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Rocky Mountain Crude Differentials A Suncor Perspective

Rocky Mountain Crude Differentials A Suncor Perspective. Tim Kirwin Crude Trader April 2006. Rocky Mountain Crude Differentials. Executive Summary Rockies production increased versus anticipated decline

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Rocky Mountain Crude Differentials A Suncor Perspective

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  1. Rocky Mountain Crude DifferentialsA Suncor Perspective Tim Kirwin Crude Trader April 2006

  2. Rocky Mountain Crude Differentials • Executive Summary • Rockies production increased versus anticipated decline • Canadian crude production increasing, however Padd 4 refiners have not increased Canadian crude percentage • Infrastructure is inadequate to handle supply/demand disruptions • Quality of common stream Guernsey is heavier than historical • Heavy industry wide turnaround maintenance • Unplanned refinery maintenance • Signs of over supply already taking place prior to refinery outages

  3. Rocky Mountain Fundamentals • Demand • Unplanned outages in December 2005 lowered demand for local and Canadian crudes. • Demand has been further reduced by industry wide refinery maintenance (including Suncor) mandated by the EPA to produce ultra clean fuels. • Suncor was not a sweet buyer February/March • The east plant continued to run at full capacity • Both plants expected back to full capacity in April (Suncor running at 85% as of April 25th)

  4. Rocky Mountain Crude Differentials • Refinery Supply • Refineries are all different in what kinds and how much of any one crude they can run • Refineries rarely able to process 100% of any crude type • To fill up all refinery units and run at full capacity refineries make decisions based on • Price • Yield • Availability • LP determines optimum crude slate

  5. Sweet Crude Sour Crude OSA 5% LSR 12% LSR 20% Naphtha 9% Naphtha 19% Naphtha 12% Kerosene 12% Diesel 40% Distillate 13% Kerosene 13% Diesel 31% Gas Oil 35% Gas Oil 40% Gas Oil 31% Asphalt 8% Sweet Resid

  6. Differential widened in 2005, major move due to Suncor fire maintenance

  7. Strong outright WTI prices have off-set wide differentials

  8. Suncor Energy – overview • Suncor is a major purchaser of Rockies crude: • We have increased domestic crude runs since purchasing the refineries • Suncor focuses on fair pricing to foster strong long-term relationships with crude suppliers • Suncor’s oil sands production is increasing, but that production and the infrastructure to take it to market are planned years in advance. • In 2005 less than 8% of Suncor crude came from Oil Sands • Suncor has invested over $400 million in refinery upgrades. • reliable demand for Rockies crude • local refining means lower fuel prices • increased employment, economic benefits, taxes/royalties

  9. Suncor has increased Rockies crude purchases Barrels Per Day

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