2. 1 Transport and Station Observations and Recommendations January 26, 2005 TOMA – Diesel Fuel Marketers Seminar Nashville, TN TRANSPORTATION OF ULSD MAP SYSTEM TESTING

3. 2 ULSD Timeline 80% pool

4. 3 Diesel Marketing - Low Sulfur or ULSD? n Who are your customers? n What are your logistical capabilities – tanks, lines, dispensers? n What are your supply options? n What is your risk tolerance? n Pricing? n HOW DO YOU ENSURE PRODUCT QUALITY?

5. 4 Light Product Distribution System Pre-Test Observations n Barges, Pipelines, Terminals, Transports have little or no experience in handling ultra low sulfur diesel product n Protecting the sulfur quality of ULSD while transporting it presents a challenge as difficult as when handling Jet Fuel n Industry has a new distribution challenge that has not been completely quantified. Additional transportation system testing and sharing of test data will be required. n Industry will spend millions of dollars to make facility and procedural changes to our transportation systems to minimize the risk of sulfur contamination

6. 5 Objective of MAP ULSD Testing Evaluate the capability of barge, pipeline, terminal, transport and retail facilities to deliver 15 ppm ULSD to the retail customer.

7. 6 MAP ULSD Testing Background n Barge transportation, loading and unloading operations n Originating tank and manifold piping n Pipelines from 6 through 20 – up to 500 miles in length n Destination manifolds and tank piping n Terminal Aboveground Storage Tanks n Transport loading and unloading operations n Retail Station Underground Storage Tanks n Third party pipeline companies ability to move ULSD

8. 7 Test Scenario Example Gulf Coast to Louisville ~ 24,000 bbls ULSD ~250 samples (Gulf Coast) (Lexington, KY)(Louisville, KY)

9. 8 Terminal Operations Observations & Recommendations

10. 9 Observations - Terminal Operations n Distillate aboveground storage tanks, after receipt of ULSD, showed indications of product (sulfur) stratification n A single tank sample will not represent the overall sulfur level of the product in the tank n Tank turns (heel mixing) for above ground storage tanks may not be effective for converting tanks to ULSD n Header displacement tests indicate that dead leg piping will displace

11. 10 Recommendations - Terminal Operations n To obtain the sulfur level of ULSD in a tank, several samples at different liquid heights will be required n Tanks must be emptied and have two turnovers, emptying the tank each time, before the tank can protect ULSD n Contamination from dead legs remains a possibility. ä Each terminal must be thoroughly analyzed for dead leg contamination

12. 11 Transport Operations

13. 12 Objectives of Transport Testing n Determine the sulfur contamination impact of transport heels n Establish if the transport type, flat vs. slope bottom, contributes differently to contamination

14. 13 Transport Testing Background n Two scenarios included transport testing ä Louisville 4/16/04 ä Macon 5/31/04 n Previous contents of the transports were jet fuel at 1425 ppm sulfur n Transports were compartmented ä One loaded as is ä One drained down at rack prior to loading ä One flushed at rack prior to loading n 300 gallons loaded in each compartment

15. 14 Observations – Flat Bottom Transports

16. 15 Observations – Slope Bottom Transports

17. 16 Transport Operations Observations n Transports need to be completely drained when switching from higher sulfur products to ULSD n A flat bottom transport can present significant contamination issues when loading ULSD n Sloped bottom transports had little if any contribution to contamination n Draining compartments at the loading rack reduced flat bottom contamination n Flushing compartments with ULSD prior to loading effectively removed any residual sulfur contamination in both transport types

18. 17 Transport Operations Recommendations n Transport operators will need to adopt procedures to protect ULSD quality n Transport operators should consider complete drain down capability prior to loading ULSD n More testing needs to be done

19. 18 Retail & Station Operations

20. 19 Objectives of Station Testing n Determine how stations can successfully convert to ULSD from low sulfur diesel n Ascertain the impact of manifolded underground storage tanks n Establish if/when product stratification occurs

21. 20 Station Testing Background n Louisville 4/16/04 ä Truck Stop A ä Truck Stop B ä Gas Station ä Minimized Inventories n Macon 5/31/04 ä Truck Stop C ä Truck Stop D ä Normal Inventories Samples were pulled from each station before and after drops ä Top, middle, and bottom samples from each tank ä A nozzle sample (random dispenser)

22. 21 Macon Station Tank Mixing

23. 22 Louisville Station Tank Mixing

24. 23 Station Drop Volume Correlation LOUISVILLE % Drop VolumeStratify? Truck Stop A * Indicates drop tank Tank 1 *70%No Tank 266%No Tank 370%No Truck Stop B Tank 186%No Tank 2 *77%No Gas Station Tank 1*25%Yes MACON % Drop VolumeStratify? Truck Stop C Tank 1 *58%Slight Tank 249%Yes Truck Stop D Tank 163%No Tank 262%No % Drop Volume =Volume of Load Delivered Total Inventory After Delivery

25. 24 Station Mixing Calculations Station Tank 1 Actual Sulfur ppm Calculated Sulfur ppm % diff Truck Stop A 25.160.9- 58% Truck Stop B – Drop 1 34.642.6- 23% Truck Stop B – Drop 2 17.218.9- 10% Truck Stop C 82.4177.43- 115% Truck Stop D 140.3171.7- 22% n Average sulfur content in UST before the drop n Inventory in tank before the drop n Volume of ULSD load n Sulfur content of ULSD n Linear mixing assumptions

26. 25 Station Observations n Mixing does occur across manifolded tanks n Stratification in USTs can occur if the drop volume is less than 60% of the final UST inventory n Multiple drops into different tanks promote better mixing n Stations should be able to successfully provide 15 ppm with planning multiple drops into each tank

27. 26 Station Recommendations n Minimize inventory levels in tanks prior to receiving ULSD loads to minimize stratification n Drop into each tank on site to promote mixing and quicker conversion n Estimate number of loads necessary to convert a station using historical sulfur content, tank inventories, and site sales

28. 27 CONCLUSION