CERI Commodity Report Crude Oil

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1 CERI Commodity Report Crude Oil June-July 2014 Increasing Project Costs in the Oil Sands Sector Dinara Millington Recently, the Canadian Energy Research Institute (CERI) published the ninth annual edition of its oil sands supply cost and development projects update. 1 The report presents a long-term view for Canadian oil sands production and supply in conjunction with an examination of oil sands supply costs for greenfield projects. This article will provide a brief overview of the supply costs for in situ and mining projects. For more details on the production, capital and royalty forecasts, refer to CERI Study 141. Supply cost is the constant dollar price needed to recover all capital expenditures, operating costs, royalties and taxes and earn a specified return on investment. Supply costs in the study are calculated using an annual discount rate of 10 percent (real), which is equivalent to an annual return on investment of 12.5 percent (nominal) based on the assumed inflation rate of 2.5 percent per annum. Supply Cost Estimates Based on the project design assumptions presented in Table 1 and oil and gas price forecasts, the supply costs of crude bitumen using SAGD, surface mining and extraction, integrated mining and upgrading, and a standalone upgrader have been calculated for a greenfield hypothetical project. Figure 1 illustrates the supply costs for these projects. The plant gate supply costs, which exclude transportation and blending costs, are C$50.89/bbl, C$71.81/bbl, C$107.57/bbl, and C$40.82/bbl for SAGD, standalone mine, integrated mining and upgrading, and a standalone upgrader, respectively. A loose comparison 2 of field gate costs from CERI s May 2013 update with this year s supply costs indicates that, after adjusting for inflation, the supply cost for a SAGD producer has risen by 4.4 percent, 1.6 percent for a standalone mine and by 5.9 percent for an integrated mining and upgrading project. This increase is not surprising given the fact that capital and operating costs, the largest components of supply costs, are all increasing. On the capital costs side, the drilling costs, labour costs and planning and FEED are the major drivers of capital cost escalation. During the operations of the project, labour costs, feedstock costs, and repairs and maintenance are responsible for the uptick in total operating costs. Table 1: Design Assumptions by Extraction Method Project Design Parameters Source: CanOils, CERI Measurement Units SAGD Mining and Extraction Integrated Mining and Extraction and Upgrading Stand Alone Upgrading Stream day capacity bbl of bitumen per day 30, , , ,000 Production Life years Average Capacity Factor (over production life) percent 75.00% 89.00% 89.00% 89.00% Capital Expenditures Initial Millions of dollars 1,050 8,276 16,417 6,000.0 Initial Dollars per bbl of capacity 34,987 82, ,760 60,000 Sustaining (Annual Average) Millions of dollars Operating Working Capital Days payment Operating Costs Non-energy total (Annual Average) Millions of dollars Non-energy total Dollars per bbl Energy Requirements Natural Gas Royalty Applicable GJ per day 35,910 54,000 62,100 Non-Royalty Applicable GJ per day 20,871 81,436 Electricity Purchased Royalty Applicable MWh/d ,128 Non-Royalty Applicable MWh/d 448 Electricity Sold MWh/d Other Project Assumptions Abandonment and Reclamation percent of total capital 2% 2% 2% 2% CERI Commodity Report Crude Oil Editor-in-Chief: Dinara Millington (dmillington@ceri.ca) About CERI The Canadian Energy Research Institute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in Our mission is to provide relevant, independent, objective economic research in energy and related environmental issues. We strive to build bridges between scholarship and policy, combining the insights of scientific research, economic analysis, and practical experience. For more information about CERI, please visit our website at Relevant Independent Objective

