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Transcript of Copyright ©: EAI, Inc., 2002 Energy Analysts International Westminster, Colorado.
Copyright ©: EAI, Inc., 2002
Energy Analysts InternationalEnergy Analysts International
Westminster, Colorado
Copyright ©: EAI, Inc., 2002
Rocky Mountain Business Analysis,Outlook and Strategy
Selected Excerpts from EAI’s Rocky Mountain Business Study
For the Western Interstate Energy Assocation
October 2, 2002
Copyright ©: EAI, Inc., 2002
Overview of Corporation• Incorporated in 1982
• Original and current mission: To provide the energy industry products and services built upon market driven, integrated and “Bottom-Up” information and analysis.
• Consulting services built upon innovative but standardized approaches to forecasting, planning, strategy / business development, and business benchmarking / competitive analysis.
• EAI clientele includes all major U.S. and Canadian petroleum companies, petroleum transportation companies and a growing base of energy consumers.
EAI (Energy Analysts International, Inc.)
Figure ES-2
Copyright ©: EAI, Inc., 2002
Business Areas Serving the Petroleum Industry
EAIEnergy Services
ComputerApplications
SupportServices
EnergyConsulting
EAI (Energy Analysts International, Inc.)
Figure ES-3
Copyright ©: EAI, Inc., 2002
Services
Energy Consulting
Client Specific Studies
Special Topic/ Industry Studies
IntegratedRegional Tracking
and Analysis
"Real Time"SupportServices
EAI (Energy Analysts International, Inc.)
Figure ES-4
Copyright ©: EAI, Inc., 2002
Western Region Specific Consulting ProductsRefined Product and Crude Oil Specific
Refined Product Study ProductsWestern Region Petroleum Business Outlook and StrategyRocky Mountain – Petroleum Business Analysis and OutlookU.S. Hypermart Petroleum Market Outlook Study
Crude Oil Study ProductsWest Coast Crude Supply, Logistics and Market OutlookRocky Mountain Petroleum Business OutlookGulf Coast Crude Supply, Distribution and Refining OutlookNorth American Crude Supply, Logistics and Refining Outlook
Copyright ©: EAI, Inc., 2002
EAI (Energy Analysts International, Inc.)
Rocky Mountain Business Analysis Rocky Mountain Business Analysis and Outlook-2002and Outlook-2002
Integrated Rocky Mountain Petroleum Integrated Rocky Mountain Petroleum Trends and OutlookTrends and Outlook
Copyright ©: EAI, Inc., 2002
Western Region Refined ProductWestern Region Refined ProductSupply-Demand NetworkSupply-Demand Network
Western Region is relatively isolated from Gulf Coast Western Region is relatively isolated from Gulf Coast until Longhorn starts up and KMPL is expandeduntil Longhorn starts up and KMPL is expanded
Refining Center
Primary Pipeline
Product Movement
PacificNorthwest
RockyMountain
Gulf Coast
KM
Cenex
Pioneer
Wyco
Chase
Yellowstone
KMPL
Chevron
ATA
DS
SA
AL
Phillips
DS
Olympic
KM
Sinclair
Conoco
Co
no
coW
yco
CALNEV
Phoenix
Tucson
El Paso
TankerMovement
KMPL
PacificSouthwest
Ch
evron
LH
Shamrk
ShellFA
Tucson
Foreign and Gulf
Coast Imports
Copyright ©: EAI, Inc., 2002
Western regions growing increasingly short of product. Accelerated consumption growth through the mid to late 1990’s under conditions of moderate refinery expansion has tighted supply.
Although future consumption growth is not likely to be as aggressive, the Western regions will require increasing supply of product from outside the trade area.
Western regions import product from the Gulf Coast, Caribbean, West Texas, Texas Panhandle and Midcontinent regions.
Rocky Mountain region interacts with West Coast regions in several areas: 1) West Coast product supplements RM supply for Eastern WA market, 2) SLC supply interacts with WC supply out of Reno and Las Vegas, and, 3) West TX refiners supply both RM and Tucscon-Phoenix markets.
