THE M.W. KELLOGG COMPANY
A [*»»<>* of Pullman Incorporated
AVAILABILITY OF RESIDUAL FUEL OIL
TASK #2 FINAL REPORT
SUBMITTED TO
ENVIRONMENTAL PROTECTION AGENCY
AIR POLLUTION CONTROL OFFICE
DIVISION OF PROCESS CONTROL ENGINEERING
CONTRACT NO. CPA 70-68
DECEMBER 31, 1970
-------
RESEARCH AND ENGINEERING DEVELOPMENT
AVAILABILITY OP RESIDUAL FUEL OIL
TASK #2 FINAL REPORT
Submitted to
ENVIRONMENTAL PROTECTION AGENCY
o
AIR POLLUTION CONTROL OFFICE
DIVISION OF PROCESS CONTROL ENGINEERING
Contract No. CPA 70-68
APPROVED:
Project Direc
Che
Manager
al Engineering Development
DJrector
-------
R 4 ED 20 LAB. 3-68
THE M. W. KELLOGG COMPANY
A DIVISION OF PULLMAN INCORPORATED
Research 4 Engineering Development
iKEUOCSl
Page No.
Report No.
RED 70-1248
AVAILABILITY OF RESIDUAL FUEL OIL
TASK #2 FINAL REPORT
EPA-APCO-DPCE CONTRACT NO. CPA 70-68
December 31, 1970
Staff:
C.J. Royce
Period Covered:
June 1970 to December 1970
L. 0. No.
4092
Distribution :
APCO
P.T. Atteridg
A.L. Dowling
Dwyer
Jesser
Multhaup
Crady
Royce
Schreiner
Sliger
J.B
B.W
R.H
C.W
C.J
W.C
A.G
E. Solomon
R.E. Vener
M.J. Wall
R.I.D. (3)
Copy No.
1-75
76
77
78
79
80
81
82
83
84
85
86
87
88-90
AUTHORS:
-------
AVAILABILITY OP RESIDUAL FUEL OIL
TASK #2 FINAL REPORT
CONTRACT NO. CPA 70-68
Submitted to
ENVIRONMENTAL PROTECTION AGENCY
AIR POLLUTION CONTROL OFFICE
DIVISION OF PROCESS CONTROL ENGINEERING
THE M. W. KELLOGG COMPANY
RESEARCH & ENGINEERING DEVELOPMENT
PISCATAWAY, N.J.
-------
TABLE OF CONTENTS
Page No,
I. INTRODUCTION 1
II. SUMMARY AND CONCLUSIONS 3
III. DATA ORGANIZATION 9
A. Data Sources 9
B. Reporting Periods 9
C. Geographical Reporting Areas 10
IV. STATISTICS OP RECENT HISTORY OF FUEL OIL 11
V. RESIDUAL FUEL OIL SITUATION—PRESENT AND FUTURE 45
A. Current and Projected Production of RFO 46
B. Economics 64
VI. ANALYSIS OF FUEL OIL SITUATION 72
A. Domestic RFO Production 72
1. Current Sulfur Levels—:Existing Refineries 72
2. Low Sulfur Levels—Existing Refineries 73
3. Low Sulfur Levels—Existing Refineries 75
Plus Hydrotreating
4. Economics of Low Sulfur RFO 76
5. Future Desulfurization Plants—U.S. 77
B. Foreign RFO Supplies 79
1. Eastern Hemisphere Imports 79
2. Western Hemisphere Imports 80
C. World-United States Supply/Demand 81
D. Potential Methods of Increasing U.S. RFO Supply 84
1. Increased Domestic Production 85
2. Increased Eastern Hemisphere Imports 86
3. Increased Western Hemisphere Imports 86
VII. GLOSSARY 88
-------
LIST OF TABLES
Table No. Title Page No,
1 TOTAL REFINERY THROUGHPUT AND FUEL 12
OIL PRODUCTION BY GEOGRAPHIC AREA -
1968 (NON-COMMUNIST WORLD)
2 NET FUEL OIL IMPORT, EXPORT AND CON- 13
SUMPTION BY GEOGRAPHIC AREA - 1968
(NON-COMMUNIST WORLD)
3 TOTAL REFINERY THROUGHPUT AND TOTAL 16
OPERABLE REFINING CAPACITY BY GEO-
GRAPHIC AREA - 1968 (NON-COMMUNIST
WORLD)
4 FUEL OIL TRANSFERS BETWEEN PAD 17
DISTRICTS - 1968
5 SUMMARY OF FUEL OIL PRODUCTION, 18
IMPORTS AND CONSUMPTION BY PAD
DISTRICT - 1968
6 SULFUR CONTENT OF DOMESTIC FUEL OILS 19
GRADES 1, 2, 4, 5, 6 BY PAD DISTRICT -
1968 AND 1969
7 SULFUR CONTENT OF FOREIGN IMPORTS OF 26
RESIDUAL FUEL OIL TO PAD DISTRICT 1 -
1968 AND 1969
8 , AVERAGE RESIDUAL FUEL OIL PRICES FOB 28
TERMINAL FOR EAST COAST PORTS, GULF
PORTS AND INLAND DISTRICTS
9 POSTED RAILROAD SHIPPING RATES APPLI- 31
CABLE TO RESIDUAL FUEL OIL SHIPMENT
IN TANK CARS OF 15,000 GALLONS AND
LARGER
10 FUEL OIL SPECIFICATIONS 34
11 SALES OF RESIDUAL FUEL OIL BY END 35
USE IN THE UNITED STATES, 1964-1969
12 PROJECTED SALES OF RESIDUAL FUEL OIL 36
BY END USE IN THE UNITED STATES,
1970-1975
-------
LIST OF TABLES (Cont'd)
Table No. Title Page No,
13 SALES OF DISTILLATE FUEL OIL BY END 39
USE IN THE UNITED STATES, 1964-1969
14 PROJECTED SALES OF DISTILLATE FUEL 40
OIL BY END USE IN THE UNITED STATES,
1970-1975
15 DOMESTIC AND IMPORTED RESIDUAL FUEL 43
OIL STATISTICS FOR OVERALL UNITED
STATES, I960 THRU MAY 1970
16 DOMESTIC AND IMPORTED RESIDUAL FUEL 44
OIL STATISTICS FOR PAD DISTRICT 1,
1965 THRU MAY 1970
17 PRODUCTION STATISTICS FOR REFINERIES 47
PRODUCING RESIDUAL FUEL OILS FOR
IMPORT INTO THE UNITED STATES,
1964-1969
18 UNITED STATES SUPPLY AND DEMAND 48
STATISTICS FOR RESIDUAL FUEL OIL,
I960 THRU MAY 1970
19 UNITED STATES SUPPLY AND DEMAND 50
STATISTICS FOR RESIDUAL FUEL OIL
PROJECTED THRU 1975 AT DIFFERENT RFO
POOL SULFUR LEVELS
20 UNITED STATES MONTHLY DEMAND FOR 55
RESIDUAL FUEL OIL, 1966-1970
21 UNITED STATES MONTHLY DEMAND FOR 56
RESIDUAL FUEL OIL PROJECTED THROUGH
1975
22 UNITED STATES RESIDUAL FUEL OIL 59
SUPPLY/DEMAND STATISTICS, PARTS 1 & 2,
1965-1975
23 ECONOMICS OF PRODUCING LOW SULFUR 65
RESIDUAL FUEL OIL IN THE UNITED STATES
-------
LIST OF FIGURES
Figure No. Title Page No.
1 MAP OF PETROLEUM ADMINISTRATION FOR 20
DEFENSE (PAD) DISTRICTS
2 MAP OF BUREAU OF MINES REFINING 21
DISTRICTS
3 MAP OF THE GEOGRAPHICAL AREAS OF 22
THE NATIONAL SURVEY OF BURNER FUEL
OILS
4 TRENDS IN SULFUR CONTENT OF BURNER 24
FUEL OILS. 1962-1969
5 POSTED RAILROAD SHIPPING RATES FOR 32
RESIDUAL FUEL OIL IN TANK CARS OF
15,000 GALLONS AND LARGER
6 POSTED RAILROAD SHIPPING RATES FOR 33
RESIDUAL FUEL OIL IN TANK CARS OF
15,000 GALLONS AND LARGER
7 SALES OF RESIDUAL FUEL OIL BY END 37
USE IN THE UNITED STATES. 1965-1975
8 TOTAL SALES OF DISTILLATE FUEL OIL 1)1.
IN THE UNITED STATES. 1964-1975
9 SALES OF DISTILLATE FUEL OIL BY END l\2
USE IN THE UNITED STATES. 1965-1975
10 UNITED STATES DAILY AVERAGE CRUDE 51
RUNS TO STILLS. 1960-1975
11 RESIDUAL FUEL OIL DEMAND IN THE 52
UNITED STATES. 1960-1975
12 UNITED STATES RESIDUAL FUEL OIL 53
PRODUCTION FOR DIFFERENT RFO POOL
SULFUR LEVELS. 1960-1975
13 RESIDUAL FUEL OIL SUPPLY/DEMAND 54
STATISTICS FOR THE UNITED STATES.
1960-1975
14 VARIATION IN DEMAND FOR RESIDUAL 58
FUEL OIL BY MONTH OF YEAR. 1966-1975
-------
LIST OF FIGURES (Cont'd)
Figure No. Title Page No.
15 TOTAL CRUDE THROUGHPUT AND RFO PRO- 6l
DUCTION CAPABILITY OF VENEZUELA,
NETHERLANDS ANTILLES, TRINIDAD, VIRGIN
ISLANDS AND THE BAHAMAS. 1965-1975
16 TOTAL UNITED STATES RFO DEMAND AND 62
WORLD RFO SUPPLY POTENTIAL (NO SULFUR
LIMITS). 1965-1975
17 TOTAL UNITED STATES RFO DEMAND AND 63
WORLD RFO SUPPLY POTENTIAL (0-1.035
SULFUR LIMIT). 1968-1975
18 INCREMENTAL COST OF REDUCING THE TOTAL 66
DOMESTIC RESIDUAL FUEL OIL POOL SULFUR
LEVEL FROM CURRENT LEVEL TO 1.0$ W
19 INCREMENTAL COST OF REDUCING THE TOTAL 6?
DOMESTIC RESIDUAL FUEL OIL POOL SULFUR
LEVEL FROM CURRENT LEVEL TO 0.5% W
20 CAPITAL INVESTMENT REQUIRED TO REDUCE 68
THE TOTAL DOMESTIC RFO POOL SULFUR
LEVEL FROM CURRENT LEVEL TO 1.0$ W.
1967-1973
21 CAPITAL INVESTMENT REQUIRED TO REDUCE 69
THE TOTAL DOMESTIC RFO POOL SULFUR
LEVEL FROM CURRENT LEVEL TO 0.5$ W
(ONSITES ONLY) 1967-1973
22 CAPITAL INVESTMENT REQUIRED TO REDUCE 70
THE TOTAL DOMESTIC RFO POOL SULFUR
LEVEL-FROM CURRENT LEVEL TO 0.5% W
-------
I. INTRODUCTION
The work described in this report was performed as
Task #2 under Contract No. CPA 70-68 with the National Air
Pollution Control Administration, Environmental Health
Service, Public Health Service, Department of Health,
Education, and Welfare.*
The objectives of this task were to estimate the pres-
ent and future availability of residual fuel oil (RPO),
relative to the United States market, at current high sulfur
it it
levels and at low sulfur levels. These estimates were to
be made on the basis of available data to be obtained from
government publications, trade journals, etc. However, as
work progressed it became apparent that the available pub-
lished data dealing with foreign RFO production capability
were inadequate for the development of a meaningful analysis
of the imported RFO supply picture. Consequently, it was
decided that the best method of obtaining the necessary data
was through the use of a questionnaire submitted directly
to the appropriate companies. In following this latter pro-
cedure, the questionnaire has been limited to those Carib-
bean and South American refineries that are the main suppli-
ers of RFO to the United States.
The study actually consisted of two phases, as
follows:
Phase 1
Compilation of statistical data re-
lating to the recent history of the crude oil
and residual fuel oil situation throughout the
world with particular emphasis on the United
* Recently changed to Air Pollution Control Office,
Environmental Protection Agency.
** RFO containing less than 1% S is defined as low sulfur
while high sulfur refers to percentages above 1%.
-------
States. These statistics include data covering
total crude runs to stills, total installed re-
fining capacity, residual fuel oil production
and demand, fuel oil imports and exports, fuel
oil consumption by end use, fuel oil price as
a function of sulfur content, fuel oil trans-
portation costs, and sulfur content of domestic
and imported fuel oils.
Phase 2
Estimation of the present and future produc-
tion capability of existing refineries,
domestic and foreign, which are engaged in
supplying the United States residual fuel oil
requirements.
Projection of the RFO production capabili-
ties of these same refineries after the addi-
tion of hydrotreating facilities and the
incremental cost of producing low sulfur RFO
as a result of such modifications.
In those cases where estimates of future statistical
data were required for both phases 1 and 2, the data pro-
jections have been carried through the period 1971-75.
-------
II. SUMMARY AND CONCLUSIONS
A. Domestic RFO Production
Domestic production of RPO has been systematically
reduced from 11.25 to 6.85 volume percent of the total
crude run during the period I960 to 1969. This was done
to maximize profits by increasing the production of the
more valuable light petroleum fractions. On a short term
basis, such as during the current 1970-71 winter season,
the trend toward minimizing RFO may be temporarily re-
versed. Long term, however, the trend is expected to
continue but at a substantially lower rate of change in
the decrease of the volume percent of crude going to RFO
production.
Domestic RFO production for the period 1971-1975 is
estimated to be in the 750,000 to 850,000 BCD*range, of
which 150,000 to 175,000 BCD are estimated to be in the
0-1.0% sulfur content range. The addition of heavy re-
siduum hydrotreating facilities to reduce the overall
domestic RFO pool to 1$ sulfur content would decrease
total RFO production by about 105? to the 675,000-750,000
BCD level. A capital investment of roughly 300 to 400
million dollars would be required and the incremental
production costs would vary from $0.75 to $1.85 per
barrel with an overall U.S. average in the $0.75 to $0.90
per barrel range.
