PetroleumRefiningOverview

Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
M j fi
Petroleumproducts
Basicpetroleumeconomics
Basic petroleum economics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery

2
GrowthofU.S.EnergyConsumption
120

100
d=10 BTU)

80
15

Wood
EnergyConsumed(Quad

HydroelectricPower
NuclearElectricPower
60
Coal
NaturalGas
Petroleum

40

20

0
1750 1800 1850 1900 1950 2000

Source:18501949,EnergyPerspectives:APresentationofMajorEnergyandEnergyRelatedData,U.S.DepartmentoftheInterior,
, gy p f j gy gy , p ,
1975;19502000,AnnualEnergyReview2000,Table1.3.

4
EnergyMarketsAreInterconnected

https://publicaffairs.llnl.gov/news/energy/energy.html

5
PetroleumPathway

Crude Transportation Crude Refining

g
Crude Production

Product Storage &

Transportation Retail Distribution Consumer Use

6
 U.S.RefiningCapacity

CompanieswithCapacitiesExceeding1Millionbbl/day(calendar)

CapacityBarrels Barrelsper EXXONMOBILCORP

Company perCalendarDay StreamDay

EXXONMOBILCORP 1,951,850 2,029,800
VALEROENERGYCORP 1,863,300 2,061,500 VALEROENERGYCORP
CONOCOPHILLIPS 1,839,000 1,948,788
BPPLC 1,277,215 1,493,000
MARATHONPETROLEUMCORP 1,193,000 1,270,000
PDVAMERICAINC 1,104,050 1,135,500
CHEVRONCORP 1,030,271 1,096,700 CONOCOPHILLIPS

Total 17,751,878 19,009,850

CapacitiesforLLCrefineriessplitamongthepartnercompanies
BPPLC

MARATHON
CHEVRONCORP PDVAMERICAINC

EIA,Jan.1,2012database,publishedJune2012
EIA, Jan. 1, 2012 database, published June 2012
http://www.eia.doe.gov/oil_gas/petroleum/data_publications/refinery_capacity_data/refcap_historical.html

7
U.S.OilfromImports

EIApublisheddatausedforcharts
http://www.eia.gov/dnav/pet/pet_move_wkly_dc_nusz00_mbblpd_w.htm
// / / /
http://www.eia.gov/dnav/pet/pet_pnp_wiup_dcu_nus_w.htm

8
U.S.OilImports2009

http://www.eia.doe.gov/energy_in_brief/foreign_oil_dependence.cfm

9
LocationsofU.S.Refineries

NPRARefiningCapacityReport,January1,2011
NPRA R fi i C it R t J 1 2011
http://www.afpm.org/Statistics/

10
IndividualRefinerySizes 10Largest&10Smallest
AtmosphericCrude AtmosphericCrude
DistillationCapacity DistillationCapacity
CORPORATION State Site
(barrelsperstream (barrelspercalendar
day) day)
EXXONMOBILCORP Texas BAYTOWN 584,000 560,500
EXXONMOBILCORP Louisiana BATONROUGE 523,200 502,500
HOVENSALLC VirginIslands KINGSHILL 525,000 500,000
MARATHONPETROLEUMCORP Louisiana GARYVILLE 518,000 490,000
PDVAMERICAINC Louisiana LAKECHARLES 440,000 427,800
BPPLC Texas TEXASCITY 475,000 400,780
EXXONMOBILCORP Texas BEAUMONT 359,100 344,500
BPPLC Indiana WHITING 430,000 337,000
SUNOCOINC Pennsylvania PHILADELPHIA 355,000 335,000
CHEVRONCORP Mississippi PASCAGOULA 360,000 330,000
WORLDOILCO California SOUTHGATE 10,000 8,500
CALUMETLUBRICANTSCO Louisiana PRINCETON 8,655 8,300
MARTINRESOURCEMANAGEMENTGRP Arkansas SMACKOVER 7,700 7,500
BPPLC Alaska PRUDHOEBAY 8,000 6,935
VALEROENERGYCORP California WILMINGTONASPHALTPLANT 6,500 6,300
CONTINENTALREFININGCOLLC Kentucky SOMERSET 6,300 5,500
GOODWAYREFININGLLC Alabama ATMORE 5,000 4,100
GARCOENERGYLLC Wyoming DOUGLAS 4,500 3,000
SILVEREAGLEREFININGINC Wyoming EVANSTON 3,300 3,000
FORELANDREFININGCORP Nevada ELY 5,000 2,000

