© 2012 KBC Advanced Technologies plc. All Rights Reserved.

Scott Sayles, Executive Consultant

Shale or Tight Oil Processing

20 November 2012

Agenda > What is Shale or Tight Oil? > Market Drivers > Refinery Impacts, Experience > Plant Modification Implications > Conclusions

20 November 2012 PROPRIETARY INFORMATION 2

What is Shale or Tight Oil? > Shale or Tight Oil are terms for the geological formation where oil is found

– The name does not infer quality of the crude oil – Location of the deposit determines the qualities – Tight Oil can be found around the world – Focus here will be on North America production

Shale Oil Shale NGLs2012 AFPM FCCU Seminar Houston Texas

20 November 2012 PROPRIETARY INFORMATION 3

What is Shale or Tight Oil? > Current situation is the quality and volumes are variable

– API ranges from 20 to 55 – Sulfur generally low and nitrogen – Paraffin generally high – Heavy metals are low (Ni &V) – Alkaline metals are high – Lead, Arsenic and Barium are elevated – Filterable solids increases with decreasing API – Production chemicals add contaminents

20 November 2012 PROPRIETARY INFORMATION 4

Market Drivers > 65 to 70 refineries have access > Limited pipeline to local refineries > Rail in North America

– Reaches to the east coast – Train size becomes limiting

> Truck to distribution points and to local refineries – Cushing is reported to collect 36,000+ BPD (CVR Energy 2012) – Other locations are similar

> Other options being explored: – Barges on Mississippi – Saint Laurence Seaway shipments

PROPRIETARY INFORMATION 20 November 2012 5

Market Drivers > It’s not all oil. > Gas production is high for these fields > Cheap natural gas has changed the energy economics > SMR Hydrogen is low cost > Energy efficiency or savings projects have to be carefully

evaluated – Cost is lower – May allow internal production for improved refinery reliability

PROPRIETARY INFORMATION 20 November 2012 6

Overall Impact

Low Cost Natural Gas

Crude Feedstock

Coke

CrudeTower

NHTCatalytic

Reforming Unit

Gasoline Pool

Reformate

Hydrotreated Naphtha

Virgin Naphtha

Jet and Diesel Pool

KeroseneDHT

Kerosene HT Jet

DieselDHT

HT Diesel(ULSD)

Middle Distillate

Vacuum Tower

Atmospheric Resid

CokerVacuum Resid

Naphtha

GOHTor

HCU

ATM Gas Oils

SyntheticJet/Diesel

Naphtha

CFHT

FCCU

FCC Naphtha

FCC Gas Oil

Fuel Oil Pool

Cutter Stock forFuel Oil

Wild Naphtha

Alkylation

Alkylate

VacuumGas Oils

Naphtha

CokerC3s and C4s

Cok

er G

as O

ils

FCCC3s and C4s

Vacuum Resid

Wild Naphtha

UtilitiesUtilities to Units

Utilities from Suppliers

Oil

Mov

emen

t and

Sto

rage

(OM

S)

Vacuum Ohds

DesalterCrude

Waxy, Fouling

Problems with cold flow properties

Low Yields

Cracks well High olefins

Low Utilization

Lower octanes/yields

Low Rate

20 November 2012 PROPRIETARY INFORMATION 7

0

2

4

6

8

10

12

14

16

18

10095908580757065605550454035302520151050

Ble

ndin

g In

dex

Num

ber

Percent of Crude 'B' in Blend

Crude 'A' and Seven 'B' Crudes

Crude B1Crude B2Crude B3Crude B4Crude B5Crude B6Crude B7

Incompatible Region

Refinery Impacts, Experience > Tankage

– Incompatibility – Wax deposition

> Desalter – Wax causes stable emulsions – Fouling – Salt carry-over – High filterable solids

> Crude unit – Preheat fouling – Tray fouling in upper sections – Light ends lift limitations – Crude heater undersized

Operating GAP

Technology GAP

CurrentDesalter

inlet

outlet

mudwash

CER, Cold Eyes Review

KBC BenchmarkKerosene P/A

12

Reflux fromReflux Pumps

3456789

1011121314

151617

1920212223242526272828

18

32

293031

35363738394041

34

42

43

46

4445

474849505152

53

545556575859

Overhead Vapors to Overhead Condenser

Kerosene Vapor fromKerosene Stripper

Kerosene Draw toKerosene Stripper

Diesel Vapor fromDiesel Stripper

Kerosene Reflux fromKerosene Stripper

Diesel P/A

Diesel Draw toDiesel Stripper

Diesel Reflux fromDiesel Stripper

HGO Vapor fromHGO Stripper

HGO P/A

HGO Draw toHGO Stripper

HGO Reflux (Wash Oil) fromHGO Stripper

Overflash DrawCrude Feed from

Crude Heater

Overflash Return

Steam In

Bottoms toVacuum Heater

20 November 2012 PROPRIETARY INFORMATION 8

> Vacuum tower – Low yields – Waxy – Vacuum heater oversized

> FCCU (See 2012 AFPM FCCU Seminar) – Cracks well – Good selectivity – Lower octane – Lower slurry

> Olefins processing about the same – Conversion increase – Heat balance? – Atmospheric resid?

