REFINERY OILY RESIDUALS COST MINIMIZATION STRATEGY DSM ENVIRONMENTAL SERVICES, INC.

1. REFINERY OILY RESIDUALS COST MINIMIZATION STRATEGY DSM ENVIRONMENTAL SERVICES, INC. P.O. Box 442128 Houston, TX 77244-2128 (281) 870-8676

2. REFINERY RESIDUALS COST MINIMIZATION • PRESENTATION • AGENDA • STRATEGY GOALS • OVERVIEW - OILY RESIDUALS • STRATEGY DEVELOPMENT • STRATEGY IMPLEMENTATION - CASE HISTORY • DSM CONTRACT SERVICES

3. REFINERY RESIDUALS - COST MINIMIZATION • STRATEGY GOALS • Quantify technical and economic status of current oily residual management practices, operating procedures and forecasted volumes • Optimize, modify and/or add oily residual management practices and operating procedures as supported by cost benefit analysis • Substantially reduce overall oily residuals management costs

4. REFINERY RESIDUALS - COST MINIMIZATION • REFINERY OILY RESIDUALS • OVERVIEW • Oily Residual Sources • Regulatory Classification • Refinery Management Practices • Residuals Inventory Management

5. REFINERY RESIDUALS - COST MINIMIZATION • OILY RESIDUALS - OVERVIEW • Refinery Oily Residual Sources WWTP Sludges- API bottoms, DAF float/bottoms, primary wastewater settlement tanks Storm Water Storage- Primary storm water settlement tanks or lagoons Oil Storage Tanks- Tank bottom sediment from crude oil, clarified slurry oil, spent catalyst, slop oil, heavy fuel oil tanks Process Units- unit oil/water separators, process unit turnaround, routine maintenance Environmental Remediation- contaminated soil, product spills, RCRA Unit closure, remediation projects

6. REFINERY RESIDUALS - COST MINIMIZATION • OILY RESIDUALS - OVERVIEW • Regulatory Status and Classification Regulatory Classification - management practice dependent Residual is not a waste - if processed at refinery for oil recovery Oil-bearing hazardous secondary materials (sludges, byproducts and spent materials) from the petroleum refinery industry (SIC Code 2911) are excluded from the RCRA & Texas definitions of “solid waste” as per 40 CFR §261.4(a)(12)(i) if: (a) material is not speculative accumulated or placed on the land prior to recycling and (b) material is processed to recover oil-bearing materials for insertion into the refinery process. Residual is a RCRA waste - if transported off-site to a non-refinery facility for recycling, treatment, storage or disposal Economic & Regulatory Incentive - for On-Site Management

7. REFINERY RESIDUALS - COST MINIMIZATION • OILY RESIDUALS - OVERVIEW • Refinery Management Practices (on-site) Sludge Removal/Handling - removal of tank bottom sludge Practices Include: manual removal (mining); fluidizing bottoms with cutter stock, heat, water or chemical for removal, fly ash stabilization, etc. Mechanical / Chemical Separation - concentrate solids, remove oil and water and reduce weight/volume Practices Include: dewatering/deoiling of API bottoms, DAF float/bottoms, tank bottom sludges, separator sludges; tank settling; tank emulsion break; etc. Coker Injection - oily residuals incorporated with coke Practices Include: quench cycle injection or hot cycle injection Thermal Desorption- thermal removal of organics and water Practices Include: low temp desorption (water & light end removal); high temp. desorption processes (meet LDR treatment standards).

8. REFINERY RESIDUALS - COST MINIMIZATION • OILY RESIDUALS - OVERVIEW • Refinery Management Practices (off-site) Off-site Incineration - thermal destruction of organics (Regulated as RCRA hazardous waste) Off-site Thermal Desorption- thermal desorption with recovery of organics and water (Regulated as RCRA hazardous waste) Off-site Subtitle C Landfill - land disposal(Applicable only to waste that meets or is not subject to Land Disposal Restrictions (LDRs) treatment standards ) Liquid Cement Kiln Fuel - mechanically dewatered oily residual solids in oil slurry (30% solids; 5% H2O; 65% oil- regulated as RCRA hazardous waste) Dry Cement Kiln Fuel - mechanically andthermally dewatered oily residual solids (< 10% H2O; > 10,000 BTU/lb.- regulated as RCRA hazardous waste)

