A Review Of Global Developments - DME

The DME Success Story:
A R eview of Global Developments
Dr. T heo F leisch and Dr. Ron S ills
BP Group T echnology and International DME Association
NGCS 8
Natal, Brazil
May 2007

Oxygenates /DME in the NGCS s eries
• F irst mention in S outh Africa (NGCS 4, 1995)
• Market led GT L: the Oxygenate S trategy (NGCS 6, 2001, Alaska)
í Great promise, great hurdles
• B eyond GT L -F T : L arge S cale Gas Convers ion through Oxygenates (NGCS 7,
2004, Dalian)
í B uilding momentum (as s ociations , conferences )
í Atlas methanol
í First commercial plants in China
• T he DME S uccess S tory: A Review of Global Developments (NGCS 8, 2007,
Natal)

Outline
• Drivers for the emerging conversion indus try
• T he s pecial role of oxygenates (methanol and DME )
• T he long journey for new technologies and bus ines s es
• A global update on oxygenate developments
• A look into the future

Drivers : s tranded and as s ociated gas
• Gas Reserves (2005) = 6500T CF
(185T CM); “under-explored”
• R/P ratio: ~70 years (versus oil at ~35)
• About 40% of gas is stranded
í (Russia, Qatar, Alaska, …)
í S olution: convers ion of gas into
trans portable liquids
• Associated gas: re-injected or flared
í ~15bcfd flared

New driver: S ecurity of supply
Indus try moves from GT P to “XTP”
Convers ion T echnologies
Methane
Coal
Petcoke
Biomass
Reforming
Synthesis
Gas
CO + H2
GT L P R OCE S S
FT
Upgrading
GT C or GT F C T E CHNOL OGIE S
Methanol and DME
Gas oline, Hydrogen
Olefins
Ammonia and others
Diesel
Naphtha
S yn-crude
Gas ification/UCG
“Clean Coal T echnologies ”

Driver: value creation
F eeds tock: $0 to 2/MMB T U (remote/flared gas ; coal)
Products: $10/MMBT U
(diesel at $50 oil or methanol at $200/t)
XT P: Benefits from high oil prices
Mitigated by es calating capital cos ts
Coal convers ion more expens ive than gas conversion

BP Context
• Drivers of the E nergy F uture
í Demand growth
í L ocation of demand and res ources
í S ecurity of s upply
í Environmental Impact
• Key T echnologies
í Resource business extensions
í L ow-carbon technologies
í Convers ion technologies
S o: BP S ustainability Report, www.bp.com

Outline
• Drivers for the emerging conversion indus try
• T he s pecial role of oxygenates (methanol and DME )
• T he long journey for new technologies and bus ines s es
• A global update on oxygenate developments
• A look into the future

Why oxygenates ? Why DME ?
• Oxygenates (general)
í Proven production technologies (high efficiency)
í Multiple markets (fuels and chemicals)
í S uperior combus tion properties
í Pos itive environmental impact
• DME (specific)
í L P G blending opportunity
− (WL PG As s ociation endors ed)
í Environmentally benign
í Ultimate dies el fuel

Comparis on GT L and MeOH/DME
GT L -F T
MeOH/DME
T echnology
availability
Is s ue but improving
Global choice
Process steps
3
2/3
E fficiencies
T hermal/carbon
F uel markets
60/77
Conventional
Large
70/85
Conventional
Large

Why oxygenates ? Why DME ? ---continued
• New, large markets
í Methanol in gas oline
í DME in LPG
í New chemistries (eg olefins )
• Divers ity of products and markets
í Beyond GTL-FT and LNG
í Gas R efinery or Polygeneration
• S maller s cale projects
í S maller gas field requirement
− ~150mms cfd; 300mms cfd for GT L-F T
í Less capital, less risk

Outline
• Drivers for the emerging conversion indus try
• T he s pecial role of oxygenates (methanol and DME )
• T he long journey for new technologies and bus ines s es
• A global update on oxygenate developments
• A look into the future

A B rief His tory of DME
1963
Major Activity/E vent
F irs t us e as aeros ol
Companies
Akzo Nobel
1990-94
Jan/Feb
1995
1996-2001
1996-now
2000-4
DME multi-purpos e fuel s trategy development
Dies el fuel demons tration
P res s conference, papers , world tour
IEA DME Annex XIV & XX (workshops & studies)
India DME Project
Multiple commercial projects pursued
Formation of IDA, JDF, KDF, and CDA
Amoco, HT AS , AVL , DT U ,
B P vis it with NE DO, T E PCO,
EPDC and others
TNO and 16 companies;
Amoco and partners
Amoco, Japan DME L td, DME
International, Iran, Chinese
ventures , Methanex,
200+ members
2004-7
F irs t commercial projects !!!
Annual conferences
S handong Jiutai. Luthianhua
Group

