Energy Analysts International Westminster, Colorado
<ul><li>Rocky Mountain Business Analysis,Outlook and Strategy </li></ul><ul><li>Selected Excerpts from EAI’s </li></ul><ul...
Overview of  Corporation <ul><li>Incorporated in 1982 </li></ul><ul><li>Original and current mission:  To provide the ener...
Business Areas  Serving the Petroleum Industry Figure ES-3  EAI Energy Services Computer Applications Support Services Ene...
Services Energy Consulting Figure ES-4  Client Specific Studies Special Topic/ Industry Studies Integrated Regional Tracki...
<ul><li>Western Region Specific Consulting Products </li></ul><ul><li>Refined Product and Crude Oil Specific </li></ul><ul...
Rocky Mountain Business Analysis and Outlook-2002 Integrated Rocky Mountain Petroleum  Trends and Outlook EAI (Energy Anal...
<ul><li>Western Region Refined Product </li></ul><ul><li>Supply-Demand Network </li></ul><ul><li>Western Region is relativ...
<ul><li>Western regions growing increasingly short of product.  Accelerated consumption growth through the mid to late 199...
Regional Gasoline Balance:  Local Refining Output minus Consumption U.S. Western Regions 2001 Total Gasoline, MBPD Overall...
Incremental Gasoline Supply Requirements Western Regions (PNW, PSW and RM) KM -> Arizona from El Paso PSW Waterborne/ Long...
<ul><li>Refined Product Network Status </li></ul><ul><li>Rocky Mountain Region-2002 </li></ul>Total Chevron Pl Capacity (6...
<ul><li>Williams Product Pipeline Proposed Routing </li></ul><ul><li>West Texas to Salt Lake City </li></ul>(xx) Proposed ...
<ul><li>Gasoline Demand Trends and Outlook </li></ul><ul><li>Rocky Mountain States </li></ul><ul><li>Product demand growth...
Rocky Mountain Total Light Product Supply-Demand Balance Trend Total Light Product = Gasoline, Jet, Distillate - MBPD Impo...
<ul><li>Refinery Throughput Profile </li></ul><ul><li>Rocky Mountain Region Refineries </li></ul><ul><li>1991 -  2002 </li...
<ul><li>Geographical Phase In Area  </li></ul>Pacific Northwest Rocky Mountain Gulf Coast KMPL CENEX Pioneer Kaneb Chase Y...
<ul><li>Impact of New Low Sulfur Product </li></ul><ul><li>Specifications </li></ul><ul><li>1 of 2 </li></ul><ul><li>New l...
<ul><li>Impact of New Low Sulfur Product </li></ul><ul><li>Specifications </li></ul><ul><li>2 of 2 </li></ul><ul><li>Ultra...
<ul><li>Major Issues and Topics </li></ul><ul><li>Rocky Mountain Petroleum Business </li></ul><ul><li>(Page 1 of 3) </li><...
<ul><li>Major Issues and Topics </li></ul><ul><li>Rocky Mountain Petroleum Business </li></ul><ul><li>(Page 2 of 3) </li><...
<ul><li>Major Issues and Topics </li></ul><ul><li>Rocky Mountain Petroleum Business </li></ul><ul><li>(Page 3 of 3) </li><...
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  1. 1. Energy Analysts International Westminster, Colorado
  2. 2. <ul><li>Rocky Mountain Business Analysis,Outlook and Strategy </li></ul><ul><li>Selected Excerpts from EAI’s </li></ul><ul><li>Rocky Mountain Business Study </li></ul><ul><li>For the </li></ul><ul><li>Western Interstate Energy Assocation </li></ul><ul><li>October 2, 2002 </li></ul>
  3. 3. Overview of Corporation <ul><li>Incorporated in 1982 </li></ul><ul><li>Original and current mission: To provide the energy industry products and services built upon market driven, integrated and “Bottom-Up” information and analysis. </li></ul><ul><li>Consulting services built upon innovative but standardized approaches to forecasting, planning, strategy / business development, and business benchmarking / competitive analysis. </li></ul><ul><li>EAI clientele includes all major U.S. and Canadian petroleum companies, petroleum transportation companies and a growing base of energy consumers. </li></ul>Figure ES-2 EAI (Energy Analysts International, Inc.)