2 Real 2013 CDN$/bbl Page 2 Figure 1: Total Field Gate Bitumen/SCO Supply Costs a Return on capital included. Source: CERI. After adjusting for blending and transportation, the WTI equivalent supply costs at Cushing for SAGD projects is US$84.99/bbl, US$ for a standalone mine; US$ for an integrated mining and upgrading, and US$41.44/bbl for a standalone upgrader. A summary of costs are presented in Table 2. At WTI prices of US$100/ bbl, the only project that would be economic is a SAGD in situ project, which is consistent with how the oil sands projects are currently being developed. The greenfield projects that will be built are mostly in situ type projects, the development of mines and integrated mines is only happening as expansion of existing projects that can provide some cost savings and economies of scale. Table 2: Supply Costs Summary Source: CERI SAGD 10% ROR (a) Mining 10% ROR (a) Mining & Upgrading 10% ROR (a) Standalone Upgrading 10% ROR (a) Fixed Capital (Initial & Sustaining) $18.92 $31.14 $54.72 $24.25 Operating Working Capital $0.45 $0.70 $1.06 $0.39 Fuel (Natural Gas) $4.31 $1.90 $3.03 $3.74 Other Operating Costs (incl. Elec.) $14.55 $19.97 $28.66 $9.07 Royalties $9.43 $13.61 $12.39 $0.00 Income Taxes $3.09 $4.42 $7.55 $3.33 Emissions Compliance Costs $0.11 $0.04 $0.05 $0.00 Abandonment Costs $0.03 $0.04 $0.07 $0.03 Project $50.89 $71.81 $ SC at Field Gate (C$2013/bbl) While capital costs and the return on investment account for a substantial portion of the total supply cost, the province stands to gain $9.4 to $13.6 in royalty revenues for each barrel of oil produced on average, over the life $40.82 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 WTI Equivalent SC at Cushing (US$2013/bbl) SAGD Standalone Mine Integrated Mining and Upgrading Standalone Upgrader of an oil sands project. On a percentage basis, these range from 11.5 to 19 percent. How CERI s estimates of supply costs compare to others is presented in Table 3, CERI s supply costs are within the provincial regulator s range for a SAGD and a mining project, the rest were not available. The National Energy Board s (NEB s) estimates of costs fall below CERI s calculated costs. Table 3: Supply Costs Comparison WTI Equivalent Supply Costs Project Source: CERI, ERCB. CERI (2013 US$/bbl) NEB (2012 US$/bbl) 3 Supply Cost Sensitivities The presented costs for four different oil sands projects also need to be analyzed in terms of how sensitive costs are to changes to some of the variables. The ranges used for sensitivities are summarized in Table 4. Table 4: Assumptions for Sensitivity Analysis ERCB (2013 US$/ bbl) 4 SAGD Standalone Mine Integrated Mining n/a and Upgrading 5 Standalone Upgrader n/a Parameter Sensitivity Initial Capital Cost +/-25% Sustaining Capital Cost +/-25% Non-Energy Operating Costs +/-25% Natural Gas and Electricity Prices +/-25% Discount Rate +/-2% Steam-to-Oil Ratio +/-25% Carbon Tax +CDN$25/tonne CO 2 eq. Bitumen supply cost sensitivities for a hypothetical SAGD, integrated mining, extraction and upgrading, a standalone mine and a standalone upgrader project are represented graphically in Figures 2-5.

