Plg stifel presentation v gb final 120913


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Topics to be discussed include:
• Impact of shale oil and gas on U.S. industry competitiveness
• Growth expectations for unconventional oil and natural gas production
• Competitive dynamics between pipelines and crude-on-rail
• Related opportunities / challenges for the rails & equipment companies
• Time for Q&A will be allotted at the end of the call

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Plg stifel presentation v gb final 120913

  1. 1. Logistics Engineering Supply Chain Dial In Numbers (888) 267‐2848 (Domestic) (973) 413‐6103 (International) Passcode:  641287 Stifel Capital Markets Conference Call December 9, 2013 | 11:00 AM EST 1
  2. 2. Introduction Stifel Nicolaus Capital Markets  Conference Call Date:      Monday, December 9, 2013 Time:     11:00 AM EST Length:  60 minutes Shale Gas Implications for US  Manufacturing Renaissance Crude by Rail  Update Taylor Robinson President Graham Brisben CEO Host Michael Baudendistel, CFA, Transportation Analyst Dial In Numbers (888) 267‐2848 (Domestic) (973) 413‐6103 (International) Passcode:  641287 Replay (800) 332‐6854 (Domestic) (973) 528‐0005 (International) Passcode: 641287 2
  3. 3. About PLG Consulting » Boutique consulting firm with team members throughout the US Established in 2001 Over 80 clients and 200 engagements Significant shale development practice since 2010 Partial Client List » Practice Areas Logistics Engineering Supply Chain » Consulting services Strategy & optimization Assessments & best practice benchmarking Logistics assets & infrastructure development Supply Chain design & operationalization M&A/investments/private equity » Specializing in these industry categories: Energy Bulk commodities Manufactured goods Private Equity 3
  4. 4. Logistics Engineering Supply Chain Shale Gas Implications for US Manufacturing Renaissance A detailed analysis of shale’s direct impact to the renaissance of US manufacturing Real World Experience Strategic Perspective Depth of Analysis Hands-on Engagement Presented by Taylor Robinson December 9, 2013 4
  5. 5. Shale Gas Is More Important to US Industry Competitiveness Than Oil Oil vs. Gas Price on BTU Basis » Natural gas is 4X cheaper than oil on a BTU-basis Innovation will convert more transportation fuels and other energy requirements to natural gas $30 WTI Crude ($/MMBTU) $25 Natural Gas ($/MMBTU) » US electricity prices are the lowest in the industrial world US industries are now the power cost leaders Gas drives an increasing share of the US electricity generation capacity $20 $15 $10 Chemicals Resins Compounds » Natural gas is a cleaner burning fuel compared to other hydrocarbons $5 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: EIA A Average Cost of Electricity (2012) ¢/kWh » US gas downstream products will have world class competitiveness - are the “building blocks of manufacturing” 35 30 25 20 15 10 5 0 31¢ 30¢ 18¢ 13¢ 9¢ 7¢ 4¢ 3¢ 5
  6. 6. US Shale Gas History Gas rig count has decreased significantly, but gas production has increased – Why? » Shale gas prolific supply growth in 2007 & 2008 caused a dramatic price drop in 2009, rigs shifted to oil & liquids » Drilling productivity continues to lower costs and increase production with less rigs » Rig Count by Class vs. Gas Production And the Liquids (Crude, NGL) wells produce dry natural gas as a by-product Representative Productivity Gains – Fayetteville Shale Play Source: Southwestern Energy investor presentation, September 2013 Source: Bentek, September 2013 6
  7. 7. US Shale Gas Future » Abundant US gas supply for the foreseeable future US Natural Gas Supply/Demand Low cost reserves in accessible locations near population US will become a net gas exporter by 2020 » US gas demand will grow gradually due to: Coal-fired generation plant converting to gas More industrial use – steel, fertilizer, methanol Mexican export via pipeline and LNG export overseas Increasing use as transportation fuel US gas cost competitiveness is sustainable Supply will overwhelm demand as prices approach $5 US government will likely limit LNG export to protect US from world gas market price Annual Average Henry Hub Spot Natural Gas Prices 2011 $ per M Btu » Source: EIA, Annual Energy Outlook, 2013 Source: BENTEK, September 2013 7
