1. Refining 101 + Technical Teach-in on the
Teach-
Hydrotreater & Hydrocracker
January 13, 2009

2. Safe Harbor Statement
Statements contained in this presentation that state the
Company's or management's expectations or predictions of the
future are forward–looking statements intended to be covered
by the safe harbor provisions of the Securities Act of 1933 and
the Securities E h
th S iti Exchange A t of 1934 Th words quot;believe,quot;
Act f 1934. The d quot;b li quot;
quot;expect,quot; quot;should,quot; quot;estimates,quot; and other similar expressions
identify forward–looking statements. It is important to note that
actual results could differ materially from those projected i
tl lt ld diff t i ll f th j t d in
such forward–looking statements. For more information
concerning factors that could cause actual results to differ from
those expressed or forecasted, see Valero’s annual reports on
Form 10-K and quarterly reports on Form 10-Q, filed with the
Securities and Exchange Commission, and available on
Valero’s website at www.valero.com.
2

3. Rich Marcogliese
g
Executive Vice President
and
Chief Operating Officer
3

4. Crude Oil Characteristics
Crudes are classified and priced by density and sulfur content
Crude density is commonly measured by API gravity
• API gravity provides a relative measure of crude oil density
• The higher the API number, the lighter the crude
Light crudes are easier to process
Heavy crudes are more difficult to process
Crude sulfur content is measured as a percentage
• Less than 0.7% sulfur content = sweet
• Greater than 0.7% sulfur content = sour
• High sulfur crudes require additional processing to meet regulatory
specs
Acid content is measured by Total Acid Number (TAN)
• Acidic crudes highly corrosive to refinery equipment
• Hi h acid crudes are those with TAN greater than 0 7
High id d h ih h 0.7
4

5. Crude Oil Basics
Crude Oil Quality by Types
4.0%
Estimated Quality of Reserves (2007)
Cold Lake
SOUR
Cerro Negro
3.5%
Maya
WCS
3.0%
M-100 (resid) Arab Heavy Sweet
SULFU CONTENT
High Acid
2.5% Arab Medium
19%
(Sweet)
Light/Medium
Dubai
Napo 1%
UR
2.0%
2 0% Mars
Sour
Arab Light
Iran Heavy
Ameriven-
1.5% 14%
Hamaca 66%
Urals
Heavy
Alaskan North
Sour
1.0% Slope
EET
SWE
0.5% WTI
Brent
Tapis
Bonny Light
Cabinda
0.0%
15 20 25 30 35 40 45 50
Source: DOE, Oil & Gas Journal, Company Information
HEAVY API GRAVITY LIGHT
Source: Industry reports
Majority of global crude oil reserves are sour
Most quoted benchmark prices are light sweet crude oils
• WTI (West Texas Intermediate), Western Hemisphere
(W t T It di t ) W t H ih
• Brent (North Sea Crude), Europe
5

6. What’s in a Barrel of Crude Oil?
Crude Oil Types Inherent Yields
Characteristics
2007 U.S. Refinery
3%
Production
> 34 API Gravity
32%
Light Sweet < 0.7 % Sulfur
Propane/
(e.g. WTI, LLS, Brent) Refinery
8%
30% Butane
8%
35% Demand Gases
35%
Most Expensive
Gasoline
RFG
48% Conventional
2% CARB
24 to 34 API Gravity
Premium
24%
Medium Sour > 0.7 % Sulfur
26%
(g
(e.g. Mars, Arab Light,
, g,
50% Demand
Arab Medium, Urals)
Distillate
35%
48%
Less Expensive Jet Fuel
Diesel
Heating Oil
1%
< 24 API Gravity
15% Heavy
> 0.7 % Sulfur 9% Fuel Oil &
21%
Heavy Sour Other
15% Demand
(e.g. Maya, Cerro Negro, Cold
63%
Lake, Western Canadian Select) Source: EIA Refiner Production
Least Expensive
Refineries upgrade crude oil to higher value products
6

