Juan B. Sosa, Consul General of Panama

CAPT Bill Diehl, USCG (Ret.)

Expansion of the Panama Canal – A Game Changer: Port of Houston and Beyond

The Panama Canal

How A Canal Works

Suez Canal Type

New Third Set of Locks at the Panama Canal

Panama Canal Construction

The Panama Canal Connects 144 Trade Routes Across the Globe

The Port of Houston • No. 1 U.S. Port in foreign waterborne tonnage

• Home to largest petrochemical complex in the U.S. (2nd largest in the world)

• 2.1 million jobs per year nationwide

• Generates $500 billion in annual economic activity nationwide

Pilot Moved

Tug and Barge

5% General Cargo 11%

Container 11%

Bulk 8%

Chemical Tanker

13%

Tanker 45%

Pure Car Carrier

1%

LPG 5%

2011 8,022 Ships

Pilot Moved Tug and Barge

5%

General Cargo 12%

Container 12%

Bulk 12%

Chemical Tanker

16%

Tanker 34%

Pure Car Carrier 1%

LPG 7% 2014

8,338 Ships

Annual Vessel Arrivals Port of Houston

*Source EIA 2015

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

2009 2010 2011 2012 2013 2014

Light Sweet Light Sour Medium Heavy Sweet Heavy Sour

Houston Crude Oil Imports by Quality In thousands of barrels

*Source Greater Houston Port Bureau, EIA

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Estimated Petroleum Exports for the Port of Houston (MBD)

Refined Products Chemicals NGLs Crude Oil

MBD

Houston Ship Channel and surrounding, TX • Ascend 2015 New propane PDH • Celanese-Mitsui JV 2015 New methanol • Chevron Phillips Chemical 2014 New hexane • Chevron Phillips Chemical 2017 New ethylene • Enterprise 2016 New propylene • Exxon Mobil 2017 New ethylene • Exxon Mobil 2016 New polyethylene • Formosa 2018 New ethylene • Formosa 2016 New propylene • Ineos 2014 Ethylene debottleneck • LyondellBasell 2015 Ethylene expansion • LyondellBasell 2014 Propylene debottleneck • LyondellBasell 2014 New polyethylene • Flint Hills (Petrologistics) TBD New PDH

Freeport – Old Ocean, TX • BASF-Yara 2018+ New ammonia • BASF 2019 Methane-to-propylene • Dow 2017 New ethylene • Dow 2015 New PDH • Dow 2018 New propylene • Dow 2017 Gas to Liquids • Dow Agrosciences TBD Herbicide • CP Chemical 2017 Ethylene expansion • CP Chemical 2017 New polyethylene

Corpus Christi / Point Comfort, TX • LyondellBasell late-2015 Ethylene expansion • Formosa 2017 Ethylene dichloride • Formosa 2016 New PDH • Formosa 2016 New propylene • M&G Group 2016 New PET • M&G Group 2016 New PTA • Oxy/Mexichem JV 2017 New ethylene (2 units)

Beaumont – Orange, TX • LANXNESS 2016 Butadiene rubber • Orascom Construction (OCI) 2016 New methanol

Lake Charles, LA • G2X 2017 Methanol-to-gasoline • LyondellBasell late-2015 Ethylene expansion • Sasol 2018 New ethylene • Sasol 2016 New polyethylene • Westlake 2015 Ethylene expansion

Baton Rouge – New Orleans Corridor, LA • Axiall / Lotte 2018 Ethylene expansion • BioNitrogen 2015 New UAN • Eurochem 2017 New ammonia • CF Industries 2015 Ammonia expansion • Methanex 2015 Methanol migration • Methanex 2016 Methanol migration • S. LA Methanol 2016 New methanol • Valero 2016 New methanol • Dyno Nobel 2016 New ammonia

Iowa • LyondellBasell 2014 Ammonia expansion • Orascom (OCI) 2015 New fertilizer • Iowa Fertilizer 2015 New Ammonia

Mobile, AL • Huntsman Chemical 2015 Epoxy expansion

Parkersburg/Natrium, WV • Odebrecht TBD New ethylene • Dominion 2014 Gas fractionation

restart and expansion OK

• Koch 2016 Urea expansion • LSB Ind. 2015 New ammonia

Monaca, PA • Shell 2018 New ethylene

Pacific Northwest • Northwest Innovation 2018 New Methanol

(2 locations) • Tesoro 2017 New Xylene

Indiana • Midwest Fert. 2017 New ammonia

Sources: ICIS, Company announcements, Kirby Corp.

*Notes: Date reflects anticipated year in-service, red font reflects construction in progress

$100 Billion+ in Planned U.S. Petrochemical Investment

US Producers to Target Key Markets

0

20

40

60

80

100

120

140

160

180

2011 2012 2013 2014 2015 2016 2017 2018

Waterborne Foreign Trade Houston - Millions Metric Tons

Imports Exports Houston Total Trade

The Canal Shifts the Market to the USGC/USEC

Cost Based on: • 4,000 TEU Vessel • Canal Tolls January 2011 • $467.00 / MT Bunker (HFO) • Actual Charter Rate

Cost Based on: • 8,000 TEU Vessel • Canal Tolls January 2011 • $467.00 / MT Bunker (HFO) • Actual Charter Rate

• Predictability • Environmental • Safety • Security • Dredging • Efficiency

Challenges

Dredging Challenges

• Harbor Maintenance Trust Fund

• PHA Study – Wider vs.

Deeper Dredging

• Accommodating Post-Panamax Ships

Waterside Congestion

• Inefficient scheduling • Increase in non-productive

movements • Increase in waterway

congestion

Shoreside Congestion

• Insufficient Supply chain growth

• Transportation • Work Force • Storage

Questions/Comments?