TABLE 1

 ALTERNATIVE DEHYDROGENATION-BASED MTBE PLANT CONFIGURATIONS

BARRELS PER STREAM DAY

Operating Mode MTBE ISOOCTANE ALKYLATE

Feeds

Mixed Butanes 15,000 15,000 13,733

Normal Butane 0 0 15,000

Methanol 5,130 0 0

Products

Fuel from Dehydrogenation (FOE*) 2,130 2,169 2,026

Less Hydrogen for Isooctene Saturation 0 (441) 0

Fuel from Isomerization (FOE*) 111 111 102

MTBE 15,090 0 0

Butane Purge 62 0 0

Isooctane 0 10,368 0

Alkylate 0 0 22,019

Feed to Isomerization Unit 13,943 13,943 12,766

Feed to Dehydrogenation Unit 29,870 30,215 29,680

Feed to Deisobutanizer Tower 29,083 29,083 26,626

*Fuel Oil Equivalent Barrels @ 6.3 MMBTU/Barrel
1994 1995 1996 1997 1998 1999 2000

CAPACITY: 22,019 BPSD (323,679 MGAL/YR) ALKYLATE

FEEDSTOCKS

Mixed Butanes (20.97) (22.86) (28.39) (26.31) (18.33) (24.43) (40.65)

N-Butane (24.14) (26.23) (32.32) (30.02) (21.22) (27.95) (45.83)

Total Feedstock Costs (45.11) (49.09) (60.71) (56.33) (39.55) (52.37) (86.47)

VARIABLE OPERATING COSTS

Fuel (4.06) (3.57) (5.08) (5.35) (4.55) (4.88) (8.85)

Electricity (1.30) (1.33) (1.37) (1.39) (1.36) (1.44) (1.50)

Steam (1.77) (1.56) (2.22) (2.34) (1.99) (2.13) (3.87)

Catalysts & Chemicals (1.41) (1.41) (1.41) (1.41) (1.45) (1.42) (1.45)

Treated Water (0.20) (0.20) (0.21) (0.22) (0.22) (0.22) (0.23)

Total Variable Costs (8.74) (8.08) (10.29) (10.71) (9.57) (10.08) (15.90)

FIXED OPERATING COSTS (1) (4.62) (4.74) (4.83) (4.95) (5.00) (5.05) (5.05)

TOTAL CASH COSTS (58.47) (61.90) (75.83) (71.98) (54.11) (67.50) (107.42)

PRODUCTS

Fuel 2.17 1.91 2.72 2.87 2.44 2.61 4.74

Alkylate (2) 57.13 59.04 67.03 66.25 48.89 59.52 96.56

Total Products 59.30 60.95 69.76 69.12 51.33 62.14 101.31

CASH MARGIN 0.83 (0.96) (6.07) (2.87) (2.79) (5.37) (6.11)

ALKYLATE PRICE NEEDED FOR CASH BREAKEVEN 56.30 60.00 73.11 69.12 51.68 64.89 102.68

CASH BREAKEVEN "GREEN PREMIUM" (3) (0.83) 0.96 6.08 2.87 2.79 5.37 6.12

ADD ALKYLATION INVESTMENT

Needed Margin @ 25% ROI (4) 4.89 5.02 5.14 5.27 5.40 5.42 5.55

ALKYLATE PRICE NEEDED FOR ROI 61.18 65.01 78.25 74.39 57.08 70.31 108.22

"ROI GREEN PREMIUM" (5) 4.05 5.97 11.21 8.14 8.19 10.79 11.66

48.01 51.08 59.93 58.99 41.79 52.37 83.78

11.29 9.86 9.83 10.13 9.54 9.76 17.52

(1) Includes direct labor, supervisory & administative staff, maintenance, supplies, property taxes and insurance.

(2) Alkylate value derived from vapor pressure and octane blending calculations versus gasoline at 8 RVP and 93 R+M/2.

(3) Alkylate price premium above (below) calculated blending value required to produce cash breakeven economics (zero net cash flow).

(4) Simple before-tax return on alkylation investment only; no further return on pre-existing dehydro and isomerization facilities assumed.

(5) Alkylate price premium above (below) calculated blending value required to produce 25% BTROI on new alkylation equipment investment.

