Transcript Slides for Chuck Jones

Jim O’Malley
McCloskey Petcoke Conference
July 2004
WTI 3-2-1 Spread
8
7
$/Bbl
6
5
4
3
2
1
0
1998 1999 2000 2001 2002 2003 2004 2005
Sweet/Sour Spread (WTI-Maya)
12
$/Bbl
8.69
10
8
6
4
2
May
1999
2000
2001
2002
2003
2004
Ocean Freight Costs Increasing
(USGC to Mediterranean Petcoke Freight Rates)
35
30
25
$/MT
2004
2003
20
15
10
5
Monthly Avg. 1997-2002
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Petcoke Freight Rates
40
$25
$/MT
30
USWC to Japan
20
$24
10
USGC to Mediterranean
0
May
1999
2000
2001
2002
2003
2004
Comparison Between Delivered Prices
(Petcoke vs. Steam Coal)
140
%
120
100
72%
Japan
80
60
41%
40
Mediterranean
20
0
1999
2000
2001
2002
2003
May
2004
Coal Costs
3.50
$/MMBtu, CIF
3.00
Mediterranean
2.50
2.00
1.50
1.00
Japan
0.50
1999
2000
2001
2002
2003
May
2004
World* Petroleum Coke Production
60
Million MT
50
40
30
Fuel-Grade
20
10
Calcinable-Grade
1995
* Excluding CIS
1997
1999
2001
2003
World* Petroleum Coke Production
90
83.9
Million DMT
80
70
Calcining
Fuel
60
50
40
30
20
10
0
2001
* excluding CIS (i.e. FSU)
2003
2005
2007
Fuel-Grade Petcoke Demand
U.S. Compared to World
20
18
DMT
U.S.
16
World (ex U.S.)
14
12
10
8
6
4
2
0
Power Iron & Steel Cement
Generation
Residential
Permanent
Other
Industry
Storage
Fuel-Grade Petcoke Demand (Cement Industry)
• Continues as the largest demand sector for fuel-grade petcoke
• Commitment to Cement Sustainability Initiative (CSI)
Petcoke in Cement Production
12
10
8
6
4
2
0
Million MT
2001
2006
Europe
Latin
America
U.S.
Asia w/o
Japan &
China
Other
European Petcoke Demand (2003)
Power
1.3
Iron & Steel
Cement
1.3
11.7
Residential
0.5
Others
1.2
Total = 16 million MT
Petcoke Consumption by European Countries
4000
Spain
Italy
Turkey
Belgium
Netherlands
Other
3000
2000
1000
0
2001
2002
Note: Other includes Denmark, France, Germany,
Greece, Ireland, Romania, United Kingdom & Other.
2003
U.S. Fuel-Grade Petcoke Production by Region (2003)
PADD 4
0.6 MM
PADD 2
4.7 MM
PADD 1
1.0 MM
PADD 5
7.0 MM
PADD 3
21.7 MM
(million MT/year)
U.S. Utility Petcoke Receipts
5.0
millions MT
4.0
3.0
2.0
1.0
0.0
1999
2000
2001
Data sources: FERC Form 423 & Confidential Sources
2002
2003
Fuel-Grade Petcoke Demand (Power Generation)
Power Industry Petcoke Consumption
• Fastest growing
sector; U.S. is the
largest consumer
Base Forecast
25
Million DMT
20
• Act as “swing”
consumers –
buying when prices
are low and pulling
back when prices
increase
World w/o
U.S. & Canada
15
Canada
10
U.S.
5
0
2001
2002
2003
2004
2005
2006
2007
2008
Environmental Regulatory Impact
on Petcoke Supply/Demand
• Probably most
significant driver for
energy use/policy
decisions
• Greenhouse gases pose
greatest threat to
petcoke production and
use through the Kyoto
Protocol
CO2 EMISSIONS ALLOWANCE COST
FOR PETROLEUM COKE
160
$/MT Petcoke
120
80
Projected Cost - EU
40
0
0
10
20
30
$/MT CO2
40
50