Reduction of the domestic pool to a 0.5% sulfur con-
tent via hydrotreating would decrease total RFO produc-
tion by about 25% to the 550,000-625,000 BCD range. A
capital investment of roughly 700 to 1100 million dollars
would be required and the incremental production costs
would vary from $0.90 to $2.25 per barrel with an overall
*Barrels Per Calendar Day
-------
U.S. average in the $0.95 to $1.15 per barrel range. For
comparison, the September 1970 spot price in New York
Harbor showed a premium of $0.55 to $1.05 per barrel for
maximum ~L% sulfur No. 6 PO versus no sulfur guarantee
-------
B. Foreign RFO Supply Potential
1. Eastern Hemisphere
Eastern Hemisphere (Western Europe and Middle East)
imports have increased from less than 5% (1964) to 14.2$
(Jan./May 1970) of the total U.S. RFO imports. Largely
responsible for this increase is the availability of low
sulfur RFO from Western Europe made possible by the process-
ing of low sulfur African crudes. The potentially available
Eastern Hemisphere imports are estimated at 225,000 to
300,000 BCD for the 1971-75 period. Of this total about
100,000 to 200,000 BCD will be in the 0-1% sulfur content
range. Since this quantity represents less than 20$ of
the total Western Europe production of RFO, it should be
possible on a short term basis to increase the supply
potential from this area by competitive bidding for a larger
share of the total production.
2. Western Hemisphere
Western Hemisphere (Venezuela, Trinidad, Nether-
lands Antilles, Virgin Islands and Bahamas) production
over the period 1965-69 averaged 1,385,000 BCD of which
70% was imported into the United States. Based on ques-
tionnaire data obtained by Kellogg, the production capa-
bility of RFO will increase by 6% per year, from 1,690,000
BCD in 1970 to 2,250,000 BCD in 1975. The production of
low sulfur RFO will increase by 2.6% per year, from 550,000
BCD in 1970 to 1,140,000 BCD in 1975. The United States
probably will continue to import the major portion of the
Western Hemisphere production.
-------
C. United States Supply/Demand Analysis
The total world RFO supply potential versus United
States demand shows a RFO surplus for the years 1971, 1972
and 1973 of 317,000, 192,000 and 61,000 BCD respectively.
For 1974 and 1975 it shows a deficit of 94,000 and 204,000
BCD respectively. In order to meet the United States
demands for the years 1971, 1972 and 1973 , however, it will
be necessary to increase the percentage of total Western
Hemisphere production which is imported into the United
States from 73% in 1969 to 97$ in 1973 and/or increase
imports from the Eastern Hemisphere. To the extent that
it would not be possible to obtain this great a portion
of the Western Hemisphere output, the deficit predicted
for 1974 would occur at some earlier date.
The total world supply potential of 0-1.05? sulfur
content RFO versus United States demand shows a deficit of
64,000 BCD for 1971, increasing to 532,000 BCD in 1975.
The United States RFO supply/demand statistics (see
Table 22) are based on the best available statistical data
combined with reasonably conservative estimates. Since
the many factors influencing both supply and demand are
constantly changing, these data are intended to be indica-
tive of representative trends rather than firm quantitative
values. However, it can be concluded with reasonable cer-
tainty that the U.S. will experience a chronic RFO shortage
no later than 1973-74 and a low sulfur RFO shortage begin-
ning in 1971 if prompt action is not taken to increase the
world supply potential.
-------
D. Potential Modifications to World RFO Supply
The short term methods used by the industry to increase
RPO supply potential in response to the rapid growth in demand
apparently will be adequate to meet U.S. demand for no sulfur
limit RFO for the next three or four years but will not be
adequate to meet low sulfur RPO requirements thru 1971. There-
fore on a long term basis the solution of the RPO supply
problem will require some modification and considerable accel-
eration of present plans to expand Western Hemisphere RFO
production capability.
Domestic production of high sulfur RPO is being in-
creased by 100,000 to 200,000 BCD during the 1970-71 winter
season. This incremental production should be continued
for as long as is necessary to remove the pressure on the
continued increase in imported RPO prices. The industry
also should take steps to reduce the current sulfur level
of the domestic RPO pool to alleviate the low sulfur RFO
shortage, assuming of course that an adequate price incen-
tive will be maintained on a long term basis.
As a short term solution to the low sulfur RFO shortage,
imports from the Eastern Hemisphere should be continued and
increased to the extent possible without raising prices ex-
cessively. From a long term standpoint, however, the con-
tinued growing reliance on Western Europe for RFO supply
is not as desirable as increased domestic and Western
Hemisphere production. This is true because of the following
factors: 1) the latter production sources are controlled by
U.S. firms and consequently are more responsive to changes in
U.S. demand; 2) shipping distances from South America and the
Caribbean as compared to Eastern Hemisphere sources are
shorter thus requiring a smaller tanker fleet'and 3) Eastern
Hemisphere supply potential is subject to change owing to
many factors, such as air pollution restrictions, which are
outside the control of U.S. based oil companies.
-------
Probably the most satisfactory long term solution to
the RPO supply problem would be to accelerate the increase
in the production capability of Western Hemisphere refineries
It should be noted that presently planned expansions through
the year 1973 are inadequate to meet the growing demand,
particularly for low sulfur RFO. To facilitate the needed
expansion, it will be necessary to develop long term stable
supply sources for low sulfur African crudes, long term
adequate price incentives and methods for the disposition
of the light petroleum fractions which are essentially
byproducts in the Caribbean and South American producing
areas.
-------
III. DATA ORGANIZATION
A. Data Sources
The primary data sources for crude petroleum and
petroleum product statistics are the mineral industry
survey reports published by the United States Department
of the Interior, Bureau of Mines. The major part of the
data compiled for phase 1 was obtained from four Bureau
of Mines publications: "Petroleum Statement, Annual",
"Burner Fuel Oils, Annual", "International Petroleum,
Annual", and "Fuel Sales, Annual".
Residual fuel oil prices were obtained from
"Platt's Oil Price Handbook" and "Platt's Oilgram" daily
price service. Secondary data sources including the
"World Petroleum Report", "Petroleum Facts and Figures"
(API), "Annual Statistical Review" (API) and the "Oil
and Gas Journal" were also used extensively.
B. Reporting Periods
The most recent calendar year for which complete
fuel oil statistics have been compiled and published is
1968. Therefore, 1968 was selected as a basis and the
basic phase 1 data for this year are presented in Tables
1-8, 11 and 13-
In some cases, where current data are essential
to indicate changing trends such as for fuel oil prices
and fuel oil demand statistics, the latest available data
which cover all of 1969 and a part of 1970 have been
included.
-------
C. Geographical Reporting Areas
The geographical region divisions used in this study
are the same as those used by the Bureau of Mines for re-
porting petroleum data.
Domestic statistics are reported on a nation-wide
basis or by Petroleum Administration for Defense (PAD)
district (Figure 1).
International statistics are reported in the
"International Petroleum Annual" on the basis of seven
world areas, and with one minor modification, these areas
also have been used in the present study. The modifica-
tion consisted of dividing the North American area into
two districts covering the United States separately and
Canada, Mexico and Bermuda combined, thus producing a
total of eight areas.
-------
IV. STATISTICS OP RECENT HISTORY OP FUEL OIL
The phase 1 objectives (defined in Section I
of this report) comprise the-compilation of statistical
data covering all aspects of the production and consump-
tion of residual fuel oil. The data are reported in
both tabular and graphical form with specific tables
and figures related to the individual objectives as
follows:
Task Order Item Table No. Figure No.
1 1, 3, 15
2 2, 15
3 6, 7 . 3, 4
4 4, 5, 16 l, 2
5 8, 9 5, 6
Additional statistics not specifically covered by the
task order but which have been compiled at the request
of NAPCA are given in Tables 10-14 and Figures 7-9.
The tables and figures that are shown above
(i.e., Tables 1-16 and Figures 1-9) are discussed in-
dividually with respect to reporting periods, general
content, method of calculation, and purpose. This dis-
cussion is given immediately below.
Tables 1 and 2 include refining data for the
non-communist world subdivided into eight world dis-
tricts. These data cover total refinery throughput,
fuel oil production, net fuel oil imports and exports
-------
TABLE 1
TOTAL REFINERY THROUGHPUT AND FUEL OIL PRODUCTION BY GEOGRAPHIC
(NON-COMMUNIST WORLD)
I
M
1
Area
United States
Canada, Mexico
and Bermuda
Central America
and Caribbean
South America
Western Europe
Middle East
Africa
Asia
Total
Refinery
Thruput
4.063,000
576,891
184,578
1,298,726
3,621,460
711,589
212,303
1,529,419
(All Quantities in 1000 Barrels)
Domestic Crude Imported Crude
Total
87.5
69.2
0.6
58.1
3.8
73.4
60.2
9.7
3.555.125
399,485
1,062
754,187
135,857
522,406
127,864
148,629
Total
••^••••••w
12.5
30.8
99.4
41.9
96.2
26.6
39.8
90.3
507,875
177,406
183,516
544,539
3,485,603
189,183
84,439
1,380,790
AREA - 1968
Fuel Oil Production
Distillate FO
Total
20.7
24.5
20.2
15.6
27.3
2C.O
22.0
15.3
839,373
141,127
37,320
202,215
987,073
142,098
46, 711
234,143
Residual FO
Total
6.8
18.2
35.0
49.1
34.1
43.6
33.4
41.1
275,814
104,742
64,510
637,568
1,234,408
309,953
70,903
628,814
Total
12,197,966 46.3 5,644,615 53.7 6,553,351 21.6 2,630,060 27.3 3,326,712
Data From "International Petroleum Annual 1968", Bureau of Mines
-------
TABLE 2
NET FUEL OIL IMPORT, EXPORT AND CONSUMPTION BY GEOGRAPHIC AREA - 1968
(NON-COMMUNIST WORLD)
Area
United States
Canada, Mexico
and Bermuda
Central America
and Caribbean
South America
Western Europe
Middle East
Africa
Asia
Net Fuel
DFO
48,148
18,367
-
-
93 » 413
-
16,643
30,702
(All Quantities in 1000 Barrels)
Oil Imports Net Fuel Oil Exports
RFO DFO RFO
409,928
27,939
13,789 8,064
75,126 433.912
35.005
74.256 138,560
4,675
17,567
Net Fuel Oil
DFO
887,521
159,494
29.256
127,089
1,080,486
67,842
63.354
264,845
Consumption
RFO
685.742
132,681
78,299
203,656
1,269,413
171,393
75,578
6/,6,381
Total
207.283 508,903
157,446 572,472
2,679,887 3,263,143
Data From "International Petroleum Annual 1968", Bureau of Mines
Mineral Industry Surveys, Annual Petroleum Statement 1968, Bureau of Mines
-------
and net consumption. The net fuel oil import or
export figures represent the sum of the exports and
imports for each area. It is evident from the data
in these tables that South America and the Middle
East areas are the only net exporters of RFO while
the United States is the major importer, receiving
about 80% of the world total of imported RPO.
It also is evident from Tables 1 and 2
that although the United States is a major consumer
of RPO, (only Western Europe uses more) it pro-
duces the least amount based on volume percent of
total refinery throughput. On this latter basis,
the 1968 production of RFO is shown in Table 1 for
the non-communist world and is seen to range from
a low of 6.8% in the United States to a high of
49.1$ in South America, with an overall average of
27-3$. The world consumption of fuel oil shown in
Table 2 differs from the world production listed in
Table 1 by the amount of inventory change which is
neglected in these tables. Further, it should be
noted that the sizable discrepancy between the
total export and import quantities shown in Table 2
is not explained in the data source.
-------
Table 3 includes total refinery throughput, total
operable refining capacity, and total throughput as per-
cent of total refining capacity, i.e., stream efficiency.
The overall average stream efficiency is 91$ ranging from
a low of 80.7$ for Africa to a high of 97.5$ for South
America with the United States second at 95.1$.
Table 4 shows the quantity of fuel oil trans-
ferred between PAD districts broken down by method of
transfer. It should be noted that residual fuel oil is
not transferred between PAD districts by pipeline. The
net transfer data indicate that PAD districts 1 and 2 are
net importers and districts 3 and 5 are net exporters of
RFC. No transfer of RPO was made into or out of district
*J during 1968. Figure 1 shows the PAD district boundaries
superimposed on a map of the United States.
Table 5 includes domestic fuel oil production,
foreign fuel oil imports and net fuel oil consumption
broken down by PAD district. Net fuel oil consumption is
the sum of the net transfer from other PAD districts,
foreign imports and domestic production. Again, inventory
changes are neglected. It is obvious from Table 5 that
PAD district 1 is the major consumer of foreign imports,
receiving over 95$ of the total.
Table 6 includes a yearly arithmetic average sulfur
content of each grade of domestically produced fuel oil
for the years 1968 and 1969, broken down by PAD district.
Also shown are the minimum and maximum sulfur values of
the samples used in the calculation of the arithmetic
averages. These data are reported in the "Burner Fuel
Oils, Annual" (1-a) for geographical areas that differ
slightly from the PAD districts (Figure 1) used elsewhere
in this report; therefore, to maintain a consistent basis,
the data have been adjusted to conform to the PAD districts
-------
TABLE 3
TOTAL REFINERY THROUGHPUT AND TOTAL OPERABLE REFINING CAPACITY
BY GEOGRAPHIC AREA - 1968
(NON-COMMUNIST WORLD)
Area
United States
Canada, Mexico
and Bermuda
Central America
and Caribbean
South America
Western Europe
Middle East
Africa
Asia
(1)
Total
Refinery
Thruput
Bbl/Day
11,100,000
1,576,000
504,000
3,548,000
9, 895,000
1,944.000
580,000
4.179,000
(2)
Total Operable
Refining Cap.
