Understanding Fuel: Costs, Purchasing, Pricing Strategy ...
Transcript of Understanding Fuel: Costs, Purchasing, Pricing Strategy ...
![Page 1: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/1.jpg)
Understanding Fuel: Costs,
Purchasing, Pricing Strategy,
& Internationally
PRESENTED BY:
Walter P. Chartrand
Aviation Training Academy
Schedulers & Dispatchers Conference | New Orleans, LA | January 14-17, 2014
Thursday, 1/17/14 | 8:45 a.m. - 10:15 a.m.
![Page 2: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/2.jpg)
Download the NBAA Scheduler’s & Dispatcher’s Conference App Today
2
![Page 3: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/3.jpg)
Pay It Forward
Benefitting:
Dress for Success - New Orleans for Women
Volunteers of America - Greater New Orleans for Men
Drop off clothing at designated spots in the convention center.
![Page 4: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/4.jpg)
First Time Attendee Passport Program
4
• 8 stickers required
• Stickers from 5 Educational Sessions
• Visit NBAA Regional Booth # 1256
• Ambassador Resource Desk
• Visit Sponsor Universal Weather and
Aviation Booth # 525
• Must fully complete evaluation
• Must be present at Grand Prize Luncheon
to win TBD!
Guidelines to Win
![Page 5: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/5.jpg)
• Silence your mobile devices.
• If you must take a call, please exit and return quietly.
• Complete and turn in your Session Review before you
leave. Your feedback is important!
5
Please remember to…
![Page 6: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/6.jpg)
First a little test…
• As you came in the door you should have
been handed a short and simple
questionnaire…did you get one?
• Please take a moment to answer the
questions to the best of your ability in the first
set of blanks.
• OK…OK… JUST GUESS!
![Page 7: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/7.jpg)
Where does fuel come from?
• Crude Oil…What is Crude Oil?
Complex mixture of chemicals, mainly
hydrogen and carbon compounds called
HYDROCARBONS
• Where is it found ?
![Page 8: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/8.jpg)
Top World Oil Producers and Consumers
![Page 9: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/9.jpg)
Exploration & Production
First oil well ever drilled was in the middle of a
quiet farm community in northwestern
Pennsylvania in 1859
![Page 12: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/12.jpg)
Refining Process
What is the Primary method
for processing crude oil into
refined products called?
![Page 13: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/13.jpg)
Supporting Slide Heading DISTILLATION
![Page 14: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/14.jpg)
![Page 15: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/15.jpg)
Supporting Slide Heading
• Gasoline – 18 gallons
• Kerosene and Light fuel Oils – 10 gallons
• Residual Fuel Oil – 5 gallons
• Jet Fuel – 3 gallons • Lubricating Oil, Asphalt, Wax - 2 gallons
• Manufacturing Chemicals - 2 gallons
• Other - 2 gallons
The type of crude being processed determines the exact amount of
each product obtained from each particular barrel, but on average…
Gallons distilled from each Barrel (One Barrel = 42 U.S. Gallons)
![Page 16: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/16.jpg)
Aviation Turbine Fuels (Jet fuel) is D-1655 56 different evaluation standards tests
Aviation Gasolines (Avgas) is D-910 33 different evaluation standards tests
Fuel Specifications
ASTM - American Society for Testing and Materials ASTM International is one of the largest voluntary
standards development organizations in the world,
It is a trusted source for technical standards for
materials, products, systems, and services.
![Page 17: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/17.jpg)
Jet Fuel shipping via pipeline
• Pipelines are typically made of steel and vary in size from
12 to 47 inches in diameter
• Multi-product pipelines are designed to transport two or more
different products in the same line
![Page 18: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/18.jpg)
Jet Fuel shipping via pipeline
![Page 19: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/19.jpg)
![Page 20: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/20.jpg)
Jet Fuel shipping via pipeline
![Page 21: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/21.jpg)
Fuel Delivery Terminals
![Page 22: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/22.jpg)
The vast majority of fuel delivered to airports is
performed by over-the-road transport trucks
![Page 23: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/23.jpg)
Transportation
• Over-the-road transport trailers designed to haul aviation fuel, should be “product grade dedicated”
• Although these trailers do not have filtration, the fuel is filtered into the trailer at the terminal, and filtered again when delivered into airport storage
• Inspections of these trailers should occur both before and after loading at the terminal
![Page 24: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/24.jpg)
Product Supply Chain Jet (Typical)
Refinery
Pipeline
Ship / Barge
Rail
Distribution Terminal
Ship / Barge
Pipeline
Rail
Dedicated
Truck
FBO Lab RQC Lab
Manufacturing/blend
Tank
Shipping Tank
Receipt Tank
Shipping Tank
Delivery Terminal
Receipt Tank
Lab
Shipping Tank Dedicated
Truck
Pipeline Ship / Barge
Release
Certificate
Lab
QC QC
QC
QC QC
QC
QC
QC
QC
QC
QC
QC
QC
QC
QC QC QC
Inspection
Refinery Quality Certificate (RQC) Certificate of Analysis (CoA)
Certific
ate
of A
naly
sis
(Co
A)
QC
QC
Specification
verification
QC
![Page 25: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/25.jpg)
Quality Control
Certificate of Analysis
This is the document that is the fuels
“Birth Certificate”
It must show the products test
evaluation results
• Provides information to assist the end user in evaluating the independence
and/or absence of contamination to the material
• Confirmation of test evaluation results matching field evaluation ensure
product integrity
![Page 26: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/26.jpg)
Product receipt checklist
• 21 steps BEFORE
delivery hose is connected
• 8 procedures to start and
ensure safe delivery
• 12 steps to be performed
after load is received
All performed to ensure the correct
product is received clean, dry and
on-spec into the correct tank, without
incident
![Page 27: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/27.jpg)
Fuel Farms
Fuel storage tanks can be single-wall or double wall,
and require pumping, filtering and metering system
![Page 28: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/28.jpg)
Fuel Farms Here is a typical a two product above ground,
fuel storage tanks with delivery system
What does an above ground, double wall, 12K Avgas
and a 20K Jet Fuel storage tank with pump system cost?
