California Transportation Fuel Trends in Historical Demand

Joint Lead Commissioner Workshop on Transportation Energy Demand Forecasts

June 24, 2015

Gordon SchrempEnergy Assessments Division

California Energy Commission

Presentation Overview• California transportation fuel production and distribution

infrastructure – key elements• Refineries• Marine facilities• Rail logistics• Pipelines• Distribution terminals• Retail stations

• Regional fuels markets• West Coast• Examples of other export and import regions of the United States

• California historical transportation fuel demand• Gasoline• Diesel fuel• Renewable fuels

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Transportation FuelInfrastructure Overview

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Fuel Infrastructure – Key Elements

• The California transportation fuel “infrastructure” consists of several interconnected assets operated by a combination of refiner and third-party companies:

• Refineries• Marine facilities• Rail logistics• Pipelines• Distribution terminals• Retail stations

• Crude oil and petroleum product infrastructure assets separate and distinct from one another – not interchangeable

• Unlike electricity distribution system, Northern California is not directly connected to Southern California

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Key Elements - Refineries

• 3 primary refinery locations• 12 refineries produce

transportation fuels that meet California standards.

• 8 smaller refineries produce asphalt and other petroleum products.

• California refineries provide majority of transportation fuel to neighboring states.

• Process over 1.6 million barrels per day of crude oil

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Key Elements - Refineries

• Refineries primary hub of logistical activity• Raw materials imported and finished products

shipped• Crude oil receipts during 2014 received by

• Marine vessels (foreign) - 787.1 TBD• Marine vessels (Alaska) – 190.5 TBD• California source via pipelines – 664.8 TBD• Rail/truck – 15.7 TBD

• Process units operate continuously at or near maximum capacity, except during periods of planned maintenance or unplanned outages.

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TBD = Thousands of Barrels Per DayValero Benicia refinery

Key Elements – Marine Facilities

• Marine facilities located in sheltered harbors with adequate draught to accommodate typical sizes of petroleum product tankers and crude oil vessels.

• Wharves usually have adjacent storage tanks that are used to temporarily hold petroleum products prior to transfer to a subsequent location.

• Most refiners operate a proprietary dock.• Third party storage provides access to majors and independents.

• Kinder Morgan• Pacific Atlantic• NuStar• Petro-Diamond

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Key Elements - Rail Logistics• Refiners use rail cars to routinely ship propane and seasonally

send out and receive butane.• Rail cars are also used to deliver refinery feedstock such as gas

oils and sulfuric acid for alkylation units.• More recently, California refiners have started using rail cars to

import crude oil from Canada and domestic sources outside the state due to changing trends of increasing oil production and discounted prices.

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Key Elements – Pipelines• Pipelines used throughout the distribution infrastructure to

interconnect key elements• Intra-state pipelines used to convey petroleum products within

California’s borders to distribution terminals• Interstate pipelines used to export transportation fuels to

Arizona and Nevada• NV – Over 90% of supply• AZ – Over 50% of supply

• Like refineries, pipeline systems normally operate on a continuous basis.

• Pipelines can only operate if transportation fuels are available to push liquid through the system.

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Key Elements - Pipelines (cont)

• The pipeline infrastructure in California is controlled by a combination of common carrier and private companies.

• Kinder Morgan is the sole common carrier of petroleum product pipelines in the State and transports the majority of fuels through its system every day.

• Other companies, such as Chevron, ExxonMobil, Shell, and Tesoro operate proprietary systems or segments that handle the balance of transportation fuels.

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Kinder Morgan northern system

Key Elements – Distribution Terminals• Output from the refineries is usually placed in intermediate

tanks prior to blending the finished products.• The majority of gasoline, diesel and jet fuel is shipped from the

refinery by pipeline to over 60 distribution terminals.• Tanker trucks then transport fuel to retail & non-retail stations.• Several truck trips during 2014:

• Gasoline – 40.28 MM gal/day• 5,035 tanker deliveries/day

• Diesel fuel – 9.68 MM gal/day• 1,210 tanker deliveries/day

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Key Elements – Retail Stations

• Consumers obtain transportation fuels mainly from retail locations accessible to the public, along with card-lock facilities that require membership.

