Notes

Slide Show

Outline

1	Challenging Times for Making Refinery Capacity Decisions Joanne Shore John Hackworth Energy Information Administration NPRA Annual Meeting March 2004
2	Capacity Surplus Disappearing, Creating Short-Term Challenge
3	But Long Term, Will We Need Petroleum Capacity?
4	Uncertain Factors Affect Capacity Decisions, But Can Learn From History
5	Demand – A Crucial Factor Affecting Capacity Decisions Future growth forecasts What could affect future growth?
6	Transportation Demand Growth Drives EIA’s Reference Case
7	Efficiency Could Affect Demand, But How Quickly?
8	Historical Efficiencies Affected Demand Relatively Quickly
9	Gasoline Imports – A Competitive and Essential Supply Source
10	Changing U.S. Specifications May Change Import Sources
11	Some Historical Suppliers Cannot Produce Low Sulfur Gasoline
12	EU-15 Demand Mix May Imply Excess European Mogas Supply
13	European New Vehicle Choices Show Why Diesel Fuel Growth May Continue
14	EU Hydrocracking Growing, But Not as Fast as Mogas/Diesel Demand Shift
15	Imports – Less Competitive in the Short Term Short-term: Fuel spec changes may be reducing number of potential import sources Reduction in import sources may increase margins But will that change over time? Long-term: May still see higher product imports Can capacity investment today compete tomorrow?
16	Historical Capacity Change May Provide Insights into Future Change Historical growth Closures Operating Refinery Profile Yield Improvements
17	Total Capacity Grew Since Mid 1990’s
18	Closures Still Occurring, But Rate Slowing
19	Capacity Growth Largest for Mid-Sized Refineries
20	Distillation Capacity Grew with Conversion Capacity
21	Transportation Fuel Production Increased through Yield Improvements
22	Future Volume Increases May Not Benefit from Yield* Improvements Yield Decline Factors MTBE bans Focus on stream treating vs. conversion Achieving ultra-low sulfur specifications Other specification requirements (cetane, aromatics, driveability) Reliability deterioration with increasing complexity Refinery feed quality deterioration Yield Improvement Factors More hydrocracking More refinery upgrading projects No oxygen mandate
23	Risk: Will Return on Investment Be Realized?
24	Closing Points Environment may be improving for U.S. capacity expansion U.S. needs increasing petroleum fuel volumes for some time Product import sources decline in short term – but long term? Specification changes reducing refinery capability Consequences – Continued higher margins Yet keep an eye on the long term; large changes can occur