  8. 8. Marcellus: Future Gas Play of Choice » Marcellus is gas play of choice Massive scale near highest US population density Rapid increase in production – now 5th largest production “country” in the world Low cost wells with high productivity enables dry gas profitability for efficient drillers at current price Export potential for LNG & NGL from Marcus Hook and other export terminals However, no ethane crackers in the region, so gas NGLs need to be piped to Gulf region for further processing Shale Gas Development Rates Shale Play IRR Currently, only profitable dry  gas play Source: Bentek, September 2013 Source: Bentek, September 2013 8
  9. 9. Shale Gas Downstream Products Inputs >> Wellhead >> Direct Output >> Thermal >> Fuels >> Raw Materials >> Generation Downstream Products Steel Process Feedstocks Proppants Fertilizer (Ammonia) Gas Home Heating (Propane) OCTG Methanol Other Fuels Chemicals NGLs Feedstock (Ethane) Feedstock (Propane, Butane, etc) Water Cement Chemicals and Resins Chemicals and Resins Crude Petroleum Products Gasoline Petrochemicals Diesel, Jet Fuel Other Refined Products » Shale crude oil makes the headlines, but shale gas & NGLs will drive US industry and manufacturing cost competitiveness and growth 9
  10. 10. NGL Boom In Progress » NGL = Natural Gas Liquids or “Wet Gas” Prevalent in large Crude plays as a by product – Bakken, Eagle Ford, Permian Prolific areas in eastern Marcellus and Utica Adds profitability potential for oil & gas production companies » NGLs require processing and fractionation Capacity coming on line quickly in multiple plays 3-9 gallons/MCF (thousand cubic feet) – Ethane ~42-65% – Propane ~28% – Normal Butane ~8% – Iso-Butane ~9% – Condensate ~13% » NGL supply growth will outpace downstream product demand in North America Ethane currently “rejected” in large volumes due to low prices As processing capacity increases, export of downstream products will grow significantly due to cost advantage 10
  11. 11. Ethane is the “Building Blocks” for Manufacturing Feedstock/ Intermediary Finished Products 11
  12. 12. Shale Gas Phased Impact To US Industrial & Manufacturing Cost Competitiveness 2008 2010 2012 2014 2016 2018 2020 Phase III – “Manufacturing”:  Raw material cost driven Shale  Gas Boom Phase II ‐ Downstream Products:   Resins, Chemicals Phase I ‐ Gas & Power‐intensive Industries:  Steel, Fertilizer, Methane  » Phase I & II expansion, brownfield and greenfield plants announced – 2014-2017 investment peak Nearly $90B of chemical industry investments have been announced with more announcements expected Foreign investment is over 50% of announced Not all of the announced factories will be built or be delayed due to regulatory issues » Ethane crackers are vital to downstream growth 10 expansions and 7 greenfield crackers announced 3-5 world scale crackers likely to be built 12
  13. 13. Phase I – Gas- and Power-Intensive Industries Are Advantaged Now » Steel example -- Direct Reduction Iron (DRI) Average Cost of Electricity (2012) Gas strips oxygen from iron core to make high purity/quality pellets DRI pellets cost ~$270/ton vs. scrap steel cost ~$390/ton Nucor/Encana $750 M plant in St. James Parish, LA is starting early 2014 with capacity of 2.5 M tons/year (will be largest DRI plant in the world) Voestalpine 2 M tons/year HBI and DRI plant is due online in early 2016 » Fertilizer example – Numerous new plant announcements Three iron‐ore storage domes stand near Nucor's direct‐reduced iron plant in  Convent, ‐ Feb 1, 2013 Gas is feedstock for ammonia/nitrogen 5 plants will likely be built out of the 20 factory announcements First world scale plant in nearly 25 years in Wever, IA – Iowa Fertilizer (OCI) – projected to start in late 2015 CF Industries’ two fertilizer expansions that have been announced in IA and LA are likely to be built – 2016 start » Methanol example – Imports will be displaced Beaumont OCI plant restoration in 2012 – producing methanol & ammonia LyondellBasell’s restart of mothballed Texas plant operational late 2013 Methanex is relocating two plants from Chile to LA – first plant expected operational by end of 2014 and second early 2016 OCI new plant announced in Beaumont – Q4 2016 start Valero evaluating bolt-on approach for methanol plant at refinery in LA, project could startup in 2017 13
