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    Ippai infrastructure f_ alan troner Ippai infrastructure f_ alan troner Presentation Transcript

    • Ways & Means: Infrastructure for Security,Efficiency & Profitability By Al Troner ASIA PACIFIC ENERGYCONSULTING Houston, Texas, USA Phone: +1-281-759-4440; Fax: +1-281-759-4441; Email: apenergy@apecconsulting.comAsia Energy Security Summit Colombo, Feb 29 –March 01, 2012
    • Infrastructure Equals Ways & Means Small ticket items often equally important Usually plant, often physical things Sometimes operational, i.e. problem-solving “Big picture” view can’t ignore the small details Remember, problem-solving, like trade, uses two hands 2 ASIA PACIFIC ENERGY CONSULTING
    • Objectives – The Big Picture Decrease cost; improve profitability Allow greater choices in base materials, feedstock Increase security of supply Improve product quality; reduce environmental damage Meeting government mandated regulations Increase competitive edge on domestic and international markets 3 ASIA PACIFIC ENERGY CONSULTING
    • Nuts & Bolts – Tank Storage Simple investment allows sophisticated operations Large cargo shipments, reduced transport cost Strategic stocks bolster security Allow vast expansion of products trade/refining, i.e. Singapore Singapore’s refinery output less than blended exports 4 ASIA PACIFIC ENERGY CONSULTING
    • Singapore Storage Detailed Capacity Site Operator Ownership (000 CM) Products Vopak 69.5%; PSA Products,Banyan Basin, Jurong Vopak 30.5% 1,261.32 Chemicals Horizon Terminals ENOC 52%; IPG 15%; SK Energy 15%; Horizon Singapore Martank BV 10%;Banyan Basin, Jurong Terminals UAEs Boreh Intl 8% 1,237.40 ProductsJurong Helios Terminal Chemoil 270.00 Products Hin Leong 65%,Jurong Universal Terminal PetroChina 35% 2,300.00 Products Products,P. Busing Tankstore Kuo International 929.50 Chemicals Vopak 69.5%, PSA Products,P. Sebarok Vopak 30.5% 1,261.00 ChemicalsP. Seraya Oiltanking 100% 1,165.68 ProductsTotal Operating 8,424.90 5 ASIA PACIFIC ENERGY CONSULTING
    • Nuts & Bolts – Ports/Berthing In 1980s large cargoes easy to track Less than a dozen 300,000 DWT berthing/SBM Tankers need large support infrastructure Storage, ports & berthing underpin blending trade China’s ballooning infrastructure typical 6 ASIA PACIFIC ENERGY CONSULTING
    • China Ports Max. CapacityPort (DWT) Oil Receiving Operator StartupCapacity by 2004 900,000Dagushan Port at Dalian 300,000 Petrochina 2004Qingdao 300,000 Sinopec by 2004 Zhanjiang Port at Maoming 300,000 Sinopec 2002Added Capacity by 2011 3,375,000Zhou Shan port at Zhejiang (1) 300,000 Sinopec 2005Yangpu port at Hainan 375,000 Sinopec 2006Huizhou port 300,000 CNOOC 2007Huangdao Port at Qingdao 450,000 Sinopec 2008Caifeidan Port at Tangshan 300,000 Sinopec 2008Xianrendao Port at Yingkou 300,000 Petrochina 2009Nanjiang port at Tianjin 300,000 Sinopec 2008Douwei port at Quanzhou, Fujian 300,000 Sinopec 2009Daxie port at Ningbo 300,000 Sinopec 2009Xingang Port at Dalian 450,000 Petrochina Under ConstructionGRAND TOTAL 4,275,000Source: China National Statistics Yearbook 7 ASIA PACIFIC ENERGY CONSULTING
    • Nuts & Bolts – Crude & Products Pipelines Distinction on all pipelines – trunk vs. distribution Crude generally trunk; products generally distribution Asia Pacific lags behind Western & ME Gulf in both Pipelines can create captive suppliers or buyers Crude pipelines already reshaping trade, prices, blends 8 ASIA PACIFIC ENERGY CONSULTING
