P. 1 

# OAR Box 1669 Prepped by Charmelle Mathews



### Document

Number: 

# jd) 11-1- 2 Docket Number: 

# A-98-1 3

Printed 9/23/2008 9:36:49 AM

Sheet 94 of 110P. 2

m e u._> . reuoicu m_v.cniiin g an u uasonn e iviarKeung : ^>ag £ 1 o t 1 4 

# ei a Th e U.S . Petroleu m Refinin g

an d Gasolin e Marketin g Industry :

- 1 - / J / 

### MA R - 6 2C0 I EP A AI R DOCKE T Updat e o f Selecte d Table s an

d Figure s Availabl e 

## Overview o f Domesti c Petroleu m Refinin g an d Marketin g The U.S . refining and marketing industr y ha s bee n characterize d b

y unusually low produc t

margins , lo w profitability , selectiv e retrenchment , an d substantia

l restructurin g throughou

t th e decad e ofth e 1990's . Cost s involve d in complying wit h environmenta

l law s hav e grown substantially durin g th e perio d an d hav e als o affecte

d th e profitabilit

y ofth e domesti c industry . (Not e 1 ) Profitabilit

y (measure d by rate o f

retur n on investment

) fro mth e refining operation s of domesti c petroleum companie s ha s varie d widely , eve n befor e the 1990' s (Figur

e 1) . Consequently , refiners ' abilitie s t o recou p thei r investmen

t hav e bee n impaired . However , th e profitabilit

y o f U.S . refining an

d marketin g durin g 1997 wa s th e highes t sinc e 1989 , whe n th e retur n o n investmen

t fromthes e operation s las t

exceede d 1 0 percen

t (Figur e 1) . Refiner s wer e abl e t o achiev e their

high level of

profitabilit

y partly becaus e of

event s of 199 7 (suc h a s lowe r energy costs ) and partly becaus e of efforts an d development s ove

r th e las t severa l year s (such a s lowe r marketin g costs) . (Cost-cuttin g through anumbe r o f downstrea mmergers , a s well a s th e formation o f

anumbe r o f downstrea malliance s an

d join t ventures , als o underli e th e curren t profitabilit y in downstrea

moperations . Fo

r amor e extensiv e discussio n of

thes e developments , se e th e sectio n entitle d "Recen

t Structura l Change s in U.S . Refining : Joint Ventures , Mergers , an

d Mega

Mergers." ) Th e experienc e ofth e majors illustrate s financial development s i n U.S . refinin g and marketing . Th e averag e pric e receive d b

y th e U.S . majors fo

r refined petroleu mproduct s fel l b y 4 percen t betwee n 199 6 an d 1997 . Motor

gasoline price s registere d asligh t 1-percen t decline,-wit

h mos t ofth e overall refined product s pric e decline attributabl e to othe r products . (Not

e 2 ) Thi s patter

n o f pric e chang e reflecte d th e relatively greate r growt h in deman

d fo r transpor t fuels , du e t o generall

y strong economi c growth , an d adro p i n deman

d fo r heatin g fuels , du e to mil d winter weathe r i n 1997 . (Not

e 3 ) I n total , th e U.S . majors mor e tha n survived thes e pric e reduction s and th e resultin g reductio n in thei r revenue s a s their

cost s of purchase d material s an

d product s (mainly crude oi l costs ) fel l b y mor e tha n th e overall declin e in refine d produc t prices . Consequently , gros s margin s (refine d produc t revenue s les s ra w materia l an d produc t purchase s divide d b y refined produc t sale s volume ) wer

e substantially highe r i n 1997 tha n in 199 6 an

d wer e th e highes t

sinc e 199 2 (afte

r adjustin g fo

r inflation) . (Not

e 4 ) Although gros s margin s wer e a t their highes t level sinc e 1992 , th e primar y reaso n tha

t net refined produc t margin s (petroleu

mproduc t revenue s minu s all out-of-pocke t refinin g an

d marketin g expense s divide d by refined produc t sale s volume ) wer

e s o hig h durin g 199 7 wa s tha t majors als o reduce d their

operatin g cost s b y 6 percen t between 199 6 an d 1997 . Thi s reductio n wa s par t o f a longer-ter mtrend . All categorie s of

