Natref Motivation for the Postponement of Compliance Timeframes in terms of Regulation 11 of Section 21 NEM:AQA Minimum Emissions Standards

Transcription

1 Natref Motivation for the Postponement of Compliance Timeframes in terms of Regulation 11 of Section 21 NEM:AQA Minimum Emissions Standards Motivation Report Prepared by National Petroleum Refiners of South Africa (Pty) Limited March 2017

2 Page i Natref Motivation for the Postponement of Compliance Timeframes in terms of Regulation 11 of Section 21 NEM:AQA Minimum Emissions Standards National Petroleum Refiners of South Africa (Pty) Limited Jan Haak Road Sasolburg 1947 March 2017

3 Page ii Executive Summary This is a motivation in support of an application for a further postponement of the compliance timeframes applicable to existing plants contained in the Minimum Emissions Standards (MES) published in Notice No. 893 in Government Gazette of 22 November 2013 (GN 893) and amended in terms of Notice No. 551 in Government Gazette of 12 June 2015 (GN 551), for sources at five points of compliance at National Petroleum Refiners of South Africa (Pty) Limited (Natref) in Sasolburg. Natref previously submitted a postponement application ahead of the 1 April 2015 compliance timeframe for existing plant standards, for various sources at its facility located in Sasolburg, hereafter referred to as the 2014 Postponement Application. The postponement decision for these sources, which was subsequently reflected in Natref s varied Atmospheric Emissions Licence (AEL), provided an extension until 31 March From 1 April 2018 there will be 17 points of compliance at Natref. These consist of six local stacks, nine points connected to the main stack, the loading gantry vapour recovery unit and the tank farm. It is expected that 11 of these 17 points will be compliant with new plant standards by 1 April However, the sources at five of the points of compliance (as detailed in Table E-1 and Figure E-1) will be challenged to achieve compliance with the existing plant standards by 1 April In those instances, in which application is being made for a postponement of two or more years, the requested postponement period will extend beyond the date upon which the new plant standards take effect (i.e.1 April 2020) and thus application for a postponement of both existing and new plant standards for these sources at 5 points of compliance is necessary. This motivation therefore supports an application for postponement of both the existing and new plant standards to align with the postponement periods requested for each point of compliance. Table E-1: Summary of Postponement Request Cat. 2.1 Description CDU/VDU furnaces As per Fig E-1 Alternative Emission Limit requested Point 1 SO2, 2 200* 2.1 B12002 Point 5 SO2, 7 000* 2.1 Boilers and hot oil heater Point 7 SO2, 3 500* PM, 350* 2.2 FCC Point 2 PM, 900* Postponement request date 1 April 2018 to 31 March April 2018 to 31 March April 2018 to 31 March April 2018 to 31 March 2022 Roadmap Solution/Technology intervention VDU off-gas amine treating Vacuum pre-flash off-gas amine treating Refinery fuel oil phase out Electrostatic precipitator installation 2.4 LSR Tanks Not shown in Fig E-1 VOC s** 1 April 2018 to 31 March 2019 VRU or IFR with Nitrogen Blanketing * Based on calculation (mg/nm 3 at 10% O2 273 K and kpa), since a further set of independent samples to verify emissions concentrations is pending. The final verified sampling results taken at the recently installed sampling points at the points of compliance will be submitted to the NAQO s office as soon as these are available. Refer to Footnote at Table 3-1 for more detail. ** No limit prescribed, requires installation of approved technologies as described in the MES.

4 Page iii During the 2014 Postponement Application, Natref requested a five year postponement period in order to advance the associated compliance projects toward safe completion. A three year postponement period was granted. The postponement decisions for these sources were subsequently aligned in the varied Atmospheric Emission Licence (AEL) of Natref. During the postponement period Natref has installed sample points at all the points of compliance connected to the Refinery Main Stack, to confirm the emission concentrations for the applicable Listed Activities. Natref is awaiting sampling results for all new points of compliance which were installed in the fourth quarter of The alternative emission limits provided in Table E-1, are proposed as limits to be complied with during the extended compliance period, and are based on calculations that are considered conservative. It is expected that the final motivation report will include alternative emission limits based on sampling results which are expected to be lower than the calculated values provided in Table E-1. Figure E-1: Schematic of the points of compliance associated with Natref s main stack Note 1: SP indicates current sample point at the Main Stack (as per current AEL). As set out in this postponement application (hereafter referred to as the 2017 Postponement Application ), Natref is challenged to meet the existing plant standards applicable to the sources at 5 points of compliance by 31 March Natref is therefore applying for a further postponement to complete the necessary project activities underway to implement the most appropriate solutions and make provision for the safe and complete execution of the projects which should achieve compliance with the prescribed emission standards applicable to sub-categories 2.1, 2.2 and 2.4 of the MES for the five points of compliance.

5 Page iv As it did in its 2014 Postponement Application, Natref has included a roadmap to sustainable air quality improvement, containing information detailing Natref s actions toward sustainable air quality improvements during the extended compliance timeframes. The roadmap is aligned with the intent of the National Environmental Management: Air Quality Act (Act No. 39 of 2004) (NEM:AQA) and the MES, including Natref s commitment to the ongoing investigation of and, the implementation of feasible and sustainable compliance solutions. The complete roadmap to compliance for these five sources is provided in Section 4.3 of this report. This application is made in terms of Regulation (11) of GN 893 which entitles a person, to apply in writing, to the National Air Quality Officer (NAQO) for a postponement from the compliance timeframes set out in Regulations (9) and (10) of GN 893. As required by Regulation (12) this application includes 1. A motivation report outlining detailed reasons and a justification for this postponement application. 2. An independently compiled Atmospheric Impact Report (AIR) prepared by Airshed Planning Professionals (Annexure A) in accordance with the Atmospheric Impact Report Regulations of October 2013 (Notice No. 747 in Government Gazette of 11 October 2013), along with a further independent peer review report (Annexure B) on the modelling methodology employed in the AIR. The dispersion modelling that informed that AIR was conducted in alignment with the Regulations Regarding Air Dispersion Modelling (Notice No. 533 in Government Gazette of 11 July 2014). 3. A Public Participation Report (Annexure C) prepared by SRK Consulting outlining the public participation process conducted in accordance with the National Environmental Management Act (Act No. 107 of 1998) (NEMA) Environmental Impact Assessment Regulations. A Comments and Response Report (CRR) detailing all comments received on the application and responses thereto have been collated and is included at Annexure D. Natref therefore respectfully requests a postponement of the compliance timeframes applicable to existing and new plant standards for the five points of compliance listed above linked to sub-categories 2.1, 2.2 and 2.4 of the MES, as per the timeframes requested in this report.

6 Page v Table of Contents Executive Summary... ii Glossary... ix List of Abbreviations... xii 1 Introduction Background... 3 Operations... 3 Overview of the Facility Natref process Need for use of fuel oil internally Natref design intent regarding higher sulphur crudes Proximity to a major freshwater source... 6 Description of Refinery Configuration and applicable Minimum Emission Standards Postponement Request Request for point source emission standards Plant and process improvements already made Natref s environmental management philosophy Environmental improvements over the past 15 years SO2 Improvements PM Improvements NOx Improvements VOC Improvements Installation of sampling points at Points of Compliance defined in November 2013 MES Projects in Progress Amine treating of Vacuum Pre-flash and Vacuum Off-gas (Points 1 & 5 as per Figure 2-4) Installation of PM reduction technology on the FCC (Point 2 as per Figure 2-4) SRU Availability Improvement Project (Point 3 as per Figure 2-4) Refinery Fuel Oil Phase Out (Point 7 as per Figure 2-4) VOC Reduction on LSR Tanks Postponement Request - CDU/VDU Furnaces (Compliance Point 1 as per Figure 2-4) Description of the point source Applicable Standards Progress made to date Road map to Compliance - Project Schedule Postponement Request Reason for Postponement Due Diligence obligations project development and governance framework Previous Postponement Application... 22

7 Page vi 6 Postponement Request - Vacuum Pre-flash Off-gas Furnace (Compliance Point 5 on Figure 2-4) Description of the point source Applicable standards Progress made to date Roadmap to Compliance - Project Schedule Postponement Request Reason for Postponement Due Diligence obligations project development and governance framework Previous Postponement Application Postponement Request - Boilers and Hot Oil Heater (Compliance Point 7 on Figure 2-4) Description of the point source Applicable standards Progress made to date Roadmap to Compliance Project Schedule Postponement Request Reason for postponement Due Diligence obligations project development and governance framework Previous Postponement Application Postponement Request - Catalytic Cracking Units: Postponement request for PM (Compliance Point 2 on Figure 2-4) Description of the point source Applicable Standards Progress made to date Roadmap to Compliance - Project Schedule Postponement Request Reason for Postponement Due Diligence obligations project development and governance framework Previous Postponement Application Refinery Shutdown Opportunity Postponement Request - Storage Tanks: Postponement request for VOCs Description of the point source Applicable Standards Progress made to date Postponement Request Reason for Postponement Due Diligence obligations project development and governance framework Previous Postponement Application The Atmospheric Impact Report Overview... 37

8 Page vii Study approach and method Dispersion modelling Ambient air quality monitoring stations Emissions scenarios National Ambient Air Quality Standards Sensitive receptors Model performance Compliance with AIR Regulations Peer review of the dispersion modelling methodology and datasets Dispersion Modelling Results Sulfur Dioxide (SO2) Nitrogen Dioxide (NO2) Particulate Matter (PM2.5 and PM10) Carbon Monoxide (CO) Benzene Overall findings of the AIR Meeting the NAAQS The effect of the alternative emissions limits Health effects Ecological effects Public Participation Approach to Public Participation Announcement of application process Public comment on Draft Motivation report Public Meeting Follow up with I&APs Comments Received Conclusions and Way Forward Annexures Annexure A: Atmospheric Impact Report Annexure B: Independent Peer Review Report Annexure C: Public Participation Report Annexure D: Comments and Response Report Annexure E: Redacted Atmospheric Emission Licence Annexure F: Natref Annual Emissions Report

9 Page viii List of Tables Table 2-1: Points of Compliance... 8 Table 3-1: Summary of Postponement Request Table 4-1: Overview of Sasol s stage-gate project governance model Table 5-1: Excerpt from MES Category 2.1 Combustion Installations Table 5-2: CDU/VDU Furnace (Point 1) Project Schedule as per latest available information Table 5-3: Alternative emissions limit requested for the CDU/VDU Furnaces (Point 1) Table 6-1: Excerpt from MES Category 2.1 Combustion Installations Table 6-2: Vacuum Preflash Off-gas Furnace (Point 5) Project Schedule Table 6-3: Alternative emissions limit request for the Vacuum pre-flash Off-gas Furnace (Point 5) Table 7-1: Excerpt from MES Category 2.1 Combustion Installations Table 7-2: Boilers and Hot Oil Heater (Point 7) Project Schedule Table 7-3: Alternative emissions limit request for the Boilers and Hot Oil Heater (Point 7) Table 8-1: Excerpt from MES Category 2.2 Catalytic Cracking Units Table 8-2: FCC (Point 2) Project Schedule Table 8-3: Alternative emissions limit request for Natref s FCC (Point 2) Table 9-1: Category 2: Petroleum Industry, the production of gaseous and liquid fuels and well as petrochemicals from crude oil, coal, gas or biomass, Subcategory 2.4: Storage and Handling of Petroleum Products, special arrangement (4)(b)(i) Table 9-2: Storage Tanks Project Schedule Table 10-1: Summary listing of the sensitive receptors illustrated in Figure Table 11-1: Availability of printed copies of the Draft Motivation Report and AIR Table 11-2: Public Meeting Details List of Figures Figure 2-1: Map showing the position of the Natref refinery, located in the Northern Free State... 3 Figure 2-2: Natref s activities in the liquid fuel value chain... 4 Figure 2-3: Schematic of Natref production process... 5 Figure 2-4: Schematic of listed activities linked into Natref s main stack... 9 Figure 4-1: Refinery Fuel Oil Fired Figure 4-2: SO2, PM NOx reduction as a result of reduction in Refinery fuel oil firing Figure 10-1: Schematic displaying how the dispersion modelling scenarios are presented, for each monitoring station receptor in the modelling domain Figure 10-2: Map showing the positions of the 52 sensitive receptors identified for presenting the predicted ambient air quality Figure 10-3: Simulated and observed hourly SO2 concentrations Figure 10-4: Simulated and observed hourly NO2 concentrations Figure 10-5: Simulated and observed daily PM concentrations Figure 10-6: Simulated and observed hourly CO concentrations Figure 10-7: Simulated annual Benzene concentrations Figure 11-1: Technical and Public Participation Process... 50

