Examining The Current Demand And Transport Capabilities ... · PDF fileExamining The Current...
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Examining The Current Demand And Transport Capabilities For Taking Canadian Crude To The
US Gulf Coast, East Coast And West Coast
Brian Freed [email protected] Direct – 832.519.2273
Agenda
• Company Introduction • Analyzing the current capabilities of transporting crude
to the US coast • Specifying the effects increased transportation to the
US coast will have on the WTI-WCS differential to establish future prices for Western Canadian crude
• Quantifying the different netback received for marketing Western Canadian crude on the US Coast vs. the Midwest
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Inergy – Crestwood Merger
Crestwood and Inergy to merge forming a $7 billion midstream partnership
Crestwood Midstream Partners (NYSE: CMLP), Crestwood Holdings LLC, Inergy, L.P. (NYSE:NRGY) and Inergy Midstream, L.P. (NYSE:NRGM) have executed definitive agreements to create a fully integrated midstream partnership with a total enterprise value of over $7 billion
- Deal announced May 6th; general partner close completed June 2013; MLP merger expected early Q4 2013
- Transaction approved by the Boards of Directors and committees of independent directors of NRGY, NRGM and CMLP; subject to CMLP unitholder vote; no financing contingencies
Unified strategy focused on servicing the midstream infrastructure needs of the most prolific shale plays in North America
- Marcellus Shale, Bakken Shale, Eagle Ford Shale, Permian Basin, PRB Niobrara Shale, Utica Shale, Barnett Shale, Fayetteville Shale, Granite Wash, Haynesville Shale and Monterey Shale
Diverse midstream assets and services along the midstream value chain with visible long-term growth potential
- Complementary blend of long-term fee-based contracted cash flows with high-growth shale assets and organic expansion opportunities
Combined, Crestwood and Inergy provide an integrated midstream service offering that links fundamental energy supply with fundamental energy demand
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Premier Shale Player
Pro Forma Asset Summary
• 1,300+ mmcf/d natural gas transportation capacity
• 2,000+ mmcf/d gathering capacity
• 400+ mmcf/d processing capacity
• 1,000+ miles of pipeline
• 7 processing plants
• 80+ Bcf of current storage capacity
• 1,000 BPD crude oil rail loading capacity
• 275 tractors and 531 trailers
• Significant North American NGL Logistics business
Operations in virtually every premier shale play in North America
Steuben Gas Storage
Seymour LPG Facility West Coast Midstream
NGL Transportation Offices
Rail Terminal Tres Palacios
COLT Hub
Thomas Corners Gas Storage
Watkins Glen NGL Storage Facility Bath NGL Storage Facility
South Jersey Terminal
Gathering and Processing Assets Greenfield Development Targets
`
Stagecoach Gas Storage Seneca Lake Gas Storage PRBIC Hub
Linking Supply to Demand
Expect significant commercial and operating synergy by linking Crestwood producer relationships and access to supply at the wellhead with Inergy demand-side services and relationships
Natural Gas NGLs Crude Oil
Supply Demand
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NGL and Crude Oil Business Overview
“Tailgate to Burner Tip” Solutions
Provide assured flow and optimal value for producers and refiners/processors in the rich shale plays such as the Marcellus, Utica, Eagle Ford, Bakken and other shale plays
Lowers cost and ensures supply logistics for the evolving needs of refinery, pet-chem, industrial, and end-use retail markets
Combination of facilities and transport assets along with supply and logistics expertise creates synergistic results for NGL platform
Service Offerings
Storage and terminalling Transportation – pipelines, transport and
rail car fleet Supply and logistics marketing services Natural gas and NGL fractionation and
processing
Watkins Glen NGL Storage Facility
Bath NGL Storage Facility
South Jersey Terminal
Seymour LPG Facility West Coast Midstream
