1. The Potential for the Siting of an Ethane Cracker in the State John Houston Senior Vice President, Bayer Corporation

2. North America – Business Structure Breakdown of Total Sales by Subgroup 2010 As of December 31, 2010 EUR 8.2 billion HealthCare 56 % 25 % MaterialScience 19 % CropScience Employees in United States: ~15,100 Employees in West Virginia: ~1,000 Employees in Pittsburgh: ~2,700 Pittsburgh/West Virginia = 24.5% of all U.S. Employees Page 2 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011

3. bo·nan·za [buh-nan-zuh] –noun 1: rich mass of ore, as found in mining. 2: a source of great and sudden wealth or luck; a spectacular windfall –noun 1: an exceptionally large and rich mineral deposit (as of an ore, precious metal, or petroleum) 2: a something that is very valuable, profitable, or rewarding : a very large amount : extravaganza

4. Page 4 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Ethylene Demand Driven By What We Consume PVC Source: Chemical Market Associates, Inc. Ethylene Polyethylene Polystyrene/ ABS PET/Ethylene Glycol LDPE LLDPE HDPE

5. U.S. Ethane Supply/Cracker Capacity Page 5 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Source: Bentek

6. U.S. PE Converters 2010 Page 6 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 6 to 10 companies 1 to 5 companies 11 to 20 companies 21 to 40 companies 41 to 70 companies 71 to 105 companies Source: CMAI

7. Page 7 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Statistics According to the WVONGA-commissioned study by WVU, Marcellus shale development by 2015 could mean  6,600 and 19,600 additional jobs for the Mountain State  $890 million in employee payrolls (in 2015)  20% growth rate each year According to the American Chemistry Council, a 25% increase in ethane supply could mean  17,000 new knowledge intensive, high paying chemical industry jobs  395,000 jobs outside the chemical industry  More than $4 billion in federal, state and local tax revenue annually over 10 years  Nearly $33 billion increase in American chemical production  About $16 billion in chemical industry capital investment to build new capacity  More than $132 billion in U.S. economic output

8. Page 8 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Bayer’s Potential Scenario Photo: Ras Laffan Olefin Cracker in Qatar

9. Why West Virginia? Why Bayer?  Well positioned for both feedstocks and consumers  Direct access to major highways, waterways, railroads, pipeline  Available Land  Ethylene producers likely to build where they have an anchor  Long term security of feedstock supply is a key  Project needs a champion Page 9 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011

10. Liquids from Wet Shale Gas Seeking a Home Page 10 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Steam Crackers Source: EIA

11. Page 11 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Tug of War

12. Questions

13. Ethylene – The Ethane / Ethylene Family Tree Page 13 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Acetic Acid (CH3COOH) Annual Global Production: 6.5M tons Vinyl Acetate Monomer (VAM) 40-45% of Global Acetic Acid Polyvinyl Acetate Wood glue, Paints, Adhesives Synthetic fibers & fabrics Ester of Acetic Acid Inks, paints, coatings Polyethylene terephthalate Soft drink bottles Ethylene (C2H4) World’s Highest Vol. Organic Compound Annual Global Production: 113M tons Unsaturated Hydrocarbon Cellulose Acetate Synthetic textile, photographic film Food Additive (E260) Acidity regulator, condiment (vinegar) Polar Protic Solvent Acetic Anhydride 25-30% of Global Acetic Acid Polyvinyl Chloride (PVC) Annual Global Production: 30+M tons Clothing, upholstery, hoses, tubing, flooring Polyethylene ~50% of Global Ethylene World’s most widely used plastic Vinyl Chloride (CH2=CHCl) 31.1M Tons in 2000 Ethylene Oxide (C2H4O) Annual Global Production: 20M tons Ethanolamines Adhesives, Agro, Cleaners, Pharma, Printing, Surfactants Ethyleneamines Corrosion Inhibitors, Coatings, Detergents Fungicides, Lubes, Surfactants Glycol Ethers Brake Fluids, Detergents, Paints/Inks, Pharma, Plasticizers, Solvents Alpha Olefins Precursors, Detergents, Plasticizers, Lubricants, Additives Ethylbenzene Precursor to styrene (packaging and rubber) Alkyl Alkanolamines Absorbents, Coatings, Detergents Flocculants, Metalworking, Textiles Glycol Ester Acetates Adhesives, Coatings, Heat Transfer, Inks, Paints, Polyester, HI&I Ethylene Glycol Antifreeze/Deicing, Dye/printing, Hydraulics, Latex, PET Polyurethanes Rigid & Flexible Polyols, Coatings, Adhesives, Sealants, Elastomers Solvents Adhesives, Agro, Dry Cleaning, HI&I, Inks Paints, Coatings, Rubber & Polymer Mfg. Polymerization Halogenation & Polymerization Oligomerization Alkylation Acetaldehyde (CH3CHO) Annual Global Production: 1M tons OROR Ethane (C2H6)

14. Heavy Feeds & Polyethylene Dominate Global Ethylene Market Page 14 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Polyethylene 61% Styrene 7% EDC/VCM/PVC 11% Ethylene Oxide/Glycol 13% Other 8% 2010 Ethylene Demand Ethane 33% Naphtha/Gas Oil 53% Propane & Butane 12% Other 2% 2010 Ethylene Supply 120 Million Tons Ethylene

15. An Ethane Primer Page 15 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011  Only two uses for ethane  Keep it in the NG stream or separate it out for chemicals production  Natural gas price sets the floor value  Yields only ethylene, hydrogen, and fuel gas when cracked  Ethane cracker capital costs are low  Every 10 cent move in ethane price changes cash costs by 4 cents  A cracker consumes roughly 1.29MT of ethane for 1MT of ethylene  A 1 MM MT/year cracker consumes ~ 63K BPD

16. Olefins Flow Diagram Page 16 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 Feedstocks Energy Petrochemicals Ethane Field Condensates Propane Butanes Naphtha Gas Oil Propylene Pygas Benzene Toluene/Xylene Heavy Aromatics C 5 /C 6 Non Aromatics Pygas Benzene Toluene/Xylene Heavy Aromatics C 5 /C 6 Non Aromatics Crude C 4 Butadiene Mixed Butylenes Crude C 4 Butadiene Mixed Butylenes Fuel Oil Crude Oil Refinery Ethylene Methane/Hydrogen Natural Gas Gas Separation Unit Ethylene Unit

17. U.S. Ethylene Expansion “Talk” In The Press ~ 4.0 Million Tons By 2017 Page 17 The Potential for the Siting of an Ethane Cracker in the State June 21, 2011 * Dow and ChevronPhillips capacity additions shown are CMAI estimates ** 1 MM metric tons Braskem/Idesa JV in Mexico expected to start-up in 2015/16