Cladding. Metallurgical. Category: Nominee(s): Web site: 01/08/2012. Full Description: When and how. arc materials, this developing

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1 Title of Innovation: CermaClad, High Speed Large Area Metallurgical Cladding Category: Coatings and Lining Nominee(s): Andrew Sherman CEO, MesoCoat Inc. Euclid, OH, USA Figure 1: Comparison of CermaClad process with the current state of art laser cladding technology. As can be seen in the above figure CermaClad hass a 40X wider application source compared to a laser cladding torch. Web site: Date of Innovation: 01/08/2012 Full Description: When and how was it developed? The development of this technology began in early 1996 at Oak Ridge National Lab (ORNL), when scientists at ORNL were exploring the idea of using the High Density Infrared (HDIR) arc lamp manufactured by Vortek, Inc. of Canada for thermal processing of functional materials, this arc lamp technology was primarily used inn the semiconductor processing industry. ORNL continued developing the technology for applying a variety of corrosion and wear resistant materials on metal substrates and understanding the process, flow, metallurgy, control over temperature e and chemistry as they continued. In 2008, MesoCoat Inc. approached ORNL for licensing this technology with the intention of using this technology

2 to apply their patented nanocomposite materials on large areas such as ship decks for a project sponsored by the U.S. Navy. MesoCoat realized the potential of this technology and exclusively licensed the technology from ORNL in Since then, MesoCoat has developed, demonstrated, and qualified variety of material with cladding thickness ranging from 100 microns to 15 mm for a variety of applications. In the past 4 years, MesoCoat has built its expertise in process control, metallurgy, material science, scalability, and reducing the footprint of the cladding system which was as big as a 4 feet cube to one that can go inside pipes as small as 7 inches in internal diameter. This technology has unlimited potential since it has no limitation on the materials that can be fused and can basically fuse any metal known to man on metal substrates for corrosion, wear, erosion, insulation, conduction or any other application. MesoCoat s R&D activities are now focused on such niches that give them a competitive advantage over any other process. MesoCoat has demonstrated defect free metallurgical cladding on metal substrates, which has been verified by the #1 Global Risk Management Lab, Det Nortske Veritas, where the test results have shown 6X lower rate of corrosion, 90% lower dilution of base metal and heat affected zone, and other mechanical and metallurgical properties that are much better than those required under the API 5LD and DNV OS F101 standards. How does it work, in basic terms? The CermaClad high speed large area fusion cladding process offers a faster, better, and more cost competitive process for cladding corrosion resistant alloy (CRA), wear resistant material, cermet, ceramic, and metal powders on large metal surfaces to provide outstanding corrosion and wear protection. CermaClad technology uses a high intensity light source, which is effectively an artificial sun encapsulated in a quartz and aluminum reflector, to rapidly fuse cladding material on steel pipes and tubes (both internal and external surfaces), plates, sheets, and bars at rates X faster, with better metallurgical and surface properties, and at lower costs compared to current state of art. If you have ever tried burning a paper by focusing sun rays with a magnifying glass, you would understand the basic concept of CermaClad. The corrosion and wear resistant cladding material (Paper) is heated and fused using the CermaClad high intensity arc lamp (Sun) that is encapsulated in a quartz and aluminum reflector (Magnifying glass). So, you apply the corrosion and wear resistant material on the base metal that you need to protect, then you just scan the lamp over it, and within seconds you get a metallurgically clad layer of corrosion and wear resistant material on top of the base metal. To explain the basic process, the required corrosion or wear resistant materials is applied onto a metal substrate either as slurry or in powder form, and then just run the arc lamp over it within fraction of a second the corrosion or wear resistant materials melts, fuses, and metallurgically bonds to the metal substrate.

