Economics of MEG Production from Carbon Dioxide

Economics of MEG Production from Carbon Dioxide E058210A0

E058210A0 Economics of MEG Production from Carbon Dioxide

Industrial Process Report ABSTRACT This re This repo port rt pr pres esen ents ts th the e ec econ onom omic icss of Mo Mono noet ethy hyle lene ne Gl Glyc ycol ol (M (MEG EG)) pr prod oduc ucti tion on fr from om ca carb rbon on di diox oxid ide e (C (CO2 O2)) us usin ing g an electrochemical process. The process examined is similar to Liquid Light process. In this process, CO2 is electrochemicallyy converted to oxalic acid, which is then hydrogenated to MEG. electrochemicall Thi hiss re repo port rt ex exam amin ines es on onee-ti tim me co cost stss as asssoc ocia iate ted d wi witth the co cons nstr truc ucttio ion n of a Uni nite ted d Sta tate tess-b -bas ased ed pl plan antt and the continuing costs associated associated with the daily operation of such a plant. More specifically, it discusses: discusses: * Capital Investment, broken down by: - Fixed capital required for production production units (ISBL); infrastructure infrastructure (OSBL) and contingency - Working capital capital and costs costs incurred during industrial plant commissioning commissioning and start-up * Production cost, broken down by: - Manufacturing variable costs (raw materials, utilities) - Manufacturing fixed costs (maintenance (maintenance costs, costs, operating charges, plant overhead, local taxes and insurance) - Depreciation and corporate overhead costs * Production cost history (4-year timeframe) * Raw materials consumption, products generation and labor requirements * Process block flow diagram and description of industrial site installations (production units and infrastructure) * Multi-regional fixed capital analysis (United States, China, Germany, Saudi Arabia, Singapore, Japan and Brazil) This report was developed based essentially on the following reference(s): US Patents 20140221684 and 20140206895, both issued to Liquid Light in 2014

Keywords: Ethylene Glycol, Fiber Grade, Hydrogen Hydrogen Bromide, Bromine, 1,2-Ethanediol

TERMS OF USE Data, information, tools, analyses and/or models herein presented are prepared on the basis of publicly available information and non-confidential information disclosed by third parties. Third parties, including, but not limited to technology licensors, trade associations or marketplace participants, may have provided some of the information on which the analyses or data are based. The data, information, tools, analyses and/or models herein presented are developed independently by Intratec and, as such, are the opinion of Intratec and do not represent the point of view of any third parties nor imply in any way that they have been approved or otherwise authorized by third parties that are mentioned in this report. Intratec conducts analyses and prepares reports and tools for readers in conformance with generally accepted professional standards. Although the statements in this report are derived from or based on several sources that Intrat Int ratec ec bel believ ieve e to be rel reliab iable, le, Int Intrat ratec ec doe does s not gua guaran rantee tee the their ir acc accura uracy, cy, rel reliab iabili ility, ty, or qua qualit lity; y; any suc such h information, or resulting analyses, may be incomplete, inaccurate or condensed. All estimates included in this report are subject to change without notice. This report is for informational purposes only and is not intended as any recommendation of investment. Reader agrees it will not, without prior written consent of Intratec, represent, directly or indirectly, that its products have been approved or endorsed by the other parties. In no event shall Intratec, its employees, representatives, resellers or distributors be liable to readers or any other person or entity for any direct, indirect, special, exemplary, punitive, or consequential damages, including lost profits, based on breach of warranty, contract, negligence, strict liability or otherwise, arising from the use of this report, whether or not they or it had any knowledge, actual or constructive, that such damages might be incurred. Reader agrees that Intratec retains all rights, title and interest, including copyright and other proprietary rights, in this report and all material, including but not limited to text, images, and other digital files, provided or made available as part of this report. The reader further agrees to refrain from any general release of the information presented in this report, so as to constitute passage of title into the public domain or otherwise jeopardize common law or statutory copyright.

TABLE OF CONTENTS ABOUT THIS REPORT..... REPORT.................. .......................... .......................... .......................... .......................... ........................... ........................... .......................... .......................... .......................... .......................... .......................... .................5 ....5 Study Objective................... Objective................................ .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ....................... ..........5 5 Report Overview................................ Overview............................................. .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ......................5 .........5 ABOUT ETHYLENE GLYCOL...... GLYCOL................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ...................6 ......6 Description................... Description...... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ........................... ........................... .......................... .......................... .......................... .................6 ....6 Applications................. Applications.... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .................. .....6 6 Fiber Grade Ethylene Glycol Glycol Production Pathways Diagram......... Diagram...................... .......................... .......................... .......................... .......................... .......................... ................... ......7 7 PROCESS OVERVIEW.. OVERVIEW............... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ..................... ........8 8 Product(s) Generated......... Generated....................... ........................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ..................... ........ 8 Process Inputs..................... Inputs.................................. .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ...................... .........8 8 Physico-Chemistry Highlights...... Highlights................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ....................... .......... 9 INDUSTRIAL SITE........ SITE..................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ................... ...... 10 Introduction..................... Introduction........ .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .........................10 ............10 Production Units Description.............. Description........................... .......................... .......................... .......................... .......................... .......................... ........................... ........................... .......................... .......................... ..............11 .11 Site Infrastructure Infrastructure Description.............. Description........................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .........................16 ............16 Key Process Input and Output Figures............. Figures........................... ........................... .......................... .......................... .......................... .......................... .......................... .......................... ........................18 ...........18 Labor Requirements................. Requirements.............................. .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ............... 18 CAPITAL INVESTMEN INVESTMENT............ T......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ...................19 ......19 Fixed Capital............................... Capital............................................ .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ..............20 .20 Working Capital........... Capital........................ .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ................. 25 Additional Capital Requirements........ Requirements..................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ............... 25 Total Capital Capital Investment Investment Summary............ Summary......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .................. ..... 26 PRODUCTION COSTS..... COSTS.................. .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ................27 ...27 Manufacturing Variable Costs............. Costs.......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ..............29 .29 Manufacturing Fixed Costs.................... Costs................................. .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .........................30 ............30 Corporate Overhead......... Overhead...................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ...................... ......... 30 Depreciation................... Depreciation...... .......................... .......................... .......................... .......................... ........................... ........................... .......................... .......................... .......................... .......................... .......................... ......................... ............ 31 Total Production Cost......... Cost...................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ................... ...... 31

Production Cost Cost History............. History.......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ........................ ........... 32 PROCESS ECONOMIC ECONOMICS S SUMMAR SUMMARY............. Y.......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ......................33 .........33 LABOR WAGE RATES & PRICING BASIS....... BASIS.................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ....................35 .......35 REFERENCES............ REFERENCES ......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................37 ..........37 ANALYSIS METHODOLOG METHODOLOGY............ Y......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ........................39 ...........39 Introduction..................... Introduction........ .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .........................39 ............39 Bibliographical Research.............. Research........................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ......................39 .........39 Process Overview......................... Overview...................................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ........................39 ...........39 Examining an Industrial Site............ Site......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .................. ..... 41 Capital Investment Estimating...... Estimating................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ....................42 .......42 Production Cost Estimating............. Estimating.......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ..................47 .....47 Product Value Estimating................... Estimating................................ .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ................49 ...49 Estimates Limitation........ Limitation..................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ...................... ......... 50 ABOUT INTRATEC.. INTRATEC............... .......................... .......................... .......................... ........................... ........................... .......................... .......................... .......................... .......................... .......................... .......................... ........................51 ...........51 Our Business...................... Business................................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... .......................... ...................... .........51 51 Our Reports................... Reports................................ .......................... .......................... .......................... .......................... .......................... ........................... ........................... .......................... .......................... .......................... .......................... ............. 51 APPENDIX 1: FIXED CAPITAL REGIONAL COMPARISO COMPARISON........... N........................ .......................... .......................... .......................... ........................... ........................... ........................ ........... 53 APPENDIX 2: INTRATEC CHEMICA CHEMICAL L PLANT CONSTRUCTIO CONSTRUCTION N INDEX....... INDEX.................... .......................... .......................... .......................... .......................... ....................54 .......54

ABOUT THIS REPORT Study Objective This re This repo port rt pr pres esen ents ts th the e ec econ onom omic icss of Mo Mono noet ethy hyle lene ne Gl Glyc ycol ol (M (MEG EG)) pr prod oduc ucti tion on fr from om ca carb rbon on di diox oxid ide e (C (CO2 O2)) us usin ing g an electrochemical process. process. The process examined is similar to Liquid Light process. The pr The prim imar aryy ob obje ject ctiv ive e of th this is st stud udyy is to ex expl plai ain n th the e co cost st st stru ruct ctur ure e of th the e af afor orem emen enti tion oned ed pr proc oces ess, s, en enco comp mpas assi sing ng capital investment and production cost figures .

The process design and economics in this report are based on an industrial facility with a nominal production capacity of per year, a capacity that is globally competitive. In add additi ition on the economic assessment, developed for the period , assumes the construction of a United States-based industrial facility that includes the infrastructure typically required for such a project. ,

Report Overview Thi hiss re repo port rt is str truc ucttur ured ed in intto ei eigh ghtt mai ain n pa part rtss wh whic ich h fo foll llow ow a lo logi gica call seq eque uenc nce. e. Ea Eac ch of the hese se pa part rtss is de desscr criibe bed d below. By wa wayy of in intr trod odu uct ctio ion, n, th the e fi firs rstt pa part rt – th the e cu curr rren entt ch cha apt pter er – br brie iefl flyy exp xpla lain inss th the e re repo port rt it itse self lf,, it itss str truc ucttur ure e and objjec ob ecti tive ve.. Rea eade ders rs are en enc cou oura rage ged d to spe pend nd a fe few w min inut utes es re read adin ing g th thiis cha hapt pter er,, so as to ma makke the mos ostt of the study. In th the e se seco cond nd pa part rt,, About Ethylene Glycol , th the e re read ader er wi willll le lear arn n th the e ba basi sics cs of Et Ethy hyle lene ne Gl Glyc ycol ol it itse self lf.. Th This is ch chap apte terr al also so covers its applications and major production pathways. The thi hird rd pa part rt,,   Process Overview , pr pres esen ents ts ba basi sic c asp spec ects ts of the pr proc oces esss stu tudi died ed:: pr prod oduc ucts ts ge gene nera rate ted, d, pr proc oces esss inputs, and physico-chemistry highlights. The fo The four urth th pa part rt,, Industrial Site, de desscri ribe bess an in indu dusstr tria iall pl plan antt ba bassed on th the e pr proc oces esss un unde derr ana nallys ysis is,, in te term rmss of the production units and infrastructure required. This technical analysis underlies the entire study. The fi The fift fth h pa part rt,, Capital Investment , pr pres esen ents ts al alll ca capi pita tall co cost stss as asso soci ciat ated ed wi with th th the e pr proc oces esss ex exam amin ined ed,, fr from om de desi sign gn an and d erection of an industrial site to plant startup. the e pr proc oces esss ar are e ex exam amin ined ed in th the e si sixt xth h pa part rt.. On Ongo goin ing g co cost stss re rela late ted d to th the e op oper erat atio ion n of a un unit it Operational Expenses of th based on the pro based proces cesss are stu studie died, d, inc includ luding ing man manufa ufact cturi uring ng fix fixed ed cos costs, ts, ma manufa nufactu cturin ring g var variab iable le cos costs, ts, dep deprec reciat iation ion and corporate overhead. The seventh part, Process Economics Summary , summarizes all economic figures presented throughout the report. Finally, to address any questions or concerns about the methodologies and procedures adopted in the development of this report, the reader is referred to the eighth part, Analysis  Analysis Methodology .

