opportunities 2013 KBR, Inc. All Rights Reserved 18

19 High Severity FCC 2-8% FCC propylene yield 15-25% Propylene yield improvement from FCC Improvement achieved by Catalyst and additive modifications Process condition changes: pressure, temp, catalyst/oil ratio Hardware change A variety of technology offerings KBR offers Maxofin TM process 2013 KBR, Inc. All Rights Reserved 19

20 On Purpose Technologies Comparison Process Metathesis PDH Catalytic Olefins MTO/MTP Feedstocks Ethylene & Butene Propane C4-C10 Olefins or Straight Run Methanol (or coal/methane) Ethylene price sensitivity Negative Neutral Positive Positive (MTO) Feed Pretreatment Significant Significant None to little None Major Byproducts None None Ethylene BTX gasoline Ethylene (MTO) Water Economic plant size Small to moderate Large Small to large Large Commercial proven Yes Yes Yes Yes Capital Investment Low to moderate Moderate Moderate Moderate to Large 2013 KBR, Inc. All Rights Reserved 20

21 Thank You 2013 KBR, Inc. All Rights Reserved 21