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All rights reserved © 2012
Global Crude, Refining and Clean Fuels Outlook to 2035 December 2012
All rights reserved © 2012
Economic Outlook, Crude Price Trends Global GDP US$ Size & Y-O-Y Growth Rates US$Billions (bar/Left), % Real Change (line/right) Global GDP US$ Size & Y-‐O-‐Y Growth Rates
Hart Energy WTI Price Forecast (US$ per barrel) 150
$100,000.00
5.0
$90,000.00
4.0
130
3.0
120
$60,000.00
2.0
110
$50,000.00
1.0
$40,000.00
0.0
$80,000.00
$70,000.00
$30,000.00
-‐1.0
$20,000.00 $10,000.00 2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
$-‐
140
100 90 80 70
-‐2.0
60
-‐3.0
50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
US$ Billions (bar/left), % Real Change (line/right)
Baseline
All rights reserved © 2012
High
Low
Global Refined Product Demand 120
MILLION b/d
100 80 60 40 20 0 2011 Gasoline
2012 Naphtha
All rights reserved © 2012
2015 JetFuel
2020 Middle Distillate
2025
2030
Residual Fuel
2035 Other Products
Global Product Demand Outlook 11% 10% 10% 29%
34%
46%
7% 7% 26% 2011
Other
23% 2012
LPG
2015
Heavy Fuel Oil
2020
2025
Distillate
2030
All rights reserved © 2012
2035
Jet Fuel/Kerosene
Source: Hart Energy’s World Refining & Fuels Service
14% Increment 2011-2035 Naphtha
Gasoline
Shift to Lower-Sulfur Diesel 45 40 35 30 25 20 15 10 5 0 2011 < 10 ppm
All rights reserved © 2012
2012 11 - 50 ppm
2015
2020 51 - 500 ppm
2025
2030
501 - 2,000 ppm
2035 > 2,000 ppm
Shale/Oil Sands Boom in NA § Unconventional Tight Oil (Shale) dramatically changing North American crude oil landscape ♦
Addition of 4 million b/d production
♦
Quality shift to light, low sulfur
♦
Logistic constraints – emerging crude-by-rail infrastructure
§ Major uptake in Canadian oil sand production over next decade ♦
Turn up in production – 2+ million b/d increase 2011 to 2020
♦
Additional 0.8 million b/d 2021- 2025
§ Increasing supply of condensate and NGL
North American petroleum independence in 10 years U.S. surpassing Saudi Arabia crude oil production – emerging as world’s No. 1 liquids producer All rights reserved © 2012
A New Force in the Market?
All rights reserved © 2012
A New Force in the Market?
All rights reserved © 2012
North America: Supply Landscape Canadian Crude Production kb/d
U.S. Tight Oil Production kb/d
4,000
7000 6000 5000 4000 3000 2000 1000 0
0
2012
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Bakken
Permian
All rights reserved © 2012
Eagle Ford
Other
2014
2016
2018
2020
Sweet Conventional
Light SCO
Heavy SCO
Bitumen Blends
2022
2024
Other Conventional
2026
PADD 3 Crude Oil Quality Increasing share of light, low-sulfur crude in mix and lighter, lower-sulfur overall crude mix. THOUSAND b/d 9000
8000 7000 6000 5000
4000 3000 2000
34%
1000 0 2012
15% Year °API Sulfur All rights reserved © 2012
2014
2016
2018
2020
Low Sulfur L ight
Low Sulfur Med
Low Sul Heavy
High Sul L ight
High Sul Med
High Sulfur Heavy
2012 30.0 1.54
2014 30.5 1.49
2016 30.9 1.44
2018 31.3 1.39
2020 31.4 1.37
Shale & Tight Resource Advantages Shale Gas – Lower Fuel Costs for Energy-Intensive Refining
All rights reserved © 2012
U.S.: Favorable Refining Position Potential $/Barrel Margin Advantage at Lower Natural Gas Price U.S. Price $/ 103 CF $5.00 $3.00
PADD PADD 1 PADD 3
Natural Gas 103 CF/Bbl 0.10 0.18
Offshore Refinery Fuel Basis $8/103 CF $12/103 CF $17/103 CF $0.30/bbl $0.70/bbl $1.20/bbl $0.90/bbl $1.62/bbl $2.52/bbl
Added advantage on hydrogen purchases. Additional potential from other energy purchases.