ABOUT ETHYLENE GLYCOL Description Monoet Mono ethy hyle lene ne Gl Glyc ycol ol (M (MEG EG)) is a di diol ol,, a ch chem emic ical al co comp mpou ound nd th that at co cont ntai ains ns tw two o hy hydr drox oxyl yl gr grou oups ps.. ME MEG G is al also so kn know own n as Ethylene Glycol and presents the chemical formula C2H6O2, being the simplest diol. Ethylene Glycol is a colorless, practically odorless, low viscosity, hygroscopic liquid at room temperature. Commercially, Ethylene Glycol is available in three grades: * Fiber Grade: min. min. 99.8% of purity purity * Industrial Grade: min. 99.5% of purity * Antifreeze Grade: min. 98% of purity purity

Applications Ethylene Glycol is a major industrial product and it is widely applied in the production of polye yesster fib fibers and pollye po yeth thyl ylen ene e te tere reph phttha hala late te (P (PE ET) re resi sins ns.. Fo Forr suc uch h ap appl plic icat atio ion, n, Fib iber er Gra rade de Eth thyl ylen ene e Gly lyc col is us used ed,, si sin nce hi high gh purity feedstock is necessary. Ethylene Glycol is also applied as a base compound in antifreeze formulations employed in automobile applications. Other usages of Ethylene Glycol include heat transfer, gas dehydration and solvent applications. applications.

Fiber Grade Ethylene Glycol Production Pathways Diagram Monoethylene Glycol can be manufactured from several raw materials.

Globally, the largest volume of  

Mono Mo noet ethy hyle lene ne Gl Glyc ycol ol is pr prod oduc uced ed fr from om et ethy hyle lene ne vi via a et ethy hyle lene ne ox oxid ide e in inte term rmed edia iate te,, ge gene nera rati ting ng di di-- an and d tr trii-et ethy hyle lene ne glycol as well. The following chart presents different pathways pathways for Fiber Grade Ethylene Glycol Glycol production.

PROCESS OVERVIEW This chapter presents technical aspects of the Monoethylene Glycol (MEG) production from carbon dioxide (CO2) using an electrochemical process. More specifically, the current chapter describes the products generated, the process inputs, and highlights about the physico-chemistry related to this process.

Product(s) Generated The only product of the process is Fiber Grade Ethylene Glycol.

Process Inputs Raw Material(s) * Electricity As well as in other electrochemical processes, electricity is considered one of the main raw materials of the analyzed process. * Carbon Dioxide Carbon dioxide (CO2) is a colorless gas, mainly produced as a by-product of combustion of fossil fuels and fermentation processes. * Hydrogen The hydrogen molecule, H2, is the normal state of pure hydrogen, even though hydrogen can be found in its atomic form under specific conditions. It is a very stable molecule, not usually reactive under normal conditions. Essential Essent ially, ly, mol molecu ecular lar hyd hydrog rogen en is pro produc duced ed ind indust ustria rially lly by thr three ee dif differ ferent ent met method hods: s: hyd hydroc rocarb arbons ons ste steam am reforming, hydrocarbons partial oxidation and water electrolysis. Hydrogen can also be obtained as a by-product recovered in processes such as the manufacture of styrene from ethylbenzene. Utilities The utilities consumed consumed in the process are cooling water and and high pressure steam. The process also requires the consumption of some chemicals necessary for the maintenance of the electrodes and membranes utilized in the electrochemical reaction.

Physico-Chemistry Physico-Chemistry Highlights In this process, MEG is produced from carbon dioxide (CO2) via oxalic acid. First, CO2 is electrochemically reduced into oxalate and bromide is oxidized into bromine (Br2), as indicated in equations (1) and (2). The cath ca thol olyt yte e an and d an anol olyt yte e us used ed in th this is st step ep ar are e te tetr trab abut utyl ylam ammo moni nium um br brom omid ide e (T (TBA BA-B -Br) r) sa salt lt di diss ssol olve ved d in ac acet eton onit itri rile le solvent. Nex ext, t, ox oxal alat ate e is ac acid idiifi fied ed to ox oxal aliic aci cid d us usin ing g hy hydr drog ogen en br brom omid ide e (H (HBr Br)) fo form rmed ed by the re reac acttio ion n of br brom omin ine e wi witth hydr hy drog ogen en (H (H2) 2),, as pr pres esen ente ted d in eq equa uati tion onss (3 (3)) an and d (4 (4). ). The hen, n, ox oxal alic ic ac acid id is est ster erif ifie ied d wi with th met etha hano noll pr prod oduc ucin ing g dimethyl oxalate, which is hydrogenated forming Ethylene Glycol product, as shown in equations (5) and (6). Beside Besi dess Et Ethy hyle lene ne Gl Glyc ycol ol,, so some me im impu puri riti ties es su such ch as me meth thyl yl gl glyc ycol olat ate, e, 1, 1,22-bu buta tane nedi diol ol an and d so some me he heav avyy co comp mpou ound ndss are formed during the hydrogenation reaction.

(1)

2 (CO2) + 2 (TBA+) --> TBA2-oxalate

(2)

2 (TBA-Br) --> --> bro bromine + 2 (TBA+)

(3)) (3

TBA2 TB A2-o -oxa xala late te + 2 (h (hyd ydro roge gen n br brom omid ide) e) --> oxalic oxalic ac acid id + 2 (T (TBA BA-B -Br) r)

(4)) (4

brom br omiine + H2 --> --> 2 (h (hyd ydro roge gen n br brom omid ide) e)

(5)) (5

oxal ox alic ic ac acid id + 2 (m (met etha hano nol) l) ---> > di dime meth thyl yl ox oxal alat ate e + 2 (H (H2O 2O))

(6)) (6

dim di met ethy hyll ox oxal ala ate + H2 ---> > MEG + 2 (m (met etha hano nol) l)

INDUSTRIAL SITE This chapter presents all installations that comprise an industrial site for Monoethylene Glycol (MEG) production from carbon dioxide dioxide (CO2) using an elect electroche rochemica micall process. The process examined examined is simi similar lar to Liqui Liquid d Light process. The present study was mainly based on: US Patents 20140221684 and 20140206895, both issued to Liquid Light in 2014

Introduction The inf inform ormati ation on pre presen sented ted in thi thiss cha chapte pterr is bas based ed on com common monly ly uti utiliz lized ed con concep cepts ts rel relate ated d to the typ type e of  installations found within a typical industrial industrial site. These concepts include: * Production units. Also known as inside battery units, units, these installations installations comprise all all main processing processing units of  the site necessary to the manufacturing of products. These units are located Inside the Battery Limits (ISBL). * Infrastructure. Also known as outside battery battery units or offsite offsite facilities, these installations installations do not directly directly enter into the manufacturing of a product. product. They are support buildings, auxiliary units units used for providing and distributing utilities and storage facilities. These units are located Outside the Battery Limits (OSBL). (OSBL). Production Units

Production units form the core of an industrial site. site. Comprising the site’s battery limits limits (ISBL), such units may be numerous, numer ous, complex complex and invol involve ve several pieces of equipment. equipment. In this context, the most didactic didactic approach to presenting all production units of a site is through the use of a block flow diagram. Visual information is, in fact, the clearest way to present a chemical process and is least likely to be misinterpreted. In general, these diagrams consist of a series of blocks, representing unit operations or groups of equipment, connected by input and output streams. In fact, there are no strict standards according to which such diagrams diagrams are made. To facilitate the presentation of the production units under analysis, Intratec developed a block flow diagram according to the following standards: * Raw materials consumed consumed are represented by blocks in in gray * Main process areas are represented by blocks in light blue blue * Products and by-products generated generated are represented by blocks in dark blue * Main process streams streams are represented by lines connecting connecting the blocks

The figure below illustrates the type of information presented in the block flow diagram, according to such standards.

The process areas areas represented represented (in light blue) correspond correspond to what is define defined d as a “functional “functional unit”. Basic Basically, ally, a “functional unit” is a significant step in the production process in which a particular physico-chemical operation (i. e., distillation, reaction, evaporation) evaporation) occurs. According to this definition, a given functional functional unit is not associated with a single piece of equipment, but rather with a group of equipment and ancillaries required to perform a particular operation. Blocks representing process areas also show key technical parameters related to these areas, including: highest operating temperature and pressure, representative material of construction, and other parameters. As to the process streams represented, there is an indication of their phase when leaving/entering leaving/entering a block. Also, such streams provide a global material balance of the process, normalized by the mass flow rate of the product considered cons idered in the analysis. analysis. In other words, the number near each stream represents represents the ratio between its mass flow rate and the output flow rate of the product under analysis. It is worth noting that areas having no significant impact on the economics of the process may not be included in the diagram. Similarly, some streams may may also not be represented. Nevertheless, the diagram presented is still extremely useful in providing readers with an overall understanding and “feeling” of the process studied. For more information on how the process examined was divided into functional units, the reader is referred to the section on Production Units in the “Analysis Methodology” chapter. Site Infrastructure

Infrastructure requirements comprise the offsite facilities, or the units located Outside the Battery Limits (OSBL). The OSBL usually have a significant impact on the capital cost estimates associated with any new industry venture. This impact is largely dictated dictated by, among other things: specific conditions conditions where the industrial site will will be erected; the level of integration the new site will have with nearby facilities or industrial complexes; and assurance and promptness in the supply of chemicals.

Production Units Description The production units related to the process under analysis are described based on the above explanation. On the next page, a block flow diagram illustrates the production units examined.

The process under analysis analysis is briefly described described below. For clarity, clarity, the descr descriptio iption n was divide divided d according to the process areas indicated in the diagram. It is important to mention that some aspects of the process examined are either industrial secrets, not published in patents, or have changed and were not reported reported in the literature at the time time this report was developed. That being the case, the design herein presented is partially based on Intratec process synthesis knowledge such that there may be some differences between the industrial process actually employed and the process described in this study.. Never study Neverthele theless, ss, the desig design n prese presented nted suitably suitably repres represents ents the technology examined examined in suffi sufficient cient detail to estimate the economics of the technology within the degree of accuracy expected from conceptual evaluations.