3 How or why is the innovation unique? CermaClad TM represents a revolutionary advancement in cladding technology because it can produce an exceptional product at a fraction of the cost and manufacturing time of competing technologies. The unique process that utilizes a high intensity plasma arc lamp to clad materials creating a strong metallurgical bond at the interface with the base metal substrate, producing cladding that can withstand extreme temperature and pressures and resist corrosion and wear. The CermaClad TM process also improves processing times and maintains the structural integrity of base metal by limiting the penetration depth of the thermally affected zone during the cladding process. In short, it is simply a cheaper, better, and faster alternative to its competitors. By offering high performance cladding products at a fraction of the cost of current technologies, the innovative CermaClad TM process could expand the number of cladding applications across a variety of areas, potentially growing the cladding market from its current $3.8 billion/year to more than $5 billion/year. CermaClad Value Proposition: Time: X times the production rate of weld/laser cladding Coverage of ft 2 /hour with a single system Same line speed as that of steel mills, and thus avoiding any delay in the project schedule and scope Performance: True metallurgical bond, >30,000 psi Minimal heat input to the substrate leading to strength retention of substrate Little to no dilution of substrate thereby providing maximum corrosion/wear protection 3 6X lower wear and corrosion rate compared to the SAME materials applied with weld overlay or laser cladding Less than 2% porosity, and no cracking on cladding up to 15mm thick Field portable system under development Cost: 20% lower sales price compared to current competition Reduces lead time and thus significantly lowers the overall project costs Process enables application of thinner clad layers, greatly reducing material costs Faster process ensures lower operating costs CermaClad Application Process: CermaClad utilizes the very high rate and scalable (up to 1MW and greater) power of the high energy density source to rapidly fuse the metallic, ceramic, and ceramer coatings to the

4 substrate in about one half second. The application area depends on lamp power (and size) and dwell time (transit speed). The optical/thermal power distribution, which can be controlled through optical focusing and lamp design, is tailored to the coating feedstock for pin hole free, uniform coatings (flow and surface energy control) and optimum performance (corrosion and wear life). The CermaClad system represents a revolutionary advancement in coating and cladding technology, compared with weld overlays, electroless plating, and thermal or plasma spray alternatives. Most firms go through a similar process of 4 to 6 steps to produce clad products. The first step always involves material preparation in which the base substrate is cleaned. In the second step, the clad material is applied in solid or powder or slurry form to the substrate. Cladding materials are chosen based on whether corrosion resistance, wear resistance or higher hardness is required for the end use of the substrate being clad. The third step involves fusing the two dissimilar materials together. In many other cladding processes, this step must be repeated several times to build the coating material to a certain thickness. The fourth and last step is to cool the final product. Most other cladding approaches require both a fifth step (reforming the backing of the degraded substrate at the diffusion points) and a sixth step (finishing the end product by grinding, smoothing, polishing, etc.) to meet clients property specifications. The CermaClad process is far superior to the competition mainly because of Step 3 The high density infrared heating lamp technology uses a very high wattage rate and that wattage is a scalable (from 50KW to 1+MW) power source to rapidly fuse coatings to the substrate in about ~1/2 second (15 100X faster than competition). The metallurgical bonding achieved by this system results in a stronger bond (with strength in excess of 30,000 psi) and offers better metallurgical properties than any other current cladding process with minimal dilution of the base material. The scalability of the power source allows uniform coverage of different coverage amounts (i.e., clad thickness) over a range of surface sizes. What type of corrosion problem does the innovation address? According to World Corrosion Organization, corrosion costs $2.2 trillion annually to the global economy. CermaClad provides a faster, better, cheaper solution to protect metals from corrosion and wear and thus extend the life of metal assets. CermaClad is a technology without limitation when it comes to selection of corrosion and wear resistant material that need to be fused using the high intensity arc lamp. CermaClad results in a thin or thick metallurgical cladding based on the end use environment that is smooth, pinhole free, with wider tracks, minimal porosity, minimal dilution, small heat affected zone, and a strong metallurgical bond. So, now here is a technology that can completely replace weld overlay and laser cladding for large area applications and specifically for clad pipes that can not only offer outstanding metallurgical and surface properties without damaging the base metal, but also at X faster production rate and at approximately 20% lower cost.

