Transcript Propane Market Overview & Demonstration of the PERC County

Propane Market Overview &
Demonstration of the PERC
County Residential Propane Model version 2.0
Propane Education and Research Council
Presented by:
Mike Sloan
[email protected]
&
Richard Meyer
[email protected]
For Presentation Audio Call: (800) 561-4946 and Enter Code 500579
icfi.com
© 2006 ICF International. All rights reserved.
• Introduction to Propane Models
• General Market Overview
Key Issues and Trends
Market Challenges and Opportunities
Near and Long-Term Propane Market Outlook
• Propane Model Discussion and
Demonstration
County Residential Propane Model (New Version 2.0)
Questions are Encouraged
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What are the PERC Propane Models?
The models estimate and project odorized propane demand by end-use sector.
Propane Demand and
Forecasting Model v5.0
County Residential
Propane Model v2.0
(PDFM)
(CRPM)
• State-level Projections
• County-level Projections
Residential
Reseller/Cylinder
Agricultural
Residential Only
Commercial
Industrial
Internal Combustion
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What can I use the PERC Models for?
• Estimate Future Demand
– By region
– By company service territory
• Evaluate Demand Uncertainty
– Approximate demand potential under a variety of scenarios.
– What will demand look like during a cold year? Warm year? High price? Low price?
• Identify New Sales Opportunities
– What markets are growing?
– Where are markets growing?
• Identify Use per Customer Trends
– Models provide estimates on both propane customers and consumption.
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Primary Data Sources
• US Census Bureau
–
–
–
–
• National Oceanic and Atmospheric
Administration (NOAA)
• U.S. Department of Housing and Urban
Development (HUD)
• National Association of Home Builders
(NAHB)
• Gas Appliance Manufacturers
Association (GAMA)
• Propane Industry Sources
• Harris Interactive surveys for PERC
1990 and 2000 Census
American Community Survey
American Housing Survey
Survey of New Residential Construction
• U.S. Department of Energy Energy Information Administration
(EIA)
–
–
–
–
Residential Energy Consumption Survey
(RECS)
Commercial Building Energy consumption
Survey (CBECS)
Manufacturing Energy Consumption Survey
(MECS)
Vehicle Inventory and Use Survey (VIUS)
• American Petroleum Institute
–
Sales of Natural Gas Liquids and Liquefied
Refinery Gases (annual survey).
Much of the data, including the census data on
propane households, is included in the models.
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Looking Forward – Projections of
Propane Demand 2008 – 2012
• Energy prices remain near historic high levels
– NYMEX futures prices for propane, natural gas, fuel oil.
– DOE electricity price forecasts (modest growth from current levels)
• Residential housing starts do not rebound to 2000 levels before
2012.
• General Efficiency Trends Improvements
– Equipment and Building Shell Efficiencies
– Combined Improvement of 1.1% per year.
• Slow near term GDP growth
– 1.3% in 2008
– 2.4% in 2009
• Propane considered “environmentally friendly” in key markets.
• Weather “normal” is average of 1998-2004 weather.
– This average is about 4% warmer than the 1971-2000 30-year normal.
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Propane Markets Projection Through 2012
• Modest (+2.6%) growth in
demand in 2007 due to
returning to more normal
weather
Forecast
• Modest (-1.1%) decline in
demand in 2008
–
Demand supported by slightly
colder weather
• Significant decline (-4.4%)
in demand in 2009 due to
higher prices.
• Very slow growth in other
sectors partially offsets
declines in residential
sector.
• Very small decline in demand (less than 1 percent per year) in 2010 as growth due to
general economic conditions in the non-residential sectors offsets declines in the
residential market.
• Moderate growth in demand in 2011-2012 due to growth in all sectors.
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Historically High Energy Prices
Historical Spot Prices &
NYMEX Futures Strip
• Prices peaked in July
and have retreated
somewhat.
$30
$/MMBtu
$25
$20
WTI Crude
Mt. Belvieu Propane
Henry Hub Natural Gas
NY Harbor Heating Oil Spot
• Significant price volatility
in past 18 months.
$15
• Price gap between fuel
oil and propane has
shrunk, opening
opportunities:
$10
$5
$-
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New England
Mid-Atlantic
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Impact of Propane Price on
Recent/Projected Propane Demand
• Higher prices have
had a major impact
on propane
demand.
–
And can be
expected to have a
continuing impact.
• 12 percent
difference between
high price and low
price demand
scenarios by 2010.
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Impact of Housing Market on New Propane
Residential Construction Starts
• Construction starts
peaked in 2005,
only to sharply
drop off through
the end of 2008
due to the housing
slowdown.
• Housing expected
to turn around by
end of 2008/mid
2009.
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Market Share of Primary Space Heating Fuels
Market Share for Primary Space Heating Fuels of New
Construction Starts
60%
Market Share
50%
40%
30%
Electricity
20%
Natural Gas
10%
10%
2000
2001
9%
2002
Propane
8%
2003
2004
OilHeating Fuel
Primary Space
2005
2006
2007
No Heat / Other
7%
Market Share
• Propane market
share in new
construction is
increasing.
• Electricity continues
to take market
share from natural
gas and fuel oil.
• Regional trends
differ significantly.
