Prepared Answering Testimony of Exxon Mobil Corporation under OR14-6.

Exhibit No. EM-1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION BP Pipelines (Alaska) Inc., ConocoPhillips ) Transportation Alaska, Inc., and ) Docket No. OR14-6-000 ExxonMobil Pipeline Company ) PREPARED ANSWERING TESTIMONY OF DR. DAVID I. TOOF ON BEHALF OF EXXON MOBIL CORPORATION January 3, 2014 Exhibit No. EM-1 SUMMARY OF THE PREPARED ANSWERING TESTIMONY OF DR. DAVID I. TOOF 1 Dr. David I. Toof is a self-employed consultant who has provided economic and financial 2 consulting services to regulated industries and has provided expert testimony in several prior 3 Commission proceedings, including prior TAPS Quality Bank litigation. In his prepared 4 answering testimony, Dr. Toof responds to the testimony of Flint Hills Resources Alaska, LLC 5 (FHR) witness Dr. Phillip K. Verleger, Jr. Specifically, Dr. Toof explains why Dr. Verlegers 6 proposals (1) to eliminate the fixed and capital costs associated with processing the Resid cut; 7 (2) to substitute FHR witness Mr. Norman Liebermans proposed Coker product yields for the 8 existing TAPS Quality Bank product yields; and (3) to establish Resids purported value as a 9 blendstock for Fuel Oil 380 (FO-380) as a price floor in valuing Resid should be rejected in 10 this proceeding. 11 Dr. Toof begins his testimony by providing an overview of the mechanics and history of 12 the TAPS Quality Bank, including a discussion of how the Resid cut is valued, and how the 13 methodology for that valuation evolved through Commission and D.C. Circuit proceedings. In 14 particular, Dr. Toof traces the evolution of both the valuation of Resid as a Coker feedstock, 15 including the rejection of a blending-based valuation, and the development of the Coker cost 16 elements, including the costs that Dr. Verleger proposes to eliminate. Dr. Toof also notes that 17 other Quality Bank cuts, including Heavy Distillate and Light Distillate are, under applicable 18 precedent, valued in a manner that is consistent with the approach that is currently taken with 19 respect to Resid. 20 Dr. Toof then refutes the alleged evidence that Dr. Verleger relies on in concluding that 21 the TAPS Quality Bank methodology is undervaluing the Resid cut, a conclusion on which Dr. 22 Verleger bases his proposal to eliminate the fixed and capital costs associated with coking Resid. i Exhibit No. EM-1 1 For example, with regard to Dr. Verlegers comparison of the Platts price assessment for ANS 2 crude oil to the values that the TAPS Quality Bank methodology generates for the ANS stream, 3 and Dr. Verlegers comparison of the value of Resid as a Coker feedstock to ...