CALI FORNIA EN ERGY COMMISSION
9/9/07 1
Outlook for Crude Oil Imports into
California
Prevention First 2008
Long Beach, CA
September 9, 2008
Gordon Schremp
Fuels and Transportation Division
California Energy Commission
CALI FORNIA EN ERGY COMMISSION
9/9/07 2
Presentation Topics
• Petroleum infrastructure and regional product flows
• Crude oil production – CA and United States
• Declining production – historical and forecast
• Crude oil imports continuing to grow – forecast
• Additional crude oil tanker visits
• Incremental crude oil storage capacity
• Southern California imports & outlook
• Factors increasing forecast uncertainty
• IEPR proceedings
• Recent industry developments
CALI FORNIA EN ERGY COMMISSION
9/9/07 3
California’s Petroleum Infrastructure
CALI FORNIA EN ERGY COMMISSION
4
California Refineries
• 3 primary refinery locations
• 14 refineries produce
transportation fuels that meet
California standards
• 8 smaller refineries produce
asphalt and other petroleum
products
• California refineries provide
majority of transportation fuel
to neighboring states
• Limited petrochemical
facilities outside the refineries
CALI FORNIA EN ERGY COMMISSION
9/9/07 5
Interstate Dependence for
Transportation Fuel Supply
Source: Argonne National Laboratory
CALI FORNIA EN ERGY COMMISSION
9/9/07 6
Anacortes
Seattle
Portland
Chico
SF
LA
Bakersfield
Las
Vegas
Reno
Phoenix
Tucson
El Paso, TX
8
15
SD
21
7
1
2
3
4
5
9
10
19
14
17
11
12Fresno
1618
20
6
22
13
West Coast Petroleum Flows
1 Foreign Imports into Northern California
2 Foreign Imports into Southern California
3 US Gulf Coast Imports into Northern California
4 US Gulf Coast Imports into Southern California
5 Ship/Barge - San Francisco to Los Angeles
6 Ship/Barge - San Francisco to Portland
7 Ship/Barge - Washington to Los Angeles
8 Kinder Morgan - San Francisco to Chico
9 Truck - Chico into Southern Oregon
10 Kinder Morgan - San Francisco to Reno
11 Kinder Morgan - San Francisco to Fresno
12 Kinder Morgan - Bakersfield to Fresno
13 Truck - Imperial into Western Arizona
14 Kinder Morgan - Los Angeles to Las Vegas
15 Kinder Morgan - Los Angeles to San Diego
16 Kinder Morgan - Los Angeles to Imperial
17 Kinder Morgan - Los Angeles to Phoenix
18 Kinder Morgan - Los Angeles to Tucson
19 Kinder Morgan - Tucson to Phoenix
20 Kinder Morgan - El Paso to Tucson
21 Longhorn Pipeline - Houston to El Paso
22 Ship/Barge - San Francisco to Eureka
CALI FORNIA EN ERGY COMMISSION
9/9/07 7
Crude Oil
CALI FORNIA EN ERGY COMMISSION
9/9/07 8
United States Oil Production
1986 to 2007
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Mil
lion
s o
f B
arr
els
Per
Yea
r
California Alaska Rest of US
CALI FORNIA EN ERGY COMMISSION
9
California Oil Production
1986 to 2007
0
100
200
300
400
500
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Mil
lio
ns
of
Ba
rrel
s P
er Y
ear
Fed OCS State Offshore State Onshore
9/9/07
CALI FORNIA EN ERGY COMMISSION
9/9/07 10
0
50
100
150
200
250
300
350
400
4501
87
6
18
83
18
90
18
97
19
04
19
11
19
18
19
25
19
32
19
39
19
46
19
53
19
60
19
67
19
74
19
81
19
88
19
95
20
02
Mil
lio
ns o
f B
arr
els
per
Year
California Oil Production1876 to 2007
Cumulative CrudeOil Production28.0 Billion Barrels, Equivalent to 10.6Months of Current Global Demand
Production Peaked in 1985424 Million Barrels
CALI FORNIA EN ERGY COMMISSION
9/9/07 11
Recent Crude Oil Production Trends
• Global crude oil production 31.2 billion barrels in 2007, roughly 85.6 million barrels per day
• 2007 U.S. crude oil production 1.87 billion barrels or 5.1 million barrels per day
• CA crude oil production in 2007 was 243 million barrels or 667 thousand barrels per day
• California crude oil production has declined 40% since 1986, Alaska 61% and the rest of U.S. by 35%
