Business Confidential Respect For People…Honesty and Integrity…Excellence…Courageous Leadership…Winning Attitude…Enterprise First Refining East State Of

Business ConfidentialRespect For People…Honesty and Integrity…Excellence…Courageous Leadership…Winning Attitude…Enterprise First

Refining East State Of the Refining East State Of the BusinessBusiness


Refining East ReviewRefining East Review Refining East Units: Coker, Hydrocracker (HCU – 2 stages), Hydrogen Plant, Naphtha Hydrotreater (NHT), Diesel

Hydrotreater (DHT), Catalytic Reformer #1 (CR1; Paused), Catalytic Reformer #2 (CR2), Sulfur Plant #2 (S2), Sour Water Strippers (SWS).

Staffing: 118 total (excluding 2 on loan to PEI and 1 to USW Tops Representative).– 9 Shift Leaders, 3 Production Specialists, 1 Operations and Maintenance Coordinator (OMC), 3

Operations/Maintenance Liaison (OMLs will be staff by end of September), 1 Projects Coordinator, 1 Reliability Specialist, 1 T/A planning, 99 operators (26 Alky operators, 31 DU5/SATS/S3 operators, 42 RCCU/RGHT operators)

– Coker – 4 operating positions (1 Console operator, RCM Operators: FEL Operator, Structure Operator, Utilities Operator)

– HCU / HP – 4 operating positions (2 Console operators, RCM Operators: HP / HCU 1st Stage Operator, HCU 2nd Stage Operator)

– NHT – 1 operating position (Console / RCM)– DHT – 1 operating position (Console / RCM)– S2/SWS – 1 operating position (Console / RCM)– CR1 – 1 operating position (Console / RCM) Currently not using this position– CR2 – 2 operating positions (Console operator, RCM operator)

Staffing plan reductions to align with SPI-100: – Absorb S3 from Refining West into S2 Board– Absorb RGHT from Refining West into NHT/DHT Board– Combine NHT/CR1/CR2 RCM position into 1 position during nights / weekends– Combine Coker Utilities / Coker Structure RCM Positions during nights / weekends

Future Moves:– Fill 2 Operation Maintenance Liason positions (posting closed)– Fill CTL positions (Only 4 of 8 CTL positions are filled with permanent staff employees)


Unit CapacitiesUnit Capacities

Unit Maximum Capacities:– HCU Safeguarded at 38MBD, 1st Stage at 28MBD. Work ongoing to really understand limits– Coker Safeguarded at 28.5 MBD. Need to understand this limit.– CR2 Safeguarded at 40MBD. Limit is system pressure. Don’t foresee running at 40MBD– CR1 Safeguarded at 22MBD. Don’t foresee running at 22MBD.– S2: 90 LTD. Limit not well understood.– NHT Safeguarded at 38MBD. Preliminary plans to debottleneck to 42 MBD. – DHT Safeguarded at 70 MBD. Not too long ago we were safeguarded at 55 MBD.


Refinery ’08 Score Card ReviewRefinery ’08 Score Card Review

2008 YTD Actual Target Status

Best Yields/Optimal Energy Energy Intensity Index, EII 90.7 91.0 Crude API 30.3 32.3 Crude Added value 0.8 Tons of Sulfur (Lt/day) 111 150.0 Electricity Consumption (mwh) 48.9 43.1 Fuel Gas (knlfeb) 535.0 562.8 Best Yields % (Gas, Jet, Diesel) 97.67 100.0Lowest Sustainable Cost Non-Energy Variable Costs(NEVC) 15.0 13.1 Direct Fixed Costs (ICP) 117.8 115.1 Achieve Net Income Target, $MM -30.6 75.7People Absenteeism - Hrly & Staff 3.3 3.5 Overtime - site 13.3 10.0

Norco Refining2008 Business Objectives


Refinery Combined Injury RateRefinery Combined Injury Rate

0

1

2

3

4

5

6

7

8

9

10

2001

2002

2003

2004

2005

2006

2007 J F M A M J J A S O N D

7/14/08

4/25 - C - at DHT T/A – mouth injury

4/26 – E - at Coker – finger fracture, sutures

5/5 – C – (LTI) - at Hydro – knee injury, surgical repair.

6/3 – C – at Hydro T/A – finger laceration, sutures.

6/6 – C – at Hydro T/A – fractured wrist.

6/11 – C – at Hydro T/A – smashed finger (sutures)

6/26 – C – at Logistics – finger laceration, sutures.