NGL Transportation Offices Rail Terminal
Tres Palacios
COLT Hub and PRBIC (a)
States with NGL supply and logistics operations
States with storage or terminal assets
__________________ (a) Acquisition of 50% interest in PRBIC closed August 30 20123
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COLT Terminal (Epping, ND)
BNSF RAILWAY
Truck Station
Tank Farm
Rail Loading
Pipeline to Ramberg/Beaver
Lodge
Scope of Facilities: - (8) truck bays - (5) 120 MB tanks @ Hub - (2) 8,700 ft unit-train loops - 21 miles of 10” pipe w/ 120 MB tank @ Ramberg/Beaver Lodge -Pipeline connection with Hiland, Summit, Enbridge & Tesoro
Gathering Pipeline
Connections
COLT Pictures
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COLT - November to April
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• Rail – 120,000 bpd to 160,000 bpd – Expanding from 14 to 20 loading arms – Increasing pumps – Adding 2 additional storage tracks (4 trains total)
• Tanks – 600,000 bbls working capacity to 1,080,000 bbls – Adding 2 x 240,000 bbl tanks (1 fungible)
Truck Racks – 64,000 bpd to 96,000 bpd – Adding 4 additional truck racks
Hiland Expansion – 32,000 bpd to 60,000+ bpd – Looping the line for additional capacity and bi-directional service
Meadowlark (Summit/Bear Tracker) – 40,000 bpd+ – Completing connection at COLT
Crude Trucking Services – available as needed ~5,000 bpd 10
COLT Terminal 2013 Expansions
A;ldsfjkas;ldjfk
U.S. Coking Capacity by PADD
Capacity (Bbls per stream day) % of Capacity
PADD I 81,500 2.8%
PADD II 569,776 19.3%
PADD III 1,650,280 55.8%
PADD IV 75,600 2.6%
PADD V 579,500 19.6%
Total 2,956,656 Source: EIA (Delayed and Flex Coking capacity)
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U.S. Coking Capacity by State
Source: EIA (Delayed and Flex Coking capacity)
0
100
200
300
400
500
600
700
800
900
1,000 A
laba
ma
Cal
iforn
ia
Del
awar
e
Illin
ois
Indi
ana
Kan
sas
Loui
sian
a
Mic
higa
n
Min
neso
ta
Mis
siss
ippi
Mon
tana
New
Je
rsey
Ohi
o
Okl
ahom
a Texa
s
Uta
h
Was
hing
ton
Wyo
min
g
32
496
55
211
102
64
600
30 67
105
47
27 58
38
913
9
83
20
Cap
acit
y (T
hous
and
bpd)
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U.S. Coking Capacity by Company
Source: EIA (Delayed and Flex Coking capacity)
Capacity (Bbls per stream day) % of Capacity ACCESS INDUSTRIES 97,500 3.3% BP HUSKY REFINING LLC 35,000 1.2% BP PLC 260,100 8.8% CHALMETTE REFINING LLC 30,000 1.0% CHEVRON CORP 184,600 6.2% CHS INC 35,100 1.2% CVR ENERGY 25,000 0.8% DEER PARK REFINING LTD PTNRSHP 89,000 3.0% DELEK GROUP LTD 6,500 0.2% EXXON MOBIL CORP 390,300 13.2% HOLLYFRONTIER CORP 30,000 1.0% HUNT CONSLD INC 32,000 1.1% HUSKY ENERGY INC 23,000 0.8% KOCH INDUSTRIES INC 81,000 2.7% MARATHON PETROLEUM CORP 145,500 4.9% MOTIVA ENTERPRISES LLC 235,000 7.9% PBF ENERGY CO LLC 81,500 2.8% PDV AMERICA INC 194,900 6.6% PHILLIPS 66 COMPANY 317,376 10.7% ROYAL DUTCH/SHELL GROUP 72,800 2.5% SINCLAIR OIL CORP 20,000 0.7% TESORO CORP 95,000 3.2% TOTAL SA 52,600 1.8% VALERO ENERGY CORP 311,500 10.5% WRB REFINING LP 111,380 3.8% TOTAL 2,956,656 100.0%
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U.S. Refinery Crude Oil Inputs
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12.5
13
13.5
14
14.5
15
15.5
16
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Refinery Input - Yearly Average (MMBOD)
Source: EIA
• Refinery inputs have nearly returned to pre-2008 global economic meltdown levels 2013 average (Jan – Aug) of 15.16 million barrels per day
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U.S. Crude Oil Imports
Source: EIA
9.2
8.2
9.2 8.6
9.0 9.2 9.3 8.9 8.9 8.9 8.7 8.7
8.3 8.3 8.7 8.6 8.7 8.9
8.5 8.5 8.3 8.0 8.1
7.5 7.9
7.2 7.4 7.7 7.7 7.7
0
1
2
3
4
5
6
7
8
9
10
Jan-‐11
Feb-‐11
Mar-‐11
Apr-‐11
May-‐11
Jun-‐11
Jul-‐1
1
Aug-‐11
Sep-‐11
Oct-‐11
Nov-‐11
Dec-‐11
Jan-‐12
Feb-‐12
Mar-‐12
Apr-‐12
May-‐12
Jun-‐12
Jul-‐1
2
Aug-‐12
Sep-‐12
Oct-‐12
Nov-‐12
Dec-‐12
Jan-‐13
Feb-‐13
Mar-‐13
Apr-‐13
May-‐13
Jun-‐13
U.S. C
rude
Oil Im
ports (M
MBO
D)
10-‐20 20-‐30 30-‐40 40-‐50 50-‐60 60+ Total Imports