• Crude oil production decline expected to continue, despite sustained higher prices and significant drilling activity
• Rate of decline has been greater over the last couple of years compared to longer trends – Kansas & N. Dakota exceptions
• Declining domestic oil production will need to be replaced with increased imports of crude oil from foreign sources
CALI FORNIA EN ERGY COMMISSION
0
50
100
150
200
250
300
350
400
450
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
Mil
lio
ns o
f B
arr
els
per
Year
California Crude Oil ProductionDecline Forecast 2008-2025
Historical CA Crude Oil ProductionHigh Decline Scenario
High Decline Rate - Revised
Low Decline Scenario
Low Decline Rate - Revised
REVISED High Production Decline
Rate of -3.12 Percent Per Year2004 through 2007 Average
REVISED Low Production Decline
Rate of -2.36 Percent Per Year1992 through 2007 Average
Decline Forecast to Continue
12
CALI FORNIA EN ERGY COMMISSION
CA Refineries - Crude Oil Supply Sources
9/9/07 13
California
Alaska
0
100
200
300
400
500
600
700
800
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Mill
ions o
f B
arr
els
Foreign
CALI FORNIA EN ERGY COMMISSION
9/9/07 14
0
50
100
150
200
250
300
350
400
450
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Millio
ns
of B
arr
els
Pe
r Y
ea
r
California Crude Oil Imports
1982 through 2007
Alaska Foreign
CALI FORNIA EN ERGY COMMISSION
9/9/07 15
California Crude Oil Imports – Historical
• Imports of crude oil have increased as California crude
production fell and refineries processed additional oil
• Total imports of crude oil have increased 19% between
1995 and 2007
• Imports of Alaska crude oil declined a total of 62% between
1995 and 2007
• The largest increase has been for foreign crude oil imports
– 14.3% per year increase
– Nearly 5 times greater compared to levels of 1995
• What is the outlook for crude oil imports for California and
what are the primary factors influencing the forecasts?
CALI FORNIA EN ERGY COMMISSION
9/9/07 16
Crude Oil Import Forecast - Approach
Infrastructure
RequirementsCA Crude Oil
Decline Forecast
Refinery Distillation
Capacity ProjectionsCrude Oil
Import
Requirements
CALI FORNIA EN ERGY COMMISSION
California Crude Oil Imports – Low Forecast
9/9/07 17
0
100
200
300
400
500
600
700
800
900
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
Mil
lio
ns o
f B
arr
els
Historical Projected
2005
imports =408 million
barrels
2015
imports =491 million
barrels
2025
imports =563 million
barrels
California
SourcedCrude Oil
Refinery Input
CALI FORNIA EN ERGY COMMISSION
California Crude Oil Imports – High Forecast
9/9/07 18
0
100
200
300
400
500
600
700
800
900
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
Mil
lio
ns o
f B
arr
els
Historical Projected
2005
imports =408 million
barrels
2015
imports =541 million
barrels
2025
imports =666 million
barrels
California
SourcedCrude Oil
Refinery Input
CALI FORNIA EN ERGY COMMISSION
9/9/07 19
California Crude Oil Imports - Forecast
• Crude oil imports are forecast to increase in California due to:
– Continuing decline of local crude oil production
– Gradual expansion of the capacity of California refineries to
process crude oil – referred to as “refinery creep”
• The lower estimate for increased crude oil imports assumes that
crude oil production declines at a slower pace (2.4% per year) &
expansion of distillation capacity is at a smaller rate (0.4% per
year)
• The higher estimate for incremental crude oil imports assumes
that the production of California crude oil declines at a steeper
pace (3.1% per year), while refiners expand distillation capacity
at a higher rate (nearly 1% per year)
CALI FORNIA EN ERGY COMMISSION
9/9/07 20
Crude Oil Imports – Entire State
• Waterborne crude oil imports forecast to increase by 20 to 38% by 2015 & 32 to 63% by 2025, compared to 2005