11
MajorchangestotheslateofUSrefineries
Motivacompleted$10billionJVexpansion
Increasedto600,000bpdcapacity,nowlargestinUS
Operatingproblemscausednearimmediateshutdownofnewcrudedistillationtrain
O ti bl d i di t h t d f d di till ti t i
Plantoexportrefinedproducts
Refineriesrequiringsweetcrudelackflexibility&severalshuttingdown
Phillips66soldTrainertoDeltaAirLines(185,000bpd)
JVformedbetweenSunoco&CarlyleGrouptocontinuetooperatePhiladelphiarefinery
(335 000 bpd)
(335,000bpd)
WasscheduledtocloseAugust2012

Braskem AmericawillpurchaseaportionofSunocosMarcusHoodrefinery(178,000
bpd) to produce
bpd)toproduce
Hess/PDVSAsHovensa refineryshutdown(500,000bpd)
Phillips66offeringAlliance(BelleChase)forsale(247,000bpd)

12
CompanyProfile Phillips66

AtmosphericCrude AtmosphericCrude
DistillationCapacity DistillationCapacity
CORPORATION State Site
(barrelsperstream (barrelspercalendar
day) day)
WRBREFININGLP Illinois WOODRIVER 345,000 328,000
CONOCOPHILLIPS Louisiana BELLECHASSE 260,000 247,000
CONOCOPHILLIPS Texas SWEENY 260,000 247,000
CONOCOPHILLIPS Louisiana WESTLAKE 252,000 239,400
CONOCOPHILLIPS NewJersey LINDEN 251,000 238,000
CONOCOPHILLIPS Oklahoma PONCACITY 215,188 198,400
WRBREFININGLP Texas BORGER 154,000 146,000
CONOCOPHILLIPS California WILMINGTON 147,000 139,000
CONOCOPHILLIPS California RODEO 128,000 120,200
CONOCOPHILLIPS W hi
Washington FERNDALE 107 500
107,500 100 000
100,000
CONOCOPHILLIPS Montana BILLINGS 62,600 58,000
CONOCOPHILLIPS Alaska PRUDHOEBAY 16,000 15,000

13
DistributionofU.S.RefineryCapacities

40 6,000

ar day]
Numberr of Operatiing Refinerries

35
5 000
5,000

bbl/calenda
30
4,000
25

apacity [Mb
20 3,000

15
2,000

Segment Ca
10
1,000
5

0 0

S
Less than 10 - 50 50 - 100 100 - 200 - 300 - 400 - Greater
10 Mbpd Mbpd Mbpd 200 300 400 500 than 500
Mbpd Mbpd Mbpd Mbpd Mbpd

14
U.S.RefineryCapacityHistoricalTrends
400 20

mday]
MMbbl/stream
300 15
mberofUSReffineries

eryCapacity[M
200 10

OperatingRefine
Num

100 5

0 0
1980 1985 1990 1995 2000 2005 2010
Source:http://tonto.eia.doe.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm

15
NewestGrassRootsRefineriesinU.S.
LastgrassrootscomplexrefineryinU.S.wasMarathonPetroleumsGaryville,LA,refinery
openedin1976
Twoothercomplexrefineriesopenedinthe1970saretheCOPAllianceRefinerynearNew
Orleans,LA,&theBPCherryPointRefineryinnorthwestWashington(1971)
Multiplesimplerefineries
Complexrefineriesinplanningstage
p p g g
HyperionEnergyCenter,400,000bpdrefinerynearUnionCounty,SD
WillincludePetcoke IGCCforpower&hydrogen
AirpermitwithStateSupremeCourt,rulingexpectedinSeptember2012atearliest
Air permit with State Supreme Court ruling expected in September 2012 at earliest
ArizonaCleanFuelsYuma,LLC,150,000bpdrefinerynearYuma,AZ
NopressreleasessinceMarch2009