10 Page ix Glossary Definitions of terms as defined in GN 893 that have relevance to this application: AEL Atmospheric Emission Licence, Licence No. FDDM-MET , issued by the Fezile Dabi District Municipality in March 2014, as amended on 30 March 2015, to the National Petroleum Refiners of South Africa (Pty) Ltd. (Natref) for its operations in Sasolburg. Existing Plant Any plant or process that was legally authorised to operate before 1 April 2010 or any plant where an application for authorisation in terms of the National Environmental Management Act (Act No.107 of 1998) was made before 1 April Fugitive emissions Emissions to the air from a facility, other than those emitted from a point source. New Plant Any plant or process where the application for authorisation in terms of the National Environmental Management Act (Act No.107 of 1998) was made on or after 1 April Point source A single identifiable source and fixed location of atmospheric emission, and includes smoke stacks. Total volatile organic compounds (VOCs or TVOCs) means organic compounds listed under US-EPA Compendium Method TO-14. Point of compliance means any point within the off gas line, where a sample can be taken, from the last vessel closest to the point source of an individual listed activity to the open-end of the point source or in the case of a combination of listed activities sharing a common point source, any point from the last vessel closest to the point source up to the point within the point source prior to the combination/interference from another Listed Activity. Additional definitions provided for the purpose of clarity in this application: Alternative special arrangements Specific compliance requirements associated with a listed activity s prescribed emissions limits in Part 3 of GN 893 and GN 551. These include, among others, reference conditions applicable to the prescribed emission limits of the listed activity, abatement technology prescriptions and transitional arrangements. Alternative emissions limits the standard proposed by Natref based on what is considered reasonable and achievable as a consequence of the assessments conducted, including the independently conducted dispersion modelling, and which Natref proposes as an alternative standard to be incorporated as a licence condition with which it must comply during the period of postponement. The alternative emissions limits are specified as ceiling emissions limits or maximum emission concentrations, as defined in this Glossary. In all instances, these alternative emissions limits seek either to maintain emission levels under normal operating conditions as per current plant operations, or to reduce current emission levels, but to some limit which is not identical to the promulgated minimum emissions standards. Specifically, these alternative emissions limits do not propose an increase in current average baseline emissions. Atmospheric Impact Report In terms of the Minimum Emission Standards an application for postponement must be accompanied by an Atmospheric Impact Report as per Section 30 of the NEM:AQA. The Regulations Prescribing the Format of the Atmospheric Impact Report (AIR) were published in GN 747 of 2013.

11 Page x Ambient standard The maximum tolerable concentration of any outdoor air pollutant as set out in the National Ambient Air Quality Standards published in terms of Section 9 (1) of the NEM:AQA. These standards are herein referred to as the NAAQS. Ceiling emissions limit Synonymous with maximum emission concentrations. The administrative basis of the Minimum Emissions Standards is to require compliance with the prescribed emission limits specified for existing plant standards and new plant standards under all operational conditions, except shut down, start up and upset conditions. Whereas average emission values reflect the arithmetic mean value of emissions measurements for a given process under all operational conditions, the ceiling emission would be the 100th percentile value of emissions measurements obtained. Hence, ceiling emission values would be higher than average emission values, with the extent of difference between ceiling and average values being dependent on the range of emission levels seen under different operational conditions. Since the Minimum Emissions Standards specify emissions limits as ceiling emissions limits or maximum emission concentrations, Natref has aligned its alternative emissions limits with this format, to indicate what the 100th percentile emissions measurement value would be under any operational condition (excluding shut down, start up and upset conditions). It is reiterated that Natref does not seek to increase emission levels relative to its current emissions baseline through its postponement applications and proposed alternative emissions limits (specified as ceiling emission limits), but rather proposes these limits to conform to the administrative basis of the Minimum Emissions Standards. Maximum emission concentrations Synonymous with ceiling emissions limits. Refer to glossary definition for ceiling emissions limits. Criteria pollutants Section 9 of NEM:AQA obliges the Minister to identify a national list of pollutants in the ambient environment which present a threat to human health, well-being or the environment. These pollutants are referred to in the National Framework for Air Quality Management as criteria pollutants. Once these pollutants are identified, the Minister is then required to establish national standards for ambient air quality in respect of these criteria pollutants. Presently, eight criteria pollutants have been identified, including sulphur dioxide (SO2), nitrogen dioxide (NO2), ozone (O3), carbon monoxide (CO), lead (Pb), particulate matter (PM10), particulate matter (PM2.5) and benzene (C6H6). In this document, any pollutant not currently specified in the National Ambient Air Quality Standards (NAAQS) is called a non-criteria pollutant. Existing plant standards The emission standards which Existing Plants were required to meet by 1 April 2015 unless subject to a postponement. The standards contain emission parameters for various substances which may be emitted, including, for example, particulate matter, nitrogen oxides and sulphur dioxide. Listed activity In terms of Section 21 of the NEM:AQA, the Minister of Environmental Affairs has listed activities that require an AEL. Listed Activities must comply with prescribed emission standards. The standards are predominantly based on point sources, which are single identifiable sources of emissions, with fixed location, including industrial emission stacks, called a point of compliance. Minimum Emission Standards Prescribed maximum emission limits and the manner in which they must be measured, for specified pollutants. These standards are published in Part 3 of GN 893, as amended by GN551. These standards are referred to herein as MES. Minister The Minister of Environmental Affairs.

12 Page xi New plant standards The emission standards which existing plants are required to meet, by April 2020, and which new plants have to meet with immediate effect. The standards contain emission parameters for various substances which may be emitted, including, for example, particulate matter, nitrogen oxides and sulphur dioxide. Postponement A postponement of compliance timeframes for existing plant standards and new plant standards and their associated special arrangements, in terms of Regulations (11) and (12) of GN 893. Fuel oil a collective term to describe numerous grades of fuel oils, including, amongst others, refinery fuel oil, bunker fuel oil, etc. GN 893 Government Notice 893, 22 November 2013, published in terms of Section 21 of the National Environmental Management: Air Quality Act (Act No. 39 of 2004) and entitled List of Activities which Result in Atmospheric Emissions which have or may have a Significant Detrimental Effect on the Environment, Including Health and Social Conditions, Economic Conditions, Ecological Conditions or Cultural Heritage. GN 893 repeals the prior List of Activities published in terms of Section 21, namely Government Notice 248, 31 March GN 893 deal with aspects including: the identification of activities which result in atmospheric emissions; establishing minimum emissions standards for listed activities; prescribing compliance timeframes by which minimum emissions standards must be achieved; and detailing the requirements for applications for postponement of stipulated compliance timeframes. GN 551 Government Notice 551, 15 June 2016, published in terms of Section 21 of the National Environmental: Air Quality Act (Act No. 39 of 2004) and entitled Amendments to the list of Activities which result in Atmospheric Emission which have or may have a Significant Detrimental Effect on the Environment, including Health, Social Conditions, Economic Conditions, Ecological Conditions or Cultural Heritage published in Government Notice No. 893, Gazette No dated 22 November Shutdown schedule - A programme for the scheduled period for which a plant or piece of equipment, such as a tank, is out of commission for maintenance for an extended period of time. Natref National Petroleum Refiners of South Africa (Proprietary) Limited, a joint venture between Sasol Oil (Pty) Ltd (63.64% shareholding) and Total South Africa (Pty) Ltd (36.36% shareholding). Special arrangements Any specific compliance requirements associated with a listed activity s prescribed emissions limits in Part 3 of GN 893. These include, among others, reference conditions applicable to the prescribed emission limits of the listed activity, abatement technology prescriptions and transitional arrangements Postponement Application - Postponement application submitted ahead of the 1 April 2015 compliance timeframe for existing plant standards, for various sources at the Natref facility, which application was substantially granted Postponement Application This postponement application which is being submitted ahead of the 1 April 2018, being the date upon which the 2014 postponement application s decision requires compliance.

13 Page xii List of Abbreviations AEL Atmospheric Emission Licence BID - Background Information Document CDU Crude Distillation Unit CEM Continuous Emission Monitoring CBOs - Community Based Organisations CO Carbon Monoxide C6H6 - Benzene CRRs - Comment and Response Reports CV Calorific Value DEA Department of Environmental Affairs DHC Distillate Hydrocracker EIA Environmental Impact Assessment ESP Electrostatic precipitator FCC - Fluidised Catalytic Cracker GN Government Notice H2S Hydrogen sulphide GN Government Notice I&APs - Interested and Affected Parties LDAR Leak Detection and Repair LSR Light Straight Run Petrol MES - Minimum Emissions Standards NAAQS - National Ambient Air Quality Standards NAQO - National Air Quality Officer NEMA - National Environmental Management Act NEM:AQA - National Environmental Management: Air Quality Act NGOs Non Government Organisations NOx Oxides of nitrogen NU Naphtha Unifiner PM2.5 Particulate Matter with radius of less than 2.5 μm PM10 Particulate Matter with radius of less than 10 μm PPP Public Participation Process RCD Reduced Crude Desulphurisation SMS Short Message System SO2 - Sulphur dioxide VDU Vacuum Distillation Unit

14 Page 1 1 Introduction National Petroleum Refiners of South Africa (Proprietary) Limited (Natref) operates the only inland crude oil refinery in South Africa, and employs approximately 600 permanent staff. The refinery is located in Sasolburg in the Northern Free State, and is operated on behalf of two shareholders, Sasol Oil (Pty) Ltd (63.64%) and Total South Africa (Pty) Ltd (36.36%). In March 2010, the Department of Environmental Affairs (DEA) published Minimum Emission Standards (MES), in terms of the National Environmental Management: Air Quality Act (NEM:AQA). In November 2013, the Regulations within which the MES were contained were repealed and replaced by Government Notice No. 893 in Government Gazette of 22 November 2013 (GN 893) which were in turn, amended by Notice No. 551 in Government Gazette of 12 June 2015 (GN 551). This application is therefore aligned with the 2013 MES (i.e. GN 893 as read with GN 551). The MES serves to define maximum allowable emissions to atmosphere for a defined range of pollutants and regulate specific activities that can generate such emissions. In terms of the MES, existing production facilities are required to comply with MES prescribed for existing plants by 1 April 2015 ( existing plant standards ) unless otherwise specified or subject to a postponement. Existing plants are then further required to comply with the MES applicable to new plants by 1 April 2020 ( new plant standards ) unless otherwise specified or subject to a postponement. Natref previously submitted a postponement application ahead of the 1 April 2015 compliance timeframe for existing plant standards, for various sources at its facility (the 2014 Postponement Application ). The postponement decision for these points of compliance, which was subsequently aligned in Natref s Atmospheric Emission Licence (AEL), provided an extension until 31 March A copy of Natref s AEL, which has been required to be partially redacted to protect certain sensitive information but which information does not relate to the emissions which are the subject of this application, is included in Annexure F. As set out in this 2017 Postponement Application, Natref is challenged to meet the MES as reflected in its AEL, by 31 March 2018 for sources at five points of compliance. Natref is therefore applying for this postponement, as detailed in Table 2-1 to complete the necessary project activities underway to implement the most appropriate solutions and make provision for the safe and complete execution of the projects which should achieve compliance with the prescribed emission standards applicable to sub-categories 2.1, 2.2 and 2.4 of the MES for the five points of compliance. Natref is also requesting the inclusion of two special conditions in its AEL, relating to Part 2: General, Applicability of Notice, Item 3 of the MES. This 2017 Postponement Application pertains to postponements which were granted consequent upon the 2014 Postponement Application as reflected in its AEL, which Natref will be unable to meet the MES by 01 April Thus, postponements previously granted and which are valid until 31 March 2020 are not discussed in this submission.

15 Page 2 The application includes: A motivation report outlining detailed reasons and a justification for the postponement application. An independently compiled Atmospheric Impact Report (AIR) compiled in accordance with the Atmospheric Impact Report Regulations of October 2013 (GN 747 in Government Gazette of 11 October 2013), along with a further independent peer review report on the modelling methodology employed in the AIR. The AIR was conducted in alignment with the Regulations Regarding Air Dispersion Modelling (GN 533 in Government Gazette of 11 July 2014). A Public Participation Report outlining the Public Participation Process (PPP) conducted in accordance with the National Environmental Management Act (Act No. 107 of 1998) (NEMA) Environmental Impact Assessment Regulations. A Comments and Response Report (CRR), Annexure D detailing all comments received to date on the application and responses thereto. This motivation report therefore provides: Detailed information on the affected Natref activities, the MES in general, together with the specific requirements for the affected points of compliance (Section 2). Reasons for the postponement request (Section 3-9). Key findings of the stand-alone AIR, in order to demonstrate the implications of the postponement request on ambient air quality (Section 10). The full AIR is included in Annexure A. A Public Participation Report summarising the full public participation process that is being conducted in support of this application. The Public Participation Report reflecting the process conducted thus far is included in Annexure C and the Comments and Response Report in Annexure D.