0

1

2

3

4

5

6

7

8

9

10

2001

2002

2003

2004

2005

2006

2007 J F M A M J J A S O N D

7/14/08

4/25 - C - at DHT T/A – mouth injury

4/26 – E - at Coker – finger fracture, sutures

5/5 – C – (LTI) - at Hydro – knee injury, surgical repair.

6/3 – C – at Hydro T/A – finger laceration, sutures.

6/6 – C – at Hydro T/A – fractured wrist.

6/11 – C – at Hydro T/A – smashed finger (sutures)

6/26 – C – at Logistics – finger laceration, sutures.


RE YTD - No Body Gets HurtRE YTD - No Body Gets Hurt

Mo. YTD Mo. YTD Mo. YTD Mo. YTD Mo. YTD Mo. YTD Mo YTD 03to07 Mo. YTD 03to07

Coker 0 1 0 3 0 1 0 1 2 45 2 6 3 3 1 1 1 0

Hydro 0 0 5 9 0 0 3 4 32 55 0 3 3 5 0 0 0 1

Total 0 1 5 12 0 1 3 5 34 100 2 9 6 8 1 1 1 1

Open Serious CROWS

REFINING_EAST

JUNE 2008 NORCO HSE KPI

NOBODY GETS HURTFirst Aids-Employees

First Aids Contractors

Recordables Employees

Recordables Contractors

CROWS Submitted

Serious CROWS

Open CROWS 2003 to 4/30/08YTD


Refinery Environmental PerformanceRefinery Environmental Performance


RE 100% Compliance RE 100% Compliance

21 Overdue CAIR’s (CAIR 1’s = “0”) (CAIR 2’s = “13”) (CAIR 3’s = “8”) 6 Deferrals, All Internal Inspections 100% Procedure Review Compliance 100% Checklist Compliance 88% Lab Calibration Compliance. 99.26% CBT refresher training No Environmental Corporate Chargeables. No PSM incidents


0

5

10

15

20

25

J F M A M J J A S O N D

25

27

29

31

33

35

37

39

41

43

45


CR-1 CR-2

25

27

29

31

33

35

37

39

41


NHT

20

22

24

26

28

30

32

34

36

38

40


HCU

14

16

18

20

22

24

26

28


Coker

30

35

40

45

50

55

60


DHT

Refining East

MOP

T&R Plan


Refinery ’08 Net Income After TaxRefinery ’08 Net Income After Tax

338362

148

114

312

-31

-100

-50

0

50

100

150

200

250

300

350

400

'04 '05 '06 '07 '08Plan

'08 YTD

$MM

4.7

-5.0-3.4

-25.3

-14.6

13

-30

-20

-10

0

10

20

30

40

50


Actual Estimate Plan


Quick Hit Ideas to Improve IncomeQuick Hit Ideas to Improve Income Blend HCU Heavy Naphtha to HCU Bottoms

to ULSD. Feed RCCU Heavy Naphtha to DHT.


Refining East NEVCRefining East NEVCJul

ActualJul Plan

YTD Actual

YTD Plan

Catalyst 0 0 285 0

Chemical 187 126 1,592 816

Non-Energy Utility 97 83 762 681

Other Variable (56) (4) (462) (25)

Total NEVC 228 206 2,177 1,473

YTD:

– Catalyst: No budget for Catalyst Change Outs (PVs 631-NHT/PHT Reactor, 887-CR1/Chloride Absorber, 889-CR2/ Chloride Absorber, 968 & 969-CR2 Dryers) ~ $284K

– Chemical: Used Nitrogen for T/A start-up ~ $133K

– Chemical: Higher than plan expenses for Baker Petrolite chemicals, Caustic, and other Nitrogen purchases

July:

– Chemical: Sulfolane and DIPA for Tank Re-inventory ~ $143K

– Nitrogen & DMDS Credit received for Catalyst Change-Out for T/A.


