an intensive 3-day course on the fundamentals of refining
TRANSCRIPT
COURSE DIRECTORS:
Mr. Tod D. McGreevy Vice President, Muse, Stancil & Co., USA
Dr. Tilak K. Doshi Managing Consultant, Muse, Stancil & Co. (Asia) Pte Ltd, Singapore
An Intensive 3-Day Course on the Fundamentals of
COURSECRUDE & PETROLEUM
www.cconnection.org/events/refiningeconomics
SAVE UP TO US$320For Early Bird Or Team Fees
(see back page for details)
REGISTER NOW! Tel: (65) 6338 0064 | Fax: (65) 6338 4090 | Email: [email protected]
Visit us at:
Hotel Jen Tanglin, Singapore • 17 - 19 September 2018
Organised by:
• CrudeOilSupplyandDemand
• CrudeOilTypesandQualityAssays
• ProductTypesandQuality
• Tankers,TerminalsandTransport
• CrudeOilandProductsPricing
• CrudeOilandRefinedProductPricingExercise
• ProductsManufacturingTechnology
• ProductsBlendingExercise
• RefiningCostsandYields
• MarginalRefineryConfiguration
• RefiningCapitalCosts
• Environmental Compliance
• ForecastingandOutlook
• RefineryEconomicAnalysis
• TransactionsandClosures
• RefineryValuationTeamExercise
COURSE(3 DAYS)
This course is designed to increase yourunderstanding of petroleum productsmarkets and how they interact with therefiningindustryandcrudeoilmarkets,andis of importance to:
• Refiners• Financial Analysts• Bankers• Crude Oil Marketers• Petroleum Analysts• Regulators/Government• Refinery Finance Executives• Technology Suppliers• Project Developers• Commercial Business Analysts• Crude & Products Managers• Products Supply and Distribution
Executives• Strategic/Business Development
Managers• Financial Institutions/Energy Lenders• Investment Analysts• Insurers• E&C Firms/Economic Feasibility
Analysts• Crude Producers
WHO SHOULD ATTEND
CERTIFICATE OF ATTENDANCEFor all participants who successfully complete the full 3-day course
KEY ISSUES TO BE COVERED:
Refining EconomicsGain an In-depth Understanding of How Refineries
Make Money and What Affects Refining Investment
The Refining Economics course is designed to teach fundamentals of refining
economicstonon-refinersortothosenewlyintroducedtorefining.Atechnicalbackground
is not necessary to understand coursematerials and the course should be useful to financing or
marketingindividualswhohavesomeinvolvementwithrefiningorpetroleumproducts.Similarly,a
marketingbackgroundisnotcriticalandthecoursemaybehelpfultorefineryengineerswhowould
liketounderstandhowcommercialandeconomicfactorsdriveoperatingandinvestmentdecisions
thataffecttheirrefineries.
ABOUT THE COURSE
REGISTER NOW! Tel: (65) 6338 0064 | Fax: (65) 6338 4090 | Email: [email protected]
WHY YOU SHOULD ATTEND THIS COURSE
ABOUT THE COURSE DIRECTORS
Mr. Tod D. McGreevy Mr.TodMcGreevyhasover28yearsindustryexperienceandadiversebackgroundinpetroleumrefiningandmanufacturing.Mr.McGreevycurrentlyservesasVice-Presidentand Director of Muse, Stancil and Co., a global energy consultancy headquarteredinDallas,Texas. HehasbeenwithMusesince2003and isalsoaDirectorofMuse’sSingaporeaffiliate,Muse,Stancil&Co(Asia),PteLtd.
Duringhiscareer,Mr.McGreevyhasheldvariouspositionsthatencompassmanyofthetechnical/managerial functions found in thedownstreamsectorof thepetroleum industry. Previousworkassignmentshavegivenhimawealthofexperienceinrefineryeconomicsincludingtacticalplanningand optimization, long-term, strategic planning, project evaluation, economic justification, anddevelopment, budgeting, financial performance measurement and benchmarking, and financialmodeling.
