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Frito-Lay, Division of PepsiCo




        WI State Energy Office, Wisconsin Clean Cities
         Natural Gas for Transportation Roundtable
                      January 29, 2013
                    PepsiCo Confidential
 Company
  Sustainability Vision
 Projects and Results
 Fleet Operations
 CNG




                          PepsiCo Confidential
Our Sustainability Vision:
To Become a Preeminent Green Company


                                              Goal
                                         Leave No Trace
     Sustainability Strategy              Strategy
     1 Bold Goal                  Conserve And Preserve
                                 The Earth’s Natural Assets
     3 Targeted Natural Assets
     3 Headline Objectives          FL’s Eco-Footprint
                                 Water        Energy            Land




                                  Strategic Objectives
             • Perpetually reduce consumption of non-renewable natural assets
             • Step function change in consumer loyalty and customer intimacy
             • Embed sustainability within the cultural DNA of Frito-Lay


                                         PepsiCo Confidential
                                      PepsiCo Confidential                      3
Our Strategic Scope Includes Our Entire Operating Footprint,
Extending to Every Partner to Whom We “Write a Check”


                                                      10



                                                       9
       Make                                                                                       Move
                                                       8




                                                       7



                                                       6




                   5   4    3       2   1                          16   17       18     19   20




                                                       11



                                                       12



                                                       13




                                                       14
        Sell                                                                                      Support
                                                       15


                           Assets                Practices                   External


                                        PepsiCo Confidential                                                4
                                            PepsiCo Confidential
SunChips… Powered by the Energy of the Sun




       Modesto Solar Field…
       April, 2008 Earth Day




                               PepsiCo Confidential
PC Stack Heat Recovery….
Building Heat and Hot Water Production




      Beloit and FF in 2009

                                PepsiCo Confidential
                              PepsiCo Confidential     6
Net Zero and Conventional Technologies will be Implemented System-Wide
as Rates, Inflation and Business Conditions Develop… Beloit Example




                    Beloit                                         Wind Turbine Power Purchase
                                                                            Agreement




         Low Pressure Biomass Boiler   PepsiCo Confidential      Energy… Efficiency and Recovery
                                          PepsiCo Confidential                                     7
Ten Years of Continuous Improvement and
Significant Productivity
                                                Water                                                          Natural
                    100                                                                 100                     Gas
                             90
                                                                   45%                                                             33%
                                                                                             90
                             80




                                                                                    BTU / Lb
          Gal / Lb


                             70                                                              80

                             60
                                                                                             70
                         50
                             40                                                              60
                                  '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09                     '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09


 >$70MM
                                                Fuel                                                      Electricity
                                                                        5%
                             76                                                        100
                                                                                                                                   25%
                                                                                             90
          Gallons/Lbs Sold




                                                                                  kwh / Lb

                             72                                                              80


                                                                                             70


                             68                                                              60
                                                                                                  '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
                                         '07         '08          '09
                                                                    PepsiCo Confidential
Oil is more expensive than we think…


      Military – Middle East                                 Spills




         Refinery Fires                               Pollution/Smog/GHGs




                               PepsiCo Confidential
PepsiCo Confidential
World Class Fleet




        Reliability                     Sustainability                 Capability
 Provide safe, dependable          Preserve the environment and    Build a powerful team of
vehicles for all our associates   reduce green house gases while    fleet professionals who
and the customers we share         becoming one of the most fuel      continue to provide
  the roads with everyday            efficient fleets in America
                                                                     World Class Service
We will be the most fuel-efficient fleet in America
through People, Process, & Technology…




 2008                               2010                                        2012                     2020




                             14%
        47.8
               45.7
                      43.4
                             41.2
                                                                                                   50%
                                    39
                                           37
                                                      35
                                                               33
                                                                         31
                                                                              29
                                                                                       27
                                                                                             25
                                                                                                   23




        ‘08    ‘09    ‘10    ‘11    ‘12    ‘13        ‘14      ‘15      ‘16   ‘17      ‘18   ‘19   ‘20



                                                 PepsiCo Confidential
PepsiCo Confidential
2012 added 83 New Tractors to our Fleet. Saved the company
about 1,100,000 Gallons of Diesel Fuel Annually




                                PepsiCoPepsiCo Confidential
                                        Confidential
Why CNG ?
North American Fuel
  Natural Gas Production

                           NATURAL GAS AS A FUEL SOURCE
                              •Natural gas is a readily available
                               fuel, with over 98% coming from
                               North America.

