Domestic Sweet / WTIDomestic Sweet / WTISpecifications Specifications

COQA- October 2009

Dennis Sutton- Marathon Petroleum

2

Domestic Sweet / WTI Specifications

Brief Review of the History Current Work Future Plans

3

A Decade Ago

Development of LLS Specifications API Gravity, Sulfur, Metals, MCRT, HTSD, Light

Ends, TAN (added later)

Extensive Basin Quality Work Led by Aaron Dillard and Others

4

COQG Efforts

January 2005 - John Maurer of Valero initiated discussion on specs for major crudes at Domestic Trading Centers

A subcommittee was formed to pursue this work West Texas Intermediate (WTI) and Cushing, OK

were agreed to be our greatest interest and impact High Temperature Simulated Distillation (HTSD),

acidity (TAN), API gravity, sulfur, carbon residue (MCRT) and metals were identified as important quality parameters

5

2006 - 2008

Data was obtained that showed Domestic sweet to be a light, sweet, very low TAN stream but there was a great deal of variability in the metals and HTSD data. Also, some uncertainty about exactly where and how some samples were obtained.

An article in the July 17, 2008 Oil Daily highlighted COQG’s efforts in developing more comprehensive Domestic Sweet specifications

Clifford Mills (consultant) has been invaluable in handling the data

6

2009

John Maurer reassigned within Valero In 2009, conference calls have been used to

complement the COQG meetings to progress in a more timely manner.

In order to set appropriate specification limits, we agreed further analytical testing was needed with tightly defined sampling and lab procedures.

Commercial labs were surveyed to determine their capabilities and interest in conducting analyses.

7

2009 March ASTM Crude Oil Sample (CO0903) was WTI/Domestic Sweet Over 80 labs worldwide submitted data on

this sample Data was provided for a wide slate of

parameters by multiple test methods including all of the tests we are interested in

While only one sample, this provided excellent information on the reproducibility of the methods

8

CO0903 Results - API & Sulfur

API Gravity and Sulfur are tests we are concerned about that currently have specifications defined by NYMEX.

NYMEX has ≤0.42 wt%; no desire to change; what happens when it exceeds 0.42%? Over half the labs reported >0.42%.0.0370.042860.424

Sulfur, wt %, by D4294

NYMEX has 37-42; no concern.0.440.506439.4API Gravity, by D287

CommentsReproducibility

This SampleASTM

Reproducibility

Number of Valid ResultsMean

Sample: CO0903

9

CO0903 Results - RVP & Pour Point

While we are not seeking to add specifications for Viscosity, RVP, or Pour Point, NYMEX does have published specs for these parameters. Are these monitored at Cushing?

NYMEX has a published spec of ≤ 50°F. WTI should be nowhere near this limit. 16.39.061-3Pour Point, °F, by D97

This sample reproducibility is much worse than quoted ASTM value; NYMEX has a published spec of <9.5 psi1.4790.296326.07RVP, by D5191

CommentsReproducibility

This SampleASTM

Reproducibility

Number of Valid ResultsMean

Sample: CO0903

10

CO0903 Results - Yields

While the precision from this large group is poor, some labs do quite well.

This is just 100 - (% at 1020°F).2614.3% >1020°F

Value interpolated since % at 1020°F is not directly reported.2685.7% at 1020°F

Reproducibility is large.792755450% point (°F)

Reproducibility is large.522826420% point (°F)

CommentsReproducibility

This SampleASTM

Reproducibility

Number of Valid ResultsMean

Sample: CO0903 - HTSD by D7169

11

CO0903 Results - Others

TAN, Carbon Residue (MCR) and Metals (Nickel & Vanadium) are parameters for which we desire to implement specifications. These four parameters are part of the LLS specifications.

2.9Only stated for values >50 ppm1712.9

Vanadium by D5708B

The small number of valid results is due to the fact that not all labs use D5708B.

2.1Only stated for values >10 ppm185.9Nickel by D5708B

0.260.23661.94MCR by D4530

0.110.16800.11TAN by D664

CommentsReproducibility

This SampleASTM

Reproducibility

Number of Valid ResultsMean

Sample: CO0903

12

In Progress

Thanks to the efforts of various companies, we are collecting and analyzing approximately 40 Domestic Sweet/WTI samples, taken at Cushing.

Samples are being collected from multiple operators, over several weeks time, utilizing three different commercial labs.

Data is flowing to Clifford Mills for workup. Clifford has received about half of the data so far.

