Transitioning from Commercial Pilot to Mass Production 2 IUT s skid mounted 15,000 barrel per day Processing Unit

Transcription

1 1 Investor Presentation International Ultrasonic Technologies Inc. Alberta, Canada Feb. 15, 2017 By Christine Gao

2 Transitioning from Commercial Pilot to Mass Production 2 IUT s skid mounted 15,000 barrel per day Processing Unit

3 Executive Summary 3 IUT is a private company based in Calgary Alberta Canada. IUT is engaged in the business of developing and commercializing a patented and proprietary desulphurization technology. IUT owns Eight (8) U.S. patents related to the use of ultrasonic wave in conjunction with oxidation agent to desulphurize hydrocarbon products. The patented process has been field tested in different countries and successfully reduced sulphur content of different processed petroleum products including natural gas liquids (NGL), gasoline, kerosene and diesel to less than 10 parts per million, which meets the ultra low sulphur transportation fuel standards of many countries.

4 Executive Summary 4 IUT is helping crude oil producers, transporters, blenders and refiners see a greater return on investment and comply with increasingly stringent regulatory demand by improving the quality of petroleum streams in a cost effective manner using its patented and proprietary technology for oxidative desulfurization. IUT is currently seeking investment to mass produce and market it s units to all around the world.

5 Desulfurization Regulatory Picture 5 Established to prevent SO x emissions due to fuel combustion Canada/US Gasoline: 30 ppm sulfur Canada/US On-Road diesel: 15 ppm sulfur Canada/US Non-Road diesel: 15 ppm sulfur Europe and China Diesel/Gasoline: 10ppm Pipeline Sulphur specifications are also tightening Ultra Low Sulphur Diesel(ULSD) is expected to meet global standard in the future

6 6 Opportunity Traditional ydro-treating" Desulfurization (DS) process is: - Capital intensive, - A high pressure / high temperature process, and - A hydrogen consuming operation IUT is using Oxidation Desulphurization (ODS): - A low temperature / low pressure process, - A potentially cost-effective alternative, - Designed to be easily integrated into potential customers' facilities, and a patented proprietary technology

7 7 Opportunity Additional benefits to refiners may include: - Lower hydro-treating cost - Lower hydrogen usage - Reduction of carbon footprint - Ability to more economically meet tougher environmental regulations

8 DS vs ODS 8 Traditional DS IUT ODS ydrogen addition Yes No Pressure 2000 PSI 60 PSI or less Temperature C 90 C or less Equipment cost expensive DS of 40% or less Operating costs Expensive About $ 1.5 / bbl. Removable no yes Modular and capacitive no yes Efficient removal of stubborn sulfur compounds 50% of the total hydrogen to remove sulfur residues 1% Effectively remove all sulfur compounds Operating complex Very simple, only one person The octane number of refined oil reduce increase

9 Target Market 9 The target markets for our IUT technology and our IUT units are : (1) The crude oil production, transportation, and refining markets. Environmental regulations mandate the reduction of sulfur content in many fuels including gasoline, diesel fuel, and bunker fuel. (2) Since our technology is designed to impact the overall quality of crude oil/product oil in a cost effective manner, the successful commercialization of our technology can be expected to produce economic benefits to our future customers in these markets.

10 Business Model IUT owns the equipment and leases it to the customer for a nominal fee. 2. IUT provides desulfurization service and collects a "processing" fee on each barrel that the customer processes using IUT's technology 3. Customer pays for equipment and probe replacement and other equipment maintenance 4. Pursuing direct-to-customer opportunities and strategic partners with third party distributors

11 Economics 11 1, The world's diesel prices according to sulfur content standards vary widely. The average selling profits increase by about $ 14 to $ 35 per ton depending on different IUT applications 2, With the installation of equipment in an oil refinery with annual output of 3 million tons diesel, using the handling/service charge of $7 US dollars per ton calculation, the annual revenue will be $21 million US dollars and five years sale revenue of nearly $100 million US dollars. Based on Profit margin of 30%, an annual Net Profit of $6.3 million US.

12 Capital Requirement & Financing 12 IUT is seeking 3 million US dollars as technology transfer fee to start up mass producing the equipment. IUT will joint venture with the investors to manufacture and market the units worldwide. The deal involves IUT setting up a joint venture equipment manufacturing facility either in Canada or overseas with Investor. Investor will have an option to own more than 50% control interest in the company. The JV company will have the exclusive right to market the equipment in the local country and also exporting the equipment to the other countries via IUT s own marketing channel. The financing can be arranged in full equity or partial equity/debt proportion depending on the final agreement between IUT and the Investor group.

