Forties Pipeline System Contaminant Management & Waiver Process Offshore Operators Awareness Pack

Presentation Objectives Improve awareness of Forties Pipeline System Understand why waiver process exists Impact of chemicals / contaminants on FPS Mutually beneficial Understand how & when to use the waiver process When is a waiver required? Different types of waiver Waiver form & information requirements Overview of waiver costs www.fortiespipeline.com

Forties Pipeline System www.fortiespipeline.com

FPS LPG Facilities and INEOS Kinneil Process Stabilisation Compression Fractionation CO2, H2S, Hg, RSH removal Gas drying Effluent treatment Mercury Removal FPS LPG Facilities and INEOS www.fortiespipeline.com

Contaminant Management E&P Onshore ‘Costs’ Additional OPEX (energy, chemicals) Gas Treatment Bed change-outs Reputation/Legislation Additional CAPEX (to increase capability) Risks Long Term Integrity Throughput restrictions Contaminants e.g. CO2, H2S Water - produced water - disposal capability – reinjection or overboard or export. Production Chemicals - manage performance -(e.g. hydrates) - integrity E&P Offshore ‘Costs’ OPEX (chemicals) CAPEX (to meet export specifications) Risks Oil Revenue Gas Revenue Throughput restrictions Contaminants impact on gas plant impact on ‘System Capability’. Water impact on processing capability separation efficiency gas plant performance Offshore Export Pipeline Downstream Operations Contaminants: impact of water and CO2 on integrity - impact on hydraulic performance Production Chemicals - manage integrity - manage performance Contaminant impact on product quality (e.g. Forties Blend) or Cracker feedstock. Product downgrading/ financial cost to BP LPG Shipping Demurrage Effluent Plant Impact on effluent Quality and discharge consents Reservoir www.fortiespipeline.com

The waiver process Allows a customer to export material not meeting their contractual specifications, e.g. Start-up chemicals, e.g. methanol, glycol Production chemicals, e.g. corrosion / scale inhibitor Manage process upsets, e.g. export excess water Allows FPS to meet all our customers’ needs by: Maintaining system integrity Maintaining system availability Managing impact on the environment Maintaining product quality Helps ensure the Forties Pipeline System is available to meet the needs of all our customers both now and in the future www.fortiespipeline.com

Ad-hoc Waiver Process Applies whenever material not meeting specification will or may be exported to FPS. Is instigated by the customer identifying a requirement and submitting a waiver request form to FPS by e-mail FPS will then evaluate the request and either: Approve the request by sending a ‘Waiver Granted’ form Request further information if required Suggest an alternative date / quantity which would enable the waiver to be approved Reject the request Once the operation has been completed, the customer must close-out the waiver by completing a ‘Waiver Close-Out’ form www.fortiespipeline.com

Other Chemical waivers We recognise that some of our customers have a requirement to continuously inject certain chemicals, e.g. Corrosion / scale inhibitors Deoilers / demulsifiers Wax inhibitors FPS has agreed with each shipper a list of production chemicals that can be used; these chemicals are routinely used in the operation of the field, such as corrosion / scale inhibitors. If shippers wish to use ad-hoc chemicals or change any of the chemicals on their approved list then the shipper should complete a waiver request form and send it to the FPS waiver team. The approval process for other chemicals is likely to take longer than 72 hours as additional research and tests may be required before BP is able to approve the waiver; typically 2 months’ notice should be given to approve such a request. Use of certain chemicals including alcohols, glycols, acids and biocides will not be included in the approved list of other chemicals. There will be a periodic review of routinely used chemical contaminants at which time the shippers will be obliged to inform FPS of the previous years use www.fortiespipeline.com

When should I submit? FPS has limited capacity for water, methanol and glycols. Capacity is booked on a first-come, first-served basis For planned activities involving ‘routine’ chemicals, waivers must be submitted a minimum of 72 hours in advance, but no more than 2 weeks For complex operations or ‘non-routine’ chemicals, it can take several weeks to complete an assessment, so our advice is to submit as soon as possible if you are seeking to use Chemicals not previously used on your facility Chemicals in larger quantities than previously used A complex operation involving several chemicals www.fortiespipeline.com

