Transforming American Industry through Alternative Materials. MARK COSTA Senior Vice President Corporate Strategy and Marketing

Transcription

1 N Transforming American Industry through Alternative Materials MARK COSTA Senior Vice President Corporate Strategy and Marketing

2 Eastman At-A-Glance A global manufacturer of chemicals, plastics and fibers Leading producer of differentiated coatings adhesives, and specialty plastics products One of the world's largest manufacturers of PET polymers for packaging Leading supplier of cellulose acetate fibers 2006 sales revenue of $7.5B

3 Chemicals from Coal (1983) EASTMAN Chemicals from Wood (1920)

4 Eastman Chemical Company At-A-Glance Coal Gasification based since 1983

5 Strong, Consistent Acetyl Stream Earnings An Industrial Gasification Competitive Advantage Eastman Chemical Company Operating Earnings Acetyl Stream Olefins and Polyester Streams ~ 20% of products based on gasification, but ~ 50% or more of earnings based on gasification

6 The Costliest Component Commodity Chemical Costs Conversion Costs (including energy costs) Raw Materials Costs Logistics

7 Rising Costs of Conventional Raw Materials $12 $80 Natural Gas $/MMBTU $10 $8 $6 $70 $60 $50 $40 Crude $/bbl $4 $30 $20 $2 $10 $0 $ Crude (West Texas Intermediate) Natural Gas (Houston Ship Channel) Note: All prices are in constant 2007 dollars (YTD October) Source: Eastman, Global Energy Decisions

8 U.S. Industry Options Close Shop Move Out Transform American Industry

9 Impact to the Ammonia & Methanol Industries (Since 2003 Approximately 20 Ammonia and 6 Methanol Plants Closed) Ammonia Plants Methanol Plants Illustration Only Sources: U.S. Geological Survey, Mineral Commodities Summaries, 2007 Chemical Economics Handbook - SRI Consulting, 2007

10 The Exodus Through the worst downturn in industry history, the North American chemical industry vowed never to build a world-scale chemical plant again. --Joseph Chang, Editor ICIS Chemical Business magazine (August 6, 2007)

11 The Exodus Eastman Announced Plants! Source:ICIS Chemical Business

12 Eastman's Answer Transform the Company through Industrial Gasification of Alternative Domestic Materials Coal Petcoke Biomass Secondary Recycled Materials

13 Industrial Gasification is Advantageous Coal/Petcoke: Lower Cost & Less Volatile $12 Coal & Petcoke vs. Conventional Raw Materials $80 Natural Gas, Coal & Petcoke $/MMBTU $10 $8 $6 $4 $2 $ $70 $60 $50 $40 $30 $20 $10 $0 Crude $/bbl The spread is large and growing Crude (West Texas Intermediate) Coal (Illinois Basin) Natural Gas (Houston Ship Channel) Petroleum Coke Note: All prices are in constant 2007 dollars (YTD August) Source: Eastman, Global Energy Decisions

14 Industrial Gasification is Advantageous U.S. has more than 25% of the World's Coal Reserves 50% % of Total World Reserves 40% 30% 20% 10% U.S. has 250-plus year supply of coal (largest single-nation fossil reserves on earth) U.S. Non-U.S. 0% Coal Crude Oil Natural Gas Source: International Energy Agency and Dept. of Energy Information Adm. (EIA)

15 Coal Gasification is Advantageous Environmentally Friendly Choice Gasification Advantages Lb/MMBtu Lower air emissions and water usage Lower solid wastes Inexpensive mercury removal Much lower costs for CO2 capture SCPC (FGD/ESP/SCR) IGCC (MDEA, No SCR) Industrial Gasification (IG) NOx SO2 Particulates SCPC and IGCC Source: EPA Report "Environmental Footprints and Costs of Coal-Based IGCC and PC Technologies", July 2006

16 Carbon Capture and Compression Costs (per metric ton) $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 $40 $20 $10 $8-10 Pulverized Coal IGCC Coal to Liquid Industrial Gasification Source: MIT s The Future of Coal, 2007 Note: Does not include pipeline transportation and injection costs

17 The Challenges High Capital Costs Reliability Concerns Financing Issues Economies of Scale Off-take Agreements & Market Risks

18 Eastman's Performance History Annual Syngas Production New Production Record! Continual Process Improvement

19 Eastman's Gasification Credentials Demonstrated Best-In-Class Performance (sustained high reliability) Plant Availability % Industry Start-up History Eastman Average Industry Range of Performance Years from Mechanical Completion A Source, excluding Eastman data: J. Phillips, EPRI, "Integrated combined cycles with CO2 capture", GCEP research symposium, Stanford University, June 13-16, 2005.

20 Eastman's Strategy for Growth: Gasification Methanol Coal Ultra-Clean Syngas EMN Strategic Chemicals Petroleum Coke Hydrogen Baseload Hydrogen Ammonia Removal of: Sulfur, Mercury, Arsenic & Other Components Carbon Dioxide Enhanced Oil Recovery (EOR) or other sequestration options

21 The Future is Here. Right Now.

22 Thank you for your attention!