  14. 14. Phase II - Low Cost Gas Feedstock Provides Significant Cost Advantages for Chemicals & Resins » US has a large structural cost advantage due to gas-based ethane for downstream products Europe and Asia are tied to crude-based naptha as a feedstock for their downstream processing US has shifted to ~90% ethane feedstock for ethylene » However, US ethane cracker and processing capacity is tight and ethylene prices are inflated Current ethane cracker margins 50-60 cents/lb Additional cracker capacity expected in 2016/2017 Margins/prices will moderate as more capacity comes online New US resin facilities also on the drawing board Excess resin capacity will promote globally competitive prices and large export increases Source: Townsend Solutions North America Ethylene Expansions 50,000 k tons 45,000 k tons 40,000 35,000 30,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actual Capacity Additional Capacity Sources: Townsend Solutions 14
  15. 15. Phase III - Raw Material Cost Advantage Is Key Cost Driver to Reshoring Growth » Raw materials normally accounts for 60-70% of manufacturing cost of goods sold (COGS) Most product cost competition is won or lost here Shale gas giving the US an advantage for steel, plastics, chemicals » Total labor cost is usually ~20% of COGS for US manufacturers China labor cost in $ will continue to rise due to inflation and currency appreciation US labor rate expected to remain stable » Transportation & Logistics costs are in “Other” Asia/China has 5~10% cost disadvantage due to extra ~ 1 month shipping lead time (major cash flow disadvantage) Transportation costs continue to rise » Energy cost is usually less than 5% for final manufacturer However, energy costs are buried in raw material costs and transportation and can be more substantial in energy-intensive products US has a tremendous advantage vs. industrialized world 15
  16. 16. Implications and Wrap Up » Reshoring manufacturing volume will be limited until raw material costs are advantaged with some exceptions: Durable goods Quality differentiation Innovation / proximity to market advantages Mexico near-sourcing » Shale gas-driven raw material advantages will take 5 years+ to flow through supply chain Ethane crackers are current bottleneck to downstream cost competitiveness Bottleneck will be relieved in 2016/2017 timeframe Imports will be displaced – exports will grow dramatically in some industries » Shale gas competitiveness is sustainable with huge, accessible supply reserves with continuous production cost improvement » Shale oil is “icing on the cake” for the US Shale oil and gas supply chain will drive job growth Energy independence coming! Improvement in trade deficit 16
  17. 17. Thank You! For follow up questions and information, please contact: Taylor Robinson, President +1 (508) 982-1319 / 17
  18. 18. Logistics Engineering Supply Chain Crude By Rail Report A detailed look at the impacts of crude by rail on the marketplace Real World Experience Depth of Analysis Strategic Perspective Hands-on Engagement Presented by Graham Brisben December 9, 2013 18
  19. 19. The Shale Development Revolution – Big Picture Disruptive Technologies • Hydraulic Fracturing • Horizontal Drilling Market Dynamics • • • • Supply & Demand Customers Price Logistics Continuous Evolution • Productivity • Rapid Change 19
  20. 20. Shale Play Product Flows Outbound » Natural Gas Majority via pipelines, some trucks » Natural Gas Liquids (NGLs) Requires processing (fractionation) 3-9 gallons/MCF (thousand cubic feet) – – – – – Ethane Propane Normal Butane Iso-Butane Condensate ~42-65% ~28% ~8% ~9% ~13% » Crude Oil Bakken play as a model 20
