Transcript Document

JACOBS
CONSULTANCY
Global Petcoke Outlook
Here today but
… where tomorrow?
Mike Stewart
Manager,
Carbon Group
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Jacobs Consultancy
Petroleum
Coke
Quarterly
www.petcokes.com
A Publication of Jacobs Consultancy Inc.
World Outlook
Annual Report
3
Coal Tar
Pitch
Report
www.petcokes.com
McCloskey Group Petcoke Conference—2008
A Publication of Jacobs Consultancy Inc .
Houston, TX
JACOBS
CONSULTANCY
Jacobs Consultancy

Formerly The Pace Consultants Inc. - practice founded in 1957
– Refining, petrochemicals, natural gas and power generation

Parent – Jacobs Engineering Group (NYSE: JEC)

The Carbon Group – Providing a market and technical
consulting service to the worldwide petroleum coke and
binder pitch markets

Since 1983, the authoritative and unique source on petroleum
coke and other carbon products
–
–
–
–
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Pace Petroleum Coke Quarterly (PCQ) & petcokes.com services
Focused Multi-Client Reports (Calcined Petroleum Coke, Coal Tar Pitch)
Private Single-Client Studies
Carbon Conferences
McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Points for Today
6

Where we are

Where we’re heading

Where we could be going
McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
2008 Global Refining Capacity
25.0
85.3 Million Barrels per Day
Million BPD
20.0
15.0
10.0
5.0
0.0
Africa
7
Asia Pacific
Eastern
Europe
Middle East
McCloskey Group Petcoke Conference—2008
Source: January 2008 Oil & Gas Journal
North
America
South
America
Houston, TX
Western
Europe
JACOBS
CONSULTANCY
2015 Global Refining Capacity
35.0
Potentially 113 Million Barrels per Day
30.0
Million BPD
25.0
20.0
15.0
10.0
5.0
0.0
Africa
8
Asia Pacific
Eastern
Europe
Middle East
McCloskey Group Petcoke Conference—2008
Source: January 2008 Oil & Gas Journal, Jacobs Consultancy
North
America
South
America
Houston, TX
Western
Europe
JACOBS
CONSULTANCY
Announced Refinery & Upgrader
Spending: 2008-2015
140.0
$US 600 Billion
120.0
$US Billion
100.0
80.0
60.0
40.0
20.0
0.0
Africa
9
Asia
Pacific
Eastern
Europe
Middle
East
North
America
McCloskey Group Petcoke Conference—2008
South
America
Western Upgraders
Europe
Houston, TX
JACOBS
CONSULTANCY
Jacobs’ Thoughts on Refining

Announced refining capacity
– ~ 27 MMBPD (29 w/ upgraders)

Represents $600 billion in Capex
– Without upgraders, ~$487 billion

Probability weighted, more likely:
– 10.8 MMBPD
– $201 billion
– Nearly 2/3 built in Asia and Middle East
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Petcoke Yield for
Various Crude Streams
25%
Arab Ext Lt (37° API)
Arab Lt (33° API)
20%
19%
18%
Arab Med (31° API)
Yield, weight %
Arab Hvy (27° API)
15%
Maya (22° API)
Alberta Snybit/Dilbit (19° API) 11%
12%
10%
10%
7%
5%
0%
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
World Petcoke
Production – 2007*
Total Production ~ 88 million DMT
Latin
America
10%
Calcined
Asia (ex
China)
7%
FuelGrade
China
8%
EU
2%
North
America
70%
Calcined = 22.8 million DMT
Other
3%
Fuel-Grade = 68.4 million DMT
*Estimated
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
World Petcoke
Production – 2007
50
Millions DMT/yr
Total World Petcoke Production ~ 88 million DMT
40
30
20
10
0
ED
IT
N
U
S
TE
A
ST
N
TI
LA
M
A
ER
IC
A
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IN
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EU
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IC
FR
/A
ST
ID
M
McCloskey Group Petcoke Conference—2008
A
PE
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R
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LE
EA
Houston, TX
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CONSULTANCY
Forecast World Petcoke
Production – 2015
Millions DMT/yr
60
Upgrader Expansions
50
Refinery Expansions
2007
40
Total World Petcoke Production ~ 145 million DMT
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20
10
A
ST
/A
FR
IC
O
PE
AN
C
EU
R
A
AD
IS
C
SI
A
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HI
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AM
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IC
TE
S
A
0
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Petcoke Demand –
Cement Production

