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Logistics Engineering Supply Chain

Stifel Nicolaus Capital Markets Conference CallMay 24, 2013 | 11:00 AM

Dial In Numbers

(888) 267-2848 (Domestic)(973) 413-6103 (International)Passcode: 987415

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Crude by Rail Update

Graham BrisbenCEO

Taylor RobinsonPresident

Shale Gas – Driver of Reshoring

Introduction

Stifel Nicolaus Capital Markets Conference Call

Date: Friday, May 24, 2013Time: 11:00 AM ESTLength: 60 minutes

HostMichael Baudendistel, CFA,Transportation Analyst

Dial In Numbers(888) 267-2848 (Domestic)(973) 413-6103 (International)Passcode: 987415

Replay(800) 332-6854 (Domestic)(973) 528-0005 (International)Passcode: 987415

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About PLG Consulting

» Boutique consulting firm with team members throughout the US Established in 2001 Over 80 clients and 200 engagements Significant shale development practice since 2010

» Practice Areas Logistics Engineering Supply Chain

» Consulting services Strategy & optimization Assessments & best practice benchmarking Logistics assets & infrastructure development Supply Chain design & operationalization M&A/investments/private equity

» Specializing in these industry categories: Energy Bulk commodities Manufactured goods Private Equity

Partial Client List

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Shale Gas – Driver for ReshoringA detailed analysis of shale’s direct impact to the renaissance of US manufacturing

Real World Experience Strategic Perspective Depth of Analysis Hands-on Engagement

Presented by Taylor RobinsonMay 24, 2013

PLGConsulting.com

Logistics Engineering Supply Chain

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Today’s Reshoring Discussion

What is reshoring?The return of manufacturing that has been moved offshore to the original manufacturing location, mainly the U.S.

Why is this relevant? What has changed/will change?Conditions have changed over the past few years that now favor reshoring production including quality concerns, lower energy and raw material costs in the U.S., and rising foreign labor costs.

What are the largest cost drivers in manufacturing products?Materials, Labor, Overhead, Transportation, and Energy.

Has it started yet?New factory announcements in the chemical, resin, fertilizer, and steel industries have been made in the past year. Limited numbers of traditional manufacturing companies have moved their operations back to the states.

When will it hit?PLG believes that the trend will grow substantially over the next several years for a number of reasons. Let’s discuss!

* MIT Forum for Supply Chain Innovation Survey; 340 participants completed the survey; 2013 Jan

1

2

3

4

5

15% definitely

considering

2013 MIT Survey* of Manufacturers

Considering Reshoring

34% considering

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The Shale Development Revolution

Disruptive Technologies

-Hydraulic Fracturing-Horizontal Drilling

Continuous Evolution

-Constant Change-Rapid Change-Difficult to predict

Marketing Dynamics

-Supply & Demand-Customers-Price-Logistics

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Two Technology Breakthroughs Together:

Hydraulic Fracturing & Horizontal Drilling

Great YouTube Video by Marathon on Fracking

http://www.youtube.com/watch?v=VY34PQUiwOQ

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US Shale Plays

Gas:MarcellusHaynesvilleBarnett

Oil:BakkenEagle FordPermian Basin

Most Active Plays

UticaEaglebineMississippi Lime

Emerging Plays

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Shale Oil & Gas:

High Level Supply Chain

NaturalGas

• Proppants

• Clean water

• Chemicals

Materials

• Drilling Rigs

• OCTG (Pipe)

• Cement

Equipment

Upstream

Exploration

Production

(Well Site)

Midstream Downstream

Refining

Fuel

Gasoline Distillates

Crude

Oil

Crude/

Gas

Mixture

Chemical

Feedstocks

Process

Product

Logistics Flow

Transportation

Processing

Gathering

Jet Fuel Residuals

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Downstream Supply Chain

Consumers

Petrochemicals

Aromatics Ammonia Many Others

Olefins

Ethylene Propylene Butylene

Polymers

Polybutadiene Polypropylene Polyethylene

ManufacturingIntermediates become

consumer and industrial products

NaturalGas Power

Generation

Industrial Use

Consumer Use

Petrochemical

Processing

Process

Product

Logistics Flow

RefinedCrude

Products

Chemical

Feedstocks

• Naptha

• Ethane

• Propane

• Butane

• Iso-butaneWetgas

Drygas

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Natural Gas & Petrochemical

Downstream Products

Feedstock/Intermediary

Finished Products

Natural Gas,

OIl

Ethane,

Naphtha, etc.

