TANK BARGE OPPORTUNITIES RELATED TO CRUDE OIL PRODUCTION & MOVEMENT Third Edition A SPECIAL INDUSTRY STUDY Prepared by: November 2014 775 Ridge Lake Boulevard, Suite 400 ~ Memphis, Tennessee 38120-9403 Telephone 901.202.4600 ~ Fax 901.766.4402 http://www.informaecon.com
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TABLE OF CONTENTS I. EXECUTIVE SUMMARY... X II. INTRODUCTION... 1 III. MACRO-ECONOMIC OUTLOOK... 4 IV. WORLD CRUDE OIL MARKET... 7 A. BASELINE ASSUMPTIONS... 7 B. WORLD CRUDE OIL... 7 C. PETROLEUM AND LIQUID FUEL CONSUMPTION... 9 D. WORLD NET PETROLEUM SUPPLY RELATIVE TO WORLD PRICE... 9 V. NORTH AMERICA CRUDE OIL MARKET OUTLOOK... 11 A. U.S. CRUDE OIL SUPPLY AND DEMAND OUTLOOK... 11 B. U.S. CRUDE OIL PRICE OUTLOOK... 12 C. U.S. CRUDE OIL PRODUCTION BY PADD DISTRICT AND STATE... 13 D. CRUDE OIL DEMAND... 21 VI. WORLD NATURAL GAS MARKET... 24 VII. U.S. NATURAL GAS MARKET... 25 A. NATURAL GAS SUPPLY AND DEMAND OUTLOOK... 27 B. NATURAL GAS PRICE OUTLOOK... 28 C. NATURAL GAS SUPPLY... 29 D. NATURAL GAS REGIONAL PRODUCTION... 29 E. NATURAL GAS DEMAND... 32 VIII. U.S. TRANSPORTATION MODES FOR CRUDE OIL AND PETROLEUM PRODUCTS... 35 A. U.S. CRUDE OIL MODAL SHARE... 35 IX. INLAND NAVIGATION SYSTEM... 38 A. TANK BARGE FLEET... 39 B. RAIL EQUIPMENT... 45 C. PIPELINE... 51 X. TERMINAL MARKET SITUATION... 63 A. CRUDE OIL FLOW... 64 B. INFRASTRUCTURE PROXIMITY TO THE RIVER... 68 C. SURPLUS AND DEFICIT AREA... 69 XI. LIQUID BARGE COMMODITY PROFILE... 80 A. GENERAL OVERVIEW... 80 B. CRUDE OIL... 87 C. PETROLEUM PRODUCTS... 87 D. CHEMICAL PRODUCTS... 88 XII. BARGE PRESSURE INDEX... 90 informa economics, inc. iii
LIST OF FIGURES Figure 1: Outbound Crude Petroleum Barge Movements by Waterway Segment... xiii Figure 2: NYMEX Nearby Monthly Crude Oil Price... 1 Figure 3: U.S. Shale Locations and River and Rail Networks... 2 Figure 4: U.S. Real GDP ($2005) and Annual Change by Quarter... 4 Figure 5: U.S. Revolving and Non-Revolving Debt (billion dollars)... 6 Figure 6: Relationship between OPEC Crude Oil Basket Price and World Net Petroleum Supply... 10 Figure 7: U.S. Crude Oil Field Production and Forecast... 11 Figure 8: Brent Crude Oil and West Texas Intermediate Nearby... 13 Figure 9: Marcellus, Utica, Antrim, New Albany Locations with River Terminals, Refineries, and Railroads... 14 Figure 10: Bakken, Gammon, Niobrara Locations with River Terminals, Refineries, and Railroads... 15 Figure 11: Eagle Ford, Barnett, Haynesville, Tuscaloosa Locations with River Terminals, Refineries, and Railroads... 16 Figure 12: Monthly U.S. Finished Gasoline Consumption... 21 Figure 13: Operable Refinery Capacity and Capacity Utilization... 22 Figure 14: Automobile Sales (excluding Light Trucks) (China, India and U.S.)... 23 Figure 15: World Total Dry Natural Gas Production (2012) (billion cubic feet)... 24 Figure 16: Natural Gas Consumption by End Use (2010) (2014) (trillion cubic feet)... 26 Figure 17: Natural Gas Supply and Consumption (trillion cubic feet)... 27 Figure 18: U.S. Natural Gas Price... 28 Figure 19: U.S. Natural Gas and Crude Oil Locations with River and Railroads... 31 Figure 20: Relationship between Weather and Total Natural Gas Consumption (billion cubic feet)... 33 Figure 21: Natural Gas versus Coal... 34 Figure 22: U.S. Crude Oil Ton-miles by Mode (billions)... 36 Figure 23: U.S. Petroleum Products Ton-miles by Mode (billions)... 37 Figure 24: Major Navigable Inland River and Waterway Segments... 38 Figure 25: Historic Size of Inland Barge Fleet... 39 Figure 26: Liquid Tank Barge Fleet by Type... 40 Figure 27: Liquid Tank Barge Profile of the 2013 Fleet... 41 Figure 28: Average Age of Tank Barge Fleet by Type... 42 Figure 29: Tank Barge Retirement Schedule for the 2010 Fleet by Barge Type... 43 informa economics, inc. iv