5 According to International Energy Agency, almost 70% of the remaining oil and gas reserves are highly sour and caustic and hence require better corrosion resistant products to explore these reserves safely and efficiently. Clad pipes will be required in large quantities for hundreds of reserves which are going to be developed over the next several years. Current processes for manufacturing metallurgical clad pipe are too slow and expensive, and hence there is an urgent need for a manufacturing technology that enables higher productivity at lower costs and CermaClad does exactly that. What is the need that sparked the development of the innovation? A need for providing a better metallurgical corrosion and wear resistant cladding for metals sparked the interest of ORNL. MesoCoat was initially interested in applying its patented nanocomposite cermet coatings to large area such as ship decks which are huge, and hence needed a process that can coat large areas at a very fast rate hence MesoCoat approached ORNL regarding licensing this technology. As MesoCoat moved ahead with development, Oil and Gas companies specified the need to clad the inside of pipes at very high production rate, something that can be close to the productivity of a steel mill; they made it very clear that current weld overlay and laser cladding are extremely slow and even the final product is not as outstanding as it needs to be. This sparked MesoCoat s interest towards developing a system which can go inside a pipe and clad the pipe ID, from a system which was as big as a 4 feet cube. MesoCoat has already demonstrated a strong metallurgical cladding that had 6X better corrosion resistance, better surface, and 40X lower dilution compared to weld overlay; and was certain that if this system can go inside the pipe, it can change the playing field specifically in the $1.8 billion clad pipe market and make a huge overall impact in the $3.8 billion metal cladding segment which is expected to double in size over the next 3 5 years. Are there technological challenges or limitations that the innovation overcomes? There are several challenges and limitation that this innovation overcomes like cladding the inside of a pipe with the high intensity arc lamp which had never been done before, overcoming the slowness of weld overlay process which is the current state of art with CermaClad that has X higher productivity, provides surface and metallurgical properties of cladding that are a magnitude better that weld overlay, and reduces cost of metallurgical clad pipes by approximately 20% thus expanding its market potential and replacing a big chunk of mechanically lined pipe alternative which is heavily used for Oil and Gas applications. What are the potential applications of the innovation? Corrosion and Wear resistant metallurgically clad pipes for a wide range of applications like risers and flow lines in both onshore and offshore Oil and Gas production, transportation, processing, and refining; hydro transportation and tailings pipe for Oil Sands transportation and processing; Ore and other slurry lines for Mining; and flow lines for processing and production in various industries.

6 Corrosion and Wear resistant metallurgically clad plates used in mining and processing applications; clad plates and components for ship decks, ballast and cargo tanks; and for fabricating pressures vessels, reactors, tanks, rolls, heat exchangers, valves, separators, and other components for Oil and Gas, Mining, Power generation, Nuclear, Desalination, Cement, Steel, Marine, Paper and Pulp, Hydrometallurgy, and other industries. CermaClad Product Line: CermaClad CRA (Corrosion Resistant) CermaClad CRA cost effective clad products are made from Corrosion Resistant Alloys (Alloy 626, 825, 904L, Monel 400) and Stainless Steel at cladding thicknesses between 2.5mm 4mm; using our proprietary CermaClad high speed fusion cladding technology that provides ultimate corrosion resistance, true metallurgical bond, with no damage to the substrate and better metallurgical properties than competitive cladding processes. Applications: Oil and Gas (OCTG ID, Risers, Flow lines, Transportation pipelines, Tankers, Vessels, Reactors) Oil Sands (Slurry Lines ID) Mining (Slurry lines ID, Wear plates) Power Generation (Boiler tubes) CermaClad WR (Wear Resistant) CermaClad WR cost effective clad products are made from Wear Resistant materials like Chromium Carbide and Tungsten Carbide at cladding thickness between 5mm 8mm; using our proprietary CermaClad high speed fusion cladding technology that provides ultimate wear resistance, true metallurgical bond, with no damage to the substrate and better metallurgical properties than competitive cladding processes. Applications: Oil Sands (Slurry Lines ID) Oil and Gas (OCTG ID, Tankers, Vessels, Reactors) Mining (Wear plates) Power Generation (Boiler tubes) CermaClad LT (Low Thickness) CermaClad LT cost effective clad products are made from corrosion resistant materials like Stainless Steel and Aluminum at cladding thickness between 0.1mm 1mm; using our proprietary CermaClad high speed fusion cladding technology that provides ultimate corrosion resistance, true metallurgical bond, with no damage to the substrate and better metallurgical properties than competitive paint systems and cladding processes. Applications: Shipbuilding (Ballast and Cargo Tanks, Decks) Infrastructure (Rebars, Beams)

