Godwin J. Igwe, Ph.D.[UK], PE [Texas], FAIChE [USA], FNSChE

1. OPPORTUNITIES FOR EXPANSION:BUILDING A ROBUST CRUDE OIL VALUE CHAINPresented To: O.B. Lulu-Briggs Roundtable On Petroleum Exploration, Development And Production Godwin J. Igwe, Ph.D.[UK], PE [Texas], FAIChE [USA], FNSChE World Bank McNamara Fellow [USA], Alexander-von-Humboldt Fellow [Germany] Professor and Director Center for Gas, Refining & Petrochemicals (IPS) University of Port Harcourt www.cgrpng.org Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

2. OUTLINE • The Oil and Gas Value Chain • Upstream • Midstream • Downstream • Strategies to support wealth creation in Nigeria • Capacity Building at Center for Gas, Refining & Petrochemicals (IPS) • Pilot Plant and Research Programme • Closing remarks Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

3. GLOBAL COMPETITIVENESS • In August 1989, Igwe (WB Report 1989) addressed the Economic Development Institute of the World Bank in Washington DC. because he was the only African who won the Robert McNamara Fellowships Award in 1987-88. • Assume that this is planet earth: What do we make, produce, manufacture, to the world? For example, Japan makes Toyotas, Hondas, etc. Germany makes Mercedes Benz, BMWs, etc. They do not have crude oil. How many unemployed people do we have? Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

4. The Petroleum Industry Drives The Nigerian Economy WE HAVE CRUDE OIL $$$ Agriculture Power Petrochemicals Refinery Fuels Oil & Gas Education Pharmaceuticals Banking/ Finance Insurance Manufacturing Infrastructure Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

5. Contribution of Petroleum Sector to GDP Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 5

6. (1960~1999+) Limited GDP impact from oil & gas activity in Nigeria Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

7. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

8. Human Capital: Nigeria’s strength is not only in its resource endowment but also its human capital. • UN Statistics: 3.25 MM Nigerians in US • Medical Professionals: 115,000 • IT 174,000 • Pharmacists 87,000 • Engineers 49,500 • Legal, Financial, Real Estate and Business-related: 250,000 Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

9. Resource DiversificationThe Oil & Gas Value Chain Upstream Midstream Downstream Also touches consumers through thousands of products such as fuels (gasoline, diesel, jet fuel, heating oil and non-fuels (asphalt, lubricants and non synthetic rubber, plastics, fertilizers, antifreeze, pesticides, pharmaceuticals) Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 9

10. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

11. OIL & GAS HYDROCARBON STRUCTURES • To understand how unrefined oil and unprocessed gas are converted into useful products, it is necessary to be familiar with four types of hydrocarbons: • Paraffins • Olefins • Naphthenes, and • Aromatics • All of these compounds are arrangements of carbon and hydrogen atoms, and sometimes they include other elements such as oxygen, sulfur, and trace metals. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

12. Paraffins • Natural gas and a substantial portion of crude oil are composed of paraffin hydrocarbons. The simplest is methane, the main ingredient of natural gas. It has one carbon atom attached to four hydrogen atoms. Examples are ethane and propane, also components of natural gas • Each carbon atom can bond or attach to four other atoms and each hydrogen atom can bond with one other atom. They are saturated hydrocarbons because paraffins have the greatest possible number of hydrocarbons. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

13. Paraffins: Structures Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

14. Olefins: Structures • Like paraffins, olefins are chains of carbon atoms with attached hydrogen atoms. However, olefin chains do not have the greatest possible number of hydrogen atoms. • If two hydrogen atoms are missing, two carbon atoms in the chain will form a double bond to make up for the deficiency. An example is ethylene, an important petrochemical. • Olefins are known as unsaturated hydrocarbons because of their hydrogen deficiency. • They do not occur naturally in crude oil but are formed in the refinery by the breakdown of larger hydrocarbon molecules. Olefins are very useful in creating certain refinery products and petrochemicals. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

15. Olefins: Structures Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

16. Naphthenes • The carbon atoms of naphthenes form rings rather than chains, so naphthenes are called ring compounds or cycloparaffins. • Hydrocarbons in this group have names that begin with the prefix “cyclo” to indicate ring structure. Example is cyclohexane, a hydrocarbon often occurring in natural gasoline. The carbon rings of naphthenes are saturated with hydrogen atoms. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

17. Naphthenes: Structures Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

18. Aromatics • Aromatic hydrocarbons are compounds that contain a ring of six carbon atoms with alternating double bond and single bonds and six attached hydrogen atoms. • The most important type of structure is known as a benzene ring. The most important aromatics in refinery production are the BTXs – Benzene, Toluene, and Xylene. Aromatics occur naturally in crude oil. They are also created by refinery and petrochemical plant processes. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

