EPA 460/3-87-05
                    ASSESSMENT OF  IMPACTS
                           ON THE
              REFINING AND NATURAL GAS LIQUIDS
                         INDUSTRIES OF
           SUMMER GASOLINE VAPOR PRESSURE CONTROL
                        24  August 1987
                         Prepared for
          The U.S.  Environmental Protection Agency
                     Under  Subcontract to
                 Southwest  Research Institute
                             under
           Contract  68-03-3353,  Work Assignment B3
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                         DISCLAIMER
This   report   was   furnished   to   the  U.S.   Environmental
Protection Agency  by Bonner & Moore Management  Science under
subcontract  to  Southwest  Research  Institute,  6220  Culebra
Road,  San  Antonio, Texas,  in  fulfillment of  Work  Assignment
B3  of  Contract No.  68-03-3353.   The contents of  this report
are  produced   herein  as   received  from Bonner & Moore.   The
opinions,  findings,  and  conclusions  expressed  are  those  of
the  authors  and not  necessarily those of Southwest  Research
Institute  or   the  U.S.    Environmental   Protection   Agency.
Mention of company  or product names  is  not to be considered as
an  endorsement by  the  authors,  Southwest Research Institute
or  the U.S. Environmental  Protection Agency.
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                      TABLE OF CONTENTS



Paragraph                                                Page

                          SECTION  1

                         INTRODUCTION



1.1      STUDY BACKGROUND	   1-2

1. 2      ACKNOWLEDGEMENTS	   1-2

1. 3      REPORT ORGANIZATION	   1-3



                          SECTION  2

                  APPROACH AND METHODOLOGY



2.1      GENERAL APPROACH AND METHODOLOGY	   2-1

         2.1.1    Product Demands	   2-5

         2.1.2    Crude  Availabilities	   2-5

         2.1.3    Other  Raw  Mater ials	   2-6

         2.1.4    Refinery Process Configuration	   2-6

         2.1.5    Economics	   2-7

         2.1.6    Product Qualities	   2-7

         2.1.7    Alcohol Usage	   2-9

2. 2      STUDY PARAMETERS AND CASES	   2-9

         2.2.1    Crude  Acquisition  Cost	   2-9

         2.2.2    No-Investment  Effects	   2-10

         2.2.3    Control of  Ethanol-Containing
                  Gasol ine	   2-10

         2.2.4    Butane Market  Price.Effects	   2-10

         2.2.5    Bunker Sales Volume Effects	   2-11

         2.2.6    Case Run Summary	   2-11

2.3      STUDY LIMITATIONS AND AREAS EXCLUDED	   2-13
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                      TABLE OF CONTENTS  (Cont'd)


Paragraph                                                Page


                          SECTION  3

                     SUMMARY OF RESULTS


3.1      NATIONAL AND REGIONAL ESTIMATED COSTS	   3-1

         3.1.1    Refining Costs	   3-4

         3.1.2    NGL Industry Costs	   3-8

3.2      PARAMETER EFFECTS	   3-14

         3.2*1    Effect  of Crude  Cost  on
                  RVP-Control Costs	   3-14

         3.2.2    Effect  of Process  Investment
                  Exclus ion	   3-16

         3.2.3    Effect  of Ethanol  Blend Control	   3-19

         3.2.4    Effect  of Domestic  Butane  Price	   3-20

         3.2.5    Bunker  Fuel Sales  Volume Effects....   3-23

3.3      CONCLUSIONS	   3-25

                          SECTION  4

                      DETAILED RESULTS


4.1      CASES WITH CRUDE AT $22 PER BARREL	   4-2

4.2      ALTERNATE CRUDE-COST CASES	   4-18

4.3      NO-IN VESTMENT CASES	   4-26

4.4      CONTROLLED  ETHANOL BLENDING CASES	   4-30

4.5      BUTANE PRICE CASES	   4-33

4.6      INCREASED BUNKER FUEL SALES  CASES	   4-36

4.7      VARIABLE-VOLUME  GASOLINE  ADJUSTMENTS	   4-39
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                      TABLE OF  CONTENTS (Cont'd)



Paragraph                                                Page



4.8      NGL SECTOR COST  IMPACT	  4-41


         4.8.1    Butane  Markets	  4-41


         4.8.2    Butane  Storage	  4-44


         4.8.3    Natural  Gas  Processing Economics....  4-46


         4.8.4    Industry Cost Impact	  4-49


                      REPORT  BIBLIOGRAPHY	  4-53



                      LIST OF  APPENDICES



 A       PRODUCT  DEMAND  FORECASTS 	  A-1


 B       RAW MATERIAL SUPPLY  FORECAST	  B-l


 C       PRODUCT  SPECIFICATIONS	  C-l


 D       ECONOMIC AND FINANCIAL FACTORS	  D-l


 E       BASE CONFIGURATION	  E-l


 F-       OXYGENATE BLENDING  VALUES	  F-l
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                    LIST  OF  ILLUSTRATIONS


Figure                                                   Page


 2-1     Regions Defined  for  Modeling Refining
         Operations 	   2-3

 3-1     Refining Costs  for Control of RVP in
         Summer Gasoline	   3-5

 3-2     Added Cost of Controlled Gasoline
         (W/Crude @ $22/BBL)	   3-6

 3-3     Crude Cost Effect  on Refinery Costs
         For RVP-Control  (Region 3)	   3-15

 3-4     Crude Cost Effect  on Refining Plus NGL
         Costs for RVP-Control Region 3)	   3-17

 3-5     No-Investment Effect on RVP-Control
         Refining Costs  (Region 3)	   3-18
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                       LIST OF TABLES


Number                                                   Page


 2-1     REGION DEFINITIONS	   2-2

 2-2     REGIONAL RVP CONTROL LEVELS	   2-8

 2-3     CASES STUDIED	   2-12

 3-1     ESTIMATED COSTS FOR CONTROLLING MAXIMUM
         RVP OF SUMMER GASOLINE	   3-2

 3-2     REDUCTION IN U.S.  REFINERY PURCHASES
         OF NORMAL BUTANE	   3-8

 3-3     EFFECTS OF CONTROLLING  RVP OF  ETHANOL
         BLENDS	   3-19

 3-4     SUMMARY OF BUTANE  PRICE EFFECTS	   3-22

 3-5     SUMMARY OF BUNKER  FUEL  VOLUME  EFFECTS	   3-24

 4-1     EAST COAST MODEL RESULTS	   4-2

 4-2     MID-CONTINENT/ROCKIES/NORTHWEST
         MODEL RESULTS	   4-6

 4-3     GULF COAST MODEL RESULTS	   4-10

 4-4     CALIFORNIA MODEL RESULTS	   4-14

 4-5     GULF COAST MODEL RESULTS AT $17
         PER BARREL	   4-18

 4-6     GULF COAST MODEL RESULTS AT $27
         PER BARREL	   4-22

 4-7     GULF COAST MODEL RESULTS WITHOUT
         INVESTMENT.	   4-26

 4-8     GULF COAST MODEL RESULTS WITH  CONTROLLED
         ETHANOL BLENDING	   4-30

 4-9     GULF COAST MODEL RESULTS AT
         VARYING BUTANE  PRICES	   4-33

 4-10    GULF COAST MODEL WITH
         INCREASED BUNKER FUEL  SALES	   4-36

 4-11    NET INCOME-LOSS ESTIMATES	   4-40
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                   LIST OF TABLES  (Cont'd)

Number                                                   Page


 4-12    BUTANES REQUIRED AS PETROCHEMICAL
         FEEDSTOCKS  IN 1990	   4-42

 4-13    NORMAL-BUTANE UNDERGROUND STORAGE
         CAPACITY	   4-45

 4-14    GAS PROCESSING ECONOMICS	   4-47

 4-15    NGL SECTOR  COSTS	   4-51
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                          SECTION 1
                        INTRODUCTION
         This  report  presents the results  of  a study of  the
economic  impact,  on  the  U.  S.  refining  and  natural   gas
liquids  industries,   of  regulations  which  would  reduce  the
vapor  pressure  of  summer gasoline.   The study was  conducted
under  subcontract  to Southwest  Research Institute  (SwRI)  of
San Antonio,  Texas,   the  prime  contractor  for a work  assign-
ment   project   commissioned  by   the  U.   S.  Environmental
Protection Agency.*

         This  study   was  inititated  as  an  extension  and  re-
evaluation   of   earlier   study  on   the  same  subject.1t2,3
Decline  in  crude oil prices  during  1986 and several  aspects
of the earlier work were  noted as  having important  impacts on
the  results  of that  study.   As a  consequence,  EPA  recognized
the  need   for   further   study   of  vapor   pressure   control.
Furthermore,  EPA has  changed its concept  of  vapor  pressure
control  from one of  absolute change  (i.e., one,  two or  three
psi  reductions)  to one of relative change  (i.e.,  10, 20  or 30
percent  reduct ion).

         This  latest  study  expanded  the scope  of  the  earlier
study  to include  refining  models representing all  parts  of
the  U.S.**.    Use  of  alcohols  in   motor  gasoline   is more
appropriately  treated  in  this   study.    Interactions  among
natural  gas liquids  supply and  refining  and  petrochemicals
use  were modeled  in  this  study  rather  than being  prejudged
and  fixed as  in  the earlier work.
*Work Assignment B-3 of Contract  No.  68-03-3353
**The earlier  study used models  of  East  Coast, Gulf  Coast  and
  Great Lakes  refineries and  extrapolated  the  results  from
  these regions  to cover the  whole  nation.
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         After  a  review  of  results  from  initially-defined
cases, five  additional  cases were  defined and run to  extend
the sensitivity analyses embodied  in  this  study.  This  report
was,  therefore,  delayed  on  publication to allow  reporting  of
this additional work as part of  the whole  study.

1.1      STUDY BACKGROUND

         The  language  and  content of this report assume  that
the reader  is  generally  familiar with petroleum  refining and
natural  gas  liquids  production  and  use.   The report,  there-
fore,  makes  use  of terms  and references to  processes used  in
these  industries  without  definition.   On   the  other  hand,
understanding the  results does not  require intimate knowledge
of  refining  and  natural  gas liquids  technologies.  The study
can be  readily understood  with  only a  general   knowledge  of
the relationship  of  results to  gasoline manufacture, natural
gas liquids  utilization and  petrochemical  operations.

         Those  readers  who would  like  an  overview of  petro-
leum  refining and vapor  pressure  control are encouraged  to
review the introductory material  supplied  in the  final  report
of  the  earlier  study or  similar  material   included   in  the
recent report of  the National Petroleum Council^.
1.2      ACKNOWLEDGEMENTS

         During  the  design and  execution  of this  study,  Mr.
Michael Lidgard  of EPA, Ann Arbor,  and Mr.  Norman R.  Sefer of
Southwest Research Institute  contributed  suggestions  and sup-
port  and  produced  comments  concerning  final  documentation.
All   of   these   efforts  were   helpful  and  are  gratefully
acknowledged.
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1.3      REPORT ORGANIZATION

        "This  report  contains  four  sections  and  six  appen-
dices.   Following this  introduction,  Section  2 discusses the
approach  taken and the methodology  employed.   Section 3 sum-
marizes study  results  and Section 4 presents detailed results.
Supporting  information  is  presented  in Appendices  A through
F.   Bibliographies are  included  at  the end of  the  main body
of the report  and  with each appendix,  as appropriate.
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                          SECTION 2
                  APPROACH AND METHODOLOGY
         An  understanding  of approach,  premises and  assump-
tions  is  important  in  judging  the  applicability of  results
from any study and  in appreciating  its  inherent  strengths  and
limitations.   This  section  describes  the  approach taken  by
Bonner & Moore  Management  Science  in estimating  the  refining
and natural  gas  liquids (NGL) industry  costs  associated with
gasoline  vapor  pressure  reduction  in  the  United   States.
Descriptions  are  also provided  for  the major study  premises
and assumpt ions.
2.1      GENERAL APPROACH AND METHODOLOGY

         Estimates   of   the  added   costs  associated   with
restricting  gasoline vapor pressure  were  prepared by  deter-
mining  the  increased refining  costs  in each of  four  regions
of the  U. S.  and  by bracketing the cost implications  of  con-
sequent  actions within  the  NGL   sector.    The  four  regions
defined for  this study are  identified  in Table  2-1  and  mapped
in Fi gure 2-1.
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                           TABLE 2-1
                      REGION DEFINITIONS
    REGION                     DESCRIPTION
               East  Coast, PADD 1


               Mid-Continent, Rocky Mountains,  Northwest,

                 PADD 2,  PADD 4 and PADD  5  (ex. California)


               Gulf  Coast, PADD 3


               California
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                     Banner 6 Moore Management Science

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 GO
 s:
 »
 i
 00
                                                                                              ,;-i"t-';''
ro

LO
Figure  2-1.   Regions Defined for Modeling Refining Operations

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         Mathematical (linear programming) models of  the com-
posite  refining*  capability  in  these   four   regions  were
constructed using RPMS, a proprietary Bonner & Moore  software
and  database  system.    Each  regional   refining  model  was
required  to meet  demand  forecasts   for   1990  (adjusted for
summer  seasonal  output  variation)  using  projected   crude
supplies for that  same  future time.   Gasoline production was
modeled  to  recognize  three  grades:   an  unleaded premium,   an
unleaded regular  and a  leaded  regular**  with  a maximum TEL
content  of  0.1  gram per  gallon.    Each  model  was run with
gasoline vapor  pressure set  to  correspond to current  limits
and,  subsequently,  at three levels of reduction  from  current
limitations.   Differences  in total refining costs, as  deter-
mined  from  these  runs, provided  the desired  refining cost
estimates for each  region modeled.

         Results from analyses of  these  regions  were  combined
to  provide  a  national  estimate.   Probable cost  implications
of  NGL  sector  actions were added  to  provide estimates  of the
combined refining and NGL costs.
*   Olefins  production from  steam cracking  was  also  repre-
    sented   in   these  models   since   NGL  uses  and   other
    feedstocks  for  olefin  production represent close  connec-
    tions with  refining and natural  gas  processing.
**  The  probable elimination  of  leaded  gasoline  sales  and
    substitution of a  middle-octane  unleaded  grade  is  covered
    since  the  clear  octane of  leaded  gasoline  is  approxi-
    mately  the  same as an  89 (R+M)/2 unleaded  gasoline.
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         An important simplifying assumption embodied  in this
approach is that  industry-level  results will be adequate  for
current and preliminary decision-making with respect  to vapor
pressure  reductions.    This  underlying  assumption precludes
use of  study  results  for  decisions at  the  sub-regional   and
individual refinery levels.

         Refining model  study  premises are summarized  in  the
following paragraphs.
2.1.1    Product Demands

         All product  requirements  from each refining  region,
except  for  sulfur,  butadiene and  petroleum coke, were  fixed
at forecasted  refining  demand levels for each  region.   These
by-products  were  allowed  to  vary at  prices determined  from
current market  quotations.   Three forecasts based on  varying
crude oil costs, were prepared.  Forecasts  of product  demands
and related  refinery output are presented  in Appendix  A.
2.1.2    Crude Availabi1i t ies

         Projections  of  crude  supply were  developed for  17
quality classes in each  region.  These classes  are  defined  in
terms  of   sulfur  and  gravity  ranges.    A  reasonable  swing
crude,  selected  as  representative   in  terms   of  supply and
cost, was  defined for  each  region.   Arabian light crude oil
was  chosen  for Regions  1,  2 and  3.   Region  4 was  assigned
North  Slope  Crude.   Swing  crudes were  allowed  to  vary  in
volume  as  required  by  overall product  output  and  process
volume  gains  and  losses.   The data  summarized in Section  4
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have  the  17 quality  classes collapsed  into  four categories
solely for  ease  of reporting results.   Details  of crude oil
supply forecasts  for  each  of the three crude-cost situations
are presented in Appendix B.
2.1.3    Other Raw Materials

         In  addition  to  each  region's  slate  of crude  oils,
other raw materials  included ethane, propane, normal  butane,
iso-butane  and  natural  gasoline.   Availabilities were  fore-
cast  for  three  crude-cost  situations.   These were  based  on
indigenous  production as  well  as interregional  movements  and
foreign source imports.   Details are presented in Appendix B.
2.1.4    Refinery Process Configuration

         Capacity limits for all major processes were  imposed
as  configurations  for  each region.   These  capacities were
based on  public  information representing  capacities as of  1
January 1986  (Oil <5c  Gas Journal,  March 24, 1986).   Announced
changes (additions and  deletions)  in major process  capacities
were  applied  to existing  regional  capacities.   Calibration
for 1990 capacities  was obtained from model results  from cases
representing  annual  average  product demands and raw material
supplies  for  each region.   Auxiliary process capacities were
allowed  to take  any  required  level  at  costs representing
typical equipment construction.   All major processes,  except
for cat cracking of  untreated  feeds, were  allowed to be built
at  costs   typical  of  the  sizes  installed  in  recent   years.
Preventing  the addition of  untreated-feed cat  cracking capa-
city  reflects constraints  on  atmospheric  emissions  (parti-
cularily  sulfur  oxides).    Base  configuration  details  are
presented  in Appendix E.
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2.1.5    Economics

        "All costs  and  prices were  based  on first half  1986
values.  Arabian  crude  to Regions 1,  2  and 3 was priced  FOB
the  Arabian Gulf  plus  transportation  to   the  East  and  Gulf
Coasts and  to  the  Great  Lakes from the Gulf Coast.  Region  4
crude price was set  to an equivalent  laid-in  cost  for  Alaskan
crude.  Natural  gas liquids were priced using  forecasts  pre-
pared  by  Resource  Planning  Consultants'  Hydrocarbon  Pricing
Model using crude  oil  prices of $17, $22 and $27.  Purchased
electrical power was priced  according  to regional  quotations.
No  escalation  to  1990  was  employed,  i.e.,  a  constant  1986
dollar value was used.  Details  are  presented  in Appendix D.
2.1.6    Product Qualities

         Except  for  gasoline, all  products  were  required  to
meet product  quality  specifications as presented  in  Appendix
C.  Gasoline  octanes were  forced  to meet  current quality  spe-
cifications.   Lead content of  leaded  regular was  limited  to
0.1 gram/gallon, maximum.

         Current summer gasoline  vapor  pressure  and distilla-
tion limits  were determined from the ASTM D  439 schedule  for
seasonal  and  geographic   volatility   classes for  the  areas
supplied  by   refineries in  each   region.   Details   on  product
specifications are presented  in Appendix  C.

         The  several volatility requirements  imposed  on  gaso-
line blends  of each regional  model  represent the  volumetric
weighting  of  volatility  requirements   for  gasolines   to  each
region  supplied  from  a  given refining  center.   Table  2-2
shows  the RVP summer  maxima  using the  current  ASTM D  439
schedule,  state-level  gasoline  consumptions  and  potential
levels of vapor  pressure  reduction.
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                          TABLE 2-2
                 REGIONAL RVP CONTROL  LEVELS
Summer Maximum RVP, psi

Region 1
Region 2
Region 3
Region 4
Bases
11.75
11.01
10.92
9.23
1st Reduction
10.73
10.05
9.97
8.43
2nd Reduction
9.71
9.09
9.02
7.63
3rd Reduct ion
8.69
8.14
8.07
6.82
         Survey  data  indicate that gasolines  currently being
supplied  are generally  below  the maximum  RVP  suggested  by
ASTM D  439.   No credit  has  been recognized  in  this  study  to
reflect  that first-increment  reductions may  be  less  costly
because of current RVP  levels  being  below ASTM standards.

         Table  2-2  limits  were  applied  to  each  of  three
grades  of  gasoline  depicted  in  each model.   Other  quality
specifications  for gasoline  as well  as  other blended  products
are presented in Appendix  C.
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2.1.7    Alcohol Usage

       ' f At EPA's  request,  gasolines  were required to  repre-
sent use of methanol-plus-tertiary butyl alcohol  in a  two-to-
one ratio as a constituent  in three percent of all gasolines.
The  fixed  concentration  imposed for this alcohol mixture  was
7.5  volume  percent.   Ethanol was required to be  blended  into
seven  percent  of  all  gasoline.   When  used  with   unleaded
regular  to  produce gasohol, the  ratio  was  fixed at  one part
ethanol  in  ten parts of unleaded  regular.  In the cases where
ethanol  blends  were   .equired  to  meet  restricted  vapor
pressure,  the  same fixed  ratio  of alcohol to hydrocarbon  was
employed.

         Regional  use  of  alcohols was  varied  to reflect  the
same  proportion  of  alcohol  used  in  recent   years.    The
national uses  were,  however, fixed  to  satisfy the three  and
seven percent  requirements  prescribed by EPA.
2.2      STUDY PARAMETERS AND CASES

         Certain assumptions  and  conditions were analyzed  to
determine  their  effects  on  the  cost  of  reducing  gasoline
vapor pressure.
2.2.1    Crude Acquisition Cost

         Three  crude-cost  alternatives  were  recognized  in
product-demand  and  raw-material-supply  forecasting.   A  low-
cost  alternative was  characterized  by  imposing a  $17  per
barrel  average  acquisition  cost;  a  middle-cost  alternative
was  characterized  by imposing a $22  per barrel cost; and,  a
high-cost alternative was characterized  by  imposing  a $27 per
barrel  cost.  As  shown  by the forecast  results  in Appendix  A
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and B, low-cost crude results in greater demands  for products
and reduced domestic  crude  production.   High-cost crude  pro-
vides higher  domestic  crude  supply and  causes   lower demand
for  refined  products.   Low  and  high  crude-cost cases  were
evaluated for Region 3  only.
2.2.2    No-Investment Effects

         To assess the consequences of  imposing vapor-pressure
control without  allowing  time  for planning,  engineering  and
construction of new or expanded process  capacity,  a  series  of
Region  3  cases were  run  in which  no  process  investment  was
allowed.   In other words, reduced  vapor  pressure had  to  be
accomplished  within  the  processing  capability  needed  for
normal  (current) vapor pressure gasoline.
2.2.3    Control of Ethano1-Containing Gasoline

         One  set  of  cases  for  the Region  3  model  involved
refinery blending of ethanol  into  a  hydrocarbon  base  stock  to
meet  finished  unleaded  regular gasoline specifications.  All
other  cases  simulated  ethanol  being  splash  blended  into
finished unleaded  regular  (to produce gasohol).   The  purpose
of  this  set of cases  was   to  assess  the cost  of  controlling
vapor pressure of ethanol  blends.
2.2.4    Butane Market Price  Effects

         An  examination  of  the  effects  of  butane  price  on
butane  use was  added to  this study  after  a  review of  the
results  for   the  cases  described above.    Three  cases  were
defined  to assess  the changes  in domestic  butane  utilization
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as  price was  decreased  toward  a  fuel  value equivalent  to
natural  gas  at $2.41  per IVMBtu.   Iso-butane price  was  also
decreased even though  earlier  results  indicated  that  domestic
supply would be used at  projected market  price.
2.2.5    Bunker Sales Volume  Effects

         Two  cases were  added  to  the  study  to  measure  the
effects of  increasing the  demand for  bunker fuel (at constant
market  price)  to  reflect  the  idea   that  world  markets  for
high-sulfur fuel oil are  not  affected by small changes in the
U.S.  supply.   Bunker demand  was increased  by 15,000 barrels
per day, or by  approximately  14  percent.
2.2.6    Case Run  Summary

         Table  2-3 identifies the  cases  examined in terms of
parameter selections, regions and RVP control level.  Note  that
most,  but  not all,  combinations  of conditions  were examined
with crude at $22  per barrel.   Effects of crude cost,  invest-
ment and ethanol blend control were studied  only  for Region 3.
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 I
 oo
                                                               TABLE 2-3
CASES STUDIED


Annual — — — •




Summer Reduction

Average Base RVP
Crude e $17/bbl
Region 3
Crude § $22/bbl
Region 1 X
Region 2 X
Region 3 X
No Investment
Ethanol w/control
Butane price variation
Increased bunker sales
Region 4 X
Crude e $27/bbl
Region 3
* RVP half way between second and third

X

X
X
X



X
X

X
levels

First

X

X
X
X
X
X


X

X


Second

X

X
X
X
X
X
*
X
X

X


Third

X

X
X
X
X
X
*

X

X

to

t-»
to

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2.3      STUDY LIMITATIONS AND AREAS EXCLUDED

         Inherent in the industry-level scope and methodology
of this study  are certain  limitations  in  the range of appli-
cability  of  results.     For  example,  costs   which  may  be
experienced at specific refineries could be  larger or smaller
than  those  measured  in  this  study.    Changes   in  supply
logistics  caused  by regional  changes  in  manufacturing costs
cannot  be  addressed  with  regionally  separated  models  as
employed.

         Modeling  assumptions  embodied  in  the mathematical
depictions of  refinery technologies are not  discussed in  this
report  because details  are  subject  to  repeated  and nearly
continuous scrutiny and improvement derived  from previous and
current studies,  both  private and  public,  and  because  the
scope of this  study  and  this document  do  not call for review
of modeling details.

         In  addition to  the general caution  that industry-
level model  results  do not  reflect  the  extremes of  specific
refining situations,  there  are  four  other   limitations which
should be noted, namely:

         1)   Changes  in  behavior  of  end-use  consumers  are
              assumed  to  be only  those  embodied  in demand
               forecast  variations associated  with different
              crude costs.

         2)   Reduced evaporative  losses and improved miles-
              per-gallon effects  from reducing  gasoline vapor
              pressure  are   independent of  regionality (e.g.
              not affected  by the base summer  gasoline vapor
              pressure).     This   also  implies  that  summer
              driving habits  and  regional car population  com-
              positions are  uniform among regions.
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         3)   Cost  assessment  does  not   address   how  added
              costs for  RVP  control would  be  borne.   If  the
              pump  price  for  gasoline  were  increased,   for
              example, diesel-powered  vehicle sales might  be
              increased as a consequence.
         4)   While investments for control  of  summer gaso-
              line were  required  to be amortized  in that  part
              of  each  year,  no credit  has  been given to  the
              value of  such  facilities during  other parts  of
              the year*.

         Several  areas  were  excluded  from  this  study which
are related to the  issue of  reduced gasoline volatility or  to
study premises  and model  assumptions.   These exclusions  do
not necessarily  imply lack  of concern on  the part of  those
involved  in  this  study  or  lack  of  importance.  These exclu-
s ions are:

         1)   Deviations from assumed economics, e.g., changes
              in  labor  costs,  capital  costs,  tax  rates,  etc.
              have  not been  studied.

         2)   Major changes  in crude  supply or product  dis-
              tribution  logistics have not  been considered.

         3)   Technology  breakthroughs in  refinery processes
              or  in end-use  of  fuels were  not  considered.
*Prior study work  indicated  that  such  value  is  small.
SWR-8701                                                  2-14
                     Bonner B Moore Management Science

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         4)   Consequential  changes  in  refinery  emissions
              have not been evaluated.

         5)   A  limit  of 0.1  gram/gallon  maximum lead  alkyl
              was  imposed  on  leaded gasoline.  No assessment
              of effects from introduction of a third  unleaded
              grade or the elimination of  leaded  gasoline  was
              made.