                               •The energy availability from
                                known sources provides more
                                than 150 years of available
   Natural Gas Pipelines
                                energy supply.

                               •There are approximately 1.5
                                million miles of gas pipelines in
                                the US with service to virtually
                                every street and community.
WHY CNG?
WHY CNG?

•   Abundant & domestic fuel                                                       CNG vs Diesel
•   Fuel savings - ~ $2.20/gallon                           1,800
                                                            1,600               1,695
                                                                                                23%
•   Clean, less CO2 and other emissions                     1,400
                                                            1,200                       1,302
                                                            1,000

Future:                                                         800                                $500      47%
                                                                600
•   Opportunity to run biogas = Zero GHG                     400
                                                                                                      $500
                                                             200                                              $268
•   Potential future tax credits on fuel and
                                                                0
    tractor
                                                                                        g/mi CO2          Fuel $/1000mi


                                                            Fully Capable Tractor for Us
                                                            •         9L 320 hp     1000 lb-ft, automatic trans.
                                                            •         75 – 169 gallon fuel
                                                            •         300 – 700+ mi range
                                                            •         SA & TA
                                                            •         4 OEs in production


                                                            •         12L 420hp engine due in 2013


                                               PepsiCo Confidential
CNG Operation - Key Considerations


When Scoping CNG, We Must Solve For:

• Tractors – Range & Load
• Change Mgmt & Implementation
• Garage/Maintenance
• Training

• FUEL!


We currently face a classic “Chicken-And-Egg” challenge that we hope to break
through with an innovative partnership approach with fuel providers.

The National Fuel RFP will offer up our base volume commitment for station
construction in exchange for aggressive pricing and preferred location.
                                 PepsiCo Confidential
RFP Outline

•    Competitive Process based on “anchor tenant” arrangement
•    Prioritized Tier 1 and 2 sites based on scale & business need

•    Key components:
     – Base fuel volume commitment
     – Performance
     – Schedule – Specific startup




                               PepsiCo Confidential
Sites Considered for RFP




          Vancouver




     Modesto                                                                 Killingly
                                                Topeka


         Kern                                            Jonesboro
                                                                         Charlotte


                                                   Pulaski/FV
                      Dallas                                         Perry




                                           Rosenberg                  Orlando



                         PepsiCo Confidential
Beloit, Wisconsin
Frito-Lay owned CNG station




                        PepsiCo Confidential
Garage Capability

 Must Invest in garage capability to maintain CNG assets
         - Building safety/NFPA
         - Training
         - Tools

 General NFPA & FMG Requirements
•Methane detection
•Indirect heating sources
•Adequate ventilation
•Dropped ceiling or no electrical <18” below ceiling
level
•Low-temperature lighting
•No spark sources (motors, relays, etc) in air
handling equipment or near ceiling.
•In some cases automatic door openers may be
required – tie into detection system.


     Exact Scope will be determined upon a detailed site review
2013-on Future CNG Site Approach
•Target 100 CNG Units in 2013.

•Add units at existing locations with “optimized” fuel.

•Go to 4-5 new sites each year

•Prioritize largest sites – SCALE - bigger bang for the buck, lower risk

•Factor in business changes as needed

•Garage Investment/External MX support



•Annual Fuel Partner RFP will include prioritized site list
    •Non-optimized current sites
    •New Sites without fuel
    •Real Estate Purchase Option

                                   PepsiCo Confidential
2013 CNG Tractors will make up 20% of our Fleet
    CNG is quickly becoming a reality in our fleet!




