Petroleum Outlook: Increased Inter-PADD Movements Expected

1
Petroleum OutlookIncreased Inter-PADD Movements
Expected

• Joanne Shore
• Energy Information Administration
• API Annual Pipeline Conference
• Dallas, Texas
• April 2002

www.eia.doe.gov
2
Introduction

• Supply-Demand Fundamentals Drive Prices
• Regional Prices Reflect Regional Supply-Demand
  Balances Distribution System Needs
• Future Regional Supply-Demand Balances

3
WTI Crude Oil Price Uncertain Future, But
Drivers Adding Upward Pressure
Sources History EIA Projections Short-Term
Energy Outlook, April 2002.
4
OPEC Discipline Economic Recovery Tighten World
Balance in 2002
Total includes commercial and government stocks.
Source EIA
5
U.S. Supply/Demand Balance Follows World
Sources History EIA Projections Short-Term
Energy Outlook, April 2002.
6
Product Supply/Demand Balance Affects Wholesale
Price Relative to Crude Oil
Apr-Aug 00 15cents
Apr-Aug 99 8 cents
Apr-Aug 01 16cents
Source Reuters
7
Regional Supply/Demand Balances Affect Regional
Prices
Source EIA
8
Recent Focus on Distribution Systems Ability to
Help Restore Regional Imbalances
Imports
9
Pipeline Barge Movements of Light Products
Critical to Regional Supply
Note Light products are gasoline, distillate
and jet fuel. Source EIA, Petroleum Supply
Monthly, 2001
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Light Product Demand Growth Expectedin All
Regions
Source EIA
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Potential Increases in Light Product Demand
2001-2007
Source EIA
12
But How Will Supply Grow Relative to Demand?
Source EIA
13
Domestic Supply Is Expected To Grow in Aggregate
Source EIA
14
Size of Shutdowns Largest in PADD 2, But More
Shutdowns Possible
Refinery Shutdowns 1990-2000
Source EIA
15
Potential Light Product Volume Changes 2000 - 2007
Note Light products are gasoline, distillate
jet Source EIA
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MTBE Ban Refinery Impacts

• LOSS OF GASOLINE YIELD
• Substitute Ethanol for MTBE
• But Only Need Half As Much Ethanol for Same
  Oxygen
• Remove Light Ends to Keep RVP Down
• Remove Heavy Ends to Keep DI Down (CA)

• BALANCE BY INCREASING
• Crude Oil Throughput (utilization increase)
• Outside Clean Streams (Iso-octane, alkylate)
• Volume of Ethanol Used
• Product Imports If Available

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RFG Blending Component Imports May Not Increase
Source EIA
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Illustrative MTBE Ban ImpactsLight Product
Volume Changes 2000 - 2007
Net Imports
Production
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Illustrative MTBE Ban Impacton Net Receipt
Changes 2000 - 2007
Note Light products are gasoline, distillate
jet Source EIA
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Conclusion

• Demand growth will continue to pressure supply
• Refinery growth is expected, but tight markets
  produce varying regional balance dynamics
• PADD 3 key incremental supply source
• Increasing flows to PADDs 1 and 2
• MTBE bans could pressure distribution system
• Loss of gasoline production capability
• Loss of imports
• More distinct products to move
• Increased inter-PADD movements