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NYS Petroleum Fuel Supply DynamicsWinter 2013 - 14

May 15, 2014 DPS Technical ConferenceCharles WesleyNYSERDA

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– NYSERDA monitors winter fuel supply dynamics on a continuous basis throughout the heating season

– Distillate Fuels Ultra Low Sulfur (ULS) Diesel & Heating Oil (only NYS) ULS Kerosene

– #6 Residual Fuel Oil sulfur content aggregated in US EIA data sets NYC = 0.3%; Nassau, Rockland, Westchester = 0.37%;

Suffolk County: Towns of Babylon, Brookhaven, Huntington, Islip, & Smithtown = 1.0%

Overview

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New York State Distillate Demand

1973 = 123.8 mmbbl

2012 = 61.0 mmbbl

Residential demand decline from peak = -64.8%1973 = 62.3 mmbbls, 2012 = 21.9 mmbbls

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New York Residual Demand

1973 = Total 169.1 mmbbl

2012 = Total 14.5 mmbbl

Lack of demand conditions the supply industry to not prepare for any additional need

1978 = Electric 87.2 mmbbl

2012 = Electric 0.5 mmbbl

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Petroleum Fuels Used by Electric Sector

1973 = 92.7 mmbbl 2005 = 36.6 mmbbl

2012 = 0.9 mmbbl

2012 = 0.9 mmbbl

Lack of demand conditions the supply industry to not prepare for any additional need

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East Coast Refinery Capacity

2000 = 1.7 mmb/d2014 = 1.3 mmb/d25% fuel production capacity decline

As East Coast capacity declines it is replaced by more distantGulf Coast fuels delivered by pipeline, 3 weeks away

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East Coast Distillate Supply Sources

2003 = 534.1 mmbbl2012 = 379.2 mmbbl

Northeast supply is growing more dependent on distant Gulf Coast area production

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Historic Distillate Inventories

Nov 2009 = 47.0 mmbblNov 2013 = 17.9 mmbbl

Red & Blue fuels are for diesel transportation. 2013 – 14 was firstyear Blue was used for heat in NYS, and stocks were limited

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2013-14 Season Distillate Inventories

2013 – 14 total Mid-Atlantic stocks sharply lower than 5-year averageULSD stocks declined from August – November as futures prices were higher than fuel in storageULSD – When January cold spells hit stocks were low and then dropped rapidly to FebruaryWhen NYS gas interruptions occurred ULSD supplies were very limited Retail heating oil (ULSD) prices moved upward

15 mmbbls less (-43% vs 5-year)

Price induced drop

Cold induced high demand

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East Coast Residual Production

May 2003 = 212,000 b/d

Jan 2014 = 57,000 b/d

73% Production decline

Sulfur content unknown. Can it be used by NYC generators?NYC sulfur content = 0.3%

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2013-14 Season Residual Inventories

Jan 2007 = 16 mmbbls

Jan 2014 = 6.2 mmbbls, -61%

2013 – 14 total Mid-Atlantic stocks sharply lower than 5-year averageSupply industry no longer hold significant volumes, demand is not thereResidual Fuel stocks have been near the 7.0 million barrel level since 2011Data shows all sulfur content levels combined.Unknown if low sulfur fuels 0.3% is available

Dec 2013 -29% last year & 39% 5-year avg.

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Questions?

Charles M. WesleyNYSERDA

(518) 862-1090 ext 3364cmw@nyserda.ny.gov