Dr. Tilak K. DoshiDr. Tilak K. Doshi is Managing Consultant with Muse, Stancil & Co. (Asia) based inSingapore. Dr. Doshi is an industry expert with over 25 years of international workexperienceinleadingoilandgascompaniesandthinktanks.
Dr. Doshi is the author of many articles and three books on energy economics, themost recentofwhichwas “SingaporeChronicles:Energy” (StraitsTimesPress, 2016).
HereceivedhisPh.D.inEconomicsfromtheUniversityofHawaiionascholarshipprovidedbytheEast-WestCentre.Hewasoneoftwocandidateswhichweregrantedthe1984RobertS.McNamaraResearchFellowawardbyWorldBank,Washington,D.C.
1. Understand how location, configuration,and crude oil supply contribute to refiningprofitability.
2. Identify new refinery project opportunitiesand learnhowtomaximizetheircommercialvalue.
3. Discover how to develop new opportunitiesand reduce their operating, technical, andcommercialrisks.
4. Find out how refinery configurations affectpetroleumproductpricesworldwide.
5. Improve your understanding of the rolelogisticsplaysinrefineryprofitability.
6. Learn howto interpretpublished informationontherefiningindustryandrefiningcompanies.
7. Identify keymethods of comparing refinerycompetitive strength.
8. Understand the nature of petroleummarkets, market cycles, and their globalinterconnectivity.
9. Discover how refineries can be modified tobecomemoreprofitable.
10. Learn whyrefineriespreferdifferenttypesofcrudeoils.
11. Find out how trends in petroleum demandforcerefineriestoinvest.
12. Hear about key issues driving refineryinvestmentinthecurrentmarket.
Conference Connection’s introductory and advance two to four day courses,executive briefings and country workshops, organized with industry specialists, leading
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Copyright © Conference Connection Pte Ltd. The organisers reserve the right to alter the content and timing of the programme.
COURSE OUTLINE Singapore • 17 - 19 September 2018
Registration on Day 1 at 8.00am. Sessions start promptly at 9.00am and end at approximately 5.30pm. Lunch will be between 12.30pm and 2.00pm with mid morning and mid afternoon refreshments.
ABOUT THE ORGANISER
I. INTRODUCTION TO REFINING (Day 1 Morning Session)
Refining is a highly interconnected, globalbusinessyetregionalvariationspersist.Thisinitialworkshopmodulewill providea shortoverviewoftheglobalrefiningsector.
• Historyoftheindustry
• Macrorefiningtrendsanddrivers
• Supplychainrolesandcontributors
II. CRUDE OIL BASICS
Thecostofcrudeoilisapproximately70-80%ofthe cost of operating refineries. Understandingcrudeoilsupply/demandtradepatternsisvitaltoachievingaprofitablerefiningbusiness.
• Globalcrudesupply/demandfactors
• Futureproductiontrends(includingbothconventionalandunconventionalresources)
The next part of the session focuses on crudeoilproperties,assayinterpretation,andblendingtechniques. The discussion will focus on therelationship between crude oil properties andeconomic value and how refiners can optimizefinancial returns by utilizing shrewd blendingstrategies.
• Bulkcrudeoilpropertyrelationshipswithrefiningvalue
– Signatureproperties:APIgravityandsulfurcontent
– Othercommercialvaluedrivers:distillationrange,TotalAcidNumber,etc.
• Crudeoilassays
– Sourcesandtypesofassays(commercial/marketingversusproject/planningquality)
– Interpretingassaydata
• Crudeoilblendingexercise(Laptoprequired!)
– Weightversusvolume-basedproperties
– Blendingtechniquesandstrategiesformaximizingrefiningreturns
III. PETROLEUM PRODUCTS (Day 1 Afternoon Session)
Environmental concerns are resulting inincreasingly stringent transportation fuelsspecifications,andthishasasignificantimpactonrefineryoperationsandprofitability.Thissessionwill review product consumption trends andchangestokeyspecifications.