13

Domestic Sweet - Lab Testing

The following slate of analytical testing is being conducted on the whole crude sample as received:

1. API Gravity by ASTM D2872. Total sulfur by ASTM D4294

Centrifuge to eliminate free water3. Total Acid Number (TAN) by ASTM D664 using the first

inflection point4. Nickel by ASTM D5708B5. Vanadium by ASTM D5708B6. MCRT by D45307. High Temperature GC Simulated Distillation (HTSD) by

ASTM D7169. Report 20% point, 50% point, and Recovery @ 1020F.

COQG Domestic Sweet Project

Preliminary Data Review

15

Status of project

Some data received from four sources Data was obtained at four different

laboratories (Three were slated in the project) Data development continues

16

Preliminary Observations API Gravity levels have trended up since the previous study Sulfur levels continue to exceed the NYMEX maximum on many

samples and have increased slightly since the previous study TAN values are consistent with the previous study

There appears to be some between laboratory bias MCRT values are consistent with the previous study Ni & V data significantly lower than previous study and less

variable Simulated distillation data is still suspect

17

Preliminary API Data

API - Cushing Domestic SweetOutliers removed

36

37

38

39

40

41

42

43

5/1/1996

9/1/1996

1/1/1997

5/1/1997

9/1/1997

1/1/1998

5/1/1998

9/1/1998

1/1/1999

5/1/1999

9/1/1999

1/1/2000

5/1/2000

9/1/2000

1/1/2001

5/1/2001

9/1/2001

1/1/2002

5/1/2002

9/1/2002

1/1/2003

5/1/2003

9/1/2003

1/1/2004

5/1/2004

9/1/2004

1/1/2005

5/1/2005

9/1/2005

1/1/2006

5/1/2006

9/1/2006

1/1/2007

5/1/2007

9/1/2007

1/1/2008

5/1/2008

9/1/2008

1/1/2009

5/1/2009

9/1/2009

API data Average 2 Sigma limits NYMEX Limits

18

Preliminary Sulfur Data

Sulfur - Cushing Domestic SweetOutliers eliminated

0.32

0.34

0.36

0.38

0.4

0.42

0.44

0.46

0.48

5/1/

1996

9/1/

1996

1/1/

1997

5/1/

1997

9/1/

1997

1/1/

1998

5/1/

1998

9/1/

1998

1/1/

1999

5/1/

1999

9/1/

1999

1/1/

2000

5/1/

2000

9/1/

2000

1/1/

2001

5/1/

2001

9/1/

2001

1/1/

2002

5/1/

2002

9/1/

2002

1/1/

2003

5/1/

2003

9/1/

2003

1/1/

2004

5/1/

2004

9/1/

2004

1/1/

2005

5/1/

2005

9/1/

2005

1/1/

2006

5/1/

2006

9/1/

2006

1/1/

2007

5/1/

2007

9/1/

2007

1/1/

2008

5/1/

2008

9/1/

2008

1/1/

2009

5/1/

2009

9/1/

2009

Wt%

All Data Received Average 2 Sigma Limits NYMEX Maximum

19

Preliminary TAN Data

TAN - Cushing Domestic SweetOutliers eliminated

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0.55

0.6

7/7/

2000

10/7

/200

0

1/7/

2001

4/7/

2001

7/7/

2001

10/7

/200

1

1/7/

2002

4/7/

2002

7/7/

2002

10/7

/200

2

1/7/

2003

4/7/

2003

7/7/

2003

10/7

/200

3

1/7/

2004

4/7/

2004

7/7/

2004

10/7

/200

4

1/7/

2005

4/7/

2005

7/7/

2005

10/7

/200

5

1/7/

2006

4/7/

2006

7/7/

2006

10/7

/200

6

1/7/

2007

4/7/

2007

7/7/

2007

10/7

/200

7

1/7/

2008

4/7/

2008

7/7/

2008

10/7

/200

8

1/7/

2009

4/7/

2009

7/7/

2009

mg

KO

H /g

m

Data Average 2 Sigma Limit

20

Preliminary MCRT Data

MCRT - Cushing Domestic SweetOutliers Removed

0

0.5

1

1.5

2

2.5

3

10/2

5/20

04

12/2

5/20

04

2/25

/200

5

4/25

/200

5

6/25

/200

5

8/25

/200

5

10/2

5/20

05

12/2

5/20

05

2/25

/200

6

4/25

/200

6

6/25

/200

6

8/25

/200

6

10/2

5/20

06

12/2

5/20

06

2/25

/200

7

4/25

/200

7

6/25

/200

7

8/25

/200

7

10/2

5/20

07

12/2

5/20

07

2/25

/200

8

4/25

/200

8

6/25

/200

8

8/25

/200

8

10/2

5/20

08

12/2

5/20

08

2/25

/200

9

4/25

/200

9

6/25

/200

9

