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Refining Company Perspective & Approach to High Quality Binders

Refining Company Perspective & Approach to High Quality Binders

June 18, 2019 company perspective & approach to high quality

Pavel Kriz, Ph.D., P.Eng. Americas Group & Discipline Technical Leader

This communication may contain confidential information for the use of the entity to which it is addressed. If you are not the intended recipient, you are hereby notified that any use, dissemination, distribution, or copying of this communication is prohibited. If you are the intended recipient, information may not be reproduced or further distributed out of your organization without the originator's authorization in writing. 2019 © Imperial Oil Limited. All rights reserved. Imperial & ExxonMobil: Funding Members of Asphalt Institute

2 Global Asphalt Operations

In NA Imperial & ExxonMobil manufacture asphalt at Joliet, Billings, Nanticoke & Strathcona Refineries • Produce over 2MTa of premium asphalt • Utilize high quality WestCan crudes • Committed to product quality & integrity

Sarnia Technology Applications & Research • Canada’s first & largest research est. 1924 • 700+ patents • ~40+ PhDs out of ~100 employees • Global Centre of Excellence for Asphalt Asphalt Production • Long heritage & deep expertise in asphalt research Asphalt Technology/R&D

3 Crude Oil

• “Crude oil is a naturally occurring, yellowish-black liquid found in geological formations beneath the Earth's surface” • It is a mixture of a large number of different hydrocarbons • Each oil has a unique mix of molecules, which define its properties, like color and viscosity

Composition by weight

Element Percent range Carbon 83 to 85% Hydrogen 10 to 14% Nitrogen 0.1 to 2% Oxygen 0.05 to 1.5% Sulphur 0.05 to 6.0% Metals < 0.1%

4 Crude Oil Origin

5 Crude Oil Reservoir

Saturated porous reservoir rock Impermeable layers (e.g. sandstone) (e.g. granite)

6 Types of Crude Oils & Recovery Methods

Recovery Method: 80 % 20% Primary Secondary Tertiary (EOR) In-situ Mining (CSS, SAGD*) Conventional Medium Heavy Extra Heavy Oil Sand Crude Oil Crude Oil Crude Oil Crude Oil Bitumen (API>25°) (API~20-25°) (API~10-20°) (API<10°) (API<10°)

Oil mobile in the reservoir Reservoir Reservoir Permeability

Oil immobile in the reservoir

Tight Oil *Cyclic Steam Saturation (API>25°) Steam Assisted Gravity Drainage Fracking **Excl. fracking

Viscosity, Density Cost of Production**

7 Further Oil Sand Bitumen Processing

Diluent

Bitumen (in-situ) Blending DilBit

SynBit

Solids Upgrader Bitumen (mining) Synthetics Treatment (Coker)

Tailings Petcoke

8 Straight-run Asphalt = Vacuum Distillation Residue

Asphaltic crude quality is a critical factor in high quality asphalt production

9 Crudes Vary in Composition & Value

Synthetics Light Medium Heavy Extra Heavy Bitumen 100

75

Distillation Yield, vol. % Yield, Distillation 50

25

0

Price, Viscosity, Sulphur, Metals, Asphalt Yield Fuels Yield & Ease of Refining & Quality

10 Refineries Optimize Inputs & Outputs, Configuration Limited

Average Output (%) from Oil in Canada 36 26 14 7 7 4 4 3

*Lubes, Petrochemical Feeds, etc. Source: Canadian Fuels Association, 2017

11 Refinery Configuration Drives Input & Output Choices

Fuel Gas Steam LPG Iso/Alky Cracking Ethylene/Propylene HDS Naphtha A D Reforming U HDS crude DHDS Diesel

Aromatics Catalytic BTX Extraction cracking VDU Raffinate

Lube plant Lubes

Hydrocracking Hydro-treatment

Asphalt

Coking Petcoke

12 Asphaltic Crude Quality & Distillation Target = The Two Levers to Target a PG Asphalt Western Canadian Crudes* 70 70 Higher Harder

C quality asphalt °

64 64

PG 58-28

C °

58 58 HTPG,

52 52

High Temperature (HTPG), PG Temperature High Softer Lower asphalt quality 46 46 -40 -34 -28 -22 -16 -40 -34 -28 -22 -16 Low Temperature PG (LTPG), °C LTPG, °C

13 *Kriz, P. et al, CTAA 2012 Quality Assurance & Testing

QC Testing needs to be based on science & field validation, Timing & & also must be fast, practical & reproducible Variability Tank Test duration & variability increase cost • More tanks, heating, corrections, delays, disputes etc.

Simple parameter change may invalidate the test outcome Refinery Laboratory ? Transportation 17 laboratories 2 samples Reproducibility Two plate sizes QA Timing & Variability Customer/ Customer/ Agency Agency Laboratory

14 Product Integrity – We are Responsible from Cradle to Grave

Crude Crude Manufacturing Product Customer & Production Management Control Certification End-use Application

Production of top tier Crude assays & Straight-run asphalt Certified laboratories Trusted advisor asphalt crudes selection process State-of-art process Robust PQ systems Performance testing in control customer application

Century-long commitment to customers & industry – Expertise, Research & Leadership Investment to future: Asphaltic crude production, dedicated asphalt facilities, R&D (internal/external) & people

15 Industry Trends

International Maritime Organization Low Sulphur Fuel Oil • Effective Jan 1, 2020, Sulphur content limit in 3 Mbd of FO marine fuel reduces from 3.5 to 0.5 %

0.3 Mbd of FO

Increasing recycling rates vs. refining Global asphalt business is ~1.7 Mbd objectives to produce more fuels & petrochemicals • Many new “softeners” enter market

Asphalt market globalization • Large refineries become competitive trans- regionally (e.g. EU imports to US East Coast)

16 Key Takeaways

• ExxonMobil/Imperial is has over a 100 years long history of asphalt manufacturing

• Canadian oil sands yield top tier asphaltic feedstock

• Straight-run refinery operation yield premium asphalt grades

• Refineries exist to produce fuels, asphalt is 4%  maximize residual molecule uplift

• Imperial & ExxonMobil heavily invest in asphalt R&D to help to sustain the industry

• Support science based, field validated, practical & reproducible specifications

• Responsible manufacturer ensures product integrity beyond sales specification

• New challenges on the horizon: IMO, more conversion, global market

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