70%
6%
5%
4%
3%
2%
1%
0%
2000
2001
2002
2003
2004
2005
2006
2007
Primary Space Heating Fuel
Source: U.S. Census Bureau
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Manufactured Housing
Market Continues to
Decline
• Total manufactured housing
placements declined from
338,000 in 1998 to about
94,000 in 2007.
• Propane placements declined
from 118,000 in 1998 to about
10,000 in 2007.
• Future placements are
expected to decline further in
2008, before rebounding slowly
thereafter.
• Older units with a high share of
propane are being rapidly
retired.
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Impact of Conservation on Propane Space
Heating Consumption per Household
• Between 2000 & 2007
weather normalized
propane use per customer
dropped by about 12.8%.
• By 2010, propane space
heat use per household is
expected to decline by 20
percent.
• Higher efficiency
technologies reduce per
customer demand by
about 0.6% per year.
• Improvements in building shell efficiency reduces per customer demand by
about 0.5% per year
• Price response reduces demand by an additional 5% from 2007 to 2009.
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Current Consumer Propane Market
Opportunities
The current high energy price
market has created an opportunity
for propane in every market where
propane competes with distillate
fuel oil. (Primarily home heating
fuel oil markets and engine fuel
markets.)
• High End Residential
Construction
• Modular Housing
– (But not manufactured housing)
• New Applications in Existing
Propane Homes
– Tankless water heaters
– Heating Oil Conversions
We expect the “price window” to
close somewhat from current
levels. However, changes in U.S.
and international regulations, and
promotion of diesel in fuel
efficiency programs are likely to
lead to high distillate prices relative
to crude oil for the foreseeable
future.
• Fuel Oil Conversions
• Engine Fuel Applications
–
–
–
–
Fleet vehicles
Commercial mowers
Irrigation pumps
Backup generation/distributed
generation
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Propane Conversion Opportunities
• 3 million propane
customers could add
propane water heating
and/or cooking
applications.
– About 430,000 cooktop
replacements and
431,000 water heater
replacements occur
naturally each year.
• Substantial market for
conversion of fuel oil
customers, especially
in Northeast.
– 400,000 fuel oil
customers replace
furnaces and water
heaters each year.
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Propane Internal Combustion Engine
Sector
• Growth in forklift
propane demand is
expected to offset near
term declines in onroad propane use.
• Projected growth in
new propane on-road
vehicles indicates
growth in this market
starting in 2008.
Internal Combustion Sector (million gallons)
2000
2001
2002
Forklift
431
440
437
On-Road Vehicles
167
157
146
Non-Road Vehicles
194
196
199
Total
792
793
782
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2003
434
134
204
772
2004
438
122
208
767
2005
449
109
214
772
2006
468
100
220
788
2007
493
95
226
814
2008
518
96
231
845
2009
543
109
237
889
2010
567
123
244
933
2011
593
129
251
973
2012
622
139
259
1,020
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Questions?
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New in PERC Propane Models
• New Forecasts, Now Extended Through 2012.
• New Data
–
–
–
–
Weather & Energy Prices Updated through mid-2008
American Community Survey 2006 (implemented where applicable)
Survey of New Residential Construction 2007
American Petroleum Institute Survey 2007
• Updated User-Interface in County Model.
– New Control Panel
– Streamlined Design Now More Intuitive
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County Model New User-Interface Structure
Scenario
Builder
Select Counties
Control Panel
Run the Model
Customize
County
Household
Data
&
Two Run Scenario
Comparison
Single
Run
Output Tables
Print
Shortcut
Scenario
Comparison
Output Tables
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Hardware / Software Requirements
• CRPM and PDFM developed in Excel 2003.
– Tested on Microsoft Excel 2007 and Windows Vista
• Computer Requirements
– CRPM Memory Requirements – Model may take few minutes to run
– Number of counties selected at one time will affect speed performance.
• Macro Security
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Model Demonstration
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Outline of Model Demonstration
• Show Title page, Control Panel, and review basic structure of CRPM.
• Select Counties (3 in N. Oregon, 1 in S. Washington)
–
–
Columbia, Multnomah, Washington, Clark
Show optional “Save To” and “Restore From” feature.
• Run one scenario, observe output.
–
–
Note analysis times vary proportional to number of counties selected.
Discuss types of data found in Output Tables
•
–
Note relative year-to-year change in consumption for the counties.
Discuss “Chart Usage” and “Chart County” Pivot table graphs.
• Scenario Comparison (Compare two model runs)
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Overview Scenario Builder and different factors that can be adjusted.
Run a Cold/Warm weather scenario.
•
–
Highlight comparison table / chart
Back to Scenario Builder, run two price scenarios using spot price.
•
•
•
Scenarios will be pre-set and loaded from the model. This will exhibit the Save/Restore feature on the
Scenario Builder.
High price = Base Case * 1.2. Low price = Base Case * 0.8
Compare output using Scenario Comparison on Control Panel
• User-Defined Values
–
Explain purpose of Res_Stock_Def_User page, and how propane stocks that are input now
automatically adjust future years.
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Questions?
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Presentation Audio Dial In:
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Propane Market Overview &
Demonstration of the PERC
County Residential Propane Model version 2.0
Propane Education and Research Council
Presented by:
Mike Sloan
[email protected]
&
Richard Meyer
[email protected]
icfi.com
© 2006 ICF International. All rights reserved.