VLS.L Regulatory News (VLS)

17 April 2012

Oxford Catalysts Group PLC

("Oxford Catalysts" or "the Group")

New experimental facility for microchannel reactor testing and development opens

at the PTT R&D site in Thailand

A new experimental facility for testing microchannel reactors has begun operations at the PTT Research and Technology Institute in Wangnoi, Ayutthaya, Thailand, approximately 70 km north of Bangkok. The new facility, which is operated by PTT, the Thai National Energy Company, was set up under the terms of a research collaboration with Velocys, Inc., the US-based member of the Oxford Catalysts Group, and is designed specifically to test microchannel reactors for gas to liquids (GTL) applications.

The facility, which is manned by 8 research staff from PTT, is linked to Velocys via a computer network to enable Velocys researchers to access experimental data in real time. This will make it possible for Velocys to analyse various aspects of catalyst performance and to optimise and validate the long-term performance of its microchannel steam methane reforming (SMR) reactors, an important element in the Group's modular GTL technology. It will also enable PTT staff to gain valuable experience in the use of microchannel GTL technology, and provide them with the data necessary to carry out detailed engineering evaluations of modular GTL facilities.

PTT are particularly interested in the Group's modular GTL technology as a means to monetise associated gas from on-shore wells that is currently disposed of by flaring.

Ratanavalee In-Ochanon, PTT Executive Vice President says:

"PTT is strongly committed to working with Velocys to develop its technology for microchannel GTL. The new microchannel research facilities at Wangnoi will play an important role in bringing this technology towards commercialisation, and we are very pleased to know that our new research facility will help to bring this about."

Jeff McDaniel, Commercial Director at the Oxford Catalysts Group says:

"The new PTT facility at Wangnoi will enable us to work closely with PTT to carry out basic research and testing of microchannel reactor capabilities. This collaboration will provide valuable help as we commercialise our modular GTL technology. We are looking forward to a long-term relationship working with PTT. "

Notes to Editors

For further information or to obtain pictures, please contact:

Notes to Editors

Oxford Catalysts designs and develops technology for the production of clean synthetic fuels from both conventional fossil fuels and renewable sources such as bio-waste. The Group is primarily focused on the emerging market for distributed scale production of synthetic fuels via Fischer-Tropsch ("FT") synthesis − a market that has the potential of producing as much as 25 million barrels of fuel a day.

The FT reaction is used when converting natural gas, coal or bio-mass into clean high-performance liquid synthetic fuels, processes known as GTL, CTL and BTL respectively. The Group is the recognised world leader in the design and development of high-activity catalysts and associated novel chemical reactors for the small scale production of synthetic fuels. (The Group's reactor technology − known as microchannel process technology − is marketed under the brand name of Velocys).

Oxford Catalysts Group PLC is listed on the AIM market of the London Stock Exchange (LSE: OCG). The Group has some 85 employees with facilities near Oxford, UK and Columbus, Ohio, USA.

www.oxfordcatalysts.com

www.velocys.com

Microchannel reactors

Microchannel reactors are compact reactors containing thousands of channels with characteristic dimensions in the millimetre range. Mass and heat transfer limitations reduce the efficiency of the large conventional reactors used for gas to liquids (GTL) and other processes. The use of microchannel processing makes it possible to intensify chemical reactions, enabling them to occur at rates 10 to 1000 times faster than in conventional systems.

The Oxford Catalysts Group has developed microchannel Fischer-Tropsch (FT) and steam methane reforming (SMR) reactors, as well as the highly active catalysts optimised for use in them. This allows the GTL process to be carried out cost-effectively as a distributed process in small, modular plants located nearer the feedstock resource.

The Gas to Liquids (GTL) process

The GTL process involves two operations: steam methane reforming (SMR), followed by Fischer-Tropsch (FT) synthesis.

In SMR the methane gas is mixed with steam and passed over a catalyst to produce a synthesis (syngas) consisting of hydrogen (H2) and carbon monoxide (CO). The reaction is highly endothermic, so requires the input of heat. This can be generated by the combustion of part of the methane, excess H2 or other fuel gas.

In microchannel SMR reactors the heat-generating combustion and steam methane reforming processes take place in adjacent channels. The high heat transfer properties of the microchannels make the process very efficient.

In the FT process, first developed in Germany in the 1920s and 1930s to produce liquid fuel from coal, the syngas is converted is converted into paraffinic hydrocarbons over a cobalt catalyst. The process is highly exothermic, or heat generating. The range of products that can be produced includes diesel, jet fuel, naphtha and bases for synthetic lubricants. Generally these are of higher quality than those derived by conventional means.

Microchannel FT reactors consist of reactor blocks containing thousands of thin process channels filled with FT catalyst, which are interleaved with water-filled coolant channels. As a result they are able to dissipate the heat produced by the FT reaction much more quickly than conventional systems, so more active FT catalysts can be used. The Oxford Catalysts Group's microchannel FT reactors take advantage of a new highly active FT catalyst developed by Oxford Catalysts Ltd.

Small scale distributed GTL based on the use of microchannel SMR and FT reactors provides a cost-effective way to capture stranded gas located far from existing pipeline infrastructure and markets, and associated gas produced along with oil - resources that would otherwise be wasted. It can also be used to boost the economics for shale gas developments.

PTT

The Petroleum Authority of Thailand (PTT) was established in 1978 to procure adequate oil for domestic consumption and to ensure the country's energy security. Today the PTT Group is involved in oil and gas exploration and production both in Thailand and abroad. It also operates gas pipelines and gas separation plants, carries out hydrocarbon refining and petrochemical production and markets refined fuels and lubricating products.

www.pttplc.com/en