Refining Utilization to Remain High (thousand b/d)
2008
2010 PADD 2/4
All rights reserved © 2012
2012
2014 PADD 3
2016
2018
2020
PADD I & 5
Tight Oil Production Light Liquids THOUSAND b/d
2,500 2500
1,000
2010
2011
2012
2013
2014
2015
Condensate
2016
2017
2018
NGL
Source: Hart Energy/Rystad Energy’s North American Shale Quarterly
All rights reserved © 2012
2019
2020
Latin America: Refined Product Demand MILLION b/d
Increment 2011-2030
2.1%
Other, 8%
Fuel Oil, 0%
LPG Naphtha Gasoline Jet/Kero Diesel Fuel Oil Other
Naphtha, 2%
Diesel, 42%
2011
2020
LPG, 6%
2030
Gasoline, 37%
Jet/Kero, 5%
§ Demand (8.5 MMb/d) will grow by 47% (2030) § Diesel and gasoline represent 60% of total demand and contribute 80% of increment § LPG and fuel oil participation higher than other regions § Brazil and Mexico represent 60% of total demand
All rights reserved © 2012
Asia Pacific: Dominates Demand Growth Strong growth from 2011 level of 28 million b/d (China 35% of total)
2011
2015 China
All rights reserved © 2012
2020 India
2025 Japan
2030 Other
Asia Pacific: Developments Crude capacity expansions outpacing demand – over 4 million b/d by 2015
2011-15
2015-20
Capacity Projects
All rights reserved © 2012
2020-25
Capacity Requirements
2011 Transport Fuel
2015 Naphtha
2020 Resid
India: Refining Outlook Major Expansions 2012 and 2020 Conversion
§ India currently major refined product exporter of > 1 million b/d
Hydrocracking
40 KB/D
Catalytic Cracking
170 KB/d
§ Upgrade will increase export capability by ~ 150,000 b/d
Coking
290 KB/d
§ Longer term, greater share needed in country and in Asia Pacific
Alkylation
8 KB/D
Isomerization
9 KB/D
Reforming
80 KB/D
Hydrotreating
660 KB/D
All rights reserved © 2012
Fuel Quality
Europe: Refining Challenges § § § § § §
Imbalance between production and demand (gasoline, diesel) Strong dieselization of passenger fleet Stringent marine fuel requirements Biofuels requirements Energy efficiency and CO2 reduction (ETS) Competitive pressure from low-cost U.S. producers
§ § § § §
Modernization (addition of hydrocrackers) Further decline in gasoline/distillate production ratio 13 closures since 2008 (ca 1.24 million b/d capacity) Another 0.5 million b/d capacity under threat Facilities sold for foreign capital (Russia, India, China) or for sale
§ Production vs. demand imbalance will remain an issue All rights reserved © 2012
Russia/CIS: Expansion Plans Units to be commissioned in Russia between 2012 and 2020 Conversion
§ Initial focus on quality (octane, sulfur), later focus on conversion § Upgrade planned for Belarus § Azerbaijan and Kazakhstan plan complete modernization § Ukraine has serious problems in refining sector
All rights reserved © 2012
Hydrocracking
13 units
Catalytic Cracking
4 units
Coking
4 units
Fuel Quality Alkylation
11 units
Isomerization
15 units
Reforming
8 units
Hydrotreating
23 units
Middle East: Oil & Product Supplier § § § §
Fastest growth in oil product demand Refinery construction ongoing Worries on global market over regional instability Iraq ♦
Strong increase in crude oil production
♦
Speed, size of expansion depends on export capabilities
§ Iran ♦
Feels effect of sanctions (mainly on oil export side)
♦
Progress in refinery upgrades, but grassroots facilities lagging
§ Saudi Arabia ♦
Strong refinery construction (1.2 million b/d within five years)
♦
Gasoline for domestic market, diesel (10 ppm) for export
All rights reserved © 2012
Takeaway Points
§ North American crude expansion will shift crude supply/markets § North America: Highly competitive refining position § Growing pressure on light product (naphtha/gasoline) markets in Atlantic Basin § Strong growth in Latin America/Middle East: Latin America over investment scenario; Middle East emerging as marginal global diesel supplier § Russia: Planned refining expansion covering domestic needs and maintaining European supply
All rights reserved © 2012
Thank You!