         6)   This  study   assumed  that  enough  fuel-grade
              alcohol  of  each  type  would  be  available  for
              inclusion  at  the  prescribed  concentrations  in
              al 1  gasolines.   No  attempt  was made to  deter-
              mine  how  such  alcohol  might  be supplied,  the
              price at  which  it  could  be  made available,  or
              the  economics  of  alcohol blending.    Methanol
              for  synthesis of MTBE was  treated as a  separate
              raw material and assumed  to  be in ample supply.

         7)   Although   it   is   theoretically  possible   to
              restrict  summer  vapor  pressure  of  only  that
              gasoline  sold  in   non-compliance   metropolitan
              areas,  this  study  does  not  address the  poten-
              tially  lower manufacturing costs or the  higher
              segregation and distribution costs  of doing  so.
SWR-8701             Bonnsr B Moore Management Science                  2-15

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                          SECTION 3
                     SUMMARY OF RESULTS
         This section  summarizes  and  analyzes study  results.
Detailed  results  from which  these summaries  have  been pre-
pared  are presented  in  Section  4.   Supporting  material   is
provided  in appendices.

         All  results  are  based  on  forecasts  of  product
demands and  crude  supplies  for  the year  1990.  Economics are
based  on   prices  for  the   first  half of  1986  and  constant
(non-inflated)  1986  dollar  values.    Refinery   output   to
satisfy  projected  demands   is  based  largely  on   historical
distribution  patterns.   For  example, Gulf  Coast  refineries
are assumed  to  continue to  supply large volumes of  products
to East Coast and Midcontinent markets.

3.1       NATIONAL AND REGIONAL ESTIMATED COSTS

          Since   the  regional  definitions   of  this   study
comprise  all 50  states,  national cost  estimates   are  simply
the  sums  of  regional  costs  for  each level  of RVP  control.
These  are presented  in  Table 3-1.   The  first  sheet of  this
table  shows  daily  costs and an  annual  extension  based on  a
five-month,  i.e.,  152-day,  summer  control period.   The  second
sheet  of  Table  3-1 presents results expressed as dollars per
barrel  of gasoline.   Both  sheets show  cost  components for
direct  refining,   refining   income  loss(*)   and NGL-Industry
impacts.   Of these  three,  only  direct  refining costs  should
be  considered  societal  since  income loss  and NGL-Industry
costs  would  appear  as  savings   to  other  elements  of the
nation's  economy.
 *'  Income loss is explained and detailed  in Subsection  4.5

SWR-8701            Bonner B Moore Management Science                    3-1

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                                                TABLE 3-1
                                      ESTIMATED COST for CONTROLLING

                                      MAXIMUM RVP of SUMMER GASOLINE

                                (Average Acquisition Cost of Crude « S22/BBL)
                                            (Sheet 1 of 2)
Reduction Level

REGION 1
Direct Refining Cost(*),
Refining Income Loss,
NGL- Industry Cost,
Subtotal Cost,
REGION 2
Direct Refining CostC*),
Refining Income Loss,
NGL- Industry Cost,
Subtotal Cost,
REGION 3
Direct Refining Cost(*),
Refining Income Loss,
NGL- Industry Cost,
Subtotal Cost,
REGION 4
Direct Refining Cost(*),
Refining Income Loss,
NGL -Industry Cost,
Subtotal Cost,
NATIONAL Costs, M$/D
Direct Refining Cost<*)
Refining Income Loss
NGL -Indus try Cost


MS/D
MS/D
MS/D
MS/D

MS/D
MS/D
MS/D
MS/D

MS/D
MS/D
MS/D
MS/D

MS/D
MS/D
MS/D
MS/D




Total Cost, MS/D
NATIONAL Costs, MMS/Year
Direct Refining Cost<*>
Refining Income Loss
NGL -Industry Cost




Total Cost, MMS/Year
(*) Societal Costs

1st

11.0
5.2
18.7
34.9

173.4
18.6
167.2
359.2

370.8
24.9
910.0
1,305.7

32.1
6.8
0.0
38.9

587.3
55.5
1,095.9
1,738.7

89.3
8.4
166.6
264.3

2nd

83.6
4.5
0.0
88.1

491.3
14.4
119.7
625.4

555.6
18.6
198.6
772.8

123.0
5.8
0.0
128.8

1,253.4
43.4
318.4
1,615.2

190.5
6.6
48.4
245.5

1st+2nd

94.6
9.7
18.7
122.9

664.7
33.0
286.9
984.6

926.4
43.6
1,108.6
2,078.6

155.1
12.6
0.0
167.7

1,840.7
98.9
1,414.2
3,353.8

279.8
15.0
215.0
509.8

3rd

164.6
4.5
0.0
169.1

675.0
14.4
2.1
691.5

627.6
18.5
12.4
658.5

177.6
5.8
0.0
183.3

1,644.7
43.3
14.4
1,702.4

250.0
6.6
2.2
258.8

1st+2nd*3rd

259.1
14.1
18.7
292.0

1,339.6
47.5
289.0
1,676.1

1,554.0
62.1
1,121.0
2,737.1

332.6
18.4
0.0
351.1

3,485.4
142.1
1,428.7
5,056.2

529.8
21.6
217.2
768.5

SWR-8701
Bonner B Moore Management Science
                                                                                         3-2

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                                                  TABLE  3-1
                                        ESTIMATED COST for CONTROLLING

                                        MAXIMUM RVP of SUMMER GASOLINE

                                 (Average Acquisition Cost of Crude » S22/BBL)
                                              (Sheet 2 of 2)
Reduction Level
REGION 1
Direct Refining CostC*),
Refining Income Loss,
NGL- Industry Cost,
Subtotal Cost,
REGION 2
Direct Refining Cost(*>,
Refining Income Loss,
NGL -Industry Cost,
Subtotal Cost,
REGION 3
Direct Refining Cost(*),
Refining Income Loss,
NGL -Industry Cost,
Subtotal Cost,
REGION 4
Direct Refining Cost(*),
Refining Income Loss,
NGL -Industry Cost,
Subtotal Cost,
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
S/bbl
NATIONAL Costs, S/bbl
Direct Refining Cost(*>
Refining Income Loss
NGL -Industry Cost
Total Cost, $/bbl
(*) Societal Costs

1st
0.017
0.008
0.029
0.054
0.084
0.009
0.081
0.174
0.119
0.008
0.292
0.419
0.033
0.007
0.000
0.040
0.086
0.008
0.161
0.256

2nd
0.130
0.007
0.000
0.137
0.238
0.007
0.058
0.303
0.179
0.006
0.064
0.249
0.127
0.006
0.000
0.133
0.185
0.006
0.047
0.239

1st+2nd
0.147
0.015
0.029
0.191
0.322
0.016
0.139
0.477
0.298
0.014
0.356
0.668
0.160
0.013
0.000
0.173
0.272
0.015
0.208
0.494

3rd
0.257
0.007
0.000
0.264
0.327
0.007
0.001
0.335
0.203
0.006
0.004
0.213
0.184
0.006
0.000
0.190
0.244
0.006
0.002
0.252

1st+2nd*3rd
0.404
0.022
0.029
0.455
0.649
0.023
0.140
0.812
0.501
0.020
0.360
0.881
0.344
0.019
0.000
0.363
0.515
0.021
0.210
0.747

SWR-8701
                                Banner B Moore Management Science
3-3

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3.1.1    Refining Costs

         -Graphical  presentation  of  refining  costs are  shown
in Figures 3-1 and 3-2.

         Figure  3-1  illustrates  refining costs at  three per-
centage   levels   by   Region.     Refining  cost   effects,   as
illustrated  in  Figure  3-2,   show  the  strong  influence  of
regional  natural  gas  prices.    Relatively  high  prices  in
Regions  1  and  4  cause  RVP-control  costs in  those  regions  to
be  lower  than  control costs  in Regions  2  and 3.    This  rela-
tionship  results  from  the  alternate  disposition  of  light
hydrocarbons as   refinery  fuel.    These  hydrocarbons must  be
backed out of gasoline  to  reduce RVP.  At best, refinery fuel
can  have  no greater  value than purchased  natural gas  cost.
Consequently,  in  Regions 1 and 4,  where natural  gas  is  rela-
tively costly,  the  alternate  value  for  light  hydrocarbons  is
greater  than  in  Regions 2  and  3.   Thus, the  light  hydrocar-
bons'  loss  in  value,  when not sold  as  gasoline,  is  less  in
Regions  1 and 4.

         Refining results  from  this  study differ  from earlier
results1 because  of three major differences  in study premises.

         1)   This  study recognizes  an  increase  in  mile-per-
              gallons  efficiency with  lower-RVP  (i.e.,  higher
              density)  gasoline as  well  as  a   reduction  in
              evaporative  leases.

         2)   This  study requires  all  process investments for
              RVP control   to  be amortized  during  the  summer
              control  period,  i.e.,  152  days.
SWR-8701             Bonner 6 Moore Management Science                   3-4

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 CO
 z:
 •x
 I
 CD
 -J
 O
           
-------
   0.80
   0.70'
   0.60
 CD
 ffl
 «» 0.50
 o
 o
 Q
 UJ

 g 0.40
   0.30
   0.20
                                 77
   0.10
                       10                20



                           % OF BASE RVP REDUCTION
                                   30
        Figure 3-2
Added  Cost  of Controlled  Gasoline

(Crude @ $22/BBL)
SWR-8701
                        Homer 6 Moore Management Science
                                            3-6

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         3)   Crude  cost  is  treated  as a  parameter  in  this

              study.  The  central  value of $22 per barrel  is
              well below the $31 per barrel value  used  in  the

              earlier study.


         When  these  changes  are   taken  into  account*,   the

earlier  study  results  compare reasonably  well  and any  dis-
crepancy  is  easily  explained by  several   other  changes  and

refinements  in  this  current  study,   e.g.,   revised   demand
forecasts.


         Refining costs shown  in Table  3-1  include an adjust-

ment to recognize that  reducing RVP reduces refining  industry

revenue  and,  thus,  its margin  from gasoline  sales because
less gasoline is sold.  Value  of  lost sales has  been  approxi-

mated  by  using  a refining  margin  on  gasoline of  5.6 percent

applied  to the  incremental  cost  of gasoline at  each reduced

RVP level  times the  decrease  in gasoline sales.   This adjust-

ment  ranges  from  $0.009 per  barrel to  $0.006 per  barrel  for

each  increment of RVP control.
•Results  from  the earlier  study  placed  the  cost  of  a  2-psia
 reduction  in  RVP at  $0.65  to  $0.68  per  barrel.   Adjusting
 those results  for crude cost  changes between  the  two
 studies  indicates an  equivalent  range  of  $0.46  to  $0.48
 per barrel  for crude  at $22 per  barrel.    Accounting for
 gasoline demand decreased  by  improved  mileage and  lower
 evaporative losses  is a reduction of approximately $0.26 per
 barrel which  adjusts  the  above-produced  range to $0.20  to
 $0.22 per  barrel.   Using  a 1990  summer  average  (uncontrolled
 RVP) of  10.78, a 2-psi adjustment amounts  to  a  decrease of
 18.6 percent.  At this reduction level,  the  curve  for
 national costs in Figure  3-2  shows  a control  cost  of approx-
 imately  $0.32  per barrel.   Comparing  this latter  figure to
 the adjusted  cost range from  the earlier  study  suggests that
 the difference in amortization  (restricted to summer period
 only) adds  $0.10 to  $0.12  per barrel to RVP  control  cost.
SWR-8701                                                   3-7
                     Bonnw B Moore Management Science

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3.1.2    NGL Industry Costs

        |The refining cost  increases  resulting from gasoline
RVP  control  are only  a  portion of  the costs which  will  be
experienced  by  the domestic  energy industry.   Domestic gas
processors will  also  be  impacted by  lower  values  for a por-
tion of  their  production and  the  entire  natural gas liquids
(NGL)  industry  will  be  strongly  affected.    A  principal
response of  the refining industry to reduced gasoline volati-
lity  is  to  reduce purchases  of  normal-butane  for gasoline
blending, which will depress the value  of this product.

         Results  presented  in  Table  3-2  show  reduction  in
refinery purchases of normal-butane  (excluding  volumes con-
tained  in  North  Slope   Crude  and  purchases  for  ethylene
feedstock use).

                          TABLE 3-2

             REDUCTION IN U.S. REFINERY  PURCHASES
                      OF NORMAL-BUTANE
                            (MBCD)
            RVP
         Reduct ion             Reduction in Purchases*
      (% of Base RVP)

            8.7                       -119.5
           17.4                       -203.5
           26.1                       -205.4
       *Reduction in refinery purchases relative to those
        for the summer base case with $22 crude cost.
SWR"8701

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         U.S.  gas processors produced 202 MBCD of normal-butane
in 1985; but  they  are projected to produce  only  194 MBCD in
1990.    "Phe  large  reductions  in refinery  purchases  shown in
refining model results indicate that gas processors will have
to seek  alternative  markets  for  most  of  their  production.
Possible alternate markets include the following:

         •  Ethylene  feedstock

         •  Feedstock  foe  other chemicals (maleic anhydride,
            acetic acid,  aerosols, MTBE, etc.)

         •  Boiler fuel

Existing "Other  chemical"  feedstock and household/commercial
fuel   markets   are  small  -  less  than   15,000  bpd,   and  are
limited by  process  and equipment constraints.  Thus  ethylene
feedstock and  boiler  fuel  uses would  have to absorb most of
the butane displaced  from refineries.

         The alternative of leaving butane  in  the natural  gas
stream at the  gas  processing  plant is considered impractical
since butane  has  to  be  recovered  in  order to extract  ethane
and propane  from raw natural  gas.  Ethane is required  as an
ethylene feedstock by  those ethylene plants without  the capa-
city  to  substitute other feedstocks.   A substantial portion
of propane  production goes to  home  heating and agricultural
uses without alternative fuel capability.   In  addition,  rein-
jection of  butane  into  the natural  gas  stream represents an
economic penalty  to  the gas  processor  and  is prohibited by
dew point specifications of most gas transmission pipelines.
SWR-8701                                                 3.9
                    Bonnet E Moore Management Science

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         Our  modeling  approach   allowed   the  purchase  of
desired volumes of butane for refining and ethylene feedstock
needs.  However, refining was not required to purchase all of
the  domestic  supply  since  markets  exist   outside  of   the
refining sector  and  a  study  objective was  to  determine  how
refinery purchases will respond to volatility control.

         Natural  gas  processors  will  be  forced  to market
normal-butane  released  from refineries to  boiler fuel and/or
ethylene  feedstock  markets  at   values  substantially  below
historical butane prices.   The lower values  for normal-butane
and other  NGLs represent a  cost  of  volati1ity control which
will be borne by the gas processing industry.  The normal-butane
regional fuel  value.   Our analysis  indicates that a  signifi-
cant  portion  of  the  normal-butane  displaced  from  gasoline
blending will  have  to  be marketed as  boiler fuel because of
the saturation of other markets.

         Our analysis  shows  that  increased usage  of butane as
an  ethylene feedstock  will be  primarily  at  the expense of
naphtha  and gas  oil   feedstocks.    This conclusion   is drawn
from  analysis  of feedstock  flexibility  of   individual olefin
plants.   Most  U.S.  olefin  plants  were designed for either
light   feedstocks   (ethane,   propane)   or   heavy  feedstocks
(naphtha,  gas  oil,  natural  gasoline,  etc.).  Only  one  U.S.
olefin  plant  has  been  specifically  designed to  crack butane
and this plant  has  been substantially  modified so that it is
now  a  light  feedstock  cracker  without butane  capability.
Optimum  cracking  conditions  (residence time,   steam-to-oil
ratio,  heat  balance)  differ for  butane as  compared to ethane
SWR-8701            BonnareMoorBManaflBmentSctence                  3-10

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or propane  so  it  is  usually cracked as a separate  feedstock.
Furthermore, cracking  butane yields more  coproducts than do
light feedstocks, so recovery systems  have  to be  sized  accor-
dingly.     Because   of   these  considerations,  most   plants
designed  for  light  feedstocks  have  little  or  no   butane
feedstock flexibility.

         On  the  other  hand,  olefin plants  designed   for
naphtha  can usually  crack  up  to  20  percent  butane without
design  limitations.    Most  U.S.  olefin plants  designed  for
heavy  liquids  have  been modified  to   increase their flexibi-
lity for ethane and propane  in  order to take advantage  of  the
generally  attractive  economics of  these  feedstocks.    Our
modeling  effort  reflects  the   industry   capacity   feedstock
1imi tat ions.

         Within  the  physical constraints  of the  olefin plant
feedstock flexibility,  ethylene feedstocks compete  with  each
other  on  an economic basis.  This  raises  the question as  to
whether  a  reduction  in  butane prices  to  fuel  value would
lower  other  LPG feedstocks  to  comparable  levels.   Our  answer
is as  follows.

         Ethane  prices  in  this  study are  approximately at
fuel  value   without  any  adjustment  for  lower normal-butane
values.   Therefore,  any  further  reduction  in  ethane  price
will only reduce ethane  supply  or  shift ethane  to boiler  fuel
markets  at  approximately  the  same price.   As  a  result, no
effect  on ethane price  is  anticipated.
SWR-8701                                                 3.11
                     Bonnar B Moore Management Science

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         Refining model  results  show propane  purchases for
ethylene feedstock consistent with needs of plants with  mini-
mum  feedstock  flexibility.*  These  plants cannot substitute
any appreciable volume of butane within present configuration
so no adjustment was made in propane  prices.

         The model results  show that  even  at  fuel value,  nor-
mal butane is still not an  economically attractive substitute
for natural  gasoline  as  an  ethylene  feedstock.  Our analysis
indicates  that  75  to 85 Mbpd  of  butanes  (including refinery
source  butane)  can  be cracked  as an  olefin  feedstock  given
the availability of  other  products and the existing physical
constraints  of  the  industry.    Thus, at  least  some  of the
available  domestic  supply  will  have to be marketed as  fuel
and this increment will set  the market price.  While our ana-
lysis  of  ethylene   feedstocks  does  not  show  cost   impacts
beyond normal-butane, lower  normal-butane  prices  will  have  an
impact  on  iso-butane price.   Lower  iso-butane prices  would
result  because  normal-butane can be  isomerized  to  iso-butane
(at a cost of about six cents per  gallon).

         The NGL sector costs shown  in Table  3-1  are based  on
reduced  normal  and  iso-Butane values.   These reduced  values
will  impact  all  of   the  domestic supply  of  butanes  (normal
plus  iso-Butane)  except  for west  coast  production because  a
two-tier price  system could  not  exist.    Total  costs   to the
NGL sector at  the  3  RVP  reduction level  are  calculated  to  be
'Approximately 17.4 billion pounds of  the  ethylene  industry's
 total annual capacity of 35.0 billion pounds  is  classified
 as  LPG  capacity.   Most  of   these  plants can  utilize  only
 ethane  or    propane   for  feedstock.    The   remaining  17.6
 billion  pounds  of   capacity  can  utilize  a  full  range of
 feedstocks  from  ethane  through  naphtha (and  in  some  instan-
 ces through gas oil).
SWR-8701             BonmrB Moore Management Science                 3-12

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$2 million  per  day during the  summer  period or $312 million
annually>   However,  the NGL costs  in  Table 3-1 reflect only
those sales  to  uses  other  than refining and olefin  feedstock
applicat ions.

         Non-refinery volumes  include  normal-butane  used as  a
feedstock for petrochemicals other  than olefins  (i.e.,  maleic
anhydride,  acetic  acid,  and  aerosols)  and  normal-butane used
as boiler  fuel.    Iso-butane  totals include volumes  consumed
for propylene oxide  and for  aerosols.   Sales to the  refining
sector  were not  included  because  lower  revenue  to the NGL
sector would be offset by lower costs  to refining.

         Regions  2 and  3  show  increasing  costs  to the NGL
sector  as  RVP  is  reduced  from  one  to  three  psia because
increasing  amounts of  domestic butane  are  displaced  from  the
refining  sector.    In  Region  1,   non-refinery  sales  are   a
constant  volume  for  all RVP  cases  and reductions  in  refinery
purchases from case to  case would be accomplished  by reducing
transfers  from  other regions.   Since  there  is  no  change  in
non-refinery  purchases  over  the  three levels  of  RVP  reduc-
tio'n, all  NGL costs  in  Region 1 would occur  with  the  first
reduction case.

          In  Region 4,  the  refineries  are shown  purchasing  no
normal-butane in  the  base case.   Butane  values would  there-
fore, be  unaffected  by  volatility  reductions and  would  cause
no impact on the NGL sector in  that  region.
SWR-8701                                               3_13
                     Bonner 6 Moore Management Science

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3.2      PARAMETER EFFECTS

        ^Three parameters were  included  in  the design of  this
study.   One  was  crude  cost,  which  was  studied  at   three
levels, namely, $17, $22 and $27 average acquisition cost  per
barrel.  Another was process investment, which was  studied as
a  "go"  or  "no-go" possibility.   A  third was control or  non-
control  of  ethanol-containing  gasolines  to  meet  restricted
vapor pressure.
3.2.1    Effect of Crude Cost on RVP-Control Costs

         Usi.ng  the  refining  model   for  Region  3,  cases  for
control of summer gasoline RVP were  prepared at  crude  and  NGL
costs  consistent  with  $17  and  $27   per  barrel.     These
translate  into  estimated  Gulf Coast landed costs  for  Arabian
Light  Crude  of  $17.94  and $28.41  per  barrel,  respectively.
Associated with  each  crude cost were corresponding  forecasts
for refined product output requirements  and crude  supplies  as
well  as  costs of other  raw materials  and purchased  natural
gas and electrical energy.  Capital  costs  and  other  operating
costs were not varied.

         Refining  control  costs  for Region  3  at  the  three
levels  of  crude  cost are  shown  graphically  in Figure 3-3.
The   interesting  aspect  of  this  figure  is   that   refining
control  cost   is  not  affected  greatly  by changes  in  crude
cost.   It  also shows that refining  costs  are  at (or  near)  a
maximum when  1990 crude prices are  at  $22 per  barrel.  This
indicates  that  lower  ($17) crude cost  is enough  to  overcome
the modest  larger refined  product   demands  forecast at that
low  cost.   At  $27  per  barrel,  however,  decreases  in  fore-
casted refined product demands overshadow  higher raw material
SWR-8701             Bonner B Moore Management Science                   3-14

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    0.60
    O.SO
   ffl
     0.40
o
o
Q
UJ
Q
Q
     0.30
     0.20
     0.10
                        10                 20


                                % OF BASE RVP
                                                        30
       Figure 3-3
                   Crude Cost  Effect  on Refining Costs

                   for  RVP-Control  (Region  3)
SWR-8701
                     Bonner B Moore Management Science
3-15

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costs.   This  phenomenon  should be recognized more  as  a con-
sequence of  the  relative  optimism or  pessimism  of  forecasts
and not /any  intrinsic significance of  the  crude acquisition
        w
costs employed.

         Total  control  costs  (refining  plus NGL  costs)  for
Region 3 at  the  three  levels  of  crude  oil  costs  are shown in
Figure 3-4.   Inclusion of  NGL costs  spreads the  control cost
curves considerably  for  the  three cases.   Most of  the  NGL
costs occur  at  the  first  reduction level  because most  of  the
refinery  purchases   of  normal-butane  are  displaced   by  the
first reduction level.

         NGL  costs   increase   with increased  crude oil  and
natural gas  costs.   This  is  due  to the increasing penalty of
pricing a  portion of  the  NGL  supply  at fuel value.  Refining
costs  are  however,   at  (or near)  a  maximum with  $22  crude.
Thus,  total  cost  for  both  sectors  is  highest  for  the  $22
crude oi1 case.
3.2.2    Effect of Process Investment Exclusion

         Using  the  Region 3 model,  three cases  were  run  in
which process expansion or addition was not permitted.  Thus,
reduced RVP  had to be achieved  by  changes  in operations and
blending.  Such a situation would occur if refiners should  be
required to  meet  RVP  restrictions without sufficient advance
notice so  that  planning,  engineering and  construction of new
or expanded  facilities can take place.

         Figure   3-5   presents   a  graphical   comparison   of
results  with  and without  process  investment.    As  shown,
refining costs  more  than  double when process  investment  is
excluded as  an alternative.
SWR-8701

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    0.90
     0.80
     0.70
     0.60
     0.50
   00
   00
   v» 0.40
   8
   Q
                                                      $22.
                                                      $27.
                                                         $17.
     0.30
     0.20
     0.10
                        10                20

                                 % OF BASE RVP
                                      30
      Figure 3-4,
Crude Cost Effect  on Refining  Plus  NGL
Costs for  RVP-Control (Region  3)
SWR-8701
                        Banner B Moore Management Science
                                               3-17

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   1.40
    1.20
   1.00
 O

 CD

 a
 UJ
 o
    0.60
    0.40
    0.20
    0.0
                       10                20



                           % OF BASE RVP REDUCTION
                                                          30
       Figure 3-5
No-Investment Effect on  RVP-Control

Refining Costs  (Region  3)
SWR-8701
                        Bonner B Moore Management Science
                                            3-18

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3.2.3    Effect of Ethanol Blend Control

        -Except for  the  three  cases of this sensitivity ana-
lysis, all  other  model results  include  "splash blending" of
ethanol to  produce gasohol*.   For this  set  of three cases,
ethanol was blended  into a hydrocarbon  base  blend  to meet
unleaded regular  specifications.   The three cases, using  the
model  for Region  3,  impose the three levels of RVP reduction
on al1 gasolines.

         Results  for RVP  control   costs  are  shown  in Table
3-3.   For  comparison,  the corresponding  results  from  the
"gasohol" cases for Region 3 are also presented.   No base-RVP
case  with   controlled  ethanol  blends  was  prescribed  by  the
study  work  plan.   Thus,  the cost   of  the  first level of  RVP
control is  low because of  the  octane credit achieved with  in-
refinery blending  of ethanol.

                          TABLE  3-3

        EFFECTS OF CONTROLLING RVP  OF ETHANOL  BLENDS
            (Region 3 with Crude  @  $22 per barrel)
                                Refining Control Cost,  $/BBL
                                 First     Second       Third
                                 Level     Level        Level

  W/O Control  (i.e., W/Gasohol)  0.126     0.186        0.209

  W/Control                      0.048     0.190        0.211
*Gasohol  is represented  in  this  study  as  a  post-refinery
 blend of ten parts of  finished  unleaded  regular  gasoline  and
 one part denatured ethanol.
SWR-8701             Bonner B MOOT Management Science                  3~19

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Table 3-3  clearly  shows  that RVP control costs (at  least  for
the second and third  levels) are essentially  the  same  whether
ethanol As used  to make  gasohol downstream of refining  or  in
        1*
on-spec Unleaded  fuel.   Since  no  case  was  run with  ethanol
blends required to meet base-case  summer  RVP,  the  cost of  the
first level of control cannot be determined.   It  seems reaso-
nable  to  assume,   however,  that control  costs  for  the  first
increment  would  be  similar to   those  for   gasohol's  first
increment.

