Tulsa Refinery

On June 1, 2009 Holly Corporation acquired the 85,000 bpd Tulsa Refinery and 3.2 million barrels of storage and related logistics assets (on-site truck and rail loading facilities) from Sunoco for $65 million. Holly later sold in October 2009 associated logistics assets to Holly Energy Partners and Plains All American Pipeline for a combined amount of $57.5 million. In December 2009 Holly acquired the 75,000 bpd Sinclair Tulsa refinery for $128.5 million with plans on integrating the two Tulsa refineries. The combined facility is planned to be operated at a capacity of 125,000 bpd. These two refineries are located approximately 2 miles apart and will be connected via pipeline. This refinery complex sits in the Midwest region (PADD II), approximately 45 miles from the supply and storage hub at Cushing, Oklahoma, in a region that is well served by crude pipelines that deliver crude oil from Canada, U.S. onshore and the Gulf Coast. This provides the Refinery the flexibility to optimize its crude slate and maintain lower crude inventories than a typical refinery.

This refinery complex produces a combination of high value lubricants and specialty products in addition to distillates (diesel and jet fuel) and gasoline fuels. Refined distillates and gasolines are primarily delivered from the refinery to market by two pipelines owned or operated by Magellan Pipelines. The Magellan pipeline terminal is located across from the refinery and these Magellan pipelines connect the refinery to distribution channels throughout Texas, Oklahoma, Kansas, Missouri, Illinois, Iowa, Minnesota and Wisconsin. Additionally, on-site rail and truck rack capability facilitates access to local refined product markets.

The combined refinery incorporates the following processing units to produce the above mentioned products. The processing units that are located at each respective site are listed below:

• Legacy Sunoco: Crude Distillation with a Light Ends Recovery Unit (LERU), MEROX, Unifiner, Platfomer, Propane De-Asphalting, Lube extraction unit, MEK Dewaxing, Delayed Coker and Butane Splitter along with specialty blending capabilities.


• Legacy Sinclair: Crude unit, Naphtha HDS, FCC, Penex, CCR reforms, Alkylation unit, Scanfiner, Diesel HDS and Sulfur unit.

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Crude Oil and Feedstock Supplies

The refinery feedstock consists primarily of Oklahoma Sweet, Cushing Common and West Texas Intermediate. The Oklahoma Sweet is ideal for lubricant production due to superior viscosity index and high paraffinic content. The refinery is also capable of processing small volumes of light sour crude and has the ability to receive Crude imports from Canada and the Gulf Coast via its Cushing oil hub connection.

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Refined Products

The Holly refinery complex in Tulsa, OK manufactures a combination of Lubricants and Specialty Products, Distillates (Diesel and Jet Fuel), Finished gasoline, Petroleum coke and LPG.

Specialty Products:
Approximately 10% of the plants production consists of lubricants and specialty products which are categorized and explained below. Each of these products can be custom blended in tank car-size quantities in order to satisfy customer requirements.

Lubricating Oils (Base, Blended & Process oils):
These solvent neutral ("SN") paraffinic products are specifically manufactured as base stocks or blending components in the manufacture of finished lube products. Typically these products are shipped to blender-compounders who prepare the finished product sold to end-users. Applications include passenger and commercial vehicle engine oils, specialty products for metalworking or heat transfer applications and other industrial applications.

Some of the Process oils produced at the Tulsa plant are designed for the rubber and chemical industry and are extracted from the Refinery's Lube Extraction Unit (LEU) where increased aromaticity and low volatility is desirable. Beyond rubber applications, these highly refined oils are used in: adhesives, coatings, and defoamers.

Waxes:
Soft and semi finished waxes that are produced aid in manufacturing more flexible packaging, waterproofing corrugated board, emulsions, extrusion processing, candles, rubber, adhesives, gaskets and fire logs. The waxes are removed from oil by solvent crystallization and filtration and are de-oiled to produce a range of products differentiated by melting points.

Horticultural Oils:
These highly refined process oils are used in Horticultural sprays that can be applied as either a Pesticide or Herbicide. The pesticide spray oils are paraffinic oils specifically designed to meet growers' requirements for an extremely effective pesticide with low toxicity. The Herbicidal Oils are used in conjunction with other herbicides as an adjuvant. As carriers, they form a better spray pattern than herbicides used alone, and improve penetration, wetability, spreadability and anti-evaporative action for improved post-emergent weed control.

Asphalt Modifiers:
The plant produces numerous Hydrolene Asphalt Modifiers to accommodate the complete spectrum of asphalt applications and performance requirements. Hydrolene is available in both aromatic and paraffinic formulations, offering various viscosity and volatility characteristics for specific customer applications. Product applications include improving compatibility with polymer modified asphalts in paving and roofing industry.

Light Refined Products:
The light petroleum products manufactured consists of distillates and gasoline which is estimated to account for 39% and 44% of the plants production respectively once the integration of the two refineries is completed. Additionally, the previously produced gas oil production (approximately 12,000 bpd) from Holly's legacy Sunoco refinery will now be upgraded to higher grade refined products (distillates and gasoline) by further processing the gas oil at the newly acquired legacy Sinclair refinery. The refined gasoline and distillates are delivered to market by two pipelines owned or operated by Magellan Pipelines. These two processing locations have on site storage and logistic assets consisting of over 3 million barrels of storage, truck loading racks and rail loading and unloading facilities.

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Capital Improvement Projects

As a result of the purchase of the Sinclair refinery, Holly had adjusted its previously announced capital project budget of $250 million to take advantage of the existing processing units available at both Tulsa processing sites. By integrating these two refineries it allows Holly to eliminate approximately $125 million in planned capital spending. Holly now plans to satisfy both the Ultra Low Sulfur Diesel (ULSD) requirements and MSAT 2 compliance based on a revised capital budget of approximately $56 million. Holly potentially avoided an additional $100 million in capital spending should Holly had chosen to build gas oil upgrading facilities that the integration now provides. The integration of these facilities is estimated to be completed in the 3rd Quarter, 2010.

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