Site Infrastructure Description The infrastructure requirements of the industrial site examined are def ined based on the following assumptions:

The figure below illustrates the configuration of the industrial complex that encompasses the industrial process examined. The offsite facilities considered considered in the analysis (i.e., areas 90, 91 and 92) were defined according according to the aforementioned assumptions.

Fina Fi nall lly, y, of offs fsit ite e fa faci cili liti ties es we were re di divi vide ded d in into to ar area eas s ac acco cord rdin ing g to th thei eirr ty type pe/f /fun unct ctio ion. n. Th Thes ese e ar area eas s ar are e li list sted ed be belo low, w, as well as the major equipment, systems and facilities included in each of them.

Key Process Input and Output Figures In accordance with the block flow diagram and the global material balance previously presented, the following tables table s show key proces process s indicators indicators of the technology technology examined in this report. These indicators indicators reflect reflect the raw material consumption and the products generation rates per metric ton of Fiber Grade Ethylene Glycol produced. Raw Materials Consumption RAW MATERIAL

CONSUMPTION PER METRIC TON OF PRODUCT

UNIT

It should be noted that estimation of raw material requirements in the conceptual design phase is usually reasonably reaso nably accurate accurate but tends to be somew somewhat hat understated understated compared compared to real opera operations tions.. Loss Losses es from vesse vessell vents, unscheduled equipment, inerting systems, physical property inaccuracies, startup, shutdown and other process operations not typically addressed in this phase may increase raw materials consumption.

Labor Requirements The following table presents the number of operators per shift required to run the equipment of the process examined, as well as the personnel per shift required to directly supervise the operating labor. Labor Requirements PERSONNEL REQUIRED

Operators Supervisors

WORKERS PER SHIFT

CAPITAL INVESTMENT This ch This chap apte terr de deta taililss al alll ca capi pita tall co cost stss as asso soci ciat ated ed wi with th Mo Mono noet ethy hyle lene ne Gl Glyc ycol ol (M (MEG EG)) pr prod oduc ucti tion on fro from m ca carb rbon on di diox oxid ide e (CO2) using an electrochemical process, from design and erection of an industrial site to plant startup. The costs that comprise the total capital investment are grouped under three main headings: * Total fixed capital. capital. Investment necessary to the erection erection of the industrial plant itself  * Working capital. capital. Funds required for getting getting the plant into into operation, and meeting meeting subsequent obligations obligations * Additional capital capital requirements. Costs incurred during during industrial plant commissioning and start-up The graph below illustrates the composition of total capital investment.

The estimates included in this chapter are based on the following assumptions: * Plant nominal capacity: * Industrial plant location: United States * Construction on a cleared, level site * Period of analysis: * IC Index at the the period of analysis: analysis:

of Fiber Grade Ethylene Glycol per year

The IC In The Inde dexx st stan ands ds fo forr In Intr trat atec ec Ch Chem emic ical al Pl Plan antt Co Cons nstr truc ucti tion on In Inde dex, x, an in indi dica cato torr pu publ blis ishe hed d mo mont nthl hlyy by In Intr trat atec ec to scale capital costs from one time period to another. This index reconciles the price trends of fundamental comp co mpon onen ents ts of ch chem emic ical al pl plan antt co cons nstr truc ucti tion on su such ch as la labo bor, r, ma mate teri rial al an and d en ener ergy gy,, pr prov ovid idin ing g me mean anin ingf gful ul hi hist stor oric ical al and fo fore rec cas astt da datta fo forr ou ourr re rea ade ders rs an and d cli lien entts. Fo Forr mor ore e inf nfo orm rma ati tion on abo bout ut th the e IC Ind ndex ex,, the re rea ade derr is re refe ferr rred ed to Appendix II – Intratec Chemical Plant Construction Index. In th the e ne next xt pa page gess ca capi pita tall co cost stss ar are e de desc scri ribe bed d in fu furt rthe herr de deta tailil,, an and d es esti tima mate tess ca calc lcul ulat ated ed ar are e pr pres esen ente ted. d. Fo Forr mo more re info in form rmat atio ion n on th the e me meth thod odss em empl ploy oyed ed fo forr es esti tima mati ting ng th the e co cost stss pr pres esen ente ted, d, th the e re read ader er is re refe ferr rred ed to th the e “A “Ana naly lysi siss Methodology” chapter.

Fixed Capital Fixed Fixe d ca capi pita tall is re rela late ted d to th the e er erec ecti tion on of th the e in indu dust stri rial al si site te it itse self lf.. Al Also so re refe ferr rred ed as “c “cap apit ital al ex expe pend ndit itur ures es”” (C (CAP APEX EX), ), fixed capital constitutes the fraction of the capital investment which is depreciable. It includes Total Process Capital (TPC) and Project Contingency, as described below. Totall Pr Tota Proc oces esss Ca Capi pita tall en enco comp mpas asse sess th the e in inve vest stme ment nt re requ quir ired ed fo forr th the e co cons nstr truc ucti tion on of of:: (1 (1)) pr proc oces esss ar area eass pr prev evio ious usly ly pres pr esen ente ted d in th the e "P "Pro roce cess ss Bl Bloc ockk Fl Flow ow Di Diag agra ram" m" (I (ISB SBL L in inve vest stme ment nt); ); (2 (2)) th the e si site te in infr fras astr truc uctu ture re (O (OSB SBL L In Inve vest stme ment nt), ), also als o pre previo viousl uslyy dis discus cussed sed;; and (3) a pro proces cesss con contin tingen gency cy ref reflec lectin ting g tec techni hnical cal unc uncert ertain aintie tiess ass associ ociate ated d wit with h lim limite ited d desi de sign gn da data ta,, wh whic ich h ma mayy in incu curr ca capi pita tall co cost st in incr crea ease sess (e (e.g .g.,., ad addi diti tion onal al eq equi uipm pmen entt no nott in incl clud uded ed in th the e pr prel elim imin inar aryy design). Pro roje jec ct Con onttin inge genc ncy, y, on the ot othe herr ha hand nd,, is inc nclu lude ded d to cov over er th the e cos ostts wh whiich may ar ariise as the pr proj ojec ectt ev evol olve ves. s. Such Su ch co cost stss in incl clud ude: e: pr proj ojec ectt er erro rors rs or in inco comp mple lete te sp spec ecif ific icat atio ions ns,, la labo borr co cost stss ch chan ange ges, s, st stri rike kes, s, pr prob oble lems ms ca caus used ed by weather; inflation, etc. The table below summarizes all items that make up the fixed capital cost: Fixed Capital Summary (USD Million) LOWER LIMIT

COMPONENT

UPPER LI LIMIT

ESTIMATED

%

Inside battery limits (ISBL) Process contingency (

of ISBL)

Outside battery limits (OSBL) Total process capital (TPC) Project contingency (

of TPC)

TOTAL FIXED CAPITAL The ab abov ove e tab able le als lso o pr pres esen entts the up uppe perr an and d low ower er li lim mit itss fo forr the fi fixe xed d cap apit ital al fi figu gure res, s, acc ccor ordi ding ng to th the e ac acc cur urac acyy rang ra nge e ex expe pect cted ed fr from om co conc ncep eptu tual al ev eval alua uati tion onss pr pres esen ente ted d in th this is re repo port rt.. Th The e pr pres esen ente ted d ra rang nge e is as asso soci ciat ated ed wi with th a confidence level of 90%. In other words, a 90% confidence level means that, for every 100 times the project is actually implemented, the fixed capital required will fall into the range predicted with our estimates 90 times.

For a be For bett tter er un unde ders rsta tand ndin ing g of th the e co cost stss in invo volv lved ed in a ne new w in indu dust stri rial al ve vent ntur ure, e, it is a co comm mmon on es esti tima mati tion on pr prac acti tice ce to divide the fixed capital into direct process costs, indirect process costs and project contingency. contingency. Fundam Fund amen enta talllly, y, th the e di dire rect ct pr proc oces esss co cost stss ar are e al alll ma mate teri rial al an and d la labo borr co cost stss as asso soci ciat ated ed wi with th th the e pr proc oces esss eq equi uipm pmen entt (from (fr om pur purcha chase se to ins instal tallat lation ion,, inc includ luding ing the req requir uired ed ins instal tallat lation ion bul bulks) ks).. In sho short, rt, the tot total al dir direct ect cos costt rep repres resent entss the total installed equipment cost. The in The indi dire rect ct co cost stss ac acco coun untt fo forr fi fiel eld d in indi dire rect cts, s, en engi gine neer erin ing g co cost sts, s, ov over erhe head ad,, an and d co cont ntra ract ct fe fees es.. In Indi dire rect ct co cost stss ar are e defi de fine ned d by th the e Am Amer eric ican an As Asso soci ciat atio ion n of Co Cost st En Engi gine neer erss (A (AAC ACE) E) St Stan anda dard rd Te Term rmin inol olog ogyy as th thos ose e "c "cos osts ts wh whic ich h do not become a final part of the installation but which are required for the orderly completion of the installation." Accord Acco rdin ingl gly, y, th the e ch char artt be belo low w pr pres esen ents ts th the e fi fixe xed d ca capi pita tall br brok oken en do down wn by di dire rect ct pr proc oces esss co cost sts, s, in indi dire rect ct co cost stss an and d project contingency. Fixed Capital Composition

The two charts in the next page detail the composition of direct field costs and indirect costs, respectively.

Direct Costs Composition

Indirect Costs Composition

The next table presents the detailed fixed capital breakdown, based on the direct and indirect costs approach. Fixed Capital Breakdown COMPONENT

MM USD

% OF BEQ

% OF TOTAL

Bare equipment (BEQ) Equipment setting Piping Civil Steel Instrumentation & control Electrical Insulation Painting Direct costs Engineering & procurement Construction material & indirects General & administrative overheads Contract fee Indirect costs Total process capital (TPC) Project contingency (

of TPC)

TOTAL FIXED CAPITAL

It is wo wort rth h no noti ting ng th that at th the e pr proc oces esss co cont ntin inge genc ncyy pr pres esen ente ted d in th the e Ta Tabl ble e "F "Fix ixed ed Ca Capi pita tall Su Summ mmar ary" y" is in incl clud uded ed wi with thin in each component listed in the table above. For fu For furt rthe herr in info form rmat atio ion n ab abou outt th the e co comp mpon onen ents ts in incl clud uded ed in th the e fi fixe xed d ca capi pita tall br brea eakd kdow own, n, re read ader er is re refe ferr rred ed to th the e chapter “Analysis Methodology”.