Figure 30: Annual Tank Barge New Builds and Retirements, and Fleet Size... 45 Figure 31: Network of Class 1 Railroads, Railroad Terminals, Inland Waterways, Pipelines and Refineries... 46 Figure 32: Total Rail Tank Fleet and Capacity... 47 Figure 33: Select Crude Oil Trunkline Pipeline Systems and Refineries... 52 Figure 34: Keystone Pipeline Map... 53 Figure 35: Proposed Northern Gateway Pipeline... 54 Figure 36: Koch Dakota Express Proposal... 55 Figure 37: Sandpiper Proposal... 56 Figure 38: Niobrara Pipeline Proposals... 57 Figure 39: Texas Pipeline Proposals... 58 Figure 40: Houston-to-Houma Pipeline System... 59 Figure 41: Select Petroleum Product Pipeline Trunk Pipeline Systems... 60 Figure 42: U.S. Natural Gas Pipelines... 61 Figure 43: U.S. Crude Oil and Natural Gas Locations with River Terminals, Refineries, and Railroads... 63 Figure 44: Volume of Crude Oil Entering the Mississippi River System... 64 Figure 45: Outbound Crude oil Petroleum Barge Movements by Waterway Segment... 65 Figure 46: Share of Outbound Crude oil Petroleum Barge Movements by Waterway Segment... 66 Figure 47: Inbound Crude oil Petroleum Barge Movements by Waterway Segment... 66 Figure 48: Share of Inbound Crude oil Petroleum Barge Movements by Waterway Segment... 67 Figure 49: U.S. Crude Oil Surplus in and Deficit (2014) with River Terminals, Refineries, and Railroads... 72 Figure 50: Tank Barge Commodity Profile of Tons Moved... 80 Figure 51: Tank Barge Commodity Profile of Ton-miles... 81 Figure 52: Tank Barge Petroleum Products Profile of Tons Moved... 82 Figure 53: Tank Barge Petroleum Products Profile of Ton-miles... 82 Figure 54: Tank Barge Chemical Products Profile of Tons Moved... 83 Figure 55: Tank Barge Chemical Products Profile of Ton-miles... 84 Figure 56: Inland Liquid Barge Traffic by Movement Type (million tons)... 85 Figure 57: Inland Liquid Barge Traffic by Major Grouping (million tons)... 86 Figure 58: Inland Liquid Barge Traffic by Major Grouping (billion ton-miles)... 86 Figure 59: Key Petroleum Products Moved by Barge (million tons)... 88 informa economics, inc. v
Figure 60: Key Chemical Products Moved by Barge (million tons)... 89 Figure 61: Tank Barge Pressure Index (Tonnage Index less Barge Index)... 91 Figure 62: Tank Barge Pressure Index (Tonnage Index less Barge Index) (Effective Fleet Size)... 91 Figure 63: Tank Barge Pressure Index (Ton-mile Index less Barge Index) (on a Tonnage Basis) (Effective Fleet Size)... 92 Figure 64: Tank Barge Pressure Index (Ton-mile Index less Barge Index) (on a Tonnage Basis) (Effective Fleet Size)... 92 LIST OF TABLES Table 1: World Petroleum and Liquid Fuel Supply (thousand barrels per day)... 8 Table 2: World Petroleum Consumption (thousand barrels per day)... 9 Table 3: U.S. Crude Oil Supply and Consumption (thousand barrels per day)... 12 Table 4: Crude Spot Price Forecast, FOB (dollars per barrel)... 12 Table 5: U.S. Crude Oil Production by State and PADD (thousand barrels per day)... 19 Table 6: U.S. Natural Gas Supply, Consumption and Annual Prices... 28 Table 7: New-Well per Rig... 29 Table 8: U.S. Shale Gas Unproven Discovered Technically Recoverable Resources Summary... 32 Table 9: U.S. Crude Oil Ton-miles by Mode (billions)... 35 Table 10: U.S. Petroleum Products Ton-miles by Mode (billions)... 37 Table 11: Affected Entities and Requirements of Proposed Tank Car Standards and Operational Controls for High-Hazard Flammable Trains... 49 Table 12: Safety Features by Tank Car Option of Proposed Tank Car Standards and Operational Controls for High-Hazard Flammable Trains... 50 Table 13: Additional Interstate Natural Gas Pipeline Capacity by Year... 62 Table 14: Chain of Rocks Pool Crude Oil and Petroleum Product Terminals Capacity (barrels per day)... 68 Table 15: Refinery Capacity by State (barrels per day)... 69 Table 16: U.S. Surplus or Deficit Crude Oil by State (thousand barrels per day)... 71 Table 17: Canada Crude Oil Origin Summary... 74 Table 18: Bakken Crude Oil Origin Summary... 75 Table 19: Niobrara Crude Oil Origin Summary... 75 Table 20: Eagle Ford and Permian Basin Origin Summary... 76 Table 21: Corpus Christi Destination Summary... 77 informa economics, inc. vi
Table 22: Houston Texas Destination Summary... 77 Table 23: Louisiana Destination Summary... 78 Table 24: Chemical Plant New Build Summary... 89 informa economics, inc. vii