Terry Higgins Executive Director, Refining & Special Studies [email protected] +1.703.891.4815
All rights reserved © 2012
Hart Energy Consultants Speak the language – 20 different languages spoken On the ground Close network with all in country and regional stakeholders Numerous advanced degrees (engineering, finance, law) Combined 200+ years of energy industry experience
All rights reserved © 2012
All rights reserved © 2012
All rights reserved © 2012
Global Crude, Refining and Clean Fuels Outlook to 2035 December 2012
All rights reserved © 2012
Economic Outlook, Crude Price Trends Global GDP US$ Size & Y-O-Y Growth Rates US$Billions (bar/Left), % Real Change (line/right) Global GDP US$ Size & Y-‐O-‐Y Growth Rates
Hart Energy WTI Price Forecast (US$ per barrel) 150
$100,000.00
5.0
$90,000.00
4.0
130
3.0
120
$60,000.00
2.0
110
$50,000.00
1.0
$40,000.00
0.0
$80,000.00
$70,000.00
$30,000.00
-‐1.0
$20,000.00 $10,000.00 2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
$-‐
140
100 90 80 70
-‐2.0
60
-‐3.0
50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
US$ Billions (bar/left), % Real Change (line/right)
Baseline
All rights reserved © 2012
High
Low
Global Refined Product Demand 120
MILLION b/d
100 80 60 40 20 0 2011 Gasoline
2012 Naphtha
All rights reserved © 2012
2015 JetFuel
2020 Middle Distillate
2025
2030
Residual Fuel
2035 Other Products
Global Product Demand Outlook 11% 10% 10% 29%
34%
46%
7% 7% 26% 2011
Other
23% 2012
LPG
2015
Heavy Fuel Oil
2020
2025
Distillate
2030
All rights reserved © 2012
2035
Jet Fuel/Kerosene
Source: Hart Energy’s World Refining & Fuels Service
14% Increment 2011-2035 Naphtha
Gasoline
Shift to Lower-Sulfur Diesel 45 40 35 30 25 20 15 10 5 0 2011 < 10 ppm
All rights reserved © 2012
2012 11 - 50 ppm
2015
2020 51 - 500 ppm
2025
2030
501 - 2,000 ppm
2035 > 2,000 ppm
Shale/Oil Sands Boom in NA § Unconventional Tight Oil (Shale) dramatically changing North American crude oil landscape ♦
Addition of 4 million b/d production
♦
Quality shift to light, low sulfur
♦
Logistic constraints – emerging crude-by-rail infrastructure
§ Major uptake in Canadian oil sand production over next decade ♦
Turn up in production – 2+ million b/d increase 2011 to 2020
♦
Additional 0.8 million b/d 2021- 2025
§ Increasing supply of condensate and NGL
North American petroleum independence in 10 years U.S. surpassing Saudi Arabia crude oil production – emerging as world’s No. 1 liquids producer All rights reserved © 2012
A New Force in the Market?
All rights reserved © 2012
A New Force in the Market?
All rights reserved © 2012
North America: Supply Landscape Canadian Crude Production kb/d
U.S. Tight Oil Production kb/d
4,000
7000 6000 5000 4000 3000 2000 1000 0
0
2012
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Bakken
Permian
All rights reserved © 2012
Eagle Ford
Other
2014
2016
2018
2020
Sweet Conventional
Light SCO
Heavy SCO
Bitumen Blends
2022
2024
Other Conventional
2026
PADD 3 Crude Oil Quality Increasing share of light, low-sulfur crude in mix and lighter, lower-sulfur overall crude mix. THOUSAND b/d 9000
8000 7000 6000 5000
4000 3000 2000
34%
1000 0 2012
15% Year °API Sulfur All rights reserved © 2012
2014
2016
2018
2020
Low Sulfur L ight
Low Sulfur Med
Low Sul Heavy
High Sul L ight
High Sul Med
High Sulfur Heavy
2012 30.0 1.54
2014 30.5 1.49
2016 30.9 1.44
2018 31.3 1.39
2020 31.4 1.37
Shale & Tight Resource Advantages Shale Gas – Lower Fuel Costs for Energy-Intensive Refining
All rights reserved © 2012
U.S.: Favorable Refining Position Potential $/Barrel Margin Advantage at Lower Natural Gas Price U.S. Price $/ 103 CF $5.00 $3.00
PADD PADD 1 PADD 3
Natural Gas 103 CF/Bbl 0.10 0.18
Offshore Refinery Fuel Basis $8/103 CF $12/103 CF $17/103 CF $0.30/bbl $0.70/bbl $1.20/bbl $0.90/bbl $1.62/bbl $2.52/bbl
Added advantage on hydrogen purchases. Additional potential from other energy purchases.