                        Thank You!!
Appendix
CNG VS Diesel Price Build

                           CNG & Diesel Price Build

           $4.50



           $4.00
                               $3.75                  $3.94

           $3.50



           $3.00



                                                                      Taxes
           $2.50
                                                                      Station Op & Margin
                   $2.19
$/gallon




                                                                      Capital
                                                                      Refining & Delivery
           $2.00
                                                                      Commodity



           $1.50
                           Oil Cost = $2.96/gal @
                           $90/barrel
           $1.00


                           Gas Cost = $0.42/ gal
           $0.50
                           @ $3.00 NYMEX
           $-
                    CNG         Bulk Diesel           Retail Diesel
Natural Gas Supply Chain
                 EXTRACTION               PIPELINE   STORAGE        TRANSPORT




                  EXTRACTION            PIPELINE




                                                                                                                         Commercial Station Design
                                                                                                                         -Public
                                                                                                                         -Pricing
                                                                                                                         -Pressure & Flow
                                                                                                                         -Pavement
                                                                                                                         -Proximity




The drilling and hydraulic fracturing industry is
                                                          (An extensive network of piping already exists
heavily regulated and best practices are used by
                                                          to transport natural gas from the source to use
drillers minimize environmental impact on:
                                                          points
-Water usage
-Fluid disposal and recycling
-Drinking water contamination
-Gas leakage




                                                                                                                           CNG Energy Basics
                                                                                                                     1 gallon diesel = 139,000 BTU
                                                                                                            = X cubic ft NG (show visual) not under pressure
                                                                                                               = Y cubic feet (show visual) under pressure
                                                                                                                  = 1 Diesel Gallon Equivalent (DGE)
CNG Safety
•   Natural gas vehicles are a safe alternative with a proven track record.

•   CNG is about as flammable as diesel fuel. CNG gas poses a danger of
    ignition only when present in a 5% to 15% concentration.

•   CNG will not pool when spilled, which reduces the probability of a fire if the
    tank is breached.

•   Natural Gas presents an asphyxiation hazard at concentrations exceeding
    21%.




              Methane Gas Detection – under hood and in cab
CNG Tank Safety
•   Twenty-Year Tank Design - Design and Construction
    is Heavily Regulated

•   All CNG Vehicle Fuel Containers MUST meet the federal
    government’s FMVSS 304 (49 CFR 571.304), Compressed
    Natural Gas Fuel Container Integrity.



Tank Testing Procedures:
• Drop/Crash Testing
• Bonfire Testing
• Dynamite Testing
• Gunfire Testing – Armor Piercing Rifle Bullets
• Hydraulic Crush Tests
• Acid/Corrosion Tests

•   Pressure Relief Valve is designed to safely vent tank
    in case of overpressurization, impact, or fire.

•   Google “CNG Tank Testing” – Numerous Web Sites
    and You Tube Videos

•   SUMMARY: NATURAL GAS IS AS SAFE, OR SAFER, THAN
    DIESEL AND GASOLINE

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Frito-Lay - Natural Gas Fleet