3 Page 3 Figure 2: Supply Cost Sensitivity 30 MBPD SAGD Project Figure 5: Supply Cost Sensitivity 100 MBPD Standalone Upgrader Discount Rate (2% change) Initial Capital Cost (25% change) Initial Capital Cost (25% change) Non-energy Operating Costs (25% change) Discount Rate (2% change) SOR (25 change) Sustaining Capital Cost (25% change) Carbon Dioxide Levy Non-energy Operating Costs (25% change) Sustaining Capital Cost (25% change) CDN$/bbl Carbon Dioxide Levy Source: CERI SOR (25 change) Figure 3: Supply Cost Sensitivity 100 MBPD Mining and Extraction Project Source: CERI CDN$/bbl Non-energy Operating Costs (25% change) Initial Capital Cost (25% change) Sustaining Capital Cost (25% change) Source: CERI Figure 4: Supply Cost Sensitivity 115 MBPD Integrated Mining, Extraction and Upgrading Project Source: CERI Discount Rate (2% change) SOR (25 change) Carbon Dioxide Levy Discount Rate (2% change) Initial Capital Cost (25% change) Non-energy Operating Costs (25% change) Sustaining Capital Cost (25% change) SOR (25 change) Carbon Dioxide Levy $55 $60 $65 $70 $75 $80 $ CDN$/bbl $90 $95 $100 $105 $110 $115 $120 $ CDN$/bbl The supply costs for all projects are most sensitive to changes in capital cost. A 25 percent increase in initial capital cost would affect an integrated project the most, raising its supply cost by C$13.93/bbl. The supply cost for a SAGD producer will increase by C$5.22/bbl and a standalone mine would experience a C$7.84/bbl increase from its base supply cost. For a standalone upgrader the cost will go up by C$5.69/bbl. Changes in discount rate and operating costs will also alter the supply costs. As expected, SAGD supply cost is more sensitive to changes in steam-to-oil ratio and carbon compliance cost changes than the supply costs of the other two projects. Endnotes 1 CERI Study 141, Canadian Oil Sands Supply Costs and Development Projects ( ), July The report is available for download at 2 Because some changes were made in the project energy requirements as well as project economics, a direct comparison of costs is not favoured. 3 NEB, Canada s Energy Future 2013: Energy Supply and Demand Projections to 2035, November Includes an after-tax rate of return, in the order of 10 to 15 percent. 4 AER, Alberta s Energy Reserves 2013 and Supply/Demand Outlook , May A nominal 10 percent discount rate is used. 5 There was no supply cost estimate presented for an integrated project in the ERCB s ST-98, 2012.

4 Page 4 US$/bbl Spot Crude Prices Differential WTI Brent US$/bbl US$/bbl WTI - Edmonton Light Price Differentials Differential WTI Edmonton Light Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Spot Prices WTI Brent Edm.Light* H.Hardisty Year-to-Date Quarter-to-Date June 16, SOURCE: EIA. SOURCE: EIA. US$/bbl WTI - Hardisty Heavy Price Differentials US$/bbl NYMEX WTI Crude Forward Curve 4 contract months Differential WTI Hardisty Heavy May Jun Jul Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 SOURCE: NRCan, EIA. SOURCE: EIA, CERI.

5 SOURCE: EIA, CERI. SOURCE: NRCan. Page 5 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal 3.50 CDN/US$ RBOB Gasoline Heating Oil Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date June 16, Oil Demand Global in Selected Oil Demand Countries US Products Demand June June 2014 Y-on-Y change MMbpd % % 10% % 49% 48% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 5% 0% -5% -10% -15% -20% -25% -30% -35% Total Gasoline Jet Fuel Distillate Residual Propane Other Total OECD Total Non-OECD non-oecd Demand share SOURCE: IEA Oil Market Report. SOURCE: EIA Weekly Petroleum Status Report. Relevant Independent Objective

6 SOURCE: IEA Oil Market Report, CERI. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. Page 6 Global Oil Supply MMbpd Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 non-opec Supply OPEC Supply non-opec Share of Global Supply Canadian Oil Production by product Mbpd 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Q14 2Q14 3Q14 4Q14 1Q15 AB L/M/H AB Bitumen SK Other NGLs Synthetic 62.0% 61.5% 61.0% 60.5% 60.0% 59.5% 59.0% 58.5% 58.0% 57.5% 57.0% Mbpd 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Mbpd 3,000 2,500 2,000 1,500 1, US Oil Production by region 1Q14 2Q14 3Q14 4Q14 1Q15 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region May-11 May-12 May-13 May-14 OECD North America OECD Europe OECD Pacific

7 Page 7 MMb US Commercial Stocks May 30 - June 27, 2014 Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 1Q13 2Q13 3Q13 4Q13 1Q14 SOURCE: EIA Weekly Petroleum Status Report. SOURCE: IEA Oil Market Report. Relevant Independent Objective

