Trim Desulfurization Process for Off Spec Ultra Low Sulfur Diesel Transmix

The U. S. Environmental Protection Agency has mandated that refiners reduce the sulfur level in 80% of their on-road diesel
production to 15 ppm effective June 1, 2006. In order to facilitate a smooth transition from low sulfur diesel (LSD) containing
500 ppm sulfur to this ultra low sulfur diesel (ULSD), terminals will have until September 1, 2006 and retail outlets until
October 15, 2006 to comply.

To meet the sulfur specification of 15 ppm in the final product, refiners are expected to produce ULSD containing only 6-7
ppm sulfur. This ULSD will then be pipelined to terminal facilities throughout the United States along with jet fuel and
kerosene containing as much as 2000-5000 ppm sulfur; and a substantial amount of mixing of products will
occur at the interfaces. Some of this interfacial material, known as “transmix,” is expected to exceed the EPA’s 15 ppm
sulfur limit and therefore will not be able to be sold as ULSD.

An estimated 250,000 barrels/day of off-spec transmix ULSD are expected; and existing transmix facilities that are
designed to simply separate gasoline/diesel transmix into its component boiling ranges by distillation will be unable to
remove sulfur that may be blended into ULSD. Through 2010, product owners will have the option to downgrade ULSD
transmix to 500 ppm sulfur diesel or #2 heating oil subject to the 20% rule and at a financial loss.

TransFining-D is a cost-effective and simple process being developed by Trans Ionics Corporation specifically to meet the
needs of refiners in recovering product that would otherwise be downgraded resulting in a cost to the ULSD owner and a
potential shortage of ULSD to consumers. Experimental data show that TransFining-D can remove more than 95% of the
sulfur from a mixture containing 25 ppm sulfur, under very mild conditions. Scale-up of the process is continuing
through the end of 2006; and the final process is expected to be commercially available in mid to late 2007 for toll
processing of transmix on-site at terminal facilities using truck-mounted units.