From this brief presentation of past activities, it can be seen that the AMERAPORT concept has been recognized and that there is interest at the regional and national levels. The intensity of activity in May is indicative of the degree of that interest. Background information continues to be prepared in anticipation of the various other hearings, meetings and seminars.

10

BENEFITS

In examining the economic benefit of constructing and operating an oil refinery in Alabama, it is useful to employ the value added concept. Value added is that amount of money added to a product by the process it undergoes. For instance, if a refinery buys a barrel of crude oil for $3.80, refines it, and sells it for $4.80, the value added to that barrel of oil by the refining process is $1.00. This dollar is then allocated to labor, profits, taxes, etc. Of course, the total value of the barrel of oil is $4.80; however, the refinery's contribution to Gross State Product is the value added of $1.00. The important thing to remember about value added is that, in this discussion, it is the amount of money available for distribution to the people of Alabama.

The construction time for a refinery which has a 225,000 barrels per day processing capacity is approximately two years. Industry sources indicate that this size refinery is the most feasible and is what they plan to construct. This type refinery was used as a basis for computing the estimated figures displayed on the following charts.

The chart shows that construction will produce a total value added of $175,200,000, which is available in different forms to Alabamians over the two year period. For instance, $128,000,000 in the form of wages will be paid to the construction crews, and $4,260,000 will be paid to local and

11

state governments in the form of taxes. The total value of the construction, which includes all facilities, such as access roads, fences, etc., is estimated to be $400,000,000.

The economic benefits gained by the operation of a refinery differ from those of construction in that construction produces a one-time increase, while operation provides a recurring benefit over the useful life of the refinery. For illustration, the following chart shows the result of operations over a twenty-year period.

These estimates show that operation will produce an annual total value added of $110,000,000. Again, as in construction, these amounts will be available in different forms to the people of Alabama. In twenty years the refinery will have contributed over two billion dollars to Gross State Product. The total annual value of the products produced is $394,200,000.

Continued analysis will take many forms and will cover numerous factors, but the pertinent information has already been developed. In the two-year construction period and twenty years of operation one 225,000 bbls/day refinery will make available an estimated $2,375,200,000 to Alabamians.

These contributions will significantly improve the economic well-being of Alabama and the AMERAPORT impact states, which as the reader will recall are the first objectives of the AMERAPORT Corporation.

12