SPL Status

1. SPL Status

2. AHC’s current supply planning organization manages product moves via vessel, barge and pipeline between 24 terminals while crude supply is managed by HOVENSA, a separate company • Gas (Mbpd) • Demand (148) • Hovensa 60 • Port Reading 54 • Purchases 34 • Distillate (Mbpd) • Demand (93) • Hovensa 39 • Port Reading 9 • Purchases 45

3. Physical location of people can be a structural impediment to process optimization - technology could be used to compensate for physical distance NYO: SPL HOVENSA Woodbridge: Customer Account Services Volumetric Accounting Marine Retail Operations Energy Marketing Terminal Operations Brooklyn: Marine Supply Points Locations Partner Organization Locations Hovensa: Refined Products

4. The SPL organization, located in AHC’s New York Office, is comprised of 13 individuals with specialized responsibilities

5. Tims Central Server Extract (WDBTIMSCS) Generates inventory and truck sales data for Hess. Time: Midnight ODM (Honeywell) Generates inventory data for Hovensa. Time: 7:30 a.m. Supply Planning CIMS (Mainframe) Generates customer, product, location, and general class data. Time: 8:30 p.m. (NYCSSQL02) Data loaded to Oracle tables via SPLOAD process-Load starts 4:30 a.m. Sales Forecast Reports Refinery Inventory System (Whessoe-Coggins Fuels Manager) Generates inventory data for Hess, tank data for Hess and Hovensa. Time: 6 a.m. SAP Generates forecast, exchange, and lease data for Hess. Time: Midnight Spot Sales/ Purchases Retail Sales Six main systems facilitate supply planning’s daily tasks

6. Interfaces between these systems, and those of partner organizations, are mainly manual or hardcopy Lab Requests from various sources • Energy Marketing • Customer Forecasts • Lab (LIMS) • Lab Data • Night Letter • Retail Operations • TSW (Manual Entry) • Actual Sales • R&M Mgmt Reporting • Forecasts (monthly) Bulk Move Modifications • Helmsman • Actual Sales • Forecasted Sales • Historical Sales • Refinery • Whessoe-Coggins FuelsManager • RICS (Ref Inv Cons Sys) • Tank • Inventory • Vessel Schedules Second Reserve • Operating instructions • Tank Samples • Jet Fuel Movements • Other Movements Rack Sales Sales Forecast Feedstock Needs Night Sheet (NY Harbor) • CIMS (Mainframe) - 8:30 p.m. • Customer • Product • Location • General Class • Terminal Operations • TIMS (SQL Server) - 4 p.m. • Inventory • Truck Sales • Tank Gauging • Petroex Exchanges • SAP - Midnight • Forecast • Exchange • Lease • Budget • Product Pricing • Prices • Margins • Sales Summary • Bulk Orders Adj Inv • Exchanges • Deal Information Moves, Inventories, Capacities, Price/Diff Trade Details Night Letters, Orders, Blending OPIS Overnight Forecasted Moves Supply Planning WestFax Bulk Sales Forecast Market Info Forecast PAWS Barge Positions Barge Positions Market Recap Spentonbush (Barges) Barge Requests Deal Sheets, Exchange Info Shipping windows • CCD • Trade Details • Hovensa • Chartered Barges • Updated barge positions New Business Development Customs Form Automated Sheridan (Shipping) • CAS • Delivery of Goods • Reconciled Contract • Exchange Customer Setup • Invoices Hardcopy • Secucred Ship ID’s • Scheduling Status/Problems • Billing • Noon Ship Position Reports Customs Broker • Lease Deals • Exchange Contracts • Throughput Contracts Fax, E-mail, Phone • ShipNet • PlannedMaintenanceSched Customer Info April 11, 2000