MHACleanFuelsRefinery,15,000bpsd refineryontheFortBertholdIndianReservationnear
Makoti,ND
ReceivedkeyEPApermitfordischargingtreatedwastewaterAugust2011

16
PetroleumProducts
Therearespecificationsfor
over2,000individualrefinery
products
Intermediatefeedstockscan
beroutedtovariousunitsto
producedifferentblendstocks
Dependsuponthelocal
d h l l
economics&contractual
limitations

Ref:Unknownorigin.PossiblySoconyVacuumOilCompany,Inc.(1943)

18
U.S.Refinery&BlenderNetProduction

IncludesproductiontoApril2012
Source:http://tonto.eia.doe.gov/dnav/pet/pet_pnp_refp_dc_nus_mbbl_m.htm

19
U.S.Refinery&BlenderNetProduction

1.53ratioof
gasoline&naphtha
tomiddledistillates

EIA,refineryyield
EIA, refinery yield
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm

20
Crude&ProductPrices

http://www.bloomberg.com/energy/

22
RefineryEconomics
Whendorefinersmakemoney?
Highcrudeoilprices?
Lowcrudeoilprices?
L d il i ?
Itdepends!
Differencebetweenthesalepriceoftheproducts&purchasepriceofthecrudeoil
p p p p
Operatingcostscutintothismargin
Typicalprices
Whatisthepriceofcrudeoil?
Dependsonlocation,quality,

Whataretheproductprices?
What are the product prices?

23
PricesAreCrudeSpecific

US Crude Prices 6/29/2012 World Crude Prices May-12

$/bbl $/bbl
Alaska-North Slope 27 $ 114.39 Arab light - Saudi Arabia $ 108.48
South Louisiana Sweet $ 98.25 Basrah light - Iraq $ 105.94
California-Midway Sunset 13 $ 91.90 Bonny light 37 - Nigeria $ 112.87
California Buena Vista Hills 26 $ 99.65 Es Sider - Libya $ 111.27
Wyoming Sweet $ 75.21 Girassol - Angola $ 111.20
East Texas Sweet $ 83 75
83.75 Iran heavy - Iran $ 107 06
107.06
West Texas Sour 34 $ 76.50 Kuwait export - Kuwait $ 107.55
West Texas Intermediate $ 81.50 Marine - Qatar $ 107.79
Oklahoma Sweet $ 81.50 Minas 34 - Indonesia $ 120.21
Texas Upper Gulf coast $ 74.50 Fateh 32 - Dubai $ 107.71
Michigan Sour $ 73.50 Brent 38 - UK $ 110.27
Kansas Common $ 80 50
80.50 Isthmus 33
33 - Mexico $ 107 20
107.20
North Dakota Sweet $ 63.34 Tia Juana light 31 - Venezuala NA
Urals - Russia $ 109.21

