Transportation Market Trends

Opportunities for Additional GHG Reductions From Petroleum Transportation Fuels Workshop

Sacramento, CA

August 20, 2018

Siva GundaEnergy Assessments Division

California Energy CommissionSiva.Gunda@energy.ca.gov

California Energy Commission

Outline• Crude oil production trends & CA sources• Transportation fuel trends• Improving efficiency & rising use of EVs

8/20/2018 28/20/2018 California Energy Commission

8/20/2018 3California Energy Commission

0

2,000

4,000

6,000

8,000

10,000

12,000

Jan-

1981

Jan-

1982

Jan-

1983

Jan-

1984

Jan-

1985

Jan-

1986

Jan-

1987

Jan-

1988

Jan-

1989

Jan-

1990

Jan-

1991

Jan-

1992

Jan-

1993

Jan-

1994

Jan-

1995

Jan-

1996

Jan-

1997

Jan-

1998

Jan-

1999

Jan-

2000

Jan-

2001

Jan-

2002

Jan-

2003

Jan-

2004

Jan-

2005

Jan-

2006

Jan-

2007

Jan-

2008

Jan-

2009

Jan-

2010

Jan-

2011

Jan-

2012

Jan-

2013

Jan-

2014

Jan-

2015

Jan-

2016

Jan-

2017

Jan-

2018

Thou

sand

s of

Bar

rels

Per D

ay

U.S. Less CaliforniaCalifornia + Outer Continental Shelf

Source: Energy Information Administration (EIA)

9.989 million barrels per day

0.478 million barrels per day

7.535 million barrels per day

1.005 million barrels per day

Outside of California, U.S. oil production has increased 135.6 percent between the low point of 2007 (unrelated to hurricanes) and April 2018 primarily through greatly expanded development of domestic shale oil deposits, steadily improving drilling efficiency & a dramatic increase of hydraulic fracturing. California output has declined 27.8 percent.Although California contains some shale oil deposits (according to EIA & USGS), a similar rebound of oil production in the state has not occurred due to more complex geological formations that greatly increase development costs & a significant downward revision in the volume of technically recoverable oil.

4.240 million barrels per day

California & U.S. Production 1981-2018

8/20/2018 4California Energy Commission

3,069

915

455 389347

168

-132 -128

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Texas North Dakota New Mexico Oklahoma Colorado Rest of U.S. California Alaska

Thou

sand

s of B

arre

ls P

er D

ayChange in Crude Oil Production

January 2010 vs. March 2018

Source: Energy Information Administration (EIA)

U.S. crude oil production has changed from 5.391 million barrels per day in January 2010 to a record 10.474 million barrels per day during March 2018

8/20/2018 5

Crude oil production gains are from shale oil (tight oil) formations. California & Alaska fields are conventional formations that have been producing for many decades (older fields).

California Energy Commission

California & Other Domestic Lower 48

Sources

Alaska

0

100

200

300

400

500

600

700

800

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Mill

ions

of B

arre

ls

Foreign

56.7 %

12.3 %

354.1 Million Barrels

31.0 %

77.1 Million Barrels

193.8 Million Barrels

California Refinery Oil Sources (1982–2017)

Sources: DOGGR, Energy Information Administration, Class 1 Railroads and the California Energy Commission.

8/20/2018 6

1.71 million barrels per day in 2017 – foreign receipts expected to grow as California’s output continues to decline.

California Energy Commission

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Thou

sand

s of

Bar

rels

per

Yea

rDomestic Crude-by-Rail

Other DomesticMarine

Alaska

Saudi Arabia

Ecuador

Iraq

Columbia

Brazil

Angola

INDONESIA

MEXICO

KUWAIT

CANADA

ALL OTHERS

Annual Crude Oil Receipts into California

Sources: Energy Information Administration and the California Energy Commission.

8/20/2018 7

Waterborne receipts of oil rising & diversity of foreign sources increasing.

Nearly 69 percent of oil processed in CA refineries during 2017 was delivered via marine vessels.

California Energy Commission

4.40%

43.24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Perc

enta

ge o

f Tot

al F

orei

gn Im

port

s

Northern California Califiornia United States

Canadian Crude Oil Imports –California & SF Bay Area

8/20/2018 8

Contrary to the national trend, California refiners have collectively not been increasing their use of Canadian crude oils. The trend appears to be declining since 2010. Even if greater use of Canadian oil occurs over time, refiners are expected to offset with other types of oil to maintain consistent average blended properties.

Source: Energy Information Administration

-

California Energy Commission

8/20/2018 9California Energy Commission

14,606,188

14,486,19014,540,241

14,701,647

15,107,812

15,491,961

15,584,894

14,200,000

14,400,000

14,600,000

14,800,000

15,000,000

15,200,000

15,400,000

15,600,000

15,800,000

16,000,000

2011

2012

2013

2014

2015

2016

2017

Thou

sand

s of G

allo

ns

Source: California Energy Commission analysis of State Board of Equalization data.

