2012 Reenergize the Americas 2A: Jesse Thompson

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  • Exports of US refined products have grown rapidly in recent years. -- Exports are a product of (1) excess US capacity, (2) weak domestic demand, and (3) strong demand from developing countries -- Refiners experienced good profits during the last decade, and invested in expansion of existing plants. Between 2000 and 2010, domestic refining capacity grew 14 percent. -- The run-up in oil prices from 2003-2008 discouraged domestic consumption of oil products. US oil consumption is down 3.2 percent since 2000. -- Rapid growth in the developing world led to strong foreign demand for oil, and exports from the Gulf Coast grew 166 percent between 2000 and 2010, to over 2 million barrels per day. -- The Gulf Coast accounted for 78 percent of US petroleum product exports by 2010
  • 2012 Reenergize the Americas 2A: Jesse Thompson

    1. 1. How Shale is Impacting the Texas Economy Extraction Chemicals Refining
    2. 2. After 30 years of decline,Jan 1981=100 tight oil drives production growth 120 New Mexico110 U.S. Texas100 90 80 70 60 50 40 30 Jan-1981 Jan-1985 Jan-1989 Jan-1993 Jan-1997 Jan-2001 Jan-2005 Jan-2009SOURCE: Energy Information Agency.
    3. 3.  Oil and gas revenues impact a variety of state taxes  Severance taxes  Sales taxes on energy equipment  Retail sales in energy regions Sales tax collections up 10.1% in July from July 2011 State wide oil and gas severance taxes up 61% in first six months of this fiscal year to $1.8 UTSA study: in 2011 EF generated $312 million in state taxes
    4. 4. 30 Bone Springs Barnett 10 25 Real Weekly Wages Real Weekly Wages 20 Avg Emp Avg Emp 5 15 10 0 5 0 -5 -5 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 Spraberry Wolfcamp Eagle Ford 20 10 Real Weekly Wages Real Weekly Wages 10 Avg Emp Avg Emp 5 0 0 -10 -5 -20 -10 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012*Growth rates are year-to-year. Adjusted with U.S. chained Personal Consumption Expenditures index deflator.SOURCE: Quarterly Census of Wages and Employment; Bureau of Labor Statistics
    5. 5. Oil rises while shale and weather crush natural gas 12 Oil/Gas* 10 8 6 4 2 0 Jan-1974 Aug-1979 Mar-1985 Oct-1990 May-1996 Dec-2001 Jul-2007*Refiners acquisition cost of imported crude / natural gas wellhead price (BOE).SOURCE: Energy Information Administration. Authors Adjustments.
    6. 6.  Planned expansions and new facilities in Gulf Coast could increase U.S. ethylene capacity by nearly 30 percent by 2017 More pipelines and fractionation capacity are also being added Two large TX refineries recently announced expansions
    7. 7. the U.S. becomes a net exporter of gasoline and diesel Exports of Product Triple Diesel & Gasoline net imports plunge4000 15003500 10003000 5002500 02000 -5001500 -10001000 Distillates 500 -1500 Finished Motor Gasoline 0 -2000 2000 - Jan 2003 - Jan 2006 - Jan 2009 - Jan 2012 - JanJan-1974 Sep-1983 May-1993 Jan-2003SOURCE: Energy Information Agency.
    8. 8. Cents/lbs Divergent Oil & Gas Prices lead to rise Ethane advantage60504030 Ethane2010 0-10-20 Naphtha-30-40 Jan-1997 Oct-1998 Jul-2000 Apr-2002 Jan-2004 Oct-2005 Jul-2007 Apr-2009 Jan-2011SOURCE: Muse, Stancil, and Co Ethylene Cash Margins. Authors adjustments.
    9. 9. 2011 Nameplate 2011 Ethylene Feedstock Mix* Capacity 1.0 NGL Area tonnes/year 0.9 Naptha 0.8 Asia 29,242,000 Gas oil 0.7 Other Middle East 24,059,000 0.6 0.5 United States 27,593,206 0.4 Western Europe 24,384,000 0.3 0.2 0.1* Percent of capacity reporting feedstock usage for each 0.0region was: Asia-82%, ME-46%, U.S.-99%, WE-89%, ROW-56%. 73% of global capacity reported feedstock use. Asia Middle United WesternSOURCE: 2012 International Survey of Ethylene Steam East States EuropeCrackers. Authors calculations.
    10. 10. Company Location Capacity Start-Up (mm lb/yr)Dow Chemical US Gulf Coast 4,200 2014-2017Ineos Lake Charles, LA 3,000 2018CP Chem Baytown, TX 2,500 2016/2017Braskem/Idesa Mexico 2,200 2015Shell Chemical Northeast US 2,000 2016+Formosa Point Comfort, TX 1,760 2015LyondellBasell Texas, Illinois 1,450 2012-2014Dow Chemical Hahnville, LA 800 2012Q4Williams Lake Charles, LA 600 2013Q3Westlake Chemical Lake Charles, LA 230 2012Ineos Chocolate Bayou, TX 230 2013 Source: Chemical Week, December 2011
    11. 11. The Eagle Ford Special thanks to Dr. Keith Phillips. Senior Economist, San Antonio Branch of the Federal Reserve Bank of Dallas.
    12. 12. Millions of barrels100 92.8 (projected) 90 80 70 Gas production (barrels of oil equivalent) 51.2 60 (projected) Oil production 50 NGL production 40 24 30 (projected) 20 10 0 2009 2010 2011 2012 Source: Texas Railroad Commission
    13. 13.  Lease payments $7.5 billion, 2007 - 2011 Royalty payments $5.2 billion, 2007 - 2011 Total EF personal income in 2009 was about $23.0 billion, $12.2 billion without Webb and Brazos counties
    14. 14. Annualized job growth (percent)3025 Mining20 General freight trucking15 Pipeline transportation10 5 0 Corpus Christi Houston San Antonio Source: Texas Workforce Commission, Author s calculations
    15. 15. Rig count in slow decline on oversupply of gas and gas liquidsNumber 2,500 Gas directed Oil directed 2,000 1,500 1,000 500 0 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012SOURCE: Baker Hughes

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