international exports and imports of gasoline and diesel ... · international exports and imports...
TRANSCRIPT
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International Exports and Imports of gasoline and diesel from
Port Metro Vancouver
Submission by interveners Robyn Allan and Marc Eliesen on the need for reliable export and import data discussed
at the Oral Workshop, including Port Metro Vancouver source data on foreign exports and imports, as requested.
An increase in foreign imports does not necessarily mean that higher cost refined products are
being imported or there is a reliance on US markets for supply. Reliable export data is critical as
is an understanding of the contractual relationships between the sellers of international supply
and the purchasers of international supply.
It has been publicly acknowledged by Parkland that Parkland and Chevron have entered into
long term agreements for Chevron to supply refined product BC Chevron stations—formerly
owned by Chevron and now owned by Parkland.
Further, Shell owns a refinery in Washington State but there is no evidence on the public record
that identifies Shell’s sourcing of refined product from its refinery, although Shell has confirmed
that it imports gasoline from ‘refiners’ in the Pacific Northwest. If Shell does source supply from
its US refinery—which is likely—it would be expected to do so under favourable commercial
terms facilitated when an operation is integrated. That is, Shell sourcing supply from its US
refinery would be expected to deliver a low-cost barrel relative to alternatives.
There are serious concerns over the veracity of the Department of Finance data that Deetken has
relied on, not only because this is the first instance where this data has been been used for this
purpose—as well as it being the first time Deetken has done so—it is not a publicly available
data set.
Given the serious time constraints the Inquiry is under, proper scrutiny of the data Deetken has
relied on has been frustrated. Many conclusions seem to be being drawn from the data by various
interveners while there is contradictory data, such as Port Metro Vancouver and the US Energy
Information Agency (EIA) that is available and leads to quite different conclusions. The data
contradicting the Department of Finance data is both reliable and publicly available.
Port Metro Vancouver has consistently collected international export and import data, and
reported it on a monthly basis, for years. It is unclear why Deetken did not seek to obtain this
data but has relied upon Department of Finance data that is untried.
Chart 1 provides a summary of foreign imports and exports of gasoline and diesel through Port
Metro Vancouver from 2015 to 2019. The data bases relied on to generate this table have been
included as part of this submission.
C1-5
ylapierrInquiry into Gasoline and Diesel Prices in BC
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Chart 1
There is a substantial difference between the export data from PMV and that provided by
Deetken during the Oral Workshop. This discrepancy alone raises serious questions regarding
Department of Finance data, as mentioned above. It should be noted that a source of the
discrepancy may be related to the fact that Port Metro Vancouver data is based on volume
whereas Department of Finance data is based on value. As Deetken explained in its data
disclaimer provided in Phase 1, Department of Finance data is used for taxation purposes and
therefore required ‘adjustments to approximate total volumes.’
Since there is no evidence that indicates any meaningful volume of international rail imports or
exports of refined product to or from the US, it can be assumed that the majority of international
trade for gasoline and diesel is conducted through the Port of Vancouver
Evidence indicates that long-term, mutually beneficial arrangements have been entered
into between Parkland and Chevron for foreign imports.
“So three things (to ensure no shortage of supply during planned maintenance) one is we do
build up some inventory. The second is we will look to our refining partners to assist. And then
the third is import. We also do have an ongoing supply relationship with Chevron and they
will be assisting us through that.”1 Parkland CEO, Bob Espey (emphasis added)
1 Parkland Quarter 3 Results, Earnings Call, November 3, 2017, Seeking Alpha.
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The Deetken Report, Phase 1, identifies an increase in international imports of gasoline and
diesel from PADD 3.
Source: Screenshot, Deetken Phase 1, page 12.
During the Oral Workshop, reference to foreign sourced imports from PADD 3 has been made
by parties as if they are being delivered from the Gulf Coast. However, in addition to there being
a concern over the veracity of Ministry of Finance data to represent the volume of imports and
exports (export data supplied by Deetken suggesting far less exported than Port Metro
Vancouver international export data indicates), there is some concern over the reliability of the
source of imports in the data because the data is reported on the basis of office-of-the-order-
placed rather than the refinery where the product is produced. Thus, the data may suggest PADD
3 exports when they are not coming from PADD 3.
For example, Chevron—with refined product supply agreements in place with Parkland—has its
head office in Texas, although Chevron manages refined product supply through California and
other geographic locations. Depending upon how orders are reported on Ministry of Finance
data, this could mean that what have been identified as PADD 3 shipments are not coming from
PADD 3. Deetken agreed at the Oral Hearing to look into source of supply reliability in the data.
