Norco Crude Logistics Task Force Recommendations December 2007

Agenda Water Management Emulsion Management 250 MBPD Crude Logistics Additional Considerations Notional Scope Notional Cost/Benefit Forward Plan

Water Management Short Term Bring available Delata pipeline moisture meter info into Norco (no such meter for Clovelly) Develop and train on Fish Dewatering Strategy/Agenda Streamline and improve Fish Dewatering Methodology –Minimize unnecessary circulation time –Target Free water only –Keep fish pumps on their curves Repair/Replace fish interface instrumentation and re-instate original design operation Re-align operations manpower to facilitate thorough crude water management Run imports in “gravitated series” mode Review/Develop quarantine strategy for high moisture supply issues Review and establish response protocol for high moisture indication from unit charge analyzer Longer Term Align dewatering system with new tank configuration (example: if fish are to be used – supply enough fish such that there are no more than 3 to 4 tanks per fish.) Install in-house moisture analyzers on all sources of incoming crude. Potential automation of fish system in tandem with new instrumentation Re-align operations manpower to facilitate thorough crude water management

Emulsion Management Short Term Double existing rate of demulsifier as a preventative measure (offensive vs defensive) Ensure equipment is sufficient to deliver new rate with 100% reliability (spares on site and ready to go) Develop training on desalter operation with detailed methodology on troubleshooting and emulsion breaking. Longer Term Bench Test potential improvement of desalter performance with upstream demulsifier injection. Implement new injection scheme if sufficient improvement is indicated.

250 MBPD Crude Logistics Short Term Partner with Clovelly to understand Crude proration and what we can do to influence. Consider relaxing 50MBPD as a hard minimum on HLS until Clovelly expansion is completed (notionally Sept 2008) Bring balance in over the wharf Longer Term Logistics Crude Tank reconfiguration –Align highest volume crude with highest volume delivery system –Onsite usable inventory of crude to support 48 hours of operation (including shutdown volume) with the loss of our largest crude artery –Ability to support 150MBPD crude rate with unplanned extended outage of our largest crude artery –Ability to support max rate/plan with loss of any one of our internal crude systems –Ability to import 2 different non cavern, non HLS crudes in order to drive HLS to zero –Conversion of highest exposure crude to static gauge system vs. existing running gauge for moisture protection –Appropriate sampling, metering, and analyzers to facilitate water management, segregation, and custody transfers –Ability to offload Wharf, Clovelly, and Delta independently –Ability to swing any tank into alternate service to accommodate TA schedules

Additional Considerations Delta Pipeline artery potentially dries up in the future leaving us with only 2 crude arteries. Potential other uses for the Delta pipeline hardware for use as a continued 3 rd crude artery. Modifications to the wharf crude system to enable a ratable 150MBPD import in the event that there are only 2 crude arteries in our future.

Crude Logistics Notional Scope 24” Crude Jumpover Piping Repair/Replace and recomission A 412 Piping and valving for new lease tanks Transfer pump for new lease tanks Piping and valving for tank/system interchangeability Install Mixers on all systems/tanks Piping and valving for import interchangeability New dewatering tankage and associated piping Moisture analyzers for HLS, Clovelly, and Wharf import systems Crude Composite sampler at the wharf Crude Custody Transfer metering system at the wharf

Notional Cost/Benefit $25MM Notional Cost (not including wharf logistical improvements) –Ideally would be performed in phases. One possible phase plan would look like the following: 24” Crude Jumpover logistics team project Mixer purchase and installation Lease tank and associated piping (possibly using spare system pump until transfer pump is received) Crude composite sampling and metering system at wharf Water meter installation on all crude import lines A-412 replacement/repair Tank system and import flexibility piping New Dewatering System Business Case

Forward Plan Continue with design & execution of Crude Jumpover effort Begin efforts to Lease tanks from SCC Allocate resources to develop PIF for Crude Logistical Improvement work Review PIF with investment challenge committee Assign project team to complete the following: –alternatives analysis –design –phased implementation plan –timeline –funding –construction. Consider allocating resources for wharf utilization evaluation to enable identification of re-configuration opportunities for crude import