  21. 21. “Tight” Oil Sources Driving Overall North American Growth » Dramatic increases in production due to hydraulic fracturing and horizontal drilling 7.74 MM bbl/day Projected to grow by ~30% over next four years “Tight” oil sources driving overall North American growth Production forecasts frequently revised upward Largest area of nonOPEC growth is North America Source:  BENTEK presentation, November 2013 21
  22. 22. Some Basic Facts About Crude Oil: Grades and Qualities » Heavy/sour Higher sulfur content, yield for asphalt & diesel Sources include – – – – Western Canada (largest single play in North America) Venezuela Mexico, Alaska North Slope Middle East (light/sour) Significant investments made ($48B since 2005) at select refineries to install coker units that will allow processing of heavy/sour Heavy/sour crude has a natural home in Midwest and US Gulf Coast (~2.8 MM bpd demand at USGC) » Light/sweet Brent, WTI, and US shale play crudes (Bakken, Permian, Niobrara, Eagle Ford) are light/sweet US is close to saturation point on light/sweet crude at mid-continent and USGC refining areas Source: RBN Energy 22
  23. 23. Crude Market Overview ANS Oil Sands Hardisty, AB Pacific Northwest Refiners PADD V Demand 2,500 kbpd Bakken Clearbrook, MN Light/Sweet PADD II Demand Heavy/Sour 3,325 kbpd East Coast Refiners Light/Sweet California Refiners Heavy/Sour Midwest Refiners 1,075 kbpd PADD I Demand Light/Sweet Heavy/Sour Cushing, OK Permian Brent St. James, LA LA Gulf Coast Refiners TX Gulf Coast Eagle Ford Refiners Mexican Maya 8,100 kbpd PADD III Demand Light/Sweet Sources: EIA, PLG Analysis (Google Earth) Venezuela Crude Heavy/Sour West African Brent Middle East 23 West African
  24. 24. Displacement of Waterborne Crudes by Mid-Continent Sources » Surging domestic production is diminishing imports West African imports already down ~70% from 2010 levels » Shift from coastal to mid-continent supply points necessitated “re-plumbing” the flow of crude in North America Pipeline reversals, repurposing, new starts Crude by rail comes of age – born in the Bakken Source:  BENTEK presentation, November 2013 24
  25. 25. Crude By Rail From the Bakken – A Short History » 2009-2010: Objective of crude by rail to “bridge the gap” until pipelines built and get product to market ~932,000 BPD September 2013 2010-2011 discount of ~$8-12/bbl for Bakken crude vs. peer WTI Undervalued due to logistics constraints “stranding” the oil First outbound unit train shipment December, 2009 » 2011-2012: Significant development of crude by rail loading terminals Source: EIA, North Dakota Pipeline Authority, PLG » Initial destination is Cushing, OK Delivers better price than Clearbrook » 2012-2013: Rail emerges as tool of arbitrage Flexibility to sell Bakken crude at other light/sweet trading hubs – St. James in particular – allows traders to exploit price differentials Higher cost of rail vs. pipe is offset by superior “optionality” Map by PLG Consulting 25
  26. 26. Crude Oil by Rail vs. Pipeline » Rail cost: 50-100% more expensive than pipeline transport » Near-term offsetting rail advantages: » Rail pricing drivers Advantaged rate structures for first-movers, volume, and unit train operators “Floor” has been set for crude by rail pricing Crude price differentials more important than cost vs. pipeline Cost Comparison: Bakken to Cushing and USGC $16.00 $15.00 $14.00 Dollars Per Barrel Site permitting, construction much faster Lower capital cost Scalable Shorter contracts (2-3 year commitments vs. 10 years for pipeline) Faster transit times Access to coastal areas not connected via pipeline Origin/destination flexibility Primary advantage: Tool of arbitrage for trading desks $12.00 $12.00 $10.50 $10.00 $8.00 $6.50 $6.00 $4.00 $2.00 $Pipeline to Cushing Source: PLG analysis Rail to Cushing Pipeline to Pt Arthur Rail to Pt Arthur 26
  27. 27. US Shale Plays and CBR Loading and Offloading Terminals PADD V Demand 2,500 kbpd Light/Sweet 3,325 kbpd PADD II Demand Light/Sweet Heavy/Sour Heavy/Sour 1,075 kbpd PADD I Demand Light/Sweet Heavy/Sour Load Terminal Offload Terminal Shale Play Oil Sands Play Sources: EIA, Various Industry Sources, PLG analysis (Google Earth) 8,100 kbpd PADD III Demand Light/Sweet Heavy/Sour 27