However, it is useful to note that part or all of the increase in US imports may be due to mutually
beneficial business arrangements between Parkland and Chevron. That is, the trade data may not
reflect arms-length spot transactions, but mutually beneficial long-term arrangements, with
Chevron supplying refined product to what are now Parkland’s Chevron retail outlets.
Determining the volume of product imported and exported by Parkland, by market, over the
period 2015 – 2019 is critical in this regard. The discussion that follows is relying on limited
publicly available information, albeit supported by an understanding the authors have of business
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negotiations and the financial benefits of entering into ongoing supply arrangements that on the
surface may suggest supply constrains when they do not because they represent profit
maximization for the companies involved in the supply arrangements. That is, enhanced business
returns and not lack of domestic supply can and likely does result in supply being sourced from
what appear to be increasingly distant foreign markets.
Interveners have suggested that PADD 3 sourced refined product is more expensive than local,
when this may not be the case. Notwithstanding that the marginal barrel argument is invalid in
all but a perfectly competitive market, it has been repeatedly suggested that the transportation
costs are driving refining margins, when in fact delivered barrels from PADD 3 or PADD 2
could be less expensive because of mutually beneficial import and export arrangements between
‘partners.’
Assuming Parkland is importing product from Chevron in the US as per long-term agreements,
then an increase in imports from PADD 3 would be explained as having little or nothing to do
with lack of supply from Alberta, but as a result of lower cost options for Parkland. (Again,
assuming the data properly represents PADD 3 deliveries as actually being sourced in PADD 3).
There is no question that gasoline produced in BC declined in 2018 as compared with 2017 since
Parkland’s refinery maintenance shutdown meant a reduction in overall annual capacity
utilization. The data suggests the shortfall was made up through foreign imports, but this does
not mean it could not have been made up, at least in part, by Parkland itself.
According to trade data as reported by Platts, in January 2018, Parkland exported 180,000 barrels
of refined product to Washington State just prior to the shutdown. What we do know is that
Parkland has an ongoing gasoline and diesel supply arrangement with Chevron which may
explain why the exports occur. Since both parties are sophisticated companies the supply
arrangements would be expected to be mutually beneficial in financial terms.
It is interesting to note that in his statement to analysts, Mr. Espey does not consider other
refiners as competitors, but as ‘partners.’
Chevron’s remaining refineries, from which it appears Parkland has an agreement to source
supply, are all located in the US. Chevron’s four U.S. refineries have the combined capacity to
process 932,000 barrels of oil per day. Refineries are in Richmond and El Segundo, California;
North Salt Lake, Utah; and Pascagoula, Mississippi. In January 2019, Chevron acquired a
refinery in Pasadena, Texas.2
Chevron also has a fleet of US and internationally flagged tankers and relies on its trading
operations to ensure its refined product is marketed. “Chevron’s Supply and Trading
organization provides a critical link between Chevron’s Upstream and Downstream operations.
Headquartered in Houston, Texas, with additional trading hubs in London, Singapore and San
2 Chevron Website. https://www.chevron.com/worldwide/united-states
https://www.chevron.com/worldwide/united-stateshttps://www.chevron.com/worldwide/united-states
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Ramon, California, it provides commercial support for crude oil and natural gas production
operations and our refining and marketing network.” 3
Chevron has significant business incentives to create a global network and lock down ongoing
markets in which it can sell its refined product. In electing to sell its operations in BC, the
company likely would have built its strategy into its negotiations. Perhaps the terms of the
purchase price for the assets reflect the benefit in the long-term arrangement for Chevon’s
product since a higher price for refined product would be passed on in the BC market given the
extremely high refinery margins compared to other markets.
The terms of the ongoing supply agreement between Parkland and Chevron means that purchases
of gasoline and diesel from Chevron are very likely lower than the price Parkland faces as its
next best alternative for those volumes—and may even at times be better than the pricing of its
BC produced product given the instances where Parkland has exported gasoline and diesel, even
adjusting for transportation.
It is critical that if trade data is to be relied upon it be accurate and reliable and that the business
relationships underlying the trade are appreciated. Otherwise false conclusions will be drawn
regarding the ‘marginal’ barrel, supply ‘dependence’ on foreign markets, degree of market
concentration (assumed competitive and price determined in the spot market when the market is
highly concentrated and price is imbedded in long-term contracts between ‘partners’ mutually
beneficial to both parties while wholesale price charged reflects excess profits) and impact of
import barrels on generating a need for wider margins, when they do not.