8/25

/200

9

mg/

kg

MCRT Data Average 2 Sigma limits

21

Preliminary Nickel Data

Nickel - Cushing Domestic SweetOutliers eliminated

0

2

4

6

8

10

12

14

10/2

5/20

04

12/2

5/20

04

2/25

/200

5

4/25

/200

5

6/25

/200

5

8/25

/200

5

10/2

5/20

05

12/2

5/20

05

2/25

/200

6

4/25

/200

6

6/25

/200

6

8/25

/200

6

10/2

5/20

06

12/2

5/20

06

2/25

/200

7

4/25

/200

7

6/25

/200

7

8/25

/200

7

10/2

5/20

07

12/2

5/20

07

2/25

/200

8

4/25

/200

8

6/25

/200

8

8/25

/200

8

10/2

5/20

08

12/2

5/20

08

2/25

/200

9

4/25

/200

9

6/25

/200

9

8/25

/200

9

mg/

kg

Data Average 2 Sigma limits

22

Preliminary Vanadium Data

Vanadium - Cushing Domestic SweetOutliers eliminated

0

5

10

15

20

25

30

35

10/2

5/20

04

12/2

5/20

04

2/25

/200

5

4/25

/200

5

6/25

/200

5

8/25

/200

5

10/2

5/20

05

12/2

5/20

05

2/25

/200

6

4/25

/200

6

6/25

/200

6

8/25

/200

6

10/2

5/20

06

12/2

5/20

06

2/25

/200

7

4/25

/200

7

6/25

/200

7

8/25

/200

7

10/2

5/20

07

12/2

5/20

07

2/25

/200

8

4/25

/200

8

6/25

/200

8

8/25

/200

8

10/2

5/20

08

12/2

5/20

08

2/25

/200

9

4/25

/200

9

6/25

/200

9

8/25

/200

9

mg/

kg

Data Average 2 Sigma limits

23

Simulated Distillation (1)

Reported total recovery data has varied from 92 to 100% recovery

Reported 1020°F recovery has varied from 78.8 to 91.9% recovery

Reported 20% recovery temperatures have varied from 206 to 286°F

Reported 50% recovery temperatures have varied from 494 to 599°F

24

Simulated Distillation (2)

Preliminary data indicates possible between laboratory biases Always ~100% recovery Never 100% recovery

Complete review of data will follow when all labs are equally represented

25

Where do we go from here

Continue to compile data Compare data from different sources Compare data from different labs Agree on control limits for the various components

26

Early Thoughts - Not Conclusions

The results obtained to date are encouraging! Better definition of the sampling and

analytical testing requirements has resulted in better precision.

Our data, from multiple terminals at Cushing, over several months, will provide a basis for the development of meaningful specifications for WTI/Domestic Sweet.

27

What Next?

28

Future Plans - Development of Specifications Complete current testing survey. This should be finished by the

end of the year. Clifford Mills will evaluate and distribute data without sample submitters or laboratories.

Review this data, the CO0903 crosscheck data, previous COQG results and own individual in-house information.

Agree on specifications for Domestic Sweet API >37 and <42 Sulfur <0.42 weight percent Nickel and Vanadium (ppm) MCRT TAN 20%, 50% and recovery @1020F by HTSD

29

Future Plans - Implementation

COQA representatives should contact their individual anti-trust attorneys and be sure legal is aware of COQA’sefforts and to provide appropriate counsel.

By January 1, be prepared to discuss how best to implement the specifications.

30

Final Thoughts

NYMEX currently has published WTI specifications for: API Gravity, Sulfur, Viscosity, RVP, Basic Sediment, and Pour Point. There are no requirements on how these properties should be monitored.

Current LLS specifications include: API, Sulfur, MCRT, Light Ends, HTSD, Metals and TAN. The Capline owners and operator have determined the monitoring and enforcement programs.

Our current efforts to develop and implement more meaningful WTI/Domestic Sweet specs are an extension of programs that have run successfully for years!