  28. 28. The Importance of Price Differentials to Crude by Rail » Differentials made rail attractive Bakken and WTI differential as high as ~$20/bbl vs. Brent in 2012 CBR enables producers to sell at trading hubs with higher benchmarks » Market response: E&P, midstream players willing to rapidly deploy significant capital to enable access and capitalize on spreads Multi-modal logistics hubs in shale plays and at destination markets (i.e. Cushing, OK, St. James, LA, Pt. Arthur, TX, Albany, NY, Bakersfield, CA) Lease and purchase of railcar fleets » Refineries install unit train receiving capability Particularly coastal refineries previously captive to waterborne imports (i.e. Philadelphia, PA, St. John, NB, Washington state) » Pipeline capacity underutilized Rail captures 73% Bakken takeaway by April 2013 » Differentials are both an incentive – and a risk – for crude by rail 3Q 2013 a cautionary note Source: North Dakota Pipeline Authority, PLG Analysis 28
  29. 29. Correlation of Operating Rig Count with Sand and Crude Shipments 200,000 2,500 Operating On Shore Rigs All Sand Carloads Handled 180,000 Petroleum Carloads Handled 160,000 140,000 Carloads 120,000 1,500 100,000 80,000 1,000 60,000 40,000 Operating Onshore Rigs 2,000 500 20,000 0 0 2007 Avg. 2008 STCC 14413 (sand) and 13111 (petroleum) Avg. 2009 2010 2011 Source: US Rail Desktop, Baker Hughes, STB data 2012 2013 29
  30. 30. All Crude Handled by Railroad Volume Growth 90,000 80,000 70,000 Carloads 60,000 BNSF 50,000 UP CPRS 40,000 NS CSXT 30,000 CN KCS 20,000 10,000 0 Quarterly Data STCC 13111 Source: US Rail Desktop 30
  31. 31. Shale Related Rail Traffic Still Small Relative to Coal Volumes Railcars Handled: Sand, Crude, & Coal 2,500,000 Carloads 2,000,000 1,500,000 Sand 1,000,000 Crude Coal 500,000 2013 2012 2011 2010 2009 2008 0 Sand Crude Coal Quarterly Data STCC 14413 (sand), 13111 (petroleum), 11212 (coal) Source: US Rail Desktop 31
  32. 32. Coal, Crude & Sand Trends: Carloads and Revenue Revenue Sand $18 9 $16 8 7 $14 1,400 Thousands 10 Billions Millions Carloads Combined Sand and Crude Carloads and Revenue 1,200 Crude Revenue $4.5 $4.0 Billions Total Coal Carloads and Revenue $3.5 1,000 $12 6 $3.0 $10 800 $2.5 $8 600 $2.0 5 4 3 2 1 - $6 $1.5 400 $4 $2 $0 $1.0 200 - $0.5 $0.0 32 STCC 14413 (sand), 13111 (petroleum), 11212 (coal) Source: US Rail Desktop
  33. 33. Forecast of Crude Railcar Supply and Demand » Production increases vs. railcar capacity increases Significant increase in railcar capacity with the large railcar backlog If pipelines and local refining can consume production increases in Permian and Eagle Ford, crude by rail will be primarily Bakken and Canadian Oil Sands-driven » Under best-case scenario for rail market share capture, data suggests existing & planned tank car fleet exceeds demand Assumptions: • Bakken: 80% rail market share of Bakken’s projected volumes • Western Canadian Oil Sands: CAPP projected rail load out capacity due online by 2014 (300K bbl/day) and multiply by two for capacity due online by 2015 and assume 80% CBR utilization. • 30,000 crude railcars in March and build rate of 21,500 railcars/year through Q3-2015 with attrition rate of 3,000 railcars/year • 650 bbl. average railcar capacity and average 23 day turn • Other production sources increase at rate of 2% per quarter Sources: CAPP, AAR, NDPA, GATX, and PLG analysis » Possible retrofit of “old design” railcars could dramatically decrease capacity Approx. 2/3 of unlined, 30K/gallon fleet would need retrofit 33
  34. 34. Lac Megantic Incident is Changing Crude by Rail » As with other major rail accidents, expect lasting impact » Increased product testing, documentation and traceability (FRA directive) Oil chemistry varies by well/pad Concerns with extremely low flash and boiling points Flammable liquids/crudes likely will require new design tank cars » Increased FRA audit and scrutiny of entire CBR supply chain » Railroad operating rule changes on hazmat train handling OT 55 expanded to include all trains transporting hazmats » Increased scrutiny, insurance requirements Short line and regional railroads in particular May have consequences in CBR freight rates 34