• Southern California is forecast to receive 60% of the oil imports
• Even if refinery capacity remained fixed, oil imports would increase by 13 to 17% by 2015 & 24 to 29% by 2025 due to declining crude oil production in California
Distillation
Capacity
Growth Rate 2015 2025 2015 2025
0.41 Percent 83 155 97 177
0.70 Percent 101 195 115 217
0.98 Percent 119 236 133 258
Incremental California Crude Oil Imports - Millions of Barrels
Low Rate of Crude High Rate of Crude
Oil Decline - 2.4% Oil Decline - 3.1%
CALI FORNIA EN ERGY COMMISSION
Incremental Imports – Low Case
9/9/07 21
0
50
100
150
200
250
300
2015 2015 2015 2025 2025 2025
0.41% 0.70% 0.98% 0.41% 0.70% 0.98%
Millio
s o
f B
arr
els
Refinery Creep
Low Crude Oil Decline
CALI FORNIA EN ERGY COMMISSION
Incremental Imports – High Case
9/9/07 22
0
50
100
150
200
250
300
2015 2015 2015 2025 2025 2025
0.41% 0.70% 0.98% 0.41% 0.70% 0.98%
Millio
s o
f B
arr
els
Refinery Creep
High Crude Oil Decline
CALI FORNIA EN ERGY COMMISSION
9/9/07 23
Additional Crude Oil Tanker Visits
0
100
200
300
400
500
600
700
0
500
1,000
1,500
2,000
2,500
2015 2015 2015 2025 2025 2025
Cru
de T
an
ker
Vis
its
Cru
de T
an
ker
Carg
o S
ize
CALI FORNIA EN ERGY COMMISSION
9/9/07 24
Crude Oil Imports - Additional Capacity
• Assuming a throughput design similar to the Pier 408 project,
crude oil storage tank capacity would need to be expanded
between 3.6 and 5.8 million barrels by 2015
• Slower throughput rates increase these estimates to between 7
and 11.2 million barrels of additional capacity
2015 2025 2015 2025
3.6 6.8 5.8 11.3
7.0 13.1 11.2 21.7
Low Case High Case
(Millions of Barrels)
Incremental Crude Oil Storage
CALI FORNIA EN ERGY COMMISSION
Crude Oil Receipts
Southern California Refineries
9/9/07 25
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Th
ou
san
ds
of
Ba
rre
ls
Alaska California Foreign
CALI FORNIA EN ERGY COMMISSION
9/9/07 26
Crude Oil Imports – Southern California
• Southern California crude oil imports are forecast to increase by 50 to 80 million barrels per year by 2015, an increase of 22 to 35% compared to 2005
• Longer term, incremental imports of crude oil for the region are forecast at 93 to 155 million barrels per year by 2025, between 35 and 68% greater than 2005 levels
Distillation
Capacity
Growth Rate 2015 2025 2015 2025
0.41 Percent 50 93 58 106
0.70 Percent 61 117 69 130
0.98 Percent 71 142 80 155
Incremental S. Calif. Crude Oil Imports - Millions of Barrels
Low Rate of Crude High Rate of Crude
Oil Decline - 2.4% Oil Decline - 3.1%
CALI FORNIA EN ERGY COMMISSION
9/9/07 27
Factors Increasing Forecast Uncertainty
• Distillation capacity growth rates may plateau
– AB 32 could defer or eliminate distillation expansion plans
– Although crude oil imports would be reduced compared to the
forecasted volumes, imports of transportation fuels could be
increased as a direct consequence
• New technology to reduce decline rate for California oil production
– Expanded offshore development from existing platforms
– Long-reach directional drilling from on-shore locations
– Increased injection of CO2
CALI FORNIA EN ERGY COMMISSION
9/9/07 28
IEPR Proceedings
Petroleum Infrastructure
• Energy Commission develops an energy policy document every
two years – referred to as the Integrated Energy Policy Report
(IEPR)
• Since 2003, one of the primary transportation issue has been
adequacy of the state’s petroleum infrastructure to accommodate
the anticipated growth of crude oil and transportation fuel imports
• From the 2005 IEPR:
– Despite recent and planned improvements, California still needs to expand its
marine terminal capacity, marine storage, and the pipelines that connect
marine facilities and refineries with main product pipelines.