8 Page 8 World Supply and Demand Balance (MMbpd) Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 World Demand OECD non-oecd World Supply Non-OPEC OPEC NGLs OPEC Crude Supply - Demand OECD Stocks (MMbbls) Days Cover OPEC Crude Oil Production (MMbpd) Sustainable Production Over (+)/Under (-) Target Capacity Apr-14 May-14 Jun-14 Apr-14 May-14 Jun-14 Saudi Arabia Iran UAE Kuwait Qatar Nigeria Libya Algeria Ecuador OPEC Iraq Total OPEC WTI Price Projections ($US/barrel) Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 High Price Case Reference Case Low Price Case

9 Page 9 Data Appendix Relevant Independent Objective

10 Page 10 A1: Historic Light Sweet Crude Futures Prices ($US per barrel) NYMEX Light Sweet Crude Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg. 9.4% 10.2% 8.7% 5.7% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Yr-on-Yr Chg. 12.4% 9.4% 9.7% 7.3% A2: Historic Crude Product Futures Prices ( US per gallon) NYMEX Unleaded Gasoline NYMEX Heating Oil Last 3 Day Avg. When 12-Month Spread Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg. 2.7% 2.8% 1.2% 0.7% 2.0% 2.1% 1.5% 0.2% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Yr-on-Yr Chg. 11.8% 12.6% 8.2% 6.4% 3.2% 4.2% 2.6% 2.8% Notes (Tables A1 and A2): Prices are listed by contract month. Close: final contract close on the last day of trading. Last 3 Day Average Close: simple average contract close on last three days of trading. Average When Near Month: simple average closing price on trading days when contract was near month. 12-Month Strip Average: simple average of daily near 12-month contract closing prices in a given contract month. Spread: difference between one-month and two-month forward prices in a given period. Source: New York Mercantile Exchange (NYMEX).

11 Page 11 A3: World Crude Oil Contract Prices (FOB, $US per barrel) Saudi U.A.E. Oman U.K. Norway Russia Venez. Kuwait Ecuador Mexico Nigeria Indon. Arab Lgt Dubai Oman Brent Ekofisk Urals 1 T.J. Light Blend Oriente Isthmus Bonny Lgt Minas Q Q Q Q Q Yr-on-Yr Chg. 4.9% 5.3% 5.3% 7.0% 6.9% 5.5% 2.4% 4.6% 0.3% -1.5% 6.2% 8.9% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 7.2% 7.7% 7.5% 8.5% 8.7% 6.5% 4.8% 6.3% 2.9% 2.3% 7.8% 8.7% Notes: 1. Urals is Delivered price at Mediterranean. Contract prices are based on prices at the end of each month. Source: OPEC Monthly Oil Market Report. A4: North American Posted Crude Prices (FOB, $US per barrel) United States Canada ANS 1 Lost Hills Kern R. WTI WTS GCS Okla. Sw. Kans. Sw. Mich. So. Wyo. Sw. CDN Sweet 2 HH Q Q Q Q Q Yr-on-Yr Chg. -3.0% 3.4% 3.4% 10.8% 11.4% 12.6% 10.8% 10.8% 11.9% 10.1% 12.5% 14.1% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 1.8% 3.3% 3.9% 9.9% 10.5% 11.6% 9.9% 10.1% 10.9% 9.2% 15.3% 19.1% Notes: 1. ANS is Delivered price on US West Coast. 2. Edmonton Light Sweet prices are discontinued as of May 1, 2014 and replaced by the Canadian Light Crude blend which is traded daily on the Net Energy Index. 3. Hardisty Heavy. Posted prices are based on price at the end of each month. Sources: Oil & Gas Journal; Natural Resources Canada. Relevant Independent Objective