          It should be pointed out  that  the octane  credit  for
ethanol, when blended  to meet unleaded regular specifications,
more  than offsets  the RVP  debit.   These  cases  show  added
values for "in-refinery"  blending  (ethanol  into  a  sub-octane-
sub-RVP base  stock) of 32.7,  30.8 and 30.0  cents  per gallon
of ethanol above  its value as unleaded gasoline, at each reduced
RVP level, respectively.  No attempt  to  estimate  the handling
and  distribution   cost  for   this   fuel was  made  and  none  is
included  in  the  above-stated  added  values.   This  analysis
assumes that the cost  and availability  of  ethanol  at a refin-
ery would  be the same  as  that at  the  gasohol  blending point.

3.2-. 4    Effect of  Domestic  Butane Price

         An  Examination   of  the effects  of  butane  price  on
butane  use was  added to  this   study  after   a  review of  the
results  for  the  cases  described   above.    Three  cases were
defined to assess  the changes  in  domestic butane  utilization
as  price   was  decreased  toward a fuel  value  equivalent  to
natural gas at $2.41  per MMBtu.  These  lower  prices  were one-
fourth,  one-half   and  three-fourths  of  the  way  toward  fuel
value  from  projected market  price  with crude  at   $22  per
barrel.  Resulting  prices for normal  and iso-Butane  are  shown
in  the following table.
SWR-8701
                     Bonnw 8 Moore Management Science                 3-20

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                               BUTANE PRICE RANGE
                                    ($/bbl)
Full
Ma r k e t
Pr ice
3/4
Ma r k e t
Pr ice
1/2
Ma r k e t
Pr ice
1/4
Ma r k e t
Pr ice
Normal-Butane       17.36      15.44      13.52      11.60

Iso-Butane          18.68      17.24      15.98      14.96

         Maximum RVP  for  these  sensitivity cases was set be-
tween  the  second  and third  levels  of  control,  i.e.,  at  a
reduction proportional to 2.5 psia from 11.5 psia, or a  21.74
percent reduction  in  allowable maximum RVP.   This  reduction
level  was  not directly  represented  in  the  cases originally
defined for study.  As a means, therefore, of comparing  these
three  cases   with  a  case  employing   full  market  price for
butane, summary results include a set  of averages* of second-
level and third-level results.

         Reduction  in  the  market  price  for  butane,   which
would  accompany  a  decrease  in  refinery  use of  butane,   is
shown  to  cause  the expected  consequences.   Olefin  feedstock
mix  is  changed to  include  normal-butane.   Domestic butanes
from gas processing and from  refining  are cracked in place  of
propane,  light naphtha  and  distillate  feedstocks.  This hap-
pens with the first decrease  in butane price.  Further reduc-
tion in butane price  has  no effect  other than decreasing the
cost of  raw  materials  to  the combined  refining  and olefins
sectors  in  Region  3.   Steam  cracking  facilities  in   other
regions  currently  cannot   crack  any  appreciable  amount   of
*   Actual  results  for  a  case with  full market  prices for
butanes and  at  the  intermediate  level  of RVP  control  would
not necessarily  be  the average of  results  from cases at the
second and third levels of control.
SWR-8701                                                3_2l
                    Bonner 6 Moore Management Science

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butane  feedstock.   MTBE production  did  not  change because all
i so-buty?lene   feedstock  was   being  used  in   every   case  and
butane  dehydrogenation was  not  modeled  as a route to  MTBE.


           Table  3-4   presents  a  summary  of  pertinent  results

from these  three  cases along  with  the average  values  from the
second  and  third  level  results   with   full  market   price on
butane.   Detailed results  are presented in  Section  4.


                               TABLE  3-4
                  SUMMARY OF BUTANE PRICE EFFECTS
                                Full      "3/4"     "1/211
                  Item           Market    Market    Market    Market

            Prices, S/bbl
              n-Butane              17.36    15.44    13.52    11.60
              i-Butane              18.86    17.24    15.98    U.96

            Raw Materials, Mbpcd
              Swing Crude         1.027.560   970.159   970.164   970.164
              Propane              86.838   22.113   22.117   22.117
              Domestic n-Butane       0.000   127.000   127.000   127.000
              Domestic i-Butane      63.000   63.000   63.000   63.000
              Imported Butanes       12.609   10.989   10.984   10.985

            Cash Flow(*)
                  ,M$pcd       (1,242.304)  (966.139)  (642.957)  (334.859)
                  ,$/bbl          (0.401)   (0.312)   (0.208)   (0.108)

            Process Investment^)
                        ,MM$    1,037.439   906.937   906.936   906.941
                        ,MS/bbl     0.335    0.293    0.293    0.293
             (•) Relative to b*M ca»e
SWR-8701                Bonnw 6 Moore Management Science                    3_22

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         Butanes   cracked  at  the  lower  prices  include 127,000
barrels  per day  of  production  from domestic NGL  operations
and  30,0.00  barrels  per  day  from  refining.   Current  steam
cracker  design in Region  3  would not allow this much butane
without  loss  of   overall  ethylene  production.    Engineering
changes  as well as  operational  changes would be  required  to
produce  imposed   ethylene  and  propylene  demands  with  the
feedstock  mix   selected  by the  model.    Ability  to  make  the
changes  needed by  1990 was  not  pursued  in  this  study,  but
three  years is viewed  as  a  minimum  time  for  any  significant
process  modification.

         Without  facility modification,  less  butane  would  be
consumed  by  the  olefins  sector  than  shown by   these  case
results.   This  means that  butane price  would fall  toward fuel
value  even though some of the domestic  production  were being
cracked.    Longer  term,  olefin  producers would  have  to  be
assured  of depressed butane  prices  before  they would commit
to  the  capital  investment  required  to modify  their facili-
ties.   We  conclude,  therefore,  that the  use  of  a  fuel value
for  butane in  assessing the  cost impact of RVP control on the
NGL  sector is  correct.
 3.2.5     Bunker Fuel  Sales Volume Effects

          To  measure  the  effect  on  RVP  control  costs of  an
 increase   in  production  of  residual   fuel,  two  sensitivity
 cases  were  defined  and   run  in  which  bunker  demand   was
 increased  by  15,000  barrels  per   day.    This  increase  is
 equivalent  to  a 14.29 percent  change  in  output.   One  of  the
 cases  imposed  base-case  RVP's.   The other  imposed  the  second
RVP control level.
SWR — ft 7 fl1
                     Borrow B Moore Management faience                3-23

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           Control costs from these cases and from the  original
cases pair  are  nearly  identical.   Daily and per-barrel  costs

as   well? as  other   selected  results   from  these   (and   the

corresponding  original)   cases   are  presented   in  Table  3-5.

Detailed  results are presented  in Section  4.


                              TABLE  3-5
              SUMVIARY OF  BUNKER FUEL VOLUME EFFECTS
                                     Bunker Volume and RVP Level
                               105,000   105,000   120,000   120,000
                  Item          base      -2      base      -2

            Raw Materials, Mbpcd
             Swing Crude          910.616  1,007.363   922.634 1,024.373
             Propane              85.000    71.552   105.270    79.535
             Domestic n-Butane      82.488     0.000    83.263    0.000
             Domestic i- Butane      63.000    63.000    63.000    63 000
             Imported Butanes       54.893    44.704    54.320    36.492


            Relative Cash Flow
                  •M$Pcd         -37.164   -966.117  -275.501 -1189.697

            RVP Control Cost
                                      -928.953          -914.196
                  • Vbbl                  -0.299            -0.295
            Process Investment
                       ,MM$      102.627   896.749   52.590   852.114

            RVP Control  Invs'mt
                       •»*              794.122           799.524
                       ,«/bbl             0.256            0.258
           As  shown   in  RVP  control  costs  are  essentially  un-
affected  by   the  change  in  bunker  fuel  output.     Investment

requirements  are also  unaffected by  the change  in bunker  fuel
output.   Thus,  the  balance  between  raw material  and  capital
costs  is  unaffected.
SWR-8701
                        Burner B Moore Management Science                     3-24

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3.3      CONCLUSIONS

        -Results  from  this study  show  significant variation
in  RVP  control  cost among  regions  due,  primarily,  to the
variation in cost of refinery fuel.   In Region 1 (East Coast)
and Region  4  (California), refiners  are  shown  to experience
much lower  costs  of  control  than refiners  in Regions 2 and 3
(Midcontinent*  and  Gulf Coast).   Because of  the dominating
gasoline  volumes  produced by  Region  2  and  3   refineries,
national costs,  per  barrel of  gasoline,  are similar to costs
for these major  supply  regions.

         When  compared  to  earlier study  results,  the  lower
refining costs developed in this study clearly show the major
influence of  the savings   from mileage  improvement and  lower
evaporative  losses.    From  the  $22-per-barrel   crude  cost
results,  RVP-control refining  costs  wi thout   these  savings
would be  approximately  $0.25,  $0.55  and  $0.85  per barrel of
gasoline at first,  second  and  third  levels of RVP reduction,
respectively.     At   the  first   level  of  RVP reduction,  for
example,  gasoline volume  savings  account  for  approximately
$0.15 per barrel.   Accounting  for  these fuel savings reduces
costs by 38 percent, 52 percent and 63 percent,  respectively.
Thus, the  effect of the mileage  and  evaporative-loss credit
is  large.   While  changes  in  gasoline  density  and aromatics
content  indicate that   EPA-supplied economy  factors  are pro-
bably conservative,  the realization  of  this saving involves
such a  small   improvement  in  overall fuel  economy  and loss
reduction that confirming  the validity of  such savings may be
extremely di ff icult.
*Region 2 includes the Rocky Mountain and Northwestern refin-
 eries whose output is a relatively small part of the region's
 total.
SWR-8701             Bonner 6 Moore Management Science                  3-25

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         The  negative  impact  of  gasoline volatility  control
will  be  felt more  strongly in the  NGL industry  than  in  the
        ->r
refining?industry.   Altogether, volatility  control  will cost
the NGL industry about 10  percent  of its  revenues.  A part of
this  impact  is  masked by  study results because  it  becomes a
benefit --  in  the  form of lower raw materials  cost  -- to the
refining  industry.    Additionally,   the   impact   on   the  NGL
industry  will  be  proportionately  greater  because a  larger
share of  its  total product  is  involved.
                     Homer 8 Moore Management Science                   3-26

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                          SECTION 4
                      DETAILED RESULTS
         This section  contains  selected detail  for  each  case
evaluated  in  this  study.   As shown earlier in Table  2-1,  not
all  combinations  of  region,  vapor pressure  level and  para-
meter  situations  were  included.    Presentation  order  and
grouping of  case  results  are based on region with  crude  cost
at $22  per barrel.   Sensitivity  analysis  cases  for  Region  3
are  next  and  are  arranged  to  present  alternate  crude-cost
cases, followed by no investment cases, followed  by  "control
ethane" cases.   Such  ordering  is, of  course,   arbitrary  and
should not be taken  to imply  relative  significance.

         Results  for each  case are  arranged in  row-groups,
namely,   input-output  detail,   gasoline  blend   detail   and
results-differences   between   reduced-RVP   cases   and   the
appropriate  base-RVP case.   Results  differences are  always
grouped  with   related   reduced-RVP  cases   except   for   the
"control  ethanol"  cases,  which  have no  corresponding  base
case.

         In  all  cases where ethanol  is  splash-blended  with
unleaded   regular,   pool   qualities   are   reported   without
accounting  for  the effects  of  ethanol,  i.e., pool  qualities
refer  to  refinery  pools.    The  three "control ethanol"  cases
treat ethanol as a gasoline  component  and  show  pool  qualities
as if the  ethanol  were blended  at  the  refinery.
SWR-8701             BonnsfB Moore Management Science                   4-1

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4.1
CASES WITH CRUDE  AT  $22 PER BARREL
        ^Selected   detail  from  results  of  cases  for  each
region  at  base  (normal  RVP)  and reduced  vapor pressure  are
presented in Tables 4-1 through 4-4.

                           TABLE 4-1
                   EAST COAST MODEL RESULTS
                         (Page 1 of 4)
REGION 1


RAW MATERIAL PURCHASES, MBPCO
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SWING CRUDE
SUBTOTAL CRUDES
ETHANE & PROPANE
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, S/Bbl
SWING CRUDE
PROPANE
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCO
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
CRUDE: *22
SUMMER

773.000
36.000
99.000
204.000
125.636
1237.636
0.000
0.384
25.212
0.000
0.000
4.292
1267.524

23.170
16.510
19.270
20.630
19.370
15.960
3.600

102.668
304.987
201.180
40.109
643.944
327.119
191.080
122.996
41.756
-64.371
1267.524
ETHANOL: SPLASH INVESTMENT: YES
LEVEL 1

773.000
36.000
99.000
204.000
132.266
1244.266
0.000
0.384
13.124
4.883
0.000
4.277
1266.934

23.170
16.510
19.270
20.630
19.370
15.960
3.600

102.124
303.370
200.114
39.913
645.521
327.119
191.080
123.333
43.681
•63.800
1266.934
LEVEL 2

773.000
36.000
99.000
204.000
147.799
1259.799
0.000
0.384
1.577
4.286
0.000
4.262
1270.308

23.170
16.510
19.270
20.630
19.370
15.960
3.600

101.713
302.151
199.309
39.736
642.909
327.119
191.080
124.888
47.961
•63.649
1270.308
LEVEL 3

773.000
36.000
99.000
204.000
162.000
1274.000
0.000
0.384
0.000
3.535
0.000
4.249
1282.168

23.170
16.510
19.270
20.630
19.370
15.960
3.600

101.313
300.961
198.525
39.579
640.378
327.119
191.080
126.180
57.368
•59.957
1282.168
 SWR-8701
                      Bormer B Moore Management Sctence
                                                   4-2

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                             TABLE 4-1
                    EAST COAST MODEL  RESULTS
                           (Page 2 of  4)
REGION 1


GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X 3 160 -LEADED REGULAR
X 3 160 -UNLEADED REGULAR
X a 160 -UNLEADED PREMIUM
X a 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X 8 210 -UNLEADED REGULAR
X 3 210 -UNLEADED PREMIUM
X 3 210 -TOTAL POOL
X a 230 -LEADED REGULAR
X a 230 -UNLEADED REGULAR
X 3 230 -UNLEADED PREMIUM
X 3 230 -TOTAL POOL
X a 330 -LEADED REGULAR
X 8 330 -UNLEADED REGULAR
X 3 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
CRUDE: $22
SUMMER

11.500
11.750
11.750
11.709
123.000
123.000
123.000
123.000
38.498
37.101
41.568
38.761
60.156
59.390
54.134
57.831
65.333
66.975
62.963
65.420
91.659
92.177
97.013
93.643
ETHANOL: SPLASH INVESTMENT: YES
LEVEL 1

10.730
10.730
10.730
10.730
123.000
129.357
128.622
128.081
42.833
33.942
40.096
37.369
62.542
58.044
52.535
57.014
67.452
67.152
60.436
65.048
92.081
93.495
94.628
93.627
LEVEL 2

9.710
9.710
9.710
9.710
123.771
136.142
134.926
133.729
46.500
30.747
37.569
35.511
66.249
55.671
50.508
55.746
70.381
65.354
58.750
64.059
92.291
93.533
94.016
93.484
LEVEL 3

8.690
8.690
8.690
8.690
127.635
141.268
141.512
139.116
46.500
30.204
33.701
33.991
66.993
54.084
49.397
54.693
70.904
63.451
59.075
63.268
92.077
92.300
95.745
93.368
SWR-8701
                       Homer 6 Moore Management Science
                                                                4-3

-------
                            TABLE 4-1
                    EAST COAST  MODEL RESULTS
                          (Page 3 of 4)
REGION 1


GASOLINE BLENDING DETAIL, contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY" -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
(R+M5/2 OCTANE -LEAD REGULAR
RESEARCH OCTANE -UNLEADED REG
MOTOR OCTANE -UNLEADED REG
(R+M)/2 OCTANE -UNLEADED REG
RESEARCH OCTANE -PREMIUM
MOTOR OCTANE -PREMIUM
(R+M)/2 OCTANE -PREMIUM
MAJOR UTILITIES PURCHASED
CATALYST/CHEMICALS, M$PCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MMS
RELATIVE CASH FLOW, MIPCD

CRUDE: S22
SUMMER

0.736
0.727
0.750
0.736
29.192
21.981
38.961
28.604
93.685
84.315
89.000
91.960
82.540
87.250
96.292
87.208
91.750

175.270
444.528
186.419
6021.922
0.000
•4666.855
ETHANOL:
LEVEL 1

0.730
0.732
0.756
0.739
26.994
23.185
41.418
29.652
93.688
84.312
89.000
92.055
82.445
87.250
96.485
87.015
91.750

176.804
442.260
181.069
6080.883
5.211
•4678.020
SPLASH INVESTMENT: YES
LEVEL 2

0.726
0.737
0.762
0.743
23.446
24.366
43.934
30.488
93.500
84.500
89.000
92.128
82.372
87.250
96.957
86.543
91.750

180.029
440.412
162.201
6168.945
41.129
•4761.297
LEVEL 3

0.726
0.740
0.768
0.747
22.783
25.665
45.457
31.538
93.500
84.500
89.000
92.220
82.280
87.250
97.250
86.250
91.750

182.883
438.690
109.627
6228.820
164.695
-4925.695
SWR-8701
                      BomefB Moore Mar
rt Science
                                                               4-4

-------
                             TABLE 4-1
                    EAST COAST MODEL  RESULTS
                           (Page 4 of  4)

CRUDE: (22
SUMMER
CASE DIFFERENCES
SWING CRUDE, MBPCD
NORMAL BUTANE, MBPCD
ISO BUTANE, MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MM*
RELATIVE CASH FLOW, M$PCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SWING CRUDE, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/8bl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KWH/Bbl
PROCESS INVESTMENTS, M$/Bbl
RELATIVE CASH FLOW, $/Bbl
REGION
1

ETHAHOL: SPLASH INVESTMENT: YES
LEVEL 1

6.630
•12.088
4.883
•0.015
•0.590
•0.544
•1.617
•1.066
•0.196
•3.423
1.925
1.534
•2.268
•5.350
58.961
5.211
•11.165


0.010
-0.019
0.008
0.003
0.002
•0.004 '
•0.008
0.091
0.008
•0.017
LEVEL 2

15.533
•11.547
•0.597
•0.015
3.374
•0.411
-1.219
•0.805
•0.177
•2.612
4.280
3.225
•1.848
•18.868
88.062
35.918
•83.277


0.024
•0.018
•0.001
0.007
0.005
•0.003
-0.029
0.137
0.056
•0.130
LEVEL 3

14.201
•1.577
•0.751
•0.013
11.860
•0.400
•1.190
•0.784
•0.157
•2.531
9.407
2.854
•1.722
•52.574
59.875
123.566
-164.398


0.022
•0.002
-0.001
0.015
0.004
•0.003
•0.082
0.093
0.193
•0.257
SWR-8701
                       Homer 6 Moore Management Science
4-5

-------
                            TABLE 4-2
        MID-CONTINENT/ROCKIES/NORTHWEST MODEL RESULTS
                          (Page 1 of  4)
REGION 2


RAW MATERIAL PURCHASES, HBPCD
LOW SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SWING CRUDE
SUBTOTAL CRUDES
ETHANE & PROPANE
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, $/Bbl
SWING CRUDE
PROPANE
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
CRUDE: $22
SUMMER

2266.000
374.000
293.000
752.000
232.374
3917.374
49.000
2.993
64.803
43.773
57.000
29.861
4164.804

23.750
14.070
17.830
21.030
23.400
15.960
2.900

436.718
885.304
427.682
325.468
2075.172
1327.072
350.170
469.914
135.369
•192.893
4164.804
ETHANOL: SPLASH INVESTMENT: YES
LEVEL 1

2266.000
374.000
293.000
752.000
272.400
3957.400
49.000
2.993
22.447
34.175
57.000
29.709
4152.724

23.750
14.070
17.830
21.030
23.400
15.960
2.900

434.403
880.612
425.415
323.743
2064.173
1327.072
350.170
472.349
136.881
-197.921
4152.724
LEVEL 2

2266.000
374.000
293.000
752.000
309.705
3994.705
49.000
2.993
0.000
34.900
57.000
29.595
4168.193

23.750
14.070
17.830
21.030
23.400
15.960
2.900

432.656
877.071
423.705
322.442
2055.874
1327.072
350.170
473.474
154.781
•193.178
4168.193
LEVEL 3

2266.000
374.000
293.000
752.000
342.994
4027.994
49.000
2.993
0.000
2.655
57.000
29.481
4169.123

23.750
14.070
17.830
21.030
23.400
15.960
2.900

430.953
873.618
422.037
321.172
2047.780
1327.072
350.170
475.237
162.546
•193.682
4169.123
SWR-8701
                      Bonner 6 Moore Management Science
4-6

-------
                            TABLE  4-2
         MID-CONTINENT/ROCKIES/NORTHWEST MODEL  RESULTS
                          (Page 2  of 4)
REGION 2


GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, f -TOTAL POOL
X 3 160 -LEADED REGULAR
X a 160 -UNLEADED REGULAR
X 3 160 -UNLEADED PREMIUM
X a 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X a 210 -UNLEADED REGULAR
X 3 210 -UNLEADED PREMIUM
X 3 210 -TOTAL POOL
X 3 230 -LEADED REGULAR
X 3 230 -UNLEADED REGULAR
X a 230 -UNLEADED PREMIUM
X a 230 -TOTAL POOL
X 3 330 -LEADED REGULAR
X a 330 -UNLEADED REGULAR
X 8 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
CRUDE: S22
SUMMER

11.010
11.010
11.010
11.010
127.000
127.000
127.000
127.000
37.479
37.939
40.478
38.384
56.795
56.317
58.322
56.853
61.962
63.272
73.823
65.253
90.749
93.777
97.998
94.020
ETHANOL: SPLASH INVESTMENT: TES
i F '
LEVEL 1

10.050
10.050
10.050
10.050
127.000
131.702
130.787
130.473
41.074
36.555
38.492
37.964
61.782
56.031
55.909
57.267
66.764
63.653
70.858
65.885
91.698
94.711
95.417
94.201
LEVEL 2

9.090
9.090
9.090
9.090
132.185
135.014
141.147
135.711
39.504
37.790
28.825
36.239
60.645
56.000
52.122
56.186
65.901
63.047
69.778
65.121
91.596
93.675
97.634
94.070
LEVEL 3

8.140
8.140
8.140
8.140
140.207
137.872
147.836
140.527
34.056
37.314
30.202
35.070
57.396
59.050
43.978
55.446
63.194
68.678
55.479
64.637
91.050
94.048
96.730
93.966
SWR-8701
                      Honner 6 Moore Management Science
                                                               4-7

-------
                            TABLE  4-2

        .MID-CONTINENT/ROCKIES/NORTHWEST MODEL  RESULTS
        ^                 (Page 3  of  4)
REGION 2


GASOLINE BLENDING DETAIL, contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY' -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
(R+M)/2 OCTANE -LEAD REGULAR
RESEARCH OCTANE -UNLEADED REG
MOTOR OCTANE -UNLEADED REG
(R+M)/2 OCTANE -UNLEADED REG
RESEARCH OCTANE -PREMIUM
MOTOR OCTANE -PREMIUM
(R+M)/2 OCTANE -PREMIUM
MAJOR UTILITIES PURCHASED
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MM*
RELATIVE CASH FLOW, M$PCD

CRUDE: S22
SUMMER

0.737
0.749
0.704
0.737
29.207
35.929
10.708
29.031
93.577
84.423
89.000
91.868
82.632
87.250
94.898
88.602
91.750

557.958
1890.924
754.690
18889.008
565.904
•13280.836
ETHANOL:
LEVEL 1

0.734
0.754
0.711
0.740
28.112
37.623
13.722
30.396
93.755
84.245
89.000
92.114
82.386
87.250
94.958
88.542
91.750

550.319
1880.928
740.218
18962.625
876.121
•13454.437
SPLASH INVESTMENT: YES
LEVEL 2

0.738
0.755
0.721
0.744
29.255
37.856
15.345
31.128
93.868
84.132
89.000
92.118
82.382
87.250
95.448
88.052
91.750

562.211
1873.368
650.830
19214.168
1914.786
•13942.988
LEVEL 3

0.748
0.733
0.785
0.747
32.523
23.562
54.026
32.079
94.030
83.970
89.000
91.723
82.777
87.250
96.979
86.521
91.750

577.037
1865.976
634.125
19504.020
1778.390
•14613.594
SWR-8701
4-8
                      Banner 6 Moore Management Science

-------
                            TABLE 4-2
        MID-CONTINENT/ROCKIES/NORTHWEST  MODEL RESULTS
                          (Page 4 of 4)
REGION 2


CASE DIFFERENCES
SUING CRUDE, MBPCD
NORMAL BUTANE, MBPCD
ISO BUTANE, MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KUH PCD
PROCESS INVESTMENTS, MMS
RELATIVE CASH FLOW, MSPCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SUING CRUDE, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/Bbl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KUH/Bbl
PROCESS INVESTMENTS, M$/Bbl
RELATIVE CASH FLOW, S/Bbl
CRUDE: $22 ETHANOL:
SUMMER LEVEL 1

40.026
•42.356
•9.598
-0.152
•12.080
•2.315
•4.692
-2.267
•1.725
•10.999
1.512
-7.639
•9.996
-14.472
73.617
310.217
•173.601


0.019
•0.021
-0.005
0.001
•0.004
•0.005
-0.007
0.036
0.150
•0.084
SPLASH INVESTMENT: YES
LEVEL 2

37.305
•22.447
0.725
•0.114
15.469
•1.747
•3.541
-1.710
•1.301
•8.299
17.900
11.892
•7.560
•89.388
251.543
1038.665
-488.551


0.018
•0.011
0.000
0.009
0.006
-0.004
•0.043
0.122
0.505
•0.238
LEVEL 3

33.289
0.000
•32.245
•0.114
0.930
•1.703
•3.453
•1.668
•1.270
•8.094
7.765
14.826
•7.392
-16.705
289.852
•136.396
•670.606


0.016
0.000
•0.016
0.004
0.007
-0.004
-0.008
0.142
•0.067
•0.327
SWR-8701
                      Homer 6 Moore Management Science
4-9

-------
                            TABLE 4-3
                    GULF COAST  MODEL RESULTS
                          (Page 1  of 4)
REGION 3


RAW MATERIAL PURCHASES, MBPCD
LOW SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR' CRUDES
SUING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
MIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, S/Bbl
SUING CRUDE
ETHANE
PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
CRUDE: $22
SUMMER

2736.000
230.000
756.000
1348.000
910.616
5980.616
350.000
85.000
54.893
5.986
82.488
63.000
206.000
39.922
6867.905

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

537.979
1463.125
857.153
274.650
3132.907
2097.277
316.930
1478.790
190.905
•348.904
6867.905
ETHANOL: SPLASH INVESTMENT: TES
LEVEL 1