Development History of JFE Direct DME Synthesis
89 90 91 92 93
94 95 96
97 98 99 00 01
02 03 04 05 06
Laboratory
Bench
Pilot
Demonstration
scale test
scale test
scale test
test
1kg/day
50kg/day
5t/day
100t/day
Catalyst
Development
Catalyst production Process Development
DME Synthesis Process Development
Syn-gas Process Development

Outline
• Drivers for the emerging conversion indus try
• T he s pecial role of oxygenates (methanol and DME )
• T he long journey for new technologies and bus ines s es
• A global update on oxygenate developments
• A look into the future

Major developments since NGCS 7 in 2004
• Crude oil has jumped to over $60/bbl
í Makes products more valuable
í S ecurity of s upply iss ues are on fore-front
• World scale size of oxygenate plants has doubled (>5000tpd)
í L owers cos t of production
í Produces material quantities
í Methanol dehydration plants : increas ed to >100ktpa (S handong
Juitai Chemical, L uthianhua Group)
• DME/LPG cooking market has been developed in China
í E as y blending/high value
• DME dies el market has been advanced to s erious fleet tes ting
• DME power market potential currently decreased due to lower value
of power versus synthetic liquid fuels

Methanol: relations hip of chemical and fuel value
Wholesale Gasoline & Crude Price vs Methanol Price
3.00
Energy Equivalence and Volumetric Equivalence
119
Wholesale Gasoline Price
($/gallon)
2.60
2.20
1.80
1.40
1.00
Energy E basis eq
Volumetric basis
Volumetric eq
102
85
69
52
35
WTI Crude Price ($/bbl)
0.60
18
0.20
1
100 200 300 400 500 600 700 800
Methanol Price ($/MT)

Atlas Plant inT rinidad
Pioneer methanol plant; Operational since 2004
• 5000tpd (150MMscfd); equivalent to 15,000bpd GT L
• Operated by Methanex, B P is 40% equity partner
• World’s largest single train reformer

L P Gas and DME : S ome characteris tics
Butane
Propane
DME
C 4
H 10
C 3
H 8
C 2
H 6
O
Boiling Point
-2° C
-45°C
-25°C
Kcal/Kg
11800
11900
6900
Kcal/l
6840
5950
5110
Cetane Number
5
55
Octane Number
100
13

Dies el: 2 nd generation vehicles developed
“DME is our preferred long term fuel, and under evaluation.” Volvo Group (2005)
• T es t vehicles in S weden, Japan and
China
• Most technical problems resolved
í L ubricity packages developed
í DME resistant polymers found
• Ultra-low emissions confirmed
• Improved dies el efficiency
demons trated

Methanol/DME projects : trans ition from chemicals to fuels
Trinidad – (2) 5,000 TPD
Atlas
Methanol Holdings
Oman Methanol - 3,000 TPD
Qatar Methanol - 6,750 TPD
Methanex
Egypt DME
Iran Methanol 1- 5
5,000 TPD
Iran DME
2500 TPD
Qatar
DME Int’l Corp.
2,500-4,500 TPD
China Methanol
2020: 60mmtpa
mostly coal based
China DME Plants
2020: 20mmtpa
mostly coal based
Japan DME Ltd
3,000 TPD
Methanex
Chile DME
Heritage plant
Mobil MTG
Methanol
Methanol for Fuel, Power/Olefins
DME

China conversion strategy
•2006 – 2020: $130 billion for mostly coal based conversion projects
•2020: 10% of gasoline, diesel, LPG and olefins supplied through
MeOH, F T , DME and DT O

Methanol/DME in China
S handong Jiutai Chemical industry
1 million T /y - 2009
Xinao Group
400,000 T /y - under construction
Mengda Group
1 million T /y – under planning
L uthianhua Group
200,000 T /y – under planning
China Nat. Coal/S inopec
3,000,000 T /y – 2010
Yigao Chemical Co
20,000 T /yr– Aug 2006 wet commiss.
S hanxi L anhua S ci--
Tech
100,000 T /y – under
construction, 2007
(Jincheng)
L anhu Group
1,000,000 T /Y-under
planning
Thousands
Year MT/yr
2004 40
2005 155
2006 275
2007 935
2008 1555
2009 4155
2010 8355
S handong Jiutai
Chemical Industry
30,000 T /yr 2003
100,000 T /yr 2005
S henhua Ningxia
Coal Industry Group
210,000 T /y -2007
T o 830,000 T /y - 2008
Yankuang Group
200,000 T /y - 2009
Yuannan Jiehua
Chem. Group
150,000 T/y – 2007
Under construction
Hubei Zhongjie Petrochem. Group
100,000 T/y – under const. - 2007
Hubei B iocause P harmaceutical
100,000 T /y – under planning -2007
Memo: This is a work in progress, Ron Sills, Sept. 19, 2006
L uthianhua Group
Inc, S ichuan
10,000 T /y – 2003
110,000 T /y – 2006
Shanghai
Coking/Huayi
Company
5000 T /y – Apr.2006
Xinao Group
10,000 T /y – Jan. 2006
1 MT DME requires 1.4 MT methanol

