In this presentation, originally given at the Northeast U.S. Petrochemical Conference in the summer of 2018, PLG Consulting covered: - Development factors and challenges in NE petrochemical production over the next decade and what it means for rail shipments and car demand in sand, refined products, chemicals, and other commodities - Best practices in petrochemical industry logistics - Developing logistics and supply chain strategies that lead to a competitive advantage

1. Experience // Expertise // Excellence 1
How Northeast Petrochemical Logistics Will
Change the Industry Landscape
Experience // Expertise // Excellence
Taylor Robinson, President
PLG Consulting
www.plgconsulting.com

2. Experience // Expertise // Excellence 2
Experience // Partial List
CORE EXPERTISE SERVICES INCLUDEPLG TEAM
• Bulk commodity
logistics
• Surface
transportation and
logistics
• Energy and
chemical market
intelligence
• Investment
strategy and
corporate
development
• Logistics
infrastructure
design
• Supply chain design
and operational
improvement
• Market analysis &
strategy
• Investment thesis,
target identification,
due diligence, post-
transactional support
• Diagnostic
assessments and
supply chain
optimization
• Independent logistics
technology
assessment and
implementation
• Site selection
• Real-world,
industry veterans
• Over 50 logistics,
supply chain,
market, and
engineering
experts
• Delivering value to
over 200 clients
since 2001

3. Experience // Expertise // Excellence 3
Our Clients // Partial List

4. Experience // Expertise // Excellence 44
Shale Revolution Impacts:
Global Markets, U.S. Economy and Logistics
Proppants
OCTG
Chemicals
Water
Cement
Gas
NGLs
Crude
(Coal)
Feedstock
(Ethane)
Byproduct
(Condensate)
All
Manufacturing
Steel
Fertilizer
(Ammonia)
Methanol
Plastics
Petroleum
Products
Petrochemicals
Propane
Other Fuels
Gasoline
MACRO IMPACTS TO-DATE INCLUDE
Dramatic reduction in crude imports, lower electricity costs,
lower gasoline prices, increased refined products
THE WAVE CONTINUES
U.S. petrochemical expansion based on
abundant, low cost energy and feedstocks is impacting other
manufacturing industries
Inputs Wellhead Direct
Output
Power Fuels Raw Materials Downstream
Products
Chemicals
Process
Feedstocks
Other Fuels

5. Experience // Expertise // Excellence 5
Phase I – Dry gas feedstock industries
Phase II – Wet gas feedstock with large investments and
longer lead time
Phase III – Downstream manufacturing industries thrive
as a result of low power prices, advantaged material
costs and more competitive labor costs.
Phased Impact of Shale Gas to North American
Industrial Expansions
563
2,111
1,236
846
-
500
1,000
1,500
2,000
2,500
Brasil USA China S. Arabia
Plastic Converters Productivity
Comparison
(Annual kg/employee)

6. Experience // Expertise // Excellence 6
 The North American petrochemical industry will
invest ~$145B in industrial facilities as a result of
shale gas by 2025
 Processed gas, ethylene, methanol, and resins
account for >80% of product volume output
50
projects
Product Category Breakdown
All Announced Industrial Projects in SHIELD
SHIELD Investment Forecast Through 2025
Total Announced - $255B
Commissioned since 2011 - $51.1B of investment
Likely start up by the end of 2019 - $45.1B of investment
2nd Wave – Likely start-up between 2020 and 2025 - $48.5B of
investment
Not Likely - $109.9B of announced investment
Ethylene and
Derivatives
$76.1B
Ammonia and
Derivatives
$65.8B
Polymers and
Resins
$37.2B
Methanol and
Derivatives
$34.0B
Propylene and
Derivatives
$18.8B
Gas
Processing
and
Fractionation
$8.9B
Gas to Liquids
$7.0B
Other
$6.8B
Shale-Driven Industrial Investment Forecast