Of co cour urse se,, fi fixe xed d ca capi pita tall is gr grea eatl tlyy im impa pact cted ed by th the e pl plan antt ca capa paci city ty as assu sume med. d. In th this is co cont ntex ext, t, a pl plan antt sc scal ale e an anal alys ysis is wass al wa alsso pe perf rfor orme med d in or orde derr to de depi pic ct ho how w the tot ota al cap apiita tall re requ quir ired ed va vari ries es ac acc cor ordi ding ng to the pl pla ant capa pac cit ity. y. The analysis results are presented in the next figure. Fixes Capital as Function of Plant Capacity (USD Million)

Fin inal ally ly,, fr from om th the e ana naly lyssis pr prev evio ious usly ly pr pres esen entted ed,, the fi fixe xed d cap apiita tall pe perr met etri ric c ton pr prod oduc uced ed wa wass calc lcul ulat ated ed.. Th This is para pa rame mete terr al allo lows ws re read ader erss to co comp mpar are e pr proc oces esse sess in re rega gard rdss to ho how w ca capi pita tall in inte tens nsiv ive e th they ey ar are. e. Al Also so,, it ca can n be us used ed to me meas asur ure e th the e im impa pact ct of pl plan antt sc scal ale e on th the e to tota tall fi fixe xed d ca capi pita tall an and d de dete term rmin ine e a mi mini nimu mum m pl plan antt ca capa paci city ty th that at wi willll be economically feasible. Fixed Capital per Unit of Plant Capacity (USD / Metric Ton)

Working Capital For the purposes of this study, working capital is defined as the funds, in addition to the fixed capital, that a com ompa pany ny mu musst con ontr triibu bute te to a pro rojjec ectt. Tho hose se fu fund ndss mu musst be ade dequ quat ate e to bri ring ngin ing g the pla lant nt in into to op oper erat atio ion n and meeting subsequent obligations. Workin Work ing g ca capi pita tall in incl clud udes es:: ra raw w ma mate teri rial alss in inve vent ntor ory, y, pr prod oduc ucts ts in inve vent ntor ory, y, in in-p -pro roce cess ss in inve vent ntor ory, y, su supp pplilies es an and d st stor ores es,, accounts receivable and accounts payable. The ta The tabl ble e be belo low w pr pres esen ents ts a br brea eakd kdow own n of wo work rkin ing g ca capi pita tal. l. Un Unle less ss ot othe herw rwis ise e in indi dica cate ted, d, al alll fi figu gure ress pr pres esen ente ted d ar are e in US million dollars (MM USD). Working Capital Breakdown (USD Million) COMPONENT

ASSUMPTION

Accounts receivable

day(s) of total production cost

Accounts payable

day(s) of operating operating cash cost + corporate corporate overhead

MM USD

%

Net accounts receivable Raw materials inventory

day(s) of raw materials costs

Products inventory

day(s) of total production cost

In-process inventory

day(s) of operating operating cash cost + corporate corporate overhead

Supplies and stores

of annual operating labor and maintenance costs

Cash on hand

day(s) of operating operating cash cost + corporate corporate overhead

TOTAL WORKING CAPITAL

Additional Capital Requirements Severa Seve rall ex expe pens nses es ar are e in incu curr rred ed du duri ring ng co comm mmis issi sion onin ing g an and d st star artt-up up of an in indu dust stri rial al si site te.. Th Thes ese e ex expe pens nses es ma mayy be related to: * Employee training * Initial commercialization commercialization costs * Manufacturing inefficiencies and unscheduled unscheduled plant modifications (equipment, piping, instruments, instruments, etc.) * Initial catalyst catalyst load in reactors reactors * Purchase of technology through paid-up paid-up royalties or licenses * Land acquisition acquisition and site site development Such ad Such addi diti tion onal al co cost stss ar are e no nott ad addr dres esse sed d in mo most st st stud udie ies, s, bu butt ca can n be beco come me a si sign gnif ific ican antt ex expe pend ndit itur ure. e. In th the e cu curr rren entt analysis, these costs are represented by additional capital requirements. The ta The tabl ble e be belo low w pr pres esen ents ts a br brea eakd kdow own n of ad addi diti tion onal al ca capi pita tall in inve vest stme ment nt.. Un Unle less ss ot othe herw rwis ise e in indi dica cate ted, d, al alll fi figu gure ress presented are in US million dollars (MM USD).

Additional Capital Requirements Breakdown (USD Million) COMPONENT

ASSUMPTION

Operator training

day(s) of all labor costs

Commercialization Commercializati on costs

of annual operating cash cost + corporate overhead

MM USD

%

Initial catalyst load Start-up innefficiencies

of annual operating cash cost + corporate overhead

Unscheduled plant modifications

of fixed capital

Start-up costs Land & site development

of fixed capital

Prepaid royalties

of fixed capital

TOTAL ADDITIONAL CAPITAL

Total Capital Investment Summary The table below summarizes all major capital costs discussed thus far, from the design and erection of an industrial site to plant startup. Capital Investment Summary COMPONENT

MM USD

%

Fixed capital Working capital Additional capital requirements TOTAL CAPITAL INVESTMENT

For mor ore e in info form rma ati tion on abo bout ut ho how w th the e cap apiita tall cos osts ts wer ere e es esti tima mate ted, d, the re rea ade derr is re refe ferr rred ed to sec ecti tion on on Capital  Investment Estimating in the “Analysis Methodology” chapter.

PRODUCTION COSTS This ch This chap apte terr de deta taililss al alll on ongo goin ing g co cost stss re requ quir ired ed fo forr Mon onoe oeth thyl ylen ene e Gl Glyc ycol ol (M (MEG EG)) pr prod oduc ucti tion on fr from om ca carb rbon on di diox oxid ide e (CO2 (C O2)) us usin ing g an el elec ectr troc oche hemi mica call pr proc oces ess. s. Al Also so re refe ferr rred ed as op oper erat atio iona nall ex expe pend ndit itur ures es (O (OPE PEX) X),, th thes ese e en enco comp mpas asss cos osts ts as asssoc ocia iate ted d wi with th the pl pla ant op oper era ati tion on,, sel elllin ing g of pr prod oduc ucts ts,, and con ontr triibu buti tion on to cor orpo pora ratte fu func ncti tion onss (e (e.g .g.., adm dmiini nist stra rattio ion n an and d R& R&D D acti tivi viti ties es)). In the cur urre rent nt ana nallys ysis is,, the pr prod oduc ucti tion on cos ostt wa wass gr grou oupe ped d un unde derr fo four ur main headings: * Ma Manu nufa fact ctur urin ing g fi fixe xed d co cost sts. s. Op Oper erat atin ing g co cost stss di dire rect ctly ly ti tied ed to th the e pl plan antt ca capa paci city ty,, bu butt wh whic ich h do no nott ch chan ange ge wi with th th the e production level (i.e., operating labor, supervision labor, maintenance costs, plant overhead) * Ma Manu nufa fact ctur urin ing g va vari riab able le co cost sts. s. Co Cost stss di dire rect ctly ly pr prop opor orti tion onal al to th the e ac actu tual al pr prod oduc ucti tion on of th the e in indu dust stri rial al si site te (i (i.e .e.. ra raw w materials and utilities consumption) * Depreciation. Refers to the decrease decrease in value of industrial assets assets with passage of time * Cor orpo pora ratte ov over erhe hea ad. Cor orpo pora rate te ex expe pens nses es re rela latted to ad adm min iniist stra rattio ion, n, re ressea earc rch h and de deve velo lopm pmen entt, ma mark rket et and distribution It sh shou ould ld be ke kept pt in mi mind nd th that at th the e su sum m of ma manu nufa fact ctur urin ing g fi fixe xed d co cost stss an and d ma manu nufa fact ctur urin ing g va vari riab able le co cost stss is re refe ferr rred ed as “cash cost”. The sum of cash cost with depreciation and corporate overhead, in turn, is referred to as “production cost”. The graph below illustrates the composition of production cost.

The estimates included in this chapter are based on the following assumptions: * Industrial plant location: United States * Period of analysis: * Plant nominal capacity:

of Fiber Grade Ethylene Glycol per year

* Plant operating rate: rate: The plant operating rate assumed le l eads to an annual production of . It is important to to men enttio ion n tha hatt thi hiss ra ratte doe oess no nott re repr pres esen entt any tec echn hnol olog ogyy lim imiita tati tion on;; ra rath ther er,, it is an as assu sump mpttio ion n ba bassed on us usua uall industrial operating rates. In th the e ne next xt pa page gess th the e pr prod oduc ucti tion on co cost st it item emss ar are e de desc scri ribe bed d in fu furt rthe herr de deta tailil,, an and d es esti tima mate tess ca calc lcul ulat ated ed ar are e pr pres esen ente ted. d. For mor ore e in info form rmat atio ion n on the met etho hods ds em empl ploy oyed ed to es esti tim mat ate e th the e cos ostts pr pres ese ent nted ed,, th the e re read ader er is re refe ferr rred ed to the “Analysis Methodology” chapter.

Manufacturing Variable Costs Variab Vari able le co cost stss ch chan ange ge in di dire rect ct pr prop opor orti tion on to ch chan ange gess in th the e pr prod oduc ucti tion on le leve vel. l. Su Such ch co cost stss in incl clud ude e ra raw w ma mate teri rial alss and utilities (i.e., steam, electricity, fuel, and refrigeration). The next table displays the manufacturing variable costs. Manufacturing Variable Costs Breakdown COMPONENT

QUANTITY PER MT

PRICE

USD/MT MM USD/YR

%

Net raw materials cost Net utilities cost MANUFACTURING VARIABLE COSTS

All va All vari riab able le co cost stss pr pres esen ente ted d in th this is ta tabl ble e ar are e de deri rive ved d fr from om un unit it co cons nsum umpt ptio ions ns,, de deta taililed ed in th the e pr prev evio ious us ch chap apte ter, r, an and d pricing information.

