U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

Assumptions for Annual Energy Outlook 2014: 

Liquid Fuels Markets Working Group

AEO2014 Liquid Fuels Markets Working Group Meeting

Office of Petroleum, Natural Gas & Biofuels Analysis

July 24, 2013 | Washington, DC

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Discussion topics

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 2

• Imports and exports of petroleum liquids

• Transport network

• Process unit capacity expansion

• Technology assessments of alternative fuels

• Biofuels supply curves

• E15 market penetration options

• E85 pricing and availability assumptions

• RFS and LCFS
Imports and exports of petroleum liquids 

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 3

• Petroleum product imports and exports will be endogenously 

determined

– Initial import/export supply/demand curves will be supplied to LFMM by the 

International Energy Module (IEM)

– Only 1 international supply region is represented. This may be expanded in the 

future.

• Crude export representation will be added

– Dynamic functionality will be activated only for a side case

– Exogenous assumptions will be made to reflect current reality
Transport network

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 4

• Crude and product transport between supply, refining, and 

consumption regions

• Ongoing effort to improve the transport network for crude and 

products (anticipated but not guaranteed for AEO2014)

– Crude

• Bakken

• Canadian

– Updating transport network data to include recent and upcoming projects

• Pipelines

• Marine vessels

• Rail
Process unit capacity expansion

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 5

• Apply technological optimism and learn-by-doing to a wider 

set of new technologies 

– New: coal to liquids, gas to liquids

– Continued: cellulosic ethanol, biomass to liquids, pyrolysis oils

• Better represent capacity expansion for technologies starting 

with low or no capacity

– Allow initial growth potential to continue until a specified number of units are 

built
Technology assessment of alternative fuels

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 6

Technology updates

• Using Fischer-Tropsch

data

– Gas-to-liquids (GTL)

– Coal-to-liquids (CTL)

– Biomass-to-liquids 

(BTL)

• Using data from 

demonstration facility

– Biomass pyrolysis

Financial Parameters

Cost of capital 13.5%

Economic life of plant 15 years

Debt to capital ratio 40 %

Technology Parameters

Plant Capacity Technology dependent –

Expert opinion

Plant location for 

base unit

Gulf coast (LFMM region 4)

Learning and scaling Engineering design approach 

and historical data

Development stage 

for inclusion in Tech 

assessment

Successful completion of the 

demonstration plant
Biofuels supply curves

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 7

• Update Brazilian sugarcane ethanol supply curves

• Update domestic feedstock supply curves

– Updated to USDA 2013 baseline

• soy bean oil

• corn

– Updated based on historical data compiled by USDA Marketing Service

• Yellow grease, white grease
E15 market penetration options

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 8

• At a minimum, establish a less optimistic projection

– Allow a maximum penetration of 50% of motor gasoline pool by 2030 (versus 

by 2020 in AEO2013)

• Consider zero E15 over the projection period

– based on current automobile warranty issues
E85 pricing and availability assumptions

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 9

• Relationship between E85 pricing and consumer demand 

must be robust under various scenarios

• Consumer choice function will be updated to represent latest 

findings (in Transportation module)

• Growth in E85 provides the opportunity for growth in 

advanced and cellulosic ethanol

• Seeking input on year-on-year maximum growth in the 

number of E85 stations (driven by consumer demand) under 

different market conditions
RFS and LCFS

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change 10

• LFMM results for the national RFS and the California LCFS will likely 

not meet original targets

• E85 demand, biofuels technology assessments, and biofuels 

feedstock supply will drive the ability to meet RFS and LCFS. 

AEO2014 will likely have more biofuels than AEO2013.

• EIA is in the process of updating RFS-related and LCFS-related 

parameters without specific statutory guidance

• Current challenges are:

– modeling EPA decisions which are given flexibility in the RFS statute

• yearly waivers for Cellulosic, Advanced, and Total volume targets

• multi-year re-set of target volumes

– modeling expected flexibility in the California LCFS
Contacts

11

John Powell: john.powell@eia.gov

Beth May: elizabeth.may@eia.gov

Michael Cole: michael.cole@eia.gov

Adrian Geagla: adrian.geagla@eia.gov

Irene Olson: irene.olson@eia.gov

Next Working Group Meeting

Planned for October 17, 2013.

Will present preliminary AEO2014 results.

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change
For more information

12

Office of Petroleum, Natural Gas, & Biofuels Analysis Working Group Presentation for Discussion Purposes 

Washington DC, July 24, 2013 DO NOT QUOTE OR CITE as results are subject to change

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