Ethylene

Miscellaneous

Vinyl Acetate

Linear

Alcohols

Ethyl

Benzene

Ethylene

Oxide

Ethylene

Dichloride

High Density

Polyethylene

Low-Density

Polyethylene

Adhesives, coatings, textile/

paper. finishing, flooring

Detergents

Styrene

Ethylene

Glycol

Vinyl Chloride

House wares, crates,

drums, food containers,

bottles.

Food packaging, film,

trash bags, diapers, toys

PVC

Antifreeze

Fibers

PET

Miscellaneous

Polystyrene

SAN

SBR

Latex

Miscellaneous

Medical gloves,

carpeting,

coatings

Tire, hose

Instrument lenses,

house wares

Insulation, cups

Siding, windows,

frames, pipe, medical

tubing

Pantyhose,

carpets, clothing

Bottles, film

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Shale Gas Is More Important

To US Industry Competitiveness Than Oil

» Natural gas is 4X cheaper than oil on a BTU-basis Innovation will move more transportation fuels to

natural gas Natural gas is a cleaner burning fuel

» Gas drives an increasing share of the US electricity generation capacity and has made the US the factory energy cost leaders

» Gas’ downstream by-products have world class competitiveness in the US and are the “building blocks of

manufacturing” Chemicals Resins Compounds

$0

$5

$10

$15

$20

$25

$30

2005 2006 2007 2008 2009 2010 2011 2012 2013

Oil vs. Gas Price on BTU Basis

WTI Crude ($/MMBTU)

Natural Gas ($/MMBTU)

Source: EIA

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Natural Gas Displacement of Coal

for Thermal Generation

» Natural gas now supplying ~30% of thermal fuel demand (~13% share capture from coal)

» Despite recent increases in prices, natural gas share capture expected to maintain or grow Environmental regulations of coal burning Scheduled coal unit retirements

» Will continue to adversely affecting coal industry

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Nuclear Natural Gas Coal

GW

h 2007

2012

Source: EIA

Net Generation by Source

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US Electricity Cost Competitiveness Is

Aiding Energy-Intensive Industries Now

» Shale gas boom makes electricity costs lower for US industries Reduced energy costs felt throughout supply chain Large users are achieving even lower costs by buying natural

gas directly from wells with long term contracts Some processes only become economically viable with lower

costs

» Steel example -- Direct Reduction Iron (DRI) Shale gas strips oxygen from iron core to make high purity

pellets Produces higher quality steel vs. scrap steel DRI pellets cost ~$270/ton vs. scrap steel cost ~$390/ton At least five new DRI steel plants being considered in the

U.S. by: Nucor/Encana, Bluescope Steel/Cargill, Essar Global Ltd.– Nucor signed a 20 year supply agreement with Encana

Gas & Oil to lock in energy costs

» Reciprocal Growth and Other Industry Impacts Shale gas creates demand for OCTG steel pipe for wells Increased demand for U.S. steel creates greater demand for

U.S. gas Other energy-intensive industries will have great advantages

and are anticipating further expansions in the US– Chemicals– Glass– Castings

Average Cost of Electricity (2012)

Three iron-ore storage domes stand near Nucor's direct-reduced iron plant in Convent, La.www.wsj.com - Feb 1, 2013

31¢ 30¢

18¢

13¢9¢

7¢4¢ 3¢

0

5

10

15

20

25

30

35

¢/kW

h

AAverage Cost of Electricity (2012)

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US Steel Cost Advantage

vs. China Is Widening

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US Energy Cost Advantage Is Not

a Short Term Phenomena

Over 1,000 gas wells in the Marcellus (PA) have been drilled and capped

due to gas pricing, lack of processing capacity and gas over-supply….INS

IGH

T

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Low Cost Ethylene Is Key Input to Many

Downstream Gas By Products

» Gas feedstock (ethane) makes ethylene very competitive Ethylene is feedstock for a broad range of chemical

products – a “building block” of manufacturing

US is now low cost producer of ethylene – up to 60% cost advantage

>70 cents per pound more profit per pound from ethane production compared to naphtha

Ethane-to-Naphtha cracker ratio in the US – Was 70%/30%– Likely to reach 95%/5%

» Production capacity for ethylene set to expand in U.S. -- abundant supply Investment in ethylene production has already

increased by 33% domestically Production capacity expected to rise by up to 35%

in coming years Investments in the repair and expansion of existing

crackers also increasing – part of the $95B petrochemical expansions in coming 5 years