12 Page 12 A5: Crude Oil Quality Differentials (FOB, $US per barrel) Light vs. Heavy Sweet vs. Sour Arab Lt Arab Hv Diff. Isthmus Maya Diff. CDN Sweet 2 HH 2 Diff. GCS WTS Diff Q Q Q Q Q Yr-on-Yr Chg. 4.9% 4.0% -1.5% -6.3% 6.1% 7.6% 12.6% 11.4% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 7.2% 5.1% 2.3% -2.3% 11.5% 15.2% 11.6% 10.5% Notes: 1. Edmonton Light Sweet prices are discontinued as of May 1, 2014 and replaced by the Canadian Light Crude blend which is traded daily on the Net Energy Index. 2. Hardisty Heavy. Based on contract prices at the end of each month. Sources: OPEC Monthly Oil Market Report: Oil & Gas Journal; Natural Resources Canada. A6: Crude Oil Spot Prices and Differentials (FOB, $US per barrel) Spot Prices Differentials WTI Brent Dubai Urals Basket 1 WTI-Brent WTI-Dubai WTI-Urals WTI-Basket Q Q Q Q Q Yr-on-Yr Chg. 4.6% -3.9% -3.4% -3.7% -4.3% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 9.9% 8.5% 7.7% 6.6% 6.8% Notes: 1. OPEC-Reference Basket is average price of seven crude streams: Algeria Saharan Blend, Dubai Fateh, Indonesia Minas, Mexico Isthmus, Nigeria Bonny Light, Saudi Arabia Light and Venezuela Tia Juana Light. Source: OPEC Monthly Oil Market Report.

13 Page 13 A7: World Petroleum Product Spot Prices ($US per barrel) US Gulf Coast, Pipeline Rotterdam, Barges Singapore, Cargoes Gasoline 1 No. 6 3% 2 Jet/Ker. Gasoline 1 Gasoil Resid. 3 Gasoline 1 Gasoil Resid Q Q Q Q Q Yr-on-Yr Chg. -6.4% -8.0% -5.5% -7.7% -4.6% -7.3% -5.7% -4.2% -5.2% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 7.2% 3.5% 3.9% 8.8% 3.9% 1.4% 4.9% 1.7% 1.8% Notes: 1. Regular unleaded gasoline. 2. Waterborne 3. High Sulfur ( %) Residual Fuel Oil. Spot prices are based on average daily prices over a specific timeframe. Source: IEA Oil Market Report. A8: Product Spot Prices in Selected American Cities ( US per gallon) NY Harbor US Gulf Los Angeles Gasoline 1 No. 2 H.O. Distill. Gasoline 1 Jet Fuel Distill. Gasoline 1 Distill Q Q Q Q Q Yr-on-Yr Chg. 5.2% 4.2% 1.4% 3.6% 3.4% 1.4% 3.8% 3.3% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 4.3% 3.0% 0.6% 4.4% 2.3% 0.3% 1.2% 1.0% Notes: 1. Reformulated regular unleaded gasoline. Spot prices are based on average daily prices over a specific timeframe. Source: EIA Weekly Petroleum Status Report. Relevant Independent Objective

14 Page 14 B1: World Petroleum Supply and Demand Balance (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total 1 Asia Non-Asia FSU Total 1 P. Gulf Non-Gulf Total 2 Total 3 Demand Q Q Q Q Q Q Q Q Q Supply Q Q Q Q Q Q Q Q Q Balance Q Q Q Q Q Q Q Q Q Notes: 1. Totals for OECD and non-oecd supply include net refining gains; specific regions/groupings within each do not. 2. OPEC demand is an estimate based on historical annual data. 3. Balance for World equals global stockbuilds (+) and stockdraws (-) for crude oil and petroleum products and miscellaneous gains and losses. Regional surpluses (+) and deficits (-) are balanced through net-imports and stock changes in the short-term, and net-imports in the longer term. Supply includes crude oil, condensates, NGLs, oil from non-conventional sources and processing gains. Demand is for petroleum products. Source: IEA Oil Market Report.

