Crude Grades And U.S. Refineries: Determining Blending And Trade Opportunities

Crude Grades And U.S. Refineries: Determining Blending And Trade Opportunities Introduction Themes Canadian Crude Types: General Acceptance Refiner...
Author: Ross Sherman
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Crude Grades And U.S. Refineries:

Determining Blending And Trade Opportunities

Introduction Themes Canadian Crude Types: General Acceptance Refinery Conversions: Creating Feedstock Diversity Canadian Grades: Liquidity Considerations 2

!  Love’s Travel Stops & Country Stores

!  In 2011 Forbes ranked Love’s as the 7th largest private company in America !  The Love’s companies provide jobs for >9,500 people !  Operates about 300 retail fuel facilities in 39 States as Love’s Travel Stops & Country Stores !  Wholly owns and operates Gemini Transportation as a subsidiary

!  Trucking company with a fleet of ~300 trucks, travels >30 million miles/yr !  Handles > 90% of fuel delivered to Love’s facilities

!  Wholly owns and operate Musket as a subsidiary !  !  !  !  !  !  ! 

Wholesale fuel, fuel by rail and trading business Active with gasoline, diesel, ethanol, bio-diesel, condensate and crude oil Operates in 14 States & Canada Maintains a fleet of ~1,700 railcars Current truck fleet of ~60 trucks Owns and operates 9 rail terminals for transloading and fuel storage Operates an active trading desk in both physical and financial markets

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Efficient Refinery Model: MC=MR Refineries pursue crude by rail for economic incentives resulting from: !  An absence or shortage of pipeline capacity !  An abundance of North American crude !  Changes in pricing relationships

!  Qualities resolved by economic incentives !  Logistical Constraints resolved by economic incentives

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Globally, North American lowest priced crude Economic displacement of foreign crude by North American (NAFTA) domestic crude Constrained crude exports vs. permitted exports of refined products to international markets Emerging rail delivery to refineries vs. established modes (waterborne, pipe) Increasing global demand for crude as crude quality becomes heavier Impact of renewable fuels 5

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Prolonged refining profitability !  Stable supply !  Economic advantage

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New refining entrants

!  Delta Air Lines Inc !  Private Equity (The Carlyle Group)

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Affect on economy

!  Example: Manufacturing

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North American environmental standards and regulation

!  Global benchmark, produce relatively clean products

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Canadian Crude Types: General Acceptance

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Enbridge Heavy

4.5 4

Enbridge Light

AWB CL

3.5 LLK

3 Sulfur (wt%)

Enbridge Medium

WCS

MAYA

2.5

SW Canada

M

2

LLS USA

MARS

1.5

MAYA Foreign

ORIENTE

ORIENTE

1 0.5 0

!" .!+ !9? #

LSB

ANS SYN 15

20

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