M ODULAR R EFINERY P ROPOSAL

Date: February 9, 2016

Client: MR. HENRY ECHEVERRI

I NTRODUCTION
CLIENT is interested in processing crude oil into marketable fuel products. VFuels, LLC (VFuels) fabricates
modular (skid-mounted) crude oil refining and gas processing equipment. VFuels proposed solution for CLIENT
is the design and fabrication of one (1) 1,000 bpd Crude Distillation Unit (CDU). The CDU will be located in
Colombia and will produce naphtha, diesel #2, and Heavy Fuel Oil (HFO or residuum). Multiple CDU trains can
be combined to achieve a higher throughput as necessary.

P RICE , S CHEDULE & P AYMENT T ERMS

VFuels price for one (1) 1,000 bpd CDU is $4,969,000 US (Four Million Nine Hundred Sixty-nine Thousand US
Dollars). Freight terms are FAS, Houston, Texas, USA (client is responsible for freight beyond Houston, Texas).
Please note that modular process equipment supplied by VFuels is only part of a complete refinery. Storage
tanks, civil work, utilities, buildings and other Outside Battery Limits (OSBL) equipment and services (see
Exclusions at the end of this proposal) are the responsibility of the client and are not included in this proposal.
The price listed above is valid for ninety (90) days from the proposal date and is subject to the execution of
VFuels process unit supply agreement within such ninety (90) day period. The fabricated CDU will be shipped
within ten (10) months of contract signing and receipt by VFuels of the down payment.
Milestone

Amount ($US)

Timeframe

30
20
40
10

$
$
$
$

At Contract Signing
2 months
6 months
10 months

Equipment
Down Payment
Schedule A Design Package Completion
Major Equipment Receipt
Fabrication Complete, Prior to Shipment

1,490,700
993,800
1,987,600
496,900

E STIMATED Y IELDS
The estimated yields below are based on average D-86 distillation numbers from the supplied assay.

Product
Fuel Gas
Naphtha
Diesel
Heavy Fuel Oil

Yield (%)
1.0
10.0
30.0
59.0

Yield (bpd)
10
100
300
590

*Yields can be slightly adjusted according to client specifications and fuel requirements. The production of kerosene can
be achieved by reducing the diesel product yield.

B RIEF P ROCESS D ESCRIPTION

A Crude Distillation Unit (CDU) or modular refinery is a simplified full-scale refinery that allows for distillation
of crude oil into low octane naphtha, diesel, kerosene and residual fuel oil. It does not include the more
complex refinery processes such as hydrotreating (the reduction of the sulfur content in the diesel), reforming
(increasing the octane of the naphtha for conversion into gasoline), or cracking (converting the heavier
products into diesel and gasolines).
Modular refineries require significantly less capital investment than full-scale refinery facilities; however they
are not able to produce the same yields or quality of products as a full-scale refinery. Additional process units
(reformers, hydrotreaters, crackers) would have to be added to a modular refinery to realize the products and
yields mentioned earlier.
Typically, clients that are targeting the production of diesel and kerosene utilize modular refineries. Naphtha
and residual fuel oil are either sold back into the crude stream or sold slightly below the cost of the crude
feedstock.
In operating a modular refinery, crude oil is pumped from storage to the CDU where it first passes through
heat exchangers and then to a direct-fired heater that raises the crude oil temperature.
The crude oil exits the heater and enters the flash zone of the crude tower as a two-phase stream. The
residuum (or heavy fuel oil) is the liquid part of this two-phase stream and drops to the bottom of the tower.

The vapor part of the stream flows upward through the tower producing the remaining diesel and naphtha
products.
Naphtha exits the top of the tower as a vapor and is cooled in an overhead condenser before flowing into the
reflux accumulator. Uncondensed vapor, also known as off-gas, is routed to the heater and used as fuel.
Naphtha is pumped from the accumulator and splits, with part of the naphtha returning to the tower as reflux
and the remainder flowing to storage. Any water in the crude oil feed accumulates in the water boot at the
bottom of the accumulator and is sent to water treatment.
Diesel is drawn from the side of the tower into the diesel stripper. The diesel is reboiled to remove light ends
and increase its flash point. The light ends are returned to the tower. The remaining diesel is pumped from
the bottom of the stripper, cooled in an exchanger and air cooler and sent to storage.
The residuum from the bottom of the tower is cooled in a heat exchanger and air cooler and sent to storage.
A slipstream of hot residuum is used as a heat source in the diesel reboiler.