Overview of U.S. Western Regions
Copyright ©: EAI, Inc., 2002
-250
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-150
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-50
0
50
100
150
Net
Su
pp
ly,
MB
PD
PNWNCA
SCA
AZ/NV
RM
TOTAL
Regional Gasoline Balance: Regional Gasoline Balance: Local Refining Output minus Local Refining Output minus
ConsumptionConsumptionU.S. Western RegionsU.S. Western Regions
2001 Total Gasoline, MBPD2001 Total Gasoline, MBPDOverall the western states are Overall the western states are growing increasingly gasoline growing increasingly gasoline shortshort
Copyright ©: EAI, Inc., 2002
0
50
100
150
200
250
300
350
400
Su
pp
ly,
MB
PD
NM TRCK 5.8 5.8 3.6 5.2 6.3 5.4 27.4 19.9 17.9 16.1 9.1 9.1 9.1 9.1 9.1 9.1 9.1 9.1 9.1 9.1 9.1 9.1
KM->AZ 29.1 34.2 46.2 33.4 42.3 40.2 37.2 44 57.8 69.8 69.1 74.8 74.8 74.8 74.8 74.8 74.8 74.8 74.8 74.8 74.8 74.8
DM WB 2 0.3 1.4 0.8 0.7 0.7 11.3 3.9 0.4 8.8 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1
FRGN WB 4.5 0.1 2.4 2.9 0.6 1.5 6.3 5.7 3.5 9.8 4.6 20.2 33.9 53.3 73.2 92.8 104 115 126 137 149 161
CHASE\TX PHNDLE TO DNVR 23.6 24.4 34.4 36.8 49.3 48.2 52.2 53 50.9 52 57.8 59.2 60.9 63.4 65.9 68.5 70.6 72.7 74.9 77.2 79.4 81.7
PNW FRGN 6.6 10.7 9.2 5.2 2.3 0 0 0 1.1 13.7 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Incremental Gasoline Supply RequirementsIncremental Gasoline Supply RequirementsWestern Regions (PNW, PSW and RM)Western Regions (PNW, PSW and RM)
KM -> Arizona from El Paso
KM -> Arizona from El Paso
PSW Waterborne/
Longhorn
Phoenix
Chase/UDS/Phillips to DnvrChase/UDS/Phillips to Dnvr
With no refinery closures;assumes reasonable creep for PNW and PSW areas; MTBE phase-out impact on refinery intermediate stock loss included in plot
Western regions will need Western regions will need approximately 150 MBPD of approximately 150 MBPD of incremental gasoline over next 5 years incremental gasoline over next 5 years including adjustment for gasoline pool including adjustment for gasoline pool shrinkage due to MTBE phaseout. shrinkage due to MTBE phaseout.
ForecastForecast
Copyright ©: EAI, Inc., 2002
Refined Product Network StatusRocky Mountain Region-2002
To
tal Ch
evron
Pl
Cap
acity (64)
Refinery Utilization Refineries in Colorado,
Montana , Utah and Wyoming operating
seasonally at full capacity
Casper
Salt Lake City
Salt Lake City
COUT
ID
MT
WY
BillingsBillings
North Platte
BoiseBoise
Fountain
Cheyenne (17)
Seminoe (34)
Pioneer Pl (48)
Sinclair Pl
(20)
Phillips P
l
(41.5)
Chase Pl (49)
KN
BP
L(8”)
KN
BP
l (8")
Cenex Pl (19)
YellowstonePl (56)
Kaneb (21)
Valero (50)**
Sinclair refinery expansion
Both Phillips and Valero pipelines have open capacity
Valero pl capacity from McKee to Co Springs = 50 MBPD
High Utilization
SeasonalBottlenecks
Barge
Expanded by 11 MBPD
Potential MC refinery shutdownsand high utilization
Longhorn startup in 2002/Equilon TXNM conversion in EIS stage
Refinery supply constrained
Retractionto serve
expanding SLC
Continued demand growth
Demand increasing/ refineries constrained
Incremental Valerosupply vs
local refining
Newcastle
KNB Pl (14)
KNB(10")
Rail from Helena toThompson
Falls/Spokane
Missoula
Expanded to 70 MBPD in
2000 DenverDenver
Ch
evron
Pl (17)
To MosesLake
Spokane
To Minot/Fargo
To Rapid City
Sinclair Built Segment to Chase and can reverse Denver Products Pl
Gas Diesel
Proposed Williams Pipeline Project passed