7 Bridges (Steel Structures, Beams) Oil and Gas (Pipeline OD and ID) CermaClad Addressable Markets Primary Addressable Market o Immediate: $1.8 billion (clad pipe) o Current: $3.8 billion o 2015: $7.6 billion o New Markets: $20+ billion Oil and Gas ($1.8 billion) o Pipes, Risers, Flowlines Oil Sands ($225 million) o Slurry lines, Hydro transportation and tailings pipe, wear plates Mining ($1+ billion) o Slurry lines, wear plates, screens, beds Nuclear and Energy Generation ($1+ billion) o Heat Exchangers, Pressure Vessels, Tanks, Reactors Shipbuilding ($10+ billion) o Ballast and Cargo tanks, Ship Decks Infrastructure ($10+ billion) o Rebars, Structures, Components How does the innovation provide an improvement over existing methods, techniques, and technologies? CermaClad has a X higher production rate, is 20% cheaper, and provides 6X better corrosion resistance and 3X better wear resistance compared to weld overlay and laser cladding. Lack of availability and high costs have limited the use of metallurgically clad pipes components which has been confirmed by Oil and Gas majors, and EPC companies. CermaClad would change this game with very high production rate per system thus ensuring availability, and offer clad products at lower cost with better quality. What type of impact does the innovation have on the industry/industries it serves? CermaClad changes metallurgical cladding from being merely a Preferred Option to the Most Viable Option with the highest benefit/cost ratio at the lowest risk for some of the most extreme environments where clad steel or alloy steel are considered as the best alternative. Imagine the possibilities with steel that lasts 3 6X longer It will lead to a paradigm shift in the metal asset protection and life extension. Oil pipelines that do not rupture/fail due to corrosion, bridges and infrastructure that lasts years, ships that last its design life without any repairs/maintenance related to corrosion, heat exchangers and tubes that can be used for ultrasupercritical boilers which provide higher efficiency energy, great amount of