7. Basic Refining Concepts
Intermediates Final Products
< 90°F Propane, Butane • Refinery fuel gas
and lighter • Propane
C1 to C4
• NGLs
Straight Run
90–220°F More
• Gasoline (high octane)
Gasoline (low
C5 to C8 processing
octane)
Crude oil
More
220–315°F • Gasoline (high octane)
Naphtha
• Jet fuel
Distillation C8 to C12 processing
Tower
• Kerosene
(Crude
More
315–450°F • Jet fuel
Unit) Kerosene
• Diesel
C12 to C30 processing
• Fuel oil
• Gasoline (high octane)
More
450–650°F Light Gas Oil • Diesel
Furnace processing
i
C30 to C50+ • Fuel oil
• Gasoline (high octane)
More
650–800°F Heavy Gas Oil • Diesel
Vacuum processing • Fuel oil
C 30 to C50+
Unit
• Gasoline (high octane)
Residual Fuel More
800+°F • Diesel
Oil/Asphalt • Fuel oil
processing
C50 to C100+
• Lube stocks
7

8. Hydroskimming/Topping Refinery
Crude
Unit
Propane/
4%
Propane/Butane
Butane
Gasoline
Reformer High Octane Gasoline
Low Octane Gasoline RFG
32%
Distillation Tower
and Naphtha Conventional
CARB
Hydrogen
Premium
Light
n
Distillate
HS Kerosene/Jet Fuel
Sweet LS Kerosene/Jet Fuel
Distillate
32%
Desulfurizer
Jet Fuel
Crude Diesel
LS Diesel/Heating Oil
HS Diesel/Heating Oil
Heating Oil
g
Heavy
Vacuum Gas Oil
Fuel Oil &
32%
Unit Other
Heavy Fuel Oil
100% Total Yield
Simple, low upgrading capability refineries run sweet crude
8

9. Crude and Vacuum Towers
Reactor
Heater
Crude Atmospheric Tower Vacuum Tower Reformer
9

10. Medium Conversion: Catalytic Cracking
Crude
Propane/
Unit
8% Butane
Propane/Butane
Gasoline
G li
RFG
Reformer
Low Octane Gasoline High Octane Gasoline 45% Conventional
and Naphtha
Distillation Tower
CARB
Premium
Hydrogen
Distillate
Light
n
LS Kerosene/Jet Fuel
HS Kerosene/Jet Fuel
F el
Desulfurizer Distillate
31%
Sour Jet Fuel
HS Diesel/Heating Oil LS Diesel/Heating Oil Diesel
Crude Heating Oil
Light Cycle Oil
(LCO)
Alkylation
Alkylate
Unit
Fluid Catalytic
Gas
G Oil
Vacuu Cracker (FCC)
m Unit FCC Gasoline Heavy
Fuel Oil &
20% Other
Heavy Fuel Oil
104% Total Yield
Moderate upgrading capability refineries tend to run more sour crudes
while achieving increased higher value product yields and volume gain 10

11. High Conversion: Coking/Resid
Destruction
Hydrogen Plant
Crude
Gas
Unit
Propane/
7% Butane
Propane/Butane
Gasoline
RFG
Distillatio Tower
50%
Reformer High Octane Gasoline Conventional
Low Octane Gasoline
CARB
and Naphtha
Medium/ Premium
on
Hydrogen
Heavy Distillate
36%
Distillate
HS Kerosene/Jet Fuel LS Kerosene/Jet Fuel
Sour Desulfurizer Jet Fuel
Diesel
Crude Heating Oil
LS Diesel/Heating Oil
HS Diesel/Heating Oil
Hydrocracker Hydrocrackate Gasoline
Light Gas Oil
Ultra Low Sulfur Jet/Diesel
LCO Alkylation
Alky Gasoline
Unit
U it
Fluid Catalytic
Cracker (FCC)
Medium Gas Oil
Vacuum
FCC Gasoline
Unit
Heavy
Fuel Oil &
15% Other
Delayed
Heavy Fuel Oil Coke
Coker
108% Total Yield
Complex refineries can run heavier and more sour crudes while achieving the
highest light product yields and volume gain 11

12. FCC and Hydrocracker Reactors
Fluidized Catalytic Cracker
Reactor Hydrocracker Reactors
Main Column Regenerator
12

13. Cokers
Delayed Coker
Superstructure holds the drill and drill stem
Fluid Coker
while the coke is forming in the drum
g
13

14. Conversion Economics
6-3-2-1 Crack Spread
$/Bbl
45
40
35
30
25
20
15
10
5
0
-5
Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08
LLS (Light Sweet) Mars (Medium Sour) Maya (Heavy Sour)
Need conversion capacity to capitalize on sour crude oil differentials
• Hydroskimming – Breakeven or moderate margins; High resid yield
When margins are positive – increase crude oil runs
When margins are negative – decrease crude oil runs
• Cracking – Better margins; Lower resid yield
• Coking – Best margins; Lowest resid yield
Maximize heavy crude oils 14

