Prize Review

1. Prize Review “Fruits of our Labor” December 4, 2000

2. Agenda 7:30 - 8:00 Continental Breakfast 8:00 - 8:30 Welcome Back! Agenda Review Antitrust Review 8:30 - 9:00 Survey Process Review  9:00 - 10:00 Benchmark Results a.  Business Activity b.  Operating Costs c.  The “Average” Company 10:00 - 11:30 Prize Results - Quantitative a.  FTE Savings b.  System Savings c. Other Savings d. Prize by Process 11:30 - 12:30  Lunch 12:30 - 1:00 Prize Results - Qualitative 1:00 - 1:45 Wrap up -  Issues/concerns for AC review -  Next Steps 1:45 - 2:00 Break 2:00 – 5:00 Process Workshop 2

3. Antitrust Guidelines Information exchange is necessary for the formation and operation of any joint venture. Exchange of confidential, competitively sensitive information among competitors, however, is particularly sensitive under the antitrust laws because such information exchange can facilitate price collusion or other anti-competitive coordinated conduct. • Exchange of confidential, competitively sensitive information should take place only when necessary to effectuate the formation of the Venture. Exchange the least sensitive information whenever possible. If competitively sensitive information must be exchanged, it should first be reviewed by antitrust counsel (either corporate or antitrust counsel). • “Confidential information” means all non-public information, the unauthorized disclosure of which could be detrimental to a party’s interests, and includes without limitation research, technical, manufacturing, cost, pricing, marketing, financial, personnel and other business information and plans, whether in oral, written, graphic or electronic form. • “Competitively sensitive information” means all confidential information that, if known by a party’s competitor would enhance the competitor’s ability to predict the party’s future price and output strategies, including the Party’s likely responses to price and output initiatives of the competitor. • Absent prior legal clearance and legal guidance, there should be no discussion or exchange of information among committee or team members regarding the following subjects concerning their respective Companies: • prices, price changes, price quotations, bids, or pricing policies; • any element of price, including freight, credit, warranties, and other terms and conditions of sale; • output, capacity, down time, inventory levels or costs (including production, inventory, distribution, or wage, salary or benefits cost); • the customers to whom a Company sells, or the territories in which a Company sells; • the amount that a Company pays for goods or services; future plans concerning the production, distribution, or marketing of particular products; discussion about the Venture’s future plans is acceptable. • Absent prior legal clearance and legal guidance, there should be no solicitation, acceptance, or exchange of documents or information relating to the subjects listed above. • An accurate record of each committee or team meeting should be prepared. 3

4. Process Review • Survey Process • Plus/Delta • Issues/Concerns • Go/No Go Decision • This is a decision whether the perceived benefit is substantial enough to continue the project for the next six weeks • Another go/no go decision will be made prior to the beginning of Phase 2 • Hardcopy Prize Reports • Distribution planned for mid December 4

5. Business Activity 5

6. Business Activity 6

7. Business Activity 7

8. Business Activity 8

9. Operating Costs 9

10. Operating Costs 10

11. The “Average” Company 11

12. The “Average” Company 12

13. The “Average” Company 13

14. The “Average” Company 14

15. The “Average” Company 15

16. Prize Summary Category • FTE Savings • System Savings • Working Capital • Position Mgmt • Shared Expenses Total 1 Year $40MM $30MM $170MM $25MM $20MM $285MM 5 Year $200MM $55MM $220MM $125MM $100MM $700MM 16

17. Prize Details - 1 17

18. Prize Details - 2 18

19. Prize Details - 2 19

20. Prize Details - 2 20

21. Prize Details - 2 21

22. Prize by Process • Deal Capture • Position management • Front office personnel • IT costs: deal capture • 1/3 other costs • Scheduling • Inventory reduction • Mid office personnel • IT costs: scheduling • 1/3 other costs • Settlement • A/R reduction • Back office personnel • IT costs: settlement • 1/3 other costs • $45MM • $185MM • $55MM 22

23. Prize – Qualitative • Improved Controls and Information • Knowledge workers focused on value added activities • Improved control environment • Improved supply planning reduces run outs and enables better asset utilization • More accurate and timely information decreases demurrage costs • Increased credibility with customers • Standardized Information and Processing • Global access to common information • Standard GT&Cs minimizes litigation • Improved tax processes – FET benefit: paying $.40/gallon state and federal tax on incorrect exchange balances (prize for fuels: avg. # of and aging of un-reconciled trans and volume) • Industry standards encourage & enable electronic communication • Netting: what’s the prize? What’s the impact to banking institutions? • Reduced training requirements • Shared Data/Expenses • Centralized reporting database • Move to soft copy documents reduces storage costs • Cheaper to build, maintain and operate once versus fourteen times • Service Providers • Brokers – will create revenue stream • Pipelines will stop charging scheduling fee (Williams) • Inspection companies – one inspection report versus 15 sent everywhere (assume 60% bulk requires inspection report) • One system interface versus fourteen (? – John questions) • Book Club leveraging power (same as pipeline example?) • Terminal personnel – fewer accounting inquiries = manpower savings • Better asset utilization (un-used capacity filled up … where public info) 23

24. Wrap Up • Issues/concerns? • Next Steps • Individual prize results submitted mid-December • Generic benefit template created by year-end • Conference call review of template 1/3/01, details to follow • Individual benefit templates distributed at end of January 24