  4. 4. Business Areas Serving the Petroleum Industry Figure ES-3 EAI Energy Services Computer Applications Support Services Energy Consulting EAI (Energy Analysts International, Inc.)
  5. 5. Services Energy Consulting Figure ES-4 Client Specific Studies Special Topic/ Industry Studies Integrated Regional Tracking and Analysis &quot;Real Time&quot; Support Services EAI (Energy Analysts International, Inc.)
  6. 6. <ul><li>Western Region Specific Consulting Products </li></ul><ul><li>Refined Product and Crude Oil Specific </li></ul><ul><li>Refined Product Study Products </li></ul><ul><ul><li>Western Region Petroleum Business Outlook and Strategy </li></ul></ul><ul><ul><li>Rocky Mountain – Petroleum Business Analysis and Outlook </li></ul></ul><ul><ul><li>U.S. Hypermart Petroleum Market Outlook Study </li></ul></ul><ul><li>Crude Oil Study Products </li></ul><ul><li>West Coast Crude Supply, Logistics and Market Outlook </li></ul><ul><li>Rocky Mountain Petroleum Business Outlook </li></ul><ul><li>Gulf Coast Crude Supply, Distribution and Refining Outlook </li></ul><ul><li>North American Crude Supply, Logistics and Refining Outlook </li></ul>
  7. 7. Rocky Mountain Business Analysis and Outlook-2002 Integrated Rocky Mountain Petroleum Trends and Outlook EAI (Energy Analysts International, Inc.)
  8. 8. <ul><li>Western Region Refined Product </li></ul><ul><li>Supply-Demand Network </li></ul><ul><li>Western Region is relatively isolated from Gulf Coast </li></ul><ul><li>until Longhorn starts up and KMPL is expanded </li></ul>Refining Center Primary Pipeline Product Movement Pacific Northwest Rocky Mountain Gulf Coast KM Cenex Pioneer Wyco Chase Yellowstone KMPL Chevron ATA DS SAAL Phillips DS Olympic KM Sinclair Conoco Conoco Wyco CALNEV Phoenix Tucson El Paso Tanker Movement KMPL Pacific Southwest Chevron LH Shamrk Shell FA Tucson Foreign and Gulf Coast Imports
  9. 9. <ul><li>Western regions growing increasingly short of product. Accelerated consumption growth through the mid to late 1990’s under conditions of moderate refinery expansion has tighted supply. </li></ul><ul><li>Although future consumption growth is not likely to be as aggressive, the Western regions will require increasing supply of product from outside the trade area. </li></ul><ul><li>Western regions import product from the Gulf Coast, Caribbean, West Texas, Texas Panhandle and Midcontinent regions. </li></ul><ul><li>Rocky Mountain region interacts with West Coast regions in several areas: 1) West Coast product supplements RM supply for Eastern WA market, 2) SLC supply interacts with WC supply out of Reno and Las Vegas, and, 3) West TX refiners supply both RM and Tucscon-Phoenix markets. </li></ul>Overview of U.S. Western Regions
  10. 10. Regional Gasoline Balance: Local Refining Output minus Consumption U.S. Western Regions 2001 Total Gasoline, MBPD Overall the western states are growing increasingly gasoline short
  11. 11. Incremental Gasoline Supply Requirements Western Regions (PNW, PSW and RM) KM -> Arizona from El Paso PSW Waterborne/ Longhorn Phoenix Chase/UDS/Phillips to Dnvr With no refinery closures;assumes reasonable creep for PNW and PSW areas; MTBE phase-out impact on refinery intermediate stock loss included in plot Western regions will need approximately 150 MBPD of incremental gasoline over next 5 years including adjustment for gasoline pool shrinkage due to MTBE phaseout. Forecast
