DSM Refinery Oily Residuals Cost Minimization Prog

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

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

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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 REFINERY RESIDUALS - COST MINIMIZATION

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

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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). REFINERY RESIDUALS - COST MINIMIZATION

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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 and thermally dewatered oily residual solids (< 10% H2O; > 10,000 BTU/lb. - regulated as RCRA hazardous waste) REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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. REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION

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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 REFINERY RESIDUALS - COST MINIMIZATION