• Productdemandtrends
– Gasoline
– Distillate
– Fueloil(IMO2020developments)
• Productspecificationrelationshipswithvalue
IV. CRUDE OIL AND REFINED PRODUCT PRICING
Determining prices for crude oil and refinedproductscanappeardauntingatfirst.Thismoduleremoves some of the mystery by introducingbasic techniques and methodologies used byrefinersaround theworld to translate referencemarket prices to the refinerygate.Wewill alsocoversomeofbasicconceptsusedbyforecasterstodevelopforwardpricesforvariouspetroleumcommodities.
• Basicpetroleummarketpricingconcepts
– Benchmarks
– Quality/Locationdrivers
Delegates will be required to bring their own laptop
Copyright © Conference Connection Pte Ltd. The organisers reserve the right to alter the content and timing of the programme.
COURSE OUTLINE
Singapore • 17 - 19 September 2018– Crudeoilrefiningvalues(GrossProductWorth)
– Keypricingdifferentials(light/heavy,sweet/sour,etc.)
– Overviewofcommercialpricingformulas
• Transportation/Logistics costs
– Modesoftransportation
– Worldscaletankercosts&Pipelinetariffs
– Terminalandhandlingcosts
• Refinerygatepriceforecastingexercise(Laptoprequired!)
– Benchmarkhubpricing
– Crudeoilparitypricedetermination/Marketclearingmechanism
– Locationdifferentials(import/exportparity)
– Freightcostcalculation
– Qualityadjustments
V. REFINERY CONFIGURATIONS & COMPLEXITY (Day 2 Morning Session)
Refineries vary in configuration type andcomplexity depending on many factors suchas market demand and company investmentobjectives. We will learn about the four majorconfiguration types andwhere they tend to beclustered geographically. We will also examinehowsizeandcomplexitycanplayadeterminingrole with respect to refinery profitability andcompetitive positioning.
• Refineryconfigurationtypes
– Topping/Hydro-skimming
– Cracking/Coking
• NelsonComplexityIndex
• Comparativeeconomicsandcompetitivepositioning
VI. ECONOMIC VALUE OF KEY REFINERY PROCESSING TECHNOLOGIES
This module provides a general overview ofrefining process technology, with a focus onheavy oil conversion options.Wewill also takealookattherelativeeconomiccontributionthatvarious processing technologies contribute tooverallrefineryprofitability.
• Crudeoildistillationfundamentals
• Conversion Processes
– Hydrocracking/Fluidcatalyticcracking
– Coking
– Vis-breaking/Solventde-asphalting
• UpgradingProcesses
– Hydrotreating/Benzenereduction
– Catalyticreforming&Isomerization
– Alkylation
• SupportingProcesses
– Sulfurrecovery
– Hydrogenproduction,UtilitiesandOffsites
• Petrochemicals/Biofuels
– Aromatics/Olefins
– Ethanol/Biodiesel/RenewableDiesel
Productblendingtechniquesaresimilartothoseused for crude oil except that there are morefactorstoconsidersuchascomponentavailabilityand quality, pricing, and finished productspecifications.Here,wewillconcludewithsomesimpleblendingexercisesthatintroduceconceptssuch as limiting constraints, pricing effects, andoptimization.
• Productblendingexercise(Laptoprequired!)
– Specificationlimits&pricingconsiderations
– Blendingtechniques
VII. REFINERY ECONOMIC OPTIMIZATION (Day 2 Afternoon Session)
Refining companies around the world dependheavily on optimizationmodels to continuouslymaximize profitability, yet often, there are fewpeopleintheorganizationthattrulyunderstandthe power that these tools wield in resolvingcomplex questions of economic direction. Thismodule will provide delegates with a glimpseinsidethe“black-box”beforedemonstratingtheeconomicvalueofasoundrefineryplanningandoptimizationprogram.
• Fundamentalsofrefineryeconomicsandmarginoptimizationoverview
• Refinerymodelingdiscussion
– LinearProgrammingbasicsandothertools(schedulers,priceforecast,staticmodels,etc.)