16 Page 3 2 Background Operations The refinery was founded in 1968 and commissioned in Natref employs more than 600 permanent employees in Sasolburg and 80 employees at its Durban product storage facility, Natcos. The refinery is situated in the Metsimaholo Local Municipality which is part of the Fezile Dabi District Municipality. Because the refinery is inland, approximately ±600 km from the crude oil vessel offloading facilities in Durban, imported crude oil is pumped from Durban to the Natref facility via a pipeline. Figure 2-1: Map showing the position of the Natref refinery, located in the Northern Free State The total refining capacity of all of South Africa s refineries is approximately 35 million tons per year. Natref s capacity is 5.4 million tons per year (±15% of the total). Due to its geographical location, refined fuel products from Natref are sold to the inland market (predominantly Gauteng and the Free State). Natref s business model entails the importing and storing of refining crude oil to produce refined products, and blending of these products with additives, to produce marketable products conforming with fuel specifications, as illustrated in Figure 2-2. Crude oil is procured by Sasol Oil and Total South Africa. Through a joint venture, Natref co-owns the Natcos crude oil storage facility in Durban (the Natcos Tankfarm ), which maintains Natref s crude oil stocks to ensure a reliable feed to the refinery, via a Transnet pipeline. At the refinery, crude oil is refined and the main products produced are petrol, diesel, jet fuel, bitumen and fuel oil. The refined product is then blended with Sasol s or Total s special additives, and is marketed by those two companies to their customers, via three logistics outlets 65% via pipeline; 30% via road; and the remaining 5% by rail.

17 Page 4 Figure 2-2: Natref s activities in the liquid fuel value chain

18 Page 5 Overview of the Facility Natref process Figure 2-3: Schematic of Natref production process The production processes undertaken at Natref are illustrated schematically in Figure 2-3. Most refineries only have Distillation and Product Finishing processes, whereas Natref s process includes a Fluid Catalytic Cracker (FCC) in combination with a Reduced Crude Desulphurisation unit (RCD) and a Distillate Hydrocracker (DHC). As a result of these additional activities, the Natref refinery sees very high product recovery with some 98% (by volume) crude oil being converted into finished products, 92% of which constitutes petrol, diesel and jet fuel, 3% being bitumen and 3% being fuel oil. Typical refineries only convert 65 70% (by volume) to petrol, diesel, jet fuel and bitumen products, and produce larger percentages of fuel oil from the heavy bottom components in the crude oil. Fuel oil is typically poor quality and has high sulphur content. Conventional refineries are able to sell large amounts of this fuel oil to ships as bunker fuel oil. Given that Natref does not have easy access to the bunker fuel oil market (because it is inland) the refinery process is geared towards minimising the quantities of residual fuel oil and concomitantly producing a larger proportion of other fuel products from the crude oil than a typical refinery. It is specifically the inclusion of the RCD, FCC and Hydrocracker at Natref that allows this additional product recovery. The RCD, FCC and hydrocracker allow Natref to crack (cracking is the process whereby complex heavy hydrocarbons are broken down into simpler, light hydrocarbon molecules) and thereby convert a high proportion of the heavy bottom components into petrol, diesel, jet fuel and Liquid Petroleum Gas (LPG). Whereas typical refineries can leave much of the sulphur content of their crude oil in the fuel oil component, Natref must manage proportionally more sulphur because of this higher product recovery.

19 Page 6 Presently, the Natref process reduces sulphur content in its petrol and diesel by 85 to 90%, by removing the sulphur from the crude oil it converts. Some 97% of the sulphur removed from petrol and diesel is recovered and supplied to the market as chemical feedstock, with the remaining being emitted to atmosphere as sulphur dioxide (SO2). The process of removing the sulphur from petrol and diesel, consequently results in vehicle tail pipe emissions containing relatively little sulphur, with associated positive implications for urban air quality Need for use of fuel oil internally Despite the fact that Natref produces significantly less fuel oil than conventional refineries, there is a limited market for the fuel oil that is produced at the refinery. Natref therefore uses the balance of the fuel oil it produces internally as a fuel source to harness the energy component of this fuel. It should be noted that the use of fuel oil by ships (in the form of bunker fuel oil) means that the sulphur emissions associated with the use of the bunker fuel oil typically occur at sea. In the case of Natref, due to inland location, some of those emissions occur at the refinery itself Natref design intent regarding higher sulphur crudes Crude oil with a sulphur content of less than 1% (by mass) is referred to as low sulphur crude while that with sulphur content of more than 1% is referred to as high sulphur crude. Natref is well suited to process higher sulphur crudes, due to the installation of the complex RCD, FCC and hydrocracking processes, which were installed to upgrade heavy bottom distillation fractions to white products (petrol, diesel and jet fuel). Despite the capability of processing higher sulphur crudes, Natref elected to steadily decrease high sulphur crude in its crude mix. The process of reducing higher sulphur crudes has been to meet its commitments made in terms of the Vaal Triangle Airshed Priority Area (VTAPA) Air Quality Management Plan (described in Section 4.2). The use of low sulphur crudes reduces the SO2 emissions from the refinery as less sulphur enters the refinery through the feed. Natref is constrained in further reducing sulphur content in its crude feedstocks, since the refinery was never designed to process low sulphur crudes. Natref s refining margin would be further reduced as a consequence and potentially compromise business sustainability Proximity to a major freshwater source Natref is located in close proximity to the Vaal River, a critically important freshwater system in terms of drinking water and ecological and commercial demands. Considered balancing of the consequential environmental constraints is required and thus the impacts of air quality improvement must be considered against freshwater demand and meeting stringent effluent performance standards.

20 Page 7 Description of Refinery Configuration and applicable Minimum Emission Standards The MES define the point of compliance as any point within the off gas line, where a sample can be taken, from the last vessel closest to the point source of an individual listed activity to the open-end of the point source or in the case of a combination of listed activities sharing a common point source, any point from the last vessel closest to the point source up to the point within the point source prior to the combination/interference from another Listed Activity. The point of compliance is therefore the point at which compliance with the MES must be measured. Natref has one centrally positioned main stack with various MES listed activity categories discharging to it. The refinery was designed around this main stack and in the past Natref measured its emissions on the main stack alone. There are 6 other small locally positioned stacks, all fuel gas fired heaters. Given Natref s current configuration, Natref requested a postponement on the point of compliance definition, in order to install sample ports on all points shown in Figure 2-4 below. In terms of the postponement decision granted consequent upon the 2014 Postponement Application, Natref was granted a 3 year extension to enable it to install sampling ports at each point of compliance, and an alternative emissions limit was prescribed for the main stack, for the intervening period. From 1 April 2018 onwards Natref will monitor its emissions at the points of compliance. Natref has completed the project to install the necessary sampling points to enable this. Figure 2-4 shows all refinery emission sources and points of compliance applicable from 1 April From that date, the emissions from the main stack will be monitored at nine compliance points (as seen in Table 2-1 and Figure 2-4) and monitoring will also continue to take place at the six furnaces with local stacks, the gantry vapour recovery unit and the tankfarm. Until 31 March 2018 the main stack, 6 local stacks, the gantry and tanks will be monitored as the points of compliance, as required by Natref s AEL. Table 2-1 demonstrates that by 1 April 2018 Natref will comply with existing and new plant standards for 11 out of 17 points of compliance. Additional time is required to implement technology interventions on points of compliance 1, 2, 5, 7 and 16. An initial postponement on compliance point 3 was granted until 31 March 2020 and as indicated in the Introduction, this compliance point is therefore not included in this application.

21 Page 8 Table 2-1: Points of Compliance Unit Number Category Description Routing Pollutant Status 1 B11001A, B, C B CDU/ VDU Furnaces Main Stack SO2, PM NOx 2017 Postponement Application, SO FCC and CO Boiler Main Stack SO2, PM NOx 2017 Postponement Application, PM B16001 B17001 B17002 B Sulphur Unit (SRU), including amine Treating RCD & DHC Furnaces Main Stack Main Stack Efficiency, Availability SO2, PM NOx Postponement valid until 1 April 2020, Availibility Already meets new plant standards 5 B Vacuum pre-flash off gas furnace Main Stack SO2, PM NOx 2017 Postponement Application, SO2 6 B Amine off-gas furnace Main Stack SO2, PM NOx Already meets new plant standards 7 B28004 B28005 B Boilers and hot oil heater Main Stack SO2, PM NOx 2017 Postponement Application, SO2, PM 8 B14003 B14004 B15001/2 2.1 DU & Platformer Furnaces Main Stack SO2, PM NOx Already meets new plant standards 9 B Acid gas furnace Main Stack SO2, PM NOx 10 B Hydrogen Plant Local Stack SO2, PM NOx 11 B NU Furnace Local Stack SO2, PM NOx 12 B NU Furnace Local Stack SO2, PM NOx 13 B Platformer Furnace Local Stack SO2, PM NOx 14 B Platformer Furnace Local Stack SO2, PM NOx Already meets new plant standards Already meets new plant standards Already meets new plant standards Already meets new plant standards Already meets new plant standards Already meets new plant standards 15 B Hydrocracker furnace Local Stack SO2, PM NOx Already meets new plant standards 16 F29009 F29010 F LSR Tanks TVOCs Postponement Application, technology compliance 17 G Gantry Vapour Recovery Unit TVOCs 4 Already meets new plant standards Colour Coding Meets new plant standards Postponement granted to 1 April Postponement Application 1 No limit prescribed, requires installation of prescribed technologies as described in the MES.

22 Page 9 Figure 2-4: Schematic of listed activities linked into Natref s main stack Note 1: SP indicates current sample point at the Main Stack (as per current AEL).

23 Page 10 3 Postponement Request The Regulations identifying Listed Activities and prescribing MES for those activities were published in terms of Section 21 of the NEM:AQA, and promulgated in GN 893, as amended by GN 551. Part 2 of these Regulations provides for postponement of the compliance timeframes and prescribes the requirements for applications for postponement. In this context, therefore, Natref makes this application. Request for point source emission standards Table 3-1 outlines the request in respect the MES for the five points of compliance for which Natref is applying for postponement. The detail and reasons for the requested postponements for each of the points of compliance, is described in the subsequent sections of this report. At the end of the postponement periods described below, Natref aims to be fully compliant with new plant standards for the categories listed in Table 3-1. Natref is awaiting sampling results for all new points of compliance which were installed in the fourth quarter of The alternative emission limits referred to in Table 3-1 are based on calculations and considered conservative. It is expected that the final motivation report will include alternative emission limits based on the abovementioned pending sampling results. These sampling results are expected to be lower than the preliminary calculated values provided in Table 3-1. Table 3-1: Cat. Description As per Fig CDU/VDU furnaces Summary of Postponement Request Alternative Emission Limit requested Point 1 SO2, 2 200* 2.1 B12002 Point 5 SO2, 7 000* 2.1 Boilers and hot oil heater Point 7 SO2, 3 500* PM, 350* 2.2 FCC Point 2 PM, 900* 2.4 LSR Tanks TVOCs** Postponement request date 1 April 2018 to 31 March 2021 (additional 3 years from 2015 since the project will take 6 years in total to complete) 1 April 2018 to 31 March April 2018 to 31 March 2020 (2 years, 5 years total since 2015) 1 April 2018 to 31 March 2022 (4 years, 7 years total since 2015) 1 April 2018 to 31 March 2019 (1 year; 4 years total since 2015) Proposed Roadmap Solution/Technology intervention VDU off-gas amine treating Vacuum pre-flash offgas amine treating Refinery fuel oil phase out Electrostatic precipitator installation Installation of a VRU or equivalent prescribed technology. * Note that the alternative emission limits proposed in this table are based on calculations since a further set of independent samples to verify emissions concentrations is pending. The final verified sampling results taken at the recently installed sampling points at the points of compliance (mg/nm 3 at 10% O2 273 K and kpa) will be submitted to the NAQO s office as soon as these are available. Importantly, the concentrations measured at these points of compliance are a function of ordinary process variations like oxygen and moisture content, and do not necessarily have any bearing on the tons of emissions from the main stack. It is precisely for this reason that the AIR (summarised in Chapter 10 of this report) is based on actual emissions to atmosphere measured at the

24 Page 11 main stack, rather than fluctuating emission concentrations at the points of compliance. Actual ambient impact is primarily a function of emission load and not concentration although the MES prescribes a concentration based limit. Natref confirms that, should more recent measurements necessitate the revision to the alternative emission limits proposed in Table 3-1, this will have no bearing on total emissions from the main stack, which is dictated by the ordinary production schedules of the operating plant. Consequently, this will have no change on the modelled ambient air quality impacts. ** No limit prescribed, requires installation of prescribed technologies as described in the MES. Natref will make application to the licensing authority in terms of section 46 of the AQA with regards to conditions associated with shutdown and start-up of various units of the refinery.

