Introduction toHVO, apremium biobased diesel

Markku Kuronen,Associate, markku.kuronen@nesteoil.com

Confidential

Table of contents

1. Neste Oil corp

2. Biobased diesels

3. Fuel Properties

4. Blending properties

5. Emissions

21.11.2013 Research and Technology/MarkkuKuronen 2

Confidential

History ofNeste Oil

Confidential

4

History of Neste Oil

Neste listed on the HelsinkiStock Exchange

Neste Oil spunoff from Fortum

and relisted

Neste wascreated to secure

Finland’s oilsupply

1948 1957

Naantali refinery

1995 1998 2007–2011

Neste and IVOmerge to form

Fortum

1965

Porvoo refinery

2005

Majorinvestments atPorvoo and inSingapore and

Rotterdam

The world’sleading producer

of renewablediesel today andone of the world’sleading base oil

producers

21.11.2013 Research and Technology/MarkkuKuronen

Confidential

Neste Oil in brief

21.11.2013 5Research and Technology/MarkkuKuronen

Refining capacity:15 million t/a of

petroleum productsand 2 million t/a ofrenewable diesel

Net sales: €17.9billion (2012)

Listed on theHelsinki Stock

Exchange

Largest owner: theFinnish State

(50.1%)

A refining andmarketing company

focused onpremium-quality

traffic fuels

Operations in 15countries; employs

approx. 5,000people

Confidential

6

Neste Oil’s investments to HVO

NExBTL-projectsLocation Capacity Investment Operational

Porvoo # 1 190,000 t/a EUR 100 million 2007

Porvoo # 2 190,000 t/a > EUR 100 million 2009

Singapore 800,000 t/a EUR 550 million 2010

Rotterdam 800,000 t/a EUR 670 million 2011

21.11.2013 Research and Technology/MarkkuKuronen

Confidential

Biobaseddiesels

Confidential

Renewable NExBTL – fully compatiblewith fossil diesel

Biodiesel(FAME / RME) Fossil diesel

Renewable diesel(HVO)

e.g. NExBTL

Fischer-Tropsch(BTL)

Raw materialVegetable oils &

animal fats (mainlyrapeseed oil)

Crude oil(mineral oil)

Flexible mix of rawmaterials

(vegetable oils& waste fats)

Biomass

Technology Esterification Traditional refining Hydrotreating Gasification &Fischer-Tropsch

End productEster-based,conventional

biodiesel

Hydrocarbon(gasoline, jet fuel,

diesel)

Bio-basedhydrocarbon

(renewable diesel, jetfuel, bionaphta,

biopropane)

Bio-basedhydrocarbon

(renewable gasoline,jet fuel, diesel)

Chemicalcomposition

OII

H3C-O-C-R

CnH2n+2+ aromatics CnH2n+2 CnH2n+2

8

FAME = Fatty Acid Methyl Ester, conventional biodiesel

RME = Rapeseed Methyl Ester, conventional biodiesel

HVO = Hydrotreated Vegetable Oil, advanced biofuel i.e. renewable fuel

BTL = Biomass to Liquid

Confidential

HVO and FAMEprocesses

9Research and Technology/MarkkuKuronen21.11.2013

Hydrotreatment &Isomeration

Confidential

Contaminants in the raw material

• Vegetable oils contain impurities (eg. P,Mg, Ca, Fe)

• All impurities have to be efficiently removed in thepretreatment process

• Remaining impurities will be absorbed by thehydrotreatment catalyst

• This would shorten the lifetime of the catalyst

No impurities are left in the end product

10

Element

Concentration (mg/kg)all below detectionlimit

Al <0,5Ca <0,1Cr <0,1Cu <0,1Fe <0,1Mg <0,1Mn <0,1Mo <0,1Na <0,5Ni <0,1Pb <0,1V <0,1

Zn <0,1F* <1Cl* <1P* <0.1

*from different HVO batches

Analysis results of 3 samplesNExBTL diesel product

Confidential

Waste animal fatfrom the food

industry

Currently used renewable raw materials forHVO production (10 raw materials at themoment)

11

FAD: Stearin,palm fatty acid distillate

Waste fat from fishprocessing

industry

Camelina oil Jatropha oil Soybean oil Rapeseed oil

Neste Oil also procures bio-based ethanol from the global market to beused as a bio-component in 95 E10 and 98 E5 gasoline.

Palm oil

21.11.2013

Confidential

Expanding the feedstock base for HVO

12

Algae oil

Microbial oil

Harvestingresidue and

biomass

Non-foodvegetable oils

Waste animalfats, waste oils,residue and side

streams

Short term Long term (2015-)

21.11.2013 12

Confidential

Fuelproperties

Confidential

Research and Technology/MarkkuKuronen 1421.11.2013

Typical fuel propertiesEN 590diesel

(summer)

TS 15940HVO

NExBTL

EN 14214FAME

(rape seed)Density (kg/m3) ≈ 835 ≈ 785 ≈ 885

Cetane number ≈ 53 75 ... 99 ≈ 51

Distillation range (°C) 180 ... 360 180 ... 320 350 ... 370

Heating value (MJ/l) » 35.7 ≈ 34.1… 34.4 ≈ 33.2

Total aromatics (wt-%) ≈ 30 0 0

Oxygen (wt-%) 0 0 ≈ 11Stability Ok Ok Challenge

Ash, metals Ok Ok Challenge

Cold operability Ok Ok Challenge

In diesel fuel (vol-%) ... 30 ... 100 ... 7 (... 10?)

