pipeline capacity and the crude differential -...
TRANSCRIPT
Pipeline Capacity and the Crude Differential
A Presentation to the Wyoming Pipeline Authority
Tuesday, April 25, 2006
Reno Jct., WY
Clearbrook, MN
Guernsey, WYCasper, WYSinclair 22,500
Salt Lake City, UTBig West 25,000ChevronTexaco 45,000Holly Corp 25,000Silver Eagle Refining 12,500Tesoro 60,000
Rawlins, WYSinclair 72,000
Denver, COSuncor 88,000
Mandan, NDTesoro 58,000Billings, MT
ConocoPhillips 58,000ExxonMobil 60,000Cenex 56,000 St. Paul, MN
Flint Hills Resources 298,000MarathonAshland 70,000
Hardisty, AB
Cushing, OK
Cheyenne, WYFrontier 52,000
Regina, SK
Newcastle, WYWyoming Refining 12,500
Great Falls, MTMontana Refining 8,200
Chicago, ILExxonMobil 238,000BP PLC 399,000CITGO 159,000
Wood River, ILConocoPhillips 306,000McPherson, KS
NCRA 79,000
El Dorado, KSFrontier 110,000
Other CarriersBelle Fourche & Bridger Systems
Major Pipelines & Refining Capacities
Agenda1. Problem Definition: Geographic Market Risk
– Crude production in the Rocky Mountains is at risk of shutting in due to lack of pipeline space
– Some crude production in the Rocky Mountains receives large discounts because it lacks market access
2. Problem Cause3. Problem Development4. Proposed Solutions and the Problems they solve
Supply• Increased domestic production causes exports to lower paying regions• Incremental domestic production and incremental Canadian imports
compete for pipeline space Demand• Seasonal slack decreases demand• Expected and long term unexpected refinery shutdowns shock demandOther• Quality differences• Pipeline constraints on northern and southern exits from Rocky
Mountains
PROBLEM CAUSEPROBLEM CAUSE
Summary of Causes
Two North Dakotas
North Dakota LightWyoming SweetBenchmark
Guernsey, Mandan & ClearbrookGuernseyMarket
38-4231-33Gravity ~61,000 bpd~43,000 bpdVolume
All othersBowman County
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Jan-
01
Mar
-01
May
-01
Jul-0
1
Sep-
01
Nov
-01
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep-
02
Nov
-02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep-
03
Nov
-03
Jan-
04
Mar
-04
May
-04
Jul-0
4
Sep-
04
Nov
-04
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep-
05
Nov
-05
Bar
rels
per
Mon
th
Bow man Billings Bottineau Burke Divide Dunn Golden Valley McKenzie Stark Williams
BOWMAN
PROBLEM CAUSEPROBLEM CAUSE
PROBLEM CAUSEPROBLEM CAUSE
FALLON
RICHLAND
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Two Montanas
NDS or LSWyoming SweetBenchmark
Guernsey, Mandan & ClearbrookGuernseyMarket
Dramatic IncreaseSteady IncreaseTrend~56,000~20,000 bpdVolumeRichland Fallon
PROBLEM CAUSEPROBLEM CAUSE
Reno Jct., WY
Guernsey, WYCasper, WYSinclair 22,500
Salt Lake City, UTBig West 25,000ChevronTexaco 45,000Holly Corp 25,000Silver Eagle Refining 12,500Tesoro 60,000
Rawlins, WYSinclair 72,000
Denver, COSuncor 88,000
Mandan, Tesoro 58,000Billings, MT
ConocoPhillips 58,000ExxonMobil 60,000Cenex 56,000
Cheyenne, WYFrontier 52,000
Newcastle, WYWyoming Refining 12,500
Wyoming Topics
•Two Markets: Casper/ Guernsey
•Wyoming produces 140,000 bpd of General Sour, Asphaltic, Condensate and Powder River Basin sweet
•Salt Creek CO2 Flood + 20-25mbpd
•Southwest Wyoming Condensate Production
•Future tertiary projects in the Big Horn and horizontal plays in the Powder River Basins may be in jeopardy
Wyoming Production
Powder River
Ft. Laramie/ Guernsey
Little Missouri
Baker