Salaries & WagesSalaries & WagesJul Actual Jul Plan

FTEs 91 99

Redistributed (6) (12)

Net FTEs 85 87

Jul Actual

Jul Plan

YTD Actual

YTD Plan

Salaries & Wages 1,134 987 7,767 6,763

– (Uncontrollable) GESPP Payments, OPEB Adjustments, 2 ICP Increases, and Stock Appreciation Rights Adjustment ~ $364K

– Not redistributing out the level of FTE’s to Projects, T/A, MTC as communicated in budget ~ $331K

– Not yet at budgeted 10% overtime ~ $612K


MaintenanceMaintenance

Jul Actual

Jul Plan

YTD Actual

YTD Plan

Preventative 140 139 1,126 1,060

Corrective 961 648 5,284 4,205

Non-Routine 331 495 10,097 10,892

Admin 24 21 233 148

Total Mtc 1,455 1,304 16,740 16,304

– Correctiv: Maintenance Capital Identified and Approved:

– F-51 Air Pre-Heater Rebuild ~ $397K,

– P-3131 (Jet Pump), ~$250K

– P-4210 (Boiler Feed Water Pump) ~ $140K

– P-2053 (CR2 Charge Pump) ~$150K

– Corrective: High Coker Loader Costs ~ $774K


Operating ExpenseOperating ExpenseJul

ActualJul Plan

YTD Actual

YTD Plan

Total Operating 233 446 2,558 3,121

SGS 2 0 74 0

– OPEX: On budget. Issues listed in threats

– SGS: Nothing budgeted, but expenses for Coke Drum and Feed Piping Tech Analysis, Coker Thermographs, and HCU IR Service ~ $72K


Sundries ExpenseSundries Expense

Jul Actual

Jul Plan

YTD Actual

YTD Plan

Total Sundries 35 25 226 172

Casualty Loss 0 0 17 0

– Sundries: Unidentified Payroll Payment in March (DHT/S2 Recognition) ~ $44K


RE Top 10 ThreatsRE Top 10 Threats

Risk Score Unit Responsible Group Threat Title Status Description RAM_Box_No

12,045,000.00 DHT ProjectsULSD Rundown Hydraulics Limiting Product to 67 MBPD

Risk Scored, Needs Action(s) Assigned E5

4,964,000.00 HCU ElectricalFirst Stage Charge Pump Motor DP-1933 is unspared.

Mitigation/Solution In Progress C5

4,352,000.00 HCU Machinery Fin Fan Efficiency in Refining EastMitigation/Solution In Progress E4

4,238,576.00 Coker PEI Coke Drum Feed Line VibrationsRisk Scored, Needs Action(s) Assigned D4

4,237,500.00 HCU MachineryK-1927 HCU Make-Up Compressor Foundation Repair & Overhaul

Mitigation/Solution In Progress D5

3,715,200.00 HCU Electrical Failure of Transformer T1601MMitigation/Solution In Progress C5

2,309,500.00 DHT Machinery K-5337 Vent Gas CompressorMitigation/Solution In Progress D4

2,154,000.00 HCU PEI E-1071 Metallurgy UpgradeMitigation/Solution In Progress E4

1,800,000.00 Coker Instrument EOV-13 failure in-between the T/A cycle.Entered Into Projects Database E4

1,731,000.00 CokerProcess Engineering Loss of Coker Debutanizer



Risk Score Unit Responsible Group Threat Title Status Description RAM_Box_No

4,238,576.00 Coker PEI Coke Drum Feed Line VibrationsRisk Scored, Needs Action(s) Assigned D4

3,715,200.00 HCU Electrical Failure of Transformer T1601MMitigation/Solution In Progress C5

2,939,363.64 DHT Machinery K-5337 Vent Gas CompressorMitigation/Solution In Progress D4

1,800,000.00 Coker Instrument EOV-13 failure in-between the T/A cycle.Entered Into Projects Database E4

1,731,000.00 CokerProcess Engineering Loss of Coker Debutanizer


1,429,550.00CR-2 - Bad

Actor Machinery P-2200/01 CR-2 (25°/50° Caustic Pumps)Work Completed, Monitoring Results D4

1,216,000.00 NHTProcess Engineering Increased fouling rates of the PHT

Mitigation/Solution In Progress E4

1,210,546.00 NHT OperationsNHT Reduced rates due to furnace fouling – Tube skin limitations

Mitigation/Solution In Progress D4

1,069,000.00 CokerComputer/Digital Control Coker Drum Level Measurement

Entered Into Projects Database C5

1,068,500.00 CokerProcess Engineering Antifoam Injection New Entry C5

RE Top 10 ThreatsRE Top 10 Threats


RE Top 5 Threats OverviewRE Top 5 Threats Overview1. Coke Drum Feed Line Vibrations (4,200,000) : The coker feed line vibrates. Dynamic stress analysis of the line

shows that failure is likely in ~2 years. Failure of the line would yield an environmental event, potential safety event and would shut the coker down for 1 week. A new design has been completed, and will be implemented at the end of September.