• U.S. crude oil imports have declined nearly 1.3 million barrels per day or 14.5% since 2011
40+ API imports have declined by nearly 310,000 bpd (60%) to about 210,000 bpd
30 – 40 API imports are down 800,000 bpd, averaging 2,980,000 bpd in 2013
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2013 U.S. Crude Oil Imports
Source: EIA
• U.S. crude oil imports have averaged nearly 7.62 million barrels per day in 2013
PADD III (Gulf Coast) accounts for nearly 50% of total U.S. imports
0.84; 11%
1.81; 24%
3.65; 48%
0.29; 4% 1.03; 13%
PADD I PADD II PADD III PADD IV PADD V
U.S. Crude Imports by PADD January – June 2013 Daily Average (MMBOD, % of Total Imports)
0.86; 24%
1.27; 35%
1.48; 40%
0.04; 1%
10-‐20 20-‐30 30-‐40 40-‐50
PADD III Crude Imports by API January – June 2013 Daily Average (MMBOD, % of Total Imports)
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Heavy Crude (<30 API) Imports
Source: EIA
• U.S. heavy crude oil imports have remained fairly flat since 2011
2013 average of nearly 4.5 million barrels per day
20 – 30 API crude accounts for about 75%
0
1
2
3
4
5
6
Jan-‐11
Feb-‐11
Mar-‐11
Apr-‐11
May-‐11
Jun-‐11
Jul-‐1
1
Aug-‐11
Sep-‐11
Oct-‐11
Nov-‐11
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Feb-‐12
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2
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Oct-‐12
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Dec-‐12
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Feb-‐13
Mar-‐13
Apr-‐13
May-‐13
Jun-‐13
Heavy Crude
Impo
rts (M
MBO
D)
10-‐20 20-‐30
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Heavy Crude (<30 API) Imports by PADD
Source: EIA
• PADD I & V account for 16% of heavy imports – nearly 0.7 million barrels per day
0.15 0.13 0.13
0.36 0.38 0.38
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
2011 2012 2013 2011 2012 2013
MMBO
D
10-‐20 API 20-‐30 API
PADD V Heavy Crude Imports 2011 – 2013 (Jan – June) Daily Average
(MMBOD)
0.04 0.05 0.04
0.16 0.14 0.14
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
2011 2012 2013 2011 2012 2013
MMBO
D
10-‐20 API 20-‐30 API
PADD I Heavy Crude Imports 2011 – 2013 (Jan – June) Daily Average
(MMBOD)
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Crude Oil Pipeline Network
Source: CAPP
Portland
Montréal
Québec City Saint John
Sarnia
Cushing
St. Paul
Salt Lake City
Houston Freeport
New Orleans St. James
Seaway Reversal & Twin Line
Crane
El Paso
Edmonton
Burnaby Anacortes
Kinder Morgan TM Expansion (TMX)
Pony Express TransCanada Keystone
Alberta Clipper Expansion
Trans Mountain
Enbridge
Mid
Hardisty
Centurion Pipeline
Magellan Houston to El Paso (former Longhorn)
- partial conversion
Shell Ho-Ho
Express
Guernsey
Platte
Spearhead South Flanagan South
Spearhead North Expansion
Clearbrook Superior
Wood River
ExxonMobil Pegasus
Capline Enb/Energy Transfer Eastern Gulf Crude Access
Bakken Expansion
Cromer
TransCanada Keystone XL
Kitimat Enbridge Gateway
ang
ago
Lima Must
Patoka
TransCanada Gulf Coast
Enbridge Line 9 Reversal
Southern Access Expansion TransCanada Energy East
Flanagan Chic
Port Arthur
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North American Rail Network
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CN Rail Network
Source: CAPP
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Crude By Rail Investment
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March 25, 2013 Ramond James chart
Western Canadian Rail Terminals
Source: CAPP, RBN, Company News Releases
Lloydminster
Unity Hardisty
Tilley
Bromhead
Regina
Athabasca Deposit
Fort McMurray
Peace River Deposit
Cold Lake
Deposit
Cromer Woodnorth
Wilmar NorthgateBakken-Three Forks
Estevan Stoughton
Dollard Shaunavon
Potential
Unit Train
Existing Manifest Train
Torquay Lower
Shaunavon
Oil sands Deposits and Oil Plays
Bakken
Whitecourt Cardium
Edmonton
Cheecham
Existing & Proposed
RBN Energy estimates that by 2015 rail terminal capacity to load heavy bitumen “dilbit” crude in Western Canada will be about 800 Mb/d. Unload terminals hoping to receive that
crude on the Gulf Coast will have about 1 MMb/d capacity by 2015.