Manufacturing Fixed Costs Manufa Manu fact ctur urin ing g fi fixe xed d co cost stss ar are e th the e co cost stss pr prim imar arililyy re rela late ted d to th the e pr prod oduc ucti tion on ca capa paci city ty of an in indu dust stri rial al si site te,, bu butt wh whic ich h do no nott ch chan ange ge wi with th pr prod oduc ucti tion on vo volu lume me.. Su Such ch co cost stss in incl clud ude e ma main inte tena nanc nce e co cost sts, s, op oper erat atin ing g ch char arge ges, s, pl plan antt ov over erhe head ad,, local taxes and insurance. The table below presents a breakdown of manufacturing fixed costs. Manufacturing Fixed Costs Breakdown COMPONENT

ASSUMPTION

Operating labor

  operators/shift operators/shift ;

Supervision

  supervisors/shift supervisors/shift ;

USD/MT

MM USD/YR

%

USD/oper./h USD/sup./h

Maintenance cost

of fixed capital

Operating charges

of operating labor costs

Plant overhead

of operating labor and maintenance costs

Property taxes and insurance

of fixed capital

MANUFACTURING FIXED COSTS

Corporate Overhead Corpor Corp orat ate e ov over erhe head ad is as asso soci ciat ated ed wi with th co cost stss in incu curr rred ed by a co comp mpan any’ y’ss he head ad of offi fice ce su such ch as ge gene nera rall ad admi mini nist stra rati tive ve costs, research and development activities, market and product distribution. The table below presents a breakdown of corporate overhead costs. Corporate Overhead Costs Breakdown COMPONENT

ASSUMPTION

Administration costs

of operating labor and maintenance costs

Market & distribution

of operating cash costs at full capacity

Research & development

of operating cash costs at full capacity

CORPORATE OVERHEAD

USD/MT

MM USD/YR

%

Depreciation Deprec Depr ecia iati tion on re refe fers rs to th the e de decr crea ease se in va valu lue e of in indu dust stri rial al as asse sets ts wi with th pa pass ssag age e of ti time me,, pr prim imar arililyy be beca caus use e of we wear ar and tea ear. r. Whi hile le no nott a tru rue e ma manu nufa fac ctur urin ing g co cosst, de depr prec ecia iati tion on is con onsi side dere red d to be a ma manu nufa fac ctur urin ing g ex expe pens nse e fo forr accounting purposes – it allows the recovery of the cost of an asset over a time period. In this study, the depreciation is USD

per metric ton of Fiber Grade Ethylene Glycol produced.

This calculation was based on the straight-line method and a project economic life of 10 years.

Total Production Cost The table below summarizes all production cost components discussed thus far. Production Cost Summary COMPONENT

USD/MT

MM USD/YR

%

Manufacturing variable costs Manufacturing fixed costs Operating cash costs Corporate overhead Depreciation TOTAL PRODUCTION COST For mo more re in info form rmat atio ion n ab abou outt ho how w th the e pr prod oduc ucttio ion n cos ostt co com mpo pone nent ntss we were re es esti tima mate ted, d, the re rea ade derr is re refe ferr rred ed to the section on Production Cost Estimating in the “Analysis Methodology” chapter.

Production Cost History In or orde derr to pr prov ovid ide e a mo more re co cons nsis iste tent nt vi view ew of pr prod oduc ucti tion on ec econ onom omic ics, s, th this is an anal alys ysis is al also so co comp mpar ares es th the e wa wayy in wh whic ich h prod pr oduc ucttio ion n cos ostt ha hass ev evol olve ved d ov over er tim ime. e. In thi hiss con onttex ext, t, pr prod oduc ucttio ion n cos ostt wa wass re rec cal alc cul ula ate ted d fo forr th the e las astt 4 ye yea ars rs,, on quarterly basis. The production cost historical series is presented in the figure below. Production Cost History (USD/metric ton)

PROCESS ECONOMICS SUMMARY Hereto Here tofo fore re,, th the e ca capi pita tall co cost st an and d pr prod oduc ucti tion on co cost st re rela late ted d to th the e pr proc oces esss ex exam amin ined ed we were re de desc scri ribe bed. d. Th This is ch chap apte terr prov pr ovid ides es a sum umma mary ry of al alll cap apiita tall and pr prod oduc ucttio ion n co cossts re rellat ated ed to the pr proc oces esss de desc scri ribe bed d so fa far. r. Als lso o, in or orde derr to prov pr ovid ide e a mor ore e con onssis istten entt ec econ onom omic ic ana nallys ysis is of th the e pr proc oces esss ex exa ami mine ned, d, all su suc ch co cossts ar are e com ombi bine ned d in a si sing nglle item: “Product Value”. “Produ “Pro duc ct va valu lue” e” is a te term rm co com mmon only ly us used ed wh wher erei ein n al alll cos osts ts ass ssoc ociiat ated ed wi with th th the e man anuf ufac acttur ure e of a pro rod duc uctt are comb co mbin ined ed.. Mo More re sp spec ecif ific ical ally ly,, it in incl clud udes es th the e pr prod oduc ucti tion on co cost st (m (man anuf ufac actu turi ring ng va vari riab able le co cost sts, s, ma manu nufa fact ctur urin ing g fi fixe xed d costs, corporate overhead costs and depreciation), as well as an expected return on capital employed (ROCE). Product value should not be confu fussed with product price. While product value, as previously mentioned, is calc ca lcul ulat ated ed ba base sed d on th the e co cost stss as asso soci ciat ated ed wi with th th the e ma manu nufa fact ctur ure e of a pr prod oduc uct, t, pr prod oduc uctt pr pric ice e is th the e ac actu tual al va valu lue e as seen in the market. The graph below illustrates the composition of the product value.

The table on the next page condenses the analysis developed in this report.

Economics of MEG Production from Carbon Dioxide - Datasheet BASIS: PLANT CAPACITY & OPERATION

CAP APIT ITAL AL IN INVE VEST STME MEN NT SU SUMM MMA ARY

Nominal capacity

Fixed capital

Operating rate

Working capital

Annual production

Additional capital

MM US USD D

TOTAL CAPITAL INVESTMENT DESCRIPTION

QUANTITY PER MT

PRICE

Net raw materials cost Net utilities cost MANUFACTURING VARIABLE COSTS Operating labor

oper./shift

USD/oper./h

Supervision

sup./shift

USD/sup./h

Maintenance cost

of fixed capital

Operating charges

of operating labor costs

Plant overhead

operating labor and maintenance costs

Prop. taxes and insur.

of fixed capital

MANUFACTURING FIXED COSTS OPERATING CASH COST Administration costs of operating labor and maintenance costs Marketing & distribution of operating cash costs at full capacity Research & development

of operating cash costs at full capacity

CORPORATE OVERHEAD Depreciation TOTAL PRODUCTION COST ROCE

of total capital investment PRODUCT VALUE

USD/MT

MM USD/YR

%

LABOR WAGE RATES & PRICING BASIS This chapter presents the labor wage rates, as well as raw materials and products prices used in the economic analysis for the current report. Labor Wage Rates (USD/hour) PERIOD

OPERATOR

SUPERVISOR

Pricing Basis PERIOD

REFERENCES

ANALYSIS METHODOLOGY Introduction Intratec distilled its expertise, gained from more than a decade of supporting companies worldwide in the analysis of chemical markets and process economics, and developed a consistent report development methodology. The Intra Intratec tec Indus Industrial trial Process meth methodolog odologyy ensur ensures es a holis holistic, tic, coherent and consi consistent stent techno-economi techno-economic c evaluation, guiding the development of a report that allows readers to fully understand a specific chemical process technology. In addition to being based on a common methodology, all Intratec Industrial Process reports have a common structure, struc ture, i.e., indexes, indexes, tables and charts share similar standards standards.. This ensures that Intratec’ Intratec’ss readers know upfront what they will get and, more than that, will be able to compare technologies addressed in different reports. Our methodology is continuously tested and proven by the many chemical and oil corporations, R&D centers, EPC companies, financial institutions and government agencies that rely on our reports. The methodology used in the development of Industrial Processes Economics reports is illustrated in the diagram presented on the next page.

Bibliographical Bibliographical Research The report is based on a comprehensive bibliographical research, entirely focused on the industrial process to be examined. Our research encompasses patents, patents, encyclopedias, text books, technical technical papers and non-confidential information disclosed by licensors, duly reviewed by the Intratec team. The main goal of this research is to provide a solid understanding of the process examined, which in fact underlies the entire entire stu study. dy. Dur During ing thi thiss res resear earch, ch, Intratec Intratec team ide identi ntifie fiess the maturity maturity of the pro proces cesss und under er ana analys lysis. is. Basically, established processes are mature industrial processes, i.e., several plants employing these processes have been constructed worldwide, while new industrial processes are those that have only been employed in a few plantss constructed plant constructed around the world world.. Final Finally, ly, early-stage early-stage industrial industrial processes processes are the processes processes still under development; currently, either no plants have employed such technologies or the designs of the processes themselves have yet to be completed.

Process Overview The Intratec team’s first goal is to understand the chemical, biological and/or physical transformations occurring in the target process, as well as reactants required and products formation. Thus, ini Thus, initia tially lly,, bib biblio liogra graphi phical cal res resear earch ch foc focuse usess on sto stoich ichiom iometr etry, y, con conver versio sions, ns, yie yields lds and and/or /or sel select ectivi ivity ty of  processes’ main reactions or biological processes, while also addressing the occurrence of side reactions and relevant information about catalyst employed. Regarding raw mate Regarding materials rials,, the Intra Intratec tec team identifies identifies minim minimum um quali quality ty requir requirement ementss (e.g. minimum purity, maximum maxi mum presence of spec specific ific contaminant contaminants), s), as well as typic typical al industrial industrial sourc sources. es. For products, products, the Intratec team gathers information regarding possible uses and applications, as well as the usual specifications necessary to ensure their suitability for those applications.

Examining an Industrial Site At this point, the Intratec team examines how an industrial site based on the process under analysis would be, in terms of production units and infrastructure required. Production Units

The Intratec team compiles all knowledge acquired around the process into a process block flow diagram, showing showi ng major process areas and main process process streams, accompanie accompanied d by a proce process ss description. description. The process areas correspond to what Intratec defines as “functional “functional units”. Basically, a “functional unit” is a significant significant step in the production process in which a particular physico-chemical operation (i.e., distillation, reaction, evaporation, etc.) occurs. According to this definition, a given functional unit is not associated with a single piece of equipment, but rather with a group of equipment and ancillaries required to perform a particular operation. Such division in process areas not only facilitates process understanding, but also serves as the basis for further economic analysis development. While outlining process block flow diagram, the Intratec team also maps key technical parameters related to each process proce ss area portrayed, including: including: highes highestt opera operating ting temp temperatu erature re and press pressure, ure, repres representat entative ive mate material rial of  construct cons truction ion of equipm equipment, ent, and other parameters. parameters. These parameters parameters serve as inputs for the cost estimating estimating methods used by Intratec, further described in this methodology. Site Infrastructure

The Intratec team also examines the industrial site in terms of the infrastructure (OSBL facilities) required. More specifically, this analysis identifies installations that are required but do not directly enter into the manufacture of a product (e.g., storage, utilities supply, auxiliary and administrative buildings). The first step in identifying the required infrastructure is to define the level of integration the industrial site under analysis analy sis will have with nearb nearbyy faci facilitie litiess or indus industrial trial complexes. complexes. Integration Integration level levelss prima primarily rily impact stora storage ge requirements – e.g., a plant that is not integrated needs storage for all raw materials and products, while a plant that is fully integrated with nearby complexes does not need such installations. The Intratec team assumes a level of integration based on what is most typical for the type of industrial plant examined. So, based on the process analysis analysis previously developed and on how integrated integrated the industrial site will will be, the Intratec team defines the OSBL facilities requirements. Defining Site Requirements

* Key Process Inputs & Outputs At thi thiss poi point, nt, the mai main n pro proces cessin sing g ste steps ps hav have e bee been n ide identi ntifie fied d and glo global bal mat materi erial al bal balanc ance e ca calcu lculat lation ionss are performed. perfor med. This preliminary preliminary global material material balance leads to the identificati identification on of key process indicators, indicators, which reflect raw material consumption and products generation rates per amount of the main product manufactured. It is worth mentioning that estimation of raw material requirements in the conceptual design phase is generally reasonably reaso nably accurate accurate but tends to be somew somewhat hat understated understated compared compared to real operations. operations. Loss Losses es from vesse vessell vents, unscheduled equipment, inerting systems, physical property inaccuracies, startup, shutdown and other process operations not typically addressed in conceptual design may increase raw materials consumption.

