This document provides an overview of PLG Consulting, a boutique consulting firm focused on logistics, engineering, and supply chain services for the energy and bulk commodities industries. It discusses PLG's experience in crude by rail projects, including optimization, commercial negotiations, infrastructure design and engineering. The document also summarizes trends in North American energy production driven by shale oil and gas, and the resulting impacts on crude transportation and infrastructure needs. It includes forecasts for growth in crude by rail volumes from the Bakken and Western Canada through 2019 under a low oil price scenario.

1. Logistics Engineering SupplyChain
Moving Crude Oil
By Rail
Graham Brisben
CEO
PLG Consulting
January 11, 2015

2. 2
Boutique consulting firm with team
members throughout North America
 Established in 2001
 Over 100 clients and 250 engagements
Practice Areas
 Logistics
 Engineering
 Supply Chain
Consulting services
 Strategy & optimization
 Logistics assets & infrastructure development
 Supply Chain design & operationalization
 M&A/investments/private equity
Industry verticals
 Energy
 Bulk commodities
 Freight rail
 Institutional investors and private equity
About PLG Consulting
Moving Crude Oil By Rail
Partial Client List

3. 3
Deep rail industry experience
• Operational
• Commercial
• Design & engineering
• Equipment market
Broad CBR industry client experience over
past four years
• E&P companies
• Refiners
• Terminal developers
• Investors – private equity, hedge funds,
investment banks
• Government agencies, industry trade groups
• Equipment leasing
PLG’s Crude By Rail Industry Qualifications
Moving Crude Oil By Rail
Diverse projects
• CBR supply chain optimization
• Rail commercial negotiations
• Rail car acquisition – commercial & technical
inspection
• Comprehensive design & engineering – rail,
marine, tankage, product handling, and related
facilities
• EH&S training
• Investment advising
• Industry’s only long term,CBR volume forecast
with complimentary rail tank car forecast
Recognized industry thought leader on CBR
and tank car markets
• Numerous industry presentations, articles and
advising

4. 4
ss
Source: CAPP, About Oil Sands
Source: EIA, May 2014
US Shale
Unconventional Energy Resources and ExtractionTechnologies
Moving Crude Oil By Rail
Western Canadian (WC)
Oil Sands
Source: www.epmag.com
SAGDHorizontal Drilling &
Hydraulic Fracturing
Source: Marathon, February 2014
“Moore’s Law”
at play:
Exponential
advances in
technology,
resulting in
Declining costs
Surging
production

5. 5
• New extraction technologies
resulting in record production of
gas, natural gas liquids (NGL),
and crude oil
• Water-borne imports of crude
being displaced by domestic
production
• North America on pace toward
full “energy independence” by
2020
The North American Energy Revolution
Moving Crude Oil By Rail
Source: CAPP Report, June 2014
Source: RBN Energy, December 2014

6. 6
Shale Supply Chain and Downstream Impacts
Feedstock (Ethane)
Byproduct
(Condensate)
Home Heating
(Propane)
Other Fuels
Other Fuels
Gasoline
Gas
NGLs
Crude
Proppants
OCTG
Chemicals
Water
Cement
Generation
Process Feedstocks
All Manufacturing
Steel
Fertilizer (Ammonia)
Methanol
Chemicals
Petroleum Products
Petro-chemicals
Inputs Wellhead
Direct
Output
Thermal Fuels Raw Materials
Downstream
Products
Moving Crude Oil By Rail
Impacts to-date include:
Dramatic reduction in crude imports,
lower electricity costs, lower gasoline prices,
increased refined products exports
The next wave:
Manufacturing renaissance in the US based on
abundant, low cost energy and feedstocks

7. 7
Over $120B of New Shale-Related Manufacturing Investments Have Been Announced
Moving Crude Oil By Rail
Ethylene and Propylene
Ammonia and Derivatives
Methanol
Polymers and Resins
Chlor-alkali
OtherSource: American Chemistry
Council and PLG analysis

8. 8
NA Crude Logistics Pre-2010
Moving Crude Oil By Rail
Sources: EIA, PLG analysis (Google Earth)
Light/Sweet
Heavy/Sour
Pacific
Northwest
Refiners
California
Refiners
2,525
kbpd
PADDV
Demand
Midwest Refiners
3,375
kbpd
PADD II Demand
East Coast
Refiners
PADD I Demand
1,075
kbpd
LA Gulf Coast
Refiners
TX Gulf Coast
Refiners
PADD III
Demand
8,150
kbpd
Permian
ANS
Imports
Imports
Rail
Pipeline
Marine
OilSands
Imports GOM