3 Ibid.
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Port Metro Vancouver Data Foreign Imports and Exports
The annualized volumes for foreign imports and exports relied upon in the Allan and Eliesen
Report was obtained through a special request to Port Metro Vancouver thereby ensuring only
international trade figures were relied upon (see bottom two categories in table below: Foreign
Import, Diesel and Fuel Oils, and Gasoline and Foreign Export, Diesel and Fuel Oils, and
Gasoline) The metric tonne volumes were converted into barrels relying on CME conversion
calculator for gasoline, and the separate calculator for diesel available at
https://www.cmegroup.com/tools-information/calc_refined.html
It should be noted that the monthly data for 2019 relied upon by Allan and Eliesen is bulk data
since PMV had not finalized the figures for 2019 when the data was requested, however, PMV
has confirmed that bulk traffic data is “most of the volume of petroleum products.”
Table 1
Monthly data from 2008 – 2019 is provided in the attachment panel of this submission as
requested.
https://www.cmegroup.com/tools-information/calc_refined.html
Export Summary
This document was exported from Numbers. Each table was converted to an Excel worksheet. All other objects on each Numbers sheet were placed on separate worksheets. Please be aware that formula calculations may differ in Excel.
Numbers Sheet NameNumbers Table NameExcel Worksheet Name
IMPORT
Table 1IMPORT
EXPORT
Table 1EXPORT
IMPORT
EXPORT
IMPORT
Bulk Import Gasoline & Diesel Summary by Year, Month, Direction and Origin
2008 to YTD April 2019 in Metric Tonnes
20082008 Total20092009 Total20102010 Total20112011 Total20122012 Total20132013 Total20142014 Total20152015 Total20162016 Total20172017 Total20182018 Total2019
ORIGIN1234567891011121234567891011123456789101112123456789101112123456789101112123456789101112123456789101112123456789101112123456789101112123456789101112123456789101112124
IMPORT7,93775,263189,838208,71175,83781,714145,003161,484136,220245,082129,05628,8791,485,02436,948121,50747,179131,26559,395144,449133,167180,441109,03392,30829,7251,085,41741,59043,31855,741180,274179,705150,547136,56053,845100,196143,37828,17021,2531,134,57650,32754,215105,75176,50880,239154,62391,82084,60061,81188,66745,12628,676922,36118,21920,73911,13195,12091,383168,710118,82054,04455,48958,04421,41840,699753,81363,36066,559212,68979,994135,653124,354120,928102,07189,791121,04154,32370,7331,241,49462,52553,90332,81248,02677,077121,29469,13160,972104,12849,11761,45374,986815,42571,05245,35498,83966,41372,08790,70874,876184,042125,58087,24342,29244,5941,003,08041,05456,20833,03046,656106,709253,884129,38055,70469,65255,41838,18239,641925,51830,52024,44437,34969,98641,11940,02560,22670,94846,51912,9587,28719,986461,36522,412108,931169,239175,354137,886162,53248,33069,80044,19325,85524,3769,761998,66955,65325,46756,217
Diesel & Fuel Oils7,93728,76859,30247,70216,73829,20435,73417,72123,14940,81136,7609,283353,1076,1163,99279115,0503,3799,4749,56748,36916,41217,81424,4487,48715,06925,49246,716153,43912,06310,06229,23320,42723,16725,5606,48820,92856,10416,6795,921226,63113,46921,1103,07721,2948,61318,3999,26295,22424,26918,52688,95247,06137,03437,58231,37733,86950,44877,09228,03725,114499,36221,77520,48915,75511,00322,75663,0257,9548,57445,62115,89214,85839,579287,28038,86713,26142,96926,26016,81250,72128,56223,18833,3193,1771,270278,40812,28210,86230,90163,26749,13218,86028,72713,4604,9386,608239,0383,79711,0674,40827,54014,1539,9353,9082,6508,92786,3853,38239,980103,99341,92918,32414,2234,344226,17430,53638,380
Chile10,88010,880
China15,35715,35722,89122,8919,8659,865
Japan17,48217,482
Korea (South)9,5809,5802,5672,567
Mexico9,9279,9274,3584,358
Netherlands9,2866,61115,896
Singapore3,4162,7469687,12910,5436,2948,1922,34327,3711,2421,242