Ethane exports will grow fueling more demand for gas

Relative Profit Margins for Producing Ethylene from Ethane and Naphtha

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Fertilizer Industry Reshoring Example

» Natural gas is a feedstock for ammonia production

» Cheap U.S. natural gas means billions in investment for new domestic fertilizer plants, displacing ~11 MM m/t of imports. Plant announcements include: Orascom/Iowa Fertilizer Company - Wever, IA CHS - Spiritwood, ND Ohio Valley Resources - Spencer County, IN Yara - Belle Plaine, SK Canada North Dakota Grain Growers Association - Williston Basin, ND CF Industries – expansions at Donaldsonville, LA and Port Neal, IA PotashCorp - resumption of ammonia production at Geismar, LA Agrium – KY or MO (anticipated)

» If new plant construction/expansions are completed, imports of nitrogen-based fertilizers could be reduced from ~50% to “near zero” by 2018

» Lower gas prices directly benefit American farmers Increased demand for corn, soybeans has driven fertilizer costs higher Excess natural gas supply can be utilized to produce greater volumes of

nitrogen-based fertilizer more economically

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Low Cost Gas Feedstock Provides

Tremendous Cost Advantages for Resins

» Europe and Asia are tied to naptha as a feedstock for their downstream processing, giving the US a large structural cost advantage for the foreseeable future

» Plastics will continue their cannibalization of metals and composites because of cost and weight advantage Continued conversion seen in the automotive industry Will transition more consumer and other industrial

products

» A number of large resin facilities on the drawing board New plant/expansion announcements forthcoming 40%+ of new production will be exported

» Plastics and rubber products among the first to be reshored

0

500

1000

1500

2000

2500

Asia USHistorical

Saudi US Recent

$/T

on

HDPE Calculated Cost

$2,018

$1,266

$692

Sources: CMAI, TopLine Analytics, and Alembic analysis, 2012

$526

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Raw Material Cost Advantage Is Key Cost

Driver to Reshoring Future

» Direct Materials normally accounts for 60-70% of manufacturing cost of goods sold (COGS) Most product cost competition is won or lost here Shale gas giving the US an advantage for metals, plastics,

chemicals

» Labor cost is usually ~20% of COGS for US manufacturers China labor cost in $ will continue to rise due to inflation and

currency appreciation US labor rate expected to remain stable

» Transportation & Logistics costs are in “Other” Asia/China has 5~10% cost disadvantage due to shipping

products on a boat for ~1 month (major cash flow disadvantage) Transportation costs continue to rise

» Energy cost is usually less than 5% for final manufacturer However, energy costs are buried in raw material costs and

transportation and can be more substantial in energy-intensive products

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US Is Already Among the Most Cost

Competitive Manufacturing Locations

» US competitiveness driven by continuous productivity improvements over past 25 years Many US manufacturers have adopted Lean and Six

Sigma techniques Global competition has driven other cost cutting

innovation – Value Engineering, materials

» Experts are predicting that US will close the overall cost gap with China over the next several years

» Other advantages of domestic supply chain Reduce risk due to disaster, quality, shipping delays, IP issues Reduced lead time and inventory -- improved cash flow! Responsiveness to customer demand Production is closer to R&D

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Where and When Will Reshoring Occur?

Or not occur?

Where?

Southeast US for more material-dependent cost products

Mexico for high labor content products

When?

Likely an ongoing evolutionary process for the next 5 years

Metals, Chemicals, Plastic products are first movers

Other lower labor content products will follow like appliances, transportation equipment, furniture, machinery

What products will likely never

reshore? Shoes and apparel Fabric and textiles Computer and electronic

products

1 2

3

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Further US Industry Expansion

Opportunities Through Export

» LNG export grabs the headlines Sabine Pass, LA and Freeport, TX now permitted for

exports; more terminals in application phase– 3.4 Bcf/day export capacity to come online by 2015– Represents ~5% of projected US dry gas production

20 additional terminal applications totaling 29 Bcf/day of export capacity pending before FERC

Expect only moderate volumes of LNG exports to be approved vs. abundant supply potential– Avoids exposure of natural gas to similar market

forces that have affected oil– Useful foreign policy instrument for Executive

Branch

» Ethylene and resins have large export opportunities to both Europe and Asia

» Steel and other metals have potential to grow exports

» Traditional manufactured goods will likely grow exports as production is moved back to states