25 Page 12 4 Plant and process improvements already made Section 4 details Natref s environmental management philosophy, which is founded upon a risk-based approach to ambient air quality improvements, which has realised sustained, and sustainable, improvements in Natref s pollution load to the environment, for SO2, NOx, PM, H2S and VOC emissions. This risk based approach considers Best Available Techniques (BAT) and Best Practicable Environmental Options for refineries, namely appropriately adapting for Natref s specific inland conditions, associated constraints and technical implications in the context of its long term financial sustainability. Natref s environmental management philosophy Natref recognises continuous improvement in environmental management performance as an important business imperative. Introducing capital intensive environmental improvements must be considered in the context of the overall financial sustainability of its business. Mindful of higher emissions arising from its very high crude-to-white product conversion ratio, Natref has steadily improved its emission performance, reducing its SO2, NOx and PM emissions significantly over the past 15 years. Natref is committed to comply with all applicable environmental laws, including air quality laws such as the MES. Natref s roadmap to compliance with air quality laws involves a multi-faceted approach, aligned with its risk-based philosophy. Environmental improvements over the past 15 years Natref follows a risk-based approach to identifying, prioritising and managing its environmental impacts. Natref s environmental policies, targets, standards and guidelines are then informed and driven as a function of these identified impacts with a systematic focus on continuous environmental improvement. The following sections highlight the Air Quality Improvement measures achieved over the last 15 years SO2 Improvements Natref has reduced SO2 emissions from in excess of 65 ton/day in 2000 to <18 ton/day presently, representing a substantial improvement of more reduction than 72%. This achievement, along with reduction of other emissions, was on the back of a roadmap of projects implemented over the past decade and a half. Installation of a H2S/SO2 analyser at the SRU tailgas for optimal sulphur recovery which reduced SO2 emissions. Routing of Sour Water Stripper (SWS) off-gas, one of the large SO2 emission sources at Natref (approximately 48% of SO2 emissions) to the SRU to reduce SO2 emissions and to recover additional sulphur as a saleable product to the market.

26 Fuel Oil Firing (ton/h) Page 13 Switch to lower sulphur crudes: As detailed previously Natref has steadily reduced SO2 emissions from the refinery by sourcing lower sulphur crude oil. In 2012 the CDU/VDU furnaces were revamped to allow for 100% fuel gas firing. This allows for a reduction in fuel oil firing and a resultant SO2, PM and NOx reduction at an increased efficiency, reducing the overall environmental impact. Natref has been steadily reducing the amount of fuel oil fired within the Refinery, from approximately 7.4 ton/h in 2004 to 2.8 ton/h projected at the end of See Figure 4-1 below. Subsequently SO2, PM and NOx emissions have also reduced as a result of reduction in Refinery fuel oil. From Figure 4-2 it can be seen that as a result of the reduction in Refinery fuel oil firing, SO2 emissions have reduced by approximately 2402 tons/annum, PM emissions have reduced by 106 tons/annum and NOx emissions have reduced by 224 tons/annum. Fuel Oil Fired Figure 4-1: Refinery Fuel Oil Fired

27 PM, NOx (ton/h) SO 2 (ton/h) Page 14 Emissions Reduction from Reduction in Fuel Oil Firing PM NOx SO2 Figure 4-2: SO 2, PM NOx reduction as a result of reduction in Refinery fuel oil firing PM Improvements Replacement of FCC cyclones in 2016 to reduce FCC PM. Replacement of CDU/VDU furnaces to allow for 100% fuel gas firing. Reduction in Refinery Fuel Oil firing refinery wide NOx Improvements Installation of Low NOx burners on new furnaces (CDU and VDU furnaces upgraded in 2012). Installation of new heaters with Low NOx burners as part of an upgrade to the Diesel Unifiner in 2010, which reduced NOx emissions. Reduction in Refinery Fuel Oil firing refinery wide VOC Improvements In addition to Natref s on-going LDAR programme to reduce VOCs, Natref has installed geodesic domes or double mechanical seals on tanks where applicable. Construction and installation of a vapour recovery unit (VRU) at the road and rail loading facility for petrol and diesel, which reduced VOC emissions Installation of sampling points at Points of Compliance defined in November 2013 MES In the 2010 MES, Natref s main stack was defined as the point source and therefore, the point of compliance. The 2013 MES Regulations included a new definition for the point of compliance under the section entitled Part 1: Definitions.

28 Page 15 The 2013 MES therefore now define the point of compliance as: any point within the off gas line, where a sample can be taken, from the last vessel closest to the point source of an individual listed activity to the open-end of the point source or in the case of a combination of listed activities sharing a common point source, any point from the last vessel closest to the point source up to the point within the point source prior to the combination/interference from another Listed Activity. The point of compliance is therefore interpreted as being the point where monitoring is to be conducted to confirm and report on compliance. As a consequence of this change in the definition, the point in the facility where compliance is to be assessed has therefore changed, affecting where samples are taken as well as how compliance is assessed. New sampling points at the points of compliance for the various listed activities conducted by Natref were therefore installed in Natref is awaiting sampling results for all new points of compliance which were installed in the fourth quarter of The alternative emission limits proposed in this application are based on calculations and are considered conservative. It is expected that the final motivation report will include alternative emission limits based on the pending sampling results. The sampling results are expected to be lower than the calculated conservative values reflected in Table 3-1. Projects in Progress Natref expects to comply with the applicable categories of the MES applicable to the 5 points of compliance by April In all cases compliance can only be achieved by implementing capital projects. Natref s complete roadmap is shown in Table 4-1. The projects comprising this roadmap, together with current best available indication of project schedules, are discussed in this section of the report. It must be noted that the estimated project schedules are premised on various assumptions including the refinery shut down schedule, vendor capacity and internal resource availability. Unforeseen changes in any one of these factors could impact the project schedule. Natref has adopted Sasol s stage gate project development and governance model, which provides a framework to appropriately and diligently guide projects towards successful implementation. An overview of this stage gate project governance model can be seen in Table 4-1.

29 Page 16 Table 4-1: Overview of Sasol s stage-gate project governance model Project Phase Idea Generation Prefeasibility Feasibility Engineering Final investment decision Construction Commissioning Purpose Formulate a project s opportunity statement, to crisply explain the driver for the project. In so doing, articulate the nature and scope of a project Identification of possible operational improvements and technology options to address the opportunity statement, and initial assessment of each option s applicability/feasibility, to narrow down a sub-set of prioritised solutions. Depending on the project, this phase could require extensive piloting to ensure identified options are operationally feasible. Identify the most feasible technology option following appropriately detailed technical, business and operations investigations; evaluate potential technology providers; obtain necessary authorisations and approvals from authorities for the preferred solution Detail design of the identified technology including design of the interfaces with the rest of the existing facility, including upstream and downstream process impacts; detailed resource planning including sourcing equipment and other project resources Governance step for the final authorisation on the selected business, technical and project execution option. The decision sanctions all the necessary resources for project implementation. Execution of the project; construction of the required technology; physical integration of the new technology with existing equipment and systems. The construction phase for new equipment within an operational facility is coordinated within plant maintenance schedules, to mitigate against production impacts. Commissioning of the installed equipment and ensuring the technology operates in accordance with the equipment s design basis; modifications to equipment or plant operating philosophy if required to reach equipment s design basis Amine treating of Vacuum Pre-flash and Vacuum Off-gas (Points 1 & 5 as per Figure 2-4) As detailed in Section 5 of this submission, Natref will install a new Amine treating unit in order to comply with the SO2 limits for new plants on the Vacuum Pre-flash off gas Furnace and the CDU/VDU furnaces (Category 2.1). Based on the current project schedule, compliance with the existing and new plant standards is expected by 1 April The requested postponement period of 3 years extends beyond 1 April 2020, the date when the new plant standards take effect. Therefore, application is simultaneously being made for a postponement of both the existing and new plant standards to align with the 3 year postponement period being requested Installation of PM reduction technology on the FCC (Point 2 as per Figure 2-4) As detailed in Section 8 of this submission Natref will install an ESP in order to comply with the PM limits for new plants on the FCC (Category 2.2). Based on the current project schedule, MES compliance is expected by 1 April 2022, therefore application is simultaneously being made for a postponement of both the existing and new plant standards to align with the 4 year postponement period being requested.

30 Page SRU Availability Improvement Project (Point 3 as per Figure 2-4) The pre-feasibility study has been concluded for the installation of a new SRU. Evaluation of alternative technical interventions is currently in progress to supplement the pre-feasibility study. Based on the current project schedule, compliance with existing and new plant standards for this category (Category 2.3) is expected by 1 April Postponement has been granted until 31 March 2020 and on this basis, this point of compliance is not included in this application and a further postponement will be requested closer to Refinery Fuel Oil Phase Out (Point 7 as per Figure 2-4) As detailed in Section 7 of this submission, Natref will have to completely phase out fuel oil firing within the refinery in order to comply with Category 2.1 existing and new plant standards at compliance point 7. This will require capital investment to improve the quality of the fuel oil, securing an inland fuel oil market, and securing a reliable fuel gas/natural gas supply. Natref is planning to comply with this point by 1 April Prior to 1 April 2020 Natref will endeavour to minimise its refinery fuel oil consumption to the minimum sustainable VOC Reduction on LSR Tanks As detailed in Section 9 of this submission, Natref will install an approved abatement technology on the three LSR tanks (F29009, F29010 and F29011) in order to comply with Category 2.4 existing and new plant standards for these tanks. Natref is aiming to comply on this point by 1 April In addition to the projects addressing Natref s own emission sources, Natref, together with Sasolburg Operations, submitted an offset implementation plan to the DEA following a public consultation process, for approval. It is currently advancing initiatives as outlined in that plan, and providing feedback on progress to the Zamdela community bi-annually, as committed.

31 Page 18 Table 4-2: Summary of Natref Compliance roadmap Air Quality Improvement Roadmap First postponement period Second postponement period* Air quality improvement actions '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 Pollutant of Focus in ambient air Combustion Installations - Furnaces (excluding Vacuum Off-gas Furnace) - MES sub-category 2.1 Installation of additional compliance monitoring points at point of compliance Monitoring point source PM, SO2 and NOx Systematic Reduction of Fuel Oil Firing and replacing with Refinery Fuel Gas or Natural Gas PM10, SO2, NOx (additional benefit of greenhouse gases) Combustion Installations - CDU/VDU Furnaces - MES sub-category 2.1 Installation of additional compliance monitoring points at point of compliance Monitoring point source PM, SO2 and NOx Amine treating Vacuum off-gas SO2 Combustion Installations - Vacuum Pre-flash Off-gas Furnace - MES sub-category 2.1 Installation of additional compliance monitoring points at point of compliance Monitoring point source PM, SO2 and NOx Amine treating of vacuum pre-flash off-gas SO2 Catalytic Cracking Units - FCC - MES sub-category 2.2 Installation of additional compliance monitoring points at point of compliance Replacement of FCC cyclones FCC Particulate Abatement Technology Sulphur Recovery Units - New SRU - MES sub-category 2.3 Installation of additional compliance monitoring points at point of compliance Compliace withh 99% Availibilty Requirement Storage and Handling of Petroleum Products - MES sub-category 2.4 Installation of approved control measure on LSR Tanks Monitoring point source PM, SO2 and NOx PM PM Monitoring point source SO2 SO2 VOC Action linked to Natref's risk based approach Action linked to MES compliance project, where existing and/or new plant standard will be achieved