9. REFINERY RESIDUALS - COST MINIMIZATION • OILY RESIDUALS - OVERVIEW • Residuals Inventory Management Dilemma - On-site refinery management practices not able to keep pace with current and forecasted residuals inventory due to: • Increase in residuals regulated as hazardous waste (1998 EPA Regulations) • Design or process limitations • Coker Injection (quench) : % ash in coke, solids carrying capacity of quench water, volume of quench water/cooling cycle, economic pressure to decrease coker cycle time and eliminate coke bed plugging and hot spots. • Operational inefficiencies • Tank Cleaning : sludge removal processing and disposal practices. • WWTP Sludge : sludge generation, processing and disposal practices. Results in - Increase in oily residuals volume, increase in off-site disposal, and higher overall oily residuals management costs

10. REFINERY RESIDUALS - COST MINIMIZATION • STRATEGY DEVELOPMENT 1) Baseline Analysis - Technical and economic analysis of current oily residual management practices, operating procedures, and projected oily residual inventory 2) Optimization Plan - Detailed plan to optimize, modify and/or add oily residual management practices to reduce cost. 3) Implementation Plan - Refinery validated plan for phased implementation of selected cost minimization strategy

11. REFINERY RESIDUALS - COST MINIMIZATION • STRATEGY DEVELOPMENT 1)Baseline Analysis - Baseline technical and economic analysis of current oily residual sources, management practices, operating procedures and projected inventory • Identify facility-wide oily residual sources • Document historical and current capacity / performance • Establish design and theoretical capacity / performance • Evaluate operating efficiency and utilization • Prepare site-wide oily residuals material balance • Conduct system-specific cause and effect analysis • Prepare Economic Evaluation / Cost Benefit Analysis

12. REFINERY RESIDUALS - COST MINIMIZATION • STRATEGY DEVELOPMENT 2) Optimization Plan - Analyze existing systems to optimize and/or recommend alternative practices. Phase 1 : Short Term • Focus on cost effective increase in capacity and efficiency of current systems and practices Phase 2 : Long Term • Focus on adding capacity and cost benefit to systems via process, equipment and operational changes 3)Implementation Plan - Detailed Implementation Plan with cost benefits analysis. Fully documented and technically supported by Refinery data.

13. REFINERY RESIDUALS - COST MINIMIZATION • STRATEGY IMPLEMENTATION • Background - Case History • 400,000+ bpd refinery in Texas - Client Confidential • Oily residual management practices include - Coker injection of WWTP generated oily residuals, tank cleaning with off-site sludge disposal, and on-site RCRA permitted land farm. • WWTP generated oily residuals exceeded Coker sludge injection system capacity resulting in growing on-site roll-off box inventory. • Newly listed tank bottom residuals (crude, CSO, catalyst) and primary storm water retention system sludges could no longer go to on-site land farm due to LDRs • Substantial waste management cost increase projected. • DSM was retained to conduct a technical and economic evaluation of site-wide oily residuals management practices and develop a comprehensive cost minimization strategy

14. REFINERY RESIDUALS - COST MINIMIZATION • STRATEGY IMPLEMENTATION • DSM Findings - Case History • Refinery forecasted oily residuals inventory is more than triple the current design / theoretical on-site residuals processing capacity. • All-in unit costs ($/Ton) for current oily residual management practices are prohibitive. • Refinery contracted tank cleaning practices generate excessive volumes of sludge for processing and/or off-site disposal. • Refinery Selected Strategy - Case History • Optimize, modify and add management practices for 95% on-site oily residual processing • Projected 5-year cost savings for Refinery validated and approved “DSM Optimization / Implementation Plan” range from $45.0 - $68.0 million. • Refinery selected off-site Waste Contractor for implementation

15. REFINERY RESIDUALS - COST MINIMIZATION • DSM CONTRACT SERVICES • Identify Savings Potential • 1 to 2 day DSM preliminary site evaluation • General review of refinery’s oily residual management practices and operational procedures to identify specific cost savings opportunities. • DSM conducts preliminary site evaluation at no cost to refinery • Cost Minimization Strategy Development • DSM conducts baseline technical and economic analysis, prepares optimization plan and implementation plan • Proposal based, “lump-sum” DSM contract services • Cost Minimization Strategy Implementation • DSM provides contract technical support to refinery for refinery implementation of strategy, or • DSM provides turn-key contract services for the partial or complete implementation of the selected strategy