Flint Hills Resources Pine Bend Refinery Emissions Reduction Initiative

1. Flint Hills Resources Pine Bend RefineryEmissions Reduction Initiative Deb McGovern Regulatory Affairs Manager November 18, 2004

2. Flint Hills Resources A leading producer of fuels, base oils for lubricants, and other petrochemical products Headquarters are in Wichita, KS, and FHR is a wholly owned subsidiary of Koch Industries Company has three refineries: Rosemount, MN (Pine Bend); Corpus Christi, TX; and North Pole, Alaska The Pine Bend refinery has a processing capacity of 280,000 barrels per day (~12 million gallons) 1) FHR was formerly known as Koch Petroleum Group 2) The company takes its name from the Flint Hills region of eastern Kansas, a scenic part of the Great Plains that Koch Founder Fred Koch loved and had a ranch. 3) Pine Bend is the 12th largest refinery in the US, and among the largest processors heavy crude 4) Pine Bend products include: gasoline (Blue Planet), jet and diesel fules, propane and butane, as well as ashphalt {mention BP is low S and cuts emissions} 5) Pine Bend is located about 17 miles SE of St Paul at the junctions of Hwys 52 & 55 6) Pine Bend has more than 700 employees and 200 independent contractors1) FHR was formerly known as Koch Petroleum Group 2) The company takes its name from the Flint Hills region of eastern Kansas, a scenic part of the Great Plains that Koch Founder Fred Koch loved and had a ranch. 3) Pine Bend is the 12th largest refinery in the US, and among the largest processors heavy crude 4) Pine Bend products include: gasoline (Blue Planet), jet and diesel fules, propane and butane, as well as ashphalt {mention BP is low S and cuts emissions} 5) Pine Bend is located about 17 miles SE of St Paul at the junctions of Hwys 52 & 55 6) Pine Bend has more than 700 employees and 200 independent contractors

3. Emissions Reduction Initiative(ERI) In April 1999, Pine Bend refinery announced voluntary plan to reduce overall emissions by 50% in 5 years $10-20 million committed to achieve such reductions Pine Bend is striving to become one of the lowest emitting U.S. refineries ERI is part of the company�s philosophy to be a responsible environmental citizen (i.e., full compliance, clean facility, clean products, and open and direct communications) 1) Who is FHR??? A major transportation envery and fuel product provider in MN and the Upper Midwest. We are the 12th largest refinery in the US 2) Koch�s Pine Bend refinery in 1999 was in the upper quartile of refineries as far as emission on a per barrel basis. 3) In the past decade, Koch has reduced its emissions 55% overall1) Who is FHR??? A major transportation envery and fuel product provider in MN and the Upper Midwest. We are the 12th largest refinery in the US 2) Koch�s Pine Bend refinery in 1999 was in the upper quartile of refineries as far as emission on a per barrel basis. 3) In the past decade, Koch has reduced its emissions 55% overall

4. Air Emissions Data for US Refineries(Sources: USEPA website and Oil & Gas Journal)

5. FHR Partnership with the MN Center for Environmental Advocacy In April 1999, FHR also announced a unique partnership with MCEA to monitor the refinery�s environmental performance This partnership produced a website designed to make environmental data �accessible, understandable and verifiable� to the public Website was the first comprehensive emissions reporting site developed collaboratively between an environmental group and industry

6. FHR/MCEA Website Launched in April 2002 (www.fhrpinebend.com) Designed to create a transparent view of the environmental performance of the Pine Bend refinery Tracks FHR�s progress on meeting its Emissions Reduction Initiative commitment Includes a description of the refinery processes, emission data, ambient monitoring data, and pollution prevention projects

7. Independent Review & Data Verification One key to the success of the FHR/MCEA collaboration was the formation of an Independent Review Panel chosen jointly by MCEA and FHR Panel�s role is to verify environmental data and performance, and provide advice on website content University of Minnesota was retained to audit FHR�s calculation methodologies and emissions data Air, water and waste data reviewed QA/QC sampling and analytical protocols reviewed 1) Mention Dan Reinke�s role as technical consultant to MCEA 2) They looked at air, water and waste data & reviewed TRI reports 3) They reviewed the refinery�s QA/QC protocols for sampling and analytical methods 1) Mention Dan Reinke�s role as technical consultant to MCEA 2) They looked at air, water and waste data & reviewed TRI reports 3) They reviewed the refinery�s QA/QC protocols for sampling and analytical methods

8. ERI Specifics FHR pledged to reduce its air, water and waste emissions from 18,000 tons to 9,000 tons by the end of 2004 1997 is the baseline year (represented a typical year) FHR committed to reduce a variety of pollutants Formalized baseline assumptions with MCEA air: PM-10 subset of PM emissions water: BOD subset of COD waste: exclude equipment from demolition projects

9. ERI Progress Baseline year emissions----18,000 tons Actual emissions in 2002----13,500 tons Actual emissions in 2003----14,600 tons For 2004, on target to be below the 9,000-ton goal Anticipate overall reductions to be: 63% reduction in air emissions 25% reduction in water emissions 60% reduction in waste

10. FHR Flaring Reductions Flaring at refineries is necessary to avoid over-pressuring of equipment Company set a goal to reduce flaring to improve operational and environmental performance FHR reduced flare time by 95% in the past six years We achieved this by implementing operational performance and improving existing technology

12. Lessons Learned & ERI Benefits Key Lessons Learned Knowledge of emissions is an evolving process Need to avoid double counting of emissions Don�t create disincentives for doing the right thing Benefits Community and regulator support Employees� pride of ownership and involvement in reaching ERI goal Good business sense

13. What�s Next for Pine Bend? Look for ERI announcement with more detail in Spring 2005 FHR is currently working in conjunction with USEPA to develop policies to reduce emissions during times of start-up, shutdown and malfunction