– Bestpractices(APlanning-CenteredOrganization)
• Tacticalplanningapplicationsformaximizingrefineryfinancialperformance
– Crudeoilevaluation/Productionplanning/Inventoryscheduling/Shutdownplanning
– Incrementalmargins/operatingincentives
Copyright © Conference Connection Pte Ltd. The organisers reserve the right to alter the content and timing of the programme.
COURSE OUTLINE
Singapore • 17 - 19 September 2018
• Long-range strategic planning applications for improving competitiveness
– Configurationstudies
– Technologyevaluation
VIII. REFINERY MARGINS, COSTS, AND OTHER FINANCIAL METRICS
This module will lay out the basic economicmetrics used by companies around the worldto evaluate the financial positioning of refiningassets.Wewilldiscuss several typesof refinerymargins used todescribeprofitability and learnhowtheyarecalculated.Wewillthencoverthedifferentelementsthatmakeupfixedandvariableoperating costs. The importance of capital spendingwillbeexamined,aswilltheeffectsofchanges in working capital. Various estimationtechniques will be presented for determiningoperatingandcapital costswhenactualdata isincomplete or missing.
• Financial Metrics
– Gross,variable,netmargins
– Fixedandvariablecostdevelopment
• Capital costs
– Categories(Sustaining,maintenance,environmental/regulatoryversusdiscretionary)
– ReplacementCostNew(RCN)estimationanduses
• Workingcapitalrequirements
• Benchmarkingalternatives
• Estimatingtechniques
IX. IX. ENVIRONMENTAL COMPLIANCE ISSUES AND TRENDS (Day 3 Morning Session)
Environmentalcompliance isoften looked-onasacostbutnon-compliancebearsheavycostsaswell. In thismodule,wewill explore the historyofenvironmentalcomplianceeffortsaround theworldanddiscusswhatnewinitiativesareintheworks.
• Ambientairqualitystandards
• Productspecificationstandards
• EquatorPrincipals
X. REFINERY CONSTRUCTION, SALES, AND CLOSURES
Whatfactorsareconsideredwhenacompanyismakingadecisionwhethertobuildanewrefineryor purchase an existing facility?What drives acompany to decide to exit a market by sellingarefineryor,perhaps,closingit?Inthismodule,we will explore the different factors executivesconsider when making these choices. We willlearn how to estimate the cost of constructinga greenfield refinery using industry-recognizedfactoringtechniques.Wewillalsoexaminesomeof the metrics used to determine transactionvalues for refinery sales. We will close with adiscussionofthecostsandramificationswhenadecisiontoidleorpermanentlyclosearefineryismade.
• Factoredconstructioncostestimation
– Processingequipment&off-sites(utilities,tankage,logisticsassets,etc.)
– Owner’scosts
• Refinerypurchase/saletransactions
– Financialmetrics(discountedcashflowmodeling,EBITDAmultiples,%ofRCN,etc.)
– Comparablesalesanalysis
• Refinerysaleandclosuredecision-making
– Financialdistress
– Marketchanges/Portfoliooptimization
XI. REFINERY VALUATION TEAM EXERCISE (Day 3 Afternoon Session)
You will want to bring your laptop for thissessionaswepulleverythingtogetherthatwe’velearned the previous two days! The delegateswill be separated into teams, each tasked withdetermining the fair market value of a refineryassetusingtheDiscountedCashFlowmodelingmethodology.Priortostartingwewillcoverthebasic requirements to assemble aworkingcashflowmodeltodeterminetheNetPresentValueofasimplerefinery.
• Globalassumptions(inflation,discountrate,taxrates,depreciation,on-streamfactors)
• Chargeandyieldestimates
• Refinerygatepriceforecasts
• Fixedandvariableoperatingcostestimates
• Capitalcostandworkingcapitaladjustments
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DATES & VENUESeptember 17 - 19 2018, SingaporeHotel Jen Tanglin Singapore1A Cuscaden Road, Singapore 249716Tel: +65 6738 2222 Fax: +65 6831 4314Email: [email protected]
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