* Labor Operating labor is associated with the number of operators per shift actually required to run the equipment, while supervision labor is the personnel per shift required to directly supervise the operating labor. The number of operators and supervisors estimated is based on the type and number of functional units included in the process examined. Also, it is important to mention that in addition to the operating and supervision labor considered, chemical plants also require other types of labor, not included as an operating cost item. Examples of such labor are: maintenance labor, outsourced labor, technical assistance to manufacturing, plant engineers, restaurant, purchasing, employee relations department, etc.

Capital Investment Estimating The costs that comprise the capital investment are grouped under three main headings: fixed capital; working capital; and additional capital requirements. Before estimating such capital investment figures, the Intratec team defines plant nominal capacity according to the process under analysis, considering that the plant should be competitive on a global scale. Once this assumption has been made, the Intratec team begins the actual estimation of the capital investment figures as follows. Fixed Capital

The fixed capital capital is relat related ed to the erection erection of the industrial industrial site itself. itself. Also referred referred as “cap “capital ital expenditure expenditures” s” (CAPEX), the fixed capital constitutes the fraction of the capital investment which is depreciable. It is composed of Inside Battery Limits (ISBL) Investment, Process Contingency, Outside Battery Limits (OSBL) Investment and Project Contingency, estimated as f ollows. * Inside Battery Limits Limits (ISBL) Investment The ISBL investment is the fraction of the fixed capital associated with the construction of all process areas (functional units) portrayed in the process block flow diagram. Initially, to calculate Initially, calculate ISBL inves investment tment,, the Intratec Intratec team appro approaches aches each process process area indivi individuall dually. y. The fixed capital of a given area is estimated based on the respective process parameters detailed in the block flow diagram (flow rates, pressure and temperature conditions, materials of construction, complexity), through the use of  specific preliminary cost models. It is worth noting that the Intratec cost models were founded on a number of established cost estimating methods, based on mathematical and statistical processing of an extensive volume of actual cost data of well-known industrial indus trial processes processes and functional functional units. In fact, such a mass massive ive refining of established established methods has led to robust cost models, continuously tested and proven for more than a decade by major global companies that rely on Intratec’s cost estimates of industrial processes. So, from the process parameters identified, the output of Intratec cost models is the fixed capital for each functional unit, including all costs associated with the erection of those units: direct material and labor costs, as well as indirect costs, such as construction overheads, including: payroll burdens, field supervision, equipment

rentals, tools, field office expenses, temporary facilities, etc. In the case of nonstandard functional unit, additional research is conducted and the capital cost is estimated from the use of specialized engineering design software or through quotations provided by equipment suppliers. Finally, the sum of all fixed capital figures, associated with the functional units examined, leads to the total ISBL investment figure. * Process Contingency Process contingency is utilized in an effort to lessen the impact of absent technical information or the uncertainty of that which is obtained. obtained. That being the case, case, the reliability reliability of the information information gathered, gathered, its amount amount and the inherent complexity of the process are significant to its evaluation. Errors that occur may be related to: (1) Addition and integration integration of new process process steps (2) Uncertainty in process parameters, such such as severity of operating conditions and quantity of recycles (3) Estimation of cost through scaling scaling factors (4) Off-the-shelf equipment Hence, process contingency is a function of the maturity of the technology and the reliability of the information gathered for the analysis. This value typically falls between 5% and 20% of ISBL investment. investment. * Outside Battery Limits (OSBL) Investment The OSBL investment is the fraction of the fixed capital associated with the construction of all infrastructure (storage, utilities, auxiliary units and buildings) required. The Intratec team employs cost estimation models similar to those previously described for estimating OSBL investment, i.e., initially, a preliminary design of OSBL equipment equipment is defined based on the process requirements. This preliminary design information serves as an input to Intratec's cost estimation models. * Project Contingency Project Contingency is included to cover the costs which may arise as the project evolves, related to: project errors or incomplete specifications, labor costs changes, strikes, problems caused by weather; inflation, etc. Project contingency is largely dependent on the plant complexity and technology maturity, identified during initial research. The following table shows how project contingency varies according to such aspects. aspects. Project Contingency PROCESS MATURITY

PLANT COMPLEXITY

Simple

Typical

Complex

Established Industrial Processes

15%

20%

25%

New Industrial Processes

20%

25%

30%

Early-Stage Industrial Processes

25%

30%

40%

* Fixed Capital Capital Validation Validation Depending on the availability of information about the process examined, the Intratec team utilizes three different methods to double-check fixed capital estimates: (1) Published investment data, related to the construction of industrial plants of that process worldwide (adjusted in time, location and production capacity); and/or (2) Fixed capital of similar plants (adjusted in time, location and production capacity); and/or (3) Reverse engineering methods, i.e., the fixed capital is calculated based on the known profitability of the process examined. Fixed Capital Breakdown

The report also presents a fixed capital breakdown, detailing how the fixed is divided into direct process costs and indirect process costs. The direct process costs comprise the following costs: * Bare Equipment. This is the cost associated associated with the purchase purchase of process equipment * Equipment Setting. Those are costs related to the labor cost for setting setting the purchased equipment in place. place. * Pipi Piping. ng. The costs related related to piping piping include material materials, s, such as valves, valves, fittings, fittings, pipe and supports supports used in the erection of the piping used directly in the process (for raw materials, intermediate-products, finished-products, steam, water, air, as well as any any other process piping). The labor for piping erection and installation installation is also covered in this topic. * Civil Civil.. This topic covers covers costs associa associated ted with material material and labor required required for equip equipment ment foundations foundations and civil civil work related to any building required in the industrial site. * Steel Steel.. Costs associ associated ated with materia materiall and labor required required for equipment equipment platforms platforms erection, erection, as well as any supports needed during equipment installation. * Instrumentation & Control. Those costs relate to instruments, instruments, controllers and and industrial networks networks material, and and labor required to install it. * Elec Electrica trical.l. The costs related related to electrical electrical system system cover power wiring, wiring, instrument instrument wiring, wiring, lighting, as well as transformation and service. * Insul Insulatio ation. n. Costs related related to any labor or material material required to insulate insulate process equipmen equipment, t, either for process process needs or for operators safety. * Paint Painting. ing. Those costs costs are related related to labor and material required required to paint and/or and/or coat equipment equipment according according to process requirements. The indirect process costs are described below: * Engin Engineering eering & Procurement. Procurement. Engin Engineering eering expenses expenses include include process and project project engineers involved involved in process and construction construction design, design, as well as asso associat ciated ed overhead. Devel Developmen opmentt of comp computer-b uter-based ased drawings drawings and cost engineering engin eering are also costs included included in this topic. Procu Procuremen rementt costs are those related to the purchase team,

associated home office and overhead, and accounting professionals. * Con Constr struct uction ion Materi Material al & Ind Indire irects cts.. Tho Those se costs relate relate to fie field ld temporar temporaryy bui buildi ldings ngs and the their ir operation operation,, construction tools, rentals, home office personnel located at the construction site, construction payroll, burdens and benefits. * Gener General al & Administrati Administrative ve Overheads. Overheads. Gener General al and administra administrative tive costs costs are associated associated with construc construction tion managemen mana gementt and genera generall cost costss incur incurred red durin during g const construct ruction, ion, such as const constructi ruction on superv supervision ision,, taxes and insurance, internal and licensed software, communications and travel & living. * Contract Fee. Expenses related to contract contract fees for engineering, equipment purchase and and construction work. Fixed Capital Estimate Accuracy

The accuracy range for the fixed capital cost estimate obtained according to the methods hereby presented is -15% to -35% on the low side and +25% to +60% on the high side. This accuracy range is mainly influenced by: * Reliability and amount of the information information available * Examined technology technology maturity maturity * Degree of extension extension of the study As previously explained, the fixed capital is estimated based on the preliminary design of functional units which, in turn, relies on a process scheme. The greatest essential uncertainty uncertainty lies in the basic conception conception of this process scheme. sche me. The level of uncer uncertaint taintyy varies broadly among published published information information and from steps of a process in a given research. research. In some inst instances ances,, suffi sufficient cient information information may not be avai available lable to support rigorous estimation estimation,, thus, only basic design methods are warranted. The maturity of the examined technology, in turn, turn, also plays an important role in the fixed capital capital estimates. Earlystage processes require an extra level of caution. In addition, the extension of the analysis helps enormously to reduce uncertainties and improve the accuracy of  the cost estimation. Detailed studies are crucial to achieving more precise estimates. estimates. Finally, the non-uniform spread of accuracy ranges (+50 to – 30 %, rather than ±40%, e.g.) is justified by the fact that a lack of available information usually results in underestimating rather than overestimating project costs. Working Capital

For the purposes of Industrial Process reports, working capital is defined as the funds, in addition to the fixed capital, capi tal, that a company must contribut contribute e to a project. project. Those funds must be adequate adequate to getti getting ng the plant into operation and meeting subsequent obligations. The initial initial amount of worki working ng capital is regarded as an inves investment tment item. item. The Intratec Intratec team uses the follow following ing items/assumptions items/assumpt ions for working capital estimation: * Acco Accounts unts receivab receivable. le. Produc Products ts shipped shipped to but not paid for for by the customer; customer; represent representss the extended extended credit credit given to customers (estimated as a certain period – in days – of production cost including depreciation). * Acc Accounts ounts payable payable.. A credit credit for accounts accounts payable payable such such as feedstock, feedstock, chemic chemicals, als, and packag packaging ing materials materials received but not paid to suppliers (estimated as a certain period – in days – of cash cost plus corporate overhead).

