Baker & O’Brien, Inc. All rights reserved.

PRISMTM Refining and Marketing

Industry Analysis

PRISM is a trademark of Baker & O’Brien, Inc. All rights reserved.

1

Baker & O’Brien Overview

• History – Founded in 1993 – Independently owned and managed – Combined technical and commercial expertise – Over 2,100 assignments completed

• Consulting Staff – Mostly chemical and mechanical engineers – Most have advanced degrees – MBA, economics, or finance – Consultants average 30 years experience – Experienced problem solvers – Supported by highly-trained analytical staff

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Baker & O’Brien Services Portfolio

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PRISM System

• Refining and Marketing Industry Database

• Refinery Simulator

• Crude Assay Library

• Crude Blending Tool

• Archive for Commercial Intelligence

• Menu-Driven System for Viewing and Reporting

• Open Architecture Using Microsoft® Access and Excel

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Refining and Marketing Industry Database

• Extensive Historical Performance Database – United States

Essentially all U.S. refineries Updated quarterly Historical data from 2010

– Canada Essentially all Canadian refineries Updated annually Historical data from 2010

– Europe 84 European/Middle East refineries Updated annually Historical data from 2012

– Asia-Pacific 71 refineries including all the Australian, Korean, Singapore, and

West Coast North American refineries Updated annually Historical data from 2011

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Refining and Marketing Industry Database

• Detailed Analysis of Refinery Operations – Crude and other feedstock logistics, quantities, qualities, and

costs – Individual unit capacities, operating, and replacement costs – Product yields, qualities, and distribution patterns – Fixed and variable expenses and replacement costs – Carbon dioxide emissions

• Comprehensive Economic Treatment of Supply Chain – Crude from load port or initial injection point – Products to wholesale terminals – Pipelines and waterborne transportation included – Delivered product cost to sales terminals – Can model pipeline capacity constraints

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Refining and Marketing Industry Database (Cont.)

• Consistent Basis for Competitive Analysis – Try to match actual physical operations but not financial reports – No inventory modeling; no FIFO or LIFO effects – No “hedging” or other trading profits or losses – No profits or losses due feedstock or product contracts including

exchange agreements – No preferential or “incentive” shipping rates

• Based on “Public” Information plus Baker & O’Brien Judgment – State, national, and international agency sources – Company reports and presentations – Country and state reports – Articles and newsletters

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Refinery Simulator

• Non-linear, Sequential Solution, Deterministic Model – Case study tool – Mass balanced – LP used to optimize product blending

• Individual Process Unit Models – One of almost every refinery process – Multiple crude distillation trains, distillate hydrotreaters, and

hydrocrackers – Over 800 tuning parameters - each with a default value – Logical “control valves” used to configure flow scheme – Over 65 product properties (i.e., specific gravity, aniline point,

etc.) used to drive yield correlations – Utility consumption and replacement costs built-up from unit

models

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Refinery Simulator (Cont.)

• Carbon Dioxide Emissions – Direct (boilers, heaters, FCC, etc.) based on actual fuel

composition – Indirect electrical consumption (optional) – Structure exists for tracking indirect product and feedstock

carbon dioxide – Can assign a cost to emissions

• Fixed Cost and Replacement Cost Unit Factors – Rigorous calculation of replacement cost index – Separate unit factors used to estimate fixed operating costs

• Location and Inflation Indices for Labor and Replacement Costs

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Crude Assay Library

• Over 340 Crude Assays Included • Correlation Coefficients for Property Curves

– Crudes can be “re-cut” instantaneously – No swing cuts

• Crude Assay Director Used to Regress Correlation Coefficients

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Crude Blending Tool

• Blend Crudes from Assay Library • User Specified Finish Blend Properties and Prices • LP Optimization to Produce Minimum Cost Blend

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Who Uses PRISM?

• Refining Companies – Long-Range Planning – Mergers and Acquisitions – Competitive Analysis (peer comparisons) – Supply Chain Analysis

• Marketers and Traders – Crude oil economics – Downstream integration analysis – Crude and product supply balances – Impact of refinery shutdowns

• Financial Institutions • Technology Licensors • Petroleum Pipeline Companies • Hydrogen and Industrial Gas Producers • Engineering and Construction Firms

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Competitive Benchmarking

Typical PRISM Uses

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Typical PRISM Uses

Refining Industry Margin Curve

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-$5.00

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

Refineries

Surv

ivab

ility

W. Canada

E. Canada

USA

Europe

Typical PRISM Uses

At-Risk Refinery Analysis

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Typical PRISM Uses

• Methodology – Add crude assays as needed – Set base case crude slate based on historical data – PRISM simulator and database used to calibrate base case

and calculate yields – Set incremental crude volume based on logistics – Run PRISM simulator with new crude substituted for one

or more base crudes – Use yield and operating cost shifts from the PRISM

simulations to calculate relative and absolute crude values using one or more price sets