Bbl/Day
11,658,000
1,733.000
540,000
3,639,000
11,598,000
2,154.000
719,000
4,542,000
Total Thruput
As % of Total
Refining Cap.
95.1
91.0
93.3
97.5
85.4
90.3
80.7
92.0
Total
33.327,000
36,573.000
91.0
(1) Aver, for entire year: Source, Inter. Pet. Annual 1968
(2) As of Jan. 15. 1969. ""orld Petroleum Report, 1969
-------
TABLE 4
FUEL OIL TRANSFERS BETWEEN PAD DISTRICTS - 1968
(All Quantities in 1000 Barrels)
PAD
District
I
II
III
IV
V
Method Used
To Transfer
Fuel Oil
Pipeline
Tanker
Barge
Total
Pipeline
Barge
Total
Pipeline
Tanker
Barge
Total
Pipeline
Pipeline
Tanker
Total
In
160, 515
122,704
1,452
284,671
20,344
8,542
28,886
5.176
5,176
543
8,195
1.363
9,558
DFO
Out
6,827
6,82?
5,375
5,375
175.512
123,884
9,994
309,390
7,059
183
183
Net
153,688
122,704
1,452
277,844
14,969
8,452
23, 511
170,336
123,884
9,994
304.214
6,516
8,195
1,180
9,375
In
35,083
332
35,415
6,926
6,926
-
-
62
62
RFO
Out Net
35,083
332
35,415
6,926
6,926
35.047 35,047
7,258 7,258
42,305 42,305
-
98 36
98 36
DFO - Distillate Fuel Oil
RFO . Residual Fuel Oil
-------
TABLE 5
CO
I
SUMMARY OF FUEL OIL PRODUCTION, IMPORTS AND CONSUMPTION BY PAD DISTRICT - 1968
PAD
District
I
II
III
IV
V
Domestic Fuel
Oil Production
DFO RFO
132,580 40,829
233.735 56,050
368,991 60,015
32,138 10,765
71,929 108,155
(All Quantities in 1000 Barrels)
Foreign Fuel Net Fuel Oil
Oil Imports Consumption
DFO RFO
45,502 394,528
360 573
1,290 8,271
54
996 6, 502
DFO RFO
455.926 470,772
257,606 63,549
66,067 25,981
25,622 10,819
82,300 114,621
Net Fuel Oil
DFO
% %
Import Prod .
70.9 29.1
9.3 90.7
11.8 88.2
0 125.4
12.6 87.4
Consumption
RFO
% %
Import Prod.
91.3 8.7
11.8 88.2
o 231.0
0.5 99.5
5.7 94.3
Total
839.373 275.814 48,148 409,928 887,521 685,742
Fuel Oil Consumption values neglect change in inventory.
-------
TABLE 6
SULFUR CONTENT OF DOMESTIC FUEL OILS
GRADES 1, 2, 4. 5. 6 BY PAD DISTRICT - 1968 AND 1969
Sulfur Content, Wt. %
PAD
District
I
II
in
IV
V
Fuel
Oil
Grade
1
2
4
5
5
6
1
2
4
5
5
6
1
2
4
5
5
6
1
2
4
5
5
6
1
2
4
5
5
6
(Light)
(Heavy)
(Light)
(Heavy)
(Light)
(Heavy)
(Light)
(Heavy)
(Light)
(Heavy)
Range
Min.
0.00
0.03
0.45
0.65
0.60
0.60
0.00
0.05
0.22
0.60
0.60
0.52
0.00
0.02
0.39
0.98
1.5
1.2
0.01
0.16
1.0
1.9
1.0
1.1
0.00
0.02
1.0
3.0
0.58
0.69
68/69
Max.
0.22
0.48
2.0
1.8
1.3
2.9
0.45
0.56
2.0
3.4
3.4
4.1
0.41
0.37
0.98
1.4
3.4
3.3
0.19
0.64
2.7
3.0
3.0
3.3
0.56
0.74
2.7
3.4
2.0
2.4
Arith.
1968
0.05
0.19
1.0
0.97
0.96
1.3
0.10
0.28
0.87
1.4
1.4
1.5
0.14
0.23
0.75
1.3
2.1
2.1
0.07
0.36
2.2
2.6
2.0
2.2
0.14
0.28
1.9
3.4
1.4
1.2
Average
1969
0.05
0.20
0.96
1.0
0.88
1.4
0.11
0.28
0.78
1.4
1.5
1.7
0.15
0.22
0.69
1.2
2.3
2.2
0.06
0.32
1.9
2.4
1.7
2.2
0.11
0.26
1.9
3.0
1.2
1.3
Data Source:
Bureau of Mines, Petroleum Products Survey,
"Burner Fuel Oils", 1968 & 1969
-------
I
ro
o
i
REFERENCE: ' ''"
Mineral Industry Surveys, U.S. Deportment of the Interior,
Bureau of Mines Petroleum Statement, Annual (1968).
FIGURE I
PETROLEUM ADMINISTRATION FOR DEFENSE (PAD) DISTRICTS
R.I.
(Incl. Alaska
and'Hawaii)
/ COLORADO
'< SOUTH'
\CAROLINA
[KANSAS/^
i tL
S : - ' \
''{ \ | '^ALABAMA] GEORGIA
\\ L...1 \ r-r^—
-------
i
ro
. /N.J.
}
KANSAS
'• MISSOURI
ARKANSAS
/•.
ARKANSAS"
-LdUISlA'NA
LOUISIANA GULF
COAST
REFERENCE.
Mineral Industry Surveys, U.S. Department of the Interior,
Bureau of Mines Petroleum Statement, Annual (1968).
TEXAS GULF COAST
FIGURE 2
-------
I
ro
°AKOTA UNNESOTA-..
s£i«au S°;
CENTRAL f
TENNESSEE ..
OKLAHOMA i ARKANSAS// ______ .—*-•* SOUTH
: '" ' \ NOUN*
/ I j 0 \
8
X ARIZONA! •
ALASKA R
HAWAII 0
REFERENCE:
Mineral Industry Surveys, U.S. Department of the Interior,'
Bureau of Mines, Petroleum Products Survey No. 56.
FIGURE 3
-------
Also shown for comparison are the Bureau of Mines Refining
Districts (Figure 2) and the Geographical Areas of
the National Survey of Burner Fuel Oils (as shown in Fig-
ure 3). Figure 4 illustrates graphically the trends in
sulfur content for RFO grades 4, 5 and 6 covering the
period 1962-1969. The data used in this plot are taken
from the reference cited above (i.e., 1-a).
The expression "current sulfur level" as used in
this report is defined as the weighted average sulfur con-
tent of the domestic RFO pool. It also applies to the im-
ported RFO pool. The actual value for the current sulfur
level is not known accurately for the years 1960-1969 with
the exception of 1965 when a study (6-b) was made by poll-
ing United States refiners. Based on data representing
66$ of the total RFO production for 1965, the current sul-
fur level was calculated to be 1.76$ W. All other pub-
lished studies and literature references, which have been
encountered in this study use the sulfur content values
shown in the "Burner Fuel Oils, Annual"; however, as was
pointed out previously, these latter values are arithmetic
averages based on limited sampling. This lack of detailed
data presents a serious handicap, particularly when the
intended analysis stresses the role of sulfur content.
The "Burner Fuel Oil, Annual" data indicate that
for the period 1964-1969 the current sulfur level has re-
mained essentially constant with perhaps a slight increase.
It should be noted that for the year 1965 the arithmetic
average RFO pool sulfur is listed as 1.65$ W versus the 1.76$
W value cited in the preceding paragraph. Since these data
are not statistically accurate enough to establish a trend,
the range of 1.65 to 1.85$ W was selected as indicative of
the current sulfur level of the domestic RFO pool for the
period 1965-1975.
-------
i
IV)
-Cr
I
ui
2.0-
1.9
1.8
1.7
1.6
UJ
a.
I ''5
UJ
5
.- 1.4
O
o
15
CO
1.3-
1.2
1.0-
0.9-
0.8
1961
FIGURE 4
TRENDS IN SULFUR CONTENT OF BURNER FUEL OILS
1962
1963
GRADE 4
REFERENCE:
Burner Fuel Oils, 1969, Mineral industry
Surveys, U.S. Bur Mines.
1964 1965
CALENDAR YEAR
1966
1967
1968
-------
Table 7 reports the sulfur content of the RPO
imported into PAD district 1 for the years 1968 and 1969.
Since the sulfur content data are given for a range, the
exact weighted average for the total import pool cannot
be calculated. However, by assuming a minimum value of
0.5$ W for the "0-1$" category and a maximum value of
3-0% W for the "over 2.2%" category, it is possible to
calculate minimum and maximum weighted average sulfur
content values that probably are quite close to the
actual value. For 1968 and 1969 these calculated values
are 1.6$ min/2.3$ max and 1.5$ min/2.1$ max, respectively,
These results indicate a small reduction in the overall
pool sulfur content for 1969 owing to the greater per-
centage of less than 1% sulfur fuel oil imported that
year. The percentage of under 1$ sulfur RFO imported
into PAD 1 increased from 13.8 in 1968 to 22.5 in 1969
while the volume of imports increased by 12$ from a
daily average of 149,205 barrels per calendar day (BCD)
to 272,1^6 BCD for the same period. The total volume
imported in 1970 is expected to increase about 17$ over
the 1969 level, and most of the increase will be low
sulfur fuel oil.
Data relating to the sulfur content of imported
fuel oil are not published by the Bureau of Mines. How-
ever, for each shipment of fuel oil into the United
States, documents which specify quantity, sulfur content
and point of origin are available at the office of the
Oil Imports Administration. At present, these documents
(i.e., shipping invoices) are filed (by month) in their
original form and receive no further treatment. Compila-
tion and publication of these data would prove very use-
ful to future studies relating to RFO.
-------
TABLE 7
i
ro
CTv
I
Sulfur
Content
Wt. %
0-1.0
1.01-1.5
1.51-2.2
over 2.2
Total
Gale.
SULFUR CONTENT OF FOREIGN IMPORTS OF RESIDUAL FUEL OIL
TO PAD 1 DISTRICT - 1968 AND 1969
1968
Average BbL/Day
No. 4 No. 5 & 6 Total
4,157 145,048 149,205
14,064 58,497 72,561
30,286 433,558 463,844
1,588 390,747 392,335
50,095 1,027,850 1,077,945
Min. Overall Sulfur Content
Max. Overall Sulfur Content
Imports to PAD I, Bbl/Year
Imports to U.S.* Bbl/Xear
1969
% of Average Bbl/Day
Total No. 4 No. 5 & 6 Total
13.8 20,429 251,717 272,146
6.7 9,910 74,347 84,257
43.0 30,708 434,577 465,285
36.5 14,471 372,013 386,484
100.0 75,518 1,132,654 1,208,172
1968 1969
1.6 Wt. % - 1.5 Wt. %
2.3 Wt. $ - 2.1 Wt. %
394,528,000 96.2$ 440,983,000
409, 928, 000 100$ 46!, 611, 000
$ of
Total
22.5
7.0
38.5
32.0
100.0
95.5$
100$
-------
Table 8 is a compilation of residual fuel oil
prices for East Coast ports, Gulf ports and inland dis-
tricts for the years 1968 and 1969 with spot prices up
to 9/28/70. It can be seen that fuel oil prices remained
almost constant during 1968, 1969 and the first quarter
of 1970. Prom about April 1970 until the present, how-
ever, prices have increased very rapidly owing to a
variety of reasons which include increased demand for
low sulfur fuel oil and a tanker shortage. The posted
price in New York harbor for high sulfur No. 6 fuel oil
increased by 39% between March and September 1970, and,
by 60$ for maximum 1% sulfur No. 6 fuel oil during the
same period. Concurrently, price increases of the same
magnitude were in effect throughout the United States.
Table 9 lists posted railroad shipping rates for
residual fuel oil in tank cars, 15,000 gallons and
larger, for distances up to 300 miles. It should be noted
that special contract rates which differ considerably '
from posted rates are common but these must be calculated
on an individual basis. Figures 5 and 6 show the data in
Table 9 graphically.
Table 10 is a compilation of the detailed ASTM
specifications applicable to the six grades of distillate
and residual fuel oil.
Tables 11 and'12 present total sales of residual
fuel oil in the United States by end use for the years
1964 through 1975. Projected sales for the period 1970-
1975 are based on the total demand projection shown in
Table 19 and the trend of end use as a percent of the
total, for the period 1964-1969, from Table 11. Figure 7
shows the actual and projected sales of RFO, as a per-
centage of total sales, for each use category for the
-------
TABLE 8
AVERAGE RESIDUAL FUEL OIL PRICES FOB TERMINAL ($/BBL)
FOR EAST COAST PORTS, GULF PORTS AND INLAND DISTRICTS
Period
Ending
12/68
6/69
12/69
3/70
5/70
7/20/70
8/31/70
9/28/70
Period
6/69
12/69
3/70
5/70
7/20/70
8/3V70
9/28/70
Period
Ending
12/68
6/69
12/69
3/70
5/70
7/20/70
3/31/70
9/28/70
East Coast Ports
Mew lorK Harbor
No
Max
3
3
3
3
3
3
4
• 4
No. 5
12S Max 123
.19
.19
.15
.15
.49
.76
.11
4.11/4.39
2.83
2.83
2.83
2.83
3.33
3.72
4.07
4.07
No. 6
NSG
2.20
2.20
2.20
2.20
2.37
2.70
3.05
Max 12S
2.50
2.48
2.48
2.55
2.93
3.25
3.60
Max 2.22S
2.35
2.35
Discon-
tinued
-
-
-
3.05 3.60/4.10
Boston
No. 4 No
4
Reg.