Refining Utilization to Remain High (thousand b/d)
2008
2010 PADD 2/4
All rights reserved © 2012
2012
2014 PADD 3
2016
2018
2020
PADD I & 5
Tight Oil Production Light Liquids THOUSAND b/d
2,500 2500
1,000
2010
2011
2012
2013
2014
2015
Condensate
2016
2017
2018
NGL
Source: Hart Energy/Rystad Energy’s North American Shale Quarterly
All rights reserved © 2012
2019
2020
Latin America: Refined Product Demand MILLION b/d
Increment 2011-2030
2.1%
Other, 8%
Fuel Oil, 0%
LPG Naphtha Gasoline Jet/Kero Diesel Fuel Oil Other
Naphtha, 2%
Diesel, 42%
2011
2020
LPG, 6%
2030
Gasoline, 37%
Jet/Kero, 5%
§ Demand (8.5 MMb/d) will grow by 47% (2030) § Diesel and gasoline represent 60% of total demand and contribute 80% of increment § LPG and fuel oil participation higher than other regions § Brazil and Mexico represent 60% of total demand
All rights reserved © 2012
Asia Pacific: Dominates Demand Growth Strong growth from 2011 level of 28 million b/d (China 35% of total)
2011
2015 China
All rights reserved © 2012
2020 India
2025 Japan
2030 Other
Asia Pacific: Developments Crude capacity expansions outpacing demand – over 4 million b/d by 2015
2011-15
2015-20
Capacity Projects
All rights reserved © 2012
2020-25
Capacity Requirements
2011 Transport Fuel
2015 Naphtha
2020 Resid
India: Refining Outlook Major Expansions 2012 and 2020 Conversion
§ India currently major refined product exporter of > 1 million b/d
Hydrocracking
40 KB/D
Catalytic Cracking
170 KB/d
§ Upgrade will increase export capability by ~ 150,000 b/d
Coking
290 KB/d
§ Longer term, greater share needed in country and in Asia Pacific
Alkylation
8 KB/D
Isomerization
9 KB/D
Reforming
80 KB/D
Hydrotreating
660 KB/D
All rights reserved © 2012
Fuel Quality
Europe: Refining Challenges § § § § § §
Imbalance between production and demand (gasoline, diesel) Strong dieselization of passenger fleet Stringent marine fuel requirements Biofuels requirements Energy efficiency and CO2 reduction (ETS) Competitive pressure from low-cost U.S. producers
§ § § § §
Modernization (addition of hydrocrackers) Further decline in gasoline/distillate production ratio 13 closures since 2008 (ca 1.24 million b/d capacity) Another 0.5 million b/d capacity under threat Facilities sold for foreign capital (Russia, India, China) or for sale
§ Production vs. demand imbalance will remain an issue All rights reserved © 2012
Russia/CIS: Expansion Plans Units to be commissioned in Russia between 2012 and 2020 Conversion
§ Initial focus on quality (octane, sulfur), later focus on conversion § Upgrade planned for Belarus § Azerbaijan and Kazakhstan plan complete modernization § Ukraine has serious problems in refining sector
All rights reserved © 2012
Hydrocracking
13 units
Catalytic Cracking
4 units
Coking
4 units
Fuel Quality Alkylation
11 units
Isomerization
15 units
Reforming
8 units
Hydrotreating
23 units
Middle East: Oil & Product Supplier § § § §
Fastest growth in oil product demand Refinery construction ongoing Worries on global market over regional instability Iraq ♦
Strong increase in crude oil production
♦
Speed, size of expansion depends on export capabilities
§ Iran ♦
Feels effect of sanctions (mainly on oil export side)
♦
Progress in refinery upgrades, but grassroots facilities lagging
§ Saudi Arabia ♦
Strong refinery construction (1.2 million b/d within five years)
♦
Gasoline for domestic market, diesel (10 ppm) for export
All rights reserved © 2012
Takeaway Points
§ North American crude expansion will shift crude supply/markets § North America: Highly competitive refining position § Growing pressure on light product (naphtha/gasoline) markets in Atlantic Basin § Strong growth in Latin America/Middle East: Latin America over investment scenario; Middle East emerging as marginal global diesel supplier § Russia: Planned refining expansion covering domestic needs and maintaining European supply
All rights reserved © 2012
Thank You!
Terry Higgins Executive Director, Refining & Special Studies [email protected] +1.703.891.4815
All rights reserved © 2012
Hart Energy Consultants Speak the language – 20 different languages spoken On the ground Close network with all in country and regional stakeholders Numerous advanced degrees (engineering, finance, law) Combined 200+ years of energy industry experience
All rights reserved © 2012
All rights reserved © 2012
