Permian Markets and Takeaway Infrastructure

Transcription

1 Permian Markets and Takeaway Infrastructure Refinery Capacity for Light Sweet Crude July 15, 2015 Danny Collier Vice President Commercial Optimization

2 Total US and Canada Refinery Capacity US crude refining capacity is 17,800 KBD Canada refining capacity is 2,050 KBD Valero Quebec Refinery received first WTI from Midland in December Energy Policy and Conservation Act restricted crude oil exports but left trade with Canada and Mexico unimpaired Assuming 89% utilization, 17,600 KBD is available for processing US crude oil 2

3 United States Crude Production US crude oil production averaged 7,441 KBD in 2013 and was 8,191 KBD in March 2014 Two year growth has averaged ~900 KBD/yr 8,000 U.S. Field Production of Crude Oil (Thousand Barrels per Day) KBD 6,000 4,000 2, ,441 KBD average 2013 Primary 2013 growth was from Texas and North Dakota Source: US Energy Information Administration 3

4 Western Canada Crude Production Western Canada crude oil production averaged 3,472 KBD 2013 Two year growth has averaged ~270 KBD/yr KBD 4,000 3,500 3,000 2,500 2,000 1,500 1, Western Canada Oil Supply 3,472 KBD average 2013 Canada allows crude oil exports, but logistics are constraining so these grades typically clear to the Canadian and US refining markets Source: Canadian Association of Petroleum Producers 4

5 Production versus Refinery Capacity Refinery capacity for US plus Canada provides 17,600 KBD demand Total US plus Western Canada production provides 10,900 KBD supply 6,700 KBD capacity remains for consuming incremental US and Western Canada crude oil production based on 2013 average 5

6 Light Crude Capability The available refining capacity of 6,700 KBD is not capable immediately for light crude Actual capability is highly dependent on exact crude composition and individual refinery constraints Most US refineries from were limited by coker capacity or heavy fuel oil yield As supply has shifted lighter, coker capacity utilization has decreased and naphtha yields have become a predominant concern Imports can provide insight to displacement comparisons and current light crude capacity 6

7 US and Canada Crude Imports by Region KBD 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,316 2,439 2, ,593 1,613 2,383 2,353 2, ,289 1,172 1,183 1,068 1,432 1,213 2,291 2,483 2, ,114 1,177 2,173 1,707 1, , ,783 1,840 2,027 2,314 2,151 North Sea Far East Eastern Europe Africa Latin America (other) Venezuela Mexico Middle East African crude imports (typically light sweet) have reduced most significantly over last 5 years Source: US Energy Information Administration and Canadian Association of Petroleum Producers 7

8 US and Western Canada Displacing Imports Heavy grade imports from Mexico, Venezuela, and other Latin America countries declined with incremental Canadian production ~ 3,500 KBD in 2005 to ~2,400 KBD in 2013 Western Canada production increased by 1,100 KBD over same time period Africa imports dropped from 2,500 KBD in 2007 to 740 KBD in 2014 US light sweet crude production replaced these imports Middle East crudes have higher naphtha content than other imports excluding Africa so demand for these grades is expected to reduce in

9 Crude Quality US sweet crudes yield ~38 volume % naphtha and lighter If sweet crude naphtha content increases, refinery capacity to handle additional production reduces 3 API increase, could reduce a 5,000 KBD light crude handling capability to 4,400 KBD WTI Bakken Eagle Ford Arab Medium Basrah Maya Cold Lake WTI 44 API API Sulfur Naphtha and lighter 38% 39% 37% 25% 25% 19% 22% 43% Distillate 29% 32% 31% 26% 25% 22% 17% 27% VGO 25% 24% 25% 28% 30% 26% 31% 23% Resid 8% 5% 7% 21% 20% 33% 30% 7% Light Crude Medium Crude Heavy Crude 9

10 Refinery Capacity and Imports Alaska/BC 225 KBD PADD 5 Washington 630 KBD Alberta 620 KBD Eastern Canada 725 KBD San Francisco 830 KBD Los Angeles 1,130 KBD PADD KBD PADD 3 - Inland 1,045 KBD PADD 2 3,810 KBD Ontario 420 KBD PADD 1 1,140 KBD 555 KBD Hawaii 150 KBD PADD 3 - Coastal 8,110 KBD 3,690 KBD 562KBD 897 KBD Imports 10

11 Incremental US Light Crude Processing Capacity by Region Eastern Canada is estimated at 400 KBD over 2013 average levels US Gulf Coast is estimated at 1,000 KBD over 2013 average rates based on a medium sour crude displacement PADD 3 is expected to move from a coker limited system to a naphtha limited system US East Coast is estimated at 400 KBD over 2013 average levels US West Coast is estimated at 300 KBD over 2013 average levels Before new capital investments, US refinery system could take >2,000 KBD light sweet crude above 2013 consumption 11

12 New Capacity Additions in US New light crude distillation unit capacity totals KBD in next 3 years Flint Hills (Corpus Christi) Valero (90 KBD Houston, 70 KBD Corpus Christi, 25 KBD McKee) Marathon (30 MBD, Robinson) Condensate splitter announcements total KBD in same time frame Kinder Morgan (100 KBD, Houston) Trafigura (50 KBD, Corpus Christi) Marathon (25 KBD Canton, 35 KBD Catlettsburg) Magellan (50 KBD, Corpus Christi) Refinery capacity additions (including condensate splitters) are expected to be KBD 12

13 Conclusions US refinery capacity is adequate to handle light crude production growth of ~2,000 KBD without additional investment Announced and expected new capacity is adding another ~1,000 KBD in the next three years US refinery system is expected to continue investing in light crude processing capacity as long as economics are supportive Light crude (~40 API gravity) should be separated from condensate (~55 API gravity) in order to maximize US refinery processing capacity for light sweet crude 13