Ref:Statistics,Oil&GasJournal,July9,2012

24
 PricesAreCrudeSpecific
ScaleA:
Deduct$0.02/bblforeachwholedegreeAPIfrom40.9 to
East of the Rockies Price Change Gvty Adj 35.0API.
Altamont Yellow Wax 81.31 -0.20 B
Deduct$0.015/bblforeach.1degreeAPIbelow35.0API.
Bonito Sour (Onshore) 112.75 -0.25 A
Deepwater Sour (Onshore) (30) 109.50 0.00 F,G Deduct$0.015/bblforeach.1degreeAPIabove45.0API.
Deduct $0 015/bbl for each 1 degree API above 45 0API
East Texas 93.00 -0.25 none ScaleB:
Eugene Island Sour (Onshore) 113.50 0.00 A Deduct$0.015/bblforeach.1degreeAPIbelow40.0API.
Heavy Louisiana Sweet (Onshore) 116.75 -0.25 A
Deduct$0.015/bblforeach.1degreeAPIabove45.0API.
Light Louisiana Sweet (Onshore) 116.00 -0.25 A
New Mexico Intermediate 93 25
93.25 -0
0.25
25 none ScaleF:
New Mexico Sour (34) 90.25 -0.25 none Deduct$0.015/bblforeach.1degreeAPIbelow30.0API
North Texas Sweet 93.25 -0.25 none Add$0.015/bblforeach.1degreeAPIabove30.0 to35.0API
Oklahoma Sour 90.25 -0.25 none
Oklahoma Sweet 93.25 -0.25 none Add$0.02/bblforeachwholedegreeAPIfrom36 to40.0API.
Rocky Mountain Condensate 81.06 -0.20 H Deduct$0.015/bblforeach.1degreeAPIabove45.0API.
South Texas Light Sweet 91.25 -0.25 none ScaleG:
Southwest Wyoming Sweet 86.31 -0.20 E
Add$0.1/bblforeach.1weightpercentSulfur(wt%S)below2.0
Uinta Basin Black Wax 80.31 -0.20 B to1.0wt%S
West Texas Intermediate 93.25 -0.25 none
Deduct$0.1/bblforeach.1weightpercentSulfur(wt%S)above
West Texas Sour (34) 90.25 -0.25 none 2.0wt%S
Western Colorado 82 06
82.06 -0 20
-0.20 B
ScaleH:
Add$0.015/bblpremiumforeach0.1degreebelow45.0degrees
ChevronCrudeOilMarketing Deduct$0.05/bblforeach0.1degreeabove60.0degrees
EastoftheRockies Bulletin12E88
May9,2012
http://crudemarketing.chevron.com/posted_pricing_daily.asp
// /

25
PricesAreCrudeSpecific
160

Cushing, OK WTI
140 Weekly Brent
Weekly Mexico Maya

120
Crrude Price [$/bbl]

100

80

60

40

20

0
1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013
 Crude Price Relative to
C o Brent [$/b
bbl]

-40
-30
-20
-10
0
10
20
30

1997

1998

1999

2000

Cushing,
2001

Cushing OK WTI
2002
PricesAreCrudeSpecific

Weekly Mexico Maya

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013
ProductEconomics CrackSpread
Estimatesthevalueaddedbytherefiningoperation
4standardspreads
532
532
5bbl crude 3bbls gasoline+2bbls heatingoil/diesel
321
3bbl crude 2bbls
3 bbl crude 2 bbls gasoline+1bbls
gasoline + 1 bbls heatingoil/diesel
heating oil/diesel
211
2bbl crude 1bbls gasoline+1bbls heatingoil/diesel
6321
6321
6bbl crude 3bbls gasoline+2bbls heatingoil/diesel+1bbl residualfueloil

Ruleofthumbforprofitableoperation
Longheldview greaterthan$4perbbl asstronglyprofitable
Currentview shouldbegreaterthan$9perbbl tobeprofitable

28
CrackSpread

Example Bloomberg,7/13/2012
Prices
WTICushingSpot $87.10perbbl
Brent $102.62perbbl
RBOBGasoline $2.8161pergal
HeatingOil $2.7882pergal
532Spreads
WTI 42 3 2.8161 2 7882 5 87.1
2 8161 2 2.7882 87 1
$30.71 perbbl
5

Brent 42 3 2.8161 2 2.7882 5 102.61

$15.19
$15 19 perbbl
per bbl
5

29
HistoricalCrudePrices&Margins
Spot Price Crack Spreads

$50 $160

5-3-2 Crack Spread

$140
$40
6-3-2-1

Price [$/bbl]
Crude Oil - WTI
$120
de oil]

$30
ead [$/bbl crud

$100

Cushing, OK C rude Oil Spot P

$20

$80

$10
Crack Spre

$60

$0
$40

C
-$10
$20

-$20 $0
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Source:http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

