California Refinery Crude Oil Sources and Trends

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California Refinery Crude Oil Sources and Trends OSPR TAC Informational Meeting on Non-Floating Oil Sacramento, CA November 15, 2017 Gordon Schremp Energy Assessments Division California Energy Commission [email protected]

Transcript of California Refinery Crude Oil Sources and Trends

Page 1: California Refinery Crude Oil Sources and Trends

California Refinery Crude Oil Sources and Trends

OSPR TAC Informational Meeting on Non-Floating Oil

Sacramento, CA

November 15, 2017

Gordon Schremp

Energy Assessments Division

California Energy Commission

[email protected]

Page 2: California Refinery Crude Oil Sources and Trends

Presentation Topics

• Crude oil trends and sources

• Transportation of crude oil

• California refinery operations

• Ability to track crude oil movements

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Source: EIA Drilling Productivity Report

U.S. Oil Production by Shale Basin

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Development of tight or shale oil formations through improved drilling techniques and hydraulic fracturing has resulted in a crude oil renaissance for the United States.

3 U.S. fields - Combined 4.882 MM BPD

Currently, 2nd highest daily production in world.

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US Crude Oil Production Alaska

North Dakota Texas

California + OCS Rest of US

New Mexico Colorado

Oklahoma

Source: Energy Information Administration (EIA)

9.203 million barrels per day

3.366 million barrels per day

Chart peak of 9.627 million barrels per day - Apr. 2015All-time peak of 10.044 million barrels per day - Nov. 1970

1.068 million barrels per day

U.S. Gulf of Mexico hurricane impacts

U.S. Crude Oil Production – Jan. ‘81-Aug. ‘17

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California production stays above Alaska.

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ayChange in Crude Oil ProductionJanuary 2010 vs. August 2017

Source: Energy Information Administration (EIA)

U.S. crude oil production has changed from 5.390 million barrels per day in January 2010 to 9.203 million barrels per day during August 2017

U.S. crude oil production has decreased 0.423 million barrels per day from the peak in April 2015

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California & Alaska oil production continue declining.

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Other Countries

Central & South America

Europe

Asia

Canada

Export restrictions lifted.

Record level of 1.116 million barrels per day exported.

Crude Oil Exports

Source: Energy Information Administration

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2017 Y-T-D exports averaging 896 TBD, 51.3 percent higher than same period last year.

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No exports from California.

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Cumulative Crude Oil Production29.76 Billion Barrels, Equivalent to 10.1Months of 2016 Global Demand of 96.60

Million Barrels Per Day

Peaked in 1985 at 424 Million Barrels

194 Million Barrels in 2016

California Oil Production (1865 to 2016)

Sources: California Division of Oil, Gas, and Geothermal Resources (DOGGR) and the California Energy Commission.

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Crude oil production for over 150 years in California. Declining output now at a level last seen in 1934.

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California & Other Domestic Lower 48

Sources

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Foreign

54.5 %

11.4 %

328.5 Million Barrels

34.1 %

68.8 Million Barrels

205.6 Million Barrels

California Refinery Oil Sources (1982–2016)

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

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1.65 million barrels per day in 2016 – foreign receipts expected to grow.

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rTOTAL C_B_RAIL

OTHER DOMESTICMARINE

ALASKA

SAUDI ARABIA

ECUADOR

IRAQ

COLOMBIA

BRAZIL

ANGOLA

INDONESIA

MEXICO

KUWAIT

CANADA

ALL OTHERS

Annual Crude Oil Imports into California

Sources: Energy Information Administration and the California Energy Commission.

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Diversity of foreign sources increasing.

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Near-source countries (North & South America) 45 percent of totals.

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2.24%

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Northern California Califiornia United States

Canadian Crude Oil Imports –California & SF Bay Area

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Contrary to the national trend, California refiners have collectively not been increasing their diet 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

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Diversity of Oil Movement

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Crude Oil - Marine Movements

• 66.1 percent of crude oil transported by marine vessel in 2016• Foreign sourced – 901.5 TBD (54.8 percent)

• Alaska sourced – 185.4 TBD (11.3 percent)

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SF Bay Area refineries received 64.6 percent via marine vessel during 2016.• Foreign sourced – 384.3 TBD (55.7 percent)• Alaska sourced – 61.3 TBD (8.9 percent)

Source: Quazoo.com.

Chevron - Richmond Long Wharf

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Crude Oil - Marine Movements

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Southern California refineries received 67.2 percent via marine vessel during 2016.• Foreign sourced – 517.2 TBD (54.2 percent)• Alaska sourced – 124.1 TBD (13.0 percent)

Source: General Steamship Agencies – Oil tanker Nissos Kythnos operated by Andeavor Maritime.