Crude Valuation and Marketing Strategy

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Typical PRISM Uses

Crude Valuation and Marketing Strategy

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Typical PRISM Uses

• Methodology – Set refinery base case based on historical data – PRISM simulator and database used to calibrate base case

and calculate yields, operating costs and margins – Add new unit, adjust crude slate, internal streams for new

configuration and products – Run PRISM simulator with new configuration – Use yield and operating cost shifts from the PRISM

simulations to calculate relative margins using one or more price sets

– Use margins to calculate return on investment

Capital Investment Analysis

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Typical PRISM Uses

Market Analysis

Estimated Clean Products Deliveries to Los Angeles

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0 75 150 225 300 375 450 525 600 675 750 825 900 975 1050 1125 1200Clean Product (MB/D)

Del

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ross

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to L

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es ($

/B)

Cash Opex

Cash Margin

LA R

efin

ery

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efin

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efin

ery

3

LA R

efin

ery

5

LA R

efin

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2

LA R

efin

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LA R

efin

ery

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LA R

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7

LA R

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ery

11

LA R

efin

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8

LA R

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6

LA R

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4

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Typical PRISM Uses

Marketing Analysis Delivered Cost - CA-Los Angeles

Tonne/CDLight Oil Products

CARBOB E10 Reg CA-Richmond: Chevron 69.04 3.85 72.89 US $/BCARBOB E10 Reg CA-StMaria/San Fran: Phillips 66 72.18 3.85 76.04 US $/BCARBOB E10 Reg CA-Carson: Marathon Petrole0.7160 6,742 59,286 76.87 0.21 77.08 US $/BCARBOB E10 Reg CA-Wilmington: Phillips 66 0.6970 3,541 31,986 77.10 0.21 77.31 US $/BCARBOB E10 Reg CA-El Segundo: Chevron 0.7098 13,176 116,866 77.45 0.21 77.66 US $/BCARBOB E10 Reg CA-Torrance: PBF Energy 0.7196 5,728 50,113 78.68 0.21 78.89 US $/BCARBOB E10 Reg WA-Ferndale: Phillips 66 75.04 4.11 79.15 US $/BCARBOB E10 Reg CA-Wilmington: Marathon Pe 0.7313 1,845 15,886 79.27 0.21 79.48 US $/BCARBOB E10 Reg WA-Anacortes: Shell 0.7279 4,271 36,939 75.87 4.11 79.97 US $/BCARBOB E10 Reg CA-Wilmington: Valero 0.7063 4,065 36,238 81.17 0.21 81.38 US $/BCARBOB E10 Reg CA-Martinez: Shell 78.14 3.86 82.00 US $/BCARBOB E10 Reg WA-Cherry Point: BP 0.7259 2,183 18,936 78.26 4.11 82.37 US $/BCARBOB E10 Reg WA-Anacortes: Marathon Pe 0.7552 843 7,029 78.37 4.11 82.48 US $/BCARBOB E10 Reg CA-Benicia: Valero 79.55 3.86 83.41 US $/BCARBOB E10 Reg CA-Martinez: Marathon Petroleum 80.24 3.86 84.11 US $/B

CARBOB E10 Prem CA-Richmond: Chevron 76.88 3.86 80.74 US $/BCARBOB E10 Prem CA-StMaria/San Fran: Phillips 66 80.36 3.86 84.23 US $/BCARBOB E10 Prem CA-Carson: Marathon Petrole0.7270 2,045 17,709 84.34 0.21 84.55 US $/BCARBOB E10 Prem CA-El Segundo: Chevron 0.7437 2,078 17,596 84.63 0.21 84.84 US $/BCARBOB E10 Prem CA-Wilmington: Phillips 66 0.7562 1,147 9,554 84.76 0.21 84.97 US $/BCARBOB E10 Prem CA-Torrance: PBF Energy 0.6830 1,624 14,969 86.58 0.21 86.79 US $/BCARBOB E10 Prem CA-Wilmington: Marathon Pe 0.6745 508 4,745 87.15 0.21 87.36 US $/BCARBOB E10 Prem WA-Ferndale: Phillips 66 83.61 4.12 87.73 US $/BCARBOB E10 Prem WA-Anacortes: Shell 0.6892 156 1,423 83.86 4.12 87.98 US $/BCARBOB E10 Prem CA-Wilmington: Valero 0.7468 378 3,185 89.05 0.21 89.26 US $/BCARBOB E10 Prem WA-Cherry Point: BP 0.7566 114 951 85.83 4.12 89.95 US $/BCARBOB E10 Prem WA-Anacortes: Marathon Pe 0.6819 227 2,100 85.95 4.12 90.07 US $/BCARBOB E10 Prem CA-Martinez: Shell 86.94 3.87 90.82 US $/BCARBOB E10 Prem CA-Benicia: Valero 88.69 3.88 92.57 US $/BCARBOB E10 Prem CA-Martinez: Marathon Petroleum 89.33 3.88 93.21 US $/B