* Product inventory. Products in in storage tanks. The total amount depends on sales flow for each plant, which is directly related to plant conditions of integration to the manufacturing of the product‘s derivatives (estimated as a certain period – in days – of production cost including depreciation). * Raw material material inventory. Raw materials materials in storage storage tanks. The total amount depends on raw material material availability, availability, which is directly related to plant conditions of integration to raw material manufacturing (estimated as a certain period – in days – of raw material delivered costs). * In-pro In-process cess inventory inventory.. Mate Material rial contained contained in pipelines pipelines and vessels, vessels, except except for the material material inside inside the storage storage tanks (assumed to be 1 day of cash cost plus corporate overhead). * Supplies and stores. stores. Parts inventory and and minor spare equipment equipment (estimated as a percentage percentage of operating labor and supervision and maintenance cost). * Cash on hand. hand. An adequate adequate amount amount of cash cash on hand hand to give plant plant manageme management nt the necessa necessary ry flexibilit flexibilityy to cover unexpected expenses (estimated as a certain period – in days – of cash cost plus corporate overhead). Additional Capital Requirements

There are certain one-time expenses related to bringing a process on stream. From a time standpoint, a variable undefined period exists between the nominal end of construction and the production of quality product in the quantity required. This period is commonly referred to to as start-up. During the start-up period, expenses are incurred for operator and maintenance employee training, temporary construct cons truction, ion, auxiliary auxiliary servi services, ces, testing and adju adjustmen stmentt of equipm equipment, ent, piping, and instr instrument uments, s, etc. Intra Intratec’s tec’s method of estimating start-up expenses may consist of the following components: * Labor training. Represents costs of plant crew training training for plant start-up, estimated as a certain number of days of total plant labor costs (operators, supervisors, maintenance personnel and laboratory labor). * Comm Commercia ercializat lization ion costs. costs. Comm Commercia ercializat lization ion costs are those those associated associated with marketing marketing the product product and include developing a market plan, establishing a distribution network and devising a customer support strategy. Those costs are dependent on how integrated the plant is with consumer facilities and on the maturity of the productt – how established produc established and well-known well-known it is. These costs costs range from 0.5% to 5% of annual cash cost plus corporate overhead. * Start-up inefficiency. Takes into account account those operating runs when production cannot be maintained or there are false starts. Start-up inefficiency varies according according to the process maturity: 5% for early-stage early-stage processes, 2% for new processes, and 1% for established processes, based on annual cash cost plus corporate overhead. * Unscheduled plant modifications. A key fault that can happen happen occur during the the start-up of the the plant is the risk that the product(s) may not meet specifications specifications required by the market. As a result, equipment modifications modifications or additions may be required. * Prepaid Royalties. Royalty charges on portions of the the plant are usually levied for proprietary processes. A value ranging from 0.5 to 1% of the fixed capital is generally used. * Site Developmen Development. t. Site preparatio preparation, n, including including roads and walkways, walkways, parking, railroad railroad sidings, sidings, lighting, fencing, fencing, sanitary and storm sewers, and communications.

Production Cost Estimating Pricing & Wage Rates Definition

In order to calculate fixed and variable manufacturing costs, the Intratec team collects average transaction prices of raw materials and average operators’ wage rates in the region examined in the study. The prices are based on trade statistics issued by official government agencies, over the time period considered. Pricing information is checked to verify consistency, but issues like differences in product qualities, discounts related to volumes, or contractual negotiations are not considered. However, for some chemicals, there are no trade statistics (e.g., intermediate chemicals that are not traded because beca use of trans transporta portation tion issues, issues, but are usually generated generated and cons consumed umed onsite). onsite). In those cases, the Intra Intratec tec team assumes a transfer price that considers all the costs related to the manufacturing of that product plus an amount to pay the investment made to manufacture it. The operators’ wage rates are based on data published by official government agencies. Manufacturing Variable Cost

Variable costs change in direct proportion to changes in the production level. Examples of common variable costs include raw materials and utilities. The Intratec team calculates calculates the manuf manufactu acturing ring variable costs of the plant under analysis from previously identified process input and output figures and historical pricing data, as follows: Manufacturing Variable Costs = Net Raw Material Costs + Net Utilities Costs * Net Raw Materials Costs “Net raw material costs” are the difference between raw materials costs and credits from by-products generation, as expressed in the formula below. Net Raw Material Costs = Raw Material Costs – By-product Credits The raw materials costs, in turn, are estimated by multiplying process’ consumption figures by the respective raw material prices in the region considered. The formula below illustrates the raw materials costs costs calculation: Raw Material Costs = Sum ( Raw Material Price * Raw Material Consumption ) By-products credits were estimated in a similar way, based on process’ input and output figures and pricing data. * Net Utilities Utilities Cost Cost In Industrial Processes Economics reports, the utilities cost component encompasses costs related to a plant’s consumpti cons umption on of steam steam,, elect electricit ricity, y, fuel, and refrigeration. refrigeration. These utilities utilities requirements requirements,, in turn, are estimated estimated through correlations internally developed by the Intratec team that were refined from a well-established method reported in technical literature by Mardsen et al. related to chemical process industries. (See “References” chapter) Through Throug h the use of the these se cor correl relati ations ons,, uti utilit lities ies con consum sumpti ption on fig figure uress can be qui quickl cklyy est estima imated ted wit with h bas basic ic information, related to chemical properties of components involved in the process and parameters presented in the block flow diagram. diagram. Suc Such h par param amete eters rs inc includ lude: e: num number ber of fun functi ctiona onall uni units; ts; type of eac each h func functio tional nal unit according to its energy consumption (i.e., if it involves phase changes, endothermic or exothermic reactions,

negligible use of energy, if it is a nonstandard functional unit, etc.); flow rates; heats of reactions involved in the process; molecular weight and approximate boiling points of the components. Manufacturing Fixed Cost

Manufacturing fixed costs are all the costs related to the plant operation that are not proportional to the plant operating rate. They are estimated as the sum of the following items: * Operating labor. This item accounts accounts for the total costs costs of plant operators actually required to run the equipment. This cost includes wages, burdens and benefits. The annual operator cost is obtained according to the formula: formula: number of operators per shift x number of shifts per day x operator hourly wage rate x hours worked per week x weeks per year. * Super Supervisio vision. n. Acc Accounts ounts for for the costs costs of field supervisi supervision on labor, includ including ing wages, wages, burdens burdens and benefits benefits.. The annual supervision cost is obtained according to the formula: number of supervisors per shift x number of shifts per day x supervisor hourly wage rate x hours worked per week x weeks per year. * Maintenance cost. cost. This item accounts accounts for the costs related related both to the labor and and material costs related to the maintenan main tenance ce of the plant plant.. It is calculated calculated as a perce percentage ntage of the fixed capital, capital, ranging between between from 1 to 5% of  TFC per year. This figure is primarily based on the type of equipment employed and the maturity of the process. * Operating charges. This category includes includes operating supplies (i.e., consumable items items such as charts, lubricants, lubricants, test chemicals, chemicals, etc.); packaging; laboratory laboratory supplies and laboratory labor. It is calculated as a percentage of the total labor cost (item operating labor + item supervision). * Plant overhead. overhead. This item comprise comprisess all other non-maintenan non-maintenance ce (labor and materials) materials) and non-operat non-operating ing site labor costs for services associated with the manufacture of the product, including: outsourced labor; technical assistance to manufacturing; plant engineers; restaurant; recreation; purchasing; employee relations department; and janitorial. It is calculated as a percentage of the sum of total labor and maintenance costs. costs. * Property taxes and insurance. This cost is associated with with the local property taxes charged by governments on commercial land or buildings as well as the cost of insurance to cover third party liabilities and potential plant damages. It is calculated as as a percentage of the fixed capital capital per year. Depreciation

Depreciation refers to the decrease in value of industrial assets with the passage of time, primarily due to wear and tear. tea r. Whi While le not a tru true e man manufa ufactu cturin ring g cos cost, t, dep deprec reciat iation ion is con consid sidere ered d to be a man manufa ufact cturi uring ng exp expens ense e for accounting purposes – it allows the recovery of the cost of an asset over a time period. In this report, depreciation is calculated based on the straight-line method, according to which the cost of an asset is uniformly distributed over its lifetime. The Intratec team assumes assumes a depreciation of 10 % of the fixed capital per year. Corporate Overhead

Corpor Corp orat ate e ov over erhe head ad re repr pres esen ents ts co cost stss in incu curr rred ed by a co comp mpan any’s y’s he head ad of offi fice ce no nott di dire rect ctly ly re rela late ted d to th the e manufacturing process and is estimated as the sum of the following items: * Administration costs. This item comprises the the executive and administrative administrative activities. activities. It includes salaries and wages for administrators, accountants, secretaries, legal costs, communications, office maintenance and other

costs associated costs associated with the company’s head office. office. It is calc calculat ulated ed as a percentage percentage of the sum of tota totall labor and maintenance costs. * Marketing & distribution. This is related related to the costs associated with the distribution distribution and sales (sales personnel, advertisin adver tising, g, technical technical sales service) service) of the products products manufactured manufactured in the plant plant.. This cost is calculated calculated as a percentage of the operating cash costs, considering the plant operating at full capacity, which varies according to the process maturity and the level of integration with product consumers. * Resea Research rch & development. development. This is associated associated with the research research activities activities related related to the process and products products and includes salaries and wages for personnel and funds for machinery, equipment, materials and supplies related to the research and development activities. This cost is calculated calculated as a percentage of the operating cash costs, considering the plant operating at full capacity and will vary according to the process maturity.

Product Value Estimating Heretofore, capital investment investment and production cost of the process process examined were estimated. The next step in the methodology is the development of a more consistent analysis, encompassing all costs estimated so far. In this context, all costs estimated are combined in a single item: the “Product Value”. More specifically, the product value results from the sum of production costs (i.e., manufacturing variable costs, manufacturing fixed costs, corporate overhead and depreciation) with a return on capital employed (ROCE), a parcel which reflects the capital investment. investment. The formula below expresses the product product value calculation. calculation. Produc Prod uctt Va Valu luee = Ma Manu nufa fact ctur urin ing g Va Vari riab able le Co Cost stss + Ma Manu nufa fact ctur urin ing g Fi Fixe xed d Co Cost stss + Co Corp rpor orat atee Ov Over erhe head ad + De Depr prec ecia iati tion on + Expected ROCE Amount  where all components are expressed in US dollars per amount of product. The expected ROCE amount is a component which reflects the capital costs of a given process into its product value. val ue. Thi Thiss com compon ponent ent is bas based ed on the expected expected return return on ca capit pital al emp employ loyed ed typ typica ically lly aimed by che chemic mical al companies comp anies.. It is calc calculate ulated d by mult multiplyi iplying ng capital costs by the expec expected ted ROCE percentage, percentage, divided by the tota totall amount of product manufactured: Expected ROCE Amount = Capital Costs * Expected ROCE Percentage / Product Annual Production This “Expected ROCE Amount” component is, in fact, a measure of the cost of investment required to construct the plant, in terms of US dollars per amount of product. Most chemical companies aim to achieve a ROCE percentage ranging from 10% to 30% for the construction of a new plant. In this context, context, the Intra Intratec tec team assumes assumes an expec expected ted ROCE percentage percentage of 10% for established established industrial processes. In contr contrast, ast, a 30% expected ROCE is assumed for emerg emerging ing industrial industrial proce processes, sses, as such processes processes inherently involve invol ve a large largerr amount of risk and cost uncertaint uncertainty. y. It should be noted that the risk taken taken into account account here is limited to the technical technical risk associated with with the process uncertainties. uncertainties. Other venture risks were not considered, considered, such as business environment, product market changes, increased competition, raw materials and product prices variations, change in government policy, etc. Finally, it is also important Finally, important to mention that product product value must not be confu confused sed with product price. price. Whil While e the product value is calculated based on production cost and expected ROCE, the product price is the actual value

practiced in market transactions.