– Most of the required expansion is needed in the Los Angeles Basin, which
faces a number of barriers including scarcity of land, pressure to remove a
portion of existing facilities in favor of container cargo facilities, and new
standards for marine terminals.
CALI FORNIA EN ERGY COMMISSION
9/9/07 29
IEPR Proceedings
Crude Oil Infrastructure
• Energy Commission staff analysis has identified the incremental
capacity need for a large crude oil import facility somewhere in
the San Pedro Harbor
• An important and underlying assumption in the crude oil import
forecast is that the proposed project at Pier 400 would be
constructed
• From the 2007 IEPR:
– The Crude Oil Import Marine Facility Project at Pier 400 in the Port of Los
Angeles has been significantly delayed. This facility is a critical element of
the assumption of adequate capacity through 2015.
– Without an expansion of the existing crude oil import capability for the San
Pedro harbor, refiners will eventually be forced to reduce production of
transportation fuels as they run out of options to import additional crude oil.
CALI FORNIA EN ERGY COMMISSION
9/9/07 30
Crude Oil Infrastructure – Recent Developments
• Port of Los Angeles recently issued a draft SEIS/SEIR for public
comment on the proposed crude oil import terminal project on
Pier 400, referred to as the pacific L.A. Marine terminal LLC
Project
• Energy Commission submitted a comment letter to the Port of LA
on August 14, 2008
• An excerpt from the August 14th letter reads:
– We believe the proposed Pacific Marine Terminal Project would
address one of the most pressing and immediate transportation
energy infrastructure needs identified in the IEPRs. It would provide
necessary new facilities to improve and expand the marine crude oil
infrastructure to help ensure reliability of needed crude oil imports.
California Energy Commission
www.energy.ca.gov
CA Marine Terminal
Infrastructure
Constraints & OutlookPrevention First 2008
Long Beach, CA
September 9, 2008
Eugenia Laychak
Special Projects
Energy Facilities Siting Division
[email protected] / 916-654-4543
Permitting Challenges
• Energy Planning Results
• Infrastructure Needs
• Regulatory Framework
• Challenges & Guidelines
California Energy Commission
www.energy.ca.gov
Liquid Transportation Fuels
2007 IEPR:
• CA needs reliable & safe supply of fuels
• Constraints lead to higher costs
• Need robust, environmentally & technologically sound infrastructure
California Energy Commission
www.energy.ca.gov
CA Fuels Infrastructure
California Energy Commission
www.energy.ca.gov
• 51 Marine Terminals
• 52 Storage/Distribution
Facilities
• 22 Refineries
• 5,560 Miles of Pipeline
Concerns
• Growing demand for
fuel products
• Infrastructure at or
near capacity
• Capacity may
decline
• Infrastructure must
upgrade or expand
California Energy Commission
www.energy.ca.gov
Infrastructure Needs
• Ongoing maintenance, repairs & replacements
• Future expansions for all fuels
o including clean/alternative fuels
• Federal plans for energy corridors
• Continuing need for permits
California Energy Commission
www.energy.ca.gov
California Energy Commission
www.energy.ca.gov
Complex Regulatory
Framework
California Energy Commission
www.energy.ca.gov
Permitting Could Involve
Any Of:
• 25 state/federal agencies
• 58 counties
• 478 cities
• 2,300 special districts
• 107 sovereign Native American nations
California Energy Commission
www.energy.ca.gov
Permits
Federal/Tribes State/Regional Local
•Army Corps
•Bureau of Land
Management
•National Park
Service
•Fish & Wildlife
Service
•Aviation Admin.
•Tribes
•Caltrans
•Regional Water
Boards
•Coastal
Commission
•Bay Commission
•Air Quality Man.
Districts
•OSHA
•Toxics
•Fish & Game
•Cities
•Counties
•Ports
•Airports
•Special Districts
California Energy Commission
www.energy.ca.gov
Consultations
Federal/Tribes State/Regional Local
•NOAA Fisheries
•Advisory Council
on Hist. Preserv.