Cost at Source Transportation Delivered CostDescription Source

Liquid Sp. Gr.

Quantity

B/CD Other UOM/CD

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Typical PRISM Uses

Product Supply Curve

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

0 500 1000 1500 2000 2500 3000

1000 barrels per day

Cen

ts p

er G

allo

n In

crea

se

Demand Curve (Elasticity = -0.50)

Refinery Supply Curve

Thousand Barrels per Day

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Typical PRISM Uses

Netback Analysis

Netback Prices - CITGO: LA-Lake Charles

Tonne/CD

Jet A FL-Orlando 83.60 5.12 78.48 US $/BJet A NY-Syracuse 86.10 4.78 81.32 US $/BJet A MEX-Mexico 81.99 0.08 81.91 US $/BJet A TN-Knoxville 80.92 1.59 79.33 US $/BJet A FL-Tampa 85.31 3.33 81.98 US $/BJet A PA-Pittsburgh 84.74 3.27 81.47 US $/BJet A NY-NYH Spot 83.48 2.51 80.97 US $/BJet A NY-Rochester 86.10 4.83 81.27 US $/BJet A PA-Harrisburg 84.21 3.71 80.50 US $/BJet A FL-Miami 81.78 3.63 78.15 US $/BJet A NY-Albany 87.15 4.60 82.55 US $/BJet A PA-Philadelphia 0.8093 3,851 29,959 84.21 2.43 81.78 US $/BJet A NJ-Newark 83.27 2.51 80.76 US $/BJet A PA-Allentown 84.21 3.65 80.56 US $/BJet A LA-Calcasieu (Lake Charles) 82.83 0.21 82.62 US $/BJet A TX-Beaumont 81.15 0.64 80.51 US $/BJet A TX-US Gulf Coast Spot 79.95 1.01 78.94 US $/BJet A TN-Nashville 0.8093 963 7,490 80.07 1.61 78.46 US $/BJet A SC-Spartanburg 81.48 1.59 79.89 US $/BJet A MA-Boston 84.32 3.68 80.64 US $/BJet A NC-Greensboro 0.8093 1,925 14,979 81.02 1.66 79.36 US $/BJet A GA-Atlanta 0.8093 2,888 22,469 80.07 1.41 78.66 US $/BJet A MD-Baltimore 81.04 1.75 79.29 US $/BJet A LA-Lake Charles 82.83 0.21 82.62 US $/B

Price at Destination Transportation NetbackDescription Destination

Liquid Sp. Gr.