Confidential

Properties of diesel fuelsS-freeEN590

diesel fuel

HVO BTLGTL

(even 100 %)

If not ok

Sulfur content OK OK Aftertreatmentoperation

Distillationrange

OK OK Engine oil dilution

Stability OK OK Deposits in fuelsystem

Ash, metals OK OK Aftertreatmentdurability

Cold properties OK OK Fit for purpose allthe year round

Research and Technology/MarkkuKuronen 1521.11.2013

HVO = hydrotreated vegetable oilBTL = bio-to-liquids from biomass by Fischer-TropschGTL = gas-to-liquids from natural gas by Fischer-Tropsch

Confidential

Research andTechnology/MarkkuKuronen

16 21.11.2013

Typical properties

• NExBTL is produced from vegetable oils or animalfats via hydrogenation and isomeration.

• NExBTL is free from aromatics, sulphur and metals.• Contains only n- and i-paraffin with carbon number

(C10-C20), distillation mainly 180-320 °C• Lighter than EN590 due of these facts.• Clear and bright, colourless

NExBTL

Confidential

Research andTechnology/MarkkuKuronen

17 21.11.2013

Typical properties

• Feedstock has a very little effect toNExBTL properties. Feedstock does nothave an influence the cold properties

• High cetane number > 70.• Viscosity (at 40°C) similar than fossil

diesel (~2.3-3.5 mm2/s)• Production process control flashpoint

(>61 °C) and cold properties• Lubricity additive or FAME (~2 vol%) will

be needed to achieve lubricityrequirement. NExBTL without additiveHFRR is about 650 µm which is similarlike fossil diesel without additive

Confidential

Blendingproperties

Confidential

Research andTechnology/MarkkuKuronen

1921.11.201

3

Blending properties

• NExBTL can be easily blended with EN590, because NExBTLcontains only n- and i-paraffins similar molecules than in diesel.Same consideration have to be make than blending two fossildiesels (temperature of the fuels, lighter first to bottom etc.)

• By blending NExBTL to diesel you can achieve several benefits• Reduce aromatic and sulphur content and increase cetane

number. Also benefits from distillation (lower end point thanEN590). Cold properties can be tailor made.

Confidential

Research andTechnology/MarkkuKuronen

20 21.11.2013

Blending properties

• Same additives (lubricity, conductivity etc) than in mineral dieselcan be used with NExBTL.

• Limitations to EN590 is only density, summer grade ~30 v% ofNExBTL can be blended to have density higher than 820 kg/m3,for arctic grades even 50 v% can be blended (limit min 800 kg/m3)

• Same logistics can be used for HVO than fossil diesel no risk ofcontamination (for example pipelines where JET is transferred)

Confidential

Distillation of biofuel blends

21

GC distillation for better accuracy near 0 % and 100 %=> Do not compare ⁰C-values to standard distillation

Source: HVO Handbook,http://www.nesteoil.com/binary.asp?GUID=7A041F14-022A-4295-B1E4-1102585F5E3F

21.11.2013

Confidential

Benefits with blending

21.11.2013 Research and Technology/MarkkuKuronen 22

Confidential

Benefits for blending

21.11.2013 Research and Technology/MarkkuKuronen 23

Confidential

Benefits when blending

21.11.2013 Research and Technology/MarkkuKuronen 24

Confidential

Research andTechnology/MarkkuKuronen

25 21.11.2013

Blending with FAME blends

• NExBTL can be added to EN590 + 7% FAME blend. It isimportant to know quality of the FAME (content of saturatedmonoglycerides) and aromatic content of the mineral diesel.Swedish class 1 (total aromatics max 5 V/V%) can tolerateup to 7 vol% high quality RME, meaning ~20 ppm saturatedmonoglyceride content. Same rule can be used for pureHVO.

• It is not recommended to store NExBTL and FAME in sametank (up to 7%V/V good quality FAME can be blended withNExBTL). FAME’s impurities like saturated monoglyceridesmight precipitate in cold temperature above cloud point inlow aromatic diesels.

• If blending is made in tank farm, it is recommend to blendfirst fossil diesel and NExBTL (chemically close to eachother) and after that FAME is added to final blend.

Confidential

Emissions

Confidential

Emission with HVO compared toEN590

21.11.2013 Research and Technology/MarkkuKuronen 27

Confidential

GHG reduction

• All the renewable raw materials that Neste Oil uses inrefining offer the users of NExBTL renewable diesel anopportunity to reduce greenhouse gas emissions by40–90% compared to fossil diesel.

21.11.2013 Research and Technology/MarkkuKuronen 28

Confidential

Useful info:

• HVO handbook• http://www.nesteoil.com/default.asp?path=1,41,119

91,12243,12335

21.11.2013 Research and Technology/MarkkuKuronen 29

Confidential

Thank you.Markku KuronenMarkku.kuronen@nesteoil.com

Confidential