EIS stage. Startup in 2003
Major Demand Centers
Major Refining Centers
High Demand Growth Areas
Pipeline Capacities in MBPD(xx)
Figure PRS-8
Copyright ©: EAI, Inc., 2002
Williams Product Pipeline Proposed RoutingWest Texas to Salt Lake City
(xx)
Proposed pipelines
Refinery
Pipeline capacities, MBPD
El Paso
Dallas
Houston
Corpus Christi
San Antonio
Austin
Lubbock
MidlandOdessa
Artesia
Albuquerque Amarillo
Abilene
Wichita Falls
San Angelo
Flagstaff
Tucson
Phoenix
Juarez
EM(17)
(32)
(8)
(111)
SF
(173)(17)
(55)
SF(95)
(17)
CH(25)
DS
(50)
(20)
DS(24)
SH (15)NV
TXLH
FA
TX
FAPR
WL
(13)
FA
(17)
TX
DS(32)
FA
Ft Worth
Grand Junction
Salt Lake City
Farmington
DS
CH
DPWY
PH
MP
PI
CH
CH ChevronDP Den ProdDS Dia ShamrockEM EmeraldFA FinaLH LonghornMP MapcoMS MesaNV NavajoPH PhillipsPI PioneerPR PrideSF Santa FeEQ EquilonWL WilliamsKN Kaneb
DenverAspen New
Construction
Copyright ©: EAI, Inc., 2002
0
50
100
150
200
250
300
350
400
De
ma
nd
, M
BP
D
UT 58.7 60.2 63.1 64.5 66.2 67.3 68.7 70.2 71.7 73.2 74.7 76.1 77.2 78.2 79.1 79.9 80.6
MT 31.4 32.8 33.7 32.3 33.1 28 28.6 29.3 30.1 30.9 31.8 32.6 33.2 33.8 34.3 34.7 35.2
ID 37.7 39.5 37.4 42.8 44.8 40.9 42 43.3 44.5 45.7 47 48.1 49.1 50 50.7 51.4 52
WY 22.6 22.5 23.1 22.3 22.6 19.9 20.3 20.6 21 21.3 21.6 21.9 22.2 22.4 22.6 22.8 23
CO 114.8 120.1 122.8 126.4 133.1 140.6 143.6 146.6 149.7 152.9 156.2 159.1 161.6 163.8 165.6 167.3 168.9
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Gasoline Demand Trends and OutlookRocky Mountain States
Product demand growth projected to slow across region, most of demand concentrated in Colorado and Utah
Colorado
Wyoming
Idaho
Montana
Utah
Copyright ©: EAI, Inc., 2002
0
100
200
300
400
500
600
700
800
MB
PD
Imports 95 89 78 67 67 61 62 88 88 106 115 121 126 129 139 155 148
Refined 366 377 375 382 389 385 398 374 382 395 398 415 418 423 435 447 445
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Rocky Mountain Total Light Product Supply-Demand Balance Trend
Total Light Product = Gasoline, Jet, Distillate - MBPD
Imports to RockiesImports to Rockies
Refinery ProductionRefinery Production
Consumption + ExportsConsumption + Exports
Williams pipeline to add 65 MBPD of Williams pipeline to add 65 MBPD of pipeline import capacitypipeline import capacity
Copyright ©: EAI, Inc., 2002
Refinery Throughput ProfileRocky Mountain Region Refineries
1991 - 2002Note High Utilization Rates, Capacity Creep and Crude Run Growth
200
300
400
500
600
700
800
Cap
acit
y o
r T
hro
ug
hp
ut
[MB
PD
]
0102030405060708090100110120
Per
cen
t U
tiliz
atio
n
Refinery RunsCrude Tower Capacity
Crude Tower Utilization
Copyright ©: EAI, Inc., 2002
Geographical Phase In Area
PacificNorthwest
PacificNorthwest
RockyMountain
RockyMountain
Refining Center
Primary Pipeline
Product MovementGulf CoastGulf Coast
KMPL
CENEX
Pioneer
Kaneb
Chase
Yellowstone
KMPl
Chevron
ATA
Valero
SAAL
Phillips
Valero
Olympic
KM
PL
Sinclair
Cheyenne
Sem
inoeK
aneb
GATXPacific
SouthwestPacific
Southwest
Phoenix
Tucson
El Paso
TankerMovement
KMPL
Chevron
Shell
FA
TX
KPLWPL
GPA area shaded - consists of CO, ID,
MT, UT, WY, ND, NM plus outlying markets supplied by GPA refiners
20 refineries are in GPA and produced 359 MBPD gasoline in 2001. Have Delay For Completing Investments To
Produce Low Sulfur Fuels
Copyright ©: EAI, Inc., 2002
Impact of New Low Sulfur ProductSpecifications
1 of 2