![Page 29: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/29.jpg)
Fuel Farms
Estimated costs of a two
product fuel farm
One Avgas, 12,000 gallon double wall tank $ 85,000.00
One Jet 20,000 gallon double wall tank $ 125,000.00
Tanks and delivery system ONLY $ 210,000.00
Installation costs $ 4,000.00
Ground work and concrete $ 3,000.00
Containment with Oil Water Separator $ 100,000.00
Fencing/security $ 3,000.00
TOTAL $ 320,000.00
![Page 30: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/30.jpg)
Larger facilities will have multiple fuel storage tanks
with different delivery systems to ensure product segregation
![Page 31: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/31.jpg)
• 11 Daily checks
• 7 Monthly inspection items
• 10 different Quarterly,
Bi-Annual and, Yearly
inspections
All performed to ensure the
fuel storage tanks are
providing clean, dry and
on-spec into fuel trucks and
aircraft, without incident
Fixed Fuel Facility Checklist
![Page 32: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/32.jpg)
Jed’s Jet Fule
Fuel Trucks
What does a new 5000 gallon Jet Refueler cost?
$175,000.00 - $250,000.00
![Page 33: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/33.jpg)
• 17 Daily checks
• 10 Monthly inspection items
• 9 different Quarterly,
Bi-Annual and, Yearly
inspections
All performed to ensure the
fueling trucks are
providing clean, dry and
on-spec into aircraft,
without incident
Fueling Vehicle Inspection Checklist
![Page 34: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/34.jpg)
Trained personnel…How many hours of training should
an aircraft service technician receive before
being considered qualified?
A minimum of 100 hours of training is required to
qualify for Supervisor certification
![Page 35: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/35.jpg)
![Page 36: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/36.jpg)
![Page 37: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/37.jpg)
Mis-Fueling Prevention Training
Cessna 441 Conquest II
Cessna 421C Golden Eagle
Avgas
Jet Fuel
![Page 38: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/38.jpg)
On-Specification, Clean, Dry Fuel
is the beginning of a safe flight
![Page 39: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/39.jpg)
What is Retail, Contract or Wholesale Fuel?
A. Retail fuel is all gallons paid for to the provider who pumped the fuel
into the airplane. i.e. an FBO
B. Contract fuel is fuel uplifted from a provider and billed to the end
user through a third party. i.e. Colt, Mariah, JetEx
C. Whole sale fuel, is typically bulk fuel (8000 gallons +) that operators
who own a fuel farm can purchase from the fuel dealers at a bulk
rate and store in their tanks for their own use. i.e. Tribute Aviation
39
![Page 40: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/40.jpg)
Resellers VS Refiners
A. Resellers – Companies who have purchased large volumes of fuel
from the refiners.
B. Refiners – Companies that produce refined oils and gas for use by
the end users.
40
![Page 41: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/41.jpg)
Why Do Operators Use Both Resellers and
Refiners to provide the fuels they
consume?
Simple, to get the most out of the resources the operator has, they will buy
from several different providers. This will ensure the operator they are
paying the lowest price for the fuel they consume.
41
![Page 42: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/42.jpg)
Great Hall
Ernest N. Morial Convention Center
Friday, January 17th, 2013 1200-1400
42
Schedulers & Dispatchers
Grand Prize Luncheon
![Page 43: Understanding Fuel: Costs, Purchasing, Pricing Strategy ...](https://reader036.fdocuments.us/reader036/viewer/2022062303/62a5e579a54d8955ad7ddba2/html5/thumbnails/43.jpg)