•Tribal Monitors
•Fish & Wildlife
Service
•Bureau of Indian
Affairs
•Coast Guard
•Historic
Preservation
Officer
•Air Resources
Board
•Dept. of Fish &
Game
•Lands
Commission
•Resource
Conservation
Districts
California Energy Commission
www.energy.ca.gov
Leases/Agreements &
Approvals
Federal/Tribes State/Regional Local
•Bureau of Indian
Affairs
•Forest Service
•Dept. of Fish &
Game
•Fire Marshall –
Office of Pipeline
Safety
•Public Utilities
Commission
•Lands
Commission
•Cities
•Counties
•Notification
Centers
•Ports/Airports
California Energy Commission
www.energy.ca.gov
Certifications/Decisions &
Determinations
Federal/Tribes State/Regional Local
•Lead NEPA
Agencies
•Lead CEQA
Agencies
•Coastal
Commission
•Bay Commission
•Lands
Commission
•Regional Water
Boards
•Lead CEQA
Agencies
California Energy Commission
www.energy.ca.gov
California Energy Commission
www.energy.ca.gov
Typical Permitting ProcessCompleting Application
Preapplication Meeting
Applicant & Agency (ies)
Preliminary Project Review 20
Days
3
WeeksPreliminary Design Review
Staff/Committee(s)
Staff/Committee(s)
1
Week
3-5
Weeks
Comments
Comments
Submit Application to Lead Agency (ies)
Application Review by Lead & Other Agency Staff
30
Days
Application Deemed Complete
Applicant
Prepares
Application
Incomplete Application
Key: Applicant Regulatory Agencies
Typical
Time-
frame
California Energy Commission
www.energy.ca.gov
Typical Permitting ProcessPost - Application
Application Deemed Complete
Initial Study
30
DaysNotice of Exemption
4
Weeks
105
DaysNegative Declaration
6-8
Weeks
1
YearEnvironmental Impact Report
Hearing
(Public or Administrative)
Approval 10
DaysDenial
Appeal
Permits/Approvals/Agreements/Leases
(30 – 50)
Key: Regulatory Agency
Typical
Time-
frameInterested Parties
Typical Permitting
Timeframes
• Non-emergency, exempt from CEQA
o About 6 months
• EIR or EIR/EIS required:
o 1-5 to ??? Years
Depends on complexity, location, # of permits &
level of controversy
California Energy Commission
www.energy.ca.gov
Challenges…
• Incomplete applications
• Questions on applicability of laws
• Lack of agency coordination
• Inexperienced staff
• Agency consultation/approval delaysCalifornia Energy Commission
www.energy.ca.gov
…Challenges
• Inconsistent agency decisions
• Balancing impacts & need for fuels
• Concerns draw out environmental review process
• Lack of information on statewide needs
California Energy Commission
www.energy.ca.gov
Results:
• Regulatory challenges can delay permitting
• Many problems are with processes
• Need better coordination & info transfer
• Some practices can serve as models
California Energy Commission
www.energy.ca.gov
Permitting Guidelines…
• Make use of pre-app. meetings
• Identify key agencies
• Provide timely consultations/comments
• Agency partnering
California Energy Commission
www.energy.ca.gov
…Guidelines…
• Coordinate agency reviews
• Joint-agency working groups
• Keep to timelines/milestones
• Consider expedited agency reviews
California Energy Commission
www.energy.ca.gov
…Guidelines…
• Buffers around facilities
• Facility master planning
• Ensure adequately trained staff
• Seek personnel with energy experience
California Energy Commission
www.energy.ca.gov
…Guidelines
• Identify “chain of command”
• Use clear criteria for decisions
• Publish model decisions
• Use gov. relations & public outreach
• Expand CEC’s participationCalifornia Energy Commission
www.energy.ca.gov
Permitting GuidelinesCommon Themes
• Applicants and agencies share responsibility for timely processes
• Applicants must be pro-active
• Agencies must coordinate and cooperate
California Energy Commission
www.energy.ca.gov
Top Related