2736.000
230.000
756.000
1348.000
968.494
6038.494
350.000
71.552
44.704
5.986
31.140
63.000
206.000
39.798
6850.674

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

535.128
1455.370
852.609
273.193
3116.300
2097.277
316.930
1478.090
195.528
-353.451
6850.674
LEVEL 2

2736.000
230.000
756.000
1348.000
1007.363
6077.363
350.000
78.268
25.218
5.986
0.000
63.000
206.000
39.703
6845.538

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

532.976
1449.517
849.181
272.095
3103.769
2097.277
316.930
1488.362
199.482
•360.282
6845.538
LEVEL 3

2736.000
230.000
756.000
1348.000
1047.757
6117.757
350.000
46.127
0.000
5.986
0.000
63.000
206.000
39.612
6828.482

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

530.878
1443.811
845.838
271.024
3091.551
2097.277
316.930
1492.944
199.297
•369.517
6828.482
SWR-870T
                       Borm B Moore Management Science
                                                              4-10

-------
                             TABLE 4-3
                    GULF COAST MODEL  RESULTS
                           (Page 2 of  4)
REGION 3


GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X 3 160 -LEADED REGULAR
X a 160 -UNLEADED REGULAR
X 3 160 -UNLEADED PREMIUM
X 3 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X 3 210 -UNLEADED REGULAR
X 3 210 -UNLEADED PREMIUM
X 3 210 -TOTAL POOL
X a 230 -LEADED REGULAR
X 3 230 -UNLEADED REGULAR
X a 230 -UNLEADED PREMIUM
X a 230 -TOTAL POOL
X 3 330 -LEADED REGULAR
X a 330 -UNLEADED REGULAR
X 8 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
CRUDE: $22
SUMMER

10.920
10.920
10.920
10.920
127.700
128.194
134.999
130.036
35.034
33.610
30.815
33.071
59.000
59.512
46.789
55.813
64.148
66.020
59.141
63.736
90.792
90.035
97.105
92.175
ET HANOI: SPLASH INVESTMENT: YES
LEVEL 1

9.970
9.970
9.970
9.970
127.700
131.799
145.737
135.022
40.342
32.844
24.095
31.698
61.895
61.070
38.570
54.836
66.726
69.281
48.826
63.026
91.324
91.921
92.929
92.101
LEVEL 2

9.020
9.020
9.020
9.020
133.045
138.173
147.171
139.812
38.548
31.621
23.722
30.614
60.568
56.650
44.772
53.979
65.717
64.686
56.024
62.413
91.233
89.852
96.753
92.054
LEVEL 3

8.070
8.070
8.070
8.070
141.284
140.861
153.663
144.566
32.820
32.958
20.931
29.523
57.062
57.890
41.922
53.214
62.855
65.724
53.895
61.859
90.801
90.054
96.605
92.045
SWR-8701
                       Homer 6 Moore Management Science
4-11

-------
                             TABLE  4-3
                    GULF  COAST MODEL RESULTS
                           (Page  3  of 4)
REGION 3


GASOLINE BLENDING DETAIL.contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR

-------
                            TABLE  4-3
                   GULF COAST MODEL RESULTS
                          (Page  4  of 4)
REGION 3


CASE DIFFERENCES
SWING CRUDE, HBPCD
PROPANE, HBPCO
MIXED BUTANES, HBPCO
NORMAL BUTANE, MBPCD
ISO BUTANE, MBPCD-
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
"PROCESS INVESTMENTS, MM$
RELATIVE CASH FLOW, MSPCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SWING CRUDE, Bbl/Bbl
PROPANE, Bbl/Bbl
MIXED BUTANES, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/Bbl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KWH/Bbl
PROCESS INVESTMENTS, M$/Bbl
RELATIVE CASH FLOW, $/8bl
CRUDE: S22 ETHANOL:
SUMMER LEVEL 1

57.878
•13.448
•10.189
•51.348
0.000
•0.124
•17.231
•2.851
•7.755
•4.544
•1.457
•16.607
4.623
11.529
•12.348
•3.999
648.586
376.148
•372.109


0.019
•0.004
•0.003
•0.016
0.000
0.001
0.004
•0.004
•0.001
0.208
0.121
•0.119
SPLASH INVESTMENT: YES
LEVEL 2

38.869
6.716
•19.486
•31.140
0.000
•0.095
•5.136
•2.152
•5.853
•3.428
•1.098
•12.531
3.954
10.185
-9.324
10.388
612.438
417.974
•556.844


0.013
0.002
•0.006
•0.010
0.000
0.001
0.003
•0.003
0.003
0.197
0.135
•0.179
LEVEL 3

40.394
-32.141
•25.218
0.000
0.000
•0.091
•17.056
-2.098
•5.706
•3.343
•1.071
•12.218
•0.185
13.171
•9.072
54.434
828.594
486.634
•626.707


0.013
-0.010
-0.008
0.000
0.000
-0.000
0.004
•0.003
0.018
0.268
0.157
-0.203
SWR-8701
                       Homer B Moore Management Science
4-13

-------
                             TABLE  4-4
                    CALIFORNIA MODEL RESULTS
                           (Page  1  of 4)
REGION 4


RAW MATERIAL PURCHASES, MBPCD
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SUING CRUDE
SUBTOTAL CRUDES
ETHANE & PROPANE
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAU MATERIAL COSTS, $/Bbt
SUING CRUDE
PROPANE
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
- METHANOL (for MT8E)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
•
TOTAL OUTPUT
CRUDE: $22
SUMMER

253.000
213.000
581.000
99.000
713.068
1859.068
0.000
8.305
0.000
0.000
11.000
10.073
1888.446

20.950
16.050
16.090
19.150
24.520
16.380
3.500

154.346
477.005
303.649
42.600
977.600
552.282
220.000
147.994
121.370
•130.800
1888.446
ETHANOL: SPLASH INVESTMENT: YES
LEVEL 1

253.000
213.000
581.000
99.000
717.-395
1863.395
0.000
8.355
0.000
0.000
11.000
9.992
1892.742

20.950
16.050
16.090
19.150
24.520
16.380
3.500

153.528
474.476
302.039
42.374
972.417
552.282
220.000
148.561
126.890
•127.408
1892.742
LEVEL 2

253.000
213.000
581.000
99.000
732.266
1878.266
0.000
8.528
0.000
0.000
11.000
9.952
1907.746

20.950
16.050
16.090
19.150
24.520
16.380
3.500

152.911
472.568
300.824
42.204
968.507
552.282
220.000
149.761
140.589
•123.393
1907.746
LEVEL 3

253.000
213.000
581.000
99.000
736.017
1882.017
0.000
8.571
0.000
0.000
11.000
9.865
1911.453

20.950
16.050
16.090
19.150
24.520
16.380
3.500

152.309
470.708
299.640
42.038
964.695
552.282
220.000
150.047
144.293
•119.864
1911.453
SWR-8701
                       Banner 6 Moore Management Science
4-14

-------
                            TABLE 4-4
                   CALIFORNIA MODEL  RESULTS
                          (Page 2 of  4)
< REGION 4


GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP,psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, f -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
V/L TEMP, f -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X 3 160 -LEADED REGULAR
X a 160 -UNLEADED REGULAR
X 3 160 -UNLEADED PREMIUM
X 3 160 -TOTAL POOL
X a 210 -LEADED REGULAR
X a 210 -UNLEADED REGULAR
X a 210 -UNLEADED PREMIUM
X a 210 -TOTAL POOL
X a 230 -LEADED REGULAR
X 3 230 -UNLEADED REGULAR
X a 230 -UNLEADED PREMIUM
X a 230 -TOTAL POOL
X 3 330 -LEADED REGULAR
X 3 330 -UNLEADED REGULAR
X 3 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
CRUDE: $22
SUMMER

9.230
8.958
9.230
9.090
138.400
138.400
138.400
138.400
29.045
32.009
32.887
31.807
57.062
56.198
52.542
55.167
63.034
66.102
62.263
64.371
91.161
93.539
97.217
94.331
ETHANOL: SPLASH INVESTMENT: TES
LEVEL 1

8.430
8.430
8.430
8.430
140.419
142.797
138.400
140.999
28.872
29.198
37.471
31.798
60.242
54.263
54.876
55.434
66.571
64.813
64.140
64.884
92.710
93.823
97.363
94.777
LEVEL 2

7.630
7.630
7.630
7.630
143.387
147.851
141.259
145.010
28.183
26.931
38.372
30.803
61.796
52.764
54.816
54.894
68.429
63.781
64.125
64.649
93.646
93.951
97.369
94.997
LEVEL 3

6.820
6.820
6.820
6.820
148.118
144.186
156.443
148.757
24.935
36.916
21.796
30.116
62.211
57.366
46.315
54.613
70.356
65.224
61.142
64.752
94.795
95.423
95.389
95.310
SWR-8701
                      HomerE Moore Mar
mt Science
                         4-15

-------
                           TABLE 4-4

                   CALIFORNIA MODEL RESULTS
                          (Page 3 of 4)
REGION 4


GASOLINE BLENDING DETAIL, contd
SP GRAVITY' -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
(R+M)/2 OCTANE -LEAD REGULAR
RESEARCH OCTANE -UNLEADED REG
MOTOR OCTANE -UNLEADED REG
(R+M)/2 OCTANE -UNLEADED REG
RESEARCH OCTANE -PREMIUM
MOTOR OCTANE -PREMIUM
(R+M)/2 OCTANE -PREMIUM
MAJOR UTILITIES PURCHASED
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MM$
RELATIVE CASH FLOW, MJPCO

CRUDE: $22
SUMMER

0.754
0.740
0.775
0.753
34.339
26.233
47.089
34.241
93.986
84. OH
89.000
92.833
83.167
88.000
96.819
86.681
91.750

328.800
668.304
83.580
13093.500
399.015
•16486.285
ETHANOL: SPLASH INVESTMENT: YES
LEVEL 1

0.752
1 0.746
0.770
0.754
33.051
28.834
44.343
34.520
94.290
83.710
89.000
92.934
83.066
88.000
96.667
86.833
91.750

333.925
664.776
68.127
13309.211
460.707
•16518.051
LEVEL 2

0.752
0.751
0.770
0.757
32.741
30.656
44.068
35.296
94.466
83.534
89.000
93.000
83.000
88.000
96.725
86.775
91.750

339.109
662.088
1.975
13577.742
408.605
•16641.480
LEVEL 3

0.751
0.761
0.759
0.759
30.152
38.661
33.852
35.732
94.500
83.500
89.000
93.000
83.000
88.000
96.895
86.605
91.750

349.248
659.484
0.000
13859.000
497.652
•16819.441
SWR-8701
                       Banner B Moore Management Sdencs
4-16

-------
                            TABLE 4-4
                    CALIFORNIA MODEL  RESULTS
                           (Page 4 of  4)
REGION 4


CASE DIFFERENCES
SUING CRUDE, MBPCD
NORMAL BUTANE, MBPCD
ISO BUTANE, MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MM$
RELATIVE CASH FLOW, MSPCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SUING CRUDE, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/Bbl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KUH/Bbl
PROCESS INVESTMENTS, M$/Bbl
RELATIVE CASH FLOW, S/Bbl
CRUDE: $22 ETHANOL:
SUMMER ' LEVEL 1

4.327
0.000
0.000
•0.081
4.296
-0.818
•2.529
•1.610
•0.226
•5.183
5.520
5.125
•3.528
•15.453
215.711
61.692
•31.766


0.004
0.000
0.000
0.006
0.005
•0.004
•0.016
0.222
0.063
•0.033
SPLASH INVESTMENT: YES
LEVEL 2

14.871
0.000
0.000
-0.040
15.004
•0.617
•1.908
•1.215
•0.170
•3.910
13.699
5.184
-2.688
-66.152
268.531
-52.102
-123.429


0.015
0.000
0.000
0.014
0.005
•0.003
•0.068
0.277
•0.054
•0.127
LEVEL 3

3.751
0.000
0.000
•0.087
3.707
•0.602
•1.860
-1.184
•0.166
•3.812
3.704
10.139
•2.604
•1.975
281.258
89.047
. -177.961


0.004
0.000
0.000
0.004
0.011
-0.003
-0.002
0.292
0.092
-0.184
SWR-8701
                       Honner B Moore Management Science
4-17

-------
4.2
ALTERNATE CRUDE-COST CASES
         Selected  detail  from results  of Region  3 cases at
$17 per barrel and $27 per barrel are presented  in  Tables  4-5
and 4-6, respectively.

                          TABLE 4-5
         GULF COAST MODEL RESULTS AT $17 PER BARREL
                        (Page  1 of 4)


REGION
3

CRUDE: S17 ET HANOI: SPLASH INVESTMENT: YES

RAW MATERIAL PURCHASES, MBPCD
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SUING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
MIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, S/Bbl
SWING CRUDE
ETHANE
PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
SUMMER

2682.000
249.000
728.000
1479.000
1032.773
6170.773
270.000
261.257
29.577
5.357
98.957
63.000
180.000
40.719
7119.640

17.940
6.160
10.650
13.698
13.070
14.640
16.320
12.600
1.790

561.790
1492.882
894.615
283.938
3233.225
2186.185
349.955
1517.235
195.431
-362.391
7119.640
LEVEL 1

2682.000
249.000
728.000
1479.000
1075.619
6213.619
270.000
277.435
0.000
5.357
56.794
63.000
180.000
40.590
7106.795

17.940
6.160
10.650
13.698
13.070
14.640
16.320
12.600
1.790

558.812
1484.969
889.873
282.434
3216.088
2186.185
349.955
1526.862
198.542
-370.837
7106.795
LEVEL 2

2682.000
249.000
728.000
1479.000
1139.788
6277.788
270.000
252.471
0.000
5.357
0.000
63.000
180.000
40.493
7089.109

17.940
6.160
10.650
13.698
13.070
14.640
16.320
12.600
1.790

556.565
1478.998
886.295
281.298
3203.156
2186.185
349.955
1520.829
202.038
-373.054
7089.109
LEVEL 3

2682.000
249.000
728.000
1479.000
1179.350
6317.350
270.000
197.466
0.000
5.357
0.000
63.000
180.000
40.399
7073.572

17.940
6.160
10.650
13.698
13.070
14.640
16.320
12.600
1.790

554.375
1473.175
882.805
280.192
3190.547
2186.185
349.955
1518.113
205.431
-376.659
7073.572
SWR-8701
                     Barer B Moore Man
                                                 4-18

-------
                            TABLE 4-5
         LGULF COAST MODEL RESULTS AT $17  PER BARREL
                          (Page  2 of 4)


REGION
3

CRUDE: $17 ETHANOL: SPLASH INVESTMENT: YES

GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP,psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, f -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X 3 160 -LEADED REGULAR
X 3 160 -UNLEADED REGULAR
X 3 160 -UNLEADED PREMIUM
X 3 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X a 210 -UNLEADED REGULAR
X 3 210 -UNLEADED PREMIUM
X a 210 -TOTAL POOL
X a 230 -LEADED REGULAR
X a 230 -UNLEADED REGULAR
X a 230 -UNLEADED PREMIUM
X a 230 -TOTAL POOL
X 3 330 -LEADED REGULAR
X a 330 -UNLEADED REGULAR
X 8 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
SUMMER

10.920
10.920
10.920
10.920
127.700
130.913
129.647
129.972
35.061
30.226
37.986
33.322
58.968
57.095
50.945
55.669
64.133
65.363
60.125
63.639
90.840
93.479
91.153
92.337
LEVEL 1

9.970
9.970
9.970
9.970
128.055
136.008
137.893
135.116
39.866
28.694
32.556
31.814
61.619
56.048
47.072
54.477
66.490
65.160
55.807
62.717
91.278
93.678
90.221
92.254
LEVEL 2

9.020
9.020
9.020
9.020
133.045
140.005
144.549
140.055
38.548
27.693
30.666
30.500
60.569
56.960
42.772
53.541
65.717
67.083
50.444
62.065
91.233
93.793
89.845
92.200
LEVEL 3

8.070
8.070
8.070
8.070
141.305
142.402
151.791
144.897
32.843
30.976
23.969
29.302
56.985
56.596
42.751
52.695
62.771
65.048
54.111
61.501
90.763
90.669
95.798
92.157
SWR-8701
                      BormefB Moore Mar
                                 Hyemer
« Science
                                                              4-19

-------
                           TABLE 4-5

         GULF COAST  MODEL RESULTS  AT $17 PER BARREL
                         (Page 3 of 4)
REGION 3
CRUDE: $17 ETHANOL:

GASOLINE BLENDING DETAIL, contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
(R+M)/2 OCTANE -LEAD REGULAR
RESEARCH OCTANE -UNLEADED REG
MOTOR OCTANE -UNLEADED REG
(R+M)/2 OCTANE -UNLEADED REG
RESEARCH OCTANE -PREMIUM
MOTOR OCTANE -PREMIUM

-------
                             TABLE  4-5

          ..GULF  COAST MODEL RESULTS  AT $ 17  PER BARREL
                           (Page  4  of 4)



CASE DIFFERENCES
SWING CRUDE, MBPCD
PROPANE, MBPCD
MIXED BUTANES, MBPCD
NORMAL BUTANE, MBPCD
ISO BUTANE, MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MM$
RELATIVE CASH FLOW, MSPCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SWING CRUDE, Bbl/Bbl
PROPANE, Bbl/Bbl
MIXED BUTANES, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, S/Bbt
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KWH/Bbl
PROCESS INVESTMENTS, M$/Bbl
RELATIVE CASH FLOW, S/Bbl
REGION
CRUDE: $17 ETHANOL:
SUMMER LEVEL 1

42.846
16.178
-29.577
-42.163
0.000
-0.129
-12.845
•2.978
•7.913
-4.742
-1.504
-17.137
3.111
11.493
-12.894
16.047
863.473
48.259
-402.937


0.013
0.005
-0.009
•0.013
0.000
0.001
0.004
-0.004
0.005
0.268
0.015
-0.125
3

SPLASH INVESTMENT: YES
LEVEL 2

64.169
-24.964
0.000
-56.794
0.000
•0.097
-17.686
-2.247
•5.971
•3.578
•1.136
•12.932
3.496
13.282
•9.702
11.632
546.817
179.742
-566.581


0.020
-0.008
0.000
-0.018
0.000
0.001
0.004
-0.003
0.004
0.171
0.056
-0.177
LEVEL 3

39.562
-55.005
0.000
0.000
0.000
•0.094
-15.537
•2.190
•5.823
•3.490
-1.106
•12.609
3.393
14.776
•9.492
19.965
595.013
418.541
-608.311


0.012
-0.017
0.000
0.000
0.000
0.001
0.005
•0.003
0.006
0.186
0.131
•0.191
SWR-8701
                       Banner B Moore Management Science
                                                               4-21

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                            TABLE 4-6

          GULF COAST  MODEL RESULTS AT $27  PER BARREL
                          (Page  1 of 4)


REGION
CRUDE: $27 ETHANOL:

RAW MATERIAL PURCHASES, MBPCD
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SUING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
MIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, $/Bbl
SUING CRUDE
ETHANE
PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
SUMMER

2809.000
213.000
772.000
, 1228.000
835.185
5857.185
377.000
12.896
49.076
6.604
83.439
63.000
223.000
39.447
6711.647

28.410
10.880
17.470
21.282
20.890
21.870
26.000
17.220
2.940

523.623
1448.083
831 .487
269.103
3072.296
2038.117
327.910
1435.422
179.183
-341.281
6711.647
LEVEL 1

2809.000
213.000
772.000
1228.000
881.630
5903.630
377.000
15.087
81.445
6.604
30.236
63.000
223.000
39.325
6739.327

28.410
10.880
17.470
21.282
20.890
21.870
26.000
17.220
2.940

520.848
1440.407
827.080
267.677
3056.012
2038.117
327.910
1470.113
187.186
-340.011
6739.327
3

SPLASH INVESTMENT: YES
LEVEL 2

2809.000
213.000
772.000
1228.000
938.753
5960.753
377.000
10.829
5.798
6.604
0.000
63.000
223.000
39.232
6686.216

28.410
10.880
17.470
21.282
20.890
21.870
26.000
17.220
2.940

518.753
1434.615
823.753
266.601
3043.722
2038.117
327.910
1437.915
190.070
-351.518
6686.216
LEVEL 3

2809.000
213.000
772.000
1228.000
953.508
5975.508
377.000
9.732
0.000
6.604
0.000
63.000
223.000
39.143
6693.987

28.410
10.880
17.470
21.282
20.890
21.870
26.000
17.220
2.940

516.711
1428.968
820.511
265.552
3031.742
2038.117
327.910
1464.234
192.365
-360.381
6693.987
SWR-8701
                      Banner 8 Moore Management Science
4-22

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                           TABLE  4-6

         GULF COAST  MODEL RESULTS  AT $27 PER  BARREL
                         (Page  2  of 4)


- REGION
3

CRUDE: $27 ETHANOL: SPLASH INVESTMENT: YES

GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
1 V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X a 160 -LEADED REGULAR
X 9 160 -UNLEADED REGULAR
X 3 160 -UNLEADED PREMIUM
X 3 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X 3 210 -UNLEADED REGULAR
X 3 210 -UNLEADED PREMIUM
X a 210 -TOTAL POOL
X a 230 -LEADED REGULAR
X a 230 -UNLEADED REGULAR
X 3 230 -UNLEADED PREMIUM
X a 230 -TOTAL POOL
X 3 330 -LEADED REGULAR
X 8 330 -UNLEADED REGULAR
X 3 330 -UNLEADED PREMIUM
X a 330 -TOTAL POOL
SUMMER

10.920
10.920
10.920
10.920
127.700
131.567
127.700
129.799
35.016
29.817
39.128
33.347
59.021
56.038
54.183
56.045
64.158
64.185
63.144
63.888
90.773
90.126
96.884
92.136
LEVEL 1

9.970
9.970
9.970
9.970
127.700
137.966
134.171
135.088
40.239
26.762
35.508
31.596
62.016
53.716
52.356
54.801
66.866
62.445
61.527
62.968
91 .393
90.065
96.305
92.050
LEVEL 2

9.020
9.020
9.020
9.020
133.014
142.301
139.051
139.749
38.520
26.755
32.966
30.575
60.674
52.663
53.003
54.173
65.825
61.694
61.698
62.425
91.274
90.517
95.189
91.962
LEVEL 3

8.070
8.070
8.070
8.070
141.530
141.161
152.246
144.336
32.215
31.984
23.924
29.764
57.194
58.330
41.734
53.474
63.062
66.362
53.111
62.062
90.950
90.569
95.565
92.038
SWR-8701
                      Banner B MOOT Management Science
4-23

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                            TABLE  4-6

          GULF COAST  MODEL RESULTS AT $27  PER BARREL
                          (Page  3  of 4)


REGION
CRUDE: S27 ETHANOL:

GASOLINE BLENDING DETAIL, contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
(R+M)/2 OCTANE -LEAD REGULAR
RESEARCH OCTANE -UNLEADED REG
MOTOR OCTANE -UNLEADED REG


SUMMER

0.743
0.733
0.761
0.742
31.107
24.820
42.112
30.781
93.755
84.245
89.000
92.144
82.356
87.250
96.511
86.989
91.750

1190.369
2267.244
2043.274
35833.128
2.572
-45143.646
LEVEL 1

0.735
0.739
0.767
0.746
28.405
26.678
43.749
31.772
93.771
84.229
89.000
92.250
82.250
87.250
96.779
86.721
91.750

1198.918
2255.232
2010.395
36129.486
1.999
•45413.502
3

SPLASH INVESTMENT: YES
LEVEL 2

0.739
0.743
0.769
0.750
29.646
28.846
42.229
32.741
93.890
84.110
89.000
92.248
82.252
87.250
97.250
86.250
91.750

1211.564
2246.160
2027.971
36814.399
2.168
-45922.657
LEVEL 3

0.751
0.735
0.790
0.753
33.255
23.449
54.598
33.919
94.092
83.908
89.000
92.250
82.250
87.250
97.250
86.250
91.750

1224.187
2237.298
2069.026
37707.023
0.000
-46590.379
SWR-8701
                       Banner B Moore Management Science
4-24

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                           TABLE 4-6

         GULF  COAST MODEL RESULTS AT $27  PER BARREL
         -.                 (Page 4 of 4)



CASE DIFFERENCES
SWING CRUDE, HBPCD
PROPANE, MBPCO
MIXED BUTANES, MBPCD
NORMAL BUTANE, MBPCO
ISO BUTANE, MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MMS
RELATIVE CASH FLOW, M$PCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SWING CRUDE, Bbl/Bbl
PROPANE, Bbl/Bbl
MIXED BUTANES, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/Bbt
TEL, GRAMS/Bbl
FUEL. MM BTU/Bbl
ELEC; UCITY, KWH/Bbl
PROCESS INVESTMENTS, MS/Bbl
RELATIVE CASH FLOW, S/Bbl
REGION
CRUDE: $27 ETHANOL:
SUMMER LEVEL 1

46.445
2.191
32.369
-53.203
0.000
-0.122
27.680
•2.775
-7.676
-4.407
-1.426
-16.284
8.003
8.549
-12.012
-32.879
296.358
-0.573
-269.856


0.015
0.001
0.011
-0.017
0.000
0.003
0.003
-0.004
-0.011
0.097
•0.000
-0.088
3

SPLASH INVESTMENT: TES
LEVEL 2

57.123
•4.258
-75.647
•30.236
0.000
•0.093
•53.111
-2.095
-5.792
-3.327
-1.076
•12.290
2.884
12.646
•9.072
17.576
684.913
0.169
-509.155


0.019
-0.001
-0.025
-0.010
0.000
0.001
0.004
-0.003
0.006
0.225
0.000
-0.167
LEVEL 3

14.755
•1.097
•5.798
0.000
0.000
•0.089
7.771
•2.042
-5.647
•3.242
•1.049
-11.980
2.295
12.623
-8.862
41.055
892.624
•2.168
•667.722


0.005
-0.000
•0.002
0.000
0.000
0.001
0.004
•0.003
0.014
0.294
•0.001
•0.220
SWR-8701
                      Homer B Moore Management Science
4-25

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4.3
NO-INVESTMENT  CASES
        ^Selected  detail from results for  Region 3,  excluding
process investment,  are presented in Table 4-7.