Source: Waterborne Energy Inc. Data in $US/MMBtu

Photo: Wall Street Journal

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Big Picture View on Reshoring

HeadwindsTailwinds

» China & other low cost labor locations have substantial labor cost advantage vs. US

» Some supply chains only exist in Asia – electronics, apparel, etc

» China business owners will fight hard to keep manufacturing work

» Chinese government will continue to subsidize certain industries

» U.S. shale gas impacts on: Energy costs Raw material costs By product costs

» China’s rising costs Labor rates Currency valuation Structural ties to oil

» Other advantages of domestic manufacturing Improved cash flow due to less inventory Reduced risk and improved

responsiveness Proximity to market and R&D

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Implications and Wrap Up

» Shale gas is a game-changer for many US manufacturing industries due to impact on material costs

» US manufacturing must continuously reduce their labor and overhead costs

» Continuous evolution…. The Chinese will not easily give up on manufacturing US products New entrants in US will use new materials and technology in many

industries Innovate or perish

» Shale oil and gas has additive benefits to the US economy Energy independence – 2020 or 2025? Driving large increase in exports – LNG, propane, petrochemicals,

chemicals, plastics Improvement in trade deficit Shale oil and gas supply chain will drive job growth

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Thank You!

For follow up questions and information, please contact:

Taylor Robinson, President+1 (508) 982-1319 / trobinson@prologisticsgroup.com

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Crude by Rail UpdateA detailed look at the impacts of crude by rail on the marketplace

Real World Experience Depth of Analysis Strategic Perspective Hands-on Engagement

Logistics Engineering Supply Chain

Presented by Graham BrisbenMay 24, 2013

PLGConsulting.com

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Shale Development Crude Oil Impacts

» Dramatic increases in US production due to fracking 7.2 MM bbl/day Projected to grow by ~30% over next four years Strong play in Bakken; surging Permian and Eagle Ford development “Tight” oil sources driving overall North American growth

Production forecasts frequently revised upward

Source: Morgan Stanley, February 2013Source: Morgan Stanley, February 2013

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Driving Toward “Oil Independence?”

» Decreasing dependency on foreign crude Combination of US shale plus Canadian oil sands estimated to reduce

imports to <15% by 2020 West African imports already down ~70% from 2010 levels

» However, supply isn’t enough – “independence” also

relies on lower domestic fuels consumption CAFE standards the primary driver

» Reducing imports means reducing waterborne crudes Mid-continent sources displacing imports at coasts, making rail critical

to the total crude market Bakken as case study for large crude by rail operations

Source: BENTEK Energy

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Bakken Oil Production and Logistics

North Dakota Crude Oil Production

First outbound unit train shipment December, 2009

~779,000 BPD February 2013

Source: EIA, PLG

» 2010-2011 discount of ~$8-12/bbl for Bakken crude vs. peer WTI Undervalued due to logistics constraints “stranding” the oil

» Early objective of crude-by-rail was to bridge gap until pipelines built, but has now become the primary transport mode for Bakken crude ~70% rail market share Pipelines operating below capacity; some project

cancelations

» Significant development of crude by rail loading terminals in 2011-2012 Takeaway capacity now exceeds production Bakken vs. WTI differential near even (within ~$5)

Source: North Dakota Pipeline Authority, PLG Analysis

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Crude Oil by Rail

North Dakota Terminals

Source: North Dakota Pipeline Authority (April 2013), PLG Analysis

North Dakota Crude Oil Rail Loading Capacity (Barrels Per Day)Rail Terminals 2013 2014* 2015* Rail Carrier

EOG Rail, Stanley, ND (Up to 90,000 BOPD) 65,000 65,000 65,000 BNSFInergy COLT Hub, Epping, ND (Q2 2012) 120,000 120,000 120,000 BNSFHess Rail, Tioga, ND (Up to 120,000 BOPD) 60,000 60,000 60,000 BNSFBakken Oil Express, Dickinson, ND 100,000 100,000 100,000 BNSFSavage Services, Trenton, ND (Q2 2012 Unit Trains) 90,000 90,000 90,000 BNSFEnbridge, Berthold, ND (Q4 2012) 80,000 80,000 80,000 BNSFGreat Northern Midstream, Fryburg, ND (Q1 2013) 60,000 60,000 60,000 BNSFMusket, Dore, ND (Q2 2012) 60,000 60,000 60,000 BNSFPlains, Ross, ND 65,000 65,000 65,000 BNSFGlobal/Basin Transload, Zap, ND (Estimate Not Confirmed) 40,000 40,000 40,000 BNSFPlains All American, Manitou, ND 65,000 65,000 65,000 BNSF