New low sulfur gasoline specifications - 150 ppm for years 2004 to 2007 in GPA. Changes to national standard 30 ppm in 2007. Small refiner hardship exemption through 2009. Early commitment to ULSD allows sulfur credits and delay of LSG.
For 2004 - 2006 interim specification: Six refiners were evaluated to have to add naphtha hydrotreating or change crude slate - Frontier, Little America, ChevronTexaco, Conoco - Denver, and Valero refineries. Chevron and Montana Refining may be borderline. Modified Sinclair refinery and Conoco Billings come close to 30 ppm.
For 2007 30 ppm specification: All others with the possible exception of Silver Eagle will have to make some process unit additions (most considering hydrotreating) or change crude slate.
Copyright ©: EAI, Inc., 2002
Impact of New Low Sulfur ProductSpecifications
2 of 2
Ultra low sulfur diesel - requires major revamps and additions to existing distillate hydrotreaters or addition of new units for those plants without. Off-road market may be an option for some small refiners considering no investment or those considering derating the capability of in-place units.
Canadian synthetic crudes targeting replacing declining Rocky Mountain light sweet crude production. Local sweet crude production in Utah, Western Colorado, and Southwest Wyoming very important. Also natural gasoline will become more important in this context.
Copyright ©: EAI, Inc., 2002
Major Issues and TopicsRocky Mountain Petroleum
Business(Page 1 of 3)
Product demand growth has slowed considerably in eastern Rockies and somewhat in western Rockies.
West Coast product growing tighter with MTBE phase out and may impact ethanol blended oxy fuels in UT and CO.
Declining RM crude production and accelerated need for Canadian conventional and syncrude supply.
New product pipeline projects are stalled due to Williams financial problems; Longhorn from Gulf Coast to El Paso delayed (start-up potentially 2003), Williams to SLC may be on-hold.
Copyright ©: EAI, Inc., 2002
Major Issues and TopicsRocky Mountain Petroleum
Business(Page 2 of 3) Product pipeline expansions to Midcontinent-Midwest from
Gulf Coast will improve supply access between Midcontinent and Eastern Rocky Mountains
Environmental regulations lowering sulfur level in gasoline and diesel beginning in 2004 and 2006; designation of RM as Geographical Phase In Area; refinery survivability issue.
Some potential for small refinery closures in Rocky Mountains. This will increase reliance on supply areas outside the region
A tightening of supply could also impact the availability of RM product for Eastern Washington, Southern Utah and western Nevada markets (areas that are also supplied with west coast product)
Copyright ©: EAI, Inc., 2002
Major Issues and TopicsRocky Mountain Petroleum
Business(Page 3 of 3)
Potential closure of New Mexico and West Texas refining capacity will impact product supply for New Mexico in absence of Longhorn product pipeline start-up.
Canadian surplus of synthetic crude, bitumen and some conventional light streams will result in “push” to RM region. This situation coupled with a relatively stable product market will continue to make the area one of the most positive refining centers.
This situation could actually spur additional refinery investment to offset some potential closures depending on the outlook for additional pipeline capacity to serve the RM region.