Specialist
Special Adviser at HSB Solomon Associates LLC
Agenda
- Demand recovery scenarios for gasoline, diesel and jet fuel
- Impact of refinery closures on supply
- Outlook for crude oil inputs, refinery utilisation and product exports
- Refining margin outlook and product inventory levels
Questions
1.
Could you outline what happened in the US refining sector in 2020? How much was refining product demand down and what was down the most?
2.
Could you outline the extent of recovery to date? Are we fully back? What’s still left? Could you break it down by products?
3.
You mentioned the industry could return to pre-coronavirus levels by 2023. How important is international travel to this recovery? You referenced airfreight, military and now domestic travel is returning.
4.
How much refining capacity has closed since the start of 2020? You mentioned how utilisation was impacted and that there are different measures of it.
5.
Has the system of storage and logistics changed in the past year? If we were having this conversation 12-13 months ago, we would have been talking about the ability to store crude oil and refined products in the US.
6.
Why do you think crude prices are artificially high right now?
7.
You mentioned that sometimes refineries have long-term supply contracts that can force them into running as long as the crude is coming in. What percentage of refineries typically have these long-term contracts? Has the way refiners are financially supplying themselves with crude changed?
8.
US gasoline inventory has been running below seasonal averages. You mentioned you expect a strong seasonal pick-up due to pent-up demand. How do we fill the gap? Could the industry be more dependent on imports? Could prices increase? What are the risks that inventories fall further?
9.
What maintenance was deferred during the pandemic in the US refining sector? Were there big maintenance projects that needed to get done at refineries? Is it a big problem that you think could lead to lower utilisation rates or throughput numbers?
10.
There have been reports of difficulty finding labour and incentivising people to get back to work across the US. Do you think that there will be any issues in attracting people to do this kind of maintenance work? Could it be more expensive, or is it still too early to say?
11.
We’ve read about the rise in raw materials prices in some of the supply chains. Could that impact cost turnarounds and maintenance activities? Are companies trying to source new steel or any sort of unique raw materials?
12.
What do you think are the implications of the shift from large to small, that big companies such as Shell are being forced to sell assets to smaller companies? Can they be run better by more focused companies?
13.
You said you’d travelled the world, talking with and visiting other refiners and discussed the availability of skilled labour in the US. You also mentioned some creativity is needed to meet US demand. What are you talking about and are the trends overseas any different for refiners that would have an impact on the US refining system, or the availability of fuel?
14.
Have we reached a limit on refined products exports from the US, which have been rising for a decade? What advantages could there be for US refiners in the markets that they’ve been exporting to?
15.
How are US refineries positioned in light of the potential peak in demand and the potentially limited export growth? How does renewable diesel – for which there has been some conversions – play into this?
16.
You mentioned crude slate. Have there been any fundamental changes over the last 1-1.5 years that would make it more advantageous for refiners and impact their profitability to run one kind of crude, or something that’s more or less available?
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