3.53
3.53
3.57
3.38
3.50
3.77
4.12
. 5
Reg.
3.
3.
2.
2.
3.
3.
3.
25
05
91
91
24
51
86
No. 6
NSG
2.32
2.32
2.32
2.14
2.35
2.65
3.00
.12A.62 3.86/4.36 3.00/3.50
Providence
No. 4
Reg.
3.34
3.34
3.40
3.40
3.55
3.81
4.16
4.16
No. 5
Reg.
3.21
3.21
3.24
3.24
3.28
3.51
3.86
3.86
No.
NSG
2.40
2.40
2.40
2.40
2.35
2.61
2.96
2.96/3.
6
46
No. 4
New Jersey
No.
Max 0.72S Max
3.30
3.30
3.25
3.30
3.72
3.97
4.32
4.32
3.
3.
3.
3.
3.
3.
4.
5 No. 6
l^S Max 12S
05 2.50
05 2.53
05 2.51
12 2.58
47 2.96
74 3.25
09 3.60
4.09 3.60/4.10
Baltimore
No. 4 No. 5
Reg.
3.38
3.38
3.38
3.09
3.33
3.59
3.94
(4.46)/4.
Maxl^S
Philadelphia
No. 4
Reg. Max
3.53
3.40
3.29
3.29
3
3
4
4
Wilmington,
No. 4 No. 5
Reg. Reg.
3.43 3.10
3.43 3.10
3.40 2.98
3.40 2.98
3.40 2.97
3.71 3.44
4.06 3.89
4.06 3.89
No.
5 No.
6
0.72S Reg. Max 12S NSG Max 12S
3.
3.
3.
3.
.61
.92
.27
.27
N.C.
No. 6
NSG
2.28
2.28
2.28
2.28
2.41
2.63
3.08
3.08
27
16
03
03
4.
No. 4
Reg.
3.90
3.90
3.90
3.90
3.90
3.90
4.25
4.25
2.30
2.30
2.30
2.22
3.29 2.89
3.72
4.07
07/4.31 - 3.
Savannah
. No. 5 No. 6
Reg. NSG
3.04 2.32
3.04 2.32
3.04 2.32
3.04 2.32
3.04 2.35
3.44 2.69
3.79 3.08
3.89 3.08
3.07
3.07
-
-
-
3.15
3.50
60/4.10
Reg.
3.12
2.94
2.82
2.82
3.05
3.32
3.67
71 3.67
No. 6
NSG Max 12S
2.33
2.15
2.18
2.04
2.28
2.54
2.89
- 3.63/4.13
Norfolk
No. 4 No
Reg. Re
3.28 2.
3.16 2.
3.H 2.
3.11 2.
3.35 3.
3.71 3.
4.06 3.
4.06 3.
.5 No. 6
*. NSG
89 2.29
83 2.29
84 2.29
84 2.03
08 2.27
44 2.63
89 3.08
89 3.08
New Haven
No. 4
Reg.
3l*T
3.60
3.60
3.60
3.77
3.77
4.12
4.12
No. 5
-
-
-
-
-
-
-
-
2
No. 6
NSG
2.39
2.39
2.39
2.39
2.39
2.80
2.96
-------
TABLE 8 (Cont'd)
East Coast Ports
i
ru
Period
Ending
12/o8
6/69
12/69
3/70
5/70
7/20/70
8/31/70
9/28/70
Period
Ending
12/68
6/69
12/69
3/70
5/70
7/20/70
8/31/70
9/28/70
Period
Ending
6/69
12/69
3/70
5/70
7/20/70
8/31/70
9/28/70
Portland
No. 4
Reg.
-
-
-
-
—
4.16
4.16
No. 5
Reg.
3.*23
3.08
3.08
3.28
3.53
3.88
3.88
No. 6
NSG
274T
2.41
2.44
2.54
2.82
3.09
3.54
3.54
Charleston
No. 4
Reg.
-
-
-
-
—
4.06
4.06
No. 5
Reg.
2796
2.96
2.96
2.96
2.96
3.44
3.89
3.89
No. 6
Reg.
2.34
2.34
2.34
2.34
2.38
2.63
3.08
3.08
Miami
No. 4
No. 5 No
. 6
NSG
2.33
-
-
-
-
-
-
-
2.
2.
2.
2.
2.
3.
3.
33
33
33
33
66
05
05
Gulf Ports
Baton Rouge
No.
-
-
-
-
-
-
-
-
-
4 No. 5
Reg.
2.83
2.83
2.83
2.83
2.83
3.05
3.40
3.40
No. 6
NSG
2.30
2.30
2.30
2.30
2.30
2.55
2.90
3.17
New Orleans
No.
-_
-
-
-
-
-
-
-
-
4 No. 5
Reg.
2.83
2.83
2.83
2.83
2.83
3.08
3.43
3.43
No. 6
NSG
2.30
2.30
2.30
2.30
2.30
2.55
2.90
3.17
Houston
No. 6
NSG
2.15
2.15
2.15
2.02
2.24
2.52
3.05
3.05
PAD Districts 1 & 2
Albany
No. 4
Reg.
3767"
3.67
3.67
3.67
3.67
3.94
4.29
4.29
No. 6
NSG
2.38
2.38
2.38
2.44
2.44
2.94
3.32
4
3.32/3.82 4
No. 5
Max 12S
3.70
3.70
3.70
3.70
3.70
3.70
,20(NSG)
.20(NSG)
Buffalo
No. 6
Max 1£S
3.42
3.42
3.42
3.42
3.42
3.42
-
Jacksonville
(Inland)
No. 6
NSG
2.32
2.32
2.32
2.32
2.35
2.69
3.07
3.07
Tampa
NoT6
NSG
2.32
2.32
2.32
2.32
2.33
2.47
3.08
3.08
Detroit
No. 6
NSG
3TTT
3.17
3.17
3.17
3.17
3.17
3.88
3.88
No. 5
No. 5
Max 1#S NSG
3.72
3.72
3.72
3.72
3.72
3.72
4.20
4.41
3T61
3.61
3.61
3.61
3.61
3.61
4.10
4.30
No. 6
Max 1#S
3.51
3.51
3.51
3.51
3.51
3.51
3.88
4.10
No. 6
NSG
3.40
3.40
3.40
3.40
3.40
3.40
3.78
3.99
Port
Everglades
No. 6
NSG
2.30
2.30
2.30
2.30
2.33
2.63
3.05
3.05
Toledo
No.
NSG
3.78
3.78
3.78
3.78
3.78
3.99
4.10
-
5 No. 6
NSG
3.57
3.57
3.57
3.57
3.57
3.78
3.78
-------
TABLE 8 (Cont'd)
PAD
Districts 1
& 2 (Inland)
Chicago Area
i
U)
o
1
Period
Ending
12/68
6/69
12/69
3/70
5/70
7/20/70
8/31/70
9/28/70
No.
Low-Sul
3.89
3.89
3.96
3.99
4.12
4.20
4.41/4.62
4.62
5
Hi-Sul
3.68
3.57
3.68
3.78
3.91
3.99
4. 20/4. U
4.41
Max 0.656S
3.57
3.47
3.65
3.68
3.95
4.10
4.10
4.41/4.51
No. 6
Max 1$S
3.36
3.31
3.44
3.47
3.55
3.89
3.88/4.10
4.30
NSG
3.15
3.05
3.15
3.26
3.39
3.68
3.68/3.99
3.99
Minneapolis
St. Paul
No. 5
Hi-Sul
3.89
3.89
3.89
3.99
3.99
4.20
4.62
4.62
No. 6
Hi-Sul
3.57
3.57
3.57
3.57
3.57
3.78
4.20
Oklahoma
No. 6
Reg.
1.65
1.70
1.70
2.00
2.00
2.62
2.73
2.73
NSG - No Sulfur Guarantee
Reg - Regular Grade
PAD Dist. 3
Arkansas
No. 5 No. 6
Reg. NSG
3.00
Data Source: Platt's Oil Price Handbook. 46th Ed., and
Platt's Oilgram Daily Price Service
Prices shown for 1968 and 1969 periods are average for 6-month period.
3/70 and 5/70 prices are average for month.
7/20, 8/31 and 9/28 prices are daily averages.
-------
TABLE 9
POSTED RAILROAD SHIPPING RATES APPLICABLE TO RESIDUAL HJEL OIL SHIPMENT
IN TANK CARS OF 15.000 GALLONS AND LARGER
i
UJ
Shipping
Radius
Miles
40
50
100
200
300
Shipping
Radius
Miles
40
50
100
200
300
Shipping Rates, 4/100 Lb.
Initial
10. 500 Gal
33.0
34.0
47.5
56.5
62.0
Shipping
Initial
10,500 Gal
0.825
0.680
0.475
0.282
0.207
Excess Over
10.500 Gal
22.4
23.0
33.5
38.5
40.0
Rates, f/100
Excess Over
10,500 Gal
0.560
0.460
0.335
0.192
0.133
Overall
IS. 000 Gal
29.8
30.7
43.3
51.1
55.4
Lb-Mile
Overall
15,000 Gal
0.745
0.614
0.433
0.255
0.185
Shipping Rates,
-------
i
OJ
rv>
I
co
UJ
QC
O
z
Q.
(L
I
CO
Q
UJ
CO
O
Q.
FIGURE 5
POSTED RAILROAD SHIPPING RATES FOR RESIDUAL FUEL OIL
IN TANK CARS OF 15,000 GALLONS AND LARGER
25
50
100 150 200
SHIPPING RADIUS, MILES
250
-------
UJ
I
Ui
i
I
_l
Ul
tr
-------
TABLE 10
i
00
Test
Gravity, °API
Flash Point, Pensky-Martens Closed Tester, °I
Viscosity, Kinematic 100°F Centistokes
Viscosity, Saybolt Furol 122°F, Seconds
Pour Point, °F
Sulfur Content, Wt. %
Ramsbottom Carbon Res. on 10$ Residue, Wt. %
Corrosion - 3 Hours at 122°F, No.
Water and Sediment, Vol. %
Sediment by Extraction, Wt. %
Ash, Wt. %
Distillation Test, on Volume Recovered Basis
Initial Boiling Point, °F.
10$ Recovery, °F.
50$ Recovery, °F.
90$ Recovery, °F.
End Point, °F.
, OIL SPECIFICATIONS
ASTM D396 Requirements
ASTM
Method
D287
D93
D445
D88
D97
D129
D524
D130
D1796
D473
D482
D86
No.l FO
Min/Max
35/-
100/-1
1.4/2.2
-
-/o
-/0.5
-/0.15
-/3
-/Trace
-
-
No. 2 FO
Min/Max
30/-
100/-
2.0/3.6
-
-/20
-/0.7
-/0.35
-
-/O.IO
-
'
No. 4 FO
Min/Max
—
130/-
5.8/26.4
-
-/20
-
-
-
-/0.50
-
-/O.IO
No.5FO(L)
Min/Max
^
130/-
32/65
-
-
-
-
-
-/I. 00
-
-/o.io
No.5FO(H)
Min/Max
.
130/-
75/162
23/40
—
-
-
-
-/I. 00
-
-/o.io
No.6 FO
Min/Max
150/-
—
45/300
—
-
-
-
-
-A>.5<
-
-/420 -/440
-/550 540/640
1 Tag Closed Tester, D56
-------
TABLE 11
i
LO
U1
I
SALES OF RESIDUAL FUEL OIL BY END USE IN THE UNITED STATES
1964-1969
(1000 Barrels)
Use
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
All Other
1964
126,215
157,176
43.098
97,595
5,350
83,024
35,568
8,606
1965
156,254
140,602
34.354
114,884
4,001
73,639
40,380
10,004
1966
167,471
141,050
35,177
140, 642
3,792
73,641
41,861
10,338
1967
175,990
131.819
37,880
158,417
5,494
80,680
40,465
8,794
1968
174,326
135,664
39,329
184,956
4,296
87,575
34,990
8,348
1969
178,095
130, 654
36,559
247,634
3,381
85,581
31,750
8,875
Total
556,632 574,118 613,972 639,539 669,484 722,529
Use
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
All Other
Total
100
100
(% of Total)
1964
22.67
28.24
7.74
17.54
0.96
14.91
6.39
1.55
1965
27.22
24.49
5.98
20.01
0.70
12.83
7.03
1.74
1966
27.28
22.97
5.73
22.91
0.62
11.99
6.82
1.68
1967
27.52
20.61
5.92
24.77
0.86
12.62
6.33
1.37
1968
26.04
20.26
5.87
27.63
0.64
13.08
5.23
1.25
1969
24.65
18.08
5.06
34.27
0.47
11.84
4.39
1.24
100
100
100
100
-------
TABLE 12
PROJECTED SALES OF RESIDUAL FUEL OIL BY END USE IN THE UNITED STATES
1970-1975
Use
(1000 Barrels)
i
uo
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
All Other
Total
197C
190,000
133.000
39,000
309,000
3,000
95,000
30,000
9,000
1971
202,000
134,400
42,000
380,000
3,600
106,000
28,000
9,000
1972
212,000
134,000
44,000
463,000
3,000
118,000
24,000
9,000
1973
220,000
129,000
45,000
544,000
3,300
128,000
26,700
10,000
1974
225,000
122,000
47,000
627,000
3,600
140,000
29,400
11,000
1975
227,000
110,000
48,000
718,000
4,000
149,000
31,000
12,000
808,000 905,000 1,007,000 1,106,000 1,205,000 1,299,000
(% of Total)
Use
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
All Other
Total
1970
23.5
16.5
4.8
38.2
0.4
11.8
3.7
1.1
100
1971
22.3
14.9
4.6
42.0
0.4
11.7
3.1
1.0
100
1972
21.1
13.3
4.4
45.9
0.3
11.7
2.4
0.9
100
1973
19.9
11.7
4.1
49.1
0.3
11.6
2.4
0.9
100
1974
18.7
10.1
3.9
52.1
0.3
11.6
2.4
0.9
100
1975
17.5
8.5
3.7
55.2
0.3
11.5
2.4
0.9
-------
I
UJ
u.