Waiver Process Summary Step Identify requirement for waiver Prepare waiver request form & submit to FPS Review waiver request versus system capacity and safe operating limits Approve / reject waiver request Close-out waiver By who? Customer FPS When? As required 3 – 14 days for ‘routine’ chemicals Normally within 2 working days As soon as decision is reached. If FPS cannot accommodate the request we would discuss possible alternatives with the customer. Within 24 hours of completion a.s.a.p. for ‘non-routine’ chemicals or changes to “other chemicals” list As soon as practicable, but may take weeks or even months www.fortiespipeline.com

Waiver costs Admin Fee is charged for each waiver requested: Methanol waivers £2,400 Other waivers £2,180 Breach waivers £3,190 Short notice waivers £110 in addition to above fees (less than 24 hours notice) Late close out waivers £110 in addition to above fees (more than 24 hours) Processing Fee Methanol cat 1 £4,250 per cubic meter Methanol cat 2 Bed change out is c £150,000 Methanol cat 2 Cost of replacing mol sieve beds and flaring off spec gas products. Estimated to be in region of £2m Water £0.1592/bbl H2S and other waivers No processing fee Others on a case-by-case basis. www.fortiespipeline.com

Methanol waiver costs FPS has a limited capacity for methanol - the ‘sustainable operating limit’ is normally 2m3 / day arriving at Kinneil Methanol destroys molecular sieve beds that dry propane product For waiver requests that do not require FPS to exceed this limit, a charge of £4,250 per m3 is applied as a contribution towards increased costs associated with: Cost of replacing damaged molecular sieve beds, including gas products flared during bed replacement Lost value of export of off-spec gas products towards end of bed life Costs incurred due to increased CO2 emissions and energy consumption during periods of flaring For waiver requests that require FPS to exceed the ‘sustainable operating limit’ and up to a ‘maximum operating limit’ The costs of replacing damaged molecular sieve beds The value of gas products flared during the bed replacement Cost of replacing mol sieve beds and flaring off spec gas products (in the region of £1.5- £2m) www.fortiespipeline.com

For more info, please see www.fortiespipeline.com Summary The waiver process has been used successfully in FPS for many years Its continued success requires our customers to be honest about their chemical usage FPS tracks chemicals through the system to manage the total quantity arriving at Kinneil (proactive) FPS monitors Kinneil for certain chemicals and can ‘back-track’ to identify transgressors if necessary (reactive) The system operates on a first-come, first-served basis Capacity for chemicals cannot be booked more than 2 weeks in advance Waiver close-outs help us optimise our capacity for chemicals For unusual chemicals, we will endeavour to complete our assessment to meet your timescales, but can make no guarantee - as much notice as possible is requested Above all, good communication between FPS and our customers is critical! For more info, please see www.fortiespipeline.com www.fortiespipeline.com

Back-up Slide 1 - Methanol ‘Knock-out’ Factor Not all the methanol injected offshore will be exported to FPS Some flashes into gas phase and is exported with gas product Some enters produced water & is discharged overboard FPS methanol capacity is based on quantity arriving at Kinneil, not quantity injected Therefore it is critical to understand what proportion of injected methanol is exported with the oil ‘Methanol Knock-out Factor’ is simply the percentage of methanol removed by offshore processing prior to export to FPS Varies from field to field, and may vary within a field depending on which wells are online at time of injection Particularly when a wet well is on / off www.fortiespipeline.com

Back-Up Slide 2 - Chemicals Impact at Kinneil Product Specifications Particularly methanol Effluent quality Discharge into Forth Separation & Knock-on effect FPS LPG Facilities and INEOS www.fortiespipeline.com

Back-Up Slide 3 : Chemicals in our Industry We all need to work together to manage chemical usage - it is in all our interests to minimise chemical usage whilst maintaining excellent safety, operational and environmental performance. We all strive to avoid production losses. www.fortiespipeline.com