TABLE 2

USGC DEHYDROGENATION-BASED C4 ALKYLATION ECONOMICS

ALKYLATE PRICE/VALUE SENSITIVITY

CENTS PER GALLON
TABLE 3

USGC DEHYDROGENATION-BASED C4 ALKYLATION ECONOMICS

PREMIUM-REGULAR PRICE SPREAD SENSITIVITY

CENTS PER GALLON

1994 1995 1996 1997 1998 1999 2000

CAPACITY: 22,019 BPSD (323,679 MGAL/YR) ALKYLATE

FEEDSTOCKS

Mixed Butanes (20.97) (22.86) (28.39) (26.31) (18.33) (24.43) (40.65)

N-Butane (24.14) (26.23) (32.32) (30.02) (21.22) (27.95) (45.83)

Total Feedstock Costs (45.11) (49.09) (60.71) (56.33) (39.55) (52.37) (86.47)

VARIABLE OPERATING COSTS

Fuel (4.06) (3.57) (5.08) (5.35) (4.55) (4.88) (8.85)

Electricity (1.30) (1.33) (1.37) (1.39) (1.36) (1.44) (1.50)

Steam (1.77) (1.56) (2.22) (2.34) (1.99) (2.13) (3.87)

Catalysts & Chemicals (1.41) (1.41) (1.41) (1.41) (1.45) (1.42) (1.45)

Treated Water (0.20) (0.20) (0.21) (0.22) (0.22) (0.22) (0.23)

Total Variable Costs (8.74) (8.08) (10.29) (10.71) (9.57) (10.08) (15.90)

FIXED OPERATING COSTS (1) (4.62) (4.74) (4.83) (4.95) (5.00) (5.05) (5.05)

TOTAL CASH COSTS (58.47) (61.90) (75.83) (71.98) (54.11) (67.50) (107.42)

PRODUCTS

Fuel 2.17 1.91 2.72 2.87 2.44 2.61 4.74

Alkylate (2) 57.13 59.04 67.03 66.25 48.89 59.52 96.56

Total Products 59.30 60.95 69.76 69.12 51.33 62.14 101.31

CASH MARGIN 0.83 (0.96) (6.07) (2.87) (2.79) (5.37) (6.11)

PREM-REG SPREAD, ACTUAL SPOT (3) 5.40 4.57 3.97 3.89 4.13 4.11 3.60

PREM-REG SPREAD NEEDED FOR CASH BREAKEVEN 4.81 5.25 8.28 5.92 6.11 7.91 7.93

CASH BREAKEVEN "OCTANE PREMIUM" (4) (0.59) 0.68 4.31 2.03 1.98 3.80 4.33

ADD ALKYLATION INVESTMENT

Needed Margin @ 25% ROI (5) 4.89 5.02 5.14 5.27 5.40 5.42 5.55

PRE-REG SPREAD NEEDED FOR ROI 8.27 8.81 11.92 9.66 9.94 11.75 11.86

"ROI OCTANE PREMIUM" (6) 2.87 4.23 7.95 5.77 5.81 7.64 8.26

(1) Includes direct labor, supervisory & administative staff, maintenance, supplies, property taxes and insurance.

(2) Alkylate value derived from vapor pressure and octane blending calculations versus gasoline at 8 RVP and 93 R+M/2.

(3) Annual average spot price spread between 93 R+M/2 premium conventional gasoline and 87 R+M/2 regular conventional gasoline.

(4) Additional premium - regular gasoline price spread required to produce cash breakeven economics (zero net cash flow).

(5) Simple before-tax return on alkylation investment only; no further return on pre-existing dehydro and isomerization facilities assumed.

(6) Additional premium-regular gasoline price spread required to produce 25% BTROI on new alkylation equipment investment.
8

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18

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FIGURE 4

USGC VALUES FOR ALKYLATE FROM DEHYDRO PLANTS

REQUIRED FOR 25% BTROI ON NEW ALKY INVESTMENT

REQUIRED FOR CASH COST BREAK EVEN

DELTA VERSUS PREMIUM GASOLINE

0

2

4

6

1994 1995 1996 1997 1998 1999 2000

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ACTUAL BLEND VALUE PERFORMANCE (OCTANE & RVP)
8

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FIGURE 5

USGC PREMIUM-REGULAR GASOLINE PRICE SPREADS

TO ATTRACT ALKYLATE FROM DEHYDRO PLANTS

REQUIRED FOR 25% BTROI ON NEW ALKY INVESTMENT

REQUIRED FOR CASH COST BREAK EVEN

2

4

6

1994 1995 1996 1997 1998 1999 2000

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ACTUAL PRICE SPREADS