Walter F lowers Clean E nergy Achievement Award
Dr, T heo H F leis ch
Dr. Yotaro Ohno
Outstanding Achievement Award
F or the Advancement of
DME
as a new and clean
Multi-feedstock & Multipurpose
Fuel
P aris , S eptember 2006

Outline
• Drivers for the emerging conversion indus try
• T he s pecial role of oxygenates (methanol and DME )
• T he long journey for new technologies and bus ines s es
• A global update on oxygenate developments
• A look into the future

Automotive fuel demand s cenario to 2100
Energy Demand x10 18 J
300
Gas
Hydrogen
Gas eous
Fuels
250
Electricity
200
BP
S ynthetic fuels
and biofuels
150
100
50
Diesel / Gasoline
F rom oil
Liquid
Fuels
0
2000 2020 2040 2060 2080 2100
Source: Data IEAsourceWEC; with modification

The future in XTP
• On-going R &D and value engineering
í lower cost processes
í Higher efficiencies
í CO2 management (at leas t from non gas bas ed plants )
• Floating applications
í Marinization of GT P
í Micro-channel technologies (Velocys , CompactGT L)
• New products from s yngas , methanol and DME
í DME to olefins is here

S ummary
• Methanol and DME have entered the fuel market
í E as y marketing through blending with conventional fuels
í Paradigm shift in methanol business
í Critical capacity is built up
í P roduction from coal dominates
• F uture outlook
í Clean diesel business emerges by 2010
í DT O becomes technology of choice
í DME will become versatile chemical building block

Thank you
Corvette

Back-up

T he dangers of technical prediction
• Nuclear-powered vacuum cleaners will probably be a reality in 10 years - Alex L ewyt,
pres ident of vacuum cleaner company L ewyt Corp., 1955
• T here is no reas on anyone would want a computer in their home -
Ken Ols on, pres ident of Digital E quipment Corp. 1977
• Drill for oil? You mean drill into the ground to try and find oil?
You’re crazy. - Drillers who Edwin L. Drake tried to enlist in 1859
• Radio has no future. Heavier-than-air flying machines are impossible. X-rays will
prove to be a hoax - William T homson, Lord Kelvin, 1899

Convers ion T echnologies
Primary E nergy Conversion T echnology Products
Natural
Gas
Reforming
Syngas
Convers ion
Clean F uels
Coal
Gas ification
-FT
-Oxygenates
- Chemicals
Chemicals
Biomass
Power
Generation
Extra
Heavy Oil
E nzymatic/B iological Conversion
R efining Processes
Electricity
Shale Oil
CO 2 Capture
CO 2 for
EOR/Storage

Proces s carbon efficiencies
Benchmark:
LNG and refineries
GT L today
Goal
Methanol/DME today
Goal
Carbon efficiency (%)
85 - 90
75 – 80
~/>85
80 – 83
85 - 90

Impact of high crude and product prices
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
1980
1981
US Energy Costs ($/Million BTU)
1982
1983
USA
Gasoline>Diesel>Natural
gas /L NG>Coal
L iquid fuels >> natural gas
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Bituminous Coal Lignite Coal Natural Gas Domestic Crude
Imported Crude Gasoline Diesel >1%S Resid Fuel Oil

GT P offers large markets for gas
Target Products
Comparison: L NG
S ynthetic “crude”
GT L -F T Dies el
Methanol, chemical
Methanol as /to gas oline
Methanol to DME (L PG)
Methanol to Olefins
Power (methanol, hydrogen)
Ammonia
Product market s ize
MMT P A
150 (actual size)
3800
1100
34
900
215
140
Very large
130

S namprogetti L PG/DME blending diagram
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New DME Production Technology
Two step process (Mega-Methanol+Dehydration)
Licensor: Haldor Topsoe, Lurgi, DPT, Toyo, MGC,etc.
(1)Methanol Synthesis:
2CH 4 +O 2 +H 2 O 4H 2 +2CO+H 2 O 2CH 3 OH
(2)Dehydration of Methanol:
2CH 3 OH
CH 3 OCH 3 +H 2 O
One step process:
Licensor: JFE
2CH 4 +O 2 +CO 2 3H 2 +3CO+H 2 O CH 3 OCH 3 +CO 2

Fundamental Process Flow of XinAo Coal Chemical Project
Coal-based energy
chemical basic
process
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DME Application and Marketing 6WUDWHJ\
DME Plant
Civil
Fuel
Diesel Alternative
Torch Cutting
Power generation, cogeneration,
air conditioner
refrigerant, china etc.
Aerosol

DME Markets : different paces of development
CFC
Replacement
Three Primary Fuel Applications...
1
commercial
LPG
Alternative
DME
2
ready
3
demonstration
Power
Generation
Transportation Fuel

Progress on DME as Diesel fuel at DT U, Denmark
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combustion
chamber
Diesel
combustion
chamber