32 Page 19 5 Postponement Request - CDU/VDU Furnaces (Compliance Point 1 as per Figure 2-4) Description of the point source This point of compliance is depicted as Point 1 on Figure 2-4. Fired process heaters are the main heat producers and they transfer the heat released in the combustion process directly to the process stream. The CDU/VDU furnaces combust fuel (gas and/or refinery residual fuel oil) to provide the heat required to heat the crude oil prior to distillation. The CDU and VDU furnaces are utilised for heating crude oil prior to distillation. The CDU furnaces also combust Vacuum Column off-gas from the Vacuum Column overheads system. The combustion of the gas containing ( 20 vol%) H2S results in SO2 emissions. This stream contributes approximately 8% to Refinery SO2 emissions. These furnaces are an integral part to refinery operation since most processes in refineries are based on the heating and partial evaporation of the hydrocarbons. Availability of all refinery furnaces is essential for the refinery and directly affects the production stability of Natref. Applicable Standards MES Category 2.1 prescribes emission limits applicable to combustion installations. Table 5-1: Excerpt from MES Category 2.1 Combustion Installations Description Application: Substance or mixture of substances Common name Combustion installations including furnaces; heaters; and boilers with a design capacity equal to or greater than 50 MW heat input. All refinery furnaces; heaters and boilers with a design capacity equal to or greater than 50 MW heat input. Chemical symbol Plant status Particulate Matter N/A New 70 Existing 120 Sulphur dioxide SO2 New 1000 Oxides of Nitrogen NOx expressed as NO2 Existing 1700 New 400 Existing 1700 mg/nm 3 under normal conditions of 10% O2, 273 Kelvin and kpa. This postponement application pertains to both the existing plant and new plant SO2 standards. Progress made to date The pre-feasibility study for treatment options for the Vacuum Column Off-gas was completed in March The study identified and evaluated the following treatment options: Routing the gas streams to existing Amine Absorbers; Routing the gas streams to the FCC Wet Gas Compressor; and

33 Page 20 Installing a new low pressure amine treating absorber. For the purposes of Natref s project scope, and in the absence of a definition in the MES of hydrogen sulphide-rich gases, Natref will design the solution according to its scientifically informed interpretation of these gases such that final H2S concentration in the offgas is lower than 1% (on a volume basis). The feasibility study concluded the installation of a new skid mounted Amine Absorber to treat the offgas stream. The Amine Absorber will first compress the gas and then remove the H2S where after the treated gas will be routed to existing furnaces. Natref is currently approaching completion of the feasibility phase for this option. Once the re-routing treatment of the H2S containing streams has been implemented, it is expected that the CDU/VDU furnaces will be compliant with new plant standards, provided that fuel oil firing is also stopped on these furnaces (refer to section 7 for more detail on phase out of refinery fuel oil). Road map to Compliance - Project Schedule The Idea Generation and Prefeasibility phases of the project are complete. As indicated above, the feasibility phase is currently in progress and nearing completion. Subject to successful completion of all project governance processes, including approval of the necessary capital, it is foreseen that with the installation of the new Amine absorber and the phase out of fuel oil, Point 1 will meet existing and new plant standards. Based on the latest project schedule, Natref anticipates meeting the existing and new plant standards for Point 1 by March Table 5-2: CDU/VDU Furnace (Point 1) Project Schedule as per latest available information Key Project Phases Idea Generation Prefeasibility Feasibility Anticipated completion date Complete Complete Complete Project Governance March 2017 Basic Engineering December 2017 Final Investment Decision August 2018 Construction and Commissioning March 2021 Postponement Request Natref therefore requests a three year postponement on compliance timelines for compliance Point 1, from 1 April 2018 to 1 April 2021, during which time Point 1 will achieve compliance with both existing and new plant standards. Natref proposes that the following alternative emissions limit be incorporated in its AEL, as set out in Table 5-3, to prevail during the extended compliance period.

34 Page 21 Table 5-3: Alternative emissions limit requested for the CDU/VDU Furnaces (Point 1) Emission component applying for postponement Emission standard for existing plants Emission standard new plants for Alternative Emission Requested* Limit All values specified at 10% O2 273 K and kpa, mg/nm 3 SO From 1 April 2018 until 31 March 2021: 2 200* Averaging period for compliance monitoring Daily average * Note that the alternative emission limits proposed in this table are based on calculations since a further set of independent samples to verify emissions concentrations is pending. The final verified sampling results taken at the recently installed sampling points at the points of compliance (mg/nm 3 at 10% O2 273 K and kpa) will be submitted to the NAQO s office as soon as these are available. Importantly, the concentrations measured at these points of compliance are a function of ordinary process variations like oxygen and moisture content, and do not necessarily have any bearing on the tons of emissions from the main stack. It is precisely for this reason that the AIR (summarised in Chapter 10 of this report) is based on actual emissions to atmosphere measured at the main stack, rather than fluctuating emission concentrations at the points of compliance. Actual ambient impact is primarily a function of emission load and not concentration although the MES prescribes a concentration based limit. Natref confirms that, should more recent measurements necessitate the revision to the alternative emission limits proposed in Table 3-1, this will have no bearing on total emissions from the main stack, which is dictated by the ordinary production schedules of the operating plant. Consequently, this will have no change on the modelled ambient air quality impacts. Since the MES prescribes ceiling limits, the alternative emissions limit requested is aligned to the maximum emission levels expected under normal operating conditions and is based on a daily averaging period for compliance monitoring. Reason for Postponement Due Diligence obligations project development and governance framework The stage gate model adopted by Natref is important to capital projects for two main reasons: From a project development perspective, bringing learnings from previous project experience to bear, the model provides a framework to carefully guide the solution design process towards successful projects. Among the many important aspects guided by the model, are detailed investigations and design considerations required to address the additional complexities of interfacing new (or altered) equipment into an integrated and operational brownfields facility, particularly one as unique as Natref. For example, such considerations would include whether additional utilities (e.g. steam or power) are needed for the new piece of equipment, and whether the new equipment changes the throughput or capacity requirements of other process units upstream or downstream of it. From a governance perspective, the model prescribes rigorous project development quality standards and business requirements to be met at each successive stage of project development, before a project is approved to proceed to the next development stage. This governance process is aimed at assuring the robustness of solution development, towards implementation of successful projects that achieve their objectives and are aligned with business intent. Good project

35 Page 22 governance means that all projects need to be properly motivated, evaluated and approved in a systematic and consistent manner. The duration of the various development phases (the stages ) is typically linked to the solution s complexity, including its number of interfaces with surrounding processes, and upstream and downstream process impacts. The governance processes (the gates ) serve as a crucial quality control mechanism to ensure that effective projects are ultimately successfully implemented and integrated into the facility s business and operating model. The stage-gate model is a sequential process, and upon successful completion of governance requirements for each stage, a project is formally approved to enter the next stage. Project schedules are driven by a number of considerations, including the following key constraints: Technology complexity: including managing upstream and downstream impacts, as well as key plant infrastructure interfaces that result from integrating new equipment into an existing process; The level of operational risk incurred by introducing new equipment to the existing process and any unintended consequences that may arise from this; Installing new equipment within a plant that is continuously operational requires careful planning for implementation during opportunity windows provided within the highly coordinated, complexwide integrated shutdown schedule. This is particularly important to minimise impacts on safety and production, and to carefully prioritise and plan over a fairly long-term horizon for cases where multiple different projects require implementation within the same portion of the plant. Given these considerations, it is Natref s experience that timeframes for implementation of capital projects on its brownfield sites often exceed five years and frequently also exceed ten years Previous Postponement Application In the 2014 postponement application, Compliance Point 1 was included under the activity defined as Refinery Furnaces. Natref sought a five year postponement from the 1 April 2015 compliance date for existing plant standards. At the time of that application, Natref did not have sample results available on this compliance point and therefore the postponement application was based on calculations. Natref also requested postponement until 1 March 2018 to install sampling points at the point of compliance. This has since been completed and sampling results are awaited. In parallel Natref continued with the various stages of the project. At the time of the 2014 postponement application the project had not concluded the prefeasibility phase yet. Accordingly, different options were still under consideration and it was also not yet known whether a feasible solution could be implemented to achieve the new plant standards through implementation of the same solution. Now that the prefeasibility and feasibility phases have been concluded, it has been confirmed that with the implementation of the project, Natref can simultaneously meet the existing plant standards as well as the new plant standards on Point 1 by 1 April Natref is therefore applying for a three year postponement of compliance timeframes for SO2 on compliance Point 1, by which time the existing and new plant standards will be concurrently met. The initial postponement period of three years granted for this point was shorter than the five year compliance extension period previously requested.

36 Page 23 6 Postponement Request - Vacuum Pre-flash Off-gas Furnace (Compliance Point 5 on Figure 2-4) Description of the point source The point of compliance is shown as Point 5 on Figure 2-4. The Vacuum Pre-flash off-gas furnace is utilised for the combustion of H2S containing off gas from the vacuum pre-flash column. The combustion of the gas containing ( 20 volume %) H2S results in SO2 emissions. This stream contributes approximately 7% to the Refinery s SO2 emissions. Applicable standards MES Category 2.1 prescribes emission limits applicable to combustion installations. Table 6-1: Excerpt from MES Category 2.1 Combustion Installations Description Application: Substance or mixture of substances Common name Particulate Matter Sulphur dioxide Oxides of Nitrogen Combustion installations including furnaces; heaters; and boilers with a design capacity equal to or greater than 50 MW heat input. All refinery furnaces; heaters and boilers with a design capacity equal to or greater than 50 MW heat input. Chemical symbol N/A SO2 NOx expressed as NO2 Plant status New 70 Existing 120 New 1000 Existing 1700 New 400 Existing 1700 mg/nm 3 under normal conditions of 10% O2, 273 Kelvin and kpa. This postponement application pertains to the existing plant and new plant SO2 standards. Progress made to date The pre-feasibility study for treatment options for the Vacuum Preflash Column Off-gas was completed in March During the pre-feasibility phase the following treatment options were considered: Routing to the gas streams to existing Amine Absorbers; Routing to the FCC Wet Gas Compressor; and Installing a new low pressure amine treating absorber. For the purposes of Natref s project scope, and in the absence of a definition of hydrogen sulphiderich gases, Natref will design the solution such that final H2S concentration in the offgas is lower than 1% (volume basis). The conclusion from the pre-feasibility study is to install a new Amine Absorber to treat the off gas streams. A skid mounted unit is recommended, firstly to compress the gas and then remove the H2S. After the installation of the new Amine absorber, Point 5 will meet the new plant standards. A common

37 Page 24 unit will be installed for the treatment for the gas from the Vacuum Preflash Column Off-gas and the gas from the vacuum column (described above in Section 5). Roadmap to Compliance - Project Schedule The Idea Generation and Prefeasibility phases of the project are complete. The feasibility phase is currently in progress. Natref expects to simultaneously meet the existing and new plant standards on Point 5 by March Table 6-2: Vacuum Preflash Off-gas Furnace (Point 5) Project Schedule Project Phase Anticipated completion date Idea Generation Complete Prefeasibility Complete Feasibility Complete Project Governance March 2017 Basic Engineering December 2017 Final Investment Decision August 2018 Construction and Commissioning March 2021 Postponement Request Natref therefore requests a three year postponement for compliance on Point 5, by which time the existing and new plant standards will be concurrently met. Natref proposes the following maximum emission concentrations as alternative emissions limits to be incorporated in its AEL, during the extended compliance period as set out in Table 6-3, to prevail during the period of postponement. Table 6-3: Alternative emissions limit request for the Vacuum pre-flash Off-gas Furnace (Point 5) Emission component applying postponement for Emission standard for existing plants Emission standard new plants for Alternative Emission Requested* Limit All values specified at 10% O2 273 K and kpa, mg/nm 3 SO From 1 April 2018 until 31 March 2021: 7 000* Averaging period for compliance monitoring Daily average * Note that the alternative emission limits proposed in this table are based on calculations since a further set of independent samples to verify emissions concentrations is pending. The final verified sampling results taken at the recently installed sampling points at the points of compliance (mg/nm 3 at 10% O2 273 K and kpa) will be submitted to the NAQO s office as soon as these are available. Importantly, the concentrations measured at these points of compliance are a function of ordinary process variations like oxygen and moisture content, and do not necessarily have any bearing on the tons of emissions from the main stack. It is precisely for this reason that the AIR (summarised in Chapter 10 of this report) is based on actual emissions to atmosphere measured at the main stack, rather than fluctuating emission concentrations at the points of compliance. Actual ambient impact is primarily a function of emission load and not concentration although the MES prescribes a concentration based limit. Natref confirms that, should more recent measurements necessitate the revision to the alternative emission limits proposed in Table 3-1, this will have no bearing on total emissions from the main stack, which is dictated by the ordinary production schedules of the operating plant. Consequently, this will have no change on the modelled ambient air quality impacts.