Highest level since 2007.

California Total Gasoline ConsumptionRebounds with Improved Economy

8/20/2018

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

Jan-

11Ap

r-11

Jul-1

1O

ct-1

1Ja

n-12

Apr-1

2Ju

l-12

Oct

-12

Jan-

13Ap

r-13

Jul-1

3O

ct-1

3Ja

n-14

Apr-1

4Ju

l-14

Oct

-14

Jan-

15Ap

r-15

Jul-1

5O

ct-1

5Ja

n-16

Apr-1

6Ju

l-16

Oct

-16

Jan-

17Ap

r-17

Jul-1

7O

ct-1

7

Perc

ent o

f Lab

or F

orce

Une

mpl

oyed

Source: U.S. Bureau of Labor Statistics.

12.0 Percent Unemployed

4.9 Percent Unemployed

California Unemployment Rate

10

--

California Energy Commission

0

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

12,000,000,000

14,000,000,000

16,000,000,000

18,000,000,000

2011 2012 2013 2014 2015 2016 2017

Gallo

nsBase Gasoline Ethanol

California Gasoline ConsumptionSteady Renewable Content

Renewable content was an average concentration of 10.1 percent by volume for each gallon of finished gasoline consumed in the state during 2017. Blend wall of 10 percent can be exceeded through additional E85 sales.

8/20/2018

Sources: California Energy Commission analysis of data from the State Board of Equalization, Energy Information Administration & California Air Resources Board.

11

■ ■

California Energy Commission

0

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

2011 2012 2013 2014 2015 2016 2017

Gallo

ns

Diesel Fuel Renewable Diesel Biodiesel

California Diesel Fuel ConsumptionIncreasing Renewable Content

California policies such as the Low Carbon Fuels Standard are compelling greater use of renewable fuel, attaining an average concentration of 13.4 percent by volume for each gallon of diesel fuel consumed in the state during 2017.

8/20/2018

Sources: California Energy Commission analysis of data from the State Board of Equalization, Energy Information Administration & California Air Resources Board.

12California Energy Commission

8/20/2018 13California Energy Commission

625.7

612.2

598.6

596.2

592.5 591.7 591.3

580

585

590

595

600

605

610

615

620

625

630

2010 2011 2012 2013 2014 2015 2016

Gallo

ns o

f Gas

olin

e Pe

r Yea

r Per

Driv

er

Sources: California Energy Commission analysis of State Board of Equalization and Federal Highway Administration data.

California Gasoline ConsumptionAnnual Use Per Licensed Driver

California continues to reduce gasoline use per driver, assisted by growing sales of alternative vehicles.

8/20/2018 14California Energy Commission

Hybrid, Plug-in Hybrid, & BEV Sales Share

.,. QI

iii

10.0%

~ 7.5% u :.c QI > ;;: QI

z 5.0% .. .E ~ iii u 0 25% ~ . ..

,:: Vl

0.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017*

Source: Cal iforn ia Energy Commission ana lysis of Ca lifornia Auto Out look by Auto Outlook, IHS Markit. *Sa les through Sept 2017.

■ BEV

■ PHEV

■ Hybrid

612.2

598.6 596.2

592.5 591.7 591.3

636.0634.1

644.5 644.9

652.2 653.3

580

590

600

610

620

630

640

650

660

2011 2012 2013 2014 2015 2016

Gallo

ns o

f Gas

olin

e Pe

r Yea

r Per

Driv

erCalifornia U.S. Less California

Sources: California Energy Commission analysis of State Board of Equalization and Federal Highway Administration data.

CA vs. US - Gasoline ConsumptionAnnual Use Per Licensed Driver

Opposite trend outside California as consumers preferentially purchase less fuel-efficient light trucks.

8/20/2018

30%

35%

40%

45%

50%

55%

60%

65%

70%

Jan

2011

Apr 2

011

Jul 2

011

Oct 2

011

Jan

2012

Apr

201

2 Ju

l 201

2Oc

t 201

2Ja

n 20

13Ap

r 201

3Ju

l 201

3Oc

t 201

3Ja

n 20

14Ap

r 201

4Ju

l 201

4Oc

t 201

4Ja

n 20

15Ap

r 201

5Ju

l 201

5Oc

t 201

5Ja

n 20

16Ap

r 201

6Ju

l 201

6Oc

t 201

6Ja

n 20

17Ap

r 201

7Ju

l 201

7Oc

t 201

7

Perc

enta

ge o

f Tot

al N

ew V

ehicl

e Sa

les

64.7 percent of total sales

52.3 percent of total sales

Light Trucks as Percentage of New Vehicle Sales

15California Energy Commission

Thank You

For technical questions, please contact

Gordon SchrempTransportation fuels expertGordon.Schremp@energy.ca.gov

Sudhakar KonalaEV expertSudhakar.Konala@energy.ca.gov

8/20/2018 16California Energy Commission