O
UJ
O
(r
UJ
o
UJ
55
50
45
40
35
30
25
ffi
e
tr 20
u.
O
S 15
_i
10
5
0
FIGURE 7
SALES OF RESIDUAL FUEL OIL BY END USE IN THE UNITED STATES
VESSELS
MILITARY
ALL OTHER
""*^
0
^^-
1
I 1 1 1 T
1964 1965 1966 1967
1968
1969 1970
CALENDAR YEAR
1971
1972 1973 1974
-------
period 1965-1975.
Tables 13 and 14 present total sales of distil-
late fuel oil in the United States by end use for the
years 1964 through 1975. Projected sales for the period
1970-1975 are based on the extrapolated total sales vol-
ume shown in Figure 8 and the trend of end use as a per-
cent of the total, for the period 1964-1969, from Table
13. Figure 9 shows the actual and projected sales of
DFO, as a percentage of total sales, for each use cat-
egory for the period 1965-1975.
Table 15 presents overall United States RFO
statistics for the period 1960-May 1970. Included are
total crude runs to stills, total RFO production, RFO
production as volume percent of crude charged, and RFO
imports. The percent of total RFO used is broken down
into domestic and foreign import components, thus show-
ing the growing dependence of the United States on for-
eign sources for RFO. The importance of RFO imports is
illustrated by the following: in I960 the split was
58.8$ domestic and 4l.2$ imported whereas it was 30.3$
domestic and 69.7$ imported for the period of January
to May 1970.
Table 16 presents RFO statistics for PAD dis-
trict 1 for the period 1965 through May 1970. It can
be seen that domestic production including imports from
PAD districts 3 and 5 remained relatively static while
foreign imports increased steadily. The percent of the
total RFO imported into the United States and consumed
in PAD 1 increased from 92.3$ in 1965 to 96.8$ in 1970.
Thus, it appears that the east coast area (PAD 1) has
become increasingly dependent on imported RFO. In 1965
imported RFO represented 81.8$ of total consumption
whereas by 1970 this had increased to 90.7$.
-------
TABLE 13
SALES OF DISTILLATE FUEL OIL ffif END USE IN THE UNITED STATES
1964-1969
(1000 Barrels)
i
uo
Use
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
On-Highway Diesel
Off-Highway Diesel
All Other
Total
1964
451.860
36,007
10, 576
3.849
88,198
16,001
13.609
76,131
41.403
9.917
1965
475,992
42,484
10,430
3,661
86,436
15,532
14,953
73,776
50,346
13,281
1966
472,778
47,108
10,485
3,612
89,104
16,642
16,303
81, 516
54.260
17,905
1967
501,026
44,997
8,997
2,858
88,688
17,478
17,325
(1)
(1)
147,831
1968
510,682
45,795
9,975
8,509
84,030
18,235
12.593
124,082
47,691
11,508
1969
511.768
42,456
13,867
12, 158
86,429
18,877
13,958
138, 81A
49,439
12, 534
747.551 786,891 809,713 829,200 873,100 900,300
Use
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
On-=fiighway Diesel
Off-Kighway Diesel
All Other
Total
(% of Total)
1964
60.4
4.8
1.4
0.5
11.8
2.1
1.8
10.2
5.5
1.5
1965
60.5
5.4
1.3
0.5
11.0
2.0
1.9
9.4
6.4
1.6
1966
58.4
5.8
1.3
0.4
11.0
2.0
2.0
10.1
6.7
2.3
1967
60.4
5.4
1.1
0.3
10.7
2.1
2.1
(1)
(1)
17.9
1968
58.5
5.2
1.1
1.0
9.6
2.1
1.4
14.2
5.5
1.4
1969
56.8
4.7
1.5
1.4
9.6
2.1
1.5
15.4
5.5
1.5
100
100
100
100
100
100
-------
TABLE 14
PROJECTED SALES OF DISTILLATE RJEL OIL BY END USE IN THE UNITED STATES
1970-1975 :
(1000 Barrels)
i
-Cr
O
Use
Heating
Industrial (Excluding Oil Co.)
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
On-Highway Diesel
Off-Highway Diesel
All Other
Total
1970
522,000
48,000
12,000
14.000
86,000
20,000
14.000
153.000
51,000
11,000
1971
532,000
50,000
12,000
15,000
85,000
20,000
14,000
168,000
53,000
12,000
1972
542,000
52,000
13,000
17,000
83,000
21,000
14.000
182,000
55,000
13,000
1973
553,000
53.000
13.000
18,000
82,000
21,000
14,000
199,000
56,000
13,000
1974
561,000
55.000
14,000
20,000
80,000
22,000
14,000
214,000
58,000
15,000
1975
570,000
56,000
14,000
22,000
78,000
23,000
14,000
232,000
60,000
15,000
931,000 961,000 992,000 1,022,000 1,053,000 1,084,000
(% of Total)
Use
Heating
Industrial
Oil Company
Electric Utility Co.
Railroads
Vessels
Military
On-Highway Diesel
Off-Highway Diesel
All Other
.eluding Oil Co.)
1970
56.1
5.2
1.3
1.5
9.2
2.1
1.5
16.4
5.5
1.2
1971
55.4
5.2
1.3
1.6
8.8
2.1
1.5
17.4
5.5
1.2
1972
54.7
5.2
1.3
1.7
8.4
2.1
1.4
18.4
5.5
1.3
1973
54.0
5.2
1.3
1.8
8.0
2.1
1.4
19.4
5.5
1.3
1974
53.3
5.2
1.3
1.9
7.6
2.1
1.3
20.4
5.5
1.4
1975
52.6
5.2
1.3
2.0
7.2
2.1
1.3
21.4
5.5
1.4
Total
100
100
100
100
100
-------
1,200
CE
<
UJ
fr
UJ
a.
uj
-------
I
XT
ru
65
60
55
50
fe 45
§ 40
(T
UJ
Q.
35
to
=3
i 30
CD
O
u.
O
(O
UJ
25
20
15
10
0 -
FIGURE 9
SALES OF DISTILLATE FUEL OIL BY END USE IN THE UNITED STATES
VESSELS
RAjLROADS
OFF-HIGHW/W DIESELS_
INDUSTRY (EXCLUDING" oil "
1964 1965 1966 1967 1968 1969 1970
CALENDAR YEAR
1971
1972
1973
1974
-------
LO
I
TABLE 15
DOMESTIC AND IMPORTED RESIDUAL FUEL OIL STATISTICS FOR OVERALL UNITED STATES
I960 THRU MAY 1970
(All Quantities in 1000 Barrels)
Year
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1st Quarter
1970
Thru May
1970
Total Crude
Runs to Stills
2,952,539
2,987,158
3,069,631
3,170,652
3,223,329
3,330,842
3,447,193
3,582,594
3,774.360
3,880,098
977,576
1,619,925
Total RPO
Production
332,147
315,577
295,679
275,910
266,825
268, 567
263,961
275,956
275.814
265,906
73,549
111,054
Vol. % RFO
on Crude
11.25
10.56
9.63
8.70
8.28
8.06
7.66
7.70
7.30
6.85
7.52
6.85
Imported
RFO
233,208
243,268
264,314
272,753
295,771
345,187
376,795
395.939
409,928
461. 611
171,015
255,144
Total
RFO
565,355
558,845
559,993
548,663
562,596
613,754
640,756
671,895
685,742
727, 517
244, 564
366.198
% of Total RFO
Domestic
58.75
56.47
52.80
50.29
47.43
43.76
41.20
41.07
40.22
36.55
30.07
30.33
Imported
41.25
43.53
47.20
49.71
52.57
56.24
58.80
58.93
59.78
63.45
69.93
69.67
Source: API, Petroleum Facts & Figures
-------
TABLE 16
DOMESTIC AND IMPORTED RESIDUAL FUEL OIL STATISTICS FOR PAD 1 DISTRICT
1965 THRU MAY 1970
(All Quantities in 1000 Barrels)
i
.t
XT
1
Year
1965
1966
1967
1968
1969
1st Quarter
1970
Thru May
1970
Produced
in PAD 1
35,782
39.446
40,941
40,829
42,257
10,710
16,082
Domestic RFO
Imported From
PAD 3 & 5
35,081
31,663
30,925
35,415
27,354
6,183
9,138
Total
Domestic
70,863
71,109
71,866
76.244
69,611
16,893
25,220
Foreign
Import
318,634
357,907
383,260
394,528
440,983
166,644
246,902
Combined
Total RFO
389,497
429,016
455,126
470,772
510,594
183,537
272,122
% of U.S. Total RFO Used
Domestic
26.38
26.94
26.04
27.64
26.18
22.97
22.71
Foreign
92.31
94.99
96.80
96.24
95.50
97.44
96.77
in PAD 1
Combined
63.46
66.95
67.74
68.65
7C.18
75.05
74.31
Source: API, Petroleum Facts & Figures
-------
V. RESIDUAL FUEL OIL SITUATION—PRESENT AND FUTURE
The phase 2 objectives of this task are to estim-
ate the RFO production capability of domestic refineries
and those foreign refineries which export the bulk of
their production to the United States. The estimates of
production capability are made for the following three
cases:
a. RFO production capability of existing re-
fineries at current sulfur levels.
b. RFO production capability of existing re-
fineries at low sulfur levels.
c. RFO production capability at low sulfur
levels of future refineries modified by
the addition of hydrotreating facilities.
A further objective is to estimate the incremental and
capital investment costs of producing low sulfur RFO by
the addition of hydrotreating facilities as in case c.
In all of the above cases the assumption is made that no
trade barriers or import quotas exist. This assumption
is essentially true at present in PAD district 1
(Eastern Seaboard) which consumes roughly 95% of all RFO
imported into the United States. There are no restric-
tions pertaining to the import of RFO into District 1
but there are restrictions on the importation of crude
oil and restrictions prohibiting the reprocessing of RFO
except by special permit.
Tables 17 through 23 and Figures 10 through 22
of this report are applicable to phase 2 of the task
specifications. A brief discussion of the individual
items follows.
-------
A. Current and Projected Production of RFO
Table 17 contains refinery throughput and RPO pro-
duction statistics for the Caribbean and South American
areas which produce RPO primarily for export to the
United States. Over the period 1964-69 total RPO pro-
duction increased by an average of 3-4$ per year while
RFO production as volume percent on refinery throughput
varied between 56.1$ and 57•!%• RFO statistics for
1970 have not been published but should show a sizable
increase over 1969 partly due to startup of a large
refinery in the Bahamas and partly caused by increased
production from the South American refineries, the
latter being attributed to the large increase in RFO
prices on the Eastern Seaboard.
Table 18 presents United States RFO supply and
demand statistics for the period I960 through May 1970.
During the period of steadily declining domestic RFO
production between I960 and 1968 the demand for this
product increased, on an average, by 2.4$ per .year.
Then in 1969 demand increased by 8% thus reflecting the
increasing restrictions on the use of high sulfur
fossil fuels along the east coast. The effect of re-
stricting the use of high sulfur fuel became further
apparent in 1970 when during the first five months of
the year demand increased by 13.7% over the similar
period of 1969.
-------
TABLE 17
PRODUCTION STATISTICS FOR REFINERIES PRODUCING RESIDUAL FUEL OILS
FOR IMPORT INTO THE UNITED STATES - 1964-1969
(All Quantities in
Year
1969
1968
1967
1966
1965
1964
Location
Netherlands
Antilles
Trinidad
Venezuela
Virgin Islands
Total
NA
Trin
Ven
VI
Total
NA
Trin
Ven
VI
Total
NA
Trin
Ven
Total
NA
Trin
Ven
Total
NA
Trin
Ven
Total
Refinery
Thruput
311,227
154,770
421,794
59,678
947,469
296,795
151,282
434,033
41,175
923,285
304,364
139,261
425,518
-
869,143
287,500
144,193
428,395
860,088
294,565
137,643
429,021
861,229
301,970
127,548
399,673
829,191
1000 Barrels)
Residual Fuel
Oil Production
174,716
88,381
255,038
28,645
546,780
156,444
85,337
255,533
20,295
517,609
157,473
75,496
256,209
—
489,177
143,455
79,661
259,294
482,410
161,636
75,442
255,670
492,748
161,801
71,28?
233,959
467,047
% V, RFO
On Crude
56.1
57.1
60.5
48.0
57.7
52.7
56.4
58.9
49.3
56.1
51.7
54.2
60.2
—
56.3
49.9
55.2
60.5
56.1
54.9
54.8
59.6
57.2
53.6
55.9
58.5
56.3
Data Source: Bureau of Mines, "International Petroleum Annual"
-------
TABLE 18
U.S. SUPPLY AND DEMAND STATISTICS FOR RESIDUAL FUEL OIL
I960 - MAY 1970
-Cr
OO
I
Year
I960
1961
1962
1963
1964
1965
1966
1967
1968
1st Quarter
1969
Thru May
1969
1969
1st Quarter
1970
Thru May
1970
(All Quantities in 1000
Barrels)
Total New Supply
Domestic
Production
332,147
315,577
295,679
275,910
266,825
268,567
263,961
275,956
275,814
78,335
123,169
265,906
73,549
111,054
Transfer
From Crude Oil
3,948
3,854
3,797
3,305
3,720
3,950
3.551
3,671
4,272
1,145
1,855
4,334
1,190
1,987
Imports
233,208
243,268
264,314
272,753
295,771
345,187
376,795
395,939
409,928
133,988
207,042
461,611
171,015
255,144
Stocks
(End of Year)
44,870
44,869
49,996
47,538
40,403
56,214
61,196
65,597
67,359
55,188
60,570
60,395
40,320
44.664
Exports
18,495
14,022
12,850
15,281
18,870
14,882
12,879
21,940
20,013
5,064
7,883
16,893
4,693
7,862
Total Demand
Domestic
Demand
559,439
548,678
545,813
538,924
554,581
587,011
626,446
651,885
668,239
218,575
328,972
721,922
259,136
374,054
% Change
In Demand
-1.92
-0.52
-1.26
+2.9
+5.85
+6.72
+4.06
+2.61
-
-
+8.03
+18.56
+13.70
Source: API, Petroleum Facts & Figures
-------
Table 19 and Figures 10-13 show data on average crude
runs to stills, RFO demand and production statistics, and RFO
import requirements for the period 1960-1975. Projected
statistics for the period 1971-1975 are given for three
sulfur levels. The projections for low sulfur RFO pro-
duction are based on the data of reference 6-a. Demand
statistics were projected on the basis of the 1969-1970
growth rates and are possibly somewhat conservative as
evidenced by the latest 1970 trend. The low sulfur RFO
production rates are applicable after the addition of
hydrotreating facilities as described later in section VI-A-3
of this report. The 1971-1975 projected RFO production
rates, calculated as volume percent on crude, are based
on the long term industry trend of maximizing profits by
minimizing RFO production. Figure 11 shows the United
States demand for RFO projected through 1975 at -growth
rates corresponding to different time periods. Figure
12 is a plot of United States RFO production, expressed
as volume percent on crude charged, as a function of
time projected through 1975 at current sulfur levels and
at 1.0% and 0.5% sulfur levels. From this plot it is
obvious that if a 0.5% sulfur RFO pool is required, U.S.
production will be significantly reduced below that at
the current sulfur level.