38 Page 25 Since the MES prescribes ceiling limits, the alternative emissions limit requested is aligned to the maximum emission levels expected under normal operating conditions. The alternative emissions limit proposed is based on a daily averaging period for compliance monitoring. Reason for Postponement Due Diligence obligations project development and governance framework Natref must follow the stage gate process for project implementation as previously detailed in Section A detailed timeline for each phase of this project is provided in Table 6-3 above Previous Postponement Application In the 2014 postponement application, this point of compliance was included under the activity defined as Vacuum Pre-flash Off-gas Furnace. Natref sought a five year postponement from the 1 April 2015 compliance date for existing plant standards. At the time of the application, Natref did not have sample results available on this compliance point; the postponement application was therefore based on calculations. Natref requested postponement until 1 March 2018 to install sampling points to confirm whether this point was compliant or not. At the time of the application it was also not known whether a feasible solution could be implemented to achieve the new plant standards, and the feasibility of different options available were still under consideration. Now that the prefeasibility and feasibility phases have been concluded, it has been confirmed that Natref can simultaneously meet the existing and new plant standards on Point 5 by 1 April Natref is therefore applying for a three year postponement of compliance timeframes for SO2 on compliance Point 5, by which time the existing and new plant standards will be concurrently met. The initial postponement period of three years granted for this point was shorter than the five year compliance extension period previously requested.

39 Page 26 7 Postponement Request - Boilers and Hot Oil Heater (Compliance Point 7 on Figure 2-4) Description of the point source The point of compliance is shown as Point 7 on Figure 2-4. This point consists of emissions from two boilers, used for steam generation as well as a Hot Oil Heating furnace. These Steam boilers can use refinery fuel gas or residual refinery fuel oil as fuel. Air emissions are the lowest when firing with gaseous fuel, and are the highest when firing with residual fuel oil as a fuel. The boilers are designed to be dual (oil/gas) fired to allow flexibility in the refinery fuel system i.e. manage refinery fuel oil levels and prevent fuel gas flaring. As per GN 551 these furnaces fall under MES Category 2.1. The two boilers are currently fired on fuel oil for two main reasons: 1. Unavailability of an alternative low sulphur fuel source; and 2. The demand or market for fuel oil in the inland is very limited. Unavailability of an alternative fuel source: Fuel gas generated by refinery processes is insufficient to meet process energy demands. An alternate fuel would need to be sourced and imported into the refinery to provide the energy requirements currently provided by refinery fuel oil. During the extended compliance period Natref must source an alternative cleaner fuel source to replace the refinery fuel oil, and thereby further lower its emissions. Low fuel oil demand in the inland market: A market or alternative destination for excess fuel oil will be required. The reason for this is that conventional refineries are sited next to the coast where they have access to a Bunker fuel market for their fuel oil. Natref does not have a bunker fuel market. The inland market for fuel oil is limited and is expected to further decline in future due to strict air emissions regulations. During the extended compliance period all reasonable endeavours will be taken to place the excess fuel oil which can no longer be fired with the Refinery. In order to produce a saleable Fuel Oil product stream, the Aluminium and Silicon content of the fuel oil must be reduced. FCC slurry solids removal by tank settling will be implemented in order to improve the fuel oil quality. As detailed in Section 2.2, given its inland location, with a significantly smaller inland fuel oil market, Natref upgrades significantly more raw material into final products to minimise fuel oil production. The refinery fuel gas and refinery fuel oil stock levels and availability therefore need to be carefully balanced with respect to supply and demand.

40 Page 27 Applicable standards MES Category 2.1 prescribes emission limits applicable to combustion installations. Table 7-1: Excerpt from MES Category 2.1 Combustion Installations Description Application: Substance or mixture of substances Common name Combustion installations including furnaces; heaters; and boilers with a design capacity equal to or greater than 50 MW heat input. All refinery furnaces; heaters and boilers with a design capacity equal to or greater than 50 MW heat input. Chemical symbol Plant status Particulate Matter N/A New 70 Existing 120 Sulphur dioxide SO2 New 1000 Oxides of Nitrogen NOx expressed as NO2 Existing 1700 New 400 Existing 1700 mg/nm 3 under normal conditions of 10% O2, 273 Kelvin and kpa. This postponement application pertains to the existing plant standard for PM and SO2 standards. Progress made to date Natref, subject to its applicable governance processes, is currently working on a proposal to completely phase out fuel oil firing inside the Refinery by April This is predicated on achieving the following: Implement tank modifications and slurry settling scope; Confirm that a saleable fuel oil product can be produced (thereby allowing the phase out of refinery fuel oil firing); and Secure additional fuel gas to compensate for the loss in fuel oil. In order to produce a saleable Fuel Oil product stream, the Aluminium and Silicon content of the fuel oil must be reduced. FCC slurry solids removal by tank settling will be implemented in order to improve the fuel oil quality. Subject to the implementation of the above scope, and securing additional fuel gas, Natref aims to meet the existing and new plant standards on Point 7 by 1 April 2020.

41 Page 28 Roadmap to Compliance Project Schedule Natref has completed the Idea Generation and Prefeasibility Phases of the project. The Feasibility study is due to commence in early Table 7-2: Boilers and Hot Oil Heater (Point 7) Project Schedule Project Phase Idea Generation Prefeasibility Anticipated completion date Complete Complete Feasibility March 2017 Project Governance May 2017 Basic Engineering December 2017 Final Investment Decision March 2018 Construction and Commissioning March 2020 Postponement Request Natref therefore requests a two year postponement on the existing plant standards for compliance on Point 7. Natref proposes the following maximum emission concentrations as alternative emissions limits to be incorporated in its AEL for the extended compliance period, as set out in Table 7-3, to prevail during the period of postponement. Table 7-3: Alternative emissions limit request for the Boilers and Hot Oil Heater (Point 7) Emission component applying for postponement Emission standard for existing plants Emission standard for new plants Alternative Emission Limit Requested* All values specified at 10% O2 273 K and kpa, mg/nm 3 Averaging period for compliance monitoring SO PM From 1 April 2018 until 31 March 2020: 3 500* From 1 April 2018 to until 31 March 2020: 350* Daily average * Note that the alternative emission limits proposed in this table are based on calculations since a further set of independent samples to verify emissions concentrations is pending. The final verified sampling results taken at the recently installed sampling points at the points of compliance (mg/nm 3 at 10% O2 273 K and kpa) will be submitted to the NAQO s office as soon as these are available. Importantly, the concentrations measured at these points of compliance are a function of ordinary process variations like oxygen and moisture content, and do not necessarily have any bearing on the tons of emissions from the main stack. It is precisely for this reason that the AIR (summarised in Chapter 10 of this report) is based on actual emissions to atmosphere measured at the main stack, rather than fluctuating emission concentrations at the points of compliance. Actual ambient impact is primarily a function of emission load and not concentration although the MES prescribes a concentration based limit. Natref confirms that, should more recent measurements necessitate the revision to the alternative emission limits proposed in Table 3-1, this will have no bearing on total emissions from the main stack, which is dictated by the ordinary production schedules of the operating plant. Consequently, this will have no change on the modelled ambient air quality impacts.

42 Page 29 Since the MES prescribes ceiling limits, the alternative emissions limits requested are aligned to the maximum emission levels expected under all normal operating conditions and are based on a daily averaging period for compliance monitoring. Reason for postponement Due Diligence obligations project development and governance framework Natref must follow the stage gate process for project implementation as previously detailed in Section A detailed timeline for each phase of this project is provided in Table 7-2 above Previous Postponement Application Natref previously submitted a postponement application ahead of the 1 April 2015 compliance timeframe for existing plant standards, for various sources (2014 Postponement Application). This point formed part of that application (Category 1.2: Fuel Oil Fired Boilers). At the time of the application, Natref did not have sample results available on this compliance point; the postponement application was therefore based on calculations. Natref requested postponement until 1 March 2018 to install sampling points. This has been completed and final sampling results are awaited. In parallel Natref has continued with the various stages of the project. At the time of the 2014 Postponement Application the project had not concluded the prefeasibility phase. Accordingly, different options available were still under consideration and at the time it was also not known whether, in conjunction with the measures below, a feasible solution could be implemented to achieve the new plant standards. A five year postponement was hence sought. Natref has since identified a possible solution however an extended compliance period is required to: Implement tank modifications and slurry settling scope; Confirm that a saleable fuel oil product can be produced (thereby allowing the phase out of refinery fuel oil firing); and Secure additional fuel gas to compensate for the loss in fuel oil.

43 Page 30 8 Postponement Request - Catalytic Cracking Units: Postponement request for PM (Compliance Point 2 on Figure 2-4) Description of the point source The FCC point of compliance is shown as Point 2 on Figure 2-4. Catalytic cracking is a conversion process for upgrading heavier hydrocarbons into more valuable petrol and other products typically derived from lower boiling point hydrocarbons. The process uses heat and a catalyst to break larger hydrocarbon molecules into smaller, lighter molecules. While the FCC is a common process to many refineries globally, the combination of an RCD, FCC and DHC is uncommon, and makes the Natref refinery by design considerably more complex than refineries without these process units, as detailed in Section 2.2. The FCC uses a catalyst in a fluidised bed at elevated temperatures to break down the long chain hydrocarbons in the gas phase. Atmospheric emissions occur during the regeneration of the catalyst, and include mainly PM, with lower concentrations of SO2 and NOx. FCC availability directly affects the production stability of Natref. Any additional outage time on this unit directly affects fuel production levels of the facility, with significant financial implications as well as fuel supply implications. Thus, any work, including maintenance, retrofits of compliance technology and any renewals or upgrades of equipment components, is planned to take place during a strictly adhered to shutdown schedule, with planned outages. This schedule is coordinated with the shutdown activities of other fuel refineries, to avoid an inland fuel shortage. Applicable Standards MES Category 2.2 prescribes emission limits applicable to combustion installations. Table 8-1: Excerpt from MES Category 2.2 Catalytic Cracking Units Description Application: Refinery Catalytic Cracking Units All installation Substance or mixture of substances Common name Chemical symbol Plant status Particulate Matter N/A New 100 Existing 120 Sulphur dioxide SO2 New Oxides of Nitrogen NOx expressed as NO2 Existing New 400 Existing 550 mg/nm 3 under normal conditions of 10% O2, 273 Kelvin and kpa. This postponement application pertains to the existing and new plant standards for PM.

44 Page 31 Progress made to date In order to reduce PM emissions from the FCC, replacement of the existing FCC cyclones was required. Since replacement of the FCC cyclones can only be done during a shutdown, Natref has replaced the cyclones in October This has reduced the PM emissions, but will not reach existing plant standards. In order to meet existing plant standards, additional abatement technology is required. The prefeasibility study for PM compliance was completed in June From the study it was decided to install an Electrostatic Precipitator (ESP) based on the anticipated future progression of environmental standards. The feasibility study was subsequently completed in August Capital approval for basic engineering was granted in November 2016 to complete basic engineering of the ESP installation of and association infrastructure. A competitive bidding process was initiated in December 2016 and contract award is planned for April Roadmap to Compliance - Project Schedule Regarding the project governance process outlined above, Natref has completed the Idea Generation, Prefeasibility and Feasibility Phases. The Basic Engineering phase is scheduled to begin in the second quarter of The particular schedule constraints for the project relate to the construction phase, due to the overall shutdown schedule. The outlet ducting from the new ESP must be routed to the refinery main stack ducting, which can only take place during a Refinery shutdown when the stack line is not live. The next refinery shut down is planned for 2021 aligned with the shut down schedules of other refineries to facilitate security of supply. Major tie-ins required for projects to connect existing and new equipment will be completed during this shutdown. In the 2014 postponement application, Natref committed to installation of abatement equipment on the FCC by 1 April 2025 at the latest. Every effort is being made to engineer, construct and commission the ESP by 1 April 2022, in line with upholding that commitment. Table 8-2: FCC (Point 2) Project Schedule Project Phase Anticipated completion date Idea Generation Complete Prefeasibility Complete Feasibility Complete Project Governance Complete Basic Engineering In Progress Final Investment Decision August 2018 Construction and Commissioning March 2022