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California Oil Sources – Pipelines

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• 33.5 percent of crude oil received by all California refineries transported via pipelines – 551.0 thousand barrels per day during 2016

• SF Bay Area refineries received 243.9 thousand barrels per day of CA crude oil via three main trunk lines from southern San Joaquin Valley – 35.4 percent of total receipts during 2016

• Southern California & Bakersfield refineries received 307.1 thousand barrels per day of CA crude via local & main trunk lines from southern San Joaquin Valley – 32.2 percent of total receipts during 2016

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National CBR Movements

Percentage of U.S. Production

Source: Energy Information Administration

1.97 percent of U.S. production as of Aug. 2017. Excludes Canadian import movements.

CBR national movements include oil from U.S. production & Canadian rail imports.

Crude Oil Transportation by Rail Tank Car

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Expanded crude oil pipeline takeaway capacity has allowed oil producers to shift away from more expensive rail transport back to pipeline movements. Domestic oil “discounts” have narrowed.

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Canada CBR Movements

Percentage of U.S. CBR Movements

37.7 percent of national CBR activity consisted of Canadian rail importsas of August 2017.

Canadian Rail Imports vs. U.S. CBR Activity

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Source: Energy Commission analysis of data from the Energy Information Administration.

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Western Canada – Heavy vs. Light

Source: Canadian Association of Petroleum Producers (CAPP).

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90.3 percent growth from heavy oil.

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Canadian Crude Oil Pipelines

Source: Canadian Association of Petroleum Producers (CAPP).

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Existing Pipeline Takeaway Capacity vs. Crude Oil Forecast for Western Canada

Source: Canadian Association of Petroleum Producers (CAPP).

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Future supply growth that exceeds pipeline takeaway capacity would need to be exported via rail tank car.

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Canadian - Pipeline Expansions

Source: Canadian Association of Petroleum Producers (CAPP).

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October 5, 2017 – TransCanada announces termination of project.

Nebraska Public Service Commission to vote of application on November 20, 2017.

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Washington Crude-by-Rail

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Current receipt capability - 318,000 barrels per day (BPD)Projects seeking permits (SP) - 409,000 BPDCancelled projects (CP) - 192,000 BPD

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WA Crude Oil Imports Via Rail Tank Cars

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Source: Washington Department of Ecology.

Washington refiners received approximately 25 percent of their oil via rail last year.Tesoro-Savage project, if approved and constructed, could be used to supply CA refiners with additional quantities of crude oil from Canada and domestic sources.

Rail routes used for year ending September 30, 2017.

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WA Crude Oil Imports Via Rail Tank Cars

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Source: Morningstar Commodities Research – January 5, 2017.

Balance of crude oil delivered to Washington refineries transported via pipelines and marine tankers primarily sourced from Alaska with declining waterborne movements from non-Canadian foreign sources.

Source: Pacific States-British Columbia Oil Spill Task Force 2017 Annual Report.

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California Crude-by-Rail

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2016 CBR volumes 2.345 million barrels or 6.4 thousand barrels per day, only 6.0 percent of capacity.

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Colorado

New Mexico

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Source: CaliforniaEnergy Commission

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Y-T-D CBR numbers up 116 percent compared to 2016 (1,769,587 barrels versus 819,237 barrels).

2017 Y-T-D CBR deliveries averaging 6.5 TBD – less than 0.4 percent of total supply.

CA Crude Oil Imports Via Rail Tank Cars

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Refineries – Historical Changes

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• Initial refining operations date to 1870s

• 1982 – 40 operating refineries• 2.565 MM barrels per day (b/d) capacity

• 61.8 percent utilization rate

• 956 thousand b/d gasoline

• 241 thousand b/d distillates

• 184 thousand b/d jet fuel

• 2016 – 15 operating refineries• 1.884 MM barrels per day (b/d) capacity

• 85.6 percent utilization rate

• 1,007 thousand b/d gasoline

• 360 thousand b/d distillates

• 281 thousand b/d jet fuel

• Increased complexity & higher utilization rates enable even greater fuel output with 62 percent fewer facilities

Source: SCV History.com

Pioneer Oil Refinery – Newhall - Circa 1877

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California Refineries - Overview

• Refineries are a primary hub of logistical activity

• 15 refineries processed 1.644 million barrels per day of crude oil during 2016

• 13 facilities produced California fuels

• Crude oil during 2016 received by• Marine vessels (foreign) – 901.5 TBD

• Marine vessels (Alaska) – 185.4 TBD

• California source via pipelines – 550.8 TBD

• Rail/truck – 6.4 TBD

• Process units operate continuously at or near maximum capacity, except during periods of planned maintenance or unplanned outages

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CARB Compliant Gasoline42.90%

Conventional Gasoline5.19%

Other RBOB0.51%

CARB Diesel13.37%

EPA Diesel3.90%

Other Diesel0.12%

Commercial Jet Fuel13.25%

Military Jet Fuel0.30%

Other Products4.05%

Asphalt & Road Oil 0.74%

Residual Fuel Oil2.41%

Liquified Refinery Gases 2.69%

Still Gas4.30%

Petroleum Coke6.28%

Other20.47%

*Note: Does not include ethanol.