19. Aromatics: Structures Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

20. Other Elements • Anywhere from 2 to 50 percent of a crude oil may be composed of compounds containing oxygen, nitrogen, sulfur, and metals. Oxygen content can be as high as 2 per cent, and nitrogen content as high as 0.8 percent. Sulfur content ranges from traces to more than 5 percent. • If a crude contains appreciable quantities of sulfur or sulfur compounds, it is called sour crude; if it contains little or no sulfur it is called a sweet crude. • Trace metals contained in crude oil include sodium, magnesium, calcium, strontium, copper, silver, gold, aluminum, tin, lead, vanadium, chromium, manganese, iron, cobalt, nickel, platinum, uranium, boron, silicon, and phosphorus. Of these metals, nickel and vanadium occur in the greatest quantities. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

21. It is in our National Interest to… • To provide jobs for our people through: • Refining processes: Nigeria consumes daily, 38 MM liters PMS (premium motor spirit, petrol), 12 million liters of AGO (automotive gas oil, diesel), and 8 million liters of DPK (dual purpose kerosene) • Petrochemicals: First thing you encounter in the morning • Fertilizer (Urea) Linchpin in industrial sector and job creation potential and multiplier effect on economy • Electricity generation • LNG Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

22. Refining • Refineries rely on four major processing steps to alter the ratios of the different fractions. • They are: Catalytic Reforming, Alkylation, Catalytic Cracking, and Hydroprocessing. Each of these methods involves feeding reactants to a reactor where they will be partly converted into products. The unreacted reactants are then separated from the products with a distillation column. • The unreacted reactants are recycled for another pass, while the products are further separated and mixed with existing streams. • In this way complete conversion of reactants can be obtained, even though not all of the reactants are converted on a given pass through the reactor. • The four processing methods, along with distillation, are the pillars of petroleum refining. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

23. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

24. Share of demand imported, % Rank Country 3 8 8 40 4 6 1 12 83 15 Meanwhile, Nigeria imports 83% of its gasoline requirements, making it the 6th largest importer of gasoline in the world with highest share of demand imported Top importers of gasoline Amount imported, kbd 1 USA 1 092 N/A 2 Netherlands 3 Mexico • “Our policy of dependence • on importation of petroleum • products is not only • unsustainable, it is • unacceptable for an oil • producing country with our • size and population” 4 N/A Singapore 5 N/A Indonesia 6 Nigeria 12 UK 14 China 18 Germany 29 France 40 India Japan 41 South Africa 43 Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 SOURCE: IEA

25. Petrochemicals • Starting from the time you get up in the morning and brush your teeth with a plastic handled tooth brush with synthetic fibre bristles, and put your head down on a polyurethane foam pillow, you are literally surrounded by petrochemicals. • Most petrochemicals are derived from the basic building blocks of ethylene,, propylene, butadiene, benzene, toluene, xylenes, ammonia and methanol. • The basic feedstocks or raw materials, hydrocarbons, i.e. crude oil and natural gas, are processed through various complex catalytic and fractionation steps from which numerous end-use products emerge. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

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27. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

28. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

29. POSSIBLE SOLUTIONS • So, we would suggest solution for our fuel shortages: a) through modular refineries, and b) small scale plastic industries from our petrochemical industries. • For our environmental degradations, we suggest: Igwe, G.J.I., US Patent #5,973,013 – Oct.26, 1999 –Polyamide/Polyurethane Micro-blend and Process (this is a plastic recycling process); Igwe, G.J.I., US Patent #5,789,649 – 08/04/98 – Method for Remediating Contaminated Soils. Igwe, G.J.I., US Patent #6,492,572 B2, Dec.10, 2002 – Method for Remediating Contaminated Soils. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

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32. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

33. PETROCHEMICAL FEEDSTOCKS & BUILDING BLOCKS Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

34. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

35. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

36. Resource Diversification: Potential Hydrocarbon Value Chain Options Diversification further downstream will add maximum value to the Nigerian Economy through these Industries: Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 36

37. Resource Diversification: Benefits of Non-Fuels Diversification - Automotive Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 37

38. Resource Diversification: Benefits of Non-Fuels Diversification - Packaging Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 38

39. Resource Diversification: Benefits of Non-Fuels Diversification – Building Materials Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 39

40. Resource Diversification: Benefits of Non-Fuels Diversification – Textiles and Sportswear Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013 40

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44. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

45. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

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47. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

48. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

49. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013

50. Prof. G.J. Igwe's Presentation to Lulu Briggs Roundtable Sept.24, 2013