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CALIFORNIA ENERGY COMMISSION
Alaska Crude Oil Disruption
Staff Update
California Energy CommissionFuels and Transportation Division
Gordon Schremp
August 16, 2006
2
CALIFORNIA ENERGY COMMISSION
Actions to Date
• Energy Commission issued a confidential situation report to the Governor’s Office on August 7, 2006
• Energy Commission staff continue to monitor California market– Production and inventory levels at refineries– Sourcing of alternative crude oil supplies– Possible reduction of gasoline and diesel fuel
imports from Washington state refineries
3
CALIFORNIA ENERGY COMMISSION
Chronology of Events – August 2006
• August 4 – BP Exploration Alaska Inc. (BPXA) receives data from smart pig run from July
• August 6 – BPXA announces that they have commenced orderly shutdown of Prudhoe Bay crude oil production– Up to 400,000 barrels per day of Alaska North Slope (ANS) crude oil
output could be reduced, approximately 50 percent
• August 9 – BPXA announces that approximately 200,000 barrels per day of ANS production has been temporarily shut in
• August 10 – BPXA announces that the Eastern Operating Area of Prudhoe Bay has been successfully shut in– Western Operating Area (WOA) still producing 120,000 barrels per day
4
CALIFORNIA ENERGY COMMISSION
Chronology of Events – August 2006
• August 11 – BPXA announces that WOA production of crude oil and natural gas liquids up to 155,000 barrels per day– 16 miles of replacement transit pipe anticipated to be delivered
some time during the 4th quarter 2006
• August 11 – BPXA announces that WOA will continue operating– 150,000 barrels per day of crude oil and natural gas liquids will
slowly increase to 200,000 barrels per day
– Instillation of 16 miles of new transit lines will be completed by early 2007
5
CALIFORNIA ENERGY COMMISSION
6
CALIFORNIA ENERGY COMMISSION
Alaska North Slope – Prudhoe Bay
7
CALIFORNIA ENERGY COMMISSION
Trans Alaska Pipeline System (TAPS)
800 Miles From Prudhoe Bay to Valdez Marine Terminal
8
CALIFORNIA ENERGY COMMISSION
Valdez Marine Terminal
7 Million Barrels Crude Oil Storage Capacity
9
CALIFORNIA ENERGY COMMISSION
Trans Alaska Pipeline System (TAPS)Annual Throughput Averages
(1977 to 2005)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,0001
97
7
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
Ba
rrel
s p
er D
ay
Source: Alyeska Pipeline Company
2.033 MM BPD Peak
891,000 BPD
10
CALIFORNIA ENERGY COMMISSION
Alaska North Slope Production(1978 to 2005 FY)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
Ba
rrel
s p
er D
ay
Rest of North Slope
Prudhoe Bay
Source: Alaska Department of Revenue
2.006 MM BPD Peak
917,000 BPD
11
CALIFORNIA ENERGY COMMISSION
Alaska North Slope Production and Alaska Inventories(February 1 - August 14, 2006)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,0001
-Fe
b-0
68
-Fe
b-0
61
5-F
eb
-06
22
-Fe
b-0
61
-Ma
r-0
68
-Ma
r-0
61
5-M
ar-
06
22
-Ma
r-0
62
9-M
ar-
06
5-A
pr-
06
12
-Ap
r-0
61
9-A
pr-
06
26
-Ap
r-0
63
-Ma
y-0
61
0-M
ay-
06
17
-Ma
y-0
62
4-M
ay-
06
31
-Ma
y-0
67
-Ju
n-0
61
4-J
un
-06
21
-Ju
n-0
62
8-J
un
-06
5-J
ul-0
61
2-J
ul-0
61
9-J
ul-0
62
6-J
ul-0
62
-Au
g-0
69
-Au
g-0
6
Bar
rels
per
Day
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Bar
rels
ANS Production
Alaska Inventories
Source: Alaska Department of Revenue
12
CALIFORNIA ENERGY COMMISSION
Alaska North Slope Production(February 1 - August 14, 2006)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,0002
/1/0
6
2/8
/06
2/1
5/0
6
2/2
2/0
6
3/1
/06
3/8
/06
3/1
5/0
6
3/2
2/0
6
3/2
9/0
6
4/5
/06
4/1
2/0
6
4/1
9/0
6
4/2
6/0
6
5/3
/06
5/1
0/0
6
5/1
7/0
6
5/2
4/0
6
5/3
1/0
6
6/7
/06
6/1
4/0
6
6/2
1/0
6
6/2
8/0
6
7/5
/06
7/1
2/0
6
7/1
9/0
6
7/2
6/0
6
8/2
/06
8/9
/06
Ba
rrel
s p
er D
ay
Rest of North Slope
Prudhoe Bay
Source: Alaska Department of Revenue
13
CALIFORNIA ENERGY COMMISSION
Alaska North Slope Production(July 1 - August 14, 2006)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,0007
/1/0
6
7/3
/06
7/5
/06
7/7
/06
7/9
/06
7/1
1/0
6
7/1
3/0
6
7/1
5/0
6
7/1
7/0
6
7/1
9/0
6
7/2
1/0
6
7/2
3/0
6
7/2
5/0
6
7/2
7/0
6
7/2
9/0
6
7/3
1/0
6
8/2
/06
8/4
/06
8/6
/06
8/8
/06
8/1
0/0
6
8/1
2/0
6
8/1
4/0
6
Ba
rrel
s p
er D
ay
Rest of North Slope
Prudhoe Bay
Source: Alaska Department of Revenue
14
CALIFORNIA ENERGY COMMISSION
Alaska North Slope Crude Oil PricesJune 1 through August 14, 2006
$60
$62
$64
$66
$68
$70
$72
$74
$76
$78
6/1
/06
6/8
/06
6/1
5/0
6
6/2
2/0
6
6/2
9/0
6
7/6
/06
7/1
3/0
6
7/2
0/0
6
7/2
7/0
6
8/3
/06
8/1
0/0
6
Do
lla
rs p
er
Ba
rre
l
No Significant Impact on ANS Prices Since Announcement
15
CALIFORNIA ENERGY COMMISSION
Crude Oil Sources For California Refineries1982 - 2005
California
Alaska Foreign
0
100
200
300
400
500
600
700
800
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Mill
ion
s o
f B
arre
ls
Alaska Crude Oil Receipts Continue to Decline, 16 % in June 2006
16
CALIFORNIA ENERGY COMMISSION
Potential Impacts of Reduced ANS Supply
• No immediate impacts on California fuel supplies• California refiners normally carry 7 to 10 days worth of inventory• Most refiners should be able to continue normal operations for at
least another couple of weeks• Alternative sources of crude oil are being sourced by refiners
– Will take several weeks to over a month for these new sources of crude to begin arriving at West Coast refineries
• Washington state refineries could experience greater impact due to higher percentage of Alaska crude use
• But potential impact on refinery operations has been reduced with news that Alaska production is expected to decline by only 200,000 thousand barrels per day, rather than the original estimate of 400,000 barrels per day