BNSF Total Capacity 805,000 805,000 805,000Plains - Van Hook, New Town, ND 65,000 65,000 65,000 CPDakota Plains, New Town, ND 30,000 80,000 80,000 CPGlobal Partners, Stampede, ND 60,000 60,000 60,000 CP

CP Total 155,000 205,000 205,000Various Sites in Minot, Dore, Donnybrook, Gascoyne, and Stampede 30,000 30,000 30,000

Total Crude Oil Rail Loading Capacity 990,000 1,040,000 1,040,000

*Project still in the review or proposed phase Year End System Capacity

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North Dakota Class I Railroads

and Crude Oil Terminals

Map by PLG Consulting

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All Crude Handled by

Railroad Volume Growth

STCC 13111 Source: US Rail Desktop

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Bakken Area Outbound Pipelines

North Dakota Crude Oil Pipeline Capacity (Barrels Per Day)

Pipelines 2013 2014* 2015*

Butte Pipeline 160,000 160,000 160,000

Butte Loop* (Late 2014) - 110,000 110,000

Enbridge Mainline North Dakota 210,000 210,000 210,000

Enbridge Bakken Expansion Program (Q1-11/Q1-13) 145,000 145,000 145,000

Plains Bakken North (Q2 2013, Up to 75,000 BOPD) 50,000 50,000 50,000

High Prairie Pipeline* - 150,000 150,000

Enbridge Sandpiper* (Q1 2016) - - -

TransCanada Keystone XL* (2015) - - 100,000

TransCanada Bakken Marketlink * (4Q 2015) - - 100,000

Hiland Partners Double H Pipeline (Q3 2014, Up to 100,000 BOPD) 50,000 50,000

Pipeline Total 565,000 875,000 1,075,000

*Project Still in the Review or Proposed Phase Year End System Capacity

Source: North Dakota Pipeline Authority (April 2013)

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Bakken Production vs. Total Takeaway

Capacity: 2013–2015 Projection

Year ND Production Forecast (Bpd)

Pipeline Capacity

Rail Terminal Capacity

Rail Carrier Capacity

ND Refinery Consumption

Total Outbound &

RefineryCapacity

Excess Logistics Capacity

2013 850,000 565,000 990,000 1,300,000 68,000 1,623,000 773,000

2014 980,000 875,000 1,040,000 1,300,000 68,000 1,983,000 1,003,000

2015 1,150,000 1,075,000 1,040,000 1,350,000 90,000 2,205,000 1,055,000Source: North Dakota Pipeline Authority, PLG AnalysisBpd = Barrels per Day

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Crude Oil Pipelines

Existing and Planned

Source: CAPP Report, 2012

» Current pipelines ex. Bakken operating below capacity

» Fixed routes and long lead times are challenged by new dynamic NA oil market 10 year commitments required for new build

pipeline projects

» Pegasus spill raising new concerns about Keystone XL Special challenges of Dilbit Pegasus the only pipeline currently handling

Canadian oil sands bitumen to US Gulf Coast

» Several natural gas pipeline conversions planned Trunkline (ETP) – Patoka, IL-St. James, LA Freedom (KM) – Permian Basin-Southern

California Energy East (TransCanada) – Hardisty, AB-

St. Johns, NB

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Crude Oil by Rail vs. Pipeline

$6.50

$12.00$10.50

$15.00

$-

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

Pipeline toCushing

Rail to Cushing Pipeline to PtArthur

Rail to PtArthur

Do

lla

rs P

er

Ba

rre

l

Source: PLG analysis

» Rail cost: 50-100% more expensive than pipeline transport

» Near-term offsetting rail advantages:

Site permitting, construction much faster

Lower capital cost

Scalable

Shorter contracts (2-3 year commitments vs. 10 years for pipeline)

Faster transit times

Access to coastal areas not connected via pipeline

Origin/destination flexibility

Primary advantage: Tool of arbitrage for trading desks

Cost Comparison: Bakken to Cushing and USGC

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Shale Development Impact on

Crude Oil Market Dynamics

» Price differentials driving trading and logistics patterns

Bakken and WTI trading at ~$10-$15/bbl less than Brent; Alberta Bitumen trading at ~$30/bbl less than Brent

E&P, midstream players willing to rapidly deploy significant capital to enable access– Multi-modal logistics hubs in shale plays– New multi-modal terminals/trading hubs at destination markets (i.e.