8 reduction in energy consumption and carbon emission since you do not have to replace steel for 3 6X its current life These are just some examples, just imagine the possibilities with steel that lasts 3 6X longer. There is 2.4 tonnes of CO2 emission for every tonne of steel that is manufactured; imagine the positive impact we can make on our environment by making this steel last 3 6 times longer. According to 'The World Corrosion Organization'; the annual cost of corrosion globally is $2.2 trillion, roughly over 3% of worlds GDP. If you add the cost related to wear, the cost of wear and corrosion mounts up to 5% of worlds GDP. Just to maintain a marginally safe D grade (on an A F scale) for U.S. highways and bridges, it will cost $1 trillion or more over the next decade. It is absolutely essential in today's economy to curtail these costs and make our operations and infrastructure more efficient; and CermaClad does exactly that. CermaClad also replaces toxic plating process and organic compounds thereby protecting our environment. CermaClad corrosion and wear resistant clad pipes would be used for both onshore and offshore Oil & Gas applications, and Oil Sands to transport caustic, abrasive fluids. CermaClad offers better wear and corrosion protection, and hence reduces the chances for failure that lead to oil spills that lead to huge environmental damage. CermaClad provides a better solution for energy production and transportation, infrastructure which is environmentally friendly and extends life of steel leading to huge savings. Does the innovation fill a technology gap? If so, please explain the technological need and how it was addressed prior to the development of the innovation. A huge gap in supply and demand existed for metallurgically clad steel for a variety of applications, and especially metallurgically clad pipe for deepwater Oil and Gas production and transportation. The current technologies weld overlay and laser cladding have existed over many decades with little to no innovation to improve productivity to meet this huge demand v/s supply gap. Also, the high costs associated with the metallurgically clad products did not help wider adoption. There has been a need for a cladding technology that can shootup productivity by at least times, offer better metallurgical and surface properties that eventually provide better corrosion and wear resistance leading to longer life, and reduce the high costs associated with metallurgically clad products. So, the gap boiled down to time (demand v/s supply), cost, and performance. The shortcomings of metallurgically clad pipes forced Oil and Gas companies to select lower quality mechanically lined pipe and roll bonded plate to pipe options since they were available in bulk quantities and in shorter lead times. Mechanical Lined pipe have severe buckling, reeling, and bonding issues whereas the rollbonded pipes are not seamless and have a lot of weld which increases the risk of failure to a great extent. CermaClad is a disruptive innovation that allows end users to use metallurgically clad products that have 75 80% reduced lead time due to X higher production rate, at 20% cheaper costs due to a great amount of reduction in operating expenses and production time, and longer life due to better surface and metallurgical properties.

9 Has the innovation been tested in the laboratory or in the field? If so, please describe any tests or field demonstrations and the results that support the capability and feasibility of the innovation. MesoCoat recently completed (American Petroleum Institute) API 5LD testing according to the specifications mentioned in (Det Norske Veritas) DNV OS F101 Offshore standards. The API 5LD specification provides the standard for clad pipe with improved corrosion resistance suitable for use in conveying gas, water, and oil in both the oil and natural gas industries; and DNV FS 101 is the globally accepted standard that gives criteria and guidance on concept development, design, construction, operation and abandonment of Submarine Pipeline Systems. MesoCoat is pleased to inform that CermaClad test results have exceeded API 5LD requirements by completing testing as specified in the DNV OS F101 Offshore Standards. To summarize the test results and give a brief comparison of CermaClad CRA (corrosion resistant alloy) with Alloy 625 weld overlay; CermaClad reduces the rate of corrosion by 6X, fused CermaClad CRA at 0.1 mm from the fusion line is much better than 625 weld overlay at 4mm (demonstrating very little dilution/stirring), and CermaClad CRA shows an outstanding metallurgical bond that is greater than 30,000 psi (50% greater than API 5LD specification). When compared to the current state of art weld overlay and laser cladding technologies; CermaClad is outstanding and the tests conducted at DNV have validated the supreme performance. MesoCoat has also completed testing and qualification of their CermaClad WR (wear resistant) samples with one of the largest Oil Sands producers in Canada, and test results have shown 3X better wear properties and life compared to weld overlay with the same material. Extended life (3 6X), better metallurgical and surface properties that leads to better wear and corrosion protection, and extended life coupled with X higher production rate and lower costs provide MesoCoat an arsenal of market levers that will be very difficult for competitors to match. Is the innovation commercially available? If yes, how long has it been utilized? If not, what is the next step in making the innovation commercially available? CermaClad plates and samples have already completed the require testing for both onshore and offshore clad pipes for both Oil and Gas, and Oil Sands industries. MesoCoat is currently completing construction of their first full scale manufacturing facility in Euclid, Ohio; and has begun operations at its demonstration/component repair facility in Eastlake, Ohio. MesoCoat expects to produce full length clad pipes for final qualification in Q4, 2012 and would begin production of corrosion resistant clad pipes at its first full scale manufacturing facility in Q4, MesoCoat is on schedule with their development task and schedule, and expects they will begin full scale production and sale of clad pipes in the beginning of Q1, Once operational this facility would employ approximately 30 employees and produce up to 25 kms of corrosion resistant clad pipe, making this facility one of the top 5 metallurgical clad pipe