  12. 12. <ul><li>Refined Product Network Status </li></ul><ul><li>Rocky Mountain Region-2002 </li></ul>Total Chevron Pl Capacity (64) Casper Salt Lake City CO UT ID MT WY Billings North Platte Boise Fountain Cheyenne (17) Seminoe (34) Pioneer Pl (48) Sinclair Pl (20) Phillips Pl (41.5) Chase Pl (49) KNB PL(8”) KNB Pl (8&quot;) Cenex Pl (19) Yellowstone Pl (56) Kaneb (21) Valero (50)** Sinclair refinery expansion Both Phillips and Valero pipelines have open capacity Valero pl capacity from McKee to Co Springs = 50 MBPD High Utilization Seasonal Bottlenecks Barge Expanded by 11 MBPD Potential MC refinery shutdowns and high utilization Longhorn startup in 2002/Equilon TXNM conversion in EIS stage Refinery supply constrained Retraction to serve expanding SLC Continued demand growth Demand increasing/ refineries constrained Incremental Valero supply vs local refining Newcastle KNB Pl (14) KNB (10&quot;) Rail from Helena to Thompson Falls/Spokane Missoula Expanded to 70 MBPD in 2000 Denver Chevron Pl (17) To Moses Lake Spokane To Minot/Fargo To Rapid City Sinclair Built Segment to Chase and can reverse Denver Products Pl Gas Diesel Proposed Williams Pipeline Project passed EIS stage. Startup in 2003 Figure PRS-8 Refinery Utilization Refineries in Colorado, Montana , Utah and Wyoming operating seasonally at full capacity Major Demand Centers Major Refining Centers High Demand Growth Areas Pipeline Capacities in MBPD (xx )
  13. 13. <ul><li>Williams Product Pipeline Proposed Routing </li></ul><ul><li>West Texas to Salt Lake City </li></ul>(xx) Proposed pipelines Refinery Pipeline capacities, MBPD El Paso Dallas Houston Corpus Christi San Antonio Austin Lubbock Midland Odessa Artesia Albuquerque Amarillo Abilene Wichita Falls San Angelo Flagstaff Tucson Phoenix Juarez EM (17) (32) (8) (111) SF (173) (17) (55) SF (95) (17) CH (25) DS (50) (20) DS (24) SH (15) NV TX LH FA TX FA PR WL (13) FA (17) TX DS (32) FA Ft Worth Grand Junction Salt Lake City Farmington DS CH DP WY PH MP PI CH CH Chevron DP Den Prod DS Dia Shamrock EM Emerald FA Fina LH Longhorn MP Mapco MS Mesa NV Navajo PH Phillips PI Pioneer PR Pride SF Santa Fe EQ Equilon WL Williams KN Kaneb Denver Aspen New Construction
  14. 14. <ul><li>Gasoline Demand Trends and Outlook </li></ul><ul><li>Rocky Mountain States </li></ul><ul><li>Product demand growth projected to slow across region, most of demand concentrated in Colorado and Utah </li></ul>Colorado Wyoming Idaho Montana Utah
  15. 15. Rocky Mountain Total Light Product Supply-Demand Balance Trend Total Light Product = Gasoline, Jet, Distillate - MBPD Imports to Rockies Refinery Production Consumption + Exports Williams pipeline to add 65 MBPD of pipeline import capacity
  16. 16. <ul><li>Refinery Throughput Profile </li></ul><ul><li>Rocky Mountain Region Refineries </li></ul><ul><li>1991 - 2002 </li></ul><ul><li>Note High Utilization Rates, Capacity Creep and Crude Run Growth </li></ul>Refinery Runs Crude Tower Capacity Crude Tower Utilization
  17. 17. <ul><li>Geographical Phase In Area </li></ul>Pacific Northwest Rocky Mountain Gulf Coast KMPL CENEX Pioneer Kaneb Chase Yellowstone KMPl Chevron ATA Valero SAAL Phillips Valero Olympic KMPL Sinclair Cheyenne Seminoe Kaneb GATX Pacific Southwest Phoenix Tucson El Paso Tanker Movement KMPL Chevron Shell FA TX KPL WPL GPA area shaded - consists of CO, ID, MT, UT, WY, ND, NM plus outlying markets supplied by GPA refiners 20 refineries are in GPA and produced 359 MBPD gasoline in 2001. Have Delay For Completing Investments To Produce Low Sulfur Fuels Refining Center Primary Pipeline Product Movement