• Approximately 10,000 locations available during 2012.• Projections based on Energy Commission’s annual A15 survey• Monthly sales can vary significantly by location

• Statewide average of 120,718 gallons per month per location• Example below from SF Bay Area counties illustrates that hyper-marts can

average over 12 times higher volumes per location

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Average Retail Sites Average Retail Sites AverageCalifornia Gasoline 500,000 to Gasoline Greater Than GasolineBay Area Retail Throughput 1,000,000 Throughput 1,000,000 ThroughputCounty Sites Gallons/Month Gallons/Month Gallons/Month Gallons/Month Gallons/MonthAlameda 371 127,583 32 671,635 15 1,572,757Contra Costa 291 119,989 37 695,126 8 1,678,949Marin 68 131,127 8 661,454 2 1,822,102Napa 37 130,631 5 649,739 1 2,102,774San Francisco 100 124,167 12 701,016 2 1,187,214San Mateo 197 129,442 19 651,417 6 1,777,563Santa Clara 393 147,795 28 651,525 13 1,660,441Subtotals 1,457 131,778 141 672,228 47 1,646,712Source: California Energy Commission

Analysis of A15 Retail Survey Data From CY 2012

Regional Fuel Markets

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Western States More Isolated than Rest of U.S.

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Significant unplanned refinery outages can create price spikes due to isolated market.

California Fuels Market is Balanced• California is nearly self-sufficient

• Marine imports normally account for less than 5 percent of gasoline supply• Primary sources of transportation fuels originate from inside the state

• Other regions of the United States vary significantly compared to California

• Price spikes following significant unplanned refinery outages less common

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Large net exporting region Large net importing region

California Historical TransportationFuel Demand

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First Anaheim service station - 1920 Mobil station attendant - 1925

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

1945

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

Thou

sand

s of G

allo

ns

Source: California Energy Commission

Since the peak in 2004, gasoline consumption declined seven of the next eight years.

Gasoline consumption dropped 8.94 percent between 2004 and 2012.

2014 consumption up 1.11 percent compared to 2013.

Long-term California Gasoline Consumption

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Gasoline demand rebound following 2008 recession lagged that of diesel fuel due to slower job recovery.

Near-term Gasoline & Renewable Demand• 14.70 billion gallons of

finished gasoline consumed in 2014.

• Base gasoline demand down 12.43 percent between 2003 and 2014

• Ethanol use increasing due to Renewable Fuel Standard

• Ethanol use up to 1.48 billion gallons during 2014

• 151 percent increase since 2003

• Ethanol accounted for 10.06 percent of total gasoline gallon during 2014

• Due to 11.1 MM gallons of E85 use during 2014

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0

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

12,000,000,000

14,000,000,000

16,000,000,000

18,000,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Gal

lons

California Gasoline & Ethanol Demand2003 - 2014

Base Gasoline Ethanol

525

381

814

596

0

100

200

300

400

500

600

700

800

900

1945

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

Gal

lons

of G

asol

ine

Per P

erso

n Pe

r Yea

r

Per CapitaPer Driver

Between 1978 and 2013 Per Capita Consumption Has Decreased 27.4 Percent

Population Source: California Department of Finance Demographic Research Unit, December 2013

Gasoline Source: California Energy Commission Analysis of Federal Highway Administration and CA Board of Equalization Data

Between 1973 and 2013 Per Driver Consumption Has Decreased 26.7 Percent

Improving Efficiency of Calif. Gasoline Use

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1,301,025

2,785,942

2,201,614

3,805,503

3,200,244

3,533,890

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Thou

sand

s of

Gal

lons

Sources: California Energy Commission analysis of data from the Board of Equalization and Energy Information Administration.

Compound Annual Growth Rate (CAGR) of 6.55 percent between 1978 and 1988.

CAGR of 3.99 percent between 1993 and 2007.

CAGR of 2.00 percent between 2009 and 2014.

Trend - diesel fuel demand growth rates declining over time.

Long-term California Diesel Fuel Consumption

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0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Gal

lons

California Diesel, Biodiesel & Renewable Diesel Demand 2003 - 2014

Diesel Fuel Renewable Diesel Biodiesel

Near-term Diesel and Renewable Demand• 3.53 billion gallons diesel

consumed during 2014.• Base diesel fuel demand up

2.33 percent between 2003 and 2014.

• Biodiesel use increasing due to Renewable Fuel Standard and the Low Carbon Fuel Standard (LCFS.)

• 57 MM gallons during 2014• Renewable diesel fuel use up

to 105 MM gallons during 2014 due to LCFS.

• Combined renewable component accounted for 4.6 percent of total diesel gallon during 2014.

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Questions?

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