Estimates Limitation The cost estimates presented in Industrial Processes Economics reports refer to a process technology based on a standardized design practice, typical typical of major chemical companies. companies. The specific design standards employed can can have a significant impact on capital capital and production costs. In this context, cost estimates estimates calculated by Intratec team naturally have limitations. In fact, the accuracy range for production cost estimated in the present study is -10% to -20% on the low side and +10% to +20% on the high side, depending on the maturity level of the process examined. The presented accuracy considers a confidence level of 90%, which is consistent with the type of conceptual evaluation that this study aims to provide. Also, it is to be noted that the basis for capital and production costs estimation is that the plant is considered to be built in a clear field with a typical large single-line capacity. In comparing the cost estimates presented with actual plant costs and/or contractor's estimate, the following must be considered: * Minor differences or details (many times, unnoticed) between similar similar processes can noticeably affect cost. cost. * The omission omission of proce process ss areas in the design considered considered may invalidate invalidate comparisons comparisons with the esti estimated mated cost presented. * Industrial plants may be overdesigned for particular objectives objectives and situations. * Rapid fluctuation of equipment or construction costs costs may invalidate cost estimate. * Market price fluctuations may may invalidate production cost estimate. * Equipm Equipment ent vendors or engineering engineering companies companies may provide goods or servi services ces below profit margins margins during economic downturns. * Specific locations may impose impose higher taxes and fees, which can impact costs considerably. Furthermore, no matter how much time and effort are devoted to accurately estimating costs, errors may occur due to the aforementioned factors, as well as cost and labor changes, construction problems, weather-related issues, issue s, strikes, strikes, or other unforeseen unforeseen situation situations. s. This is partially partially considered considered in the project contingency contingency.. Final Finally, ly, it must always be remembered that an estimated project cost is not an exact number, but is rather a projection of 

ABOUT INTRATEC Our Business Int Intrat ratec is an indep ndepen ende dent nt res researc earch h and and leadi eading ng advis dvisor oryy firm firm,, reco recogn gniized zed for for exc excell ellenc ence in the the eva evaluat luatio ion n of  chem chemic ical al mark market etss and and the the econ econom omic icss of indu indust stri rial al proc proces ess. s. We are are a mix mix of proc proces esss engi engine neer ers, s, mark market et rese resear arch cher erss and cost estimators with extensive industry experience. Sinc Since e 2002 2002,, the the repo report rtss and and data databa base sess we prov provid ide e have have incr increa ease sed d the the earl earlyy reco recogn gnit itio ion n of prom promis isin ing g rese resear arch ch and and capi capita tall inve invest stme ment nt oppo opport rtun unit itie iess in the the chem chemic ical al,, petr petroc oche hemi mica cal,l, oil, oil, plas plasti tic, c, rene renewa wabl ble e and and alli allied ed sect sector ors. s. Our Our products have been used by our clients in multiple ways, such as: * To understand chemical market size, dynamics and attractiveness * To understand the feasibility of of competitors’ technologies and developments * To obtain estimates of ventures’ profitability, capital capital and operating costs * To assess the economic economic potential of R&D breakthroughs breakthroughs * To ascertain the economic aspects aspects and risks of their competitors’ research * To screen and assess industrial industrial investment options * To define consistent business business cases for investments * To evaluate / select independent licensors

Our Reports Intr Intrat atec ec has has an exte extens nsiv ive e port portfo folilio o of repo report rtss targ target etin ing g chem chemic ical al mark market etss and and proc proces esss econ econom omic ics. s. With With more more than than 900 900 up-t up-too-da datte repo report rtss for for the chem hemical ical,, pet petroc rochem hemical ical,, oil, oil, ener energy gy,, pla plastic stic,, rene renewa wabl bles es and and alli llied sec sectors, ors, the Intratec portfolio is constantly growing. Intratec offers the following types of reports: * Prod Produc ucttion ion Pathw athwa ays Repo Report rts: s: Repor eports ts pre present sentin ing g paths aths to prod produc ucin ing g chem hemica ical and prel prelim imin ina ary econ econom omic ic compa ompari rissons ons of thos those e path pathss. From rom thes these e repo report rts, s, you you can can learn earn the ways ays in whic hich chang hanges es in feed feedst stoc ockks and location can affect chemical production economics. * Indu Indusstri trial Proc rocess ess Repo Report rts: s: Tec Technohno-ec econ onom omic ic eval evalua uati tion onss of chem hemical ical prod produc ucti tion on proc proces esse sess. Each ach repo report rt prov provid ides es an up-t up-too-da date te econ econom omic ic asse assess ssme ment nt,, incl includ udin ing g requ requir ired ed capi capita tall cost costss in seve severa rall loca locati tion onss and and oper operat atin ing g costs.

Find below the chemicals covered in Intratec reports. For a more complete and updated list, the reader is encouraged to visit www.intratec.us www.intratec.us.. 3-Hydroxypropionic Acid

Epichlorohydrin

Phthalic Anhydride

Acetone

Ethanol

Polyacrylate

Acetylene

Ethylene

Polyacrylonitrile

Acetyls

Ethylene Oxide

Polyalphaolefins

Acrylic Acid and Derivatives

Fertilizers

Polycarbonates

Acrylic/Maleic Acrylic/Maleic Copolymer

Fibers

Polyesters

Acrylonitrile

Fire Retardants

Polyethers

Adipic Acid

Food Additives

Polyethylenes

Aldehydes

Furans and Derivatives

Polylactic Acid (PLA)

Alkylbenzenes

Glycerol

Polypropylene

Amino Acids

Glycols

Polyurethanes

Ammonia

Hydrogen

Propanol and Isopropanol

Aniline

Hydrogen Cyanide

Propylene

Biodiesel

Hydrogen Peroxide

Propylene Oxide

Bisphenol A

Industrial Gases

PVC

BTX

Insecticides

Reformate

Butadiene and C4's

Isocyanates

Resins

C6's

Isophthalic Acid

Silanes

Caprolactam

Isoprene

Silicones

Carbon Monoxide

Lactic Acid

Siloxanes

Chlorine and Derivatives

Linear Alpha Olefins

Sodium Hydroxide

Chloroprene

Methacrylic Acid and Derivatives

Speciality Polymers

Citric Acid

Methanol

Styrenics

Cosmetics

MTBE

Succinic Acid

Cumene

Nitric Acid

Sulfuric Acid

Detergents

Nitro Aromatics

Synhetic Rubbers

Dicyclopentadiene

Nylon

Synthesis Gas

Diesel

Oxalic Acid

Vitamins

Dimethyl Carbonate (DMC)

Oxo Alcohols

Terephthalic Acid

Dimethyl Terephthalate

Pentaerythritol

Trimethylolpropane

Diols

PET

Urea

Diphenyl Carbonate

Pharmaceuticals

Vinyls

Dyes & Pigments

Phenol

Electricity

Phosgene

APPENDIX 1: FIXED CAPITAL REGIONAL COMPARISON Obviously, the fixed capital Obviously, capital required to erect an indus industrial trial unit is highly impacted impacted by local conditions. conditions. By way of  illustration, several country-specific factors can largely influence construction costs, such as local productivity, labor costs, local steel prices, equipment imports needs, freight, taxes and duties on imports, regional business environments, local availability of sparing equipment, and so on. In this context, this appendix shows how much the fixed capital of the plant examined would be in different locations. Considering the same industrial plant previously described, this analysis analysis compares fixed capital across the following countries: - United States - Germany - China - Japan - Saudi Arabia - Brazil - Singapore As an example, the following figure compares the fixed capital in the aforementioned countries. Fixed Capital per Region (USD Million)

Regional fixed capital figures presented were directly obtained from the fixed capital originally calculated (United States-based plant), according to Intratec’s chemical chemical plant location factors. These factors are calculated based on high volumes of local data of different locations, relating to productivity, labor costs, steel and energy prices, equipment import needs, freight, taxes and duties on imported and domestic materials and regional business environment, among others.

APPENDIX 2: INTRATEC CHEMICAL PLANT CONSTRUCTION INDEX The IC In The Inde dexx st stan ands ds fo forr In Intr trat atec ec Ch Chem emic ical al Pl Plan antt Co Cons nstr truc ucti tion on In Inde dex, x, an in indi dica cato torr pu publ blis ishe hed d mo mont nthl hlyy by In Intr trat atec ec to scal ale e cap apit ital al cos ostts fr from om on one e ti tim me pe peri riod od to an anot othe her. r. By wa wayy of il illlus usttra rattio ion, n, to up upd dat ate e a pl pla ant con onst stru ruc cti tion on cos ostt from 2009 to 2015, is necessary to multiply the cost at 2009 by the ratio of 2015’s index over 2009’s index, according to the following equation: Cost at 2015 = Cost at 2009 * (IC Index at 2015) / (IC Index at 2009) Thi hiss in inde dexx re rec con onc cil iles es pr pric ice e tre rend ndss of fu fund ndam amen enta tall com ompo pone nent ntss of che hem mic ical al pl plan antt con onst stru ruct ctio ion n suc uch h as la labo bor, r, material and energy, providing meaningful historical and forecast data for our readers and clients. Cov over erin ing g hi hissto tori rica call fi figu gure ress and ne near ar ter erm m fo fore rec cas asts ts of up to tw twel elve ve mon onth thss, the IC In Inde dexx is alr lrea eady dy a re reco cogn gniize zed d cost co st-e -esc scal alat atio ion n in inde dex, x, wi wide dely ly us used ed by th the e ch chem emic ical al in indu dust stry ry co comm mmun unit ity. y. It is a ha hand ndyy to tool ol fo forr a se seri ries es of pu purp rpos oses es,, like procurement budgeting, capital project estimation and feasibility assessments. Figure. Intratec Chemical Chemical Plant Construction Construction Index

Reader Read erss ca can n ac acce cess ss In Intr trat atec ec co cons nstr truc ucti tion on co cost st-e -esc scal alat atio ion n in inde dexx fo forr fr free ee,, at www.intratec.us www.intratec.us.. It is the only index available in the market that presents forecast and historical data.

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