15 Page 15 B2: World Petroleum Production (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total Asia Non-Asia FSU Total P. Gulf Non-Gulf Total Total Q Q Q Q Q Yr-on-Yr Chg. 10.2% -2.7% 4.1% 7.8% -1.2% 2.4% 0.7% 0.7% 2.3% -12.1% -2.3% 1.1% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 9.0% -0.3% 1.9% 7.4% -1.5% 1.0% 0.1% -0.1% 1.7% -8.3% -1.5% 1.1% R/P Ratio Notes: 1. Production includes crude oil, condensates and NGLs. 2. Reserve-Production ratio is based on latest month production and British Petroleum reserve estimates. Sources: IEA Oil Market Report and BP Statistical Review of World Energy. B3: OECD Commercial Petroleum Stocks (million barrels) North America Europe Asia-Pacific OECD Crude Product Total Crude Product Total Crude Product Total Crude Product 1 Total , ,408 2, , ,413 2, , ,337 2,566 1Q , ,374 2,657 2Q , ,376 2,662 3Q , ,401 2,697 4Q , ,337 2,566 1Q , ,003 1,292 2,583 Yr-on-Yr Chg. -0.6% -4.0% -2.2% 1.3% -8.1% -3.5% 1.7% -7.2% -3.3% 0.4% -6.0% -2.8% May , ,016 1,350 2,656 Jun , ,376 2,662 Jul , ,393 2,673 Aug , ,411 2,678 Sep , ,401 2,697 Oct , ,012 1,356 2,668 Nov , ,328 2,615 Dec , ,337 2,566 Jan , ,341 2,572 Feb , ,322 2,576 Mar , ,003 1,292 2,583 Apr , ,306 2,595 May , ,010 1,336 2,639 Yr-on-Yr Chg. -0.8% 0.0% -0.2% 0.4% -2.3% -0.7% -1.5% -1.5% -2.1% -0.6% -1.0% -0.6% Notes: 1. Product includes only finished petroleum products. 2. Total stocks include NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. All stocks are closing levels for respective reporting period. Source: IEA Oil Market Report. Relevant Independent Objective

16 Page 16 B4: OPEC Crude Oil Production and Targets (million barrels per day) Persian Gulf Non-Persian Gulf OPEC-11 OPEC-11 Arabia Iran UAE Kuwait Qatar Venez. Nigeria Libya Algeria Angola Ecuador Total 1 Target Iraq Q Q Q Q Q Yr-on-Yr Chg. 1.7% 5.6% 0.0% -1.1% -4.1% -2.7% -0.5% -82.4% -1.8% -6.8% 7.8% -3.6% 4.4% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 1.3% 5.6% -0.4% -1.4% -4.1% 0.0% 4.3% -79.1% 0.0% -5.6% 12.0% -2.4% 3.9% Quotas Over/Under % -14.7% 22.5% 25.2% -4.1% 24.6% 17.4% -83.7% -6.7% 10.5% 30.2% -10.5% Notes: 1. Does not include NGLs; OPEC production targets apply to crude oil only. 2. Iraq does not have an official OPEC target. 3. OPEC-10 production targets. 4. As of latest month. Source: IEA Oil Market Report. B5: OECD Refinery Activity Crude Input (MMbpd) - Utilization (percent) - Refining Margins ($US/barrel) North America Europe Asia-Pacific OECD Input Util. Margin 1 Input Util. Margin 2 Input Util. Margin 3 Input Util Q Q Q Q Q Yr-on-Yr Chg. 3.0% % -4.0% -71.3% -2.8% % -0.4% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg. 3.1% 95.4% -1.6% -60% 1.5% 281.3% 1.3% Notes: 1. Based on dated Brent being processed in average US Gulf cracking refinery. 2. Based on dated Brent in average Rotterdam cracking refinery. 3. Based on spot Dubai in average Singapore hydroskimming refinery. Source: IEA Oil Market Report.

17 Page 17 C1: US Petroleum Supply and Demand Balance (million barrels per day) United States 1 East Mid-West Supply Demand Net-Imp. Stk. Chg. Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 11.7% 1.2% -17.1% 55.1% 8.4% 13.7% -0.5% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. 13.0% 1.2% -18.2% 43.2% 0.5% 13.7% 1.9% % of Total % 100.0% 2.0% 28.2% 23.7% 24.9% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 12.1% -3.8% 10.7% -0.4% 1.2% 0.3% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. 13.6% -1.5% 16.4% 8.7% 1.7% 5.0% % of Total % 27.7% 7.3% 3.8% 10.4% 15.4% Notes: 1. Does not balance because of unaccounted for crude oil. Regional surpluses (+) and deficits (-) are balanced through net-imports/transfers and stock changes in the short-term, and net-imports/transfers in the longer term. 2. As of most recent month. Supply includes crude oil, condensates, NGLs, oil from nonconventional sources and processing gains. Demand is for petroleum products. Source: EIA Petroleum Supply Monthly. Relevant Independent Objective