    • Nuts & Bolts – Gas Pipelines Physical nature of gas makes big difference Long run-up to commissioning (Trans-ASEAN pipeline) Level of captiveness much higher than oil Needs steady, uninterrupted supply and offtake/ consumption Heavily impacted by regulatory regime Gas trunklines lagging far behind crude Gas transport underpins growth in NGL supply 9 ASIA PACIFIC ENERGY CONSULTING
    • Crude Pipelines to China Service Length Pipeline FillPipeline Date (Miles) (MM BBLs)CPC 2001 948 7.8BTC 2005 1,061 10.6West-East Pipeline 2008 2,029 6.0ESPO-Phase 1 2009 1,713 20.2West –East Pipeline Expanded * 2012 2,600 13.5ESPO Expanded * 2014 2,100 46.0Note: * Partially estimated. 10 ASIA PACIFIC ENERGY CONSULTING
    • Nuts & Bolts – Expanded Refining Recession accelerated refinery closures in West. Mideast downstream grew only slowly. Asia Pacific remains expansion leader. India’s/China’s share of Asia-Pacific downstream steadily growing China’s expansion outpacing India 11 ASIA PACIFIC ENERGY CONSULTING
    • India/China Share at Asia-Pacific Refining Capacity 40 33.9 MM B/D 35 28.4 MM B/D 30 25 20 15 52.6% 10 42.6% 5 0 2008 2011 million barrels/day India/China Asia Pacific 12 ASIA PACIFIC ENERGY CONSULTING
    • Refining for More Yield of Lighter Products Lighter products have higher value per volume unit. Transport fuels generally lighter; focus of growth Lighter product better quality within product group Extracting most value out of residual, VGO 13 ASIA PACIFIC ENERGY CONSULTING
    • Refining for Better-Quality Products Massive, broad-based buildup across Asia Pacific Mideast Gulf has lagged behind. Severe secondary capacity for lighter products Quality improvement to meet tightening specs Asia-Pacific refining almost a third (32.4%/28.406 MM B/D) of world’s 87.73 MM B/D. 14 ASIA PACIFIC ENERGY CONSULTING
    • Asia-Pacific Refining Capacity 1/2008 1/2011 1/2014 MM B/D MM B/D % Rise MM B/D % RiseBase Capacity (Working capacity incl. Condensate Splitters) 28.406 33.919 19.4% 37.168 9.6%Severe Secondary (incl. coking, Hydrocracking (HDC), Fluid & ResidualCatalytic Cracking (R/FCC) 8.172 12.114 48.2% 13.329 10.0%Quality Improvement Units (Distillate Hydrotreating (Dist. HDT), Gas Oil& Residual Hydrodesulfurization (GO Desulf. & Resid. Desulf) 12.870 17.226 33.8% 18.285 6.1% 15 ASIA PACIFIC ENERGY CONSULTING
    • Mideast Gulf Refining Capacity 1/2008 1/2011 1/2014 MM B/D MM B/D % Rise MM B/D % RiseBase Capacity (Working capacity incl. Condensate Splitters) 6.952 7.818 12.5% 9.761 24.9%Severe Secondary (incl. coking, Hydrocracking (HDC), Fluid & ResidualCatalytic Cracking (R/FCC) 1.118 1.382 23.6% 1.962 42%Quality Improvement Units (Distillate Hydrotreating (Dist. HDT), Gas Oil& Residual Hydrodesulfurization (GO Desulf. & Resid. Desulf) 2.489 3.148 26.5% 4.807 52.7% 16 ASIA PACIFIC ENERGY CONSULTING
    • Refining Infrastructure Observations Asia Pacific added lion’s share of new refining since 2000. Increasing efficiency, profitability – MAINLY operational flexibility Increasing dieselization of Asia Pacific – including China Mideast’s push to improve product quality has lagged Asia Pacific. China has been Asia Pacific’s leader in adding capacity. 17 ASIA PACIFIC ENERGY CONSULTING
    • The Heart of the Matter: India & China Demand Giants remain the demand growth drivers. China outstripping India in infrastructure, not only in refining This allows imports of crude, products & LNG at less cost from more suppliers. China now focusing on quality as well as India – squeeze point ADO Essential difference – India looks outward, China inward Lack of infrastructure will hamper India’s product export drive. 18 ASIA PACIFIC ENERGY CONSULTING