7. Experience // Expertise // Excellence 7
Northeast Petchem Will Grow Significantly
During 2nd Wave of Shale-Driven Growth
Gulf Coast
$80.5B
Appalachia
$1.6B
Rest of N.
America
$40.2B
Announced Petchem Projects Investment
by Region (2015-2019)
Gulf Coast
$44.6B
Appalachia
$13.6B
Rest of N.
America
$25.9B
Announced Petchem Projects Investment
by Region (2020-2025)
Northeast will grow from 1% to 16% of petchem investment
from 1st to 2nd wave

8. Experience // Expertise // Excellence 8
Ethane Ethylene 80%
Fuel Gas
13%
Polyethylene
(LDPE, HDPE)
60%
Ethylene Oxide
14%
Ethylene
Dichloride
12%
Ethyl Benzene
7%
Others
7%
Ethylene Glycol
Polyethylene
Glycol
Polyvinyl
Chloride (PVC)
Styrene /
Polystyrene
Steam Cracker
Flexible
Packaging,
Bottles, Bags
Rigid Packaging
Misc. Solvents
and Intermediates
Others
7%
Construction
Pipes, Bottles,
Flexible Films
Pharmaceutical,
Detergents,
Toothpaste
Polyester Fibers,
Anti-freeze, Fiber-
glass
Source: PLG Consulting
Ethane Cracking Downstream Products
Pipeline Integrated Facilities / Pipeline Rail Rail / TruckTransportation
Continuum
*Note: Shale gas has 42-65%
ethane content of the NGL
fractionation split
*

9. Experience // Expertise // Excellence 9
Polyethylene Types and Applications
Global Plastics Demand by Type
Source: American Journal of Polymer Science,
January 2016, Hisham A. Maddah
Polyethylene (PE) is the largest
plastic resin globally and used
in a variety of applications
Polyethylene,
29%
• Demand for plastics is tied closely to overall
economic growth
• The largest single market for polyethylene is
packaging
• Polyethylene can be processed into soft,
flexible products such as plastic bags or hard,
strong products such as pipe
• Numerous grades and specs

10. Experience // Expertise // Excellence 10
Production capacity growth is unprecedented
Source: Townsend Solutions, PLG SHIELD
North American PE Expansion Plans
• Exports will be relief valve for oversupply
being created with first wave capacity
• Shell Monaca is in 2nd wave
• PTT and other Northeast facilities will
likely be in “Third Wave” after 2023
• Extent of “Third Wave” PE capacity
growth for North America will be
determined by cracker-build decisions,
demand growth, and global export
competitiveness

11. Experience // Expertise // Excellence 11
PE Domestic Logistics Flow
Key Points:
• North American PE logistics currently heavily dependent on rail
• Some polyethylene facilities may have in-house packaging
capabilities

12. Experience // Expertise // Excellence 12
Northeast PE Facilities
Total delivered cost in North America is highly influenced by location and logistics costs
 Northeast facilities will be competitive to Northeast and eastern Midwest markets, especially for locations within trucking distance
 Southeast market will be a battleground between Northeast and Gulf Coast facilities
 This analysis assumes that PE cost is the same
 However, Northeast facilities will likely have significant feedstock cost advantage and add to competitive advantage

13. Experience // Expertise // Excellence 13
Gulf Coast PE
production hub
Future PE
production hub
Logistics Impact on PE Delivered Cost
~25% of PE is consumed in
Gulf Coast and Southeast
Northeast PE plant will offer a 5-10% total delivered
cost advantage for Northeast & Midwest markets
PE Consumption % by State
~40% of PE is consumed in
eastern Midwest and
NortheastNE logistics cost will be
reduced by >50% with
local truck delivery vs.
rail from GC

14. Experience // Expertise // Excellence 14
I Look Forward To Your Questions!
Thank You!
For follow up questions and information,
please contact:
Taylor Robinson
President
PLG Consulting
+1 (508) 982-1319
trobinson@plgconsulting.com
www.plgconsulting.com