45 Page 32 Postponement Request Natref therefore requests a four-year postponement from the existing and new plant standards for PM emissions, as illustrated in Table 8-3. Table 8-3: Alternative emissions limit request for Natref s FCC (Point 2) Emission component applying for postponement Emission standard for existing plants Emission standard for new plants Alternative Emission Limit Requested All values specified at 10% O2 273 K and kpa, mg/nm 3 Averaging period for compliance monitoring PM From 1 April 2018 to until 31 March 2022: 900 Daily average * Note that the alternative emission limits proposed in this table are based on calculations since a further set of independent samples to verify emissions concentrations is pending. The final verified sampling results taken at the recently installed sampling points at the points of compliance (mg/nm 3 at 10% O2 273 K and kpa) will be submitted to the NAQO s office as soon as these are available. Importantly, the concentrations measured at these points of compliance are a function of ordinary process variations like oxygen and moisture content, and do not necessarily have any bearing on the tons of emissions from the main stack. It is precisely for this reason that the AIR (summarised in Chapter 10 of this report) is based on actual emissions to atmosphere measured at the main stack, rather than fluctuating emission concentrations at the points of compliance. Actual ambient impact is primarily a function of emission load and not concentration although the MES prescribes a concentration based limit. Natref confirms that, should more recent measurements necessitate the revision to the alternative emission limits proposed in Table 3-1, this will have no bearing on total emissions from the main stack, which is dictated by the ordinary production schedules of the operating plant. Consequently, this will have no change on the modelled ambient air quality impacts. Reason for Postponement Due Diligence obligations project development and governance framework Natref must follow the stage gate process for project implementation as previously detailed in Section A detailed timeline for each phase of this project is provided in Table 8-2 above Previous Postponement Application In the 2014 Postponement Application, Natref indicated that it would be able to comply with existing and new plant standards for the FCC unit by 1 April 2025 at the latest. Now that the prefeasibility phase has been concluded, a schedule has been outlined confirming that Natref can meet the existing and new plant standards for Point 2 by 1 April Natref is therefore applying for a four year postponement of compliance timeframes for PM on the FCC (Point 2). The initial postponement period of three years granted for the abovementioned point was shorter than the five year postponement period requested in line with an estimated 10 year project timeframe which is required to ensure safe completion of the associated compliance project. Since Natref was granted a postponement shorter than required for its compliance project execution schedule, Natref is applying for a further postponement. Through this, compliance with existing and new plant standards will be achieved concurrently.

46 Page Refinery Shutdown Opportunity The particular schedule constraints for the project schedule relate to the construction phase, due to the shutdown schedule. The ducting from the ESP must be connected to the Refinery main stack. This can only be done safely during a complete Refinery shutdown. The Refinery shutdown is planned for once in every nine years. The major tie-ins for a FCC emission reduction project can therefore only be implemented during the next Refinery shutdown opportunity in 2021.

47 Page 34 9 Postponement Request - Storage Tanks: Postponement request for VOCs Description of the point source Natref operates three Light Straight Run (LSR) Tanks F29009, F29010 and F29011 which are the subject of this postponement application. These tanks are designed according to American Petroleum Institute 620 guideline requirements. These tanks are hemispheroids with a diameter of less than 20m. Each of these tanks is equipped with pressure relief valve and a vacuum breaker to release into the atmosphere. These tanks are pressurised tanks and operate above normal atmospheric pressure to reduce emissions. Applicable Standards Category 2.4 prescribes special arrangements that apply for control of VOCs from storage of raw materials, intermediate and final products with a vapour pressure above 14 kpa at operating temperature. The special arrangement stipulates that alternative control measures that can achieve the same or better results as the prescribed abatement technologies, may be used. Natref s three LSR tanks as described in Section 9.1 fall under category 4(b)(i) Type 3 of MES Category 2.4. Table 9-1: Category 2: Petroleum Industry, the production of gaseous and liquid fuels and well as petrochemicals from crude oil, coal, gas or biomass, Subcategory 2.4: Storage and Handling of Petroleum Products, special arrangement (4)(b)(i) Storage vessels for liquids shall be of the following type: Application True vapour pressure of contents at product storage temperature All permanent immobile storage facilities at a single site with a combined storage capacity greater than 100 cubic metres Type of tank or vessel Type 1: Up to 14 kpa Fixed roof tank vented to atmosphere, or as per Type 2 and 3 Type 2: Above 14 kpa and up to 91 kpa with a throughput of less than m 3 per annum Type 3: Above 14 kpa and up to 91 kpa with a throughput greater than m 3 per annum Type 4: Above 91 kpa Fixed-roof tanks with Pressure Vacuum Vents fitted as a minimum, to prevent breathing losses, or as per Type 3 a) External floating-roof tank with primary rim seal and secondary rim seal for tank with a diameter greater than 20m, or b) fixed-roof tank with internal floating deck/roof fitted with primary seal, or c) Fixed roof tank with vapour recovery system Pressure vessel

48 Page 35 Progress made to date Natref was granted postponement on the 3 LSR tanks until 1 April Natref had aligned its technology selection with the results of the detailed investigations undertaken by Sasol s Secunda Synfuels Operations (SSO) using Evapostop floating disc technology and has, through its own technology review, concluded that the Evapostop discs are the optimal solution to meet the Category 2.4 requirements. The Natref Board approved the technology on 10 November 2015, subject to the DEA confirming its support of the technology as a permanent solution in time for Natref s planned implementation ahead of 1 April In the case of Natref, a nitrogen blanket would be introduced in its API-620 pressurised tanks in conjunction with the installation of the Evapostop discs. The total installation of a nitrogen blanket together with Evapostop discs would take 18 months. Natref has completed the Idea Generation, Prefeasibility, Feasibility, Basic Engineering and Detailed Engineering on the Evapostop option. With only procurement and construction left, Natref was on track to install the abatement equipment in line with the granted postponement period of 1 April Given that the DEA has not yet confirmed their support for the implementation of Evapostop Technology as a permanent control measure, work on the execution of this technology is suspended. Natref is working on the prescribed technology options that are listed in Table 9-1. Roadmap to Compliance Project Schedule Natref is currently working on the prescribed technology options. These include: Installation of a new dedicated vapour recovery unit at the tanks (electrical infrastructure constraints must be investigated to determine whether this option is possible) Installation of an Internal Floating Roof with Nitrogen Blanketing The project schedule is given in Table 9-2. It is expected that compliance could be achieved by March Table 9-2: Storage Tanks Project Schedule Project Phase Anticipated completion date Idea Generation In Progress Prefeasibility Complete Feasibility May 2017 Project Governance November 2017 Basic Engineering March 2018 Final Investment Decision May 2018 Construction and Commissioning March 2019 Postponement Request Natref applies for a one year postponement until 1 April 2019 of compliance timeframes from special arrangement (4)(b)(i) of Category 2.4, to install the necessary technology to comply with the special arrangement. In the interim, Natref confirms that the VOC emissions from these units will continue to be effectively managed as part of the site fugitive emission monitoring plan.

49 Page 36 Reason for Postponement Due Diligence obligations project development and governance framework Natref must follow the stage gate process for project implementation as previously detailed in Section A detailed timeline for each phase of this project is provided in Table 9-2 above Previous Postponement Application In the 2014 Postponement Application, Natref had requested five years of postponement for the storage tanks, but was only granted three years. Natref therefore requests a further postponement for its compliance project execution schedule.

50 Page The Atmospheric Impact Report Overview The Atmospheric Impact Report (AIR) is a regulatory requirement which is required to be compiled and submitted as part of an application for postponements. The purpose of the AIR is to provide an assessment of the implications for ambient air quality and associated potential impacts associated with the postponement application. The impact on climate change has not been considered as current greenhouse emissions will not increase or decrease as a result of this application. The AIR specifically focusses on compliance with the MES, and is fit for purpose. The AIR was prepared by Airshed Planning Professionals (Airshed), an independent consultant, in accordance with the Atmospheric Impact Report Regulations and the methodology and datasets were independently peer reviewed by E x ponent Inc. The full AIR is included in Annexure A, with key elements of the report and the findings being summarised in this section of the motivation report. The AIR conducted as part of the 2014 Postponement Application includes further information on sources not addressed by this postponement application, given its fit for purpose scope, and is available from the SRK website at: Africa/publicDocuments/Natref_Postponement/FinPost/ANNEXURE_A_NATREF_Atmospheric_Imp act_report.pdf. Study approach and method Dispersion modelling Dispersion modelling is a key tool in assessing the ambient air quality implications of atmospheric emissions. A dispersion model serves to simulate the way in which emissions will be transported, diffused and dispersed by the atmosphere and ultimately how they will manifest as ground-level or ambient concentrations. For the purposes of this assessment, the Regulations Regarding Air Dispersion Modelling determined the dispersion model selection. The CALPUFF model was selected because it can simulate pollution dispersion in low wind (still) conditions, which occur frequently in the area where Natref operates and because CALPUFF is able to perform chemical transformations Ambient air quality monitoring stations As opposed to predicted ambient concentrations using a dispersion model, ambient air quality monitoring serves to provide direct physical measurements of selected key pollutants. Sasol, one of Natref s shareholders, operates four ambient air quality monitoring stations in and around Sasolburg, namely at the Sasol 1 Fence Line, Leitrim, AJ Jacobs and Eco Park. In addition, the DEA operates three quality monitoring stations in and around Sasolburg, namely at Three Rivers, Sharpeville, and Zamdela. Data from the Sasol and DEA monitoring stations for 2013, 2014 and 2015 were included in this investigation. The Sasol monitoring stations are accredited (ISO/IEC17025) to ensure data quality and availability.

51 Page Emissions scenarios In order to assess the impact of the emissions associated with the postponements for which Natref is applying, four emissions scenarios were modelled: 1. Current baseline emissions, reflective of the impacts of present operations, which are modelled as averages of measurements taken from periodic emission monitoring. This scenario is represented by the first column in the presentation of all AIR graphs (shown in blue Figure 10-1). The reason baseline emissions were modelled as averages of measured point source emissions was to obtain a picture of long-term average impacts of Natref s emissions on ambient air concentrations, which could be reasonably compared with monitored ambient concentrations, as a means of assessing the representativeness of the dispersion model s predictions. Modelling baseline emissions at a ceiling level, which is seldom reflective of actual emissions, would overpredict ambient impacts, and therefore not allow for reasonable assessment of the model s representativeness. 2. Compliance with the 2015 existing plant standards. This is modelled as a ceiling emissions limit (i.e. maximum emission concentration) aligned with the prescribed standard, and reflects a scenario where abatement equipment is introduced to theoretically reduce emissions to conform to the standards. This scenario assumes that that all sources (including compliant sources that currently operate below the MES) operate at the MES ceiling limit. This scenario is the represented by the second column in the presentation of all AIR graphs (shown in red in Figure 10-1). 3. Compliance with the 2020 new plant standards. This is modelled as a ceiling emissions limit (i.e. maximum emission concentration) aligned with the prescribed standard, and reflects a scenario where abatement equipment is introduced to theoretically reduce emissions to conform to the standards. This scenario is then represented by the third column in the presentation of all AIR graphs (shown in green in Figure 10-1). 4. A worst-case scenario of operating constantly at the requested alternative emissions limits, which have been specified as ceiling emissions limits (i.e. maximum emission concentrations), to align with the manner in which the prescribed standards are specified. The proposed maximum emission concentrations for Natref have been calculated assuming a reduction in fuel oil firing in the refinery furnaces. This will result in substantial reductions in emissions but will not result in compliance with the MES for all points of compliance. The emission concentrations also take into account the improvement expected from the cyclone replacement project on the FCC installed in November This scenario is represented by the fourth column in the presentation of all AIR graphs (shown in purple in Figure 10-1).

