An oil & refining markets presentation package: Questions answered Report

Insight 10 April 2017

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Report summary

At a recent industry event, we presented our view to over 1000 delegates on the changing petroleum markets landscape. These same insights offering valuable perspective on the challenges ahead are available in this DISCOUNTED bundle of presentations. What can you gain from our analysis and not afford to miss? What next for heavy Canadian crude? Between production, takeaway capacity and demand, things were looking up…but uncertainty is now prevalent Where do RIN obligations belong? The background, economics, costs of the current situation versus the benefits, drawbacks of moving the obligation What happens to US refineries when demand declines? Implications of declining gasoline demand on trade, refinery profitability, competition The outlook for US transport fuels: a bumpy road ahead? Diverging demand trends driven by uncertainty in regulation, consumer preference, technology What happens when US oil production recovers? Future of US production, logistics, prices, crude slates, exports

What is next for heavy Canadian crude?
- Canadian production
  - Change in North America crude oil supply
- Heavy oil supply growth
- Heavy Canadian differentials
- Logistics
- Disposition of crude
- Change is coming
  - Outlook for heavy oil
  - Biggest x-factor: The IMO
  - Widening risk for WTI-WCS
- Takeaways
Where do RIN obligations belong?
- Background on RFS
  - Objectives and legislation Important legislative points Process and calculation for RVOs Obstacles- Cellulosic
- Obstacles- Blend wall
- EPA response to petitions
  - Industry petitions
- RIN economics
  - Pass-through costs
  - Biodiesel RIN vs. Ethanol RIN Refinery yield shift Who pays
  - How much do RINs actually cost refiners?
- Scenarios
  - Scenario 1: Status quo- refiners obligated
  - Scenario 2: Point of obligation moved to blenders Scenario 3: Point of obligation and point of generation moved to retail Scenario Summary
  - What happens to US refineries when demand declines?
    - US refined product demand forecast
      - Fuel efficiency, light vehicle stock, and vehicle miles traveled
    - Gasoline supply-demand balances
      - PADD-level supply-demand balances
      - Atlantic Basin and Asia-Pacific supply-demand balances
    - Impact on Gulf Coast refinery profitability
      - Gulf Coast vs Southeast Asia net cash margins comparison
      - Gulf Coast net cash margin under depressed gasoline price scenario
    - Impact on Midwest refinery profitability
      - Sub-PADD supply-demand analysis
      - Midwest net cash margins under depressed gasoline scenario
      - Infrastructure projects from Midwest to East Coast
    - Impact on East Coast refinery profitability
      - 2016 gasoline supply curve to East Coast
    - East Coast net cash margins under depressed gasoline price scenario
    - 2030 gasoline supply curve to East Coast
    - Takeaways
  - The outlook for US transport fuels: a bumpy road ahead?
    - Global oil demand
    - US demand
      - Transport Fuels
      - Short term outlook
      - Medium term outlook
      - Risk
    - Distillate demand
      - Outlook
      - Risks
    - Jet fuel demand
    - Global outlook for transport fuels
    - Takeaways
  - What happens when US oil production recovers?
    - US production influences crude price differentials and refining margins
    - What shifts US production from declining to increasing?
    - Which producing regions will be the first to respond?
    - Will enough infrastructure be built to support the production increases?
    - How might US refiners respond to growing US crude supply? Might it sail to other refining markets?
    - How wide does Brent-WTI need to be to encourage US crude oil exports?
    - Key uncertainties and strategic implications

Tables and charts

This report includes 50 images and tables including:

Outlook for heavy oil supply & Change in heavy oil supply
History of the WTI-WCS differentials
West Canada oil supply-takeaway balance

Disposition of crude from the WCSB
Outlook for WTI-WCS
Fuel ethanol in gasoline pool
Change in North America crude oil supply from Q1 2017 basis
Outlook for heavy oil supply & Change in heavy oil supply
Timeline for enforcement of MARPOL Annex VI SOx emission limit
Range of displaced fuel oil in 2020 & Product crack spread profile, 2001-2025
Outlook for WTI-WCS
RFS initial targets by category
Refinery supply vs. blender demand- Gasoline blendstocks
Refinery supply vs. consumer demand- Diesel
Illustrative cost comparison
After pass-through refinery costs
Obligation vs Generation
US demand forecast by product
East Coast NCMs with depressed Atlantic Basin gasoline price
Illustrative 2030 gasoline supply curve
Growth in global oil demand & Global demand for main transports fuel
US distillate demand & heating degree days in New England
US jet fuel demand and ASM & US jet fuel demand
Miles travelled & Fuel efficiency
Global demand for main transport fuels
Brent-WTI Cushing differential & US tight oil differentials to WTI Cushing
Pre-FID global breakeven cost curve by resource theme
2020 global oil supply gap & Breakeven cost of required new supply
US oil supply outlook by resource theme & US tight oil supply outlook by play
Overview map of Gulf Coast infrastructure and developments
Permian supply and takeaway by destination
US crude oil supply & East Coast (PADD I) crude slates & Gulf Coast (PADD III) crude slates
Destinations of US crude oil exports & Mexico refinery crude slates
Conceptual overview of North American crude oil prices & Brent-WTI and US oil exports
US gasoline demand & US light vehicle stock
Gasoline supply-demand balances
Atlantic Basin gasoline balances supply-demand balances & Asia Pacific gasoline balance
Refinery net cash margins
USGC NCMs with depressed gasoline prices
Sub-regions of the Midwest & Midwest gasoline balance
Midwest NCMs with gasoline at discount to USGC
Midwest to Northeast product pipelines
Illustrative 2016 gasoline supply curve
US gasoline demand, US distillate demand, & US jet fuel demand
Growth in US oil demand & US demand for transport fuels
US gasoline demand & US vehicle miles travelled
US working age population and licensed drivers & US Cafe Standards
US gasoline demand & US auto sales by segment
US distillate demand and industrial production & truck fuel efficiency
US distillate demand & Global marine bunker demand