United States7,93728,76859,30247,70216,73829,20435,73417,72123,14940,81136,7609,283353,1076,1163,99279115,0503,3799,4749,56748,36916,41217,81424,4487,48715,06915,91246,716143,85912,06310,06229,23320,42723,16725,5606,48820,92856,10416,6795,921226,63113,46921,1103,07721,2948,61318,3999,26295,22424,26918,52685,53647,06137,03428,29722,02133,86934,12377,09228,03725,114460,97921,77520,4895,2124,71022,75654,8347,9546,23145,62115,89214,85839,579259,90938,86713,26142,96912,81316,81250,72118,63523,18810,4273,1771,270232,14212,28210,86230,90163,26749,13218,86028,72713,4604,9386,608239,0383,79711,0674,40827,54014,1539,9352,6662,6508,92785,1433,38239,980103,99324,44718,3244,344194,46930,53638,380
Gasoline46,495130,536161,01059,09952,510109,269143,763113,071204,27192,29619,5961,131,91736,948115,39147,179127,27358,604129,399129,788180,441109,03382,83420,1581,037,04841,59043,31855,741163,862161,891126,099129,07338,77674,70496,66228,17021,253981,13850,32742,15395,68947,27559,812131,45666,26078,11240,88332,56328,44622,755695,7304,75020,73911,13174,01088,307147,416110,20654,04455,48939,64521,41831,437658,58939,09148,033123,73732,93398,61986,77289,55168,20139,34343,94826,28645,619742,13240,75133,41417,05737,02254,32158,26961,17752,39958,50833,22646,59535,408528,14532,18532,09355,87040,15355,27539,98646,314160,854125,58053,92439,11443,324724,67241,05443,92633,03035,79475,809190,61780,24936,84440,92441,95733,24433,033686,48026,72313,37632,94142,44641,11940,02546,07361,01342,61110,3087,28711,059374,98019,03068,95265,246133,425119,561148,30948,33065,45744,19325,85524,3769,761772,49525,11725,46717,837
Aruba21,60121,601
Bahamas29,28029,280
France36,75736,757
Japan21,03021,03034,10634,106
Korea (South)32,09535,69732,01699,80815,46765,15925,66352,181158,47059,97832,4009,095101,47335,03535,03511,36928,98840,35714,61514,61526,03826,03817,29117,291
Netherlands32,09632,096
Norway31,37731,377
Singapore23,41923,41935,21435,214
Spain30,69530,69518,30418,30430,01330,013
Sweden37,58337,583
Taiwan29,78529,785
United States46,49570,056107,88559,09952,510109,269108,06681,055204,27192,29619,596950,59936,94841,05147,179111,80658,604105,98064,629123,40156,85282,83420,158749,44241,59043,31855,741103,884129,491126,09976,66329,68174,70496,66228,17021,253827,25550,32742,15395,68947,27559,81296,42166,26078,11240,88332,56328,44622,755660,6954,75020,73911,13162,64188,307147,416110,20654,04426,50139,64521,41831,437618,23239,09148,033123,73732,93368,60665,17174,93668,20139,34343,94826,28645,619675,90340,75133,41417,05737,02254,32158,26961,17752,39958,50833,22646,59535,408528,14532,18532,09355,87040,15355,27539,98646,314131,574125,58053,92439,11443,324695,39241,05443,92633,03035,79475,809164,57980,24936,84440,92441,95733,24433,033660,44226,72313,37632,94142,44641,11940,02546,07361,01342,61110,3087,28711,059374,98019,03068,95265,24698,21170,174148,30948,33065,45744,19325,85524,3769,761687,89425,11725,46717,837
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EXPORT
Bulk Export Gasoline & Diesel Summary by Year, Month, Direction and Destination
2008 to YTD April 2019 in Metric Tonnes
20082008 Total20092009 Total20102010 Total20112011 Total20122012 Total20132013 Total20142014 Total20152015 Total20162016 Total20172017 Total20182018 Total2019
DESTINATION1234567891012123456789101112123456789101112123457891011121234567891011121234567891011121234567891011121234567891011121234567891011121234567891011121234567891011121234
Load from facility10,46116,36329,83022,74621,29928,77431,59511,43823,6785,26517,627219,07428,46721,58239,81922,81328,69922,32319,06021,75628,38827,93418,73652,544332,12113,31118,19228,00824,51235,25529,28339,42043,94910,13624,98923,06958,453348,57737,81327,46515,34069,53232,59046,34938,57844,28230,29643,00340,129425,37863,09752,46065,49155,97234,88337,92526,94045,85921,98437,98645,78443,639532,02259,72967,17142,30459,74246,44148,16442,35938,29650,06534,00283,38779,448651,10967,19457,79762,82156,26255,47145,71270,55475,76368,18185,72693,017130,441868,940106,18037,7665,35452,020120,34571,72984,41782,19677,73573,14480,60581,693873,183120,714127,85890,820124,900111,092131,38791,25599,04789,241106,21697,960154,3751,344,866100,04878,732106,23179,53978,42596,557117,515116,372128,459118,81793,732106,4971,220,92252,77340,13849,72845,54932,41892,86666,95193,10074,38793,35242,10775,691759,06090,07659,94453,77459,949