                           TABLE 4-7
         GULF  COAST MODEL RESULTS WITHOUT  INVESTMENT
                         (Page 1 of 4)


REGION
3

CRUDE: K2 ETHAMOL: SPLASH INVESTMENT: NO

RAW MA"RIAL PURCHASES, MBPCD
LOW SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SUING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
MIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, $/Bbl
SUING CRUDE
ETHANE
I PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
SUMMER

2736.000
230.000
756.000
1348.000
910.616
5980.616
350.000
85.000
54.893
5.986
82.488
63.000
206.000
39.922
6867.905

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

537.979
1463.125
857.153
274.650
3132.907
2097.277
316.930
1478.790
190.905
•348.904
6867.905
L€VEL 1

2736.000
230.000
756.000
1348.000
932.024
6002.024
350.000
33.176
87.493
5.986
127.000
63.000
206.000
39.798
6914.477

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

535.128
1455.370
852.609
273.193
3116.300
2097.277
316.930
U84.053
33.542
•333.625
6914.477
LEVEL 2

2736.000
230.000
756.000
1348.000
1118.169
6188.169
350.000
0.000
68.311
5.986
126.798
63.000
206.000
39.703
7047.967

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

532.976
1449.517
849.181
272.095
3103.769
2097.277
316.930
1486.847
372.976
•329.832
7047.967
LEVEL 3

2736.000
230.000
756.000
1348.000
1296.002
6366.002
350.000
0.000
138.196
5.986
52.350
63.000
206.000
39.612
7221.146

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

530.878
1443.811
845.838
271.024
3091.551
2097.277
316.930
1515.713
506.423
-306.748
7221.146
SWR-8701
                      Banner 6 Moore Management Science
                                                  4-26

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                            TABLE 4-7
         GULF COAST MODEL RESULTS WITHOUT INVESTMENT
                          (Page 2 of  4)


REGION
3

CRUDE: $22 ET HANOI: SPLASH INVESTMENT: NO

GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X 3 160 -LEADED REGULAR
X 3 160 -UNLEADED REGULAR
X a 160 -UNLEADED PREMIUM
X 3 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X 3 210 -UNLEADED REGULAR
X 3 210 -UNLEADED PREMIUM
X 3 210 -TOTAL POOL
X
X 3 230 -LEADED REGULAR
X 3 230 -UNLEADED REGULAR
X a 230 -UNLEADED PREMIUM
X a 230 -TOTAL POOL
X a 330 -LEADED REGULAR
X 8 330 -UNLEADED REGULAR
X 9 330 -UNLEADED PREMIUM
X a 330 -TOTAL POOL
SUMMER

10.920
10.920
10.920
10.920
127.700
128. 194
134.999
130.036
35.034
33.610
30.815
33.071
59.000
59.512
46.789
55.813
64.148
66.020
59.141
63.736
90.792
90.035
97.105
92.175
LEVEL 1

9.970
9.970
9.970
9.970
129.483
136.195
137.837
135.466
37.972
28.301
32.165
31.118
60.487
56.071
47.664
54.473
65.535
65.258
56.443
62.807
91.127
93.638
89.744
92.087
LEVEL 2

9.020
9.020
9.020
9.020
134.714
140.138
146.118
140.868
36.323
28.498
26.380
29.290
59.259
55.700
44.124
53.051
64.656
65.023
53.557
61.706
91.150
93.862
89.010
92.004
LEVEL 3

8.070
8.070
8.070
8.070
144.177
142.875
155.367
146.649
29.125
30.035
19.394
26.855
54.601
56.590
39.720
51.452
60.878
65.615
50.863
30.588
90.723
94.034
88.652
91.918
SWR-8701
                      Bomer B Moore Management Science
4-27

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                           TABLE 4-7

         GULF  COAST MODEL RESULTS WITHOUT  INVESTMENT
                         (Page  3 of 4)
REGION 3
CRUDE: K2 ETHANOL:

GASOLINE BLENDING DETAIL.contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
1 RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
! (R+M)/2 OCTANE -LEAD REGULAR
RESEARCH OCTANE -UNLEADED REG
: MOTOR OCTANE -UNLEADED REG
i (R+M)/2 OCTANE -UNLEADED REG
1
RESEARCH OCTANE -PREMIUM
MOTOR OCTANE -PREMIUM
1 
-------
                            TABLE  4-7

         JGULF COAST  MODEL RESULTS WITHOUT  INVESTMENT
         *                (Page  4  of 4)



CASE DIFFERENCES
SUING CRUDE, MBPCO
PROPANE, MBPCO
MIXED BUTANES, MBPCD
, NORMAL BUTANE, MBPCD
; ISO BUTANE, MBPCD
ALCOHOLS, MBPCD
; TOTAL INPUT
I
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MM$
RELATIVE CASH FLOW, MSPCD
CASE DIFFERENCES NORMALIZED
. PER BARREL OF GASOLINE
SWING CRUDE, Bbl/Bbl
PROPANE, Bbl/Bbl
! MIXED BUTANES, Bbl/Bbl
: NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/Bbl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KWH/Bbl
PROCESS INVESTMENTS, M$/8bl
RELATIVE CASH FLOW, $/Bbl
REGION
CRUDE: $22 ETHANOL:
SUMMER LEVEL 1

21.408
-51.824
32.600
44.512
0.000
-0.124
46.572

-2.851
-7.755
•4.544
-1.457
-16.607
42.637
13.716
-12.348
•224.629
39.082
0.000
-766.070


0.007
•0.017
0.010
0.014
0.000
0.014
0.004
-0.004
-0.072
0.013
0.000
-0.246
3

SPLASH INVESTMENT: NO
LEVEL 2

186.145
•33.176
•19.182
•0.202
0.000
•0.095
133.490

-2.152
-5.853
•3.428
-1.098
•12.531
139.434
•6.779
-9.324
-798.525
379.450
0.000
•1622.836


0.060
-0.011
-0.006
•0.000
0.000
0.045
•0.002
•0.003
-0.257
0.122
0.000
-0.523
LEVEL 3

177.833
0.000
69.885
-74.448
0.000
•0.091
173.179

•2.098
-5.706
•3.343
•1.071
-12.218
133.447
16.498
•9.072
•755.057
447.609
0.000
•1923.375


0.058
0.000
0.023
•0.024
0.000
0.043
0.005
-0.003
-0.244
0.145
0.000
•0.622
SWR-8701
                      Hormer 6 Moore Management Science
4-29

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4.4
CONTROLLED ETHANOL  BLENDING CASES
        ^Selected  detail  from  results  for  Region  3>  with

        tE
ethanol-oontaining  blends required to meet  restricted  vapor


pressure, are  presented in Table 4-8.
                           TABLE 4-8
                 GULF COAST MODEL RESULTS WITH


                  CONTROLLED ETHANOL BLENDING

_
REGION 3

CRUDE: $22 INVESTMENT: YES


RAW MATERIAL PURCHASES, MBPCO
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SUING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
MIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, S/Bbl
SWING CRUDE
ETHANE
PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR + ETHANOL
UNLEADED REGULAR + PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
ETHANOL:
LEVEL 1

2736.000
230.000
756.000
1348.000
958.872
6028.872
350.000
79.695
47.242
5.986
27.846
63.000
206.000
41.431
6850.072

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

535.128
179.705
2307.979
93.489
3116.301
2097.277
316.930
1480.758
193.084
•354.278
6850.072
SPECIFICATION
LEVEL 2

2736.000
230.000
756.000
1348.000
993.989
6063.989
350.000
91.390
30.136
5.986
0.000
63.000
206.000
41.330
6851.831

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

532.976
178.982
2298.698
93.113
3103.769
2097.277
316.930
1494.873
197.502
•358.520
6651.831
CONTROLLED
LEVEL 3

2736.000
230.000
756.000
1348.000
1031.602
6101.602
350.000
69.175
0.000
5.986
0.000
63.000
206.000
41.233
6836.996

23.170
8.780
14.270
17.888
17.360
18.680
21.180
15.120
2.410

530.878
178.277
2289.649
92.747
3091.551
2097.277
316.930
1500.877
198.159
•367.798
6836.996
 SWR-8701
                      Banner B Moore Management Science
                                                  4-30

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                           TABLE 4-8
                 GULF COAST  MODEL RESULTS  WITH
                  CONTROLLED ETHANOL BLENDING
                          (Page 2 of 4)
REGION 3
CRUDEj »22 INVESTMENT: YES
ETHANOL: SPECIF I CAT ION CONTROLLED
LEVEL 1 LEVEL 2 LEVEL 3
GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REG + ETOH
RVP.psi -UNLEADED REG + PREM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REG+ETOH
V/L TEMP, F -UNLEADED REG+PREM
V/L TEMP, F -TOTAL POOL
X a 160 -LEADED REGULAR
X 3 160 -UNLEADED REG + ETOH
| % 5) 160 -UNLEADED REG + PREM
X 3 160 -TOTAL POOL
X 3 210 -LEADED REGULAR
X a 210 -UNLEADED REG I- ETOH
X a 210 -UNLEADED REG + PREM
X 3 210 -TOTAL POOL
X a 230 -LEADED REGULAR
X a 230 -UNLEADED REG + ETOH
X a 230 -UNLEADED REG + PREM
X 3 230 -TOTAL POOL
X 3 330 -LEADED REGULAR
X 8 330 -UNLEADED REG + ETOH
X 3 330 -UNLEADED REG + PREM
X 8 330 -TOTAL POOL

9.970
9.970
9.970
9.970
127.700
127.700
136.240
134.221
37.009
45.911
30.724
32.740
65.816
51.433
53.117
55.265
70.020
54.899
62.297
63.224
92.294
82.762
92.810
92.122

9.020
9.020
9.020
9.020
139.225
127.700
139.733
138.928
26.987
46.380
31.609
31.669
59.629
59.125
52.994
54.533
64.852
66.629
61.908
62.710
91.382
89.666
92.443
92.090

8.070
8.070
8.070
8.070
145.330
127.700
144.160
143.388
25.208
46.380
31.060
30.934
56.496
67.369
52.364
53.988
62.235
71.603
61.632
62.332
90.719
91.880
92.429
92.093
SWR-8701
                      Banner B Moore Management Science
4-31

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                            TABLE 4-8
                 GULF  COAST MODEL RESULTS WITH
                  CONTROLLED ETHANOL  BLENDING
                          (Page 3 of 4)


REGION 3

CHUOE: .$22 INVESTMENT: YES


GASOLINE BLENDING DETAIL, contd
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REG+ETOH
SP GRAVITY -UNLEADED REG+PREM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REG+ETOH
X AROMATICS -UNLEADED REG+PREM
X AROMATICS -TOTAL POOL
RESEARCH OCTANE -LEAD REGULAR
MOTOR OCTANE -LEAD REGULAR
(R+M)/2 OCTANE -LEAD REGULAR
RESEARCH OCT -UNLEADED REG+ETOH
MOTOR OCT-UNLEADED REG+ETOH
(R+MJ/2 OCT-UNLEADED REG+ETOH
RESEARCH OCT-UNLEADED REG+PREM
MOTOR OCT-UNLEADED REG+PREM
(R+M)/2 OCT-UNLEADED REG+PREM
MAJOR UTILITIES PURCHASED ,
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MM8TU PCD
ELECTRICITY, M KUH PCD
PROCESS INVESTMENTS, MM$
tELATIVE CASH FLOW, MSPCD

ETHANOL:
LEVEL 1

0.740
0.755
0.747
0.747
31.552
32.225
31.404
31.479
93.657
84.343
89.000
92.850
82.250
87.550
94.018
83.802
88.910

1213.740
2317.056
1989.213
36965.027
289.073
•40162.309
SPECIFICATION
LEVEL 2

0.758
0.738
0.749
0.750
37.378
19.794
32.329
32.477
93.902
84.098
89.000
92.250
82.250
87.250
94.100
83.720
88.910

1222.643
2307.732
1989.125
37425.707
674.284
-40734.855 -
CONTROLLED
LEVEL 3

0.762
0.755
0.752
0.754
37.145
31.052
33.068
33.670
94.130
83.870
89.000
92.956
82.250
87.603
94.100
83.720
88.910

1234.017
2298.660
2036.949
38223.762
1183.611
41367.918
SWR-8701
                      Banner B Moore Management Science
4-32

-------
                           TABLE  4-8
                 GULF COAST MODEL RESULTS WITH
                  CONTROLLED  ETHANOL BLENDING
                          (Page  4 of 4)

REGION 3

CRUDE: $22 INVESTMENT: YES


CASE DIFFERENCES
SUING CRUDE, MBPCD
PROPANE, MBPCD
MIXED BUTANES, MBPCD
NORMAL BUTANE, HBPCD
TSO BUTANE, MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, M$PCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KUH PCD
PROCESS INVESTMENTS, MMS
RELATIVE CASH FLOW, MSP CD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SWING CRUDE, Bbl/Bbl
PROPANE, Bbl/Bbl
MIXED BUTANES, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/8bl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KWH/Bbl
PROCESS INVESTMENTS, NS/Bbl
RELATIVE CASH FLOW, S/Bbl
ETHANOL:SPECIFICATION
LEVEL 1 LEVEL 2
_
35.117
11.695
-17.106
•27.846
0.000
-0.101
1.759
-2.152
-0.723
-9.281
-0.376
•12.532
4. 418
8.903
-9.324
-0.088
460.680
385.211
•572.546


0.011
0.004
-0.006
-0.009
0.000
0.001
0.003
•0.003
•0.000
0.148
0.124
•0.184
CONTROLLED
LEVEL 3

37.613
•22.215
-30.136
0.000
0.000
•0.097
•14.835
•2.098
•0.705
•9.049
-0.366
-12.218
0.657
11.374
-9.072
47.824
798.055
509.327
-633.063


0.012
-0.007
-0.010
0.000
0.000
0.000
0.004
•0.003
0.015
0.258
0.165
•0.205
SWR-8701
                      Bam 6 Moore Management Science
4-33

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4.5
BUTANE PRICE CASES
         Selected detail  from three cases with varying  butane
prices are  presented in Table  4-9.   It should be  remembered,
in reviewing  these  results,  that  the  RVP control  employed  is
intermediate  between the second  and third levels  defined  for
this study.

                          TABLE 4-9
                 GULF COAST MODEL  RESULTS AT
VARYING
BUTANE PRICES
(Pape 1 of 3)
CRUDE: (22

: RAW MATERIAL PURCHASES, M8PCD
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SWING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
NIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, S/Bbl
SWING CRUDE
ETHANE
PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
SELECTED PRODUCT SALES, MBPCD
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS & ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
ETHANOL: SPLASH
75/25

2736.000
230.000
756.000
1348.000
970.159
6040.159
332.000
22.113
10.989
5.986
127.000
63.000
206.000
40.419
6847.666

23.170
8.780
14.270
17.888
15.440
17.240
21.180
14.064
2.410

532.062
1447.030
847.724
271 .628
3098.444
2097.277
316.930
1497.465
200.704
-363.154
6847.666
INVESTMENT:
SO/SO

2736.000
230.000
756.000
1348.000
970.164
6040.164
332.000
22.117
10.984
5.986
127.000
63.000
206.000
40.426
6847.677

23.170
8.780
14.270
17.888
13.520
15.980
21.180
14.064
2.410

532.062
1447.030
847.724
271.628
3098.444
2097.277
316.930
1497.484
200.704
•363.162
6847.677
YES
25/75

2736.000
230.000
756.000
1348.000
970.164
6040.164
332.000
22.117
10.985
5.986
127.000
63.000
206.000
40.426
6847.678

23.170
8.780
14.270
17.888
11.600
14.960
21.180
15.088
2.410

532.062
1447.030
847.724
271.628
3098.444
2097.277
316.930
1497.487
200.703
•363.163
6847.678
SWR-8701
            Bonner 6 Moore Management Science
4-33

-------
                           TABLE 4-9
                 GULF  COAST MODEL RESULTS AT
                     VARYING BUTANE  PRICES
                          (Page  2 of 3)
CRUDE: $22

GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
RVP.psi -UNLEADED PREMIUM
RVP.psi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, f -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X a 160 -LEADED REGULAR
X 9 160 -UNLEADED REGULAR
X 8 160 -UNLEADED PREMIUM
X 8 160 -TOTAL POOL
X 8 210 -LEADED REGULAR
X 8 210 -UNLEADED REGULAR
X 8 210 -UNLEADED PREMIUM
X 8 210 -TOTAL POOL
X 8 230 -LEADED REGULAR
X 8 230 -UNLEADED REGULAR
X 3 230 -UNLEADED PREMIUM
X 3 230 -TOTAL POOL
X 8 330 -LEADED REGULAR
X 8 330 -UNLEADED REGULAR
X 8 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
SP GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SP GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X AROMATICS -UNLEADED PREMIUM
X AROMATICS -TOTAL POOL
ETHANOL: SPLASH
75/25

8.566
8.546
8.546
8.546
118.225
114.591
106.962
113.074
35.695
31.112
24.102
29.940
58.776
55.618
45.916
53.429
64.244
63.758
57.338
62.024
90.998
89.969
96.579
92.026
0.745
0.736
0.786
0.752
31.421
24.789
51.060
33.418
INVESTMENT
50/50

8.546
8.546
8.546
8.546
118.225
114.588
106.967
113.075
35.695
31.110
24.105
29.940
58.777
55.614
45.924
53.429
64.244
63.754
57.346
62.024
90.998
89.969
96.579
92.026
0.745
0.736
0.786
0.752
31.419
24.797
51.045
33.418
: YES
25/75

8.546
8.546
8.546
8.546
118.225
114.588
106.967
113.075
35.695
31.110
24.105
29.940
58.777
55.614
45.924
53.429
64.244
63.754
57.346
62.024
90.998
89.969
96.579
92.026
0.745
0.736
0.786
0.752
31.419
24.797
51.045
33.418
SWR-8701
Bonrar B Moore Management Bctenra
                                                           4-34

-------
                                          TABLE  4-9
                            GULF  COAST MODEL  RESULTS  AT

                                 VARYING BUTANE PRICES

                                        (Page  3  of  3)
                                CRUDE:  $22
             GASOLINE  BLENDING DETAIL (cont.)

             RESEARCH  OCTANE-LEADED REGULAR
             MOTOR OCTANE-LEADED REGULAR
             /2 OCTANE-LEADED REGULAR

             RESEARCH  OCT-UNLEADED REGULAR
             MOTOR OCT-UNLEADED REGULAR
             
-------
4.6
INCREASED BUNKER FUEL SALES CASES
         Selected   results   from  two  cases  with  increased
bunker  fuel  demand are  presented in Table  4-10.   Except  for
higher bunker  fuel  output,  these two employ the same premises
and  conditions  imposed  on  the   corresponding  Base Case  and
Second-RVP-Control-Level  case reported  in  Section 4.1,  Table
4-3.
                          TABLE 4-10
                    GULF COAST MODEL WITH
                 INCREASED BUNKER FUEL  SALES
CRUDE: $22 ETNANOL: SPLASH INVESTMENT: YES


RAW MATERIAL PURCHASES, MBPCO
LOU SULFUR CRUDES
MEDIUM SULFUR CRUDES
INTERMEDIATE SULFUR CRUDES
HIGH SULFUR CRUDES
SWING CRUDE
SUBTOTAL CRUDES
ETHANE
PROPANE
MIXED BUTANES
NORTH SLOPE BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
ALCOHOLS
TOTAL INPUT
RAW MATERIAL COSTS, $/Bbl
SWING CRUDE
ETHANE
PROPANE
MIXED BUTANES
NORMAL BUTANE
ISO BUTANE
NATURAL GASOLINE
METHANOL (for MTBE)
REFINERY FUEL, S/MMBTU
BASE +
msasssss

2736.000
230.000
756.000
1348.000
922.634
5992.634
332.000
105.270
54.320
5.986
83.263
63.000
206.000
39.922
6882.395

23.170
8.780
14.270
17.888
17.360
18.680
21.180
14.852
2.410
LEVEL 2+
sam««a*

2736.000
230.000
756.000
1348.000
1024.373
6094.373
332.000
79.535
36.492
5.986
0.000
63.000
206.000
39.703
6857.089

23.170
8.780
14.270
17.888
17.360
18.680
21.180
14.787
2.410
SWR-8701
                     Bonner g Moore Management Bctenca
                                                         4-36

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                          TABLE 4-10
                    GULF COAST MODEL WITH
                 INCREASED  BUNKER FUEL  SALES
                         (Page 2 of 4)
OWE: S22 ETHANOL: SPLASH INVESTMENT: TtS
SELECTED PRODUCT SALES, M8PCO
LEADED REGULAR
UNLEADED REGULAR
UNLEADED PREMIUM
ALCOHOL BLENDS
SUBTOTAL GASOLINES
DISTILLATES
FUEL OILS t ASPHALT
OTHER SALEABLE PRODUCTS
REFINERY FUEL
VOLUME LOSS
TOTAL OUTPUT
GASOLINE BLENDING DETAIL
RVP.psi -LEADED REGULAR
RVP.psi -UNLEADED REGULAR
•VP.psi -UNLEADED PREMIUM
IVP.pSi -TOTAL POOL
V/L TEMP, F -LEADED REGULAR
V/L TEMP, F -UNLEADED REGULAR
V/L TEMP, F -UNLEADED PREMIUM
V/L TEMP, F -TOTAL POOL
X a 160 -LEADED REGULAR
% » 160 -UNLEADED REGULAR
X a 160 -UNLEADED PREMIUM
X a 160 -TOTAL POOL
X 8 210 -LEADED REGULAR
X 3 210 -UNLEADED REGULAR
X 8 210 -UNLEADED PREMIUM
X a 210 -TOTAL POOL
X 8 230 -LEADED REGULAR
X a 230 -UNLEADED REGULAR
X 8 230 -UNLEADED PREMIUM
X 3 230 -TOTAL POOL
X 8 330 -LEADED REGULAR
X 8 330 -UNLEADED REGULAR
X 8 330 -UNLEADED PREMIUM
X 8 330 -TOTAL POOL
» GRAVITY -LEADED REGULAR
SP GRAVITY -UNLEADED REGULAR
SP GRAVITY -UNLEADED PREMIUM
SF GRAVITY -TOTAL POOL
X AROMATICS -LEADED REGULAR
X AROMATICS -UNLEADED REGULAR
X ARONATICS -UNLEADED MEDIUM
X AROMATICS -TOTAL POOL

537.979
1463.125
857.153
274.650
3132.907
2097.277
331 .930
U77.177
189.710
•346.606
6882.395

10.919
10.919
10.919
10.919
127.700
126.355
121.939
125.342
35.034
34.380
29.326
33.063
59.000
56.604
52.161
55.771
64.148
62.532
65.620
63.695
90.791
89.887
97.387
92.174
0.743
0.741
0.748
0.743
31.103
30.597
31.641
30.983

532.976
1449.517
849.181
272.095
3103.769
2097.277
331.930
1479.500
199.654
•355.041
6857.089

9.020
9.020
9.020
9.020
122.355
117.021
108.260
115.489
38.548
31.536
23.409
30.480
60.568
56.267
45.233
53.904
65.717
64.482
56.225
62.361
91. 233
90.005
96.391
92.035
0.739
0.733
0.789
0.750
29.699
23.678
S2.829
33.015
SWR-8701
Hornier 6 Moore Management Science
4-37

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                           TABLE 4-10
                     GULF COAST MODEL WITH
                  INCREASED BUNKER FUEL SALES
                         (Page  3  of 4)
CRUDE: $22 ETHANOL: SPLASH INVESTMENT: YES
GASOLINE BLENDING DETAIL (cont.)
RESEARCH OCTANE -LEADED REGULAR
MOTOR OCTANE -LEADED REGULAR
(R+M)/2 OCTANE-LEADED REGULAR
RESEARCH OCT-UNLEADED REGULAR
MOTOR OCT-UNLEADED REGULAR

-------
                         TABLE 4-10
                   GULF COAST MODEL WITH
                INCREASED BUNKER FUEL  SALES
                       (Page  4 of 4)
CRUDE: $22 ETHANOL: SPLASH
CASE DIFFERENCES
SWING CRUDE, MBPCD
PROPANE, MBPCD
MIXED BUTANES, MBPCD
NORMAL BUTANE, MBPCD
ISO BUTANE. MBPCD
ALCOHOLS, MBPCD
TOTAL INPUT
LEADED REGULAR, MBPCD
UNLEADED REGULAR, MBPCD
UNLEADED PREMIUM, MBPCD
ALCOHOL BLENDS, MBPCD
SUBTOTAL GASOLINES
REFINERY FUEL, MBPCD
CATALYST/CHEMICALS, MSPCD
TEL, M GRAMS PCD
FUEL, M MMBTU PCD
ELECTRICITY, M KWH PCD
PROCESS INVESTMENTS, MMS
RELATIVE CASH FLOW, MSPCD
CASE DIFFERENCES NORMALIZED
PER BARREL OF GASOLINE
SUING CRUDE, Bbl/Bbl
PROPANE, Bbl/Bbl
MIXED BUTANES, Bbl/Bbl
NORMAL BUTANE, Bbl/Bbl
ISO BUTANE, Bbl/Bbl
REFINERY FUEL, Bbl/Bbl
CATALYST/CHEMICALS, $/Bbl
TEL, GRAMS/Bbl
FUEL, MM BTU/Bbl
ELECTRICITY, KUH/Bbl
PROCESS INVESTMENTS, MS/Bbl
RELATIVE CASH FLOW, S/Bbl
INVESTMENT: YES

101.739
•25.735
-17.828
•83.263
0.000
-0.219
•25.306
•5.003
•13.608
•7.972
•2.555
•29.138
9.944
21.945
-21.672
-12.021
1113.785
799.524
-914.196


0.033
-0.008
•0.006
-0.027
0.000
0.003
0.007
-0.007
•0.004
0.359
0.258
•0.295
SWR-8701                                                    4-38a
                        Bonner B Moore Management Science

-------
4.7      VARIABLE-VOLUME GASOLINE ADJUSTMENTS

         ^Classical  methods  of  evaluating  product   quality
changes  In  refinery economics analyses  avoid  the problem  of
variable product volume by  taking any  necessary  steps  to  hold
the  subject  product's  volume  constant  while   varying   its
quality.  This was  done in  the prior study by  fixing  gasoline
output at a  constant  volume for  all RVP levels.  This  study,
in  recognizing  mileage and evaporative loss  effects of RVP
changes,  involves  changes   in gasoline  output  from RVP level
to RVP level.

         Assessing  the effect of  this variation in  refinery
output  requires  placing a  value on the  changes in  gasoline
sales  (at  the refinery gate).   Decreased gasoline output  at
reduced  RVP,  thus,  represents  a loss  in sales revenue  to the
refining  industry.   Cash flow  changes between  cases  account
for  the  reduction  in  raw material  allowed by  decreased gaso-
line  output  and   for  operating  cost   changes,   but  not   for
losses  in  revenue*.   Therefore,  some  estimate  of net  income
loss must  be added to  control  cost estimates.   Furthermore,
no attempt has been made in  this  study  to  determine or  define
how  RVP-control  costs  would be borne.   Results  show  only how
they would be incurred.

         To  resolve this matter,   an  estimate of net  income
loss was made by  applying  an estimated  refinery margin  for
gasoline  to  the  pool-average incremental gasoline cost times
the  volume   change associated  with  each  reduction  in  RVP.
Gasoline margin  used  for  this  purpose  is 5.6  percent.  Pool-
average  incremental gasoline cost,  volume changes and esti-
mated  net  income  losses for all subject cases are  summarized
in Table 4-11.
*AH fixed-demand products were modeled  without  net-back
 prices (none  is required).  Only  by-products, with  variable
 were given net-back prices.