Quantity

B/CD Other UOM/CD

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Typical PRISM Uses

Transportation Analysis

Transport-Physical Components Route Product FlowEnbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Edmonton To MN-St. Paul Park: Marathon Petroleum Syncrude SSB 30.8 MB/CD 2.4Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Edmonton To OH-Toledo: PBF Energy Syncrude SSB 30.8 MB/CD 16.2Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Edmonton To OK-Ponca City: Phillips 66 Syncrude SSP 34.4 MB/CD 4.0Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Edmonton To PA-Warren: United Rfg Syncrude SSP 34.4 MB/CD 1.5Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Ft. McMurray To TX-Baytown: ExxonMobil Cheecham Dil-Bit 21.5 MB/CD 9.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Ft. McMurray To TX-Galveston Bay: Marathon Petroleum Kearl Lake 20.3 MB/CD 118.5Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Ft. McMurray To TX-Houston: Valero Kearl Lake 20.3 MB/CD 49.5Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Ft. McMurray To TX-Port Arthur: Valero Cheecham Dil-Bit 21.5 MB/CD 6.8Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Joliet: ExxonMobil Access Western Blend 21.8 MB/CD 71.2Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Joliet: ExxonMobil Hardisty Heavy 23.2 MB/CD 1.4Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Lemont: CITGO Cold Lake Blnd 19.7 MB/CD 58.1Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Lemont: CITGO Hardisty Heavy 23.2 MB/CD 1.6Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Lemont: CITGO Mixed Sour (Hardisty) 28.3 MB/CD 51.8Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Lemont: CITGO Suncor OSE 21.7 MB/CD 6.5Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Lemont: CITGO Sunrise Dilbit 21.0 MB/CD 2.7Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Robinson: Marathon Petroleum Albian Heavy 19.5 MB/CD 0.0Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IL-Robinson: Marathon Petroleum Albian Heavy 19.5 MB/CD 21.2Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IN-Whiting: BP Cold Lake Blnd 19.7 MB/CD 111.1Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To IN-Whiting: BP Lloydminster 21.3 MB/CD 152.2Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To KS-El Dorado: HollyFrontier Albian Heavy 19.5 MB/CD 10.2Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To KS-El Dorado: HollyFrontier Bow River 21.9 MB/CD 52.6Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To KS-El Dorado: HollyFrontier Rainbow Lake 39.4 MB/CD 2.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To KY-Catlettsburg: Marathon Petroleum Medium Sour (MSO) 31.7 MB/CD 53.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To KY-Catlettsburg: Marathon Petroleum Rainbow Lake 39.4 MB/CD 68.1Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To KY-Catlettsburg: Marathon Petroleum Surmont Heavy 19.0 MB/CD 34.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To LA-Lake Charles: Phillips 66 Surmont Heavy 19.0 MB/CD 13.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MI-Detroit: Marathon Petroleum Access Western Blend 21.8 MB/CD 27.3Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MI-Detroit: Marathon Petroleum Hardisty Heavy 23.2 MB/CD 60.5Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MN-Rosemount: Flint Hills Rsrc Bow River 21.9 MB/CD 184.3Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MN-Rosemount: Flint Hills Rsrc Suncor OSH 19.6 MB/CD 9.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MN-Rosemount: Flint Hills Rsrc Western Canadian Select 20.3 MB/CD 55.8Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MN-St. Paul Park: Marathon Petroleum Cold Lake Blnd 19.7 MB/CD 7.9Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MN-St. Paul Park: Marathon Petroleum Rainbow Lake 39.4 MB/CD 21.2Enbridge-Pipeline: CAN-AB-Hardisty To CAN-SK-Kerrobert From CAN-AB-Hardisty To MN-St. Paul Park: Marathon Petroleum Western Canadian Select 20.3 MB/CD 4.5

Pipeline Throughput

Units of Measure

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Typical PRISM Uses

Commercial Intelligence Analysis

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Open Microsoft Excel Based Simulator One of “Every” Type of Unit Non-linear Unit Models LP Blending of Gasoline and Distillates Automated Data Transfer to/from Access Database

Data entry system for PRISM assay library Use Properties from Similar Crudes to

Supplement Available Data Curve-fit Property Data and Generate

Coefficients

PRISM Architecture

The PRISM system facilitates use through the user interface or directly with the simulator and crude assay tools (MS Excel).

Data Files (Microsoft Access)

Refinery Simulator (Microsoft Excel)

User Interface (Menu System)

Crude Assay Director

(Microsoft Excel)

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PETER BARTLETT Director, Baker & O'Brien (UK) Limited, Consultant EDUCATION • University of Manchester, Manchester Business

School M.B.A. (2009) • University of Manchester

B.Eng, Chemical Engineering (1992) 25 Years of Industry Experience

PRISM Support Team

GARY DEVENISH Consultant EDUCATION • University of Texas at Austin, McCombs

School of Business M.B.A. (2009) • Texas A&M University

B.S. Chemical Engineering (1995) 21 Years of Industry Experience

DAN FINELT Consultant EDUCATION • University of Houston

M.B.A. Finance (1991) • Texas A&M University

B.S. Chemical Engineering (1982) 35 Years of Industry Experience

KEVIN MILBURN Consultant EDUCATION • University of Oklahoma

B.S. Chemical Engineering (1992) 24 Years of Industry Experience

CURTIS RUDER Consultant EDUCATION • Kansas State University

B.S. Chemical Engineering (2009) 8 Years of Industry Experience

DAVID TAMM Senior Vice President, PRISM Services Manager EDUCATION • University of Houston

M.B.A. Finance (1981) • Pennsylvania State University

B.S. Chemical Engineering (1974) 43 Years of Industry Experience

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Contact Information

London Office

146 Fleet Street, Suite 2 London EC4A 2BU

Phone: 44-20-7373-0925

Houston Office

1333 West Loop South Suite 1350

Houston, TX 77027 Phone: 1-832-358-1453

Fax: 1-832-358-1498

Dallas Headquarters

12001 N. Central Expressway Suite 1200

Dallas, TX 75243 Phone: 1-214-368-7626

Fax: 1-214-368-0190

www.bakerobrien.com