52 Page 39 Figure 10-1: Schematic displaying how the dispersion modelling scenarios are presented, for each monitoring station receptor in the modelling domain National Ambient Air Quality Standards Once ambient concentrations have been predicted using the dispersion model, the predicted or measured concentrations are typically compared to defined standards or other thresholds to assess the health and/or environmental risk implications of the predicted or measured air quality. In South Africa, NAAQS have been set for criteria pollutants at limits deemed to uphold a permissible or tolerated level of health risk and the assessment has accordingly been based on a comparison between the predicted concentrations and the NAAQS. Where no NAAQS exists for a relevant noncriteria pollutant, health screening effect levels based on international guidelines are used. The measured concentrations have been used to ascertain the representativeness of the modelling and to assess the extent to which the NAAQS are met as a function of all sources of emissions Sensitive receptors Prior to dispersion modelling, 52 receptors were identified in the vicinity of Natref (within the 50-by- 50 km modelling domain). Sensitive receptors included residential areas, schools, hospitals and clinics, monitoring stations (Figure 10-2 and Table 10-1). Ambient air quality monitoring stations (AQMS) were the first receptors identified because predicted concentrations could be compared with measured concentrations for model validation. Schools, hospitals and clinics within the domain were

53 Page 40 identified and included as sensitive receptors in the dispersion model. All receptors are presented in the isopleth plots, where the AQMS are included in results figures and the 20 closest receptors are included in the results tables at increasing distance from the centre of Natref s operations. Figure 10-2: Map showing the positions of the 52 sensitive receptors identified for presenting the predicted ambient air quality Table 10-1: Summary listing of the sensitive receptors illustrated in Figure 10-2 Receptor code name Receptor details Distance source (km) from Zamdela VTAPA Zamdela monitoring station 2.1 Leitrim Sasol Leitrim monitoring station 3.1 AJ Jacobs Sasol AJ Jacobs monitoring station 3.2 Eco Park Sasol Eco Park monitoring station 5.7 Sharpeville VTAPA Sharpeville monitoring station 15.1 Three Rivers VTAPA Three Rivers monitoring station HTS Secondary School Sasolburg Provincial Hospital Sasolburg Clinic 3.2

54 Page 41 Receptor code name Receptor details Distance source (km) from 24 Lumiere Primary School AJ Jacobs Primary School Fonteine Primary School Malakabeng Primary School Bofula-Tshepe Primary School Tsatsi Primary School Cedar Secondary School Zamdela Hospital Zumayear Vaalpark Hospital Sasolburg High School Clinic A Zamdela Fakkel Secondary School Nkopoleng Secondary School Kahobotjha-sakubusha Secondary School Iketsetseng Secondary School Clinic B Zamdela Vaalpark Articon Secondary School 4.4 (a) (b) Code names used in Figures and Tables for brevity Figures and tables present findings for receptors in increasing distance from site Model performance Although atmospheric models are indispensable in air quality assessment studies, their limitations should always be taken into account. As detailed in the AIR, dispersion modelling has inherent uncertainty. The accuracy of the ambient concentrations predicted by the model are vulnerable to three main sources of errors resulting from: incorrect input emissions data; inaccurate meteorological data and inadequate scientific formulation of the model. Model uncertainty is discussed in further detail in Section of the AIR Compliance with AIR Regulations As summarised in Section of the AIR, the air quality assessment was compiled in accordance with the Regulations prescribing the format of the Atmospheric Impact Report of 2013 (as contemplated in Section 30 of the NEM:AQA) unless otherwise indicated.

55 Page Peer review of the dispersion modelling methodology and datasets The dispersion modelling methodology and datasets was reviewed by E x ponent Inc, which was identified as the appropriate peer reviewer in light of its extensive international experience in the design, development, and application of research and regulatory air quality models. Airshed s Plan of Study, the peer reviewer s report and Airshed s comments on each of the findings are included as Annexure B. Dispersion Modelling Results Sulfur Dioxide (SO2) Simulated SO2 concentrations are below the NAAQS for all four scenarios for all three averaging periods. Increases in simulated ambient SO2 concentrations are expected if Natref were to theoretically operate at existing plant standards. This is due to the fact that this scenario assumes that all sources (including compliant sources that currently operate well below the MES ceiling limit, operate at the MES ceiling limit. This includes the local stacks which, in the baseline measurements, are well within the existing plant standards. The emissions from these stacks have a greater effect on the ambient air quality as they emit at a lower height than the main stack. Reductions in ambient hourly SO2 concentrations are expected if Natref were to comply with new plant emission standards and when operating at the proposed alternative emissions. Reductions for the alternative emissions scenario are attributed to a reduction in fuel oil firing in the refinery furnaces and improvement expected from the cyclone replacement project on the FCC. This will result in substantial reductions in emissions but will not result in compliance with the MES. Simulated hourly SO2 concentrations for the four scenarios are illustrated in Figure Simulated daily and annual concentrations are illustrated in Section of the AIR together with isopleth plots and tabulated results of the modelling.

56 Page 43 Figure 10-3: Simulated and observed hourly SO 2 concentrations Nitrogen Dioxide (NO2) Simulated NO2 concentrations are below the NAAQS for all four scenarios for both averaging periods. Elevated ambient NO2 concentrations, relative to the baseline, are expected at all receptors if Natref were to theoretically operate at the existing plant and new plant standards. This is because the Natref main stack emissions are made up of a number of points of compliance. When the MES limit for all the points of compliance are added together to calculate the total main stack emissions for the existing and new plant compliance scenarios this is substantially higher than the baseline. This is due to the fact that this scenario assumes that all sources (including compliant sources that currently operate well below the MES ceiling limit, operate at the MES ceiling limit. This includes the local stacks which, in the baseline measurements, are well within the existing plant standards. The emissions from these stacks have a greater effect on the ambient air quality as they emit at a lower height than the main stack. The proposed alternative emissions are expected to result in ambient NO2 concentrations below those predicted for the baseline operations (maximum reduction by 9.5%). As for SO2 this as a result of a reduction in fuel oil firing in the refinery furnaces and improvement expected from the cyclone replacement project on the FCC. Simulated hourly NO2 concentrations for the four scenarios are illustrated in Figure Simulated annual concentrations are illustrated in Section of the AIR together with isopleth plots and tabulated results of the modelling.

57 Page 44 Figure 10-4: Simulated and observed hourly NO 2 concentrations Particulate Matter (PM2.5 and PM10) NAAQS are available for both PM10 and PM2.5. Ambient air quality impacts therefore need to be considered for both particulate fractions. Simulated concentrations of particulate matter (PM) were conservatively assumed to be PM2.5 since it was not possible to establish the PM2.5//PM10 split. While the observed PM concentrations for both averaging periods are above the NAAQS the simulated concentrations are well below the NAAQS. This illustrates the impact of other sources of PM on ambient concentrations. The predicted ground-level PM concentrations, as a result of emissions from the Natref Main Stack, are very low. Theoretical compliance with the existing and new plant emission standards would not result in a significant reduction in observed daily or annual PM concentrations. Simulated daily PM concentrations for the four scenarios are illustrated in Figure Simulated annual concentrations are illustrated in Section of the AIR together with isopleth plots and tabulated results of the modelling.

58 Page 45 Figure 10-5: Simulated and observed daily PM concentrations Carbon Monoxide (CO) Emission rates of CO for theoretical compliance with the existing and new plant emission standards and the alternative scenario were no different from the baseline. This is because none of the activities applying for postponement emit CO therefore there will be no change to CO emissions as a result of compliance. Simulated and observed CO concentrations are substantially (less than 1%) below the NAAQS. Simulated hourly CO concentrations are illustrated in Figure Isopleth plots and tabulated results of the modelling are also provided in Section of the AIR.

59 Page 46 Figure 10-6: Simulated and observed hourly CO concentrations Benzene Benzene emissions from the petroleum product storage tanks at Natref were simulated for two scenarios: the baseline emissions and a compliance scenario where the fixed roof tanks would theoretically meet the special conditions stipulated for Subcategory 2.4 Listed Activities. Simulated and observed annual benzene concentrations are below the NAAQS. Simulated annual benzene concentrations are substantially below the observed annual benzene concentrations and the NAAQS, demonstrating the impact of other sources on ambient concentrations. Compliance with the special requirements would, however, theoretically reduce ambient concentrations. Simulated annual benzene concentrations are illustrated in Figure Isopleth plots and tabulated results of the modelling are also provided in Section of the AIR.

60 Page 47 Figure 10-7: Simulated annual Benzene concentrations Overall findings of the AIR Meeting the NAAQS The purpose of the MES aims to achieve the intent of the NEM:AQA which means ensuring that ambient air quality that does not threaten the health or well-being of people and the environment is achieved. To all intents and purposes that means ambient air quality that meets the NAAQS. Thus in assessing the request for postponements, the effect of granting such a request should be assessed in terms of the implication for ambient air quality. For all criteria pollutants barring PM both the simulated and observed ambient concentrations are below the NAAQS. For PM, while the observed ambient concentrations are above the NAAQS, the simulated ambient concentrations of PM emanating from Natref s sources are well below the NAAQS demonstrating the contribution to ambient concentrations from other sources. To address these other sources, Natref is in the process of executing a Joint Offset Implementation Plan with Sasol that aims to achieve a reduction in PM emissions from the other sources The effect of the alternative emissions limits The alternative emissions limits proposed by Natref to be applicable during the extended compliance period, are in some instances significantly higher than the MES, i.e. as reported on a concentration basis. It is reiterated that the administrative basis of the MES is to comply under all operational circumstances, with emissions exceeding the MES only being tolerated for shut down, start up and

61 Page 48 upset conditions. That administrative requirement means that Natref must request ceiling emissions limits rather than average emissions limits to ensure that it can comply under all operating conditions given the known variability of emissions under normal operational conditions. The predicted ambient concentrations for the alternative emissions limits are a worst-case depiction because they have been modelled as if the emission will be maintained at those levels continually, which they will not. Yet even under the worst-case emissions scenario meeting the NAAQS is predicted in all circumstances for Natref s emissions. The key finding is that the simulated concentrations for the alternative emissions limits will reduce compared to the baseline emissions concentrations as a result of the reduction in fuel oil firing within the refinery as well as the replacement of the FCC cyclones that took place in November The emissions modelled in terms of this scenario, while generally lower than the baseline, still represent a worst case scenario post the fuel switch as these are ceiling limits and Natref will not operate at the limit constantly. Average emissions are therefore predicted to be less that the emissions modelled in terms of this scenario Health effects The AIR Regulations prescribe an assessment of the health effects of the emissions for which temporary relief is sought from the MES through a request for extended compliance periods based on the degree to which the NAAQS are met. The World Health Organisation indicates that there is no safe limit in respect of exposure to PM. However, the NAAQS prescribe a permissible or tolerable level of health risk. The overall findings of the AIR are that the alternative emissions limits requested by Natref in the interim will not result in an increase in ambient pollutant concentrations beyond the permissible health risk thresholds of the NAAQS Ecological effects The impact of emissions on the environment is assessed in terms of Section 5.2 of the AIR. The analysis covers impacts to vegetation, of dustfall, potential corrosion, impacts associated with sulfur and nitrogen deposition and the environmental impact of benzene emissions. The simulated off-site annual concentrations of SO2 and NOx for all emission scenarios are not likely to exceed the levels for even the most sensitive vegetation types. Estimated dustfall rates for the four simulation scenarios were less than 22 mg/m 2.day which is substantially below the target dustfall rates of 600 mg/m 2.day (residential) and 1200 mg/m 2.day required by the National Dust Control Regulations (Government Gazette No ). Corrosion rates were calculated using the ISOCORRAG method and are listed in Table 5-43 of the AIR (Annexure A). It is noted that corrosion rates for the baseline and alternative emissions scenario are generally lower than corrosion rates for the MES compliance scenarios. Estimates of S and N deposition rates for the Highveld are comparable with some of the industrialised regions of Europe and North America raising concern that the acidic loading of sulfur and nitrogen on the ecosystems of the Highveld could have implications for ecosystem functioning. Investigating the impact of S and N deposition rates as a result of industrial emissions including Natref require long term

62 Page 49 investigation beyond the scope of the AIR, however some research findings suggest that while grassland ecosystems of the Highveld are not yet affected by S and N deposition, some areas may be approaching critical loads. More details regarding these investigations are provided in Section of the AIR. Benzene (together with other VOCs) is a precursor pollutant involved in the formation of secondary atmospheric pollutants, such as smog (generally) and ozone (specifically). Ozone is a strong oxidant known to reduce crop plant yield, especially above a threshold of 40 ppb. An attempt to study ozone concentrations in a local area would require a comprehensive emissions inventory of NOx and VOC sources beyond those from Natref which is outside the scope of the AIR. Recent assessments of ozone concentrations on the Highveld, to which the Natref benzene emissions would contribute, however, note that ambient monthly ozone concentrations across the Highveld measured between September 2005 and August 2007 rarely exceeded 20 ppb. More details regarding these investigations are provided in Section of the AIR.

63 Page Public Participation Approach to Public Participation In terms of the MES (Government Notice No. 893, 22 November 2013) a postponement application must include a concluded public participation process undertaken as specified in the NEMA Environmental Impact Assessment Regulations. The Public Participation Process (PPP) undertaken as part of Natref s application for postponement of the compliance timeframes was structured to meet the requirements of Chapter 6 of the Environmental Impact Assessment (EIA) Regulations (Government Notice No. 733, 29 August 2014) published under the National Environmental Management Act (Act 107 of 1998) (NEMA), as specified in the MES. A Public Participation Report, detailing the project Public Participation Process undertaken to date is attached in Annexure C. The public participation process is an important component of the application process and is closely linked to the technical activities required for the preparation of the Motivation Report (Figure 11-1). Figure 11-1: Technical and Public Participation Process