13 Technology Summary 13 Ultrasound-assisted ODS: Attractive alternative to DS Complementary reactivity to DS Tuneable chemistry Choice of catalyst and oxidant Broad range of applicability Benefits: Operational savings Carbon footprint reduction Investment avoidance savings

14 14 Technology ighlights The patented technology represents an attractive option to remove sulfur content from a natural gasoline, diesel, and other product streams. The use of ultrasound allows the process to occur at low residence times (<500 us) using small reactor volumes. The oxidized sulfur compounds after treatment of natural gasoline streams with ultrasound-assisted ODS technology exhibit high solubility in water. Instead of complex post-processing separation schemes, removal of the oxidized sulfur compounds can be achieved via a basic water wash, a fundamental advantage.

15 15 ydrodesulfurization R S R' eat Pressure Catalyst R + R' + 2 S Chemical process to remove sulfur from refined petroleum products Requires heat, pressure and catalyst Not limited to sulfur (nitrogen, aromatics, olefins also react) 2 S is subsequently converted to elemental sulfur

16 16 Challenges of ydrodesulfurization C 3 S C P > 800 psi T > 650 F C 3 C S Ultra low sulfur (ULSD): Capital cost high pressure DS Operating cost/utilities high operating temperature and pressure Catalyst high catalyst cost; limited catalyst life Carbon footprint high hydrogen and operating energy usage

17 17 Oxidative Desulfurization (ODS) S O 2 Δ T Catalyst O S O O DBT DBTS Chemistry: Oxidation of sulfur species Catalysts: available and tunable Oxidants: variety Phase transfer catalysts (oil-water systems) Separation: Extraction liquid-liquid separation Adsorption Focus of a variety of companies

18 18 The Effect of Ultrasound Conversion of DBT to DBTO, % with Ultrasound w/o Ultrasound Time, min Conversion of DBT to DBTS with and without the use of ultrasound Chemistry: petroleum product, Oxidant, catalyst, phase transfer reagent Original patent assigned to IUT Ultrasound greatly enhances reactivity

19 19 Sonocracking Process Sonocracking : The application of sonochemistry to petroleum-based liquids combining ultrasound with proprietary catalysts and oxidants. magnet probe reaction chamber 2 O Oil Sulfur Compound Electricity ydrocarbon Separation A. Oil, water and additives flow together towards the reaction chamber. B. In the reaction chamber, the ultrasound probe causes cavitation (formation of small bubbles). These bubbles expand and then collapse, creating energy and heat that facilitates chemical reactions. C. Oxygen is attached to sulfur compounds thereby changing their chemical composition. Chemical reaction inside reaction chamber!

20 20 Reaction Control Feed Model Diesel benzothiophenes (BT)! Thiophenes (T)! Dibenzothiophenes (DBT) Model diesel: ULSD spiked with thiophene based compounds (25 ppm each)

21 21 Process Block Flow Diagram Two primary process steps: sulfur oxidation and sulfur species removal Mercaptan removal: adsorption and solvent regeneration are not required

22 Application I: Diesel Finishing 22

23 Successful Commercial Validation Trial 23 The first US commercial scale trials achieved sulfur levels below 20ppm All samples sweeten by the Doctor Test (ASTM D Standard Test) Method for Qualitative Analysis for Active Sulfur Species in Fuels and Solvents Average operating costs were attractive at less than $1/bbl Feed rates of up to 3,000 BPD natural gasoline having a sulfur range of ppm Trials of 40+ hours of continuous operation demonstrated robustness and stability The technology was proven to be valuable, scalable and relevant to a wide range of product streams Page 23

24 Successful Commercial Validation Trial Site 24

25 Current Status 25 Own a demo unit capable of processing up to 6,000 barrels per day oil with double lines Size of equipment is about 20 X 6 Operation cost is about $1.0 per barrel fuel treating including electricity, ultrasonic parts replacement and catalysts Ultrasonic control system is advanced to fit in one trailer with the processing line Processing capability is adjustable to smaller size or scalable to larger size

26 26 SUMMARY Cost effective, scalable solution to developing market for Product Fuel desulphurization Multiple economic and regulatory demand drivers Robust and growing patent protection create high barriers to entry Commercial results have demonstrated process scalability and ready to launch full market of the equipment / technology.

27 27 Contact International Ultrasonic Technologies Inc. Address: # 14, Street NE Calgary, Alberta, Canada T1Y 5E4 Contact Person: Christine Gao Telephone: Website: info@internationalultrasonics.com