2. Failure of Transformer T1601 (3,700,000). This is a very large transformer with a 50 week delivery time. This transformer feeds most of the electrical equipment at the HCU, and would thus shut the unit down until we replaced it. The long term mitigation for this transformer is a new HCU substation with different transformer design. We are in the process of submitting a project to buy a spare transformer (~$600K) until the substation gets built.

3. Unspared K-5337 DHT Vent Gas Compressor (3,000,000): Loss of this compressor is an automatic environmental corporate chargeable event, and we would stop producing 70MBD of diesel. We could run at reduced rates by piping some of the vent gas to S2 scrubber, and/or to a portable scrubber. Long term mitigation may be to purchase and install a spare compressor. Economics are being evaluated.

4. EOV 13 Failure in between T/A cycles (1,800,000). This electrically operated valve is a key valve in switching of Coker Drums. It has had a history of leaking and otherwise failing between T/A cycles. As we attempt to increase the intervals between T/A cycles, this becomes more of a threat. The mitigation is to have a spare valve at the warehouse. Alternative valve designs are being considered.

5. Loss of Coker Debutanizer (1,200,000): Coker gasoline goes to NHT, not having a debutanizer at the Coker means that we send butanes to the NHT, thus bottlenecking that unit. The economics of this threat are based on increasing naphtha yields at NHT.


Bad Actor ListBad Actor ListNorco Refinery Bad Actors

(Aug'07 - July'08)

1 P-2310/2510/2511/4242 HCU Condensate Injection 7 1.7 4/9/08 Mitigation/Solution In Progress 03/16/072 P-3152/53 COK OWS Oil Sump 4 3.0 6/15/08 Mitigation/Solution In Progress3 P-5947/48 DHT Diesel Booster 4 3.0 7/30/08 New Entry4 P-1752/1753/2819 DIS Oil Water Separator 3 4.0 4/20/2008 Mitigation/Solution In Progress 06/19/075 P-8139 RGHT Wash Water Booster 3 4.0 10/24/07 Mitigation/Solution In Progress6 P-7046/7047 RCCU Caustic Addition 3 4.0 4/8/087 P-1524/1525 NHT Stripper Reflux 2 6.0 5/29/088 P-2762/63/64 DIS Prototype Fuel 2 6.0 9/24/07 Mitigation/Solution In Progress9 P-2575/2576 DTL 1st Stage Water 1 12.0 11/13/07 Mitigation/Solution In Progress

1011121314

14 24


RE Mechanical Equipment MTBRRE Mechanical Equipment MTBRMTBR

Jul'07 - Jun'08

64.0059.38

92.47

78.92

55.35

87.10

20.00

40.00

60.00

80.00

100.00

120.00

ALKY COK DIS DTL HCU RCCU

Mo

nth

s

Refinery Average74.44

ALKYDIMKTRMTBE

COKCR1DHTNHTSP2SWS

(ALL LOGISTICS) MVR QC (LAB)SC (SHOPS/CRAFTS) VAT

HCUCR2H-2

RCCURGHTSBA

Refinery Target

DTLDIHDU5SP3VF

76.00

– HCU lower than average mainly due to condensate injection pump. Issue largely resolved


Major Threats to 08 PlanMajor Threats to 08 Plan

– Front End Loader Repair costs YTD is high. Need to see if trend will continue ~ $774K

– Delta Valve Repairs (will be submitted for Maintenance Capital)

– Equipment Isolation Packages NHT/CR2 ~$150K

– Overtime Threat – Many employees approaching 30%

– SWS Stripper #2 Column, Valves, Plate Exchanger Cleanings, etc… ~ $350K

– PHT Reactor ~ Potential additional $150K before year end.


– NHT Reactor cut from 2008 Plan

– Personnel Lift vs. Scaffold Cost Reduction (Also loaning to other areas) ~ $24K/mo

– Extending CR2 Regen Cycles to save on Chemical Costs and optimize utilities

– Deep dive research into Unit Supplies expected to deliver > $50K/yr cost savings.

– Front end loader reliability team revitalization expected to yield cost reductions.

– Expected efficiency gains from on-site loader mechanic.

– F-51 On-line spalling to reduce future costs of De-Coking

– Site-wide focus on frac tanks resulted in $52K/month reduction in RE alone.

Waste/Cost Reduction OpportunitiesWaste/Cost Reduction Opportunities

Documents

Business Confidential Respect For People…Honesty and Integrity…Excellence…Courageous Leadership…Winning Attitude…Enterprise First Refining East State Of