United States Refining Toolkit – Implications for Canadian Crude Producers
Argus Canadian Crude Summit Calgary, Alberta May 18, 2016
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Outline • Focus on Petroleum Administration for Defense Districts (PADD) 2 and 3 • Refinery Investments - Recent Past and Future • Refinery Utilization Trends • Trends in Quality of Processed Crudes • Canadian Crude Market Penetration
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Refinery Investments - PADD 3 35.0%
10,000
Light Crude Fractionators
25.0% Crude Capacity (MB/CD)
9,500
MB/CD
Coking/Crude (%) Hydrocracking/Crude (%)
20.0%
FCC/Crude (%) Motiva - Port Arthur
15.0% 9,000 Valero - Port Arthur and others
10.0%
Valero St. Charles and Chevron Pascagoula
Source: PRISMTM Copyright Baker & O'Brien, Inc.
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20Q1
19Q1
18Q1
17Q1
16Q1
15Q1
14Q1
13Q1
12Q1
11Q1
5.0% 10Q1
8,500
Percent of Crude Capacity
30.0%
Refinery Investments - PADD 2 4,500
35.0%
4,000
25.0% Crude Capacity (MB/CD) Coking/Crude (%)
MB/CD
Hydrocracking/Crude (%) FCC/Crude (%)
20.0%
3,500
15.0%
BP - Whiting WRB Refining - Wood River
10.0%
Source: PRISM Copyright Baker & O'Brien, Inc.
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20Q1
19Q1
18Q1
17Q1
16Q1
15Q1
14Q1
13Q1
12Q1
11Q1
5.0% 10Q1
3,000
Percent of Crude Capacity
30.0%
Refinery Investments - Conclusions • Investments were made to process heavy crude – The significant projects have been completed – No major projects are on the horizon
• Recent investments have been aimed at “light tight oil” and condensate processing – The significant projects have been completed – No major projects are on the horizon
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Crude Capacity Utilization (%) – PADD 3 100%
Percentage of Calendar Day Capacity
95%
90%
85%
Sources: EIA – Petroleum Supply Monthly PRISM Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
10Q1
80%
Relative Coker Utilization (%) – PADD 3 110%
Coker Utilization / Crude Utilization
105%
100%
95%
90%
Sources: EIA – Petroleum Supply Monthly PRISM Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
10Q1
85%
Crude Capacity Utilization (%) – PADD 2 100%
Percentage of Calendar Day Capacity
95%
90%
85%
Sources: EIA – Petroleum Supply Monthly PRISM Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
10Q1
80%
Relative Coker Utilization (%) – PADD 2 110%
Coker Utilization / Crude Utilization
105%
100%
95%
90%
Sources: EIA – Petroleum Supply Monthly PRISM Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
10Q1
85%
Crude Quality - Conclusions • Based on capacity utilization: – Heavy crude processing capability in PADD 3 seems to be fully utilized – There appears to be capacity in PADD 2 to increase heavy crude processing at the expense of light and medium crudes
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Average Crude Quality - PADD 3 1.7%
33
1.6%
32
1.5%
31
1.4%
30
1.3%
API Gravity
Sulfur, wt %
34
API Gravity Sulfur, wt %
Source: EIA – Petroleum Supply Monthly Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
1.2% 10Q1
29
Average Crude Quality - PADD 2 1.7%
33
1.6%
32
1.5%
31
1.4%
30
1.3%
API Gravity
Sulfur, wt %
34
API Gravity Sulfur, wt %
Source: EIA – Petroleum Supply Monthly Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
1.2% 10Q1
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Crude Quality - Conclusions • PADD 3 – Heavy crude expansions did not change the average quality of crude processed in the PADD – The start up of LTO and condensate distillation capacity has significantly changed average PADD crude quality
• PADD 2 – Heavy crude projects have resulted in higher average sulfur levels – The average API gravity of sweet crudes in the PADD has increased, offsetting the impact of the heavy crude projects on average crude gravity
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Canadian Crude Market Penetration - PADD 2
Percentage of Total Crude Processed
60.0%
50.0%
40.0%
Canadian Crude
Sources: DOE – Company Level Imports PRISM Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
10Q1
30.0%
Canadian Crude Market Penetration - PADD 3 20.0% Canadian Crude Columbia + Venezuela Crude
Percentage of Total Crude Processed
15.0%
10.0%
5.0%
Sources: DOE – Company Level Imports PRISM Copyright Baker & O'Brien, Inc.
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15Q1
14Q1
13Q1
12Q1
11Q1
10Q1
0.0%
Market Penetration - Conclusions • PADD 2 – Canadian crude as a percentage of total crude runs has increased significantly, but seem to be leveling off – Canadian imports are now competing with U.S. crude, not imports from other countries
• PADD 3 – Canadian crude as a percentage of total crude runs has increased significantly, but is still small – There is room for more Canadian crude, but with competition from other heavy foreign crudes
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Legal Notice
Baker & O’Brien, Inc., (Baker & O’Brien) prepared this report for the Argus Canadian Crude Summit. The opinions and findings in this report are based upon Baker & O’Brien’s experience, expertise, skill, research, analysis, and related work to date. This report relies upon public and proprietary data available to Baker & O’Brien at the time this report was prepared. All forecasts and projections contained in this presentation represent Baker & O’Brien’s best judgment, utilizing its skill, and expertise. However, such forecasts and projections are inherently uncertain due to the potential impact of factors or future events that are unforeseeable at this time or beyond Baker & O’Brien’s control. Baker & O’Brien prepared this report for the sole benefit of this Argus Canadian Crude Summit. Any reproduction, distribution, or disclosure of this information is strictly prohibited without Baker & O’Brien’s prior written authorization. Baker & O’Brien expressly disclaims all liability for the use, disclosure, reproduction, or distribution of this information by or to any third party.
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