Cushing, OK, St. James, LA, Pt. Arthur, TX, Albany, NY, Bakersfield, CA)

– Lease and purchase of railcar fleets– Pipeline expansions, reversals, new construction

Refineries installing unit train receiving capability - particularly coastal refineries previously captive to waterborne imports (i.e. Philadelphia, PA, St. John, NB, Anacortes, WA, Ferndale, WA)

Constantly changing trading and logistics patterns for light/sweet mid continent crudes– Original crude-by-rail primary destination of Cushing now being

bypassed– Crude by rail now supplying ~20% of east coast refining demand– 200 M/bpd or 40% of Bakken crudes via rail are being delivered to St.

James, LA

Source: Petromatrix

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Logistics Challenges of Light/Sweet

vs. Heavy/Sour Crudes

» Not all crudes are created equal – light/sweet vs. heavy/sour Brent, WTI, and US shale play crudes (Bakken, Permian, Niobrara, Permian) are light/sweet Heavy/sour crudes include Western Canada, Venezuela, Mexico, Alaska North Slope (ANS),

Middle East (light/sour) Light/sweet requires less downstream processing Heavy/sour has higher sulfur content Bakken has higher gas, jet, and distillate yield than peer crudes

» Refineries are generally configured to run certain types of crude Significant investments made ($48B since 2005) at select refineries to install coker units that will

allow processing of heavy/sour Major heavy/sour refining clusters: Corpus Christi, Houston, Chicago, southern Illinois, Ohio,

California US is close to saturation point on light/sweet crude at mid-continent and USGC refining areas

» The special case of the Canada Oil Sands Heavy/sour crude has a natural home in Midwest and US Gulf Coast (~2.8 MM bpd demand at

USGC) Pipeline capacity to US Midwest refining centers is at capacity Pipeline developments to coasts, US markets still 2+ years away, while tank car supply constrains

rail options Option to ship dilbit in GP oil-spec tank cars, OR undiluted bitumen in coiled, insulated cars Canadian bitumen trading at ~$30 discount vs. Mexican Maya Estimated transport cost via rail $22-30/bbl; $14-16/bbl via pipeline

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Looking Ahead:

North American Crude Oil

» The gusher of new US light/sweet shale oil production made possible by fracking has upended the traditional oil logistics and trading patterns Result: “Wrong place/wrong oil” supply displacements, i.e. Cushing overflow

Rapid investment in new logistics infrastructure, routes, modes, and terminals– Bakken now sufficiently developed; next immediate areas for significant investment are Utica, Oil

Sands, Permian, coastal areas and intermediate routes and facilities that support bitumen transport in particular

» The biggest current bottleneck: Railcars Current order backlog runs to early 2015 Major purchases by oil majors and midstream companies Extremely tight market with very high lease rates Current crude by rail fleet ~30,000 railcars, or 1-1.5 MM bbl/day equivalent

» A “new normal” in crude oil flows will emerge in conjunction with

continued North American oil production over the next five years Continued shifts of mid-continent light/sweet to coastal destinations New modes and infrastructure to get Canadian bitumen to USGC, with or without

Keystone XL Permian, Eagle Ford to meet USGC light/sweet demand; Bakken flows primarily east-

west Eventual government approval of crude oil exports on a limited basis, similar to LNG Primary risk to crude-by-rail business: WTI-Brent spread

Key Drivers

Destination Markets

Oil Price

Logistics

Capital

Source: CME and Morningstar

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Looking Ahead: Crude Oil Anticipated

Production Growth and Product Flows

= Light/Sweet= Heavy/Sour

= Pipeline

= Marine

= Rail

= Storage terminal(s)

= Refinery cluster – Light Sweet/Intermediate

= Refinery cluster – Heavy Sour/Intermediate

= Current b/d (000)= Future b/d (000) additional by 2017 +420

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Bakken

+855

704

Oil Sands

+9821,615

Eagle Ford

+1,087352

Permian

+607514

Source: BENTEK Energy, CAPP, Railroad Commission of Texas, PLG Consulting 41

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Thank You!

For follow up questions and information, please contact:

Graham Brisben, CEO+1 (708) 386-0700 / gbrisben@prologisticsgroup.com