PETROLEUM COKE VS STEAM COAL

Transcription

1 PETROLEUM COKE VS STEAM COAL The Fundamentals Phillip H. Fisher Coal Trans 2001 Prague

2 Phillip H. Fisher 2 years coke consulting experience with producers, resellers, and logistics companies 31 years with Chevron; most recently: 5 years managing Chevron s pet coke business; 3+ MM tons/year 4 years managing Chevron s short term refinery and marketing operating plan Contact [email protected]

3 World Fuel Grade Petroleum Coke Production 80 Million MT PACE

4 Additional World Coker Capacity excluding China & FSU Millions MT/year Annual Total Other U.S. Venezuela PACE 2 0 Mexico

5 US Green Petroleum Coke Exports Canada 0.24 MMT 0.34 MMT Total 19.2 MMT 19.0 MMT Japan 3.13 MMT 2.70 MMT Estimated 2000 vs Major Export Destinations Europe 0.14 MMT 0.15 MMT 0.24 MMT 0.62 MMT PACE Europe 2.10 MMT 1.93 MMT Japan 0.40 MMT 0.70 MMT 1.58 MMT 2.18 MMT Europe 7.78 MMT 7.47 MMT

6 Quality Comparison Steam Coal Fuel Grade Coke (Typ So Africa) Ash, % < 1.0 Moisture,% BTU/# 10,800-11,500 14,000-15,000 Sulfur, % < VCM HGI

7 Quantity vs Quality Producer Guarantees Steam Coal Fuel Grade Coke Producer Mine Refinery Coker Quantity Guarantee? Quality Guarantee? YES seam depth, width, extent all known YES Assay the cores NO Mechanical breakdowns, weather, storage limits, NO Crude dependent

8 Price Comparison Fuel grade coke prices on a delivered $/BTU basis is typically less than steam coal: Higher BTU/# Generally higher sulfur Coke production is not discretionary Occasionally have coke on coke competition

9 Price Comparison (Pace) Delivered ARA $/MMBTU 4.50 S. African Coal USGC Petcoke (>50 HGI) Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Delivered Price $/MM BTU

10 Contract Terms Comparison Term Pricing Quantity & Quality Steam Coal from mine to coal buyer Spot to long term up to 10 yrs Tied to index or escalator Guarantee Fuel Grade Coke from refinery to coke buyer Some spot, most 1-3 yr term; some 10 yr term Negotiated quarterly or tied to an index No guarantee

11 Key contract philosophies from the producer s point of view: Coal: I ll sell you known quantities of coal at known quality from my named mine for a price that will escalate using typically published indices

12 Key contract philosophies from the producer s point of view: Coal: I ll sell you known quantities of coal at known quality from my named mine for a price that will escalate using typically published indices Coke: I ll sell you coke of variable quality and quantity from my coker. Price can relate to forecast quality and quantity, but you cannot refuse to lift it. I will not make up shortfalls.

13 Coke Economics to Refinery 20-40% of crude is the heavy fuel oil (FO) fraction Cokers feed the FO and convert 75% of it into lighter products: gasoline, jet, and diesel Remaining 25% of coker yield is coke It is economic to run the coker and make coke even if coke value is low or negative

14 Coke Price vs Coker Margin $5.00 Coker Margin, $/bbl $4.00 $3.00 $2.00 $1.00 $0.00 ($1.00) ($2.00) ($3.00) $10.00 $0.00 ($10.00) ($20.00) ($30.00) Coke Price $/Ton $16/bbl Lt prod to FO diff $12/bbl Lt prod to FO diff ($40.00) ($50.00) ($60.00)

15 What a Coking Refinery Needs from Coke Buyer Priority differs by Refinery but all want: Reliable Lifting Market price (Quality adjusted) Safe and Clean Handling Product Stewardship

16 What a Coke End User needs from a Coke Supplier Priorities differ by end user, but all want: Meet quality requirements Reliable deliveries Competitive market price

17 End User Coke Quality Sulfur Plant specific Ash Can be an issue Sizing 2 max preferred Hardness Grinder dependent Cement Power Bricks, ceramics, space heat, etc Very Price sensitive Can be an issue 2 max preferred Grinder dependent Price sensitive May be needed for grate coating Important to stokers, grates, etc Lump coke is usually soft

18 What it Takes to be a Coke Reseller Many sources of coke to match end user requirements Good logistics operations to move, store, blend Track record of delivering on promises

19 Major Coke Resellers Year 2000 millions of tons US Exports Total coke Aimcor Koch Carbon Oxbow SSM TCP Others 5.8 Total 19.8

20 Type Moistuire, % Vol, % Ash, % HV, KB/# S, % Coke < Anthracite <1 Semianthracite <1 Bituminous SubBituminous Lignite <2 <2