15. Desulfurization Basics
Objective
Remove sulfur from light products (gasoline or diesel) to meet air quality
requirements f clean b i f l
i t for l burning fuels
Units are called desulfurization or hydrotreater
Desulfurization Unit
D lf i ti U it
Desulfurized Light Products
HC
H2
High Sulfur HC-S
HC-S
HC-S
Light H2
Elemental
H2
Products Catalyst
Ctl t
Sulfur Plant Sulfur
(HC-S) • Agricultural
HC-S
HC-S H2S S
S S • Pharmaceutical
H2 S
HC-S
S S
Hydrogen Unit
LEGEND
H2
H2 H2 HC : Hydrocarbon
y
H2 1000 or less PSI; H2 : Hydrogen
H2
H2
700 F or less
S : Sulfur
15

16. Hydrocracking Basics
Objective
Value added upgrading of high sulfur distillates to low sulfur gasoline and ultra
low sulfur jet/diesel to meet air quality requirements for clean burning f l
l lf j t/di lt ti lit i tf l b i fuels
Typically achieve 20% to 25% volume expansion due to hydrogen saturation
Hydrocracking Unit
Hd ki U it Desulfurized Hydrocrackate Gasoline
HC
H2
High Sulfur HC-S
HC-S
HC-S H2
Distillate H2 Desulfurized Ultra Low Sulfur Jet/Diesel
HC
H2
H2
(HC-S)
(HC S) Catalysts H2
Ctl t Elemental
El tl
H2
Sulfur Plant Sulfur
HC-S H2 H2 HC-S
• Agricultural
H2S
H2 S
S S • Pharmaceutical
HC-S S
S S
Hydrogen Unit
LEGEND
H2
H2 H2 HC : Hydrocarbon
1300+ PSI;
H2 H2 : Hydrogen
H2
H2
725 to 780 F
S : Sulfur
16

17. Hydrocrackers
Corpus Christi Hydrocracker
McKee Hydrocracker

18. Distillate Yield Maximization
Recent economics have incentivized maximization of
distillate rather than gasoline
Typical opportunities to increase distillate yields
• Immediate, non-capital opportunities +2 to 4%
Examples: O ti i ti of distillation cut points,
E l Optimization f di till ti t it
re-routing of intermediate streams, and tank optimization
• Non-capital taking < 1yr +1 to 2%
Examples: FCC catalyst change, HCU catalyst selection
CC C
• Capital projects taking < 1 yr +1 to 2%
Examples: Minor hardware changes (tower internals,
reactor distributors, ect.), h d li d b ttl
t di t ib t t ) hydraulic debottlenecking
ki
• Capital projects taking > 1 year +3 to 5%
Examples: Install/expand distillate draw capacity
on fractionators additional fractionation new HCU
fractionators, fractionation,
Total +7 to 13%
18

19. Q&A
19

20. Appendix
20

21. Major Refining Processes – Crude
Processing
Definition
• Separating crude oil into different hydrocarbon groups
• The most common means is through distillation
Process
• Desalting – Prior to distillation, crude oil is often desalted to remove
corrosive salts as well as metals and other suspended solids.
• Atmospheric Distillation – Used to separate the desalted crude into
specific hydrocarbon groups (straight run gasoline, naphtha, light gas
oil, etc.) or fractions.
•VVacuum Distillation – H
Di ill i Heavy crude residue (“b
d id (“bottoms”) f”) from the
h
atmospheric column is further separated using a lower–pressure
distillation process. Means to lower the boiling points of the fractions
and permit separation at lower temperatures, without decomposition
and excessive coke formation.
21

22. Major Refining Processes – Cracking
Definition
• “Cracking” or breaking down large heavy hydrocarbon molecules into
Cracking large,
smaller hydrocarbon molecules thru application of heat (thermal) or through
the use of catalysts
Process
• Coking – Thermal non–catalytic cracking process that converts low value oils to
higher value gasoline, gas oils and marketable coke. Residual fuel oil from vacuum
distillation column is typical feedstock.
• Visbreaking – Thermal non–catalytic process used to convert large hydrocarbon
g yp gy
molecules in heavy feedstocks to lighter products such as fuel gas, gasoline, naphtha
and gas oil. Produces sufficient middle distillates to reduce the viscosity of the heavy
feed.
• Catalytic Cracking – A central process in refining where heavy gas oil range feeds are
subjected to heat in the presence of catalyst and l
bj t d t h t i th f t l t d large molecules crack i t smaller
l l k into ll
molecules in the gasoline and surrounding ranges.
• Catalytic Hydrocracking – Like cracking, used to produce blending stocks for gasoline
and other fuels from heavy feedstocks. Introduction of hydrogen in addition to a
catalyst allows the cracking reaction to proceed at lower temperatures than in
catalytic cracking, although pressures are much higher.
22

