The fall of fuel oil in the US

Platts ^ | 4/29/2014 | John-Laurent Tronche

[thackney]

Introduction: US residual fuel oil demand recently hit a record-low 154,000 b/d less than a decade after demand was closer to 1 million b/d, according to US government statistics. The precipitous decline is a direct result of refineries looking to maximize production of high-value products such as middle distillates and gasoline and minimize production of low-value products like fuel oil, which typically sells for less than the crude oil used to make it. Rising natural gas production also has lead to a greater reliance on that product for power generation at the expense of fuel oil.

However, there appears to be a floor to how far demand will fall. Demand for natural gas in the US Northeast has outpaced the building of pipelines to move the product, leading to gas curtailments, volatile natural gas prices and utilities taking a second look at fuel oil. New York Harbor fuel oil traded within a $2.50/MMBtu range during the first quarter compared with a nearly $125/MMBtu range for regional natural gas prices (see story and chart). This feature pulls from some of the latest news stories about fuel oil in the US.

April 29, 2014 - US residual fuel oil demand averaged 207,000 b/d in February, the second-lowest demand figure on record despite repeated cold snaps across the Northeast that increased demand for the product, according to Energy Information Administration data published April 29.

The data are monthly figures released with a two-month lag and separate from the EIA's weekly petroleum status report that is typically released on Wednesdays.

The February average marked a 62,000 b/d decline from the January average. The February figure was also down by 97,000 b/d year on year.

The first quarter of the year was marked by several cold weather events that increased demand for fuel oil for use in US Northeast power generation, a sector whose demand for fuel oil has waned since natural gas production has become the preferred source for generation.

Even so, nationwide fuel oil demand in February was the second-lowest figure in statistics available from EIA that date back to 1936. The record-low demand of 196,000 b/d was set in December 2012, data shows.

The reason for the recent decline was a nadir for demand in the West Coast region, which saw demand fall to 78,000 b/d, a new record low. West Coast demand averaged 139,000 b/d over the past five years.

US fuel oil imports rose by more than 80% to 221,000 b/d while exports also jumped to 446,000 b/d, a nine-month high. Exports have been higher than imports for 34 consecutive months.

Fuel oil production fell to 428,000 b/d compared with the five-year average of 537,000 b/d.

Fuel oil days of supply was 177 days, data shows.

[Vinnie]

I think it was the same burner tip because switching from one fuel to the other was a minor change.

[mad_as_he$$]

Here in Northern Nevada there are many oil fired furnaces. Heat pumps don’t work well. #2 off road is WAAAYYY cheaper than propane per BTU. Not so many natural gas delivery systems in the spread out areas.

[thackney]

Thanks.

I don’t think you could buy it that way today. I might be wrong, but I would expect two different sets of burners for two different fuels.

[jughandle]

From a different perspective, after being without utilities due to the storm in the northeast, storage of fuel oil or propane seems more attractive than natural gas which may or may not be available.

[Vinnie]

Still being sold. Check it out.
http://www.powerflame.com/index.php

[thackney]

Thanks for that link, I didn’t realize the capabilities existed for such turndown ratios.

http://data.powerflame.com/support/supportdocs/Catalog/pdf/type-ac/AC-InstallationAddendum.pdf

I was thinking much more simplier units like the burners on stove. Most of those even switching between propane and natural gas require changing the burner, or at least nozzle tips.

Cheers!

[thackney]

Normally here on the Gulf Coast, when hurricanes knock out the power our gas is still available.

Almost all Natural Gas distribution systems get their pressure requirements from the mainline transmission line. They only use regulators to take pressure cuts and do not need compressors to maintain pressure.

The mainline transmission pipelines normally cover large areas and will not lose but one or two stations in the big hurricanes. At the same time, knocking down the electric lines reduces the power demand and actually reduces the Natural Gas demands on the pipelines until the power is restored.

[jughandle]

Yes, the system overall is reliable. I work for a gas utility, we had several local interruptions from damages and water getting into some old low pressure systems. Some we could repair immediately, others took days to weeks. One section had many homes with natural gas backup generators that were useless.
The one major loss was on the coastline where the barrier island’s feeding main was washed out, a few thousand without service for months, at least half of those homes weren’t touched by water and were inhabitable.

[Fledermaus]

Thanks, I couldn’t tell what they were writing about.

[SunkenCiv]

:’) I hope it’s fairly easy, and doesn’t take all year to get going on it. I’d like to change furnaces while it’s still relatively warm, and not be caught with no heat source (oil tank and no gas, but a gas furnace, for example). :’o

[thackney]

Having an assured supply of fuel in when there is major destruction is difficult.

Following Hurricane Ike, our street was about a week without power. By the end of that time, most of the homes on our street were left empty. I and a few others had gasoline generators. But by the fifth day, I was driving over an hour to find fuel then spending another hour in line.

If I buy another generator, it will probably be a Honda Tri-fuel unit (gasoline, propane & nat gas). As for now, I own a lot of 5~6 gallon tanks.

Many people in this area invested in natural gas generators afterwards. Most of our area kept the gas up. That was probably not the case in a few lower areas.

Cheers