Diesel & Fuel Oils7,57714,0438,0619,65417,53327,50219,4087,04113,7625,26517,627147,47122,64010,61214,6237,79210,6695,5246,47615,96911,9394,22424,504134,9725,80511,30421,58220,76815,20813,64714,58210,39318,421131,7119,0335,65919,7368,1997,1687,52211,35722,43117,07520,652128,83320,0358,5289,94525,95616,6928,45511,08928,73011,3267,5965,33312,630166,3149,50726,15428,93029,38724,02117,92812,60521,36016,67112,00029,61530,621258,80026,59231,31228,32915,17020,69821,35743,15740,71740,14645,45940,39368,650421,98131,97711,3515,35419,45432,25629,39841,01435,98036,28541,07544,80433,493362,44170,11347,25733,35862,76334,67242,11131,50055,11438,22158,11945,27673,754592,25848,72517,91863,13223,37932,12345,05364,01161,48077,23269,17941,29027,995571,51725,38032,65049,72841,57821,16460,56837,20662,34664,31780,21130,76864,854570,77067,59442,67153,77449,395
Chile9,5309,530
Ecuador6,4386,438
Guatemala7,6557,65511,40411,404
Mexico8,06319,71627,779
Puerto Rico14,951
United States7,57714,0438,0619,65417,53327,50219,4087,04113,7625,2659,972139,81622,64010,6125,0937,79210,6695,5246,47615,96911,9394,22418,066119,0045,80511,30421,58220,76815,20813,64714,58210,39318,421131,7119,0335,65919,7368,1997,1687,52211,35722,43117,07520,652128,83320,0358,5289,94525,95616,6928,45511,08928,73011,3267,5965,33312,630166,3149,50726,15428,93029,38724,02117,92812,60521,36016,67112,00029,61530,621258,80026,59231,31216,92615,17020,69821,35743,15740,71740,14645,45940,39368,650410,57731,97711,3515,35419,45432,25629,39841,01435,98036,28541,07544,80433,493362,44170,11347,25733,35862,76334,67242,11131,50055,11438,22158,11945,27673,754592,25848,72517,91863,13223,37924,06045,05364,01161,48077,23249,46241,29027,995543,73725,38032,65049,72841,57821,16460,56837,20662,34664,31780,21130,76864,854570,77067,59442,67138,82349,395
Gasoline2,8842,32021,76913,0923,7661,27212,1874,3979,91671,6035,82710,97025,19615,02118,03016,80012,5845,78716,44927,93414,51228,040197,14913,31112,38616,7042,93114,48729,28324,21230,30210,13610,40612,67740,031216,86628,78021,80615,34049,79724,39139,18131,05632,9257,86525,92719,477296,54543,06343,93355,54630,01718,19129,47115,85117,12910,65830,39040,45131,009365,70850,22241,01713,37430,35522,42030,23629,75316,93633,39322,00253,77348,827392,30940,60126,48534,49241,09234,77424,35527,39635,04628,03640,26752,62461,791446,95974,20326,41532,56688,08942,33143,40346,21641,45032,07035,80148,200510,74250,60180,60157,46262,13776,42089,27659,75543,93451,02048,09852,68380,621752,60851,32360,81443,09956,16046,30251,50453,50454,89251,22649,63852,44278,502649,40627,3937,4893,97111,25432,29829,74530,75410,07013,14111,33810,837188,29022,48217,27310,554
Puerto Rico19,17219,172
United States2,8842,32021,76913,0923,7661,27212,1874,3979,91671,6035,82710,97025,19615,02118,03016,80012,5845,78716,44927,93414,51228,040197,14913,31112,38616,7042,93114,48729,28324,21230,30210,13610,40612,67740,031216,86628,78021,80615,34049,79724,39139,18131,05632,9257,86525,92719,477296,54543,06343,93355,54630,01718,19129,47115,85117,12910,65830,39040,45131,009365,70850,22241,01713,37430,35522,42030,23629,75316,93633,39322,00253,77348,827392,30940,60126,48534,49241,09234,77424,35527,39635,04628,03640,26752,62461,791446,95955,03126,41532,56688,08942,33143,40346,21641,45032,07035,80148,200491,57050,60180,60157,46262,13776,42089,27659,75543,93451,02048,09852,68380,621752,60851,32360,81443,09956,16046,30251,50453,50454,89251,22649,63852,44278,502649,40627,3937,4893,97111,25432,29829,74530,75410,07013,14111,33810,837188,29022,48217,27310,554
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