Asphalt Supply Outlook 2009...Supply Outlook (2009) No reason to believe there will be extended...

Asphalt Supply OutlookAsphalt Supply Outlook20092009

Clint RybakClint RybakConocoPhillips CompanyConocoPhillips Company

Crude Oil Supply/DemandCrude Oil Supply/Demand

Crude Oil SupplyCrude Oil Supply2007 World Crude & Gas Oil2007 World Crude & Gas Oil

SuppliedSuppliedMillions of Barrels Per DayMillions of Barrels Per Day

Non-OPEC

OPEC

FSU

36.8

36.2

12.8

Total: 85.8 MMB/DSource: US DOE

Non-OPEC

OPEC

FSU

37.3

37.2

13.0

Total: 87.5 MMB/D

2008 Forecasted World2008 Forecasted WorldCrude & Gas Oil SuppliedCrude & Gas Oil SuppliedMillions of Barrels Per DayMillions of Barrels Per Day

Crude Oil SupplyCrude Oil Supply2008 Actual World Crude &2008 Actual World Crude &

Gas Oil SuppliedGas Oil SuppliedMillions of Barrels Per DayMillions of Barrels Per Day

Non-OPEC

OPEC

FSU

37.1

35.9

12.8

Total: 85.8 MMB/DSource: US DOE

Non-OPEC

OPEC

FSU

37.3

37.2

13.0

Total: 87.5 MMB/D

2008 Forecast World Crude2008 Forecast World Crude& Gas Oil Supplied& Gas Oil Supplied

Millions of Barrels Per DayMillions of Barrels Per Day

Crude Oil SupplyCrude Oil Supply2008 Actual World Crude &2008 Actual World Crude &

Gas Oil SuppliedGas Oil SuppliedMillions of Barrels Per DayMillions of Barrels Per Day

Non-OPEC

OPEC

FSU

37.1

35.9

12.8

Total: 85.8 MMB/DSource: US DOE

Non-OPEC

OPEC

FSU

36.7

36.2

12.9

Total: 85.75 MMB/D

2009 Forecast World Crude2009 Forecast World Crude& Gas Oil Supplied& Gas Oil Supplied

Millions of Barrels Per DayMillions of Barrels Per Day

World Oil Consumption

3540

45505560

65707580

859095

2001 2002 2003 2004 2005 2006 2007 2008 2009

Million

barrels

per day

-1.5-1.0

-0.50.00.51.0

1.52.02.53.0

3.54.04.5

Million

barrels

per day

China United States Other Countries

Total Consumption

Annual Growth

Short-Term Energy Outlook, December 2008

Forecast

OPEC Surplus Crude Oil Production Capacity

0

1

2

3

4

5

6

1997 1999 2001 2003 2005 2007 2009

Millionbarrelsper day

Forecast

Note: Shaded area represents 1997-2007 average (2.9 million barrels per day)

Short-Term Energy Outlook, December 2008

Crude Oil PricesCrude Oil Prices

Light-Heavy Crude PricesLight-Heavy Crude Prices

0

20

40

60

80

100

120

140

1Q 0

2

3Q 0

2

1Q 0

3

3Q 0

3

1Q 0

4

3Q 0

4

1Q 0

5

3Q 0

5

1Q 0

6

3Q 0

6

1Q 0

7

3Q 0

7

1Q 0

8

3Q 0

8

WTI

MAYA

BOW

WTI-BOW

Light / Heavy DifferentialLight / Heavy DifferentialAs A Percentage of WTIAs A Percentage of WTI

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1Q05

1Q06

1Q07

1Q08

RefiningRefining

650-

1000+

650+

1000-

U. S. Refining CapacityU. S. Refining Capacity

14

14.5

15

15.5

16

16.5

17

17.5

18

18.5

1980 1995 2000 2007

# Of Refineries

Crude Dist Cap

Last New U. S. Refinery Built in 1976Source: Oil & Gas Journal

319

175 158131

U. S. Asphalt Refining CapacityU. S. Asphalt Refining Capacity

72

98

60

42

1980 1995 2000 2007

400

450

500

550

600

650

700

750

800

# Refiner ies

Asphalt Capacity

Production Range: 600 B/D to 50,000 B/DSource: Oil & Gas Journal

U. S. Refining Coking CapacityU. S. Refining Coking Capacity

50

60

56

1.68

1.96

2.37

44464850525456586062

1995 2000 20080

0.5

1

1.5

2

2.5# Refiner ies w/Cokers

Coker Capacity MMBPD

Source: Oil & Gas Journal & EIA

Products PricingProducts Pricing

Crude/Product PricesCrude/Product Prices

0

2040

60

80100

120

140160

1Q '0

21Q

'03

1Q '0

41Q

'05

1Q '0

61Q

'07

1Q '0

8

WTI

Crude/Product PricesCrude/Product Prices

0

2040

60

80100

120

140160

1Q '0

21Q

'03

1Q '0

41Q

'05

1Q '0

61Q

'07

1Q '0

8

WTIGasoline

Crude/Product PricesCrude/Product Prices

0

2040

60

80100

120

140160

1Q '0

21Q

'03

1Q '0

41Q

'05

1Q '0

61Q

'07

1Q '0

8

WTIGasolineDiesel

Crude/Product PricesCrude/Product Prices

0

2040

60

80100

120

140160

1Q '0

21Q

'03

1Q '0

41Q

'05

1Q '0

61Q

'07

1Q '0

8

WTIGasolineDieselGC 3%

Crude/Product PricesCrude/Product Prices

Product MarginsProduct Margins3:2:1 Crack Spread3:2:1 Crack Spread

Product MarginsProduct Margins

Product MarginsProduct Margins

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1Q'05

1Q'06

1Q'07

1Q'08

Chicago 3:2:1

Gas

Diesel

Asphalt SupplyAsphalt Supply

Historical AsphaltHistorical AsphaltSupply/DemandSupply/Demand

Millions Tons - LiquidMillions Tons - Liquid

0

10

20

30

40

50

60

1980 1995 2000 2003 2005 2006 2007

Supply

Demand

Source: Oil & Gas Journal/Asphalt Institute

Asphalt Inventory HistoryAsphalt Inventory HistoryMM BarrelsMM Barrels

Supply Outlook (2009)Supply Outlook (2009)

No reason to believe there will be extendedNo reason to believe there will be extendedshortagesshortages

Will vary by region based on supplier operabilityWill vary by region based on supplier operability Larger light/heavy crude differential will produceLarger light/heavy crude differential will produce

more asphalt, smaller one decreases itmore asphalt, smaller one decreases it Light product refining margins will likely driveLight product refining margins will likely drive

crude runscrude runs Outlook is low gasoline, higher distillate marginsOutlook is low gasoline, higher distillate margins Higher asphalt prices relative to crude willHigher asphalt prices relative to crude will

produce more asphaltproduce more asphalt Asphalt will have to compete with theAsphalt will have to compete with the

hydrocarbon value of coker feedhydrocarbon value of coker feed