  35. 35. Shale Development and Crude By Rail: Current Market Dynamics » Brent vs. WTI Spread Adverse 3Q 2013 market forces have reversed WTI-Brent spread now ~$16/bbl » CBR rebound driven by Bakken to coasts Long-term outlook for Bakken CBR to USGC is weak Key driver: LLS now aligned with WTI, not Brent » “Next wave” of CBR development: Canadian Oil Sands Source: RBN Energy Terminal investments in Alberta and PADD II and III – ~600 bbl/day capacity planned NOT like the Bakken/less certainty – – – Heavy/sour product requires significant additional capex Fewer destinations 3-4 year runway until significant new pipeline capacity is added Tank car market reorienting to coiled/insulated car types Source: RBN Energy 35 35
  36. 36. Light/Sweet Crude Logistics and Price Differentials – November 2013 Rail ANS Pipeline Light/Sweet at PNW Bakken (rail): $92 Brent (ship): $112 Marine $79 (wellhead) Pacific Northwest Refiners PADD V Demand 2,500 kbpd Bakken Clearbrook, MN Light/Sweet at EC Bakken (rail): $94 Brent (ship): $111 Light/Sweet Heavy/Sour Chicago, IL East Coast Refiners California Refiners 1,075 kbpd Brent PADD I Demand Light/Sweet WTI:$93 Heavy/Sour Cushing, OK Permian St. James, LA Spread Brent - WTI LLS - WTI WTI - Bakken (Clearbrook) Dec. 2012 $21.83/bbl $20.00/bbl Nov. 2013 $16.97/bbl $3.45/bbl Change -$4.86/bbl -$16.55/bbl $3.00/bbl $11.50/bbl Light/Sweet at LA GC Bakken (rail): $94 LLS (local): $96 $6 $8.85/bbl Crude Prices from end of November 2013 Sources: EIA, PAALP, CIBC, CME Group, PLG analysis (Google Earth) TX Gulf Coast Eagle Ford Refiners Light/Sweet at TX GC Bakken (pipe): $90 Brent (ship): $111 WTI (pipe): $98 LA Gulf Coast Refiners 8,100 kbpd Brent PADD III Demand Light/Sweet Heavy/Sour 36
  37. 37. Heavy/Sour Crude Logistics and Price Differentials – November 2013 Rail Oil $63 Sands Pipeline Marine Hardisty, AB Pacific Northwest Refiners PADD V Demand 2,500 kbpd Clearbrook, MN Light/Sweet Heavy/Sour PADD II Demand California Refiners 3,325 kbpd Chicago, IL Light/Sweet Heavy/Sour Midwest Refiners Spread Mexican Maya - WCS Dec. 2012 $33.55/bbl Crude Prices from end of November 2013 Sources: EIA, CME Group, CIBC, PLG analysis (Google Earth) Nov. 2013 $23.84/bbl Change -$9.71/bbl Heavy/Sour at TX GC Mexican Maya (ship): $87 WCS (pipe): $81 WCS (rail): $87 TX Gulf Coast Refiners 8,100 kbpd PADD III Demand Light/Sweet Mexican Maya Heavy/Sour 37
  38. 38. Looking Ahead: Crude By Rail SWOT » Primary strengths and opportunities Rapid implementation, scale up of operations, terminals, transit times Shorter contracts (2-3 year commitments vs. 10 years for pipeline) Access to coastal areas not connected via pipeline Origin/destination flexibility/facilitation of arbitrage opportunities Foundational business (i.e. refining and E&P majors who have made a structural commitment to CBR) Growth in Canadian CBR – 3-4 year window Longer-term opportunities – Future exports of crude – Refinery conversions in PADD III to process more light/sweet » Primary threats and weaknesses Exposure to changing price differentials that undermines trading business – Narrow WTI-Brent spread (EIA projects $8/bbl for 2014) – Adverse benchmark alignment (i.e. WTI-LLS) Supply Sources Structural changes in supply Capital Key Drivers Destination Markets Oil Prices – Glut of Permian and Eagle Ford light sweet oil displacing rail volumes to USGC – Water-borne Eagle Ford crude deliveries to USEC Continued pipeline development Adverse commercial consequences from recent accidents 38 38
  39. 39. Looking Ahead: Crude Oil Anticipated Production Growth and Product Flows Oil Sands Export Terminal 1,985 2,590 Heavy/Sour Light/Sweet +30% Rail Pipeline Marine Hardisty, AB Pacific Northwest Refiners Bakken 929 1,363 Canadian East Coast Refiners +47% Clearbrook, MN Chicago, IL California Refiners East Coast Refiners Cushing, OK +26% 1,337 1,680 Permian St. James, LA Anticipated Production Growth (000 bbl/d) = Current 2013 = Future 2017 +35% 1,184 1,600 LA Gulf Coast Refiners Eagle Ford TX Gulf Coast Refiners Sources: EIA, BENTEK Energy, CAPP, Railroad Commission of Texas, ND Pipeline Association, PLG Analysis (Google Earth) 39
  40. 40. Thank You! For follow up questions and information, please contact: Graham Brisben, CEO +1 (708) 386-0700 / 40