Product Slate of California Refineries (2016)

Source: California Energy Commission

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Refinery Locations – Northern California

Sources: Oil Change International map, Energy Information Administration refinery data, and Energy Commission analysis

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Processed 689.5 thousand barrels per day of crude oil during 2016.

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Burlington Northern Santa Fe

Union Pacific

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Refinery Locations – Southern California

Crude Oil

Processing

Marker Capacity

Number Refinery BPCD

1 Chevron - El Segundo 269,000

2 PBF Energy - Torrance 149,500

3 Phillips 66 - Wilmington 139,000

4 Tesoro - Carson 257,300

5 Tesoro - Wilmington 104,500

6 Valero - Wilmington 85,000

BPCD = Barrels Per Calendar Day

Sources: Oil Change International base map, Energy Information Administration refinery data and California Energy Commission analysis.

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Processed 954.7 thousand barrels per day of crude oil during 2016.

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SF Bay Area Refineries – Crude Oil Properties

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Source: California Energy Commission analysis of PIIRA data

Average crude oil properties for all of the SF Bay Area refineries (combined) has become slightly lighter in density and slightly higher in sulfur content. The higher the API gravity number, the lower the density.

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Refinery Operations - Crude Oil Blending

• As a general practice, refiners blend various types of crude oil together prior to processing in their facility for purposes of maintaining a steady overall quality of crude oil that helps to better control refinery operations and regulation the different ratios and types of transportation fuels produced from one month to the next

• Although the year-to-year variability of the average sulfur and density properties does shift, the degree of change is rather modest when the scale is adjusted to include properties of various types of Canadian crude oil processed in the SF Bay Area

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Canadian Crude Oil Import Properties versus Annual Refinery Variability

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Sources: California Energy Commission analysis of PIIRA and EIA data

A meaningful shift of the average blended properties envelope would be infeasible without significant modifications to existing refineries, absent any deleterious impacts on refined product slate and economics. 2016 data point is denoted by red marker.

No Canadian crude oil imports with API gravity of less than 10. All 2016 imports were lighter than water but some were likely heavy crude blended with diluents.

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CEC Data Collection

• California Energy Commission obtains confidential information from various industry stakeholders on a weekly, monthly, and annual basis

• Reporting is mandatory and involves variety of forms

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Limited crude oil property data

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Crude Oil – Information Sources

• Monthly Energy Information Administration (EIA) Form 810– Only sulfur and API gravity (density) for ALL receipts for month

– Due up to 45 days after the end of each month

• EIA Company Level Foreign Imports– Crude oil imports by CA location – not always accurate

– API gravity & sulfur content by each delivery

– No crude oil “type” or name, just source country

– Due up to 45 days after the end of each month

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Crude Oil – Information Sources

• EIA Monthly Foreign Crude Oil Acquisition Report (EIA-856)– Crude oil “type” from list of crude stream codes

– Vessel name and discharge/load marine terminal

– API gravity data included on form for each cargo

– Sulfur content from stream code list

– Due within 30 days after the end of each month

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Version No.: 20010.01

Page of

EIA ID NUMBER:

Report Period:

Date submitted:

(d) (e) (f) (h) (I) (k) (m) (n) (o) (p)Port Date of Con- Acquisi- Other Landed

Date of of Landing tract/Point tion Price Cost Cost DaysCrude Type Gravity Loading Desti- (YYMM) Code ($/BBLs) ($/BBL) ($/BBL) Credit N

(YYMMDD) nation

Form Approved

MONTHLY FOREIGN CRUDE OIL ACQUISITION REPORT

FORM EIA-856

PART III. TRANSACTIONS

OMB Number: 1905-0174

Expiration Date: 12/31/2012

(l)(c) (j)Volume

Loading

(BBLs)Acquired

Trans-

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ber action

Num- Trans- Crude Code of

(g)

action

(a) (b)

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Page 42: California Refinery Crude Oil Sources and Trends

Crude Oil – Information Sources

• CEC Monthly Import/Export Form 700– Crude oil imports by source, foreign and domestic, marine and rail