9. 9
NA Crude LogisticsToday
Moving Crude Oil By Rail
Sources: EIA, PLG analysis (Google Earth)
Light/Sweet
Heavy/Sour
Pacific
Northwest
Refiners
California
Refiners
2,525
kbpd
PADDV
Demand
Midwest
Refiners
3,375
kbpd
PADD II Demand
East Coast
Refiners
PADD I Demand
1,075
kbpd
LA Gulf Coast
Refiners
TX Gulf Coast
Refiners
PADD III
Demand8,150
kbpd
Eagle Ford
Permian
Bakken
Rail
Pipeline
Marine
OilSands
GOM

10. 10
• Shift from coastal to mid-continent
supply points necessitated
“re-plumbing” the flow of carbon-
based energy in North America
• Pipeline reversals, repurposing, new starts
• Crude by rail comes of age – born in the
Bakken
• Waterborne imports being displaced
as shale oil and oil sands production
comes online
• Infrastructure built rapidly to help
facilitate new energy movements
• Rail provides new optionality,
speed vs. pipeline
• Lower capital cost
• Faster infrastructure development
• Destination optionality to take advantage of
new markets and price spreads
The “Re-Plumbing” of Hydrocarbons in North America
Moving Crude Oil By Rail
0
200
400
600
800
1,000
1,200
1,400
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Bbl./d USWilliston Basin Crude Production and
RailTransport
Production Crude by Rail
Source: North Dakota Pipeline Authority, PLG Analysis, January 2015

11. 11
TheThree Phases of Crude-by-Rail Growth in North America
Moving Crude Oil By Rail
0
200
400
600
800
1,000
1,200
US Crude
Originations
Williston Crude
Originations
Source: NDPA, STB, PLG
Analysis, January 2015
Crude by RailVolumes (kbpd)
2009-2011
• CBR developed from the
Bakken to bridge the gap until
pipelines are built
• First unit train shipment in
Dec. 2009
• Destination market: Cushing,
OKWTI trading hub
2011-2013
• Ascendancy of trading as main growth driver
in CBR; WTI-Brent-LLS differentials are key
• St. James, LA LLS hub becomes most
attractive destination
• Coastal refineries begin rail receipt
infrastructure build-out
• Tank car market overheats, becomes main
growth constraint
2013-current
• CBR from Bakken assumes long-term
structural role in crude oil market
• Bakken CBR transitioning to east and west
coast markets; LLS andWTI converge as
Permian and Eagle Ford growth floods
USGC
• Canadian CBR build-out begins; tank car
market reorienting to coiled/insulated car
types (~2/3 of CBR fleet order backlog)

12. 12
Low Oil Price Case North American CBR Forecast Overview
Moving Crude Oil By Rail
Bakken & Oil Sands are main drivers of
CBR volumes, accounting for ~87% of NA
movements in 2017
Other plays such as Niobrara and
Permian are seeing increasing CBR
activity but will be adequately
served by pipelines long-term
0
100
200
300
400
500
600
700
800
900
1,000
2013 2014 2015 2016 2017 2018 2019
Low ($<65/bbl) Case Crude by Rail Volumes (kbpd)
Williston
Oil Sands
Niobrara
Permian
Source: PLG Crude by
Rail & Tank Car
Forecast, Nov. 2014

13. 13
Low Oil Price Case: Bakken Production andTakeaway
Moving Crude Oil By Rail
0
200
400
600
800
1,000
1,200
1,400
2014 2015 2016 2017 2018 2019
Low Case ($<65/bbl) Takeaway (kbpd)
Pipeline Forecast
Crude by Rail Forecast
Local Refinery Forecast
CBR share of production expected to be remain strong and
long lasting due to the optionality it provides and the lack of
pipeline options to the key markets on West and East Coast
Source: PLG Crude by
Rail & Tank Car
Forecast, Nov. 2014

14. 14
Low Oil Price Case: Western Canada Production andTakeaway
Moving Crude Oil By Rail
Proportion of production handled
by rail expected to ramp up through
2017 and then drop back as pipeline
capacity starts to develop
At its peak in 2017, rail will
handle ~ 18% of production and
then fall back to ~ 6% by 2019
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2014 2015 2016 2017 2018 2019
Low Case ($<65/bbl) Takeaway (kbpd)
Pipeline Forecast
Crude by Rail Forecast
Local Refinery Forecast
Source: PLG Crude by
Rail & Tank Car
Forecast, Nov. 2014

15. Logistics Engineering SupplyChain
ThankYou !
For follow up questions and information,
please contact:
Taylor Robinson, President
+1 (508) 982-1319 / trobinson@plgconsulting.com
This presentation is available for download at:
http://plgconsulting.com/category/presentations/