  • 1. Frito-Lay, Division of PepsiCo WI State Energy Office, Wisconsin Clean Cities Natural Gas for Transportation Roundtable January 29, 2013 PepsiCo Confidential
  • 2.  Company Sustainability Vision  Projects and Results  Fleet Operations  CNG PepsiCo Confidential
  • 3. Our Sustainability Vision: To Become a Preeminent Green Company Goal Leave No Trace Sustainability Strategy Strategy 1 Bold Goal Conserve And Preserve The Earth’s Natural Assets 3 Targeted Natural Assets 3 Headline Objectives FL’s Eco-Footprint Water Energy Land Strategic Objectives • Perpetually reduce consumption of non-renewable natural assets • Step function change in consumer loyalty and customer intimacy • Embed sustainability within the cultural DNA of Frito-Lay PepsiCo Confidential PepsiCo Confidential 3
  • 4. Our Strategic Scope Includes Our Entire Operating Footprint, Extending to Every Partner to Whom We “Write a Check” 10 9 Make Move 8 7 6 5 4 3 2 1 16 17 18 19 20 11 12 13 14 Sell Support 15 Assets Practices External PepsiCo Confidential 4 PepsiCo Confidential
  • 5. SunChips… Powered by the Energy of the Sun Modesto Solar Field… April, 2008 Earth Day PepsiCo Confidential
  • 6. PC Stack Heat Recovery…. Building Heat and Hot Water Production Beloit and FF in 2009 PepsiCo Confidential PepsiCo Confidential 6
  • 7. Net Zero and Conventional Technologies will be Implemented System-Wide as Rates, Inflation and Business Conditions Develop… Beloit Example Beloit Wind Turbine Power Purchase Agreement Low Pressure Biomass Boiler PepsiCo Confidential Energy… Efficiency and Recovery PepsiCo Confidential 7
  • 8. Ten Years of Continuous Improvement and Significant Productivity Water Natural 100 100 Gas 90 45% 33% 90 80 BTU / Lb Gal / Lb 70 80 60 70 50 40 60 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 >$70MM Fuel Electricity 5% 76 100 25% 90 Gallons/Lbs Sold kwh / Lb 72 80 70 68 60 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '07 '08 '09 PepsiCo Confidential
  • 9. Oil is more expensive than we think… Military – Middle East Spills Refinery Fires Pollution/Smog/GHGs PepsiCo Confidential
  • 11. World Class Fleet Reliability Sustainability Capability Provide safe, dependable Preserve the environment and Build a powerful team of vehicles for all our associates reduce green house gases while fleet professionals who and the customers we share becoming one of the most fuel continue to provide the roads with everyday efficient fleets in America World Class Service
  • 12. We will be the most fuel-efficient fleet in America through People, Process, & Technology… 2008 2010 2012 2020 14% 47.8 45.7 43.4 41.2 50% 39 37 35 33 31 29 27 25 23 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 PepsiCo Confidential
  • 14. 2012 added 83 New Tractors to our Fleet. Saved the company about 1,100,000 Gallons of Diesel Fuel Annually PepsiCoPepsiCo Confidential Confidential
  • 15. Why CNG ? North American Fuel Natural Gas Production NATURAL GAS AS A FUEL SOURCE •Natural gas is a readily available fuel, with over 98% coming from North America. •The energy availability from known sources provides more than 150 years of available Natural Gas Pipelines energy supply. •There are approximately 1.5 million miles of gas pipelines in the US with service to virtually every street and community.
  • 17. WHY CNG? • Abundant & domestic fuel CNG vs Diesel • Fuel savings - ~ $2.20/gallon 1,800 1,600 1,695 23% • Clean, less CO2 and other emissions 1,400 1,200 1,302 1,000 Future: 800 $500 47% 600 • Opportunity to run biogas = Zero GHG 400 $500 200 $268 • Potential future tax credits on fuel and 0 tractor g/mi CO2 Fuel $/1000mi Fully Capable Tractor for Us • 9L 320 hp 1000 lb-ft, automatic trans. • 75 – 169 gallon fuel • 300 – 700+ mi range • SA & TA • 4 OEs in production • 12L 420hp engine due in 2013 PepsiCo Confidential