operatin g cost s (suc

h a s marketing , energy , an

d othe r cost s t o operat e refineries ) hav e bee

n reduce d sinc e 1990 , astated goa l ofth e U.S . majors fo

r severa l year s includin g 1997 . (Not

e 5 ) http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 /F"\3 _

-IIK, «^._> . i v-uwi^ui n iv^imin g cui u vjasuna c MaiK.ei.ing : Fag e Z u t 1 4 Marketin g cost s wer

e reduced b

y 2 8 percen

t betwee n 1990 an d 1997 an d b y 5 percen t durin g 1997 (Tabl e 1) . Th

e reductio n i

n marketing cost s i s partially du e to man y ofth e U.S . majors divestin g themselve s o

f their credit car d operation s an

d undertaking othe

r cos t reductio n efforts durin g the 1990's . (Not

e 6 ) Additionally , th e U.S . major s reduced their

numbe r of branded outlet s b y 3 4 percen t ove r th e sam e perio d o f time , becoming mor

e regiona l i n their approach t

o marketing , amov e tha

t le d t o reduce d expenses . Th e U.S . majors reduced energy cost s b y 2 4 percen t betwee n 199 0 an d 199 7 an d by almos t

6 percen t betwee n 199 6 an d 1997 . Man

y o f thes e ar e utilizin g cogeneratio n to provid e a t leas t som e o f their electricit y needs . (Not

e 7 ) Thus , although th

e gros s refined produc t

margi n fel l by 2 1 percen

t betwee n 1990 an d 1997 , th e net

refined produc t

margi n increased by almos t

1 percen t ove r th e sam e perio d becaus e ofth e substantia

l reductio n in cost s (Table 1) . (Not e 8 ) I n total , th e U.S . majors ' refined produc t margi n increase d b y almos t

7 0 percen t between 199 6 an

d 1997 . Although th e refined produc t margin increased fo

r all group s of

U.S . majors (ranke d b y th e siz e o f tota l energy assets) , th e larges t U.S . majors led wit

h a n increas e o f

10 8 percent . The grou

p o f smalles t companie s closely followed th e grou p of larges t companie s wit

h a n increas e of

7 6 percent . Trailin g wa s the grou

p o f mid-size d companies , which ha d a n increas e o f

3 3 percent . (Not

e 9 ) 

## Upgradin g Capacity : Sophisticate d Refiner s

Ma y Bu y Low , Sel l Hig h Startin g in th e lat

e 1970' s an

d continuin g t o th e present , th e U.S . majors hav e investe d heavily i n their refinerie s i

n orde r to utiliz e heavier , mor

e sulfurou s crude oil s a s inputs . Ove r th e sam e period , th e U.S . majors hav e investe d i n upgradin g their

refinerie s to produc e greate r proportion s o f

lighter , highe r value d products , particularly motor gasoline (Tabl e 2) . Th e actua l return s to thes e investment s depend no t

onl y o n th e level s o f

input an d produc t prices , but

als o ca n b e strongl

y affecte d b y th e difference s in price s o f

light an d heavy petroleumproduct s an d hig h an d lo w qualit

y crude oils . A refiner y wit h alarg e capita

l investmen

t directe d towar

d processin g lowe

r qualit y crud e oil s wil l d

o bette r financially tha

n les s versatil e refinerie s whe n th e differenc e i n pric e between high qualit y crud e oil s an d lo w qualit

y crud e oil s i s large . Similarly , arefiner y tha t ha s bee n upgrade d t o produc e a large r yiel d of ligh t product s wil l do bette

r tha n ales s sophisticate d refinerx_whe n th e differenc e betwee n lighte r product s (e.g. , motor

gasoline ) an

d heavie r product s (e.g. , residua

l fue l oil ) i s large . Par t ofth e reason fo

r th e uptick i n profitabilit

y i n 199 7 appear s grounded i n th e refiner y upgrade s tha t th e U.S . major