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Shipping Raw Bitumen by Rail
24 Source: RBN Energy
• Fantastic Pricing analysis done by RBN energy (http://www.rbnenergy.com/how-rail-beats-pipeline-transport-for-heavy-crude-from-alberta-to-the-gulf)
• $88/Bbl (assumes $4/Bbl to a recent price for Mexican Maya crude) • Rail costs include loading, unloading, freight, tank car leasing • Raw bitumen can not be shipped on a pipeline, so there is no pipeline alternative,
but cost in future slides will compare barrel for barrel of bitumen
Shipping Dilbit by Rail or Pipeline
25 Source: RBN Energy
• Assumes 28% diluent to make pipeline quality dilbit (so 1.28 bbls of shipping cost) • Dilbit price assumes $84 Cushing WCS price - $4 pipeline tariff to USGC • Diluent assumes $102/Bbl (recent price for natural gasoline at Edmonton, Alberta) a cost of
$28.56 but only netting back $22.4/Bbl because it is sold at the Gulf as 0.28 Bbl of dilbit • Pipeline cost from Hardisty Alberta to the Gulf Coast including terminal and gathering fees.
That cost is estimated at $18.50/Bbl, but because the producer must also ship 0.28 Bbl of diluent for every bitumen Bbl, the true pipeline cost goes up by 28 percent to $23.68/Bbl
Shipping Railbit
26 Source: RBN Energy
• Assumes 17% diluent to make railbit (so 1.17 bbls of shipping cost), which can move by rail in coiled & insulated cars, but not via pipeline
• Diluent price is the same as before ($102/Bbl) but the railbit price at the USGC is estimated at $84/Bbl – midway between the raw bitumen price and the dilbit price
• Because there is less diluent carried with railbit and the railbit price is higher than dilbit, the realized producer price at the Gulf for the bitumen equivalent railbit Bbl is about $7/Bbl higher than the dilbit price from the previous slide
Netback Conclusions
27 Source: RBN Energy
• Crude sales price excludes diluent – so true crude oil netback • Best pricing is shipping raw bitumen • Unit trains of less diluted railbit is the next best pricing option • Pipeline spec dilbit is most ecomomicaly schipped via pipeline • Further facilities need to be developed and tank cars delivered handle the
expanding crude by rail opportunities
Projected Rail Transport Costs Differences
Hardisty, AB
Hardisty to Pacific Northwest Results in approx. $3.50/bbl Rail cost savings
CN to CN locations from Hardisty to USGC result in Approx. $1/bbl rail savings
Baseline Rail Costs from last slides were to non-CN served Gulf Coast Markets
No Material Pricing differences
WTI – WCS Pricing
($60)
($40)
($20)
$0
$20
$40
$60
$80
$100
$120
$140
$160
WCS Dif to WTI Light Crude Oil Futures (Front Month) [USD/BBL] Argus Monthly Average Price -‐ WCS
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Heavy Crude (<30 API) Imports by PADD
Source: EIA
• PADD III accounts for nearly 50% of all U.S. heavy imports
PADD III heavy imports have declined as new U.S. supply has come on-line
0.18; 4%
1.36; 31%
2.13; 48%
0.23; 5% 0.51; 12%
PADD I PADD II PADD III PADD IV PADD V
U.S. Heavy Crude Imports by PADD January – June 2013 Daily Average
(MMBOD, % of Total Imports)
0.98 0.97 0.86
1.54 1.40
1.27
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2011 2012 2013 2011 2012 2013
10-‐20 API 20-‐30 API
PADD III Heavy Crude Imports 2011 – 2013 (Jan – June) Daily Average
(MMBOD)