18 Page 18 C2: US Petroleum Demand by Product (million barrels per day) Finished Petroleum Products NGLs Petroleum Gasoline Jet Fuel Distil. Resid. Total 1 Total Total Q Q Q Q Q Yr-on-Yr Chg. 1.4% 5.0% 5.9% -36.2% 1.4% -1.0% 1.2% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. 2.4% 2.3% 2.6% -2.8% 2.0% -6.4% 1.2% Notes: 1. Total includes other finished petroleum products. 2. Total petroleum demand includes refinery feedstocks, additives/oxygenates and other hydrocarbons. Source: EIA Petroleum Supply Monthly. C3: US Petroleum Stocks (million barrels) Petroleum Stocks 1 Crude Oil Finished Products East Mid-West S-Cent N-West West U.S. Total 2 Gasoline Jet Fuel Distil. Resid. Total , ,751 1, , ,807 1, , ,760 1, Q , ,793 1, Q , ,818 1, Q , ,832 1, Q , ,760 1, Q , ,753 1, Yr-on-Yr Chg. -5.7% -10.6% -0.4% 4.5% 0.5% -2.2% -0.8% -29.4% -9.7% -2.8% -1.5% -8.6% Apr , ,807 1, May , ,817 1, Jun , ,818 1, Jul , ,818 1, Aug , ,821 1, Sep , ,832 1, Oct , ,812 1, Nov , ,792 1, Dec , ,760 1, Jan , ,743 1, Feb , ,743 1, Mar , ,753 1, Apr , ,780 1, Yr-on-Yr Chg. -8.0% -9.1% 0.7% 2.3% 1.5% -1.5% -0.5% -33.6% -6.9% -1.1% -10.0% -8.7% Notes: 1. Petroleum stocks include crude oil, finished products, NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. 2. Includes Strategic Petroleum Reserves. 3. Total includes other finished petroleum products. All stocks are closing levels for respective reporting period. Source: EIA Petroleum Supply Monthly.

19 Page 19 C4: US Petroleum Net Imports by Source (million barrels per day) Region of Origin OPEC Canada Mexico Lat. Am. Europe Africa M.E. Total 1 Venez. S. Arabia Nigeria Total 2 P. Gulf Q Q Q Q Q Yr-on-Yr Chg. -8.5% 4.2% -22.5% % -64.1% 12.7% -17.1% 6.2% 32.2% -84.5% -3.8% 13.6% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. -7.5% -28.2% -20.9% % -60.0% 29.2% -18.2% 9.9% 45.5% -62.8% -1.8% 29.2% % of Total % 5.3% 12.5% -2.3% 4.1% 40.4% 100.0% 14.0% 28.6% 2.6% 62.1% 40.5% Notes: 1. Total includes net-imports from Russia and Asia-Pacific region. 2. Total OPEC includes the other eight cartel members. 3. As of latest month. Source EIA Petroleum Supply Monthly. C5: US Regional Crude Oil Production (million barrels per day) PAD District U.S. Major Producers East Mid-West S-Cent N-West West Total Alaska Calif. 1 Louis. Texas G. of Mex Q Q Q Q Q Yr-on-Yr Chg. 25.9% 21.4% 12.9% 14.5% 0.9% 12.6% -2.1% 3.7% -1.7% 28.7% -9.5% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg. 11.0% 19.7% 12.4% 15.2% 0.0% 11.9% -4.8% 4.5% 4.1% 27.4% -9.9% R/P Ratio Notes: 1. California includes Federal Offshore crude oil production. 2. Gulf of Mexico includes Federal Offshore production adjacent to Texas and Louisiana. 3. Crude oil Reserve-Production ratio as of latest production month. Crude oil production does not include NGLs. Source: EIA Petroleum Supply Monthly. Relevant Independent Objective