EIA revises West Texas Intermediate forecast upward

In its November Short-term Energy Outlook, the Energy Information Administration raised the forecast price of West Texas Intermediate (WTI) crude oil by $7 per barrel compared with the last Outlook, to average about $77 per barrel this winter (October-March). The forecast for monthly average WTI prices rises to about $81 per barrel by December 2010, assuming U.S. and world economic conditions continue to improve, particularly in Asia, where current growth has been stronger than expected. EIA’s forecast assumes U.S. real gross domestic product (GDP) grows by 1.9% in 2010 and world oil-consumption-weighted real GDP grows by 2.6%.

Generally higher crude oil prices through the forecast period contribute to an increase in the annual average gasoline retail price from $2.36 per gallon in 2009 to $2.81 in 2010, with prices near $3.00 per gallon during next year's driving season. Projected annual average diesel fuel retail prices are $2.48 and $2.94 per gallon, respectively, in 2009 and 2010. Higher forecast crude oil prices also raise the projected average household expenditures on heating oil this winter to $1,940 in this forecast, compared with $1,864 last winter.

API: U.S. crude oil production continues at four-year highs

U.S. crude oil production for October averaged 5.36 million barrels per day, continuing at levels not seen since 2005, according to the American Petroleum Institute’s most recent Monthly Statistical Report.

Crude production from the Lower 48 states averaged 4.67 million barrels per day, up from both last year and prior months. Even though crude production last October had recovered from precautionary platform shut-ins in the Gulf of Mexico in the face of hurricanes Gustav and Ike last September, output levels then were still lower than this October’s by nearly 15 percent. Meanwhile, Alaskan output, at 696,000 barrels per day, slipped from last October by 2.8 percent but rebounded from this summer’s lows of less than 600,000 barrels per day.

On the demand side, gasoline deliveries for October showed their first decline since May, dropping 0.5 percent from last October’s delivery surge that followed hurricane-related supply interruptions of September 2008. However, had deliveries a year ago followed a pattern more in line with historical patterns, API estimates that this year’s gasoline deliveries for October would have shown their fifth year-to-year increase in a row - though perhaps by only about one half of one percent.

Petroleum groups pleased with EPA decision delay on E15

The American Petroleum Institute issued the following statement on the Environmental Protection Agency’s decision to delay until mid-2010 a decision on the allowable ethanol content in fuel:

“EPA made a sound decision in deciding to wait until it has the scientific data and durability tests completed before increasing the allowable ethanol content in fuel. Thorough vehicle and engine studies that develop robust, scientifically supported data are needed to ensure that adverse impacts, such as engine damage, are avoided. API is actively supporting the studies that are currently underway.”

“API is concerned that EPA seems willing to consider a waiver of only part of the vehicle fleet (2001 and newer vehicles). While ethanol and other renewable fuels do - and should continue to - play an important role in helping to meet our nation’s energy demand, it’s important that the short- and long-term impacts of increasing the amount of ethanol blended into motor fuels be evaluated on the full vehicle fleet before a waiver decision is made.”

The National Petrochemical & Refiners Association (NPRA) praised the EPA decision.

“In making this decision, EPA correctly recognizes that there is more study and comprehensive testing to be done to ensure that higher ethanol blends will be safe for consumers and not threaten the reliability of their fuels or operation of their vehicles, engines and outdoor equipment,” NPRA President Charles T. Drevna said. “We’re pleased that EPA has made the decision to delay action on the E15 waiver, and look forward to working with the agency and other stakeholders to ensure that consumers will benefit from a transparent, deliberative process.”

ExxonMobil celebrates China’s Fujian Facility completion

ExxonMobil and its partners, Sinopec, Fujian Province, and Saudi Aramco, recently celebrated the full operation of China’s first integrated refining and petrochemical facility with foreign participation. This facility, the Fujian Integrated Refining and Ethylene Joint Venture Project, will help meet the region’s growing need for fuels and chemical products.

“Our participation in this world-class complex illustrates our commitment to the region and to provide our customers with the products they need,” said Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation. “This is an unprecedented partnership built on years of collaboration. The support from our partners will help ensure the safety, reliability and best-in-class performance of these facilities.”

More than $4.5 billion was invested in the complex, which tripled the capacity of the existing refinery to 240,000 barrels per day to produce transportation fuels and other refined products. In addition, the project added a new petrochemical complex that includes an 800,000 tons-per-year ethylene steam cracker, an 800,000 tons-per-year polyethylene unit, a 400,000 tons-per-year polypropylene unit and a 700,000 tons-per-year paraxylene unit.

The complex also features a state-of-the-art 250 megawatt cogeneration facility, which will meet the majority of the site’s power demands. Cogeneration is the simultaneous production of electricity and useful heat or steam from waste energy, resulting in lower operating costs and significantly reduced greenhouse gas emissions.