7. Industry Best Practices

8. Global Supply, Trading and Risk Management Crude Transport and Distribute Customers Crude Selection Processing Refining Best practice organizations are integrating as much of the production chain as possible to move from a “supply-push” mode to a “demand-pull” strategy • To be successful, the “demand-pull” model considers trading, risk management, crude sourcing, transportation, distribution, and customer strategies along with crude selection, refining and outside processing • US petroleum companies, using a systems optimization approach, have saved between US$0.50-US$1.00/barrell without major investment by taking advantage of • Open crude schedules to take advantage of market changes • Develop niche product markets where there is a location advantage • Buying products instead of making products to improve profitability • Instituting a conservative hedging program to yield dividends • Considering export markets that offer a duty drawback benefit • For example, the following refineries made successful investments based on considering the entire supply chain • Tosco’s investment decisions are often based on customer value - resulting in a low inventory system where product is often purchased instead of produced • Ultramar Diamond Shamrock made strategic pipeline investments to leverage refining investments • ICI’s Teresside refinery is operated to take advantage of logistical advantages • Shel’sl Haven refinery optimized performance by restricting it’s input to one feedstock Supply Push Demand Pull Stetzer, Marty. “Beyond the Gate: A New Pacesetter Context for Profitability in Refining.” Hart’s Fuel Technology & Management July/August 1998.

9. As organizations evolve to “demand-pull” models, they adopt a “trader” outlook on all product sourcing decisions Plan Make Execute Measure Settle Every day is a new deal Physical Ending Daily Position Position Review Yesterday New Deals Crude Oil “Common” Risk Measures Scheduling • Accounting • Activities • Settlement • Bookkeeping • Closing • Financial Reporting • Compliance • Reproting Feedstocks Analytics Market Analyses Clean Products Contract Administration Corporate Value @ Risk Measures Gas Liquids Paper Analytics Market Analyses Forward Curves Hedging Derivative Risk Measures Paper Executive Post Deal Analytics Speculative Continuous Improvement Across the Business Highly Individual “Custom” Processes | More Structured “Common” Processes

10. Low Inventory Low holding costs Higher ROCE Easier to accomplish if terminals are fed by pipeline Best with low margins + high supply reliability Take on the risk of running short High Inventory High holding costs Better ability to take advantage of supply short falls and to build niche market opportunities More difficult to accomplish with waterborne product feeds Best with high margins + low supply reliability Build reputation for reliable supply Supply Planning needs tools to determine optimal inventory positions and to enable quick reactions to changing market conditions

11. PwC industry research & client discoveries have shown that tool implementation order is important to achieve quick payout • Most petroleum companies are just starting to evaluate supply chain management options to enhance their ERP solutions • It is believed that in the next 3-5 years, the number of applications available on the web (and their sophistication) will increase dramatically • Data management should be addressed first, while decision support and optimization tools should be considered when clean data streams are firmly established Data Management----->Decision Support Single Network Optimization with Crude & Products Integration Position Management Demand Forecasting Value ($) Exchange Management Inventory Management Collaboration & Integration Supply Chain Infrastructure Time

12. Application Focus of SCP and major ERP vendors * - Provided by embedded or resold partner application Functionality is evolving for Advanced Planning and Scheduling (APS) packages which have vertical support for the petroleum industry

13. The oil industry is just beginning to optimize scheduling and planning - many companies still use in-house developed systems, which need upgrading Industry challenges and other company SCP responses... Refinery Scheduling Customers Crude Supply Terminals • LP Advanced Models • Alliance (PIMS) • Exxon (Haverly) • Shell Europe (MIMI) • Petronas (MIMI, PIMS, RPMS) • Agip Petroli (RPMS, MIMI) • Retail Operations (Petrolsoft) • Mobil • Amoco (USA) • Sunoco • TOSCO Exxon International (Manugistics) Citgo (Logility) Equiva (SCT demand forecasting with opentext knowledge management) OxyChem (I2 for bulk moves) Look to non-oil industry applications for full integration

14. To successfully evolve into a “demand-pull,” best-in-class organization, AHC must accomplish the following • Streamline processes, improve communication flows and minimize duplicative efforts to reduce avoidable costs • Prepare data needed for decision support and optimization tools • Analyze tools available in marketplace to fill remaining analysis needs • Implement tools needed for decision support including product sourcing, forecasting and safety stock optimization • Routinely determine flexible, responsive - yet optimal inventory levels that reflect market conditions • Provide reliable, high quality services to both internal and external customers and measure this performance • Move from captive “system supply” thinking to managing and exploiting the product price volatility • Maximize profitability utilizing market and trading-based systems to identify and capitalize on arbitrage opportunities and monitor risk position