– Vessel name and discharge/load marine terminal

– API gravity & sulfur content not included

– No crude oil “type” or name

– Due up to 45 days after the end of each month

• PIERS Proprietary Monthly Import/Export Data– Crude oil imports by foreign source, no domestic movements

– Vessel name and discharge/load marine terminal

– API gravity & sulfur content not included

– No crude oil “type” or name

– Due up to 45 days after the end of each month

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Page 43: California Refinery Crude Oil Sources and Trends

Crude Oil – Information Sources

• California State Lands Commission– Petroleum products & renewable fuels

– Vessel name and discharge/load marine terminal

– API gravity & sulfur content not included for crude oil

– No crude oil “type” or name

– No point of origin data

– Includes both foreign and domestic movements

• Class 1 railroad monthly reports to CEC– Petroleum products & renewable fuels

– Loading state or province & California delivery location

– API gravity & sulfur content not included for crude oil

– Volume provided by individual rail tank car – but not weight of cargo

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Page 44: California Refinery Crude Oil Sources and Trends

2015 2016

Crude Oil Marketing Name Type of Crude Oil Oil Sands Sourced Mined CI Barrels Barrels

Access Western Blend Production is generated by SAGD thermal methods. Blended with condensate. Yes No 16.31 247,794 167,231

Albian Heavy Synthetic (all grades) Partially upgraded dilbit produced from the Scotford Upgrader. Yes Yes 19.90 1,463,238 1,382,106

Boundary Lake Light sour conventional crude. No No 8.27 102,760

Burnaby Blend Blend of conventional and synthetic crudes. Partial Partial 11.98 154,030 342,430

Canadian Conventional Heavy Blend of conventionally produced heavy crudes. No No 9.27 269,969 8,028

Christina Dilbit Blend Diluted bitumen produced at Christina Lake SAGD facility. Mostly No 13.34 71,874

Christina Synbit Synthetic crude. Yes Yes 17.43 61,151

Cold Lake Production is bitumen based and requires the use of steam. Yes No 18.40 3,605,136 3,205,705

Kearl Lake Bitumen is mined by shovel and truck and then undergoes onsite paraffinic froth treatment. Yes Yes 12.05 308,662 1,235,972

Koch Alberta Light sour conventional crude. No No 8.27 63,119

Mixed Sweet Conventionally produced light sweet crude. No No 8.27 1,707,626 320,359

Peace River Sour Conventionally produced light sour stream. No No 8.27 63,807

Shell Synthetic (all grades) Light sweet synthetic crude produced from Shell Canada's Scotford complex. Yes Yes 21.39 199,994

Suncor Synthetic (all grades) Synthetic crude produced from the Suncor Canada Project. Yes Yes 23.71 2,286,703 557,872

Surmont Heavy Blend Heavy sour synbit composed of SAGD production and domestic synthetic crude. Yes Partial 18.26 792,787 895,151

Wabasca Blend of heavy oil production obtained by polymer injection and water flooding. No No 6.79 269,509

Western Canadian Select Blend of conventional and oilsands production. Mostly Partial 18.43 29,942

Canadian Crude Oil - Total Volume 11,438,150 8,374,805

All Crude Oils - Total Volumes 605,749,048 582,101,235

Canadian Crude - Share of Total (Percent) 1.89% 1.44%

Canadian Volume Sourced from Oil Sands (Whole or Part) 9,088,286 7,919,492

Canadian Portion Sourced from Oil Sands (Whole or Part) 79.46% 94.56%

Oil Sands Portion of Total Crude Oil 1.50% 1.36%

Canadian Average Carbon Intensity (CI) 17.30 17.44

Total Average for All Crude Oils (CI) 12.06 12.14

CARB Annual Reporting

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Sources: California Energy Commission analysis of California Air Resources Board (CARB) crude oil carbon intensity data.

Majority of oil imported from Canada was sourced from oil sands formations, transported via marine vessel. Not broken out by receiving facility. Data does not include density of crude oil.

Page 45: California Refinery Crude Oil Sources and Trends

No Advanced Reporting

• California Energy Commission does not receive communications of future crude oil deliveries via marine vessel or rail tank car

• USCG Electronic Notice of Arrival or E-NOA– 96-hour advance arrival submittal

– Only requires a simple description for General Cargo• Insufficient to identify crude oil cargo that consists of heavy or extra heavy crude oil

– Should specific types of crude oils be characterized as Certain Dangerous Cargos and require more detailed descriptions?

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Page 46: California Refinery Crude Oil Sources and Trends

Additional Q & A

11/15/2017 46

Northern Pintail (male), Colusa NWR, Colusa County, CA 12-27-2016.