In 2007 PIRA issued a Bottom of the Barrel study that made some bold predictions — especially about sharply narrower light-heavy spreads — that ultimately proved right on the mark. Now, PIRA is offering an updated and expanded outlook for residual fuel oil and the rest of the “bottom of the barrel.” Although the broad outlook trends addressed in 2007 generally are still true, much has changed: the global recession and its aftermath, the IMO's approval of bunker sulfur regulations, the rise of oil production from shale, the increase in world oil prices to over $100/Bbl — to name a few. These changes, along with a desire to address the broad-based interest expressed by many PIRA clients, have led to the upcoming release of Bottom of the Barrel: An Updated Outlook for Residual Fuel Oil.

The next 15 years will witness radical shifts in the supply/demand balance for residual fuel oil and other heavy products, which will have profound impacts on crude and product pricing and refining margins. On the demand side, the traditional demand sectors for fuel oil in power generation and industrial heating have been declining as substitution to coal and gas has taken market share in the industrialized world. However, these uses are nearing practical minimums in mature markets, limiting the potential for further reductions. Other residual fuel demands — notably for bunkers, asphalt, and power/industrial demand in the developing world — are still growing. Consequently, PIRA expects that in contrast with the last 15 years, global end-user demand for heavy products in total will level

• An in-depth outlook of the factors driving each region’s future fuel oil and other heavy product usage. Demand trends by region/country and by sector will show how decreases in some areas are being offset by increases in others. The impacts of upcoming changes in bunker sulfur specifications will be discussed in detail.
  
  
• A detailed look at the production of heavy products, examining changes in crude slate, refinery runs, and refinery fuel oil conversion. Refinery capacity trends will drive straight-run feedstock balances tighter, while cracked stocks remain more amply supplied.
  
  
• Analysis of the trade flows for residual feedstocks and fuel oil and how they will evolve as supply, demand, and product quality requirements change.
  
  
• Regional price forecasts relative to crude and other products, residual fuel oil quality differentials, prices relative to competing fuels, arbitrage opportunities, and the key factors that will drive these relationships.
  
  
• Regional reference case projections through 2025, by year, as well as alternative scenarios that test the impact of key variables on those projections.

• Crude producers know the importance of product supply/demand balances, product values, and refinery capacity in setting crude price differentials. This study will help them identify and evaluate the future refinery value for heavy versus light crudes and heavy crude upgrading.
  
  
• Refiners need to plan capacity changes based on the outlook for product demand, feedstock supply, and relative pricing. By providing a firm basis in evaluating future changes in these factors, which define refinery fuel oil conversion margins, the study will help refiners evaluate the future profitability for different refinery configurations.
  
  
• Trading companies want to anticipate regional supply/demand changes and price dynamics. This analysis will aid in planning terminal and shipping infrastructure needs to best capture future opportunities.
  Shipping companies know that their single largest expense is for bunker fuel, and they face uncertainty both on its price and regulations on quality. The study will provide a residual fuel oil price basis under different demand/regulatory scenarios.
  
  
• Policy makers need timely insight into how proposed changes in product quality regulations will affect supply, demand, price, and industry profitability. This study will enable them to better evaluate the impact of future regulatory changes.
  
  
• Electric utilities and other end-users constantly consider how changing fuel oil price dynamics will influence service choices and future capacity decisions. The study will make end-users better equipped to adapt to supply and price shifts, and help new project developers make more effective evaluations of fuel supply options and project viability.
  
  
• Financial institutions must make sound evaluations of how changing market conditions will affect the economics and financing of new refining and marketing ventures. This study will allow for more informed decision-making on potential projects.
  

• Buyers of PIRA's 2007 Study Bottom of the Barrel: The Future for Residual Fuel Oil can receive an additional discount.
• Companies that order before January 31, 2012, receive a 10% “early bird” discount.

Additional users (beyond three), extra report copies and database passwords can also be purchased. For detailed service pricing options, contact your PIRA sales representative or sales@pira.com.