    • India & China – A Comparison in Refining 2008/2011 2008 2011 India as % India as % India China India China of China of ChinaBase Capacity (Working capacity incl. Condensate Splitters) 3.083 9.927 31.1% 4.323 13.517 32.0%Severe Secondary (incl. coking, Hydrocracking (HDC), Fluid & Residual CatalyticCracking (R/FCC) 1.152 3.786 30.4% 1.809 6.303 28.7%Reforming 299 513 58.3% 437 872 50.1%Quality Improvement Units (Dist. Hydrotreating, GO & Resid. Desulf.) 1.123 1.863 60.3% 1.869 3.841 48.7%Of which: GO & Resid. Hydrodesulf. 0.961 1.502 64.0% 1.497 2.929 51.1% 19 ASIA PACIFIC ENERGY CONSULTING
    • India & China – A Comparison in Refining 2011/2014 2011 2014 India as % India as % India China India China of China of ChinaBase Capacity (Working capacity incl. Condensate Splitters) 4.323 13.517 32.0% 4.906 15.767 31.1%Severe Secondary (incl. coking, Hydrocracking (HDC), Fluid & Residual CatalyticCracking (R/FCC) 1.809 6.303 28.7% 2.049 7.035 29.1%Reforming 437 872 50.1% 437 1.084 40.3%Quality Improvement Units (Dist. Hydrotreating, GO & Resid. Desulf.) 1.869 3.841 48.7% 1.973 4.608 42.8%Of which: GO & Resid. Hydrodesulf. 1.497 2.929 51.1% 1.601 3.388 47.3% 20 ASIA PACIFIC ENERGY CONSULTING
    • Infrastructure & Pipelines Pipelines can make seller or buyer dependent. Pipelines are usually single-market focused. Pipelines have strategic geo-political impacts. Pipelines, particularly for crude, reduce transport cost. Pipelines cannot easily divert supply to alternative buyers. 21 ASIA PACIFIC ENERGY CONSULTING
    • Crude Pipeline Impacts Will provide Asian refiners dream crude – mid/heavy & sweet. Piped sales encourage sellers to assure supply flow. Pipelines avoid maritime chokepoints (Hormuz; Melaka). Incremental piped supply pressures traditional crude sellers. Mideast exporters must reconsider heavy/light, sweet/ sour price deltas. New crude blends to emerge? 22 ASIA PACIFIC ENERGY CONSULTING
    • Listing Emerging Trade Routes The Northeast Passage: Circum-polar from Norway, Western Russia to East Asia Expanded Panama Canal: South American crude from Columbia, Venezuela & Brazil East African Exports: New South Sudan and Uganda pipelines to coast (Kenya, Tanzania?) UAE Bypass Trunkline: Crude pipeline bypassing Hormuz; June 2012. Canadian Syncrude Pipelines: Bringing Alberta production to the Pacific Coast 23 ASIA PACIFIC ENERGY CONSULTING
    • Transportation Infrastructure This sector not sexy, but necessary – like socks But can quickly reshape oil economics Impacts cost, operation flexibility and efficiency Too often ignored for big-ticket items, such as refineries 24 ASIA PACIFIC ENERGY CONSULTING
    • Operational Ways & Means Increasing Ways & Means can be done in other non- traditional ways:  By reorganizing use of physical assets, i.e. shifting strategic stocks to working stock basis.  By creative use of supporting non-physical assets, i.e. hedging, paper trade, futures  Working with government to achieve better supply security Always remembering that Ways & Means rely not only on physical assets 25 ASIA PACIFIC ENERGY CONSULTING
    • Conclusions Oil & gas are physical commodities that must be moved, stored and processed. Ways & Means include physical infrastructure, but also non-physical operating tools – finance, management, regulation. Asia Pacific has become too big for world energy to ignore. Yet Asia Pacific has lagged in creating regional energy infrastructure. Demand giants China and India will lead Asia Pacific through 2020. Yet India is lagging in Ways & Means. Better infrastructure increases supply security, while raising commercial profits, efficiency and operating flexibility . Trade, pricing and supply soon will be reshaped by new energy infrastructure. 26 ASIA PACIFIC ENERGY CONSULTING