© 2013 CHS Inc.
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Jim Loving
Senior Vice President
Refining, Pipelines and Terminals
A bit about our refineries and our company
Energy
 Nation’s largest cooperative refiner and
connected to an extensive network of
crude and products pipelines and
terminals
 Leading wholesaler/retailer of more than
3 billion gallons of refined fuels annually
 Supplies more than 1,400 branded
outlets, including 800 Cenex®
convenience stores
 One of the U.S. largest propane retailers
 A manufacturer of high-quality lubricants
under the Cenex brand and other labels
CHS Energy Locations
Employee Safety
 Lost Workday Case Rate
2.63
Lost Workday Case Rate
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Jan - Dec
Feb - Jan
Mar - Feb
Apr - Mar
May - Apr
June - Mar
Jul - June
Aug - Jul
Sept - Aug
Oct - Sept
Nov - Oct
Dec - Nov
Lost Workday Case
Rate
* Data includes all areas of Energy and NCRA
Fleet Safety
• Miles traveled per DOT
recordable accident
2,099,160
Miles travelled per DOT
accident
2,120,000
2,100,000
2,080,000
2,060,000
2,040,000
2,020,000
Jan - Dec
Feb - Jan
Mar - Feb
Apr - Mar
May - Apr
June - Mar
Jul - June
Aug - Jul
Sept - Aug
Oct - Sept
Nov - Oct
Dec - Nov
Miles travelled per
DOT accident
* Data includes CHS Transportation and NCRA Transportation
What’s on the energy horizon?
Bakken production takes off
North American Shale Oil
U.S. crude oil imports/exports
Source: CAPP
Ft. McMurray
Heartland
`
Edmonton
Hardisty
Keystone Construction Phasing
Vancouver
Regina
Winnipeg
Keystone
2008 / 2009
Construction
Keystone XL
2014 Construction
Chicago
Cushing Expansion
2010 / 2011
Construction
Patoka
Wood River
Cushing
Keystone XL Gulf Coast
2013 Construction
Houston
New Orleans
Nederland
What’s all this about RINS?
• RINS (Renewable Identification Numbers): Serial number
assigned to a batch of biofuels to track production, use
and trading; part of compliance with Renewable Fuels
Standard 2
– It is “attached” to a gallon of renewable fuel at
production
– It can be “detached” from the gallon when the fuel is
blended, or an obligated party takes title.
• Refiners and refined fuel importers are “Obligated Parties”
and must retire a certain number of RINS per year.
Renewable Fuel Standard
Billion Gallons
Biomass Based Diesel:
Biodiesel - Ester
Standalone Renewable Diesel
Non-cellulosic Advanced:
Sugar Ethanol
Co-processed Renewable Diesel
Advanced Cellulosic Biofuel
RFS1
Conventional
Renewable Fuel
Corn Ethanol
50% GHG
Reduction
50% GHG
Reduction
60% GHG
Reduction
20% GHG Reduction (For new construction only.
Existing corn facilities grandfathered.)
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Impact of the RFS2 Plus CAFE
2012 EIA Projection
12.0
12.0
11.0
11.0
MMBPD
MMBPD
2007 EIA Projection
10.0
9.0
8.0
10.0
9.0
8.0
7.0
7.0
6.0
6.0
2005
2010
2015
Refined Gasoline
2020
2025
Ethanol
2005
2010
2015
Refined Gasoline
2020
2025
Ethanol
 The RFS2 was passed when demand was projected to increase every year….indefinitely
 The RFS2 was the response to a presidential goal to reduce gasoline consumption by
20% in 10 years (2007 – 2017)
 The current EIA projections indicate that a reduction in refined gasoline consumption of
about 13% will be achieved by 2017, and the full 20% by 2022, and 30% by 2030
Hydrocarbon demand trend in Transportation Fuels reversed in less than 5 years
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Corn Ethanol RIN Price History
Corn Ethanol RIN Credit Price
Source: OPIS
Biofuels Update
$1.20
RIN Price, $ per RIN
$1.00
$0.80
2012 RIN
2013 RIN
$0.60
$0.40
RIN Price Spike due to E-10
Blend Wall Constraint
$0.20
$0.00
RIN Prices Likely to Escalate Further due to the Infeasibility
of the RFS2 Caused by the E-10 Blend Wall
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Future Fuel Regulations
EPA Tier 3 Regulation
• 10 ppm sulfur yearly average (currently 30)
• Compliance begins in 2017. Small refinery and
small volume refiners begin in year 2020.
• There is a banking and trading program. Early
credits can be generated 2014-2016
© 2011 CHS Inc.
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EPA Tier 3 Regulation (CAFÉ)
• Sets new vehicle tail pipe emissions std and
evaporative emission std to be phased in
starting 2017
• Emission standards are modeled after CARB
• Emissions test fuel to include E15
© 2011 CHS Inc.
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Future Gasoline Requirements
• ASTM is currently voting on a ballot that would
require gasoline to have a 87.0 min octane.
Rocky Mountains are excluded but most likely
will be be added in near future.
• Engine OEM’s state they will need to produce
higher compression engines to meet new CAFÉ
standards. These higher compression engines
will need a higher octane fuel (>87.0).
© 2011 CHS Inc.
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Future Diesel Requirements
There are no known EPA proposals
• Diesel engine manufactures continue to push
for a diesel fuel cleanliness requirements.
• Diesel engine manufactures continue to push
for higher cetane limit.
• Due to the diesel engines high pressure
common rail fuel delivery systems Diesel could
end up having a detergency requirement
similar to gasoline.
© 2011 CHS Inc.
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The Future:
Always volatile, but CHS is
positioned to be a strong,
dominant force in rural
America through member
co-ops, its own retail and
independents.
© 2013 CHS Inc.
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