Richard Joswick (Study Leader; Managing Director, Global Oil Group) develops PIRA’s outlook for crude and products pricing, refinery margins, and inter-regional supply balances. He authors the monthly European Oil Market Forecast and numerous special projects. Over the last few years he was the study leader for the successful multi-client studies: Bottom of the Barrel: The Future for Residual Fuel Oil (2007); Heart of the Barrel: The Future for Middle Distillate Fuels (2009); and Top of the Barrel: The Future for Gasoline, Naphtha, and LPG (2011). He joined PIRA in 2004 after 20 years with ExxonMobil in supply logistics, planning, refining, and engineering. During his time at ExxonMobil, he had assignments developing near-term oil market forecasts, designing heavy oil upgrading processes and evaluating refining economics. Rick has M.S. and B.S. degrees from Rutgers in chemical engineering.

Dr. Mark Schwartz (President) works closely with PIRA's Global Oil and Natural Gas groups to evaluate the key assumptions underlying their outlooks and to develop plausible alternative assumptions and outcomes. Before joining PIRA in 2002, he was the Chief Economist of ExxonMobil Corp., where he was responsible for developing the company’s long-range economic and energy outlook. During his 25 years at Exxon he also had assignments in Upstream Planning, Treasurers, and Corporate Planning functions. Mark holds a Ph.D. in economics from the University of Pennsylvania.

F.W.A. (Bill) Fuller (Sr. Director, International Oil) had over 30 years of energy forecasting and analytical experience with Exxon International before joining PIRA in 1997. He now oversees PIRA’s analysis and forecasting of near-term industry oil balances, with particular emphasis on international supplies, and monitors events impacting PIRA’s oil market view. Bill has a B.S. in chemical engineering from Cornell University.

Gary Greenstein (Director, Global Oil Group) joined PIRA following 38-year career with ExxonMobil, where he was involved in all aspects of the refining business, including planning, operations, engineering, and research. Gary has a B.Ch.E. from City College of New York, an M.S. in chemical engineering from New Jersey Institute of Technology, and an M.B.A. from Fairleigh Dickinson University.

Peter Jaquette (Director, Global Oil Group) is a key contributor to PIRA's Scenario Planning Service, and was the coordinator for PIRA's Planning for Tomorrow study. He joined PIRA in 2007 with more than 25 years of experience in corporate strategic planning and economic consulting, including 14 years with ARCO and nine years with Weyerhaeuser, where he was involved in evaluating cellulosic ethanol and other energy projects. Peter has a B.A. in economics from Swarthmore College and an M.A. in economics from Stanford University.

Kenneth M. Bogden (Director, Freight Markets) is responsible for PIRA’s monthly Freight Market Outlook. Prior to joining PIRA in 2005, Ken worked for ExxonMobil for 27 years, primarily in its oil supply and trading and planning functions. He also served as Coordinator of Transportation Planning for Exxon International. Ken has a B.S. in chemical engineering from Lafayette College and an M.B.A. from Colombia University.

David A. Zinamon (Managing Director, Refining and Environmental Affairs) specializes in refined products, refinery operations, NGLs, alternative fuels and environmental matters, particularly as they affect petroleum product markets. Among other activities he is responsible for PIRA’s World Refinery Database. Dave also authors PIRA’s monthly NGL market report. Dave joined PIRA in 1984 after seven years of international energy consulting experience with Chem Systems. This followed several years of manufacturing, marketing and planning positions with Celanese Chemical, GAF Corp., and Airco. Dave has a B.Ch.E. from City College of New York and an M.B.A. from Rutgers University.
Dr. Naing Oo (Associate Director) joined PIRA’s Global Oil Group in 1995. He focuses on quantitative and econometric analysis for forecasting oil demand and prices. He is also involved in analysis on crude and product balances and trade flows. Naing holds a Ph.D. in economics from the City University of New York.

Su Hyung Ryu (Associate Director) focuses on crude and product price forecasts. Ms. Ryu maintains and develops integrated oil demand and pricing models and information systems. Since joining PIRA in 1998, she has participated in numerous benchmarking and competitive analysis projects, crude and product marketing assessments, and asset valuations. Prior to joining PIRA, Su worked at Citibank Global Banking, where she analyzed and developed investment database applications. She holds M.S. in business computer information systems from Baruch College in New York.