Regulatory Changes Impacting Supply

Maximum Gasoline Maximum Diesel

Sulfur Content (PPM) Sulfur Content (PPM)
300 500 500 500

350 350

150 150
120
90
50 50
30 30 50 50
10 15 15 10

03 04 05 06 Beyond 03 04 05 06 Beyond 03 04 05 06 Beyond 03 04 05 06 Beyond

U.S. Europe U.S. Europe

Major specs changes in the U.S. in 2006

Gasoline spec change from 90 ppm corporate average to 30 ppm at 1/1/06
In addition, batch limit spec change from 300 ppm to 80 ppm at 1/1/06
Diesel spec change from 500 ppm to 15 ppm at 6/1/06 at the refinery level
Transition period to 10/15/06 at the retail level

Capital diverted to regulatory compliance limiting capacity growth

U.S. Refining Industry expected to invest around $20 billion for Tier II
1
 Desulfurization Basics
Goal
Remove sulfur from light products (gasoline or diesel) to meet air quality
requirements for clean burning fuels

1000 or less PSI;

700 F or less

Desulfurization Unit
HC Desulfurized Light Products
High Sulfur HC-S H2 HC-S
HC-S
Light Products H2
H2 Elemental
(HC-S) Catalyst
Sulfur Plant Sulfur
HC-S HC-S Agricultural
H2S S S
H2 S Pharmaceutical
HC-S S
S S
2
H
Hydrogen Unit
H2 LEGEND
LEGEND
H2 H2 HC
H2
HC: : Hydrocarbon
Hydrocarbon
H2 H2 HH22 : : Hydrogen
Hydrogen
SS : : Sulfur
Sulfur
2
 Gasoline Desulfurization
Crude Hydrogen Plant
Unit Significant capital
Propane/Butane
investment
Lower FCC
Distillation Tower

Low Octane Gasoline Reformer High Octane Gasoline gasoline octane

(yield loss)
Kerosene Distillate
Desulfurizer
Kerosene/Jet Fuel Other Options
Sour Desulfurize
Crude
Diesel Diesel/Heating Oil FCC feed
Shift FCC
Light Gas Oil
Hydrocracker Hydrocrackate Gasoline gasoline into
Ultra Low Sulfur Jet/Diesel distillate
LCO Alky
Alkylate Gasoline
Fluid Unit
Vacuum
Catalytic
Unit Medium Gas Oil
Cracker FCC
Install
InstallNew
New
FCC Gasoline
(FCC) Gasoline FCC
FCC
Desulfurizer
Gasoline
Gasoline
Delayed
Heavy Fuel Oil Coker Coke Desulfurizer
Desulfurizer

3
St. Charles Gasoline Desulfurizer

4
 Diesel Desulfurization

Crude
Unit
Hydrogen Plant
Significant capital
Propane/Butane
investment and
time
Distillation Tower

Reformer
Low Octane Gasoline High Octane Gasoline
Diesel yield loss
Kerosene
Kerosene
Kerosene/Jet Fuel
Options
Desulfurizer
No capital
Sour Diesel Modified or New Diesel/Heating Oil investment Sell
Crude Diesel Desulfurizer
LCO on the spot
Light Gas Oil
Hydrocracker Hydrocrackate Gasoline market
Ulltra Low Sulfur Jet/Diesel
Modify or add
LCO Alky
Unit Alkylate Gasoline new diesel
Vacuum Medium Gas Oil
Fluid
Catalytic
desulfurization
Unit
Cracker FCC
FCC Gasoline
unit
(FCC) Gasoline
Desulfurizer Modify or add
Heavy Fuel Oil
Delayed
Coke
new
Coker
hydrocracker

5
 Hydrocracking Basics
Goal
Value added upgrading of high sulfur distillates to low sulfur gasoline and
ultra low sulfur jet/diesel to meet air quality requirements for clean burning
fuels
1300+ PSI;
725 to 780 F

Hydrocracking Unit HC Desulfurized Hydrocrackate Gasoline

High Sulfur HC-S H2 HC-S
HC-S H2 H2
Distillate H2 HC Desulfurized Ultra Low Sulfur Jet/Diesel
H2
(HC-S) Catalysts H2 Elemental
H2
HC-S H2 H2 HC-S Sulfur Plant Sulfur
Agricultural
H2 HC-S H2S S S
S Pharmaceutical
S
2 S S
H
Hydrogen Unit
H2 H2
LEGEND
H2 H2 H2 H2 LEGEND
H2 H2 HC
HC: : Hydrocarbon
Hydrocarbon
H2 H2
H2 HH22 : : Hydrogen
Hydrogen
SS : : Sulfur
Sulfur
6
Hydrocrackers

McKee Hydrocracker Lima Hydrocracker

7