  18. 18. <ul><li>Impact of New Low Sulfur Product </li></ul><ul><li>Specifications </li></ul><ul><li>1 of 2 </li></ul><ul><li>New low sulfur gasoline specifications - 150 ppm for years 2004 to 2007 in GPA. Changes to national standard 30 ppm in 2007. Small refiner hardship exemption through 2009. Early commitment to ULSD allows sulfur credits and delay of LSG. </li></ul><ul><li>For 2004 - 2006 interim specification: Six refiners were evaluated to have to add naphtha hydrotreating or change crude slate - Frontier, Little America, ChevronTexaco, Conoco - Denver, and Valero refineries. Chevron and Montana Refining may be borderline. Modified Sinclair refinery and Conoco Billings come close to 30 ppm. </li></ul><ul><li>For 2007 30 ppm specification: All others with the possible exception of Silver Eagle will have to make some process unit additions (most considering hydrotreating) or change crude slate. </li></ul>
  19. 19. <ul><li>Impact of New Low Sulfur Product </li></ul><ul><li>Specifications </li></ul><ul><li>2 of 2 </li></ul><ul><li>Ultra low sulfur diesel - requires major revamps and additions to existing distillate hydrotreaters or addition of new units for those plants without. Off-road market may be an option for some small refiners considering no investment or those considering derating the capability of in-place units. </li></ul><ul><li>Canadian synthetic crudes targeting replacing declining Rocky Mountain light sweet crude production. Local sweet crude production in Utah, Western Colorado, and Southwest Wyoming very important. Also natural gasoline will become more important in this context. </li></ul>
  20. 20. <ul><li>Major Issues and Topics </li></ul><ul><li>Rocky Mountain Petroleum Business </li></ul><ul><li>(Page 1 of 3) </li></ul><ul><li>Product demand growth has slowed considerably in eastern Rockies and somewhat in western Rockies. </li></ul><ul><li>West Coast product growing tighter with MTBE phase out and may impact ethanol blended oxy fuels in UT and CO. </li></ul><ul><li>Declining RM crude production and accelerated need for Canadian conventional and syncrude supply. </li></ul><ul><li>New product pipeline projects are stalled due to Williams financial problems; Longhorn from Gulf Coast to El Paso delayed (start-up potentially 2003), Williams to SLC may be on-hold. </li></ul>
  21. 21. <ul><li>Major Issues and Topics </li></ul><ul><li>Rocky Mountain Petroleum Business </li></ul><ul><li>(Page 2 of 3) </li></ul><ul><li>Product pipeline expansions to Midcontinent-Midwest from Gulf Coast will improve supply access between Midcontinent and Eastern Rocky Mountains </li></ul><ul><li>Environmental regulations lowering sulfur level in gasoline and diesel beginning in 2004 and 2006; designation of RM as Geographical Phase In Area; refinery survivability issue. </li></ul><ul><li>Some potential for small refinery closures in Rocky Mountains. This will increase reliance on supply areas outside the region </li></ul><ul><li>A tightening of supply could also impact the availability of RM product for Eastern Washington, Southern Utah and western Nevada markets (areas that are also supplied with west coast product) </li></ul>
  22. 22. <ul><li>Major Issues and Topics </li></ul><ul><li>Rocky Mountain Petroleum Business </li></ul><ul><li>(Page 3 of 3) </li></ul><ul><li>Potential closure of New Mexico and West Texas refining capacity will impact product supply for New Mexico in absence of Longhorn product pipeline start-up. </li></ul><ul><li>Canadian surplus of synthetic crude, bitumen and some conventional light streams will result in “push” to RM region. This situation coupled with a relatively stable product market will continue to make the area one of the most positive refining centers. </li></ul><ul><li>This situation could actually spur additional refinery investment to offset some potential closures depending on the outlook for additional pipeline capacity to serve the RM region. </li></ul>
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