Tables 20 and 21 tabulate the monthly RFO demand
for the periods 1966-1970 and 1971-1975, respectively.
The projected demand statistics are based on the projected
average daily demand figures from Table 19 and the
average ratio of monthly demand to average yearly demand.
The wide variation in demand, amounting to 69$ from the
July minimum to the January maximum, complicates the fore-
casting of the supply picture since it introduces the
-------
TABLE 19
U.S. SUPPLY AND DEMAND STATISTICS FOR RESIDUAL FUEL OIL
PROJECTED THRU 1975 AT DIFFERENT RFO POOL SULFUR LEVELS
ui
o
Year
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
Daily Aver.
Crude Runs
To Stills
(1)
MM Bbl/CD
8.067
8.187
8.412
8.689
8.804
9.125
9.444
9.815
10.312
10.630
10.9
11.5
12.1
12.8
13.5
14.2
Total
RPO
Demand
(Daily Aver)
MM Bbl/CD
1.528
1.503
1.495
1.477
1.515
1.608
1.716
1.786
1.831
1.978
2.208
2.48
2.75
3.03
3.30
3.56
RFO Production
% V on Crude Charge
Current
Sulfur
Level
11.25
10.56
9.63
8.70
8.28
8.06
7.66
7.70
7.30
6.85
6.70
6.50
6.30
6.10
5.90
5.75
Sulfur
l.Og W
_
—
-
-
..-
-
-
-
-
-
-
5.87
5.69
5.51
5.33
5.19
Sulfur
0.5* W
.
—
-
-
-
-
-
-
-
-
-
4.85
4.71
4.56
4.41
4.30
RFO Production
Daily Aver, MM Bbl/CD
Current
Sulfur
Level
0.907
0.864
0.810
0.756
0.729
0.735
0.723
0.756
0.753
0.728
0.730
0.747
0.762
0.781
0.796
0.816
Sulfur
1.0% W
_
-
-
-
-
-
-
-
-
-
-
0.675
0.688
0.705
0.719
0.737
Sulfur
0.5* W
_
-
-
-
-
-
-
-
-
-
-
0.558
0.570
0.584
0.595
0.611
RFO Imports
Daily Aver, MM Bbl/CD
(Reqd To Meet Demand)
Current
Sulfur
Level
0.637
0.666
0.724
0.747
0.808
0.946
1.032
1.085
1.123
1.265
1.478
1.73
1.99
2.25
2.50
2.74
Sulfur
1.0# W
_
-
-
-
-
-
-
-
-
-
-
1.81
2.06
2.32
2.58
2.82
Sulfur
0.5# W
-
-
—
-
—
-
-
-
-
—
1.92
2.18
2.45
2.70
2.95
(1) Annual Statistical Review, Dept. of Statistics, API, April 1970 (1960-1969)
-------
VJ1
M
I
1 .»•
UJ
8 I4-|-
85
a.
2
(T
CD
Z
2 12
(O
ij II
(0
o
(O 10
UJ
o
tr
o
UJ
o
a:
UJ
8-
FIGURE 10
UNITED STATES DAILY AVERAGE CRUDE RUNS TO STILLS
+—HH—h-h
I960 1961
1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975
-------
I\J
I
CO
UJ
5.0
4-5
FIGURE II
RESIDUAL FUEL OIL DEMAND IN THE UNITED STATES
^^j
PROJECTED DEMAND FOR 1970 BASED
ON JANUARY-MAY ACTUAL DEMAND
I960 1961 1962 1963 1964 1965
1966 1967 1968 1969
CALENDAR YEAR
-------
un
U)
I
FIGURE 12
UNITED STATES RESIDUAL FUEL OIL PRODUCTION
PROJECTED THRU 1975
AT DIFFERENT RFO POOL SULFUR LEVELS
I960 1961 1962 1963 1964 1965
1966 1967 !968 i969 1970 1971
CALENDAR YEAR
-------
4=-
I
o
1J O
(/) U
O
o
FIGURE 13
RESIDUAL FUEL OIL SUPPLY/DEMAND STATISTICS
FOR THE UNITED STATES. I960 - 1975
RFO POOL AT CURRENT SULFUR LEVEL
1.65-1.85% W)
RFO POOL AT 0 5% W SULFUR
I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 197! 1972 1973 1974 1975
-------
TABLE 20
U.S. MONTHLY DEMAND FOR RESIDUAL FUEL OIL (1966-1970)
(All Quantities in 1000 Barrels)
1967
1968
1969
1970
i
VJl
Month
January
February
March
April
May
June
July
August
September
October
November
December
Bbl/CD
2125
2309
2126
1637
1394
1480
1387
1459
1397
1525
1765
2028
Ratio
To Aver.
1.238
1.345
1.239
0.954
0.812
0.862
0.808
0.850
0.814
0.889
1.028
1.182
Bbl/CD
2277
2277
2201
1744
1593
1502
1371
1410
1343
1795
1908
2037
Ratio
To Aver.
1.275
1.275
1.232
0.976
0.892
0.841
0.768
0.789
0.752
1.005
1.068
1.140
Bbl/CD
2675
2379
2007
1672
1415
1584
1476
1410
1605
1641
1875
2263
Ratio
To Aver.
1.461
1.299
1.096
0.913
0.773
0.865
0.806
0.770
0.876
0.896
1.024
1.236
Bbl/CD
2757
2481
2197
1955
1670
1583
1561
1655
1816
1891
1851
2487
Ratio
To Aver.
1.394
1.254
1.111
0.988
0.844
0.800
0.789
0.837
C.918
0.956
0.936
1.257
Bbl/CD
2894
2935
2815
2121
1654
1848
1737
1780
1841
2106
2230
2650
Ratio
To Aver.
1.3H
1.329
1.275
0.960
0.749
0.837
C.787
0.806
0.834
C.954
1.010
1.200
Aver.
Ratio
1.330
1.300
1.180
0.952
0.810
0.837
0.787
0.806
0.834
0.954
1.010
1.200
Yearly Aver. 1716 1.000
1786 1.000
1831 1.000
1978 1.000
2208 1.000
1.000
Data Source:
USDli Bureau of Mines* Petroleum Statement! Monthly
-------
TABLE 21
U.S. MONTHLY DEMAND FOR RESIDUAL FUEL OIL PROJECTED THROUGH 1975
(All Quantities in 1000 Barrels)
VJI
ON
I
Month
January
February
March
April
May
June
July
August
September
October
November
December
Yearly Aver.
1971
Bbl/CD
3298
3224
2926
2360
2008
2075
1951
1998
2068
2365
2504
2976
Ratio
1.330
1.300
1.180
0.952
0.810
0.837
0.787
0.806
0.834
0.954
1.010
1.200
1972
Bbl/CD
3657
3575
3245
2618
2227
2301
2164
2216
2293
2623
2777
3300
Ratio
1.330
1.300
1.180
0.952
0.810
0.837
0.787
0.806
0.834
0.954
1.010
1.200
1973
Bbl/CD
4030
3939
3575
2884
2454
2536
2385
2442
2527
2890
3060
3636
Ratio
1.330
1.300
1.180
0.952
0.810
0.837
0.787
0.806
0.834
0.954
1.010
1.200
1974
Bbl/CD
4389
4290
3894
3146
2673
2762
2597
2660
2752
3148
3333
3960
Ratio
1.330
1.300
1.180
0.952
C.810
0.837
0.787
0.806
0.834
C.959
1.010
1.200
1975
BbVCD
4735
4628
4200
3389
2883
2980
2801
2869
2969
3396
3596
4272
Ratio
1.330
1.300
1.180
0.952
0.810
0.837
0.787
C.806
0.834
0.959
1.010
1.200
Aver.
Ratio
1.330
1.300
1.180
0.952
0.810
0.837
0.787
C.806
0.834
0.954
1.010
1.200
2480 1.000 2750 1.000 3030 1.000 3300 1.000 3560 1.000
-------
factors of shipping availability and storage capacity.
Figure 14 illustrates the variation in RPO monthly demand
for the period 1966-75.
Table 22 (Parts 1 & 2) includes domestic RFO demand
and production, required imports to meet domestic demand,
imports broken down by Eastern and Western Hemispheres,
RFO production capability of the Western Hemisphere
(Figure 15) percent of the Western Hemisphere production
which must be imported to meet United States demand, and
total world RFO supply potential versus U.S. demand
(Figures 16, 17) expressed as a surplus or deficit. These
items are tabulated for both the total RFO pool at "current
sulfur level" and for the 0-1.0$ sulfur portion of the
RFO pool.
Part of the data in Table 22 was taken from Tables
7, 17 and 19. Supplemental data were obtained from the
questionnaires (10) which provided the Western Hemisphere
RFO production capability for the years 1970-75; total
RFO production is shown as well as that at 0-1% sulfur
level. Eastern Hemisphere imports for the years 1967-
69 and Jan-May 1970 were obtained from the "Oil and Gas
Journal" (6-e). Projected statistics relating mostly to
0-1$ sulfur data are based on the following assumptions:
• The total increase in U.S. RFO demand
for the period 1970-75 is due to the
increase in demand for 0-1$ sulfur RFO.
• The increase in potentially available
RFO from the Eastern Hemisphere will
decline from about 10$ in 1971 to 4$
in 1975, reflecting a strong increase
in demand in the European market for
low sulfur RFO.
• Domestic production of 0-1$ sulfur RFO
will slowly decrease due to the gradual
percentagewise reduction in total RFO
production.
-------
FIGURE 14
VARIATION IN DEMAND FOR RESIDUAL FUEL OIL BY MONTH OF YEAR
PROJECTED THROUGH 1975
a
5.0
UJ
4.0- -
3.0 -r
*
i2-04-
ff
§? 1.0
1 1 1 1 1 1 1 1
r\
i i i i i i
i i i i i i
r\
i i i i i i
/ \
i i i
l l l l l l 1 1 l l
1971
1972
1973
1974
1975
-------
TABLE 22 (Part 1)
vo
I
UNITED STATES
Domestic
RFO Demand
Year
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
Total
1.608
1.716
1.786
1.831
1.978
(2.208)
(2.48)
(2.75)
(3.03)
(3.30)
(3.56)
0-1.056S
-
-
-
(0.332)
(0.451)
(0.681)
(0.953)
(1.223)
(1.503)
(1.773)
(2.033)
RESIDUAL FUEL OIL SUPPLY/DEMAND STATISTICS, 1965-1975
Domestic
RFO Production
Total
0.735
0.723
0.756
0.753
0.728
(0.730)
(0.747)
(0.762)
(0.781)
(0.796)
(0.816)
0-1.05&S
0.183
(0.177)
(0.181)
(0.177)
(0.167)
(0.164)
(0.164)
(0.164)
(0.164)
(0.163)
(0.163)
RFO Imports Required
To Meet Domestic Demand
Total
0.873
0.993
1.030
1.078
1.250
(1.478)
(1.73)
(1.99)
(2.25)
(2.50)
(2.74)
0-1. O^S
-
-
-
0.155
0.284
(0.517)
(0.789)
(1.059)
(1.339)
(1.610)
(1.870)
Potential Supply
Eastern Hemi sphere
Total
-
-
0.067
0.131
0.158
(0.210)
(0.230)
(0.250)
(0.270)
(0.280)
(0.290)
O-.1 n^.Q
V/^J_ • wy
-------
TABLE 22 (Part 2)
o
I
UNITED STATES RESIDUAL FUEL
RPO Production Capability of
Western Hemisphere as Defined
(Does not include U.S. Production)
Year
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
Total
1.350
1.322
1.340
1.414
1.498
1.69
(1.82)
(1.93)
2.04
2.13
(2.25)
0-1. 056S
-
-
-
-
0.55
(0.62)
0.70
0.97
1.06
(1.14)
0-0.556S 0-0.3*3
-
-
-
-
-
0.156
0.156
0.216
0.266
0.266
0.266
OIL SUPPLY/DEMAND STATISTICS, 1965-1975
Per Cent of Western
Hemisphere Production
Which Must be Imported
To Meet U.S. Demand
Total (56)
-
-
71.8
67.0
72.9
(75.0)
(82.4)
(90.1)
(97.0)
(104.2)
(108.9)
0-l.OSS (%)
-
-
-
-
(80.7)
(110.3)
(132.2)
(121.5)
(134.9)
(146.7)
Total World RPO Supply
Potential Versus U.S. Demand
SurDlus(+), Deficit (-)
Total
-
-
+0.377
+0.467
+0.406
(+0.422)
(+0.317)
(+0.192)
(+0.061)
(-0.094)
(-0.204)
0-1.056S
-
-
.-
-
(+0.138)
(-0.064)
(-0.226)
(-0.209)
(-0.370)
(-0.532)
Refer to Part 1 of Table 22 for notes applicable to above.