Cement industry – from secondary fuel
to preferred fuel
– Many kilns use 100% petcoke
– Ash in fuel becomes part of clinker
– Supply certainty important
– Coal supplier dependability concerns
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Petcoke Demand –
Power & Gasification

US state GHG regulations can hurt, not help,
gasification projects

CFB boiler technology still dominates for
power
– Guacolda – Guacolda 3
– Formosa Plastics – Point Comfort
– Cleco – Rodemacher
– Entergy – Little Gypsy
– NRG Energy – Big Cajun I
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McCloskey Group Petcoke Conference—2008
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CONSULTANCY
U.S. Gasification Projects
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Petcoke Demand –
Power & Gasification

Europe Power – lots of unmet demand
– U.K. – Ratcliffe & Drax
– Others

Gasification very much alive
– Other products – H2, SNG, methanol, F-T liquids
– Big projects – typically 1.8+ million MT/yr
– CCS for EOR being incorporated in some projects
– Project finance – adapting to petcoke market
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
The World as We See it Today

Supply limited

Clean fuels regulations in place

Climate change regulations 1-2 years away
– Waiting for technology, economics , elections to
catch up
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
High sulfur petcoke ↑

Low sulfur petcoke ↓ →
McCloskey Group Petcoke Conference—2008
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CONSULTANCY
Likely Impact on Petcoke Markets
(2010–2013)

Biggest fuel-grade petcoke production growth areas:
– Midwest/St. Lawrence Seaway market
– Canada
– China

USGC/Caribbean market
– USGC production increases by 24%
– Many petcoke fueled gasification/power projects being
developed
– “Timing conundrum”

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“Organic” demand growth important but often
unrecognized
McCloskey Group Petcoke Conference—2008
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CONSULTANCY
Where Do We Go From Here?
World
we wish to
see
World
we will likely
see
World
as it is
today
World
we hope not
to see
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
The World We Wish to See

Supply / demand balanced, and growing

Science fact prevails

Economics trump politics

Gasification makes sense

Cokers built for capacity, IMO, fuel oil

More for everyone
– High sulfur petcoke ↑
– Low sulfur petcoke ↑
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
The World We Likely Will See

Both supply and demand constrained

New cokers start up
– High sulfur petcoke ↑
– Low sulfur petcoke ↓
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
IMO emission regulations

CO2: cap / trade or carbon tax

Viable Carbon Capture Sequestration (CCS)
technology?

Politics are always wrong, and we’ll change
and/or pay for it later
McCloskey Group Petcoke Conference—2008
IMO = International Maritime Organization
Houston, TX
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CONSULTANCY
The World We Hope Not to See

A “No carbon” world
– Low carbon fuels
– Refining – BAD
– Wind, solar, corn cobs – GOOD

Cokers needed, but to sequester carbon?

Gasification is the answer, but NIMBYs
and economics prevent from happening

“No sulfur” petcoke?
NIMBY = Not in my back yard
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
What Are the Wild Cards?

New government regulations
– Greenhouse gases (CO2)
– MARPOL VI low sulfur bunker fuels
– Oil use reduction standards or vehicle mileage
standards

Alternative fuels
– Ethanol, biodiesel, gas to liquids, coal to liquids

Global and regional economies
– Recession will push projects back

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Major political upheaval
McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
Potential Impact of MARPOL VI
Cost to refiners = $125 B
Cost to shippers = $120 B
Impacts petcoke supply & quality
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McCloskey Group Petcoke Conference—2008
No impact to petcoke
Houston, TX
JACOBS
CONSULTANCY
MARPOL – Impact for Petcoke

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What could be the ultimate impact if ships can’t burn bunkers?
–
Assume Arab Light as crude oil source
–
55+ cokers (50,000 bpd each)
–
Potential petcoke production of 55 million DMT / year
McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
A Take-away:
What Should You Watch?
28

Political winds – who gets elected

Continuing government involvement

Economy

Resources

Funding – a critical issue
– New emissions regulations
– Permitting
– China, India, US are key markets – continuing strong
economies will allow projects to go forward
– Shop space, materials, labor will be a cap on
everything getting done on budget, within schedule
– Projects with deep pocket sponsors will get funded
and built
– When the price tag gets too big, even deep pockets
will scale back or rethink
McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
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McCloskey Group Petcoke Conference—2008
Houston, TX
JACOBS
CONSULTANCY
JACOBS
CONSULTANCY
Questions?
Comments?
Zingers
and barbs?