VF UELS D ELIVERABLES
VFuels will supply the client with one (1) 1,000 bpd CDU and desalter that will include preliminary and final
engineering/design (also called Schedule A and Schedule B design respectively); a modular refinery with a oneyear supply of spare parts and a documentation package. The documentation package may be used to apply
for necessary permits in country.
The preliminary (Schedule A) design will result in the following deliverables for the Inside Battery Limit (ISBL)
area of the CDU only:

Basis of Design
Process (Computer) Simulation
Stream Summary Data and Yields from Simulation
Equipment Data Sheets
General Arrangement Plan
Process Flow Diagram (PFD)
Piping & Instrumentation Diagrams (P&IDs)
Electrical Power Requirements
Electrical One Line Diagram
Summary of Required Utilities
Equipment List

Line List
Instrument List

The detailed (Schedule B) design prepared by VFuels for the ISBL area of the CDU will result in the following
deliverables:

Updates to Schedule A materials

3D Model of Equipment, Skids, Piping, etc.
Orthographic (2D) drawings cut from 3D model including vessels, structural steel skids and piping
Concrete foundation design for skids
Instrumentation drawing package including wiring schematics, wiring plans, PLC layout, junction
boxes, etc.
Electrical drawing package including area classification, grounding, power distribution, wiring plans,
motor control center, etc.

VFuels complies with typical United States standards in its design and fabrication deliverables. These include
meeting ASME B31.3 for piping design; using A106 grade piping with ANSI flanges and fittings; meeting ASME
Section 8 for pressure vessels; heaters per API 560; exchangers per TEMA Class R; air coolers ASME code
stamped and per API 661; pumps per API 685 (sealless) or ASME B73.1 (centrifugal), and area classification
and electrical per NFPA 70.
VFuels will provide the client with three (3) copies of the Schedule A and Schedule B deliverables at the time
of their completion. These deliverables will allow the client to submit to the government for their necessary
construction/operation licenses and permits. In addition, at the completion of fabrication VFuels will supply
the client with three (3) copies of the equipment data books; and at the beginning of site installation, with
eight (8) copies of the operations and maintenance manual.
The equipment supplied by VFuels as part of the CDU, and within the ISBL, will be:

Crude distillation tower with trays

Electrostatic Desalter
Overhead accumulator
Diesel stripper with packing
Off-gas drum
Direct-fired crude heater
Overhead heat exchanger
Crude/Diesel heat exchanger

Diesel reboiler heat exchanger

Crude/Residual heat exchanger
Overhead Condenser
Diesel Cooler
Residual Cooler
Crude feed pumps (2)
Naphtha product pumps (2)
Diesel product pumps (2)
Diesel reboil pumps (2)
Residual product pumps (2)
Chemical pumps (2)
Instrumentation including local gauges (temperature, pressure, level); transmitters (level,
temperature, pressure, flow); control valves; flow meters; etc.
Spare parts (one year) including vendor-recommended spares for pumps, coolers, exchangers, heater,
instrumentation and electrical.

The equipment listed above will be placed on steel frame skids (modularized) by VFuels in Houston, Texas. The
modularization process involves fabricating skids; installing the equipment (listed above); fabricating and
installing piping; installing instruments; providing insulation and jacketing of high temperature piping and
equipment; installing electrical components such as lighting, wiring, MCC, etc.; and painting all steel
components. All skids and equipment (except the heater) are assembled at the Houston shop prior to shipping
to verify proper fit.

ISBL V ERSUS OSBL; E XCLUS IONS

CDUs have two main areas, the inside battery limits (ISBL) and the outside battery limits (OSBL). The ISBL
equipment consists of the CDU or CDU supplied by VFuels.
However, a facility requires significant support facilities to the CDU that are considered the OSBL. These OSBL
features include civil work (clear, backfill and level the site), roads, security fencing, landscaping, concrete
foundations, buildings (office, control, shop, etc.), storage tanks, truck loading rack, facility piping, power
generation, electrical power distribution, area lighting, fire protection system, compressed air, nitrogen, water
treatment, oily water treatment, and wastewater treatment.

This VFuels proposal is for the ISBL CDU only. The price and schedule DO NOT include any considerations for
the OSBL features described above. In addition, the following items are not part of VFuels deliverables and
must be provided by the client:

Permits, licenses and government approvals including fees

Site security
Ocean freight of equipment (provided to Port of Houston, Texas only)
Equipment installation labor or consumables
Any other item not detailed in this proposal

S ITE W ORK , O PERATIONS & M AIN TENANCE

VFuels will supply personnel to advise the client with respect to equipment installation, commissioning and
initial startup. VFuels has included 169 man-days for this site advice in this proposal. The client shall provide
all accommodations and local transportation to US standards for VFuels advisory personnel. Any additional
man-days required on site for VFuels advisory personnel will be the clients responsibility and paid at a rate of
$US 2,500 per man per day.
Installation work includes placing the CDU equipment skids onto concrete foundations and installing
interconnecting piping and electrical items. Commissioning includes inspecting all process, mechanical,
instrumentation and electrical components to confirm readiness for startup. Startup includes slowly feeding
crude oil into the CDU and heating/ramping up flow until maximum capacity is reached and all adjustments
for correct operation are finished. A test run of the CDU is then performed to confirm achievement of the
equipment requirements.
The client will be responsible for all labor, consumables and operations/maintenance costs during startup and
during regular operation. These costs are typically expressed in dollars per barrel ($/bbl) of crude oil processed
and are higher for smaller refineries. VFuels estimates show a range of $5 per barrel for smaller 1,000 bpd
CDUs to $2 per barrel for 20,000 bpd. These costs can be divided generally into labor and materials/utilities.