-------
4.0
CTv
t-1
I
3.5
3.0
I
5
O
UJ
3"
IE
UJ
Q.
Ui
g:
<
o>
2.0
O
Z3
1.5
1.0
1965
FIGURE 15
TOTAL CRUDE THROUGHPUT AND RFQ PRODUCTION CAPABILITY
OF
VENEZUELA. NETHERLANDS ANTILLES. TRINIDAD.
VIRGIN ISLANDS AND THE BAHAMAS. ^^'
1965 - 1975 ^^^
1966 1967
1968 1969 1970 1971
CALENDAR YEAR
1972 1973
-------
5.0
i
cr\
ro
I
4.0
o
oc
5 3.0
4
O
or
s?
2.0
CD
S
3
1
1.0
FIGURE 16
TOTAL UNITED STATES RFO DEMAND
AND
WORLD RFO SUPPLY POTENTIAL
(NO SULFUR LIMITS), 1965 - 1975
-CS^
f—h
1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975
-------
o\
LO
I
2.5
2.0-
'••'
5 i.o-
A
0.5
FIGURE 17
TOTAL UNITED STATES RFO DEMAND
AND
WORLD RFO SUPPLY POTENTIAL
(0-1.0% SULFUR LIMIT), 1968 - 1975
1968
1969
1970
1971 1972
CALENDAR YEAR
1973 1974
-------
B. Economics
Table 23 presents the economics of producing low
sulfur RFO in the United States. The base case was
derived from published information (6-a) while cases 1
and 2 were developed on the same basis as the base case
using actual production statistics for 1969 and pro-
jected statistics for 1973. Incremental costs and cap-
ital investment costs for producing RFO at sulfur levels
of 1.05? W and 0.5% W are tabulated individually for PAD
districts 1-5 and for the overall United States. Plots
of incremental production costs and capital investment
as a function of time for the period 1967-73 are shown
in Figures 18-22.
The base case of the reference study was developed
by setting up an "average" refinery for each of the
five PAD districts. Parameters were established for
variables such as crude properties, product slate,
product characteristics, processing schemes and RFO
blending requirements for each average refinery.
Using the latest available refinery statistics for the
period 1964-65 the economics of low sulfur RFO produc-
tion were calculated, at 1967 cost levels, from which
the incremental cost of fuel oil production and overall
capital investment requirements for each of the five
refineries were established. Two different sulfur levels,
viz., 1.0/8 W and Q.5% W, were evaluated for each case.
Using the crude throughputs and RFO production
statistics from Table 19, similar economics have been
calculated for two additional cases for the years 1969
and 1973. Tne basic assumptions of the original study
-------
TABUS 23
ECONOMICS OF PRODUCING LOW SULFUR RESIDUAL FUEL OIL IN THE U.S.
District (PAD)
$ Sulfur in Desulfurized
No. 6 Fuel Oil Product
Base Case - 1964 Production
Total HDS Capacity, Bbl/CD
Total On Site Invest, MM$
Total Overall Invest, MM$
Cash Flow/Unit, $/Day
Oper. Cost/Unit, $/Day
New Products/Unit, Bbl/CD
Incremental FO Cost, $/Bbl
1
2
3
1.0$ 0.5$ 1.0$ 0.5$ 1.0$ 0.5$
Statistics & 1967 Economics'1'
83000 83000
58.20 69.36
89.16 106.08
4070 4830
4372 5527
11920 12250
0.71 0.85
§:
O
3
-------
2.5
2.0
FIGURE 18
INCREMENTAL COST OF REDUCING
THE TOTAL DOMESTIC RESIDUAL FUEL OIL POOL SULFUR LEVEL
FROM CURRENT LEVEL TO 1.0% W
ui
IK
oc
K
teJ
O.
(A
OC
<
O
O
en
O
o
i
UI
g
1.5
1.0
PAD » DlSTR^
PAD 5 DISTRICT
0.5
NOTE:
RESIDUAL FUEL OIL HYDROTREATlNG NOT REQUIRED
TO ACHIEVE 1% W SULFUR LEVEL IN PAD 2 AND
3 DISTRICTS.
1966
1967
1968
1969
1970 1971
CALENDAR YEAR
1972
1973
1974
-------
2.5
2.0-
UJ
tr
a:
<
CD
IE
UJ
0.
o
o
(O
o
o
UJ
2
UJ
K
O
z-
1.5
1.0-
0.5
PAH S DISTRICT^
FIGURE 19
INCREMENTAL COST OF REDUCING
THE TOTAL DOMESTIC RESIDUAL FUEL OIL POOL SULFUR LEVEL
FROM CURRENT LEVEL TO 0.5% W
1966
1967
1968
1969
1970 1971
CALENDAR YEAR
1972
1973
1974
-------
50O
400
o
o
li.
o
£ 300
g
oo —
I 2
U
2
200
ui
-------
1,000
900
(0
800
O 700
O
is 3
T I
Ul
H
UJ
z
-I
I-
Z
o
600
500
400
300
200
100
FIGURE 21
CAPITAL INVESTMENT REQUIRED TO REDUCE
THE TOTAL DOMESTIC RESIDUAL FUEL OIL POOL SULFUR LEVEL
FROM CURRENT LEVEL TO 0.5% W
(ONSITES ONLY)
PAD I DISTRICT ONSITES m .
PAD 4 DISTRICT ONSITES
1966
1967
1968
1969
1970 1971
CALENDAR YEAR
1972
1973
1974
-------
1,100
I.OOO- -
900
en
<
§
u.
O
en
800
TOO
2 600
i -i
s
o
i
In
5OO
4OO
$ 300
o
200
100
FIGURE 22
CAPITAL INVESTMENT REQUIRED TO REDUCE
THE TOTAL DOMESTIC RESIDUAL FUEL OIL POOL SULFUR LEVEL
FROM CURRENT LEVEL TO 0.5% W
(TOTALS SHOWN INCLUDE ONSITES, OFFSITES, WORKING CAPITAL ETC.)
PAD \ DISTRICT
PAD 4 DISTRICT TOTAL
1966
1967
1968
1969
1970 1971
CALENDAR YEAR
1972
1973
1974
-------
remain valid since the domestic RFO pool sulfur content
has been reasonably constant over the period 1964-67
(Figure 4) notwithstanding the deeper bite taken into
the heavy residuum and the resulting concentration of
sulfur in a diminishing RFO volume. The maintenance of
a constant sulfur level in the RFO pool has been accom-
plished primarily by blending desulfurized cutter stock
with high sulfur residuum, a procedure which has en-
tailed substantial investment in gas oil desulfurizing
units and heavy residuum conversion units on a continuing
basis. It should be noted that this category of invest-
ment will continue to be required to meet projected
future RFO production schedules at current sulfur levels
and is not included in the calculated incremental cost
of producing 1.0$ W and 0.5% W RFO.
A basic assumption made in the reference study is
that the cutter stock used for blending is already de-
sulfurized. The incremental costs shown for all three
cases are in addition to routine expenditures for the
maintenance of a constant current sulfur level and
reflect the cost of hydrotreating and other auxiliary
facilities for the desulfurization of the heavy residuum
which is required to reach the low sulfur levels desired.
Referring to the base case of Table 23 it was cal-
culated that owing to the lower sulfur content of the
crudes run in PAD districts 2 and 3 the RFO pool sulfur
content in these two districts could be reduced to 1.0% W
by blending with desulfurized cutter stock thereby elim-
inating the need to desulfurize the heavy residuum. In
PAD districts 1, 4 and 5, however, heavy residuum desul-
furization is required to reach the 1.05? W sulfur level.
To achieve the 0.5!? W sulfur level it is necessary to .par-
tially desulfurize the heavy residuum in all five PAD
districts.
-------
VI. ANALYSIS OP FUEL OIL SITUATION—PRESENT AND FUTURE
A. Domestic RFO Production
1. Current Sulfur Levels—Existing Refineries
Historically the production of residual fuel oil
in the United States has steadily decreased both in terms
of absolute number of barrels and volume percent (% V)
of crude run (Table 19). In I960 domestic RFO production
totaled 332 million barrels (MM bbl) representing 11.25% V
of crude run; by 1969, however, RFO production had de-
creased to 266 million barrels representing 6.85$ V of
crude run. This policy of reducing RFO production has
been methodically carried out to increase overall refin-
ery profits by maximizing the production of the more val-
uable products such as gasoline and light distillates.
To accomplish this reduction a large capital investment
has been expended for equipment specifically designed
for the conversion of heavy petroleum fractions.
The RFO production projections for the period
1971 through 1975 (Table 19) have been made assuming that
on a long term basis the above trend (i.e., minimizing
production of RFO) will continue but that the rate of
decrease in volume percent of RFO on crude run is leveling
off (Figure 12). It is recognized, of course, that on a
short term basis (e.g., the 1970-71 winter season) tem-
porary factors can reverse this trend such that RFO pro-
duction is increased above the rates shown in Table 19.
Factors influencing the 1970-71 RFO production rate in-
clude a tanker shortage, high RFO prices, and announce-
ments by the industry that RFO production will be in-
creased by 100,000 barrels per calendar day (BCD) during
-------
this period. However, it is believed that the trend to
reduce RPO production is valid on a long term basis and
would only be reversed permanently if the short term
factors become more pronounced and permanent. Therefore,
it is expected that average domestic production over the
next five years, at the current sulfur level of 1.65 to
1.85 weight percent, will be in the 750,000 to 850,000
BCD range.
2. Low Sulfur Levels—Existing Refineries
The Bureau of Mines annual petroleum products
survey entitled "Burner Fuel Oils" (1-a) is the only pub-
lished comprehensive data source relating to the sulfur
content of domestic RPO. However, as pointed out in
section IV of this report, these data are arithmetic
averages based on a limited sampling of the domestic RFO
pool and therefore cannot be used to calculate either
the overall RFO pool weighted sulfur average or the per-
centage of the total production which is in the 0-1.0$
sulfur range.
-------
For this reason it has been necessary to use
secondary sources as a basis for quantitatively estim-
ating the extent of low sulfur domestic RPO production.
One study (6-a) has been made from which it was
concluded that existing refineries without modification
were capable of reducing approximately 35% of the total
RPO pool to the 0-1% level by blending with desulfurized
cutter stocks while maintaining acceptable flash point
and viscosity values. A second study (6-b) in which the
actual 1965 RFO production statistics were obtained by
polling the refiners, showed that overall, approximately
25$ of the total domestic RFO production was at the 1%
sulfur level. Using the latter study as a basis, the
estimated 0-1$ sulfur RFO production for 1965 was
183,000 BCD. Therefore, the average domestic production
of 0-1$ sulfur RFO over the next five years is estimated
to be in the 150,000 to 175,000 BCD range. Since the
domestic production of 0-1% sulfur RFO is expected to
be essentially constant for the next 5 years while the
domestic demand will increase, the estimated deficit
between supply and demand increases from 83% in 1971 to
92% in 1975; that is, domestic production will satisfy
17% of the domestic demand for Q-I% sulfur RFO in 1971
-------
3. Low Sulfur Levels—Existing Refineries
Plus Hydrotreating
The RPO production rates projected for 1971-75
are shown in Table 19; these rates are based on pool
sulfur levels of 0.5% W and 1.05? W and it is assumed
that hydrotreating facilities have been installed. For
the period covered, RFO production at the 1.05? W sulfur
level is in the 675,000 to 750,000 BCD range—down 105?
from production at current sulfur levels. Production
at the 0.55? W sulfur level is in the 550,000 to 625,000
BCD range—down 25$ from production at current sulfur
levels. These production statistics are based on lower-
ing the total domestic RFO pool by hydrotreating the
heavy residuum. Short term market factors have been
neglected and it is assumed 1) that there is a uniform
demand for low sulfur fuel oil throughout the United
States, and 2) that the selling price has increased by
an amount at least equal to the incremental cost of
production. Since domestic production will provide
only 23% of the total United States demand for RFO in
1975, it is unlikely that sufficient incentive will be
generated to justify reducing the RFO pool sulfur level
by this route, i.e., hydrotreating the heavy residuum.
Currently it appears that the present method comprising
gas oil desulfurization, selective blending, and mini-
mization of heavy RFO production by conversion to other
products will continue to be the most attractive solu-
tion to the heavy ends disposal problem.
-------
4. Economics of Low Sulfur RFO
The economic data developed by the method des-
cribed in section V-B of this report are tabulated in
Table 23 and plotted on Figures 18-22.
The systematic reduction of the domestic RFO
pool sulfur level would require capital investments on
the order of 300 to 400 million dollars to reach the
1.0% W sulfur level and 700 to 1100 million dollars to
reach the 0.5% W sulfur level. (Note that these ex-
penditures are in addition to the current investments
now being expended for gas oil desulfurization and re-
siduum conversion which have been required to maintain
the current sulfur level almost constant for the previous
five years.) A desulfurization program of this mag-
nitude would require 3 to 5 years to implement and is
dependent on the existing technology of desulfurizing
heavy residuum. Recent industry developments do indi-
cate that the degree of residuum desulfurization re-
quired, i.e., removal of 50-60$ of the total sulfur, is
feasible; however, since the type of unit and the special
catalyst required have not been extensively tested in
commercial service, the estimated costs are order of
magnitude accuracy.
