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Rail is making a difference in domestic crude growth Grand Forks, ND BNSF Railway Matthew K. Rose Chairman and Chief Executive Officer September 18, 2013 Slide 2 Birth of crude by rail Fast track to growth Value of rail Whats next Topics Slide 3 The Birth of Crude by Rail Slide 4 BNSF in North Dakota BNSF employs nearly 1,500 in ND and has hired more than 240 new employees in 2013 New or expanded BNSF served facilities represent investments worth $390 million creating more than 680 jobs in ND (2010-2012) BNSF has invested more than $540 million in ND for capacity expansion and maintenance (2010-2013) For more than a century, BNSF Railway has played an important role in North Dakotas economy Slide 5 Ag Shuttle Network as the Model BNSF learned from our record with agriculture customers for building a strong supply chain network Slide 6 BNSF Shuttle Network Slide 7 Fast Track to Growth Slide 8 Growth in Crude Rail Shipments BNSF Total Volumes (000s bpd) BNSF Crude Volumes 592,000 bpd average in July, 2013 2012201320112010 Slide 9 North Dakota Unit Train Rail Facilities 1.Dec-092.Jun -113.Nov-114.Nov-115.Mar-126.Apr-127.May-128.Jun-129.Sep-1210.Nov-1211.Aug- 13 BNSF crude shippers invested nearly $1 billion developing 11 new Bakken origin facilities Slide 10 Crude Transportation Package Upstream, midstream or downstream, operations are mainstream to the mission of BNSF Railway. Upstream: Sand Pipe Aggregate Midstream: Crude Oil NGL Downstream: Fuels Asphalt Slide 11 Rail is Filling the Gap 8% OTHER 23% PIPELINE 69% RAIL 2013 Williston Basin Production 2010 Williston Basin Production 6% RAIL 20% OTHER 74% PIPELINE 11 Relieving U.S. Oil and Gas Transportation Bottlenecks Slide 12 Value of Rail Slide 13 Rail is Providing Unique Value Market Distribution Flexibility allows producers to ship in multiple constructs and to refineries throughout the U.S. Investments in infrastructure, people and process ensures Reliable Transportation Services for producers. Decades-long commitment to Safe Operating Practices helps prevent accidents in the first place. Slide 14 Vast Origin Network Provides Flexibility Proving access to all of the nations western shale plays Crude Origin Facilities 14 Slide 15 50 Destination Facilities by end of 2014 BNSF Network Other Networks Unit Train Facility Manifest Facility In-Development Facility West Coast: 19 Destination Facilities East Coast: 11 Destination Facilities Gulf: 19 Destination Facilities Mid-Continent: 12 Destination Facilities 15 Crude Destination Facilities Slide 16 How Have we Responded Today? In 2013, BNSF plans to invest $400 million on capacity initiatives to support crude- by-rail growth Slide 17 Safe Crude Oil Rail Transportation BNSF Number of Hazmat Shipments Rail is one of the safest ways to transport crude oil and hazardous materials 99.997% of rail industry shipments of hazardous materials reach their destination without a release caused by a train accident BNSF hazmat releases continue to decline even as volumes grow BNSF Total Hazmat Releases Slide 18 The rail industry has exceeded FRA Emergency Order 28 by implementing tighter controls on the commodity mix. The industry is applying provisions of the Emergency Order to: 1 or more loads of Toxic Inhalation/ Poisonous Inhalation materials, including ammonia solutions, Spent Nuclear Fuel or High Level Radioactive Waste 20 or more loaded tank cars of any hazardous material Identified trains will not be left unattended on main line or siding tracks Specific location exemptions require lead locomotive to be locked and the operating control handles removed All relevant information such as weather and grade for these trains must be recorded, verified and confirmed between the train crew and dispatcher Whats Happened in the Past 12 Months Safety: FRA Emergency Order 28 & Rail Voluntary Measures Slide 19 Whats Next Slide 20 Opportunities Continued expansion in Bakken New production in non-Bakken shales Pipeline to rail connections will expand options for customers Destination development continues Canadian rail development is coming 20 Slide 21 Challenges Spreads have narrowed, but seems to be a short-term phenomenon Pipeline competition Political and environmental risks Slide 22 Questions?