valero energy Texas City Refinery Tour – November 13, 2007

Texas City Refinery Tour November 13, 20071AgendaBasics of RefiningDesulfurizationHydrocrackingTexas City Refinery OperationsQ&APlant TourConcluding Remarks2Jonathan StuartVice PresidentRegional Refinery Operations3Crude Oil CharacteristicsCrudes are classified and priced by density and sulfur contentCrude density is commonly measured by API gravity• API gravity provides a relative measure of crude oil density • The higher the API number, the lighter the crude− Light crudes are easier to process − Heavy crudes are more difficult to process Crude sulfur content is measured as a percentage• Less than 0.7% sulfur content = sweet• Greater than 0.7% sulfur content = sour• High sulfur crudes require additional processing to meet regulatory specsAcid content is measured by Total Acid Number (TAN)• Acidic crudes highly corrosive to refinery equipment• High acid crudes are those with TAN greater than 0.74Crude Oil BasicsCrude Quality by TypesEstimated Quality of Reserves (2006)4.0% RCold LakeU3.5%Cerro Negro SOMaya WCS 3.0% TM-100 (resid)Arab HeavySweetNEHigh AcidNT2.5%Arab Medium20%(Sweet) CODubaiLight/MediumRNapoU2%2.0%FMarsSourLUArab LightIran Heavy S Ameriven-Hamaca20101.5%13% 66% 2000 UralsHeavy 1990 Sour 1.0%Alaskan North SlopeTE1980EWS0.5%WTIBrentTapisCabindaBonny Light0.0%1520253035404550Source: Oil & Gas Journal, Company InformationHEAVY API GRAVITY LIGHTSource: Industry reportsNOTE: Red line represents the average crude quality by decade (actual and projected)Majority of global reserves are sourMost quoted benchmark prices are light sweet crudes• WTI (West Texas Intermediate), Western Hemisphere• Brent (North Sea Crude), EuropeHistorical trend shows global crude supply becoming heavier and more sour5What’s in a Barrel of Crude Oil?Crude TypesCharacteristicsYields2005 U.S. 3%> 34 API GravityProduction30%Light Sweet Crude< 0.7 % Sulfur(e.g. WTI, Brent, Saharan Refinery 34%8%Propane/ButaneBlend)35% Demand7%Gases33%Most ExpensiveGasolineRFG50%Conventional3%24 – 34 API Gravity CARB21%PremiumMedium Sour Crude> 0.7 % Sulfur26%(e.g. Mars, Arab Light,Arab Medium, Urals)50% Demand50%33%DistillateLess ExpensiveJet FuelDieselHeating Oil1%< 24 API Gravity 14%Heavy > 0.7 % Sulfur10%22%Fuel Oil & Heavy Sour CrudeOther15% Demand(e.g. Maya, Cerro Negro, Cold Lake, Western Canadian Select)63%Source: EIA Refiner Production Least ExpensiveRefineries upgrade crude oil to higher value products6Basic Refining ConceptsIntermediatesFinal Products< 90°FPropane, Butane • Refinery fuel gas and lighter• Propane• NGLsStraight Run 90–220°FMoreGasoline (low • Gasoline (high octane)octane)processingCrude oil220–315°FMore• Gasoline (high octane)NaphthaDistillation• Jet fuelprocessingTower(Crude• Kerosene Unit)315–450°FMoreKerosene• Jet fuelprocessing• Diesel • Fuel oilMore• Gasoline (high octane)450–650°FLight Gas Oil• DieselFurnaceprocessing• Fuel oil • Gasoline (high octane)650–800°FMoreHeavy Gas Oil• DieselVacuumprocessing• Fuel oil Unit• Gasoline (high octane)800+°FResidual Fuel More• DieselOil/Asphalt• Fuel oilprocessing• Lube stocks 7Hydroskimming/Topping RefineryCrude UnitPropane/ Propane/Butane4%ButaneGasolineReformerHigh Octane GasolineRFGrLow Octane Gasoline eand Naphtha30%ConventionalCARBHydrogenPremiumLightSweetDistillate HS Kerosene/Jet FuelLS Kerosene/Jet FuelDesulfurizer34%DistillateCrudeJet FuelDistillation TowDieselHS Diesel/Heating OilLS Diesel/Heating OilHeating OilHeavy Vacuum Gas OilFuel Oil & Unit32% OtherHeavy Fuel Oil100% Total YieldSimple, low upgrading capability refineries run sweet crude8Crude and Vacuum TowersReactorHeaterCrude Atmospheric TowerVacuum TowerReformer9Medium Conversion: Catalytic CrackingCrude UnitPropane/ Propane/Butane8%ButaneGasolineReformerRFGLow Octane Gasoline High Octane Gasoline45%Conventionalrand NaphthaeCARBPremiumHydrogenDistillate HS Kerosene/Jet FuelLightLS Kerosene/Jet FuelDesulfurizer27%DistillateJet FuelSourHS Diesel/Heating OilLS Diesel/Heating OilDieselCrudeDistillation TowHeating OilLight Cycle Oil (LCO)Alkylation UnitAlkylate Fluid Catalytic Vacuum Gas OilCracker Unit(FCC)FCC GasolineHeavy Fuel Oil & 24% OtherHeavy Fuel Oil104% Total YieldModerate upgrading capability refineries tend to run more sour crudes while achieving increased higher value product yields and volume gain10Document Outline

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