30
HistoricalCrudePrices&Margins
S tP
Spot Price
i C Crack
kSSpreads
d
5-3-2 Spread Based on Brent
$70 $160
5-3-2 Spread Based on WTI
Europe Brent
WTI Cushing,
g, OK
$60 $140

$50 $120
de oil]

Crude Oil Spot Price [$/bbl]

ead [$/bbl crud

$40 $100

$30 $80
Crack Spre

$20 $60

$10 $40

$0 $20

-$10 $0
2005 2006 2007 2008 2009 2010 2011 2012 2013

Source:http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

31
HowMuchDoRefinersMakeFromGasoline?

RetailCostContributions
Per Gallon
PerGallon Per Barrel
PerBarrel
RetailPrice $3.73 $156.66

Taxes 11% $0.41 $17.23

Distribution & Marketing
Distribution&Marketing 10% $0.37 $15.67
Refining 13% $0.48 $20.37
CrudeOil 66% $2.46 $103.40

RefineryCosts
Refinery Costs $2.95 $123.76

Source:http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

32
HowMuchDoRefinersMakeFromDiesel?

RetailCostContributions
Per Gallon
PerGallon Per Barrel
PerBarrel
RetailPrice $3.98 $167.16

Taxes 12% $0.48 $20.06

Distribution & Marketing
Distribution&Marketing 16% $0.64 $26.75
Refining 11% $0.44 $18.39
CrudeOil 61% $2.43 $101.97

RefineryCosts
Refinery Costs $2.87 $120.36

Source:http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

33
Howdopricescompareonanenergybasis?

34
Howdopricescompareonanenergybasis?

GivenPrice HeatingValue Price[$/MWh] Price[$/MMBtu]

RBOBGasolinewholesale 2.8161 $pergallon 115,000 Btu/gal LHV 83.56 24.49
HeatingOilwholesale 2.7882 $pergallon 130,500 Btu/gal LHV 72.90 21.37
WTICrudeOil 87.1 $perbbl 5.8 MMBtu/bbl HHV 51.24 15.02
BrentCrudeOil 102.62 $perbbl 5.8 MMBtu/bbl HHV 60.37 17.69
Ethanolrack 2.27 $pergallon 75,700 Btu/gal LHV 102.32 29.99
NaturalGasHenryHub 2.88 $perMMBtu HHV 9.83 2.88
PowderRiverBasinCoal(lowsulfur) 9.15 $perton 8,800 Btu/lb HHV 1.77 0.52
IllinoisNo.6Coal(highsulfur) 48.50 $perton 11,800 Btu/lb HHV 7.01 2.06
ElectricitytoIndustrialcustomers 6.75 /kWhr 67.50 19.78
Electricity,Bloombergdayaheadspot 32.75 $/MWh 32.75 9.60

35
EarlyHistory
Firstoilwellof"Colonel"EdwinL.Drake
August1859,OilCreekinnorthwesternPennsylvania
FirstrefineriesbuiltuparoundPennsylvaniaoilwells.
Batch distillation to recover kerosene
Batchdistillationtorecoverkerosene.
Keroseneviewedasasuperiorreplacementtowhaleoil
forlampoil.
StandardOilTrust
JohnD.Rockefelleracquiredpetroleum
interestsduringthelate1800s.
OrganizedastheStandardOilTrust
in1882.
U.S.SupremeCourtdissolvedin1911.
US S C t di l d i 1911
34companiesspunoff.
Changeinproductdemand
In1911,nation'skeroseneoutput
, p
eclipsedforthe1sttimebyadiscarded
byproduct gasoline