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                            TABLE  4-11
                    NET INCOME-LOSS ESTIMATES

CRUDE
COST.I/BBL
22
22
22
22
22
22
22
22
22
22
22
22
17
17
17
27
27
-27
22
22
22
22
22


REGION
1
1
1
2
2
2
3
3
3
4
4
4
3
3
3
3
3
3
3*
3
3
3"
3

RVP
LEVEL
1
2
3
1
2
3
1
2
3
1
2
3
1
2
3
1
2
3
1
2
3
2
3

TOTAL GASO.
MBPCD
645.521
642.909
640.378
2064.172
2055.871
2047.778
3116.298
3103.765
3091.547
972.417
968.507
964.695
3216.084
3203.153
3190.543
3056.008
3043.718
3031.736
3116.298
3103.765
3091.547
3103.765
3091.547
POOL-AVE.
INC. COST
I/BBL
26.97
29.69
30.88
29.48
29.87
30.46
27.67
28.24
28.28
25.05
25.26
25.72
21.60
22.29
22.88
30.27
31.08
30.59
37.30
11.93
43.22
27.69
28.05
GASOLINE
CHANGE
MBPCD
3.123
2.612
2.531
10.999
8.301
8.093
16.604
12.533
.12.218
5.183
3.910
3.812
17.138
12.931
12.610
16.285
12.290
11.982
16.604
12.533
12.218
12.533
12.217

INCOME
M$PD
5.170
4.311
1.377
18.158
13.885
13.805
25.728
19.280
19.319
7.271
5.531
5.191
20.731
16.141
16.157
27.61
21.390
20.526
31.682
29.128
29.571
19.131
19.191

LOSS
$/BBL
0.008
0.007
0.007
0.009
0.007
0.007
0.008
0.006
0.006
0.007
0.006
0.006
0.006
0.005
0.005
0.009
0.007
0.007
0.011
0.009
0.010
0.006
0.006
•Without process investment
••With ethanol-containing
blends controlled
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4 . 8      NGL SECTOR COST IMPACT
              suppliers will  be  forced  to  find alternative
markets for butane displaced from refinery purchases by vola-
tility  reduction.    Analysis  indicates  that  the  volumes of
normal  butane  released by  the  refining sector  are so large
that  at  least  a  portion  of   the  sales will be  into  fuel
markets  in  competition with natural  gas.    This will  effec-
tively  set the price of all normal butane at  fuel value since
a  two-tiered  pricing system cannot exist.    Iso-butane  prices
will also be  impacted  since iso-butane and normal butane  pri-
ces are related through i somer izat ion economics.

4.8.1    Butane Markets
         Butanes  are  used in several applications  other  than
refinery gasoline production and ethylene feedstocks.  These
applications  include:

         •  Feedstock  for maleic  anhydride and  acetic  acid,

         •  Aerosol propellent,  and

         •  Fuel  competitive with LPG or  Natural  Gas

         Butane  can be  also dehydrogenated  to butylene  and
used  in a  number of  chemical  applications.   Iso-butane  is
used  as a  feedstock  for propylene  oxide and  as an  aerosol
propellant.

         Our  forecast  does  not  require  that  model  results
meet  a fuel demand for  butanes.   The  model   is not, however,
required to purchase  all of the projected available domestic
production.     The  model  may  also  utilize  butane  as   a
refinery/petrochemical  fuel.   For 1990,  we  project the  non-
olefin-feedstock  petrochemical/aerosol demands  for  butanes  as
shown  in Table 4-12.

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                         TABLE  4-12
              BUTANES REQUIRED  AS  PETROCHEMICAL
                     FEEDSTOCKS IN 1990
                (Other  than  olefin  feedstocks)

         Normal-Butane  Demands                   BPD

            Acet ic Acid                        5,000
            Maleic Anhydride                    7,100
            Aerosol/Other                         900
                  Subtotal                     13,000

         Iso-butane  Demands
            Propylene  Oxide                    22,000
            Aerosol/Other                       1,OOP
                                               23,000
Acetic  acid and  a  variety of  coproducts can  be  produced by
the  liquid phase  oxidation of  butane.   Celanese,  currently
has  the  only butane-based  acetic acid plant,  a  550MVI pounds
per  year  unit   at  Pampa,  Tex.   Union  Carbide  also  has  a
butane-based  unit at Brownsville,  Tx.  but  this  facility has
been  shutdown   for  several  years  and   is  believed   to  be
in operable.

         The Celanese plant  represents  about 1896 of U.S. ace-
tic  acid  capacity.   The  remainder  of   the  industry  uses  a
methanol-based   process   that   is  economically  superior  to
butane  oxidation.   Furthermore,  the  methanol  route  is more
selective  so it  avoids  the problems  of  marketing  the large
amount   of  coproducts   produced   with   butane   oxidation.
Inexpensive  butane may prolong  the life  of  the  Celanese faci-
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lity,  but  it  is  unlikely  to generate  any new  butane-based
faci1i t ies.

         In  contrast   to   acetic   acid,   normal-butane-based
maleic  anhydride processes  have  completely supplanted benzene
technology  in  recent years.   Currently,  maleic  anhydride  is
produced at  the following  locations:
                    U.S. MALEIC  ANHYDRIDE
                          FACILITIES
         Producer

         Amoco, Juliet,  111.
         Ashland, Neal,  W.  Va.
         Denka, Houston, Tx.
         Monsanto,  Pensacola,  Fla,
         Monsanto,  St. Louis,  Mo.
         USS, Neville  Island,  Pa.
                            Capaci ty
                          (MM Ibs/Yr)

                              60
                              60
                              65
                             170
                             110
                              55
                                                  505
         This  capacity   should   be   sufficient   through  the
mid-1990s,  so  normal-butane  consumption  is expected  to grow
in line with maleic anhydride  demand.

         ARCO Chemical  produces  propylene  oxide  and  tertiary
butyl alcohol by oxidation of  iso-butane  followed by  reaction
with propylene.   The only other  propylene oxide  producer  is
Dow  via  a  chlorohydrin-based process.    Dow's  process  is
believed to be economically  inferior  to ARCO's,  so new plants
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                                                         4-43

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will employ ARCO's  technology.   However,  new plants will not
be  required until  sometime  after 1990 and Dow seems unlikely
to  shutdown their  existing,  fully depreciated plants,  in the
near future regardless of iso-butane prices.

         Because   of   chemical    inertness   and   high   vapor
pressure,  high  purity  butanes  are  used  as  aerosol  pro-
pellants.   Iso-butane  is  the  predominant  product although
normal-butane  and  propane are  also  used.   Small  volumes of
butanes are also used as a solvent in polymer processing.

         In addition  to  these  current uses,  butanes  can be
dehydrogenated  to  butylenes or  to butadiene  in  the case of
normal-butane.   These  olefins   can  be used  for  derivatives
such  as methyl  ethyl  ketone,   secondary butanol,  MTBE and
polybutenes.   Of  these products, only MTBE has the  potential
for  growth  under  RVP  restrictions,  because  of  its use as  a
gasoline octane enhancer.  These  potential applications  might
consume  a  few  thousand  barrels  per  day   of  butane but  they
cannot  absorb  all of the product  displaced from refineries.

         In summary,  the chemical markets for butanes,  out-
side of olefin  feedstocks, are  limited.   Lower prices  are not
likely  to  result   in  any  major  increase  in  these markets by
1990,   although   longer   term  growth  would  be   positively
impacted.   Even so, these  demand growths would have  a  small
effect  on butane surpluses.
4.8.2    Butane Storage

         Our analysis of  the  impact  of  reduced  gasoline  vapor
pressure  impacts  on  the NGL industry assumes that  a  signifi-
cant portion of the normal-butane displaced  from  the  refining
SWR-8701                                                 4-44
                     Bonner B Moore Management Science

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 industry will  be  burned  as  boiler fuel  at a distressed price.
An alternative to boiler fuel use is to  store the normal-butane
during  the  summer period  and use  the  stored  material during
the  winter.    Underground  storage  capacity  for normal-butane
 is summarized  in  Table  4-13.
                          TABLE 4-13
         NORMAL-BUTANE  UNDERGROUND STORAGE CAPACITY
                           (M bbls)
REGION




U.
1
2
3
4
S.
TOTAL
825
15,644
47,448
0
63,917
MERCHANT
0
12,648
38,225
0
50,873
Source:   "North    American    Storage   Capacity   for   Light
          Hydrocarbons   and  U.S.   LP-Gas   Import  Terminals,
          1985",  Gas Processors  Assoc.  and  Resource Planning
          Consultants
         Of  the  total capacity  of  63.9  million barrels, 50.9
million  barrels   is  primarily   for  merchant  use  and  13.0
million  barrels   is  devoted  primarily  to  servicing  internal
requirements  - usually  for  an adjacent  refinery.
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         RVP  reduction  in  the range  studied  would add 18  to
31 million  barrels  to  normal-butane inventories which have a
current summer  peak  of  20  to 30  million barrels.  This  indi-
cates  that  RVP  control  could  roughly  double  "normal" inven-
tories.   By  historical  standards,  "full"  storage  is  only
50-60% of capacity  because of well-pressure buildup,  lack  of
storage for  displaced brine,  logistical  problems, and  other
factors.   Physical  limitations  and market  risks associated
with  storage  of  such  large volumes  make it  unlikely  that
storage will  be  adopted  as the  industry solution  for  the
displaced butane.

         Nevertheless,  NGL producers  and  refiners that  have
access to storage  and  are  willing to  assume  the market  risks
might  choose  summer-to-winter  storage.   The  analysis  pre-
sented here  is  still valid so long as an  incremental  portion
of  the domestic  supply moves  into fuel,  since  this latter
action will set  the  market price.   If  large volumes  of butane
are  stored,   it  will negatively  impact  the  winter  price  of
butane and  further  increase  the NGL-industry cost effects  of
RVP control.
4.8.3    Natural Gas Processing  Economics

         Lower  butane  prices  resulting from RVP control will
adversely  impact  the  economics of gas processing.   Economics
for  a  50  MMcfpd  cryogenic  expander  plant  located in West
Texas are  presented  in Table  4-14.  These  economics  show  the
plant  to  approximately  break  even  (margin - 0.2$/gal) with
summertime   prices   and   to   realize  an   annual  margin   of
2.08$/gal.   This annual margin  is  not  likely  to  support  rein-
vestment.    Furthermore,  margins  could  be  lower  for  older,
less  efficient  plants,  those  in remote areas, and those pro-
cessing dry  gas.
                     Bonner B Moore Management Science                 4-46

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                         TABLE  4-14
                  GAS PROCESSING  ECONOMICS
                        (Sheet 1 of 3)
BASES
         West Texas Location
         50 MM cfpd Cryogenic  Turbo  expander  Plant
         2.13 Gal/M Gas  Processed
         Operating Rate  =  90%  of Capacity
         Plant Investment  = $12.91 MM (1985$)
         Product Mix:
                               Liquid  Volume Percent
Ethane
Propane
N Butane
Isobutane
N. Gasoline
  44.6
  21.8
   8.9
   7.3
  17.4
 100.0
         Crude Oi1 =  $22/bbl
COST OF PRODUCTION
                      Uni ts/gal
                         Product
           Cost/Uni t
           Product Cost
               (*/gal)
  Raw Ma t e r i a 1s
     Gas Shrinkage
     Other
86.8 MBtu  $2.00/MMBtu
                17.36
                 0.09
UTILITIES
  Extraction Fuel
  Electr ici ty
  Cool ing Water
 8.16 MBtu
 0.072 kwh
10.01 gal
2.00/MMBtu
0.05/kwh
0.168/M gal
1.63
0.36
0.17
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                                                        4-47

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                         TABLE 4-14
                  GAS PROCESSING ECONOMICS
                       (Sheet 2 of 3)
                      Units/gal
                        Product
           Cost/Unit
        Product Cost
            (*/gal)
TRANSPORTATION & FRACTIONATION
  Subtotal Variable Cost
                             3.50
                            23.11
  Labor
    Operat ing
    Direct Overhead
2 Men/Shi ft
50% of Labor
$14.16/hr
0.71
0.36
  Other Costs
    Maintenance         2.5%  of  Inv,
    Taxes <5c Insurance   1.5%  of  Inv,
    General Overhead    65% of L&M
                            0.93
                            0.55
                            1.06
                            Total  Cost
                           26.72
ECONOMIC ANALYSIS
    Composite Product Price  -  Summer
    Gross Profit Margin  -  Summer
                          26.50
                          (0.20)
    Composite Product Price  -  Annual
    Gross Profit Margin  - Annual
                          28.80
                           2.08
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                          TABLE 4-14
                   GAS PROCESSING ECONOMICS
                        (Sheet 3 of 3)
Composite Product  Prices
                      Prices, */gal
                                      Composite Price
                                           «/gal
Component
Ethane
Propane
n-Butane
i -Butane
Nat. Gasoline
Compos i te
Gal/gal
0.446
0.218
0.089
0.073
0.174
1.000
Sunnier
15.3
34.0
24.8
30.8
45.4
Winter
15.3
34.0
41.3
55.3
48.7
Annual
15.3
34.0
34.4
45.1
47.3
Sunnier
6.8
7.4
2.2
2.2
7.9
26.5
Annual
6.8
7.4
3.1
3.3
8.2
28.8
4.8.4
Industry Cost  Impact
         Table  4-15  presents  an  example  calculation  of  the
NGL  costs.    In  these  cases  n-butane   prices   are   at   the
regional fuel  value  which varies as  follows:
                        Re g i o n
                         Fuel  Value w/ $22 Crude
                               $/MMBtu
                           1
                           2
                           3
                           4
                                 3.60
                                 2.90
                                 2.41
                                 3.50
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                     Bonner 6 Moore Management Science
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         Iso-butane price was  set at  6
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 Cfl

 3
 00
TABLE 4-15
                                                                 NGL SECTOR COSTS

                                                           ($22 Crude - 1st Reduction)
                                                                  (Page 1 of 2)
 i
en

PRODUCT
Region 1
Ethane
Propane
N-Butane
Iso-Butane
Natural Gasoline

Region 2
Ethane
Propane
N-Butane
Iso-Butane
Natural Gasoline

(a) Negative numbers
(b) Negative numbers

BASE

9.62
12.76
19.27
20.63
20.45


7.75
10.28
17.83
21.03
17.09

Indicate
Indicate
PRICES ($/Bbl)
1ST RED

9.62
12.76
15.56
20.63
20.88


7.75
10.28
12.54
15.06
19.99


DIFF


_
3.71 /
-
(0.43)
Subtotal


_
5.29
5.97
(2.90)
Subtotal
a cost decrease, I.e.
cost decreases
GAS PLANT
PRODUCTION
(BPD)

12,000
13,000
5,000
3,000
8,000
Region 1

129,000
157,000
54,000
26,000
76,000
Region 2
NGL NGL
INDUSTRY REFINING
COSTS (a) COSTS (b)
U/DAY) (t/DAY)

_ —
-
18,550
-
(3.440) 3.440
15,110 3, MO

« •»
- -
285,660 (118,745)
155,220 (155,220)
(220,400) 220.400
220,480 (53,565)
NET
NGL
COSTS
($/D AYi

_
-
18,550
-
-
18,550

_
—
166,915
-
-
166,915
revenue Increase.
, positive numbers are
cost increases.


-------
  I
 oo
TABLE 4-15
                                                                     NGL SECTOR COSTS

                                                               ($22  Crude - 1st Reduction)
                                                                      (Page 2 of 2)
 I
en
to
PRICES ($/Bbl)
PRODUCT
Region 3
Ethane
Propane
N-Butane
lao-Butane
Natural Gasoline

Region 4
Ethane
Propane
N-Butane
Iso-Butane
Natural Gasoline

(a) Negative numbers
(b) Negative numbers
BASE

9.62
12.76
19.27
23.22
20.4U


9.36
12.40
15.13
16.27
17.72

Indicate
Indicate
1ST RED

9.62
12.76
10.42
12.94
19.89


9.36
12.40
15.13
15.69
18.01

DIFF

—
8.85
10.28
0.55
Subtotal

_
-
_
0.58
(0.29)
Subtotal
NGL NGL
GAS PLANT INDUSTRY REFINING
PRODUCTION COSTS (a) COSTS (b)
(BPD) U/DAY) O/DAY)

332,000
315,000
127,000 1
63,000
179,000
Region 3 1

1,000
19,000
8,000
4,000
11,000
Region 4
a cost decrease, I.e. revenue Increase.
cost decreases, positive numbers are cost

_ -
,123,950 (391J736)
647,640 (470,770)
98,450 (98,450)
,870,040 (960,956)

_
— —
— ~
2,320 (2,320)
(3.190) 3.190
(870) 870
Increases.
NET
NOL
COSTS
U/DAY)

-
732,211
176,870
909,084

-
—
—
-
—
-


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                     REPORT BIBLIOGRAPHY
1Bonner & Moore Associates,  Inc.,  "Estimated  Refining  Cost
 Impact of Reduced Gasoline  Vapor  Pressure,"  Final  Report,
 Prepared for the U.S. EPA under Work Assignments  23  and 28
 of Contract No. 68-03-3162,  10 July  1985.

2Bonner <5c Moore Associates,  Inc.,  "Estimated  Refining  Cost
 Impact of Reduced Gasoline  Vapor  Pressure,"  Supplemental
 Report, Prepared for  the U.S. EPA under  Work Assignments  5
 and 6 of Contract 68-03-3244  and  Work  Assignment  13  of
 Contract No. 68-03-3192, 25 February  1986.

3Jack Faucett Associates, "The Butane  Industry:  An  Overview
 and Analysis of the Effects  of Gasoline Volatility Control
 on Prices and Demand," Draft  Report,  Submitted  to  the U.S.
 EPA under Work Assignment 5 Contract  No.  68-03-3244,  30 May
 1985.

^National Petroleum Council,  U.S.  Petroleum Refining,  October
 1986.
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                           APPENDIX A
                    PRODUCT DEMAND FORECASTS
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                         APPENDIX A
                  PRODUCT  DEMAND  FORECASTS
A.I      GENERAL ASSUMPTIONS

         Appendix  A presents  three  forecasts  for  petroleum
demand  used  in this  study.    These  forecasts were  developed
using prior  forecasts  from the U.S. DOE  Department  of Energy
and Chase Econometrics1^.  Three  forecasts  were  developed to
cover a range of crude oil prices  for  the 1990  time  frame.

         Forecast  generations  were  based  upon  two  assump-
tions as follows:

              U.  S.  refiners'  average  acquisition  cost  for
              crude  was  assumed to  be:  $27/bbl  in  the  high-
              cost case,  $22/bbl  in  the  medium-cost  case,  and
              $17/bbl  in  the  low-cost  case.  All prices  are
              in 1985 constant  dollars.

              Petroleum  demand is  sensitive to  fuels prices
              due  to  the impact  prices  have  on  inter-fuel
              competition and  on  total  demand for oil-derived
              products.
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A.2
METHODOLOGY
         To  forecast  petroleum product  demands  in  the U. S.,
detailed  forecasts for  total  energy  consumption  by  end-use
sector  and  fuel  type  were developed.   These  forecasts were
based on prior  forecasts  from the above-mentioned sources and
by  applying  implied growth rates  to historical data on energy
consumption  by  end-use  sector available  through  the  State
Energy  Data  Base3.  in some  cases,  the  demand forecasts were
adjusted when  judgment indicated  that  the resulting  forecast
was  unrea1i s t i c.
          Resulting forecasts  for  growth  in  energy demand  in
 each  consuming sector  for  each  crude oil cost case are  shown
 in  Figure A-l.   As illustrated in  this  figure,  the  response
 of  demands to  different  price  scenarios  varies,  due  largely
 to  the   relative   importance  of  oil  as  a  primary  fuel  in
 meeting  each  demand.
 I
 a
 CD
 a
 M
 O
 f-
 f,
 M
 u
 «
 w
 ft.
 p
      Figure A-l
          U.S.  Sector  Energy  Demand  Growth Rates
          Impact  of Oil  Price on  Demand
 SWR-8701
             Bonner B Moore Management Science
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         The  satisfaction  of  projected  energy demand  by  fuel
type  was assigned by  balancing  available  supplies for  each
fuel  with  total  demand.   This  process  of  allocating  fuel
supplies  was  done by  using data  on current  supply  patterns
and  a variety of  forecasts for each energy supply  component.
The  forecast  for  U.  S.  petroleum  demand  generated  by  this
process   is  shown in  Figure  A-2.   As   illustrated  by  this
figure,  the  demand  for  petroleum  is  strongly  influenced  by
the  cost  of crude oil.
w
1
or
      20
1070  1072   1074   1076   1078   1080   1082  1084   1086   1088

    a  f27/BB        +   f22/BBL         o   |17XBBL
                                                              1000
               Figure A-2.  U.S.  Petroleum Demand
 SWR-8701
               Banner B Moore Management Science
A-4

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A.3      MAJOR PRODUCT PETROLEUM DEMAND
        V
         Each forecast  for  total  petroleum demand was broken
into  the  major  products  identified  in  the  refining models
utilized in this study.   The forecasts  for  individual products
were prepared using a methodology  similar  to  the one described
earlier.   Within  each  consuming  sector,  petroleum products
supply  a   fraction  of  energy  demand.    Historical  data for
refined products  consumption  within each  sector,  as  well as
forecasts  on  the  growth of  product  demands,  were  used to
forecast demand for each product.

         The  forecast  for  refined  product   demand   required
examination of  the key  factors influencing demand  in each oil
price scenario.  Key  factors in each sector are:

         •    Residential  Sector  -  focus  in  this  sector is
              home heating  energy demand  and penetration of
              natural gas into this market.

         •    Commercial  Sector  -  focus  is  on regional  dis-
              tribution of  office space and  the corresponding
              air conditioning and heating demands.

         •    Industrial Sector - focus is on  inter-fuel  com-
              petition,  and  the  fuel-switching  capability
              within  each region.

         •    Transportation  Sector  -  focus  is  on   relative
              growth  among  competing refined  products, (i.e.,
              diesel  pent trat ion).
SWR-8701

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Once  each  sector's  energy  demands had  been satisfied,  like
refined product demands were summed across  sectors  to  provide
total  refined  product  demands.    Table  A-l   presents   the
resulting forecasts  for refined  product  demand.
A.4      REGIONAL DEMAND FORECASTS

         The methodology for generating  regional  energy fore-
casts  required  predicting, by  end-use sector, each  region's
share  of  the U.S.  forecast.    This  prediction employs  rela-
tionships  which equate  each  region's energy  share  to  each
region's share  of key economic  activity.   Predictions of eco-
nomic  activity  are  taken  from  Chase Econometrics'  Regional
Forecast Data Service.

         Once the  demand  for energy  for each  end-use  sector
was  forecast, the  satisfaction of this  energy  demand by fuel
type  was   forecast  using  the  same methodology  used for  the
U.S.   forecast.     Once  each  regional  energy  forecast  was
complete,  regional  demands were aggregated  and compared with
the  U.S.  forecast.    If  aggregated demands did not match  the
U.S.   forecast,   regional  demands  were  adjusted  to  attain
agreement.

         The  resulting  forecasts for  demands  of  major  petro-
leum product are presented in Table A-2.
SWR-8701             Banner B Moore Management Science                  A-6

-------
                             TABLE A-1
             U.S.  REFINED  PRODUCT DEMAND FORECAST
                              (MB/CD)
1990 DEMANDS
DEMAND $17/bbl 122/bbl »27/bbl
LPG 1,570 1,766 1,766 1,720
Citollne 6,735 7,288 7,122 6,886
JP-4 223 194 19* 194
J«t-A 956 1,233 1.145 1,054
Kerosene 116 136 136 126
Distillate 2,853 3,258 3,203 3,101
Resid 1,373 1,293 1.095 1,077
Coke 248 271 271 264
Other:
Still Cat 529 530 520 511
Asphalt I Road Oil 410 448 448 448
Lube* t Waxes 172 195 189 188
Pet. Chen. Naphtha 401 392 391 382
Other 175 135 135 122
Total 15,760 17,133 16.614 16.073
ANNUAL PERCENT GROWTH
S17/bbl $22/bbt S27/bbl
2-OX 2. OX 1.5X
1.3X 0.9X 0.4X
•2.3X -2.3X -2.3X
4.3X 3. IX 1.6X
2.7X 2.7X 1.4X
2.2X 1.9X 1.4X
•1.0X -3.7X -4. OX
1.5X 1.5X 1.0X
O.OX -0.3X -0.6X
1.5X 1.5X 1.5X
2.1X 1.5X 1.5X
•0.4X -0.4X 0.8X
•4.2X -4.2X -5.8X
1.4X 0.9X 0.3X
SWR-8701
                       Banner B Moore Management Science
A-7

-------
                          TABLE A-2

         REGIONAL REFINED PRODUCT DEMAND FORECAST
                           (MB/CD)
                        (Page  1 of 2)



	
PAOO 1 	
1990 DEMANDS

LPG
Gasoline
JP-4
Jet-A
Kerosene
Distillate
Res Id
Coke
Other:
Still Gas
Asphalt I Road Oil
Lubes ( Waxes
Pet. Cheat. Naphtha
Other
Total

ivo*
DEMAND
160
2,339
69
367
26
1,043
728
37

SO
133
51
18
52
5,074

»17/bbl
168
2,458
60
459
34
1,203
761
40

50
145
57
16
40
5,493

S22/bbl
168
2,401
60
427
34
1,183
657
40

49
145
56
15
40
5,276
....
S27/bbl
165
2,331
60
394
32
1,141
619
39

49
145
56
15
36
5,082
PADD 3 •-••
1990 DEMANDS

LPG
Gasoline
JP-4
Jet-A
Kerosene
Distillate
Res id
Coke
Other:
Still Gas
Asphalt t Road Oil
Lubes I Waxes
Pet. Chen. Naphtha
Other
Total
ITW«»
DEMAND
844
999
39
105
61
493
290
100

241
62
70
336
49
3,689
S17/bbl
989
1,153
34
154
55
566
182
109

241
68
73
332
38
3,995
$22/bbl
989
1,128
34
143
55
559
176
109

237
68
72
333
M
3,942
S27/bbl
958
1,081
34
130
49
539
180
107

233
68
72
325
34
3,810

ANNUAL
S17/btal
O.SX
0.8X
•2.3X
3.8X
4.2X
2.4X
0.8X
1.5X

O.OX
1.5X
1.9X
•2.2X
•4.2X
1.3X

ANNUAL
S17/bbl
2.7X
2.4X
-2.3X
6. A
•1.5X
2.4X
•7.5X
1.5X

O.OX
1.5X
O.SX
-0.2X
-4.2X
1.3X

PERCENT GMUTH
S22/bfal S27/bbl
0.8X O.SX
0.4X -0.1X
•2.3X -2.3X
2.5X 1.2X
4.2X 3.5X
2. IX 1.5X
•1.7X -2.7X
1.SX 1.0X

•0.4X -0.6X
1.5X 1.5X
1.5X 1.3X
•2.8X -3. OX
•4.2X -5.8X
0.7X O.OX

PERCENT GROWTH
$22/bbl *27/bbl
2.7X 2.1X
2. OX 1.3X
-2.3X -2.3X
5.3X 3.7X
•1.SX -3.4X
2. IX 1.SX
-8. OX -7.7X
1.5X 1.0X

-0.3X -0.6X
1.SX 1.SX
O.SX O.SX
-0.1X -O.SX
•4.2X -S.8X
1.1X O.SX
SWR-8701
                      Homer 6 Moore Management Science
                                                              A-8

-------
                           TABLE A-2
          REGIONAL  REFINED PRODUCT  DEMAND FORECAST
                            (MB/CD)
                         (Page 2 of  2)
	 CALIFORNIA 	
1990 DEMANDS

LPG
Gasoline
JP-4
Jet-A
Kerosene
Distillate
Resid
Coke
Other:
Still Gas
Asphalt I Road Oil
Lubes t Waxes
Pet. Chem. Naphtha
Other
Total



LPG
Gasoline
JP-4
Jet-A
Kerosene
Distillate
Resid
Coke
Other:
Still Gas
Asphalt I Road Oil
Lubes t Waxes
Pet. Chen. Naphtha
Other
Total
iyo*»
DEMAND
55
729
38
137
1
209
195
20

81
42
14
19
16
1,557

1OAA
iyo*»
DEMAND
510
2,667
77
346
28
1,108
160
91

157
173
37
29
58
5,440
S17/bbl
60
837
33
189
1
239
173
21

81
46
17
19
13
1,727

S22/bbl
60
830
33
180
1
236
162
21

79
46
16
18
13
1,695
....
S27/bbl
59
792
33
164
1
226
156
21

78
46
16
18
11
1,619
OTHER 	
1990 DEMANDS
$17/bbl
549
2,840
66
431
45
1,250
178
99

157
190
48
26
45
5,923
S22/bbl
549
2,763
66
395
45
1,225
100
99

155
190
45
25
45
5,702
»27/bbl
539
2,682
66
366
43
1,194
123
97

152
190
45
24
40
5,562
ANNUAL PERCENT GROWTH
S17/bbl 122/bbl S27/bbl
1.3X 1.3X 0.9X
2.3X 2.2X 1.4X
-2.3X -2.3X -2.3X
5.4X 4.6X 3. OX
7.2X 7.2X 6. OX
2.3X 2. OX 1.3X
-2. OX -3. OX -3.7X
1.5X 1.5X 1.0X

O.OX -0.3X -0.6X
1.5X 1.5X 1.5X
2.5X 1.9X 1.9X
•0.5X -1.1X -1.4X
•4.2X -4.2X -5.8X
1.7X 1.4X 0.7X

ANNUAL PERCENT GROWTH
$17/bbl S22/bbl S27/bbl
1.2X 1.2X 0.9X
1.1X 0.6X 0.1X
•2.3X -2.3X -2.3X
3.7X 2.2X 0.9X
8.4X 8.4X 7.5X
2. OX 1.7X 1.3X
1.7X -7.6X -4.3X
1.5X 1.5X 1.0X

O.OX -0.2X -0.6X
1.5X 1.5X 1.5X
4.6X 3.4X 3.4X
-1.7X -2.2X -2. 51
•4.2X -4.2X -S.tt
1.4X 0.8X 0.4X
SWR-8701
                      Bomer 6 Moore Management Science
A-9

-------
A.5      ANNUAL REFINING DEMANDS

         This  section  covers  the  methodology for  generating
refinery  demands  for  each  crude-cost  case.   These  required
forecasting  imports,   exports  and  movements  of  refined  pro-
ducts among regions.

