Heavy Crude Quality Project

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Heavy Crude Quality Project

• Project Meeting
• Calgary, Alberta, Canada
• May 17, 2001 900AM to noon

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CCQTA to CAPP Transistion

• facilitate a smooth transition
• maintain multi-sector focus
• broaden the knowledge base
• improve Western Canadian Basin crude
  quality/consistency

3
Facilitate smooth transition

• establish Working Committee
• transfer roles, responsibilities, reporting
• financial transition plan

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Working Committee
Note SEPAC will be consulted by CAPP Crude
Committee for potential input.
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Working Group Roles, Responsibilities

• Project Leaders
• key contacts for communications, financial,
  meetings, issue management
• Working Committee Members
• develop recommendations or programs
• obtain input from stakeholders
• identify concern areas
• establish Stream Specific Focus Groups as needed

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Stream Specific Working Groups

• develop recommedndtions for a stream that has
  been identified as an Industry concern
• structure and participation will be stream
  dependent

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Financial Transition Plan

• CCQTA
• invoice Enbridge for March
• payment collections for 2Q2001
• reimburse project sponsors 3Q2001
• Crude Quality Inc.
• invoice Enbridge for April through CAPP and
  Project Leaders
• invoice Enbridge monthly through CAPP and Project
  Leaders

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Maintain Multi-sector Approach

• communications
• Working Committee participation
• upstream/downstream synergy and opportunities

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Broaden the Knowledge Base

• work on Industry issues
• expand data utility through larger user base and
  the Internet
• communications

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Improve WCBasin Crude Quality

• define problems
• find solutions
• establish targets

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Heavy Crude Quality Project

• Data Review for 1Q2001
• 1Q2001 Quarterly Report

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Background

• Crudes tested include CL, PH, SES (surrogate for
  LSB), M, SO, WH, LLB, LLC, LLE, LLG, LLK, LLW,
  SC, F, BR North and BR South
• testing includes density, sulphur, sediment,
  salt, light ends, HTSD, TAN, MCR, Ni/V/Mo
• sampling/testing on schedule

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Conclusions

• Increased variability seen in February, more
  stability in March
• trend of increasing salt/sediment
• LLB, LLK, SES (LSB), M, SO have higher and more
  variable C4 levels
• butane addition or low quality C5
• sulphur and density more consistent, other
  parameters are quite variable

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Next Steps

• Salt/sediment investigation
• variations in light ends content
• TAN trending
• assay comparative analysis (with input from
  downstream)
• Internet data access and distribution
• more detailed assay tests (pending)

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General Observations

• Crude comparisons
• Salt and sediment correlation
• TAN, MCR and density
• Metals
• Light Ends
• Distillation

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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Crude Comparisons
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Salt and Sediment Correlation
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TAN and Density
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MCR and Density
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Nickel Geography
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Vanadium Geography
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Molybdenum Geography
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Light Ends
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Light Ends
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Distillation
High Pitch
Low Pitch
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Distillation
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Heavy Crude Quality Project

• Part II Post Break Session

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What to do with the data??

• What is the direction for heavies??
• Todays realities
• heavies predicted as future
• PADD II heavy barrels being displaced
• future pricing/spreads unfavorable
• ultimately could/should move from passive to
  active blending
• eliminate systemic degradation
• manage quality to refinery requirements

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Refinery ProblemLight Ends Yield Increasing over
Time
Actual PADD II Refinery data
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What the US is doing on West Basin
Enforcement Implementation Patti Edens updated
the group on Equilon Pipelines efforts to
deliver on spec Domestic Sweet and Super Sweet at
Cushing. Please see Attachment 3. The enforcement
program previously instituted was not working
well so a team strategy was put together by all
connecting carriers and Equilon Pipeline. Instead
of a punitive program, the new strategy is in the
form of a shared goal to deliver on-spec crude.
Training sessions and meetings were held and
alarm points established. The alarm points are
set at a level to guarantee that Cushing receipts
do not exceed the 0.42 specification. When the
alarm point is reached, the carrier is given an
hour to fix the situation before shut down
occurs. After three months, no violations on the
composite samples of all receipts at all incoming
stations have occurred. Pipeline Summit It was
agreed by all that plans for a Summit should
continue, targeted for first quarter fo next
year. In the interim, the Mid-Continent
Subcommittee will work on drafting a letter to be
signed by all shippers and sent to all carriers
reiterating the need for quality in crude oil. A
group discussion ensued as to what should be
covered in a summit. Aaron asked each person in
the room to state the current concerns in his/her
refining system. The following is a list
of everything mentioned with no prioritization
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What to do with the data??

• Establish specifications
• data determines present quality from expanded
  testing suite (customer orientation)
• determine where quality needs to be based on
  customer requirements
• deliver stable, reliable product
• business decisions will stabilize or recapture
  spreads and/or market share

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What to do with the data??

• Reduce LL alphabet
• use data to predict quality and consistency of LL
  blends
• dedicate Superior tankage to smaller product line
• consistency in consistency out
• requires capturing one or more full streams
• may require equalization of crude values
• slipstream blending

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What to do with the data??

• Use the data as a tool for opening communications
  
• develop upstream/downstream synergy and
  opportunities
• Image - be seen to be doing the right thing
  by/for the customer
• Differentiation (or catch-up)

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Heavy Crude Quality Project

• Thank you for coming