Wyoming
MontanaNorth Dakota
South Dakota
Nebraska
Alexander
Billings
Mandan
Rawlins
Cheyenne
Newcastle
Casper
Osage
Enbridge 80,000
RMPL 15,000
RM
PL 15,000
Poplar 40,000Express 282,000
Frontier 65,000
RMPL 40,000
IN THE PAST YEAR, BOTH NORTHERN AND SOUTHERN ROCKY MOUNTAINS EXITS HAVE CURTAILED NOMINATIONS•Enbridge becomes apportioned on February 2005
•Platte becomes apportioned on December 2005, seven months after completing Express expansion
PROBLEM CAUSEPROBLEM CAUSE
Platte 144,000
South DakotaBowman County Production
Ft. Laramie/ Guernsey
Wyoming
MontanaNorth Dakota
Nebraska
Billings
Mandan
Rawlins
Cheyenne
Newcastle
Casper
Sources: Montana Oil & Gas Commission; North Dakota Industrial Commission, Energy Information Administration
Montana ProductionNorth Dakota Production without Bowman County
PROBLEM CAUSEPROBLEM CAUSE
A general statement
•Richland County’s problem is lack of space on Enbridge and lack of access to Salt Lake
•Wyoming’s, Bowman County’s and Fallon County’s problem is lack of capacity leaving Guernsey, WY
Wyoming Production
PROBLEM CAUSEPROBLEM CAUSE
Supply
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan-
04
Feb-
04
Mar
-04
Apr-
04
May
-04
Jun-
04
Jul-0
4
Aug-
04
Sep-
04
Oct
-04
Nov
-04
Dec
-04
Jan-
05
Feb-
05
Mar
-05
Apr-
05
May
-05
Jun-
05
Jul-0
5
Aug-
05
Sep-
05
Oct
-05
Nov
-05
Dec
-05
Jan-
06
PADD IV Production PADD IV Foreign Imports (Canadian) PADD IV Domestic Imports
14% Overall Increase due to :-50,000 bpd or 17% increase in PADD IV Production
-20,000 bpd or 73% increase in PADD II Imports
-13,000 bpd or 5% increase in Canadian Imports Processed in PADD IV
Source: Energy Information Administration
SOLUTIONSSOLUTIONS
Near Term Solutions
Reno Jct., WY
Cle
Guernsey, WYCasper, WYSinclair 22,500
Salt Lake City, UTBig West 25,000ChevronTexaco 45,000Holly Corp 25,000Silver Eagle Refining 12,500Tesoro 60,000
Rawlins, WYSinclair 72,000
Denver, COSuncor 88,000
Mandan, NDTesoro 58,000Billings, MT
ConocoPhillips 58,000ExxonMobil 60,000Cenex 56,000
Hardisty, AB
Cushi
Cheyenne, WYFrontier 52,000
Regina, SK
Newcastle, WYWyoming Refining 12,500
Great Falls, MTMontana Refining 8,200
McPhersNCRA 79,000
El DorFrontier 11
Segregate Quality Streams to Guernsey •Currently in effect•Butte segregates Light Sweet Stream (LS) (.2%wt S 38+ API)
Segregate LS to Salt Lake City •6 months•Belle Fourche creates a new route for delivering LS to RMPL for delivery into Frontier PL at Casper
SOLUTIONSSOLUTIONS
Reno Jct., WY
Cle
Guernsey, WYCasper, WYSinclair 22,500
Salt Lake City, UTBig West 25,000ChevronTexaco 45,000Holly Corp 25,000Silver Eagle Refining 12,500Tesoro 60,000
Rawlins, WYSinclair 72,000
Denver, COSuncor 88,000
Mandan, NDTesoro 58,000Billings, MT
ConocoPhillips 58,000ExxonMobil 60,000Cenex 56,000
Hardisty, AB
Cushi
Cheyenne, WYFrontier 52,000
Regina, SK
Newcastle, WYWyoming Refining 12,500
Great Falls, MTMontana Refining 8,200
McPhersNCRA 79,000
El DorFrontier 11
•Build new pipeline leaving Guernsey to Cushing (2-3 Years) or other Midwest Destination
•Ties all Rocky Mountain production directly to NYMEX contract and reduces geographic market risk
•Many rumored projects…
•Enbridge increases capacity on North Dakota system (18 Months).
•Helps Richland County, MT production and proposed Bakken production in N.D.
•If Enbridge loops line from Alexander to Tioga, Belle Fourche could deliver more CCA barrels to Clearbrook Market.
Long Term Solutions