Floating Roof Stability This presentation is provided to clarify the issues surrounding the current budget proposal to fund the SC-AST project “Seismic Sloshing Waves”. Really the project is to do the technical work needed to understand the behavior of floating roofs under any load conditions including sloshing waves. Many floating roofs exist which do not meet the broad API 650 strength requirements outlined in API 650 Appendices C and H. However, the industry takes the vendor communities’ word for it that they have provided sufficient strengh to meet the standards. Many examples and case histories show that this is not the case. By performing this work not only with the basic requirements provide the industry with a tool to easily assess the strength of floating roofs to perform as intended but the work will provide the basis for designs needed in regions and areas subject to seismic activity. Also attached is the original API proposal that was submitted to the CRE during the last meeting cycle.

Pre-Read Background These slides will not be covered on the call; but are provided for background in order to get all on the “same page” prior to the call

Is Your Facility Vulnerable This map shows the basic regions where this work will have the highest impact

Floating Roof Critical to Tank Safety Vaporization stopped Caps fire risk to rim fires (minor events) Reduces fire protection needs (foam, etc) to rim area (not tank area) Prevents escalation to fully involved tank and terminal fires Single most important fire and safety defense of all tank components

Floating Roof Vulnerabilities Floating roofs are vulnerable to: –Sinking –Rain (In Houston, Storm Allison caused over 100 floating roofs to sink) –Gas (as from producing or pipeline operations) –Corrosion –API 650 has performance based rules which have proven to be inadequate

Why Is API 650 Inadequate Rules require 2 flooded compartments plus centerdeck and, 10 inches of rain in 24 hours Performance based rules are fine But nobody knows how to design to the rules Result is the industry depends on vendors for this There have been many suits resulting from sunk floating roofs Industry needs to have simple rules, tables and formulas that ensure roof is strong enough for this This information needs to be in the hands of industry, not just for vendors to use

Seismic Background Seismic technology changed – so codes changed API 650 Appendix E revised accordingly But job is only half complete Seismic Committee intended to address –Tank shell and bottom first (appendix E does this) –Then Floating roof stability (this is current proposal)

Seismic Failure Modes Bottom separates from shell Shell elephant foot Tearing piping Floating roof collapse First 3 covered by new Appendix E (completed) Floating roof (yet to complete)

Seismic waves cause floating roof to lose bouyancy Seismic waves cause failure deck and floating roof sinking This results in full surface fire and tank burndown What we observed in the last major refinery earthquake tank sloshing waves

Ismet Turkey

Ismit, Turkey 1998

CRE Presentation This is where we will start on the conf call

Is Sloshing Wave Floating Roof Risk Real? Hokaido –4 fully involved tank fires –2 fully involved due to floating roof collapse from SWs –50% Ismet Turkey –23 major tank fires –17 due to SWs –>50% Anchorage –Commingled data but many floating roofs collapsed API AST Leadership Committee thinks seismic work not complete API AST Leadership Committee also thinks that seismic sloshing is important and should be completed

Compare this project to other funded work Seismic has 2 major incidents (ismet and hokaido) Emergency venting (comparable funding) –No incidents since about 1990 Tank Settlement –No incidents resulting in fires or serious incidents Support: The above 2 projects not requested by outside institutions or companies Seismic: Requests by Alyeska as well as PAJ with 50% funding guarantee

Current CRE Plan for AST funding 30K for Jacking Tanks in 2006 AST would rather spend this on seismic ($25) because –Jacking not ready yet (results of settlement still in committee for another year) –Jacking is low impact compared to seismic –Jacking is much lest risk than seismic

Business Case At least 25 floating roofs per year sinking in US alone About ½ are due to corrosion; other half water or gas Of the half, about 1/3 are due to inadequate design This is about 4 per year sinking due to inadequate structural stability These would not sink or are preventable if the API Companies had simple means to evaluate floating roof stability Proposed work will result in this deliverable

Business Case Continued The lowerbound estimate for the Ismet and Hokaido Incidents are 100MM$ At least ½ of the floating roofs causing fires would not have occurred Cost savings from these standards would be roughly 30MM$ It is unknown how many fatalities occurred in Ismet, but some costs can be attributed to this By comparison, this work is at least as important than any other project funded in the last 5 years by SCAST when compared on a line basis

Funding Requirements 50 $M for 2006 and 2007 ($100M for 2 year project) PAJ agreed to 50% sharing of costs API funding is $25 for 2006 and 2007 For 2006 –AST has $30M budgeted for “tank jacking” –Cancel or defer this work and fund 2006 SSW with this –Will submit budget item for 2007 to cover balance of work for $25M

Final Statement of Benefit To Cost Benefits –Project has high value seismically vulnerable areas –Chevron and Alyeska support this activity –Work will result in not only adequate floating roofs for seismic areas –Will result in general understanding of floating roofs for other load conditions (gas, rainwater, etc) –Project is leveraged Costs –None in 2006 (deferral of tank jacking) –$25M in 2007