asphalt supply in a volatile oil world · crude oil demand demand has risen by 7 mmbd (9%) since...
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ASPHALT SUPPLY IN A VOLATILE OIL WORLD
Bill HaverlandBill HaverlandConocoPhillips ConocoPhillips
Baxter BurnsBaxter BurnsErgonErgon
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CRUDE OIL SUPPLY
A WORLD LOOKA WORLD LOOK
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Crude Oil Supply (2006)World Crude Oil ProductionWorld Crude Oil ProductionMillions of Barrels Per DayMillions of Barrels Per Day
World Proven Crude Oil World Proven Crude Oil ReservesReserves
Billions of BarrelsBillions of Barrels
W. Europe
US/Canada
Asia/PacificAfrica
Middle East
FSU/E. Europe
Latin America
11.3
6.310.6
8.49.8
FSU/E. Europe
W. Europe15 Latin
America
US/Canada
Asia/Pacific
Africa
Middle East
743
201
11679
10236
Asia/Pacific
Africa
26.0
12.6
Middle EastTotal: 85MMB/D Total: 1,292 BB
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Crude Oil Demand
Demand has risen by 7 MMBD (9%) since 2002.Demand has risen by 7 MMBD (9%) since 2002.Demand at 85 MMBD or 98% of world daily Demand at 85 MMBD or 98% of world daily delivery capacity.delivery capacity.Vulnerable to supply disruptions caused by Vulnerable to supply disruptions caused by storms, accidents, breakdowns, political unrest.storms, accidents, breakdowns, political unrest.65% of proven reserves within national oil 65% of proven reserves within national oil companies and 16% held by Russia.companies and 16% held by Russia.Traditional companies have full access to 7% of Traditional companies have full access to 7% of reserves and 12% through partners (if allowed).reserves and 12% through partners (if allowed).
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CRUDE OIL PRICING
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WTI Price by Year
0
10
20
30
40
50
60
70
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007YTD
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WTI Price by Quarter
01020304050607080
1Q 20
01
1Q 20
02
1Q 20
03
1Q 20
04
1Q 20
05
1Q 20
06
1Q 20
07
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REFINING CAPACITY
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U. S. Refining Capacity
14
14.5
15
15.5
16
16.5
17
17.5
18
18.5
1980 1995 2000 2006
more than 30less than 30Crude Dist Cap
Last New U. S. Refinery Built in 1976Source: Oil & Gas Journal
319
175 158 131
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U. S. Asphalt Refining Capacity
72
98
60
42
1980 1995 2000 2006400
450
500
550
600
650
700
750
800
# RefineriesAsphalt Capacity
Production Range: 600 B/D to 60,000 B/DSource: Oil & Gas Journal
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U. S. Refining Coking Capacity
50
585681
120138
46
48
50
52
54
56
58
60
1995 2000 20060
20
40
60
80
100
120
140# Refineries w/CokersCoke Production, MT/D
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U.S. Coker Construction Projects2005 - 2011
Planning, Engineering, or Construction Planning, Engineering, or Construction PhasePhase
Total Refineries: 360 MB per dayTotal Refineries: 360 MB per dayAsphalt Refineries: 197 MB per dayAsphalt Refineries: 197 MB per day
* * Source: Argus Asphalt ReportSource: Argus Asphalt Report
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Refinery Yield (% of Crude Intake)
0%10%20%30%40%50%60%70%80%90%
100%110%120%
TOPPINGRFY
SIMPLERFY
CCU RFY COKERRFY
OTHERMOGASJETLT NAPHHVY NAPHGAS OILNO.2NO6 or AsphaltCOKE
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PRODUCTS SUPPLY/DEMAND
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Supply Source for U. S. Demand
02468
101214161820
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06
MM
B/D
Domestic Crude Production Imported Crude Imported Products
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Historical Asphalt Supply/DemandMillions Tons - Liquid
0
10
20
30
40
50
60
1980 1995 2000 2003 2005 2006
SupplyDemand
Source: Oil & Gas Journal
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Crude Oil SourcesCrude Oil Sources
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Crude Oil ImportsInto USA from the Top Six CountriesAs of June 2007 (1000 Barrels Per Day)
573573IraqIraq66893893NigeriaNigeria55
1,1351,135VenezuelaVenezuela441,3921,392MexicoMexico331,5011,501Saudi ArabiaSaudi Arabia221,8741,874CanadaCanada11
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Canada’s Historical Crude Supply Volumes To The USA Have Been Doubling Every Decade Since 1988
4,6004,6002020 Estimate2020 Estimate3,0003,0002015 Estimate2015 Estimate2,4002,4002011 Estimate2011 Estimate2,1002,1002007 Estimate2007 Estimate1,8741,8742007 Current as of June2007 Current as of June1,2661,26619981998
68168119881988
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CANADIAN EXPORTS - 2007-2020
Important Points:
1. Canada is expected to complete 2007 with over 2,000,000 bbls per day export to the USA.
2. By 2020 Canada expects to be exporting on a moderate growth estimate 4,600,000 bbls per day to the USA over a 100% increase.
3. Approximately half (2,300,000) of this daily amount will be “DILBIT”that is heavy asphaltic crude cut with a diluent. (25% natural gas diluent and 75% heavy asphaltic oil.)
4. The remaining half (2,300,000) will be “SYNBIT” which is made up of 50% synthetic crude from the Athabasca Tar Sands Upgraders and 50% heavy asphaltic oil.
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CANADIAN EXPORTS - 2007-2020
Summary:
• The most important point is that over the next decade , the USA’s number one crude oil supplier (Canada) will be increasing the volume of good asphaltic crude to the USA by 100%
• While the main target market for this heavy Canadian crude is refined cokers for the refiner capable of making asphalt there should be ample availability of a suitable high quality asphaltic crude.
• The majority of refiners of old had to make asphalt. Today’s refinery can make a choice.
• Simply put, asphalt has got to compete with the rest of the barrel or light products.
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PRODUCTS PRICING
COKER ECONOMICS
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Prices by Quarter
2030405060708090
100110
1Q 20
001Q
2001
1Q 20
021Q
2003
1Q 20
041Q
2005
1Q 20
061Q
2007
WTIGasoline
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Prices by Quarter
0102030405060708090
100
1Q '0
0
1Q '0
1
1Q '0
2
1Q '0
3
1Q '0
4
1Q '0
5
1Q '0
6
1Q '0
7
WTIGasolineAsphalt
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Asphalt vs Coker Feed Value
0102030405060708090
Jan-02
May
-02Sep
-02Ja
n-03M
ay-03
Sep-03
Jan-04
May
-04Sep
-04Ja
n-05M
ay-05
Sep-05
Jan-06
May
-06Sep
-06Ja
n-07M
ay-07
Sep-07
WTIP&P MC Avggulf coast coker value
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Current Coking Economics
Gasoline/Diesel PricingGasoline/Diesel Pricing
Aug., 07 Price: $95.00/BBLAug., 07 Price: $95.00/BBLLess Distribution: 6.00/BBLLess Distribution: 6.00/BBL
Net to Refinery: $89.00/BBLNet to Refinery: $89.00/BBL
Kansas City Asphalt PricingKansas City Asphalt Pricing
Aug 07:Aug 07: $54.50/BBL*$54.50/BBL*($40/Ton): $7.15/BBL($40/Ton): $7.15/BBL
$47.35/BBL$47.35/BBL
Lost Value: Lost Value: $41.65/BBL$41.65/BBL
** Source Source –– Poten & PartnersPoten & Partners
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Current Coking Economics
30,000 BBLS/Day Asphalt Production30,000 BBLS/Day Asphalt ProductionX 70%X 70% Gasoil ProductionGasoil Production
21,000 BBLS Gasoil for Gasoline/Diesel21,000 BBLS Gasoil for Gasoline/DieselX $41.65X $41.65/BBL Gasoline/Diesel diff. To Asphalt/BBL Gasoline/Diesel diff. To Asphalt
$874,650 per day added margin$874,650 per day added margin
$1 Billion / $874,650 = 1,143 days (3.1 years payoff) $1 Billion / $874,650 = 1,143 days (3.1 years payoff)
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FUTURE OF THE INDUSTRY
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FUTURE FOR U. S. ASPHALT
More heavy crude being produced and run
Asphalt will have to trend faster with crude oil prices and be competitive with light products – continued volatility
Transportation – cost rising and supply at maximum (marine/rail)
A continued push towards new products for pavement preservation due to limited dollars
Warm mix asphalt
Increase technical know how to deal with different asphalts or coker bottoms to produce pg grade materials
Recycling
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QUESTIONS