1. 27 August 2012© Copyright 2012 Barber & Barber Associates, Inc.# 1 Empirical Capital Allocation Technical Presentation Reliability-Based Plant Performance & Capital Allocation Decision Tool

2. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 2 Contents 1. What is Opgrade? a) Why is Opgrade Unique? 2. What does Opgrade do? a)Typical Execution Plan b)Typical Result Values & Charts 3. Why Opgrade? a)Case Studies b)Moving Forward

3. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 3 What is Opgrade? Opgrade is an innovative service that employs a unique tool It answers the question: “ What is the impact on revenue if we allocate capital differently, when taking reliability into account? ” How? Opgrade uses a proprietary, reliability-based, statistical flow solver that transforms the following inputs into On-Stream Factors (OSFs) for all of your units and streams, thus predicting your future revenues Unit & Equipment Reliability Supply Availability Planned Maintenance Actual Process Flows Actual Mass Balance Actual Operational Rules Tank Working Volumes Intelligent Flow Routing

4. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 4 Defining Opgrade Throughout this presentation, Opgrade is used in the following contexts: OP GRADE (ŏp'grād') noun » A service to maximize return on capital employed (ROCE) and increase plant revenues by identifying operational bottlenecks and capitalizing on maintenance synergies: “Opgrade can help us maximize ROCE” » A stochastic, reliability-based capital allocation decision tool developed by Barber & Barber Associates: “Opgrade is a unique tool” verb, transitive » To raise to a higher grade or standard through reliability and performance evaluation and optimization: “We plan to Opgrade all of our plants”

5. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 5 An Innovative Service Our engineers use actual plant information to analyze your systems and maximize the return on capital employed (ROCE) for identified capital allocation scenarios Opgrade services help our clients: » Know where installing additional capital will actually alleviate reliability bottlenecks (and maximize ROCE) » Size new tanks to meet demand (and maximize ROCE) » Reallocate existing tanks to different services without reducing revenue (thus maximizing ROCE)

6. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 6 A Unique Tool The Opgrade software tool belongs to a class of tools called “Risk Assessment Tools” By combining the benefits of several different Risk Assessment Tools, Opgrade avoids the limitations inherent to those stand-alone tools Therefore, our Opgrade software tool allows us to predict your future revenues like no one else Complex tank and operational rules from Discrete Event Simulators Mechanical availability and maintenance schedules from RAM Simulators Dynamic mass balances from Dynamic Process Simulators Opgrade Combines:

7. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 7 Combines features from all three OPGRADE Combines features from all three OPGRADE Risk Assessment Tools Discrete Event Simulations (DES) Evaluate how logistics and schedules affect production RAM Studies (Reliability, Availability, Maintainability) Evaluate bottlenecks in systems based on reliability Dynamic Process Simulations Evaluate pressure, temperature and flow profiles in systems Computational Fluid Dynamics Evaluate pressure, temperature and flow profiles within equipment Finer Resolution Broader Scope

8. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 8 Other Tools » Pros A.Are good at handling complex operational rules and tank logic B.Are designed to predict overall production C.Can handle product loops (e.g. output that is also used as input) » Cons D.Are not designed for evaluating plant configurations based on reliability data E.Are not designed to calculate mass balances Discrete Event Simulation (DES) Studies

9. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 9 Other Tools » Pros B.Are designed to predict overall production D.Are designed for evaluating plant configurations based on reliability data » Cons A.Are not good at handling complex operational rules and tank logic C.Cannot handle product loops (e.g. output that is also used as input) E.Are not designed to calculate mass balances Reliability, Availability, Maintainability (RAM) Studies

10. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 10 Other Tools » Pros C.Can handle product loops (e.g. output that is also used as input) E.Are designed to calculate dynamic mass balances » Cons A.Are not designed to handle complex operational rules and tank logic B.Are not designed to predict overall production D.Are not designed for evaluating plant configurations based on reliability data Dynamic Process Simulation (DynSim) Studies

11. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 11 Opgrade is Innovative Opgrade A.Is good at handling complex operational rules and tank logic B.Is designed to predict overall production C.Can handle product loops (e.g. output that is also used as input) D.Is designed for evaluating plant configurations based on reliability data E.Is designed to calculate dynamic mass balances “ Opgrade combines the best features of three different tools without their inherent limitations”

12. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 12 What Does Opgrade Do? With Opgrade you can: » Predict future revenues using complex system models based on actual process flow » Compare the sensitivity of predicted revenue to various configurations to optimize return on capital employed » Calculate production impacts from random failure and scheduled maintenance events » Predict the average long-term production for the facility after many simulated years of operation

13. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 13 Typical Execution Plan Study kick-off & definition of objectives » Review drawings with plant engineers » Develop model Block Flow Diagrams (BFDs) Study Basis » Draft Study Basis document and review assumptions Modeling » Prepare and debug the model input file » Load model and debug control logic statements » Run model over many repetitions

14. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 14 Typical Execution Plan Generate & validate results » Ensure that the model truly represents reality Identify, create and run sensitivity cases » Calculate incremental OSF and ROCE for each case » This effort provides the greatest value in the study Final Report & Deliverables » Generate plots and result summary datasheets » Review results with team and draft report » Present findings

15. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 15 Model Complex Systems Your actual process flows Multiple commodities Intelligent conditional flow splitting Unlimited feedback / recycle loops Control flow with actual rules from operations

16. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 16 Typical Results For all modeled unit operations: » On-Stream Factor (OSF) » Mechanical Availability » Mechanical Reliability » Scheduled Maintenance Impacts Charts » Time Series of Average Unit OSF » Histogram of Tank Levels » Time Series of Average Tank Levels

17. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 17 Typical Abbreviated Results OSFMechanical Availability Mechanical Reliability Scheduled Maint. Product to Pipeline86.5% Area A84.6%95.6%99.2%3.6% Unit A182.5%95.6%99.1%3.6% Unit A282.5%95.3%98.9%3.6% Unit A382.5%95.2%98.8%3.6% Unit A482.5%87.4%92.2%4.8% Area B80.0%87.1%93.2%6.1% Unit B182.3%96.2%99.8%3.6% Area C82.3%91.8%95.3%3.6%

18. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 18 Unit Operations Typical Result Charts

19. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 19 Unit Reliability HCU modeled with three failure modes Failure data derived from industry sources “Reliability” as used here is availability with only unplanned outages included

20. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 20 Unit Availability 39-day turnaround every 3-years Overall availability is 94.8% “Availability” as used here includes both planned and unplanned outages

21. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 21 Unit On-Stream Factor Other units also drive operations (i.e. HCU cannot operate without available feed source and effluent destination) HCU is online for significantly less time than it is available (82.3% vs. 94.8%)

22. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 22 Unit Operation Charts Results charts for unit (or equipment) operations: » Show any evident operational trends » Show the effects of planned maintenance » Describe the expected operating regions for the unit » Illustrate how the On-Stream Factors (OSFs) for units are often much less than the mechanical availabilities » Are beneficial in validating that the model is setup correctly

23. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 23 Tank Operations Typical Result Charts

24. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 24 Tank Level Histogram Know how your tank levels are affected by unit availability This tank is at least 10% oversized In a sensitivity study, reducing this tank’s size by 20% had no impact on production

25. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 25 Tank Sensitivity Study This chart shows the OSF sensitivity to tank size for the same tank An increase or decrease in size of 20% has no effect on OSF Reducing size by more than 20% begins to reduce the OSF

26. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 26 Tank Operations This chart shows the time series of the same tank Only periodic maintenance operations drive the tank down If demands on the tank during maintenance can be reduced, the tank can be even smaller

27. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 27 Tank Operation Charts Results charts for tank operations: » Show any evident operational trends » Show the effects of planned maintenance » Describe the expected operating regions for the tank » Illustrate how often the tanks may go empty (or full) » Can prove that bigger tanks do not necessarily equate to more revenue

28. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 28 Proving the Business Case Why Opgrade?

29. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 29 Case Study: Plant Infrastructure Opgrade Study Establishes Business Case for $700 million Infrastructure Investment » By utilizing Opgrade, our client can proceed with confidence knowing that their $700 million capital improvement project will results in sufficient additional revenue. The study also identified $30 million in possible annual revenue improvements and at least $40 million in possible capital expenditure reductions. » Savings generated from this study alone are in excess of 100:1 return on investment in study fees.

30. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 30 Case Study: Steam Production Availability Study Improves Revenue and Optimizes Equipment Configuration » By employing our RAM study methodology, our client can sell more product because they can produce more steam. In this case, greater steam generating flexibility with fewer maintenance requirements clearly provides higher steam availability over time, yielding an annualized revenue improvement of up to $6.1 million. » Savings generated from this study are in excess of 100:1 return on investment in study fees.

31. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 31 Moving Forward Invest your CapEx wisely Know tomorrow’s output today » Calculate how much revenue (OSF) is produced in multiple scenarios » Know the value of your CapEx by comparing the total revenue (OSF) calculated for each scenario Reallocate tanks and other capital » Put your capital to its best use

32. Empirical Capital Allocation 27 August 2012© Copyright 2011 Barber & Barber Associates, Inc.# 32 Opgrade Your Plant Today! Contact us anytime for a free evaluation of your situation and learn if Opgrade can generate 100:1 returns for your plant! » sales@barberassociates.com » (888) 200-4BBA [4222] or (210) 782-8910