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Genoil Heavy OIl Executive Summary


The purpose of this document is to introduce Genoil, a Canadian company,  and its proprietary Hydroconversion Upgrader (GHU®). The Genoil Hydroconversion Upgrader (see page one picture of this pilot upgrader in enclosed attachment) is a patented oil upgrading process that economically converts heavy, high-sulfur crude oil into light, low-sulfur oil. This upgrader can process heavy oil and/or refinery residues, converting them into upgraded light crude, suitable for the use in existing refineries.

Genoil’s unique, zero-waste, environment-friendly process can desulfurize heavy, crude oil and with maximized profitability, efficiently convert it to light, sweet, crude oil.

The Genoil patented GHU technology in a single step lightens the oil by adding hydrogen, thus increasing its hydrogen ratio and sweetens the oil by removing its sulfur.  In upgrading to the more valuable sweet, light, crude oil, the Genoil GHU-system will also remove even the metals if found in the crude.

Genoil has developed the most outstanding upgrading technology in the industry.

It has tested its process several oil companies who found it to be the world’s best – demonstrating a 95% conversion rate of heavy crude oil to light crude based on local availability of hydrogen to be extracted from natural gas. All test results will be made available.

The GHU Upgrader combines the proprietary Genoil Hydroconversion Unit and an Integrated Gasification Combined Cycle unit (IGCC), can produce its own hydrogen from the non-converted oil residuals in sufficient amount to support the hydrogenation process and the utilities to run the facility, such as electrical power and steam.  By integrating a gasification process, the overall upgrader becomes a truly re-cycling, self-sufficient, no waste facility that is suitable to be added into a refinery complex or into field operations.

There are competitive upgrading technologies that also add hydrogen, but with much less efficiency. Their conversion rate is much less, as they convert only about 65% of the heavy oil to light oil versus the GHU 95% conversion rate [as based on the existing test results].   In the event local, external hydrogen is not available, Genoil will drop the conversion rate to 85% so as to have sufficient residue for hydrogen extraction for its upgrading.

Genoil’s system for heavy crude with high content of metals will utilize coking which also lightens the oil while removing the metals.  The Genoil upgrader processes the carbon or coke that is removed so that the disadvantages of coking are overcome. The resulting increase in API of the GHU-processed end crude product can be calibrated to the degree desired by the client.

This utilization of the residue hydrogen as the major ingredient in the GHU upgrading process drives the system operating costs below all of our competitors to a very significant degree of savings – 61% compared with conventional competing technologies, as most competitors use expensive natural gas in their conversion operation.  Where natural gas is at a low price, external natural gas can be used to furnish the hydrogen for the upgrader producing a 95% conversion that compares to up to 65% with competitors.

In summary, Genoil addresses the difficulties in handling crudes while achieving the lowest operation cost and the highest conversion rate technology available. The most important quality of the Genoil Hydroconversion Upgrader process is that there is absolutely no waste, as every part of the process is utilized.  This is unique, and this drives down the operating expenses. Both the fixed costs and the operating costs are lower than other major competitors.

The Genoil GHU system fixed plant costs for upgrading crude is estimated at approximately US$ 7,500.00 x the total number of barrels per day that the Genoil GHU upgrading plant would process. As per example: Installing the Genoil GHU upgrading plant where the 400,000/600,000 barrels per day (b/d) of existing Blend heavy or high sulfur crude oil comes into the storage facility nearby – before pumping the GHU upgraded, desulfurized, light crude oil out to the different existing domestic or foreign refineries  – could make good sense by saving on transport costs and refinery modification costs.

Using the above-mentioned formula, the basic Genoil GHU upgrading plant installation costs at or near to the 400,000/600,000 b/d storage facility in Tabasco would be US$ 3 – $ 4.5 Billion (or US$ 7,500 x 400,000-600,000 b/d). The GHU upgrading plant instillation cost is about 20% less than that of competitive systems though the operating costs are about 61% less based on the zero waste concept.

The total additional annual profits available to the client through employment of the Genoil GHU system should be sufficient to pay off the entire capital plant instillation cost within 2-3 years, at most.

Genoil brings to the client the ability to externally fund our upgrading project.

Genoil works with Stone & Webster, a world-class engineering firm and The Shaw Group, Inc., a multi-billion, NYSE, Fortune 500 company.  In addressing the clients requirements, Genoil’s proposed GHU upgrading system will offer a highly profitable, environment-friendly, efficient solution to its needs, one which presently could exert far-reaching, strategic significance towards solving the conflicts of the supply and demand of crude oil all around the world.

The next page demonstrate the growing need for the development of heavy oil reserves to fuel the world economy.  The light oil reserves found in the second column of the chart two indicate world light oil reserves of 400 billion barrels of oil, while the heavy oil reserves in the third column show 900 billion barrels of world reserves.   In the fifth column is shown the 27.5 billion barrel depletion rate for the light oil reserves demonstrating that it cannot last more than twenty years, see bottom of column two, and proving that the demand for heavy oil is bound to increase by leaps and bounds.  Thus, investment by the client in upgraders for heavy oil is a very sound investment for the future to capture more of the world market of oil production.   The estimates on the demand side according to Goldman Sachs for China alone is 45 million barrels a day to cover their anticipated 600 million cars, and the same is anticipated for China of another 45 million barrels of oil a day for their 2050 600 million cars.  And this does not reflect growth of demand in other parts of Asia.  World production of oil today is only about 90 million barrels a day and present light oil reserves can hardly meet present demand of 90 million barrels a day now much less 180 million barrels a day and more in 2050.

We would like to point out the dramatic widening of spreads between heavy oil and its upgraded GHU product since November of last year when spreads grew by 50%.  The tight oil situation of 2008 is back upon us and these spreads should widen from here.  We think in a year or two the spreads will approach an IRR of 100%.