37
ImplementationofTechnologies
Year Processname Purpose
p Byproducts,etc.
yp
1862 Atmosphericdistillation Producekerosene Naphtha,tar,etc.
Lubricants(original) Asphalt,residual
1870 Vacuumdistillation
Crackingfeedstocks(1930's) cokerfeedstocks
1913 Thermalcracking Increasegasoline Residual,bunkerfuel
1916 Sweetening Reducesulfur&odor Sulfur
1930
1930 Thermal reforming
Thermalreforming Improve octane number
Improveoctanenumber Residual
1932 Hydrogenation Removesulfur Sulfur
1932 Coking Producegasolinebasestocks Coke
1933 Solventextraction Improvelubricantviscosityindex Aromatics
1935 Solventdewaxing Improvepourpoint Waxes
Improvegasolineyield
p g y Petrochemical
1935
1935 Cat polymeri ation
Cat.polymerization
&octanenumber feedstocks
Petrochemical
1937 Catalyticcracking Higheroctanegasoline
feedstocks
1939 Visbreaking Reduceviscosity Increaseddistillate,tar
1940 Alkylation Increasegasolineoctane&yield Highoctaneaviationgasoline
1940
1940 Isomerization Produce alkylation feedstock
Producealkylationfeedstock Naphtha
1942 Fluidcatalyticcracking Increasegasolineyield&octane Petrochemicalfeedstocks
1950 Deasphalting Increasecrackingfeedstock Asphalt
1952 Catalyticreforming Convertlowqualitynaphtha Aromatics
1954 Hydrodesulfurization Removesulfur Sulfur
1956 Inhibitorsweetening Removemercaptan Disulfides
Converttomoleculeswithhigh
1957 Catalyticisomerization Alkylationfeedstocks
octanenumber
1960 Hydrocracking Improvequalityandreducesulfur Alkylationfeedstocks
1974 Catalyticdewaxing Improvepourpoint Wax
Increasegasolineyieldfrom
1975 Residualhydrocracking Heavyresiduals
residual
Ref:http://www.osha.gov/dts/osta/otm/otm_iv/otm_iv_2.html

38
GenealogyOfMajorU.S.Refiners

Ref:http://www.eia.gov/petroleum/refinerycapacity/

39
GenealogyOfMajorU.S.Refiners

Ref:http://www.eia.gov/petroleum/refinerycapacity/

40
DescriptionofPetroleumRefinery

Manageshydrocarbonmolecules
Organized&coordinatedarrangementofmanufacturingprocesses
Providephysical&chemicalchangeofcrudeoil
Salableproductswithspecifications&volumesasdemandedbythemarketplace
Completerefinerywillinclude:
Complete refinery will include:
Tankageforstorage
Dependablesourceforelectricpower
Wastedisposal&treatmentfacilities
Productblendingfacilities
Aroundtheclockoperations
Around the clock operations
Conversionunits

41
PetroleumRefineryBlockFlowDiagram

43
PetroleumRefineryBlockFlowDiagram
Gases

Polymer-
l Sulfur
lf
Sulfur
ization Plant
LPG
Sat Gas
Gas
Plant
Butanes Fuel Gas
Alkyl
Feed Alkyla- LPG
Gas tion
Separation Polymerization
Naphtha
& Isom-
Stabilizer
bl erization
Light Naphtha
Alkylate
Aviation
Isomerate
Gasoline
Automotive
Reformate
Gasoline
Naphtha Naphtha Solvents
Heavy
Naphtha Hydro- Reform-
treating ing Naphtha
Atmos-
pheric
Distillation
ll
Jet Fuels
Kerosene
Crude
Oil
Desalter Kerosene
Distillate Cat Solvents
AGO
Hydro- Naphtha Distillate
cracking Treating &
Hydro- Heating Oils
Blending
Gas Oil Fluidized treating
Cat Diesel
LVGO Hydro- Catalytic Distillates
treating Cracking
Vacuum
Distillation
ll Fuel Oil
HVGO
Cycle Oils
Residual
Fuel Oils
DAO
Solvent
Deasphal-
SDA
ting Coker Bottoms Asphalts
Naphtha Naphtha

Visbreak-
Distillates
ing Heavy Fuel Oil
Coker Bottoms
Gas
Vacuum Oil Lube Oil Lubricant
Residuum
Solvent
Greases
Dewax-
ing Waxes
Waxes

Coking Light Coker

Gas Oil

Coke

45