         Developing regional  refinery output  requirements  for
meeting a  forecast  of  demand  for  refined products  depends  on
assumptions  concerning product  imports, exports  and  inter-
regional  movements  as  well  as  consideration  of  refinery
throughput and product  slate  for each region.   In  the absence
of a model for optimizing refined  product supply,  the task  is
one  of  trial  balancing,   judgmental  adjustments  and  rebal-
ancing.    Historical import,  export  and inter-regional  move-
ments are used as a basis for  initial distributions.

         A U.S. supply/demand  balance is obtained  by  assuming
that historical import  and export  relationships  will  apply  in
1990.  Regional imports and exports are  similarily  defined  as
a first approximation.  Using  assumed refinery  output for  all
regions except  PADD 3,  inter-regional  product movements  are
assigned  to  satisfy  regional  demand (overall).    Historical
distribution patterns  and expected (existing)  transportation
facilities are  used in  this  allocation.   From this  alloca-
tion, PADD 3  refining  output   is determined by difference  and
judged reasonable or  used to provide adjustments  to  refinery
output  and/or  product  movements.   Repeating this procedure
leads to overall refinery output predictions.
SWR-8701             Bonrier B Moore Management Sdence                  A-10

-------
         Individual major product balances are prepared  in an
analogous manner,  with  the added requirement  that  the  total
production of  products   from  each refining  region  match  the
overall output  derived  as described  earlier.   Comparison of
product slates  derived  in this manner  to historical  product
liftings  is  another  necessary  consideration.   If   required,
adjustments  to  import and  inter-regional  transfers are made
to bring product yields  into reasonable ranges.

         Grade  distributions  for motor  gasoline,  distillate
and residual fuel were developed as follows.  For motor  gaso-
line,   the grade  distribution  was based on projected national
vehicle population,  scrappage rate,  annual  miles driven  per
vehicle,  and  CAFE mileage*.   These  projections  indicated  a
continued  decrease  in   leaded  regular  and  an  increase   in
unleaded  premium.    National  trends  were then  adjusted  for
regional  demands  based  on historical  grade  consumption  in
each region.  In PADD 1  and California, the  demand  for leaded
regular becomes  quite small  such that it  probably would be
uneconomical to maintain  the segregated distribution channels
requi red.
         Grade distribution between heating  oil and  diesel
fuel  was  based  on  the  energy-consuming  sector  demands  by
region.  Diesel  is,  thus,  the demand  in the  industrial  sector
for stationary engine and  agricultural equipment  fuel  and, in
the transportation sector, for  automotive  and military use.
All other distillate demands  were represented as heating  oil
grade.    The   refinery   distillate  grade  demands  were then
calculated on the  following assumptions:
*Relaxation of CAFE requirements  through 1986 were  considered
 in making these determinations.
SWR-8701                                                 A-ll
                     Burner B Moore Management Science

-------
         •    Distillate  imports  and exports will be  heating
              oil only.

         •    Inter-PAOD movements were  assumed  in proportion
              to  the  demands  in the   receiving  PADD  after
              adjusting for  imports  and  exports.

         Residual  fuel  oil grades were  based on  the  demands
of each energy-consuming sector  in each  region.   Grade splits
of imports,  exports  and inter-regional  movements  of  residual
fuel were based on historical  trends.  Regional  demand splits
and  movement  grade  splits  were  combined  to  develop  the
regional refining grade splits.

         This  process,   when  completed   for   each   region,
resulted  in  detailed  forecast   balances   for  each  product.
Table  A-3  presents  the  forecast  for  total  product  imports
resulting  from  these  balances.    Imports  for   the  low-cost
crude  oil  case  are   substantially  higher  due  to the  higher
level  of  demand and  the   required higher   levels  of  refinery
ope rat ions.

         Table A-4 presents the  forecast  of  refining  demands
for  the  total  U.S.   Table A-5 presents  the regional  refining
demand forecas t.
S WR — 8 7 01
                     Bonnet 6 Moore Management Science                  A-12

-------
                            TABLE A-3
                      U.S. PRODUCT IMPORTS
                              (MB/CD)
1990 IMPORTS
IMPORTS S17/bbl $22/bbl S27/bbl
LPG 276 345 300 275
Gasoline 518 623 563 515
JP-4 13 16 14 13
Jet -A 45 56 49 45
Kerosene 11 14 12 11
Diet) I lite 259 299 292 258
Res id 567 659 552 514
Coke
Other:
Stilt Gas
Asphalt I Road Oil 49 61 53 49
Lubes t Uaxes 19 24 21 19
Pet. Chen. Naphtha 32 40 35 32
Other 50 62 54 49
Total 1,839 1.855 1,645 1,505
ANNUAL PERCENT GROWTH
$17/bbl *22/bbl *27/bbl
4.6X .7X -O.U
3.8X .TX, -O.U
4.5X .7X -0.1X
4.6X .7X -0.1X
4.6X .n -0.1X
2.9X 2.4X -0.1X
3.1X -0.6X -1.9X



4.5X 1.6X -0.2X
5. OX 2. IX 0.3X
4.8X 1.9X 0.1X
4.4X 1.5X -0.3X
0.2X -2.2X -3.9X
SWR-8701
                       Bonner 6 Moore Management Science
A-13

-------
                             TABLE A-4
                      U.S.  REFINING  DEMANDS
                              (MB/CD)


Gasoline
Leaded
Unleaded Regular
Unleaded Premium
JP-4
Jet-A
Kerosene
Distillate:
No. 2 Fuel Oil
Diesel
Residual Fuel Oil:
Low Fulfur
High Sulfur
Bunkers
Coke
Other Products:
Still Gas
Asphalt & Road Oil
Lubes I Waxes
Pet. Chem. Naphtha
Other
Total

DEMAND $17/bbl
6,441 6.674
1,248
3,612
1,814
206 17V
983 1,188
94 121
2,686 3,021
1,557
1,464
882 816
270
273
273
455 442

584 530
401 388
161 186
356 369
110 187
13,359 14,100
1990 OCNAND
«2/bbl
6,567
1,220
3,575
1,773
181
1,107
123
2,973
1,551
1,422
725
221
245
260
442

520
396
183
374
195
13,786

S27/bbl
6,379
1,179
3,486
1,714
182
1,020
115
2,905
1,511
1,394
744
244
253
247
436

511
400
184
368
175
13,419
ANNUAL •HKCTT drovm
*17/bbl «2/bbl S27/tabl
0.7X 0.4X -0.2X



•2.8X -2.6X -2.4X
3.9X 2.4X 0.7X
5.3X 5.6X 4. IX
2.4X 2. IX 1.6X


•1.5X -3.9X -3.3X



•0.6X -0.6X -0.9X

•1.9X -2.3X -2.6X
•0.7X -0.3X -O.OX
2.9X 2.6X 2.7X
0.7X 1.0X 0.6X
11. 2X 12. 1X 9.7X
1.1X 0.6X 0.1X
SWR-8701
                       Homer B Moore Management Science
A-14

-------
                            TABLE A-5
                   REGIONAL  REFINING  DEMANDS
                             (MB/CD)
                          (Page 1 of 2)


Gasoline
Leaded
Unleaded Regular
Unleaded Premium
JP-4
JefA
Kerosene
Distillate:
No. 2 Fuel Oil
Diesel
Residual Fuel Oil:
Low Fulfur
High Sulfur
Bunkers
Coke
Other Products:
Still Gas
Asphalt I Road Oil
Lubes I Waxes
Pet. Chem. Naphtha
Other
Total



Gasoline
Leaded
Unleaded Regular
Unleaded Premium
JP-4
Jet-A
Kerosene
Distillate:
No. 2 Fuel Oil
Diesel
Residual Fuel Oil:
Low Fulfur
High Sulfur
Bunkers
Coke
Other Products:
Still Gas
Asphalt ( Road Oil
Lubes & Waxes
Pet. Chem. Naphtha
Other
Total

1985 «
DEMAND
616



22
43
7
296


127



36

58
80
23
5
14
1,327

4QOC -
1VO3 *
DEMAND
2932



93
509
58
1245


311



193

273
104
98
300
67
6,183
•••• •Aoo'i ••••
1990 DEMAND
S17/bbl
604
100
308
196
32
38
4
298
167
131
107
68
39

48

50
94
18
10
32
1,335


$17/bbl
3,113
556
1,672
886
62
644
75
1,430
749
681
243
66
66
111
191

241
83
113
308
91
6,595
S22/bbl
606
99
314
194
34
37
4
299
169
130
99
63
36

46

49
100
19
11
34
1,338
.... PADD
1990 DEMAND
S22/bbl
3,018
534
1,632
852
61
595
76
1,389
736
653
248
67
75
105
191

237
82
111
314
94
6,417
$27/bbl
608
98
318
192
35
37
5
291
165
126
93
59
33

47

49
103
20
11
30
1,328
3 •--•

*27/bbl
2,960
521
1,610
829
61
557
70
1,372
726
647
254
69
85
100
189

233
82
111
309
86
6,283 _
ANNUAL PERCENT GROWTH
$17/bbl
•0.4X



7.8X
•2.4X
-12. 4X
0.1X


•3.4X



5.7X

•2.8X
3.3X
-4.5X
16. OX
17.9X
0.1X

ANNUAL
$17/bbl
1.2X



•7.9X
4.8X
5.4X
2.8X


•4.8X



•0.2X

•2.4X
-4.5X
-5.8X
0.6X
6.3X
1.2X
$22/bbl
•0.3X.



6.8X
-2.7X
-8.8X
O.ZX


•4.9X



5.7X

•3.3X
4.5X
•4.2X
16. 2*
19. 8X
0.2X

(27/bbl
•0.3X



9.9X
•2.7X
•8. OX
•0.4X


•6. IX



5.3X

•3.5X
5.3X
•2.6X
16. 4X
16. 3X
•O.OX

PERCENT GROWTH •
S22/bbl
0.6X



•8. IX
3.2X
5.6X
2.2X


•4.4X



-0.2X

•2.8X
•4.7X
•6.3X
0.9X
7. OX
o.6x
S27/bbl
0.2X



•8.2X
1.8X
3.8X
2. OX


•4. OX



•0.4X

•3.1X
•4.6X
-6.3X
0.6X
5.1X
P.-?*
SWR-8701
                       Banner B Moore Management Science
A-15

-------
                            TABLE A-5
                   REGIONAL  REFINING  DEMANDS
                             (MB/CD)
                          (Page 2 of 2)
•-•• CALIFORNIA 	 "'


Gasoline
Leaded
Unleaded Regular
Unleaded Premium
JP-4
Jet-A
Kerosene
Distillate:
No. 2 Fuel Oil
Diesel
Residual Fuel Oil:
Low Fulfur
High Sulfur
Bunkers
Coke
Other Products:
Still GAS
Asphalt I Road Oil
Lubes t Waxes
Pet. Chetn. Naphtha
Other
Total

1985 •
DEMAND
842



40
180
2
243


173



78

81
43
13
30

1.725
1990 DEMAND
S17/bbl
948
156
483
308
33
232
1
302
153
149
187
41
3
143
60

81
46
17
19

1,924
$22/bbl
940
153
486
301
33
222
1
298
151
148
176
36
4
136
60

79
46
16
18

1,888
S27/bbl
896
144
469
283
33
202
1
285
144
142
169
36
4
129
58

78
46
16
18

1,802
ANNUAL PERCENT GROWTH
$17/bbl
2.4X



•3.9X
5.2X
•7.1X
4.4X


1.6X



•5.2X

0.5X
1.3X
5. OX
•9.1X
ERR
2.4X
S22/bbl
2.2X



-3.9X
4.3X
-7.1X
4.2X


0.3X



•5.2X

0.1X
1.3X
4.2X
•9.7X
ERR
2. OX
S27/bbl
1.3X



•3.9X
2.3X
•6.4X
3.3X


-O.SX



•5.7X

-0.2X
1.3X
4.2X
•10. OX
ERR
1.0X
	 OTHER ••••


Gasoline
Leaded
Unleaded Regular
Unleaded Premium
JP-4
Jet-A
Kerosene
Distillate:
No. 2 Fuel Oil
Diesel
Residual Fuel Oil:
Low Fulfur
High Sulfur
Bunkers
Coke
Other Products:
Still Gas
Asphalt & Road Oil
Lubes t Waxes
Pet. Chem. Naphtha
Other
Total
4AQC
iyo3
DEMAND
2051



52
252
28
901


271



148

147
174
27
32
29
4,112

$17/bbl
2,008
435
1,149
424
52
273
41
991
489
501
279
95
164
20
144

157
165
38
32
64
4,245
1990 DEMAND
S22/bbl
2,004
435
1,144-
426
54
253
41
988
496
492
203
55
130
19
144

155
168
37
31
66
4,144

$27/bbl
1,915
416
1,089
410
53
224
39
956
477
480
229
80
131
18
142

152
169
37
31
59
4,006
ANNUAL
$17/bbl
-0.4X



0.1X
1.6X
7.9X
1.9X


0.6X



•0.6X

•15. 3X
-1.0X
23. 7X
•0.3X
17.1X
•O.OX
PERCENT GROWTH.
$22/bbl
-0.5X



0.6X
0.1X
8.1X
1.9X


-5.6X



-0.6X

-15. 5X
•0.7X
23. 4X
-0.7X
18. OX
•O.SX
$27/bbl
•1.4X



O.SX
•2.3X
6.9X
1.2X


•3.3X



•O.SX

•15. 9X
-0.6X
23. 3X
•0.9X
15. 4X
•1.2X
SWR-8701
                      Homer £ Moore Management Science
A-16

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A.6      SUMMER REFINING  DEMANDS

         Seasonal  variations   in   manufacturing  rates  were
recognized  by  imposing  the  ratio  of  daily summer  refined
product  output  to annual  average  daily output  to  each major
product  for  each crude-cost   forecast.    These factors  are
shown in Table A-6.
                           TABLE A-6
                     SUMMER  DEMAND FACTORS
                             MAJOR PRODUCT
    Region       Gasoline     No.  2-D     No. 2     No. 6

      1            1.035        1.0       0.953     0.920
      2            1.035        1.0       0.982     0.882
      3            1.045        1.0       0.916     0.915
      4            1.040        1.0       0.982     0.950
SWR-8701             BonnerB Moore Managemert Science                  A-1?

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A. 7      GASOLINE SAVINGS

         Because  reducing  RVP reduces  the  butane content of
motor gasoline,  low-RVP  fuels are more dense than those  with
higher RVPs.  This means that gasoline  powered vehicles would
show  improved mileage  per  gallon  because the  increase in
volumetric heat of combustion would  improve miles per  gallon.
Furthermore,  lower  RVP  would lower evaporative losses in  the
distribution  and  dispensing of gasoline.   These two  factors
have been  recognized  in the gasoline demands imposed  in  this
study.  Although  the base RVP of  summer gasoline  varies among
regions,  adjustments  to  gasoline demands  were  applied  uni-
formly to all four regions.

         Table A-7  lists  the mileage and reduced evaporation
factors applied for each vapor pressure reduction level.
                           TABLE  A-7
          EFFECT OF  REDUCED  RVP  ON  GASOLINE DEMANDS
                      (Per  Cent Decrease)
                                   RVP  LEVEL
                         Base       1         2      	3_
    Higher  Density        -       0.23     0.46     0.75
    Less  Evap.  Loss       -       0.30     0.47     0.57
            Total          -       0.53     0.93     1-32
SWR-8701                                                  A-18
                     Banner B Moore Management Science

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A. 8      PETROCHEMICAL DEMANDS

         •The refining  and gas processing  sectors compete as
feedstock  suppliers  to  the   basic  petrochemical  industry.
Basic  petrochemical production was  forecast  for  this study
because changes  in  gasoline  volatility will affect feedstock
selection and economics  and,  therefore,  the overall costs of
volatility control.

         Three forecasts  were  developed  to correspond to the
three  crude-cost  scenarios.    These  three  forecasts are pre-
sented by region in Table A-8.  The  ethylene production fore-
cast  for  the  $17  crude-cost  scenario  was   taken   from  a
Resource Planning  Consultants forecast  prepared  in March of
1986 under a similar crude cost outlook.

         This  projection was  made  by  forecasting ethylene
consumption  from derivative growth  rates.   Ethylene  produc-
tion for other crude-cost scenarios  was made by adjusting the
projected rate of growth  by the following formula:
Growth U/yr> *17 Crude] x [
                                          °™*
         Ethylene Growth (%/yr) New Crude Cost
         Petrochemical  demands  for propylene, butylenes,  and
BTX  were  based  on  forecasts  reported  in  the   literature.
Adjustments for the various crude-cost scenarios were made  in
the same fashion  as for ethylene.

         Regionalization  of the  national  petrochemical  pro-
duction  forecasts was  made according to the  location of  pro-
duction  capacity  as of  early 1986.
SWR-870T             BomerB Moore Manageronttoenra

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                             TABLE  A-8
                  1990  PETROCHEMICAL PRODUCTION
$17 Crude Oil

Product
Ethylene
Propylene
Butylenes
BTX

Units
MMlbs
MMlbs
MMlbs
MMGals

1
203
989
253
159

2
2196
1407
160
507
Regions
3
31401
13119
2073
2073
$22 Crude Oil

Product
Ethylene
Propylene
Butylenes
BTX

Units
MMlbs
MMlbs
MMlbs
MMGals

1
200
980
253
150

2
2165
1394
160
503
Regions
3
30964
13011
2073-
2054
$27 Crude Oil

Product
Ethylene
Propylene
Butylenes
BTX

Units
MMlbs
MMlbs
MMlbs
MMGals

1
199
975
253
157

2
2148
1387
163
500
Regions
3
30713
12935
2073
2044
Price

4
0
285
15
61
Price

4
0
285
15
60
Price

4
0
281
15
60


National
33800
15800
2501
2800


National
33330
15670
2501
2776


National
33060
15578
2504
2761
SWR-8701
                       Homier 6 Moore Management Science
A-20

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                   APPENDIX A BIBLIOGRAPHY
1Energy Information Administration,  Annual Energy Outlook,
 1985, DOE/EIA-0383(85).
^Chase Econometics,  Energy Analysis Quarterly, Second Quarter,
 1986.
^Chase Econometrics,  Regional  Forecast Data Base, Second
 Quarter 1986.
4Dewitt <5c Co.,  1986  Petrochemical Review, Vol 1 &  2, April
 1986
5Dewitt <5c Co.,  Petrochemicals in North America, 1985
SWR-8701             Bonner B Moore Management Science                  A-21

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                           APPENDIX B
                 RAW MATERIAL  SUPPLY FORECAST
SWR-8701              BonnerBMoorBManaoumertSdencB                    B-l

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                         APPENDIX B
                RAW MATERIAL SUPPLY FORECAST
B.I      DOMESTIC CRUDE OIL PRODUCTION

         This  subsection  presents   forecasts   for   domestic
crude oil production  used  in  this study.  To account  for  the
three crude-oil-cost  alternatives used, three separate  fore-
casts  for  domestic  crude  oil  production  were  generated.
Qualities associated  with  each production area  are  also  pre-
sented.

         The production  of  domestic crude was forecast  using
Bonner <5c Moore's  crude  oil  production  model.    This  model
forecasts regional  crude oil  production based  on  historical
statistics  and  a  forecast  of  crude   oil  prices.    Using  a
correlation between  crude  oil prices and  reserves  additions,
the  impact of  price changes was  analyzed.   Reserves  additions
within each region were  based  upon  the  depletion of  remaining
unrecovered resource  in  the region and  the  historical  amount
of -reserves additions made each  year.   Reserves  additions  are
related  to price of oil  and the  degree  to  which  the  remaining
resources are  depleted.

         The ratio  of reserves to production  (R/P)  was  fore-
cast  using  historical relationships  of the R/P  ratio  to  the
degree of depletion of the resource.  Using  forecast reserves
additions and  the  R/P ratio,  production and ending reserves
were  calculated.  Forecasts for  total domestic crude oil  pro-
duction  for each crude-cost case  are  shown in Figure B-l.   As
expected,  the   lower   the  price,  the  lower  the production.
Table  B-l  presents  crude  oil  production  by major  producing
region and  the mapping  of  this  production  into each of  the
refining regions defined  in this  study.
SWR-8701             Bonner B MOOT Management Science                   B-2

-------

 A
 A
 Z
 o
      e.io
                                                  1086       1088

                                                        117/BBL
1000
                 Figure B-1.   Crude Oil  Production
SWR-8701
                        Homer 6 Moore Management Science
                                                                    B-3

-------
                             TABLE  B-1
                 1990 DOMESTIC CRUDE PRODUCTION


PRODUCING
REGION
•ss»«cas
AL,FL,HISS
TX & LA COAST
ARK.NLA.TR6
TR7&8.NM ,
TR5,9,10;KS,OK
CALIF
ALASKA
ROCKY MTN.
I NO, ILL, OHIO, MID
OTHER
TOTAL

AL.FL.MISS
TX & LA COAST
ARK,NLA,TR6
TR7&8.NM
TR5,9,10;KS,OK
CALIF
ALASKA
ROCKY MTN.
INO, ILL, OHIO, MID
OTHER
TOTAL

AL.FL.MISS
TX & LA COAST
ARK.NLA.TR6
TR7&8.NM
TR5,9.10;KS,OK
CALIF
ALASKA
ROCKY MTN.
I NO, ILL, OHIO, MID
.OTHER
TOTAL


••• ITS/ML (
• CBVICf III
	 ••• 	 RerlHIW
PADD 1 PAOO 3
47 109
1,635
82
972
102
200
28 461


48
123 3,561
--- 22$/BBL
48 113
1,688
84
990
105
200
29 514


50
127 3,694
--- 27S/BBL
50 116
1,732
85
1,005
108
200
29 567


51
130 3.813


•ASE --•
OTHER CALFIFORNIA


211
596
626
948
255 810
625
370

2,682 1,758
CASE -••


215
607
646
969
257 771
644
382

2,751 1,740
CASE •••


218
616
664
986
259 731
659
392

2.808 1,717



TOTAL
156
1.635
293
1.568
727
1,148
1.554
625
370
48
8,124

161
1,688
298
1,597
751
1.169
1,571
644
382
50
8.312

166
1,732
303
1,621
772
1.186
1,586
659
392
51
8,467

SWR-8701
                       Banner B Moore Management Science
B-4

-------
B.2      CRUDE OIL  IMPORTS

         Given each forecast  for domestic  production,  a  fore-
cast  of  crude imports  was  generated.   Within each  refining
region,  one  crude was  identified  as  the  "swing" crude.   It
was  used to  balance   raw  material  requirements  within  each
region.  The  source of  swing  crude  for  each  region  is:

         REGION           SOURCE OF  SWING  CRUDE

         PADD 1        -    Middle  East  - Arabian  Light
         PADD 3        -    Middle  East  - Arabian  Light
         Other         -    Middle  East  - Arabian  Light
         California    -    Alaskan  North Slope

         To forecast  crude  imports,  an  estimate of  the demand
for  crude  in each  refining  region  was made.    The  required
volume of imports was  calculated by  subtracting the  available
domestic production assigned  to each region  from  the refining
demand  estimate.    This volume  of  imports  was  allocated  to
each  supply  source  using  historical  and   forecast  supply
ava.i labi 1 i ty.  Table  B-2 presents the  resulting  forecast  for
crude oil imports by  country  of origin.

