Crude By Rail & Intermodal Supply Chain Op7miza7on & Opportuni7es Efficiencies of Unit vs Manifest Models John C. Wadsworth Director of Engineering and Construc<on Bakken Oil Express, LLC
John C. Wadsworth Director of Engineering and Construc<on Bakken Oil Express, LLC 34 years of experience in engineering, construction and operations involving refineries, terminals, power plants and pipelines Leader in M&A and Venture Capital at Koch Industries, Inc. Developed The Capital Asset Project Process, which has been used on multi-million dollar projects to provide value for asset owners Owner of Piping & Equipment Company, Inc. Piping & Equipment Company, Inc. has built 3 High speed unit train facilities in the Bakken in the last 3 years
Bakken Oil Express, LLC Dickinson, North Dakota
Rail System Overview Class I railroads are the seven largest systems: BNSF - Burlington Northern Santa Fe CN - Canadian National (with Illinois Central) CP - Canadian Pacific (with subsidiaries) CSX Transportation KCS - Kansas City Southern NS - Norfolk Southern Railway UP - Union Pacific Class II (Regional) Railroads Class II regional railroads operate in different regions of the country that have large areas that lack full coverage by Class I railroads. Class II railroads often compete with and/ or own barge operations for handling bulk commodities. Class III (Short Line) Railroads Class III railroads are small local railroads. A terminal railroad is a short line railroad that interchanges railcars and locomotives between different Class I and Class II railroads or between different types of carriers, like ship to rail.
Manifest Loading Very Low cost to enter business Rail siding, Transloader, no storage tanks required, labor intensive, basic permimng, limited railcar requirements Very quick schedule to begin shipping Shipping capacity limited by rail siding available addi<on of ladder tracks and more transloaders increases capacity - At 25, to 3, BPD a unit train model would have an avrac<ve payback
Unit Train Overview
Unit Train Capital Capital required for North Dakota Unit Train facili7es: $ 42 million to $ 125 Million Land Full loop for 12 car unit train is over 8, feet of rail Typical facility requires 15 + Acres Rail Working with Class 1 railroads for op<mum design will probably include minimum of two complete loops Tanks How much is enough? Design norm was 3 <mes your daily shipping rate Most facili<es have added tankage Loading systems Number of load spots for loading a rail car impact opera<ons 1 up to 18 sta<ons are typical Covered facili<es due to opera<onal concerns for safety and environmental condi<ons Environmental & Safety Spill containment Secondary containment Vapor control systems
Unit Train Opera<onal Efficiencies Opera7onal Excellence creates value for the shippers Loading <me Must achieve 24 hour turnaround to avoid rail demurrage Impacts on loading <me Opera<on personnel training, experience are cri<cal to a safe spill free opera<on (Shell play opera<ons have significant manpower challenges) Rail car design impacts loading rates Bad order cars - impact loading <me Facility maintenance and reliability can cause loading problems Rail scheduling is cri<cal to obtain efficient shipping <mes Rail availability for loaded or empty cars impacts the facility capacity Product storage adequate for inbound and outbound volumes? Accurate measurement systems in the rail loadout, tank storage, and inbound systems to provide <mely and accurate informa<on for the shipper Class 1 rail operators opera<onal efficiency, scheduling impact terminal opera<ons
Unit Train Geographical Preferences Produc7on drives the transporta7on needs Produc<on volumes New produc<on drives trucking opportuni<es As produc<on increases gathering systems, pipelines, and crude to rail are op<ons Rail infrastructure Working with Class 1 operators to site crude to rail facili<es (Manifest or Unit) Pipelines Provide gathering systems and trunk lines to provide oil to rail terminals
Where will the Crude by Rail go? Rail Helps Bridge Infrastructure Gaps Connecting Central Production Regions to Coastal Markets Tacoma, WA Bakersfield, CA $17.5 5 $17.5 4 $14.5 5 Niobrara Bakken $15. 5 $14.5 5 Eagle Ford $17.5 6 $17.5 5 $14.5 5 East Coast $1.5 3 St. James, LA Directional Illustration of Potential Movements, Public Pricing & Transit Times Source: PAA Investor Presentation.
Crude-by-Rail Receipt Terminals through 214 Company Location Capacity (MBPD) Timing Gulf Coast GEL Walnut Hill (Mobile) 75 Current GEL Natchez NA Current NS/EOG St. James Unit Train 1 Current PAA St. James Unit Train 14 Current NS/EOG St. James, Phase 2 65 213 38 East Coast BPL Albant Terminal 13 Current GLP Albany Terminal 16 Current Irving Oil St. John, NB Manifest 7 Current PBF Delaware City Unit Train 11 Current PSX Bayway Unit Train 5 Current SXL Westville Facility 4 Current BPL Perth Amboy Facility TBD 213 Carlyle Philadelphia Unit Train 14 213 ENB Eddystone Unit Train 8 213 PAA Yorktown, VA Unit Train 13 213 PBF Delware City Expansion 4 213 ENB Eddystone Unit Train Expansion 8 214 13 West Coast TLLP Anacortes, WA Unit Train 5 Current ALJ S. CA Refining Unit Train 4 213 BP Cherry Pt, WA Manifest 5 213 NGLS Tacoma, WA Unit Train 3 213 PSX Rodeo, CA Manifest 3 213 PAA Bakersfield, CA 65 214 PSX Ferndale, WA Unit Train 5 214 VLO Benicia, CA 7 214 385 Current Receipt Capacity 925 by YE 213 1,53 by YE 214 1,795
Unit Train vs Manifest Models Unit Train Manifest Capital Costs $ 42M to $ 125M $ 1M to $5M Speed to Market 12 18 Months 1 to 2 Months Geographical Requires rail and 15+ Acres Shipping Costs Shipping Time Destination Flexibility Operational Efficiency Unit trains have priority ND to USGC is 5 days Destinations must be able to receive unit trains Many advantages over Manifest More rail options less land 25 to 4% higher than unit train Manifest cars have increased transit time over Unit trains Many more facilities able to receive manifest loads Very labor intensive
Unit Train and Manifest Crude by a viable option product for movement of products markets Crude byrail Railissupplements movements to to markets John C. Wadsworth 316.295.2911