10 manufacturing facilities across the globe. MesoCoat intends to build 5 additional 4 line clad pipe manufacturing facilities over the next 3 5 years across the globe to reach a total production capacity of up to 500 kms of clad pipe ($1+ billion in revenues). MesoCoat believes that these facilities that would be located in U.S., Canada, Brazil, Indonesia, and Middle East would essentially cover the global demand, and lead MesoCoat to a leadership position in the clad pipe manufacturing industry. Are you aware of other organizations that have introduced similar innovations? If so, how is this innovation different? We are very well aware about our market and competition, and we are certain that there is nothing that comes close. As mentioned earlier, there has been some improvement over the years with weld overlay and laser cladding technologies; which includes marginal improvement in deposition rates, surface properties and metallurgy but that s about it. CermaClad is a game changing technology and that s because it provides an order of magnitude improvement in surface properties and metallurgy, life; and up to two orders of magnitude improvement in production rate at lower costs. There is no known company using a high energy density infrared arc lamp to fuse metal or other coatings on metal substrates. ProClad and Cladtek are two of the largest manufacturers of metallurgically clad pipes across the globe, and cumulatively generate approximately $1 billion in annual revenues. However, these companies use the legacy weld overlay and laser cladding technologies to produce metallurgically clad pipes; and to reiterate CermaClad is X faster and 20% cheaper process that offers longer life for metals and better properties compared to weld overlay and laser cladding technologies. MesoCoat owns the patents for the CermaClad application process, final cladding parameters, material compositions, and the use of the high energy density infrared arc lamp to apply protective coatings and surface engineering; and we have an exclusive supply agreement with the only manufacturer of these high energy density infrared arc lamps. So, the intellectual property is water tight with both US and global patents and the expertise gained over several years to control to process parameters, metallurgy, and material composition to apply an optimum cladding on metal substrates. Are there any patents related to this work? If yes, please provide the patent title, number, and inventor. Mentioned below is a list of the approved and filed patents related to MesoCoat s CermaClad technology. MesoCoat is currently preparing to file additional U.S. and global patents on new corrosion and wear resistant materials, cladding compositions, surface properties and microstructure, and broader patents to cover the entire spectrum for multiple applications spanning all the target industries B1 Rapid infrared heating of a surface Vinod Sikka (ORNL), Craig Blue (ORNL), Evan Ohriner (ORNL)

11 B2 Pulse thermal processing of functional materials using directed plasma arc Ronald Ottt (ORNL), Craig Blue (ORNL), Nancy Dudney (ORNL), David Harper (ORNL) PCT/US2010/ Coatings, Composition and method related to non spalling low density hardface coatings Andrew Sherman (MesoCoat)) PCT/US2010/ Article and method of manufacturing related to nanocomposite overlays Andrew Sherman (MesoCoat), Greg Engleman (MesoCoat) 12/699, 799 Coatings, Composition and method related to non spalling low density hardface coatings Protection Andrew Sherman (MesoCoat) 12/785, 397 Article and method of manufacturing related to nanocomposite overlays Andrew Sherman (MesoCoat), Greg Englemann (MesoCoat) 61/451,114 Method and Apparatus for forming Clad Metal Products Andrew Sherman (MesoCoat), Greg Engleman (MesoCoat) Recently Filed Thin Metal Coatings for Cathodic Protection Andrew Sherman (MesoCoat), Greg Engleman (MesoCoat), Mario Medanic (MesoCoat), Kurt Gilbert (MesoCoat) Supporting Photos: Figure 2: The spectrum generated by the high density fusion arc lampp is similar to the spectrum generated by the sun.

12 Imagine Painting a Large Wall Painting a large wall with a Roller? CermaClad Painting a large wall with a Pencil? Current Cladding Technologies Figure 3: CermaClad's primary value proposition compared to current cladding technologies Figure 4: CermaClad application process to clad/coat the inside diameter of pipes with corrosion and wear resistant materials.