  • 18. CNG Operation - Key Considerations When Scoping CNG, We Must Solve For: • Tractors – Range & Load • Change Mgmt & Implementation • Garage/Maintenance • Training • FUEL! We currently face a classic “Chicken-And-Egg” challenge that we hope to break through with an innovative partnership approach with fuel providers. The National Fuel RFP will offer up our base volume commitment for station construction in exchange for aggressive pricing and preferred location. PepsiCo Confidential
  • 19. RFP Outline • Competitive Process based on “anchor tenant” arrangement • Prioritized Tier 1 and 2 sites based on scale & business need • Key components: – Base fuel volume commitment – Performance – Schedule – Specific startup PepsiCo Confidential
  • 20. Sites Considered for RFP Vancouver Modesto Killingly Topeka Kern Jonesboro Charlotte Pulaski/FV Dallas Perry Rosenberg Orlando PepsiCo Confidential
  • 21. Beloit, Wisconsin Frito-Lay owned CNG station PepsiCo Confidential
  • 22. Garage Capability Must Invest in garage capability to maintain CNG assets - Building safety/NFPA - Training - Tools General NFPA & FMG Requirements •Methane detection •Indirect heating sources •Adequate ventilation •Dropped ceiling or no electrical <18” below ceiling level •Low-temperature lighting •No spark sources (motors, relays, etc) in air handling equipment or near ceiling. •In some cases automatic door openers may be required – tie into detection system. Exact Scope will be determined upon a detailed site review
  • 23. 2013-on Future CNG Site Approach •Target 100 CNG Units in 2013. •Add units at existing locations with “optimized” fuel. •Go to 4-5 new sites each year •Prioritize largest sites – SCALE - bigger bang for the buck, lower risk •Factor in business changes as needed •Garage Investment/External MX support •Annual Fuel Partner RFP will include prioritized site list •Non-optimized current sites •New Sites without fuel •Real Estate Purchase Option PepsiCo Confidential
  • 24. 2013 CNG Tractors will make up 20% of our Fleet CNG is quickly becoming a reality in our fleet! Thank You!!
  • 26. CNG VS Diesel Price Build CNG & Diesel Price Build $4.50 $4.00 $3.75 $3.94 $3.50 $3.00 Taxes $2.50 Station Op & Margin $2.19 $/gallon Capital Refining & Delivery $2.00 Commodity $1.50 Oil Cost = $2.96/gal @ $90/barrel $1.00 Gas Cost = $0.42/ gal $0.50 @ $3.00 NYMEX $- CNG Bulk Diesel Retail Diesel
  • 27. Natural Gas Supply Chain EXTRACTION PIPELINE STORAGE TRANSPORT EXTRACTION PIPELINE Commercial Station Design -Public -Pricing -Pressure & Flow -Pavement -Proximity The drilling and hydraulic fracturing industry is (An extensive network of piping already exists heavily regulated and best practices are used by to transport natural gas from the source to use drillers minimize environmental impact on: points -Water usage -Fluid disposal and recycling -Drinking water contamination -Gas leakage CNG Energy Basics 1 gallon diesel = 139,000 BTU = X cubic ft NG (show visual) not under pressure = Y cubic feet (show visual) under pressure = 1 Diesel Gallon Equivalent (DGE)
  • 28. CNG Safety • Natural gas vehicles are a safe alternative with a proven track record. • CNG is about as flammable as diesel fuel. CNG gas poses a danger of ignition only when present in a 5% to 15% concentration. • CNG will not pool when spilled, which reduces the probability of a fire if the tank is breached. • Natural Gas presents an asphyxiation hazard at concentrations exceeding 21%. Methane Gas Detection – under hood and in cab
  • 29. CNG Tank Safety • Twenty-Year Tank Design - Design and Construction is Heavily Regulated • All CNG Vehicle Fuel Containers MUST meet the federal government’s FMVSS 304 (49 CFR 571.304), Compressed Natural Gas Fuel Container Integrity. Tank Testing Procedures: • Drop/Crash Testing • Bonfire Testing • Dynamite Testing • Gunfire Testing – Armor Piercing Rifle Bullets • Hydraulic Crush Tests • Acid/Corrosion Tests • Pressure Relief Valve is designed to safely vent tank in case of overpressurization, impact, or fire. • Google “CNG Tank Testing” – Numerous Web Sites and You Tube Videos • SUMMARY: NATURAL GAS IS AS SAFE, OR SAFER, THAN DIESEL AND GASOLINE