PRES Flinthills

"Future Business Solutions For
Marketing of Alberta's Oil Sands"
Canada’s Oil Sands vs. the Competition
Flint Hills Resources

Doug Wilkins
Competition? What competition...
■ Some familiar names and not so familiar

names:
Sour grades:
■ OPEC sours: Basrah and Kirkuk (Iraqi)- Saudi family of
Sours- Venezuelan Sours (BCF).
■ NOPEC sours: FSU (Urals)- Mexican grades (Maya)
■ USGC domestic and offshore: WTS-Mars-Poseidon.
Competition? What competition...
Sweet Grades
■ OPEC and NOPEC
Some of the new grades mentioned on the

USGC:
■ The new Venezuelan grades- Petrozuata and
Cerro Negro.
Are there real competitive
advantages over Canadian grades?
– Canadian grades have good pipeline access

to the Mid Continent and economics have
favored eastward movements vs. the
USWC
– OPEC countries were thought to have a
competitive advantage with respect to
production cost.
Competing Vs. the World:
Most OPEC countries have certain ‘social infrastructure’ costs

associated with their oil production revenue requirements.
Source: EIG in PIW, Jan 28, 2002
Opec Member Theoretical Need According to EIG
Kuwait $7/ bbl

Libya $13/bbl
Nigeria $26 /bbl
Saudi Arabia $25.5/bbl
Venezuela $20/bbl
Indonesia $18/bbl
Iran $19/bbl
At the above levels, it appears that Canadian crudes
could comfortably compete.
What about crude quality issues?
If Canadian is getting heavier and more sour…

sour
Source PIRA
35.00
30.00 Light Sweet
25.00 Light Sour
20.00
Medium Sweet
15.00
10.00 Medium Sour
5.00 Heavy Sweet
0.00 Heavy Sour
1999 2000 2001 2002 2005 2010
Light ≥ 34º API, Medium 25-34º API, Heavy ≤ 25º API
So is the rest of the world.

Can growth in Oil Sands production find a
home in the Mid Continent?
Mid Continent Bottoms Supply / Demand Balance

Demand
PADD II PADD IV
Crude Runs 3400 500
FCC Capacity 1185 174
FCC Feed Resid % 10% 10%
Resid to FCC 119 17
Coking Capacity 380 40
Asphalt Production 180 45
950 F+ Demand 679 102
950 F+ Demand / Crude 20% 20%
Can growth in Oil Sands production find a
home in the Mid Continent?
■ On the back of declining US and Canada conventional

production, PADD’s II and IV appears to have the refining
capacity, which is in support of an earlier ADOE
presentation.
■ Some upgrading will be needed to provide the necessary

diluent to move bitumen out of the region.
■ When looking at some of the Syn-Bit blends data, they have

very similar crude distillate characteristics of conventional
medium sours… I.E. 30% bottoms cut.
Are refiners preparing for the shift in
crude qualities?
It appears USGC refiners have the lead.

Company Location Capacity Start-up
LCR Houston TX 87 1997
Orion Norco LA 75 1998
El Paso Aruba 32 2000
Phillips Sweeney TX 58 2000
Premcor Pt. Arthur TX 40 2000
Shell Deer Park TX 30 2001
MAP Garyville LA 35 2001
Exxon Baytown TX 40 2001
PEMEX Madero 44 2002
PEMEX Cadereyta Mexico 50 2002
Hess St Croix Virgin Islands 58 2002
Chevron Pascagoula MS 30 2003
Valero Texas City TX 45 2004
From a the FHR - Pine Bend centric POV
We are also getting ready!
; We have upgraded our crude and hydrotreating

metallurgy to allow us to process the higher TAN
crudes.
; We have upgraded our desalting capability
; We started up a new hydrogen plant in 2001.
; Our Flint Hills Hardisty Terminal helps in the pre-

blending efforts for some of the special crudes
we currently run.
What about Pipeline capacity?
; As outlined earlier by the ADOE, we also see some

challenges ahead with regards to pipeline capacity out
of the region. (Similar POV 2007)
; Just last week EPL announced they are looking at a

400,000 barrels a day West Coast pipeline.
; And later last year there was a group looking into a

USGC crude pipeline.
; The industry has demonstrated the ability to build

pipeline capacity ahead of production.
Conclusion
• Capacity to process seems to be a smaller issue than

the capacity to produce
• Quality issues are already on the radar screen and are
not new issues.
• We expect refiners will spend the required capital to
accommodate both the crude and products quality
issues.
• Delays in refinery infrastructure spending may be
more related to the bet on the production itself.
Will the production be there?

PRES Flinthills

Uploaded by

Copyright:

Available Formats

PRES Flinthills

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PRES Flinthills

Uploaded by

Copyright:

Available Formats

"Future Business Solutions For

Marketing of Alberta's Oil Sands"

Canada’s Oil Sands vs. the Competition

Flint Hills Resources

■ Some familiar names and not so familiar

Some of the new grades mentioned on the

– Canadian grades have good pipeline access

Most OPEC countries have certain ‘social infrastructure’ costs

Kuwait $7/ bbl

If Canadian is getting heavier and more sour…

Light ≥ 34º API, Medium 25-34º API, Heavy ≤ 25º API

So is the rest of the world.

Mid Continent Bottoms Supply / Demand Balance

■ On the back of declining US and Canada conventional

■ Some upgrading will be needed to provide the necessary

■ When looking at some of the Syn-Bit blends data, they have

It appears USGC refiners have the lead.

; We have upgraded our crude and hydrotreating

; We have upgraded our desalting capability

; We started up a new hydrogen plant in 2001.

; Our Flint Hills Hardisty Terminal helps in the pre-

; As outlined earlier by the ADOE, we also see some

; Just last week EPL announced they are looking at a

; And later last year there was a group looking into a

; The industry has demonstrated the ability to build

• Capacity to process seems to be a smaller issue than

Will the production be there?

You might also like