         Qualities  for  each  of these imports  were also  fore-
cast,  using  a method  similar to  the  approach described  for
domestic  production.    Import qualities were   assigned  using
the  historical distribution  of crude qualities received from
each exporting regions.
SWR-8701             BonnerB Moore Management Science                  B-5

-------
                             TABLE B-2
                 REGIONAL CRUDE  OIL AVAILABILITY


VOLUME: (MB/CO)
Domestic
Imports
Total
GRAVITY: (API)
Domestic
Imports
Average
SULFUR: (Xwt)
Domestic
Imports
Average

VOLUME: (MB/CD)
Domestic
Imports
Total
GRAVITY: (API)
Domestic
Imports
Average
SULFUR: (Xwt)
Domestic
Imports
Average

VOLUME: (MB/CO)
Domestic
Imports
Total
GRAVITY: (API)
Domestic
Imports
Average
SULFUR: (Xwt)
Domestic
Imports
Average
PADO 1


123
1.037
1,160

34.74
33.34
33.49

0.84
0.77
0.79


127
1,027
1,154

34.72
33.37
33.53

0.84
0.67
0.77


130
1,023
1.153

34.72
33.38
33.53

0.84
0.76
0.77
PADO 3 OTHER CALIFORNIA
--• *17/bbl

3,561
2,188
6,749

31.38
29.85
30.80

0.74
1.39
0.99
••• $22/bbl

3.694
1,899
5,593

31.32
29.91
30.84

0.75
1.33
0.95
--• S27/bbl

3,813
1,662
5,475

31.27
30.18
30.94

0.76
1.28
0.92

...

2,682
1,207
3,889

34.69
34.17
34.53

0.82
0.89
0.84
...

2,751
1,046
3.797

34.71
34.08
34.45

0.82
0.92
0.84
...

2,808
863
3,671

34.73
34.34
34.63

0.82
0.84
0.82


1.749
153
3,498

25.20
36.59
26.11

1.30
0.28
1.21


1,713
153
1,866

25.16
36.59
26.08

1.29
0.28
1.21


1,630
153
1,783

25.06
36.59
26.05

1.28
0.28
1.19
TOTAL


8,115
4,585
12,700

31.19
32.00
31.48

0.89
1.08
0.96


8,284
4,125
12,409

31.22
32.08
31.15

0.89
1.05
0.94


8,380
3,702
12,082

31.27
32.30
31.59

0.88
0.99
0.91
SWR-8701
Hornier B Moore Management Science
B-6

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B.3      NATURAL GAS LIQUIDS SUPPLY

         The forecast  of  natural  gas liquids production  from
domestic  gas   processing   is   based  on  Resource   Planning
Consultants* (RPC) forecasts under crude oil  price assumptions
identical to those used in  this study.

         The  natural   gas  liquids production  method  started
with  a  projection  of  natural gas  production  by  Petroleum
Administration  for  Defense   District   (PADD).    Associated
natural  gas  production in each PADD was  forecast  from analy-
sis  of  historical gas-to-oil  ratios.    The  forecast  of  non-
associated   gas  production   was   based  on  gas   reserves,
projected   reserve   additions  and   projected   reserves-to-
product ion rat ios.

         Once regional  natural gas production was developed,
production  of   individual  natural gas  liquids  (ethane,  pro-
pane,  butanes,  natural gasoline)  were  forecast  from gas-to-
processing and  historical  liquid-recovery factors  per million
cubic  feet   of  gas processed.   The resulting  forecasts  of
natural  gas  liquids  production  for  the  three crude-cost
levels are presented in Table  B-3.
*RPC was acquired by Conner <5c Moore Associates,  Inc.  in
 October of 1986 and carried out  the NGL  impact  assessment
 task of this project.
SWR-8701             Borrow B Moore Management Science                  B_7

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                            TABLE  B-3

         t990 DOMESTIC  NATURAL GAS  LIQUIDS PRODUCTION
         ":                   (MBCD)
$17 Crude Oil
Product/Region
Ethane
Propane
n-Butane
Isobutane
Natural Gasoline
Total
Product/Region
Ethane
Propane
n-Butane
Isobutane
Natural Gasoline
Total
Product/Region
Ethane
Propane
n-Butane
Isobutane
Natural Gasoline
Total
1
6
9
3
2
5
25
1
12
13
5
3
8
41
1
13
14
5
3
8
43
2
95
135
42
21
61
354
$22
2
129
157
54
26
76
442
$27
2
138
164
57
26
81
466
3
288
304
117
59
171
' 939
Crude Oil
3
332
315
127
63
179
1016
Crude Oil
3
355
328
134
65
191
1073
Price
4
1
16
8
3
11
39
Price
4
1
19
8
4
11
43
Price
4
1
20
8
4
12
45

Total
USA
390
464
170
85
248
1357
Total
USA
474
504
194
96
274
1542
Total
USA
507
526
204
98
292
1627
SWR-8701
BomerB Moore Management Science
B-8

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B.4      DEMANDS FOR NATURAL GAS LIQUIDS OUTSIDE OF
         REFINING AND ETHYLENE FEEDSTOCKS

         The modeling effort  in  this study explicitly  covers
the refining and  ethylene production sectors.  While a  large
portion  of  natural  gas  liquids  supply  is  consumed by  these
industries, there are also other consumers.

         To properly  reflect  the availability of natural  gas
liquids  for  refining and  ethylene  feedstocks, the  projected
demands  in other applications were included in the  forecasting
effort.  These "other applications"  include NGLs used as  fuel
in  transportation,   industrial,  residential,  commercial  and
utility  gas  applications.   Also  included are  NGLs used  as
feedstock  for   petrochemicals  other  than  ethylene  and  for
synthetic  natural  gas.    U.S.  demands  for these applications
were  taken  from  forecasts  prepared  by RFC  in  proprietary
study  reports  prepared  for  clients  in  1985  and   1986l»2i3t
End-use  fuel demands  were regionalized  for  this study  using
the 1984  and preliminary 1985  sales reported  by the American
Petroleum  Instituted   Regionalization  of  NGL used as  feed-
stocks  for synthetic  natural  gas   and  petrochemicals  other
than ethylene were based  on existing plant  locations.

         Table  B-4  summarizes  the  regional  demands for  NGLs
as fuels  and  feedstocks  (excluding ethylene)   for each  of  the
crude-cost levels used in  the  study.
SWR-8701             BonnerBMooreManagement Science                   B-9

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                            TABLE B-4

              1990 FUEL  AND FEEDSTOCK  DEMAND FOR
                       NATURAL GAS  LIQUIDS*
                             (MBCD)
$17 Crude Oil

Product/Region
Ethane
Propane
n-Butane
Isobutane
Total


Product/Region
Ethane
Propane
n-Butane
Isobutane
Total


Product/Region
Ethane
Propane
n-Butane
Isobutane
Total
•Excludes ethylene

1
6
108
5
0
119


1
12
108
5
0
125


1
13
101
5
0
119
feedstocks

2
29
244
6
0
279
$22

2
29
244
6
0
279
$27

2
33
228
6
0
267


3
33
207
2
23
265
Crude Oil

3
33
207
2
23
265
Crude Oil

3
34
194
2
21
251

Price

4
1
42
0
0
43
Price

4
1
42
0
0
43
Price

4
1
39
0
0
40


Total
USA
69
601
13
23
706

Total
USA
75
601
13
23
712

Total
USA
81
562
13
21
677

SWR-8701
Banner B Moore Management Science
B-10

-------
                   APPENDIX B BIBLIOGRAPHY
1Resource Planning Consultants  (RPC), Outlook  for  Supply,
 Demand and Pricing, March,  1986  (Proprietary  Study).

2Resource Planning Consultants  (RPC), Outlook  for  Supply,
 Demand and Pricing, March,  1985  (Proprietary  Study).

3Resource Planning Consultants  (RPC), West Coast Natural Gas
 Liquids Markets, May,  1986  (Proprietary  Study).

^American Petroleum  Institute,  Sales  of Natural Gas  Liquids
 and Liquefied Refinery Gases,  1984  (Annual  Publication).
SWR-8701             BonnBrBMooreManagBTOrttoenca                  B-ll

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                            APPENDIX C
                     PRODUCT SPECIFICATIONS
SWR-8701              Bonner 8 Moore Management Science                     C-l

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                         APPENDIX C
                   PRODUCT SPECIFICATIONS
         Specifications for those products modeled  to  satisfy
quality  restrictions  are  shown  in  Table C-l.   In  addition,
LPG was  modeled  to compositional  specification of  5  volume-
percent  maximum  olefins  content  and   80   percent  maximum
butanes.   All  other  products,  such as  lubes,  asphalts,  and
specialty naphthas were modeled as  recipe blends.

         Product specifications,  with  the exception of  those
enumerated below  are  those in  Bonner  
-------
 Go
                                                 TABLE C-1
 i
 00
                                           PRODUCT SPECIFICATIONS

                                               (Sheet 1  of 2)
GASOLINES:
REGION
SEASON
Distillation
Pet § 160°F (Max)
Pet § 210°F (Min)
Pet 0 230°F (Min)
Pet 6 330°F (Min)
20 V/L Temp. 1°F (Min)
Reid Vapor Pressure,
psi (Max)
1st Reduction
2nd Reduction
3rd Reduction
Octane, Minimum
Leaded Regular, (R+M)/2
Leaded Regular, Motor
Unleaded Regular, (R+M)/2
Unleaded Regular, Motor
Unleaded Premium, (R+M)/2
Unleaded Premium, Motor



1
Annual

46
41
48
79
115

13




89
83
87
82
91
86

.73
.47
.27
.50
.0

• 33




.0
.5
.25
.25
.75
.25






2
Summer

46.
39.
46.
79.
123.

11 .
10.
9.
8.

89.
83.
87.
82.
91.
86.

50
70
70
10
0

75
73
71
69

0
5
25
25
75
25
Annual

46
40
47
79
117

12




89
83
87
82
91
86

.65
.81
.67
.33
.8

.79




.0
.5
.25
.25
.75
.25
Summer

46.40
38.76
45.83
78.83
127.0

11 .01
10.05
9.09
8.11

89.0
83.5
87.25
82.25
91.75
86.25


3
Annual

46.50
39.80
46.80
79.10
122.6

12.00




89.0
83.5
87.25
82.25
91.75
86.25
Summer

46.38
38.57
45.66
78.79
127.7

10.92
9.97
9.02
8.07

89.0
83.5
87.25
82.25
91.75
86.25


4
Annual

46.36
38.37
45.50
78.76
127.8

11.12




89-0
83-5
88.0
83-0
91.75
86.25
Summer

46.05
35.53
42.96
78.12
138.4

9.23
8.43
7.63
6.82

89.0
83.5
88.0
83.0
91.75
86.25
o

Co

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 GO
 SC
 so

 co
 ~~J
 o
      TABLE C-1
PRODUCT SPECIFICATIONS

    (Sheet 2  of  2)
Med. S High S Bunker
JP-4 Jet-A No. 2 Diesel F.O. F.O. F.O.
Pet Dist. @ MOO°F, (Min)
Aromatics, Vol. Pet, (Max)
Smoke Point, MM
Specific Gravity, (Min)
Specific Gravity, (Max)
Flash Point, °F (Min)
Sulfur Content, Wgt. Pet (Max
Cetane Index (Min)**
Viscosity, SSF § 122°F (Max)
60.0 10.0 -
25.0 25.0 -
20.0 18.0 -
0.75 0.77 -
0.80 0.8U 0.876 - - 0.995
100 125 125 150 150
) 0.30 0.30 0.25 0.25* 1.00* 3-00
45.5
300 300
-
-
-
-
1.000
150
5.00
-
250
* Maximum sulfur contents for Region 4 were 0.15 for No. 2 diesel fuel and 0.5 for
medium sulfur No. 6.
••Average of regional survey quality from "Diesel Fuel Oils, 1985", Ella Mae Shelton
and Cheryl L. Dickson, National Institute for Petroleum and Energy Research,
October 1985
o
i

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ASTM D 439  schedules  for various volatility classes describe
distillation  controls  in  terms  of minimum  and maximum  tem-
peratures at specified percents distilled.   Representing  such
limits in mathematical  models is usually done  by  transposing
temperature   limits   at   specified  distillation   points   to
distillation  limits at specified  temperatures.

         RVP,  being  the  subject  specification of  this  study
was  varied  by  applying  proportional  reductions   in  regional
refinery base  requirements  according  to  the  following:

               A  first  level of reduction was  proportional  to
               a  1.0  psi  reduction  from  an  11.5  psi  base,
               i.e.,  8.7  percent  of  each  base  summer  RVP
               maximum.

               A  second  level  was proportional  to a  2.0-psi
               reduction  from  an  11.5  psi   base,   i.e.,  17.4
               percent of  each  base summer RVP  maximum.

               A  third  level  was proportional  to  a  3.0  psi
               reduction  from  an  11.5  psi   base,   i.e.,  26.1
               percent of  each  base summer RVP  maximum.

         Weight-percent-sulfur  specifications   for  No.  6  Fuel
Oils were  set to  represent  the  fuel oil production  grouping
in the DOE  "Petroleum Annual  Statement."  Low-sulfur  fuel  oil
(with a  specification of  0.3  weight  percent  sulfur) was  not
represented as such  because  its production  depends on  segre-
gated  low-sulfur  crudes.    Medium-sulfur  fuel  oil,  with  a
weight percent  sulfur of  1.0  represents  both low-  and  medium-
sulfur fuel.   High-sulfur fuel oil was  given  a specification
of  3.0  weight-percent   sulfur.   Bunker  fuels were  given  a
maximum sulfur-content of  5.0  weight-percent.
SWR-8701             Bonner B Moore Management Science                  C-5

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                    APPENDIX C BIBLIOGRAPHY
IDickson, C.  L.  and P.  W. Woodward,  National Institute  for
 Petroleum and  Energy Research, Motor  Gasolines, Winter,
 1985-86, August  1986.
                     Bonnet B Moore Management Science                   c" 6

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                            APPENDIX D
                 ECONOMIC AND  FINANCIAL  FACTORS
SWR-8701               Bonner B Moore Management Science                     D-l

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                         APPENDIX D
               ECONOMIC AND FINANCIAL FACTORS
         All  costs  and  prices employed  in  this  study  were
based  on  1986  values.   No  inflation  to  1990 was  employed,
i.e., a constant 1986 dollar value was  assumed.

         Prices  for major  products  and  costs  for  the  base
crude  slate  were  not  needed since demands  for major  products
and  input  of non-swing  crudes were fixed at  forecast  levels.
Costs  for  swing crudes,  natural gas  liquids  (namely,  ethane,
propane, normal  and iso-butane),  and prices  for  by-products
(namely,   butadiene,   petroleum,   coke   and  sulfur)   were,
however, required.   The  refinery costs  and net-back  prices
for  these are displayed  in Table D-l.

         Swing crude costs are based on current posted prices,
FOB Ras Tanura,  plus transportation costs to New York,  Chicago
and Houston  representing costs  to Regions 1,  2  and 3,  respec-
tively.  Normal butane,  iso-butane and  natural  gasoline costs
for  Regions  2 and  3 were  based  on  results   from  the  Resource
Planning Consultants  Hydrocarbon  Pricing  Model   using  crude
oil  prices  of  $17,  $22  and $27.   Prices  for  Region  1  were
determined using transportation cost estimates to Philadelphia.
Prices for  Region 4 were determined by  historical  analysis  of
differentials to  Region  3.   Coke prices were  based  on  export
fuel  values  for each r  ;ion.   Sulfur prices were set  to the
same  value  for  all  regions.
SWR-8701             BonnerB Moore Management Science                   D-2

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  C/J
  x:
  so
  I
  oo
TABLE D-1
                                      RAW MATERIAL  AND  UTILITY COSTS AND

                                          BY-PRODUCT  WETBACK PRICES
Region
Ave. Acquisition Cost, $/BBL
Raw Mat 'Is, $/BBL
Swing Crude
Ethane
Propane
Iso-Butane
N-Butane
Methanol (for MTBE)*
By-Products
Coke, $/FOEB
Sulfur, $/TON
Butadiene, $/TON
Utilities
Tetraethyl Lead, $/42 gm
Fuel, $/MMBTU
Electrical Power, 0/KWh
•Oxygenates for gasoline blendi
zero costs.
1
22

23.17
_
16.51
20.63
19.27
15. or

8.85
50.0
420.0


3.60
5.54
ng, being

2
22

23.75
8.09
14.07
21.03
17.83
15.96

8.85
50.0
420.0


2.90
6.78
fixed in

3
17

17.94
6.16
10.65
14.64
13-07
12.60

7.45
50.0
360.0


1.79
4.74
concentration

3
22

23.17
8.78
14.27
18.68
17.36
15.12

8.85
50.0
420.0


2.41
4.96
, were

3
27

28.41
10.88
17.47
21.87
20.89
17.22

8.85
50.0
500.0


2.94
4.97
modeled with

4
22

20.95
—
16.05
20.66
16.09
16.38

8.85
50.0
420.0


3.50
5.32


ff
 o
 I
 (jo

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         The  Refinery   and  Petrochemical  Modeling   System
(RPMS), a  proprietary Bonner & Moore  system,  generates  pro-
cess   operating   costs  from   utility  consumption   factors
multiplied by applicable utility costs.  Fuel and  steam costs
to all processes are  based  on natural  gas  or plant  fuel costs
plus  investment and operating costs  for  utility  supply facil-
ities.  Cooling water costs are based on  zero-cost  raw water
plus  the investment and operating costs of  cooling and  pumping
facilities.   Electric power  was  assumed  to  be  purchased  in
all cases  rather than  internally generated.  Power  costs were
obtained  from  Electric Power Monthly using quotations  repre-
senting each region.

         RPMS process  data  include  1982  catalyst  and chemical
costs  for  each  process.  These  1982 costs were  converted  to
1986  values using  a cost index of  1.026.

         Capital  requirements for  new and expanded capacity
were  derived  from investment-versus-capacity relationships*
for each process using equipment sizes  consistent  with recent
industry  activities.     Thus,  capacity  costs  are  based  on
typical   process   capacities.     Those  process   investments
required  for  summertime RVP compliance were  required  to  be
amortized  during   a summer  period  of  152  days.   This  effec-
tively increases capital-related costs  by  a  factor  of  365/152
or 2.4.

         The  cost  of  supporting  required  investments was
determined by applying a capital recovery  factor  derived from
the factors shown  in  Table  D-2.
*Part of RPMS proprietary data.
SWR-8701             Bonner B Moore Management Science                  D_4

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                          TABLE D-2
            FINANCIAL AND CAPITAL-RELATED FACTORS
                                                   FACTOR
    Economic Life, yrs.                              13
    Depreciation Life, yrs.                          13
    Federal Income Tax Rate, percent                 34
    After tax Cost of Capital, percent               15
    Capital Recovery Factor*                         0.226
    Local Taxes, Insurance and Overhead, { per year  2
    Maintenance, % per year                          4


*Using double-declining-balance depreciation tax credit.
         Adding  maintenance,   local   taxes,   insurance  and
overhead cost  factors  to  capital  recovery,  the  total cost of
supporting one dollar of investment becomes 0.286 dollars per
year.   When  adjusted for summertime  amortization,  the total
cost  supporting  one  dollar  of  investment  becomes  0.687
dollars per summer period.
SWR-8701                                                  D-5

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                            APPENDIX  E
                        BASE  CONFIGURATION
SWR-8701              BonnerB Moore Management Science                     E-l

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                         APPENDIX E
                     BASE CONFIGURATION
         The  capacities  of major  processes  used  in  regional
models are  displayed in Table E-l.   These data are  based  on
the  Oi1  & Gas Journal  "Annual  Refining  Survey"  (March  24,
1986)  and  represent  reported  capacities  as   of  January  1,
1986.   To  these  capacities, adjustments  based on  announce-
ments in  trade  journals and other  industry  publications  were
made  as  shown  in  Table  E-2.  Base capacities  in each  model
were allowed  to be expanded, as  required,  to meet  1990 annual
average product and  raw material  situations,  at  cost typical
of  the  sizes  installed  in  recent  years.   Capacity  additions
indicated necessary (or justified)  to meet 1990 annual average
conditions are  shown  in Table E-3.   Included in Table E-3 are
capacity requirements for  auxiliary processes  not  reported  in
conf igurat ion data.
SWR-8701             Bonner B Moore Management Science                   E-2

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 to
 z:
 »
 i
 CD
TABLE E-1
                                 REFINING  PROCESS CAPACITIES AS OF 1/1/85

                                 (Thousands  of Barrels per Calendar Day)
PROCESS
Atmospheric Crude Dist.
Vacuum Distillation
Naphtha Hydrotreating
Reforming
Cat Cracking (Total Feed)
Heavy-Oil Cracking
Hydrocracking
Alkylation
Catalytic Polymerization
Coking
Visbreaking
Light Oil Hydrotreating
Gasoil Hydrotreating
Resid Hydrocracking
Residual Desulfurization
Butane Isomerization
C5 - C6 Isomerization
MTBE Production
H2 Production (MMCFD)
REGION 1
1387.9
650.2
389.2
336.3
566.6
0.0
69.6
67.8
'16.6
74.3
12.2
354.2
118.4
0.0
0.0
0.0
23.5
2.8
89.9
REGION 2
4533.8
1631.5
1106.6
1052.5
1403-0
37.6
214.8
295.0
22.8
344.0
8.5
630.6
322.3
8.5
0.0
22.9
73.0
3.7
388.0
REGION 3
6993.5
2768.7
1703.2
1569.9
2246.7
106.2
344.7
415.9
33-3
515.9
92.6
1423.1
554.5
89.3
325.2
26.4
93-2
37.0
937.5
REGION 4
2385.7
1244.9
512.8
504.1
559.8
0.0
315.7
98.8
2.3
401.7
61.9
361.1
316.7
28.2
22.6
9.8
0.0
0.0
893.7
PJ


LO

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 C/i
 a:
 »
 I
 CO
 -J
 o
                TABLE E-2
ANNOUNCED CAPACITY CHANGES  (ABOVE  1/1/85)

 (Thousands of B. ~rels per  Calendar  Day)
PROCESS
Atmospheric Crude Dist.
Vacuum Distillation
Naphtha Hydrotreating
Reforming
Cat Cracking (Total Feed)
Hydrocracking
Alkylation
Catalytic Polymerization
Coking
Light Oil Hydrotreating
Gasoil Hydrotreating
C5 - C6 Isoraerization
REGION 1 REGION 2
31 .0
60.0
2.0 29.0
2.2 15.7
-16.0

-6.0
1.7
10.0
0.8

2.7 55.4
REGION 3
116.0
14.0
27.5
48.5

20.0
23-5
6.6
25.0
4.0
18.0
26.8
REGION 4
-26.0

-6.0
2.7

20.Q

2.2
7.0
70.0
138.0
7.4
m

-------
 C/J
 s:
               TABLE  E-3
 oo
 -j
 o
      CAPACITY ADDITIONS  FOR 1990

(Thousands of Barrels  per Calendar Day)
PROCESS
Butane Splitting
Cat Gasoline Splitting
Cat Polymerization
C5C6 Isoraerization
Debutanization
Delayed Coking
Depentanization
Pentane Splitting
Depropanization
Gas Oil Desulferization
H2 Production
High-Severity Reforming
Kerosene-Severity Hydrocrk.
MTBE Production
Visbreaking
REGION 1
11 .6
_
_
39.3
23.2
_
11 .6
10.6
10.0
_
13.2

—
_

REGION 2
83.0
14.6
_
88.4
98. 1
42. 1
83.0
33.1
119.3

_
_
_
•
3.7
REGION 3
0.9
0.9
-
-
211.8
4.2
0.9
0.4
2.6
6.5
_
52.1
—
11.2

REGION 4
61.7
—
2.2
29.3
-
-
61.7
2.0
14.3
-
—
102.2
47.8
19.6

TOTALS
157.2
15.5
2.2
157.0
381.1
46.3
157.2
46.1
146.2
6.5
13.2
154.3
47.8
30.8
3.7

VJ1

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                            APPENDIX F
                    OXYGENATE BLENDING  VALUES
SWR-8701              Banner 6 Moore Management Science                     F-l

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                         APPENDIX F
                  OXYGENATE BLENDING VALUES
         Three kinds  of  oxygenates were included as  gasoline
blendstocks in the  models  employed in this study.  These are
ethanol,   methanol-TBA  (Tertiary-butyl-alcohol)   and  MTBE
(methyl-tertiary-butyl-ether).     Non-linearities   associated
with  the  azeotropic  behavior of  alcohol-hydrocarbon  blends
were  resolved by  imposing fixed  concentrations  of  alcohols
and by  determining the  RVP  blending values of alcohols con-
sistent  with  that  concentration  and  the  RVP specification
being  imposed.     Other   blending  values  were   treated   as
constant  properties  and  are shown  in Table  F-1   along with
blending values for MTBE.
                           TABLE  F-1
                BLENDING  VALUES  FOR ALCOHOLS
"

Fixed Concentration,
Volume percent
Property
Percent Distilled at:
160°F
210°F
230°F
330°F
Research Octane (Clear)
Motor Octane (Clear)
(R+M)/2 (Clear)
Specific Gravity

MTBE

(none)


60.0
100.0
100.0
100.0
114.5
97.5
106.0
0.74
2/1
METHANOL-TBA

7.5


175.0
105.0
100.0
100.0
124.7
97.3
111.0
0.8

ETHANOL

10.0


220.0
137.0
108.0
100.0
133.4
101.8
117.6
0.8
SWR-8701
                     Homer B Moore Management Science
F-2

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         Effect ive-RVP-blending   values  for  alcohols   were
determined  by  employing  the  assumption  of  a constant  (psi)
increase;  in   the  RVP   of   a  hydrocarbon-alcohol   mixture
(regardless of  concentration  of  alcohol)  and back calculating
the  blending-RVP for  a  given RVP  specification  and  alcohol
concentration.   The  equation used  for  this calculation  is
developed as follows:
         RHVu
     + EA =
                           <  RVPS
           where:  RJJ  = RVP  of  hydrocarbon portion
                   VH  = Volume  fraction  of hydrocarbon portion
                   EA  = Constant  RVP-effect of  alcohol
                   RVPB = RVP of  final blend
                   RVPg = RVP (maximum)  specification

It is safe to assume  that RVPg  =  RVPg.

Let RA  and  VA be  the  RVP-blending value  and volume  fraction
of alcohol,  respectively,  Then,
RHvH +
                VA
                                                  (2)
Solving  equation (1)  for  RHVfj  and  substituting  in  equation
(2) gives
(RVPS - EA)VH
       VH + VA
                               =  Rvps
                                                  (3)
Solving equation (3) for RA and recognizing that VH + VA = 1.0
gi ves
         RA = RVPS +  1-VA  EA
                       VA
SWR-8701
           BonnarB Moore Management Scienco
                                                           F-3

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         Values  for  ethanol and 2/1 methanol-TBA used in this
study are shown  in Table F-2.
                           TABLE F-2
          DATA  FOR RVP EFFECTS AT ALCOHOL  BLENDING
                                    E
A        VA
          Ethanol                    1.5       0.100
          Methanol-TBA (2/1)        2.6       0.075
                     Borme Moore Management Science                   F-4

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