23. Major Refining Processes –
Combination
Definition
• Linking two or more hydrocarbon molecules together to form a large
molecule (e.g. converting gases to liquids) or rearranging to improve the
quality of the molecule
Process
• Alkylation – Important process to upgrade light olefins to high–value
gasoline components. Used to combine small molecules into large
molecules to produce a higher octane product for blending with gasoline.
• Catalytic Reforming – The process whereby naphthas are changed
chemically to increase their octane numbers. Octane numbers are
measures of whether a gasoline will knock in an engine. The higher the
octane number, the more resistance to pre or self–ignition.
•Pl
Polymerization – P
i ti Process th t combines smaller molecules t produce hi h
that bi ll l l to d high
octane blending stock.
• Isomerization – Process used to produce compounds with high octane for
blending into the g
g gasoline p
pool. Also used to p
produce isobutene, an
important feedstock for alkylation.
23

24. Major Refining Processes – Treating
Definition
• Processing of petroleum products to remove some of the sulfur,
nitrogen,
nitrogen heavy metals and other impurities
metals,
Process
• Catalytic Hydrotreating, Hydroprocessing, sulfur/metals removal –
Used to remove impurities ( g sulfur, nitrogen, oxygen and halides)
p (e.g. g yg )
from petroleum fractions. Hydrotreating further “upgrades” heavy
feeds by converting olefins and diolefins to parafins, which reduces
gum formation in fuels. Hydroprocessing also cracks heavier products
to lighter, more saleable p
g , products.
24

25. List of Refining Acronyms
AGO – Atmospheric Gas Oil kVA – Kilovolt Amp
ATB – Atmospheric Tower Bottoms LCO – Light Cycle Oil
B–B – Butane–Butylene Fraction LGO – Light Gas Oil
BBLS – Barrels LPG – Liquefied Petroleum Gas
BPD – Barrels Per Day LSD – Low Sulfur Diesel
BTX – Benzene, Toluene, Xylene LSR – Light Straight Run (Gasoline)
CARB – California Air Resource Board MON – Motor Octane Number
CCR – Continuous Catalytic Regenerator MTBE – Methyl Tertiary–Butyl Ether
DAO – De–Asphalted Oil MW – Megawatt
DCS – Di t ib t d Control Systems
Distributed C t l S t NGL – N t
Natural Gas Liquids
l G Li id
DHT – Diesel Hydrotreater NOX – Nitrogen Oxides
DSU – Desulfurization Unit P–P – Propane–Propylene
EPA – Environmental Protection Agency PSI – Pounds per Square Inch
ESP – Electrostatic Precipitator RBOB – Reformulated Blendstock for Oxygen Blending
FCC – Fluid Catalytic Cracker RDS – Resid Desulfurization
GDU – Gasoline Desulfurization Unit RFG – Reformulated Gasoline
GHT – Gasoline Hydrotreater RON – Research Octane Number
GOHT – Gas Oil Hydrotreater RVP – Reid Vapor Pressure
GPM – Gallon Per Minute SMR – Steam Methane Reformer (Hydrogen Plant)
HAGO – Heavy Atmospheric Gas Oil SOX – Sulfur Oxides
HCU – Hydrocracker Unit SRU – Sulfur Recovery Unit
HDS – Hydrodesulfurization TAME – Tertiary Amyl Methyl Ether
HDT – Hydrotreating TAN – Total Acid Number
HGO – Heavy Gas Oil ULSD – Ultra–low Sulfur Diesel
HOC – Heavy Oil Cracker (FCC) VGO – Vacuum Gas Oil
H2 – Hydrogen VOC – Volatile Organic Compound
H2S – Hydrogen Sulfide VPP – Voluntary Protection Program
HF – Hydroflouric (acid) VTB – Vacuum Tower Bottoms
HVGO – Heavy Vacuum Gas Oil WTI – West Texas Intermediate
kV – Kilovolt WWTP – Waste Water Treatment Plant
25