Refinery Impacts, Experience

CW

Condensate

Steam

FeedCoalescer

Contactor

Light Olefins

Mixed Butanes

Makeup Isobutane

Acid Settler

Fresh Acid

Spent Acid to AcidBlowdown Drum

FlashDrum

SuctionTrap

DepropanizerFeed Pumps

MixerMixer

Acid WashDrum

RefrigerantCompressor

Condenser

TotalCondenser

RefrigerantSeparator

Economizer

RefrigerantAccumulator

CW

CW

CausticWash Drum

Condensate

Steam

Depropanizer

Deisobutanizer

MixerOverheadCondenser

OverheadReceiver

Reflux/Product Pumps

CW

Propane Product

to Storage

Reboiler

ProductCooler

Reboiler

Reflux/Product Pumps

OverheadCondenser

CW

Bottoms Effluent to Debutanizer

Refrigerant Recycle

Feed/Bottoms

Exchangers

CW

DepropanizerBottoms Coolers

Isobutane

Net Effluent

Alkaline WaterWash Drum

Circulation Pumps

Circulation Pumps

Fresh AcidFresh

Caustic

Spent Caustic

Alkaline Water

Net Effluent fromSuction Trap Drum

Net Effluent toAcid Wash Drum

Feed/EffluentExchangers

WaterWash Drum

A

B

B A

CIsobutaneRecycle

IsobutaneTo

Storage

Recycle to Contactors C

OverheadReceiver Water

WaterWash Drum

20 November 2012 PROPRIETARY INFORMATION 9

Refinery Impacts, Experience > Hydroprocessing

– Low utilization – Increased run lengths

> Distillate (DHTU) – Cold flow properties are high – Dewaxing catalyst – Modification to fractionation cut

points > Gas Oil Hydrotreaters (GOHT)

– Treating severity potential to meet tier 3 sulfur

– Low sulfur in regenerator flue gas

PROPRIETARY INFORMATION

Stripper Tower

StabilizerTower

Reactor Effluent Cooler

Feed/Effluent

ExchangerFeedPumps

Fired Heater

Reactor(s)

Separator

Stripper Bottoms Pumps

H2 Rich Off GasHydrogen-rich Make-up Gas

Hydrotreated Distillate Product

Possible Light Liquid Overheads

to Fuel Gas

Kerosene Feed CW

CW

CW

CW

Overheads receiver

Wash Water Pump

Wash Water

Charge Pump

ReactorReactor

HC Feed

FiredHeater

Feed/Effluent

Exchanger

CW

Reactor Effluent Coolers

HP Separator

CW

HPHTOverhead

Cooler

HPLow TempSeparator

LPLow TempSeparator

LP Separator

H2-richOff-gas

Amine Absorber(with Trays and Packing)

Lean Amine

H2-rich Gas

Hydrogen Recycle

Compressor

H2-rich Makeup

Gas

H2-rich Purge

Stripper Tower(with Trays and Packing)

FiredHeater

Main Fractionator(with Trays and Packing)

Heavy Naphtha

Light Distillate

Heavy Distillate

Net Bottoms

Sour Vent Gas

Light HC Liquid(LPG/Naphtha)

Fat Amine

20 November 2012 10

Refinery Impacts, Experience > Naphtha Reformer

– Paraffinic low octane – Higher gas production

> Coker – Low VR yield – High API – Low CCR

> WWTP – Impacted by solids under-carry – Alkaline metals

Wet Gas

Coker Fractionator

Furnace

CokeDrum Offline Overhead

Condenser

RefluxPump

CokeDrum Online

CokeDrum Offline

CokeDrum Online

Recirculation

4-Way Valve

Velocity Medium

Fuel Gas/Fuel Oil

Overhead Trim Cooler

CWOverhead

Drum

Sour Water

Coker Naphtha

Heater Charge

Pump

Coke Drum

Vapors

Blowdown System

Off-gas

Light Slop Oil

Heavy Slop Oil

Recycle Water

Quench

Steam fromWater Quench

LCGO Stripper

LCGO Product

FeedVessel

Fresh FeedFeedPump

HCGO Product

Feed/LCGOExchanger

Feed/HCGOExchanger

P/A Exchanger

Steam Generator

P/APump

BFW

Steam

SteamHCGO

Stripper

Steam

4-Way Valve

1 2 3 4

fromOily Water System API

Separator

Sour Water

Desalter Water

Oil

Spent Caustic

Depurator

toIncinerator

Flow EQ

Spent Caustic

DAF Trains

OilSolids

Cationic and Anionic Polymers

Aeration Basin

Caustic

Cooling Tower Blowdown

Phosphoric Acid and Activated Charcoal

Biomass + Activated Sludge

Sump

Sulfuric Acid

Polishing Ponds

toRiver

Water Reuse Supply

Water Reuse Return

Reactor 3

Reactor 1

Reactor 2

Continuous Regenerator(for Reactor 4 only)

Heater 1 Heater 2 Heater 3 Heater 4

Reactor 4(tail position)

FeedRecycle Compressor

Feed/Effluent Exchanger

Separator

Unstabilized Reformate

Hydrogen-rich Gas

Charge Pump

Air Cooler

20 November 2012 PROPRIETARY INFORMATION 11

Plant Modification Implications > Most refineries can process some volume > Crude blending is the key

– Compatibility – Light Ends

> Changes to ensure piping and tankage sufficiently heated to overcome high pour points

> Consideration of dewaxing catalysts for pour control and fractionation changes

> Under running sulfur plants may require modifications to prevent fouling

> WWTP modifications

20 November 2012 PROPRIETARY INFORMATION 12

Conclusions > Tight Oil produced crudes are:

– Readily available and quantities are increasing – Waxy and low sulfur/nitrogen

> Experience has been generally favorable > Some issues are due to the waxy/paraffinic nature > Limited refinery investment modifications

PROPRIETARY INFORMATION 20 November 2012 13

Closing > Contact: Scott Sayles, Executive Consultant,

SSayles@kbcat.com > Questions? > Future webinar topics:

– Market conditions – Asset optimisation – Investment support – Sustainable workforce development

> We welcome suggestions for future topics – please email kbc-marketing@kbcat.com > Thank you for joining us!

20 November 2012 PROPRIETARY INFORMATION 14