The incremental cost of producing low sulfur RFO
varies widely by PAD district (Table 23). At the 1.0%
sulfur level it is $0.75 to $0.90 per barrel in PAD dis-
trict 1 and $1.50 to $1.85 per barrel in PAD district 4
with an overall United States average in the $0.75 to
$0.90 per barrel range. At the 0.5% W sulfur level in-
cremental costs add $0.90 to $1.10 per barrel in PAD
district 1 and $1.80 to $2.25 per barrel in PAD district
4 while the overall United States average is in the
-------
$0.95 to $1.15 per barrel range. For comparison, actual
spot prices for No. 6 RPO in New York Harbor on 9/28/70
show an Incremental cost of $0.55 to $1.05 per barrel for
1.0% sulfur No. 6 fuel oil versus no sulfur guarantee
No. 6 fuel oil which contains in excess of 2.2% sulfur.
5. Future Desulfurization Plants—United States
Federal restrictions relating to the processing
of imported fuel oils have been relaxed and the Oil
Import Administration has issued allocations permitting
the import of quantities of high sulfur residuum for fur-
ther processing. There are at present three companies
planning to construct U.S.-based refineries designed to
produce low sulfur RFO by processing imported high sulfur
residuum and topped crude. These plants have a planned
total production capacity of 265,000 BCD of RFO with a
sulfur content in the 0-1.0$ range. Approximately
70,000 BCD will contain less than 0.5% sulfur.
-------
The above plants have not yet been built due in
part to the difficulties encountered in obtaining suit-
able construction sites. Since at the present time a
definite production schedule cannot be predicted, the
output from these plants has not been included in the
estimated domestic production capability statistics for
1971-75 (Table 22).
-------
B. Foreign RFO Supplies
1. Eastern Hemisphere Imports
Imports from the Eastern Hemisphere (Western
Europe and the Middle East) comprised less than 5% of the
total RFO Imported Into the United States during the early
1960's. By 1969 Eastern Hemisphere Imports had Increased
to 12.6$ of the total (158,000 BCD) and during the first
five months of 1970 had further Increased to 14.2$ of
the total (210,000 BCD). This rapid increase in imports
during 1969 and 1970 was largely owing to the increased
demand for low sulfur RFO in the United States accompan-
ied by large price increases in 1970.
Western Europe is on balance a net importer of
RFO, but due to the availability of low sulfur African
crudes, it recently has increased production of low sul-
fur RFO of which a growing percentage is available for
export. Concurrently, however, the demand growth rate
for RFO in Western Europe has increased proportionately
as much as it has in the United States. For this reason
it is doubtful that the rapid rate of increase in RFO
imports from Western Europe attained during 1969 and
1970 can be sustained during the 1971-75 period.
The potentially available RFO imports from the
Eastern Hemisphere have been estimated conservatively
(Table 22, Part 1) at 225,0.00 to 300,000 BCD for the per-
iod 1971-75. Of this amount 100,000 to 200,000 BCD will
have a sulfur content in the 0 to 1.0$ range. These es-
timates are based on a conservative growth rate which
would be expected for petroleum products rather than the
much higher growth rate achieved by Eastern Hemisphere RFO
imports during 1969 and 1970.
-------
2. Western Hemisphere Imports
The Western Hemisphere referred to here and In
Table 22 comprises Venezuela, Trinidad, the Netherlands
Antilles, the Virgin Islands and the Bahamas. Actual RFO
production from this area for the period 1965-69 averaged
1,385,000 BCD of which approximately 70% was imported
into the United States (Table 22, Part 2).
Production capability statistics for the period
1970-75 were obtained from questionnaires (10) submitted
to those refineries whose output comprises the major por-
tion of the RPO production capacity in the Western Hemis-
phere. From these questionnaire data it is estimated that
total RFO production capability will increase by about 6%
per year; i.e., from 1,690,000 BCD in 1970 to 2,250,000
BCD in 1975. Production capability of RFO with sulfur con-
tent in the 0 to 1.0$ range will increase by about 16$
per year—from 550,000 BCD in 1970 to 1,140,000 BCD in 1975.
The "current sulfur level" of imported RFO was 2.5% in 1964
(6-c). It had decreased to about 2.0$ by 1969 (Table 7)
and will decrease to around 1.5$ by 1975 when approximately
68$ of all RFO produced in the Western Hemisphere will have
a sulfur content in the 0 to 1.0$ range. A discussion of
Western Hemisphere RFO imports into the United States is
presented in the following section of this report.
-------
C. World-United States Supply/Demand
The overall RPO supply/demand statistics for the
United States for the period 1965-75 are summarized in
Table 22. On a total basis (no sulfur limit) the world
RPO supply potential versus United States demand shows a
substantial surplus through 1972, becomes marginal during
1973-7^, and then shows a substantial deficit in 1975.
(It should be noted that the "world RPO supply potential"
is defined as the quantity that can be imported from the
Eastern Hemisphere plus the entire production from the
Western Hemisphere.) For example, in 1975 the RPO needed
from the Western Hemisphere exceeds their total produc-
tion by about 10$ (2,^50,000 BCD required vs 2,250,000
BCD produced). To meet the demand during the period
1970-73 requires increasing the percentage of total
Western Hemisphere production imported into the United
States from 73$ in 1969 to 97$ in 1973- Importing this
amount. (75-100$ of production) would create supply prob-
lems for those consumers now using the RPO which is not
imported into the United States. Thus, from Table 22
(Part 2) it can be seen that after 1973 there would be no
RPO left for consumption within the Western Hemisphere.
If, in fact, it is not possible for the United States to
import the quantities shown, as is the most likely case,
then the supply potential would decrease and the United
States RPO deficit would occur sooner than predicted in
Table 22. However, the available published statistical
data are not presented in sufficient detail to enable
making the analysis required to resolve this latter point.
The preceding analysis is based on the assumption
that the Eastern Hemisphere imports will be limited to the
-------
amounts shown in Table 22 (Part 1) which represent only
a small percentage «20$) of the total production in
this area. If the quantity imported from the Eastern
Hemisphere could be increased, the required Western
Hemisphere imports would, of course, decrease by the same
amount.
The world supply potential of RPO with a sulfur con-
tent in the 0 to 1.0$ range versus United States demand
for this product shows a modest surplus for 1970, a mar-
ginal deficit for 1971 and a substantial deficit for
1972-75. Since the United States is currently receiving
essentially all of the Western Hemisphere output of low
sulfur RPO, the potential supply problem which is appli-
cable to the total RPO production should not arise.
The factors influencing the world RPO supply poten-
tial and United States demand are exceedingly complex
and subject to change. Therefore, the conclusions to be
drawn from the statistics presented in Table 22 should
be viewed as being indicative of representative trends
rather than as firm quantitative values. However, it is
reasonable to conclude that unless substantial permanent
improvement is made in the world supply situation or
United States demand is reduced by removing sulfur re-
strictions on all fossil fuels, the United States will
experience a RPO shortage no later than the 1973-75 per-
iod. An exact determination of the extent of this short-
age would require considerably more data than are now ob-
tainable either from published statistics or from question-
naires .
The situation with respect to low sulfur RPO is con-
siderably worse than the total supply picture since the
deficit will begin in 1971 and become progressively worse
-------
through 1975. Several geographical areas have es-
tablished or are contemplating the establishment of 0.5$,
0.37$, or 0.3$ sulfur limits on RPO. Only a limited
amount of this very low sulfur RPO is presently avail-
able; however, since published statistics are not avail-
able the quantitative effect of the demand for very low
sulfur RFO on the overall supply picture cannot be deter-
mined. Directionally the total RPO supply potential will
be reduced thereby aggravating the low sulfur RFO deficit
predicted for 1971-75.
It should be kept in mind that the foregoing supply/
demand analysis is concerned with overall nation-wide
conditions. Local, temporary shortages caused by dis-
tribution problems, inadequate storage facilities,
switchover from coal to oil-burning facilities, un-
usually cold weather, etc., can and probably will occur
independently of and prior to the nation-wide deficit
shown in Table 22.
-------
D. Potential Methods of Increasing United States
RFO Supply
The world RPO supply potential is currently in the
process of adjusting to an unprecedented increase in
world demand, with the situation further complicated by
the introduction of sulfur content limitations imposed
by regulatory agencies. This adjustment is being carried
out subject to import restrictions, a tanker shortage,
pipeline shutdowns and other short term adverse factors.
Assuming that the projected demand statistics which
have been presented in this report are reasonably accu-
rate, it is concluded that the United States will exper-
ience a shortage in the total RPO supply within the next
three to four years and a shortage of low sulfur RPO in
the coming year. The indications are that perhaps the
industry did not foresee the magnitude of the demand
increase and consequently fell short in its plans to
fill this need. Conversely it is equally logical to
assume that since the current high demand growth rate
in the United States is largely the result of the im-
position of sulfur limitations on fossil fuels, the
arbitrarily set sulfur levels may not be compatible with
the capability of the industry to respond within the
available time span. The resolution of this problem de-
pends not only on how the industry plans to overcome the
predicted shortage but also on the establishment on a
nation-wide basis, of more realistic sulfur limitation
goals both with respect to allowable RFO sulfur content
and the time available for implementation.
Coupled with these considerations should be a real-
ization that the cost of cleaner air will be substantial,
-------
particularly during the interim years when processing
facilities are being installed on an accelerated basis
and before competitive economics have had a chance to
become fully operative.
It appears that the industry response to the present
demand situation has been a productive one and that a
continuance of the same techniques on an accelerated
basis should result in a satisfactory solution to the
RPO shortage problem.
The following discussion relates to the three methods
now being employed to meet current demand for RFO in the
United States.
1. Increased Domestic Production
Production of RFO during the 1970-71 winter
season has been increased by 100,000 to 200,000 BCD con-
sisting primarily of high sulfur oil. It is believed
that this incremental production should be continued as
long as required and increased if necessary. Although
this expedient provides a partial short term solution
to the current demand situation, it is not responsive to
the impending low sulfur RFO shortage. Therefore, as
part of the long term solution of the air pollution prob-
lem, the industry should provide.for gradual reduction of
the current sulfur level of the domestic RFO pool to be-
low the 1.0% level.
-------
2. Increased Eastern Hemisphere Imports
Increasing the quantity of imported low sulfur
RPO from Western Europe is the most convenient short term
solution to the predicted shortage of this material.
Since this is essentially a competitive market, RPO prices
can be expected to rise above current levels if domestic
demand for low sulfur RFO during 1971 is to be met with-
out a relaxation of proposed sulfur limitations on the
Eastern Seaboard.
Long term reliance on the European market for low
sulfur RPO supplies, however, does not appear to be as
stable and economical a solution to the supply problem as
does increasing both domestic and Western Hemisphere pro-
duction of this material. Since the reasons for this are
discussed on Page 7 of this report they will not be reported
here.
3. Increased Western Hemisphere Imports
The presently planned expansion of the ,RFO pro-
duction capability of the Western Hemisphere will satisfy
a major part of domestic requirements for high and low
sulfur RPO over the next five years. However, on the
basis of the questionnaire data received from these re-
fineries, it would appear that the planned expansion
over this period is inadequate to meet predicted total
requirements. Since there is no indication of an
-------
industry trend to substantially increase the domestic
production of low sulfur RFC, it is essential that
planned expansion of the Western Hemisphere facilities be
accelerated and increased rather than to continually in-
crease our reliance on Eastern Hemisphere imports.
Factors which are required for rapid expansion in the
former producing region are availability of low sulfur
African crudes, a market for the light fractions resul-
ting from topping crude and a guarantee of an adequate,
stable price incentive which will justify economically
the installation of the needed facilities.
-------
VII. GLOSSARY
API:
Bbl/Day:
BCD:
(fr/Bbl:
ji/Bb 1-Mile:
d;/100 Lb:
(fc/100 Lb-Mile:
$/Bb1:
DFO:
FO:
HDS:
Hi-Sul:
Low-Sul:
Max 1% S:
MM Bbl/CD, or
MMBCD:
MM$:
NSG:
OGJ:
PAD:
RPO:
USBM:
USDI;
Vol. %y or
% V:
Wt. %3 or
$ W:
American Petroleum Institute
Barrels Per Day
Barrels Per Calendar Day
Cents Per Barrel
Cents Per Barrel Per Mile
Cents Per Hundred Pounds
Cents Per Hundred Pounds Per Mile
Dollars Per Barrel
Distillate Fuel Oil (Grades 1, 2)
Fuel Oil
Hydrodesulfurization
High Sulfur Content
Low Sulfur Content
Maximum 1% Sulfur Content
Million Barrels Per Calendar Day
Millions of Dollars
No Sulfur Guarantee
Oil and Gas Journal
Petroleum Administration for Defense
Regular Grade
Residual Fuel Oil (Grades 4, 5, 6)
United States Bureau of Mines
United States Department of the Interior
Volume Percent
-------
VIII. REFERENCES
1. Mineral Industry Surveys, U.S.D.I., Bureau of Mines
(a) Petroleum Products Survey, "Burner Fuel Oils",
1968-69
(b) Petroleum Statements, Annual and Monthly,
Jan. 1968-May 1970
(c) Fuel Oil Sales, Annual, 1968-69
2. International Petroleum Annuals, 1964-68, U.S.D.I.,
Bureau of Mines
3- Annual Statistical Review, U.S. Petroleum Industry
Statistics, 1946-69, API, April 1970
4. Petroleum Facts and Figures, 1967, API
5. World Petroleum Report, 1969, M. Palmer Publ. Co.
6. Oil and Gas Journal
(a) April 29, 1968, pp. 55-63,
May 13, 1968, pp. 90-95
(b) August 15, 1966, pp. 104-105
' (c) June 27, 1966, pp. 154-156
(d) April 6, 1970, pp. 89-91
(e) July 14, 1969, pp. 29-33
7. Platt's Oil Price Handbook and Oilmanac, 46th Ed.,
McGraw-Hill, Inc. (1970)
8. Platt's Oilgram Daily Price Service,
McGraw-Hill, Inc. (1970)
9. Private Communication, A.D. Ogden, Asiatic Pet. Corp,
10. M.W. Kellogg Company Fuel Oil Survey Questionnaires
------- |