s hav e made . The upgrade s hav e increasingly enabled th e U.S . major s t o proces s relativel y lowe

r qualit y crude oil . I n 199 6 an

d 1997 , th e sprea

d between hig h qualit

y and lo w qualit

y crud e oil increased , reversin g aprio r five-year trend (Figur

e 2) , amov e tha

t generally favored th e majors ' typically upgraded refinery . Th e upgrade s als o resulte d i n proportionately mor e valuabl e light

product s a s well a s greate

r quantitie s throug

h the additio n o f

downstrea mprocessin g unit s suc h a s catalyti c crackin g an d catalyti c reformin

g units . (Not

e 10 ) The differenc e between th e sellin g pric e fo r ligh t product s an

d th e sellin g pric e fo

r heavie r product s (Not

e 11 ) ha s increase d ove

r th e pas t fe w year s afte

r narrowin g durin g th e earl

y 1990' s (Figur

e 3) . (Not e 12 ) The increas e i n qualit

y pric e spread s from199 5 t o 199 7 ha s favore d upgrade d refinerie s an

d contribute d to th e recen

t upswin g in th e profitabilit

y ofth e U.S . majors ' U.S . refining/marketing operations . Furthe r impetu s to upgrad

e th e refinerie s ofth e U.S . major s ha s bee n provide d b y th e creatio n o f join t venture s wit

h severa l non-U.S . producer s o f

crude oil . Venezuela' s Petroleo s de Venezuela , S.A . htt p ://www . eia . doe.gov/emeu/finance/usi&to/downstream / 12/ 1 /0 0P. 4

i*h e u._> . mroleu mKennin

g an d (iasolin e Marketing : Pag e 3 o f 1 4 (PdVSA) , Mexico' s PEMEX , (Not e 13 ) and , mor

e recently , Norway' s Statoi l (Not e 14 ) have allie d themselve s wit

h U.S . refiners . Fo

r example , Coasta

l Corporatio n an

d PdVS A forme

d ajoin t ventur e to operat e Coastal' s Corpu s Christ

i refinery . (Not

e 15 ) Th e refiner y wil l proces s heav

y crud e produce d in Venezuel ab

y th e join t venture . (Not

e 16) Similarly , Phillip s Petroleu mplan s to construc t a58,000-barrels-per-da

y (b/d) coke

r uni t an d relate d facilitie s i

n Venezuel ato allo w heavy , sou r Venezuela

n crud e t o b e upgraded (i.e. , transforme d int o lighte r crude oil) . I

n additio n t

o makin g along-ter magreemen

t t o provid e crud e oi l t o the refinery , i

n som e case s crud

e oil producer s hav e provide d aportio n ofth e fundin g fo r refiner y upgrade s needed t

o enhanc e the refiner' s abilit y to manufactur

e ligh t petroleu mproducts . (Not

e 17 ) (See the sectio n "Recen t Structura l Change s i

n U.S . Refining : Joint

Ventures , Mergers , an

d Mega-Mergers " fo

r amor e extensiv e discussio n ofth e recen t wid e us e o f

join t venture s in U.S . petroleumrefining. ) Domesti c refiner

y capacit y ha s als o expande d through conventiona l project s (e.g. , adding acatalyti c crackin g unit) an

d throug h debottleneckin g (Not

e 18 ) investments , whic h ar e margina l investment s tha t increas e throughput

an d thereb y effectivel

y creat e additiona

l refinin g capacit

y fromth e sam

e physica l structure . Th

e additiona l capacit y gained through debottleneckin g i s termed "capacit y creep. " (Not

e 19 ) Tota l U.S . crud e oil distillatio n capacit

y ha s increase d substantially sinc e 199 0 (b y mor e tha n 340,00 0 b/d) a s aresult

o f bot h conventiona

l investment s and debottlenecking investments . Thi s capacit

y expansio n wa s achieved eve n wit h th e closin g of

4 1 refinerie s wit

h mor e tha n 1. 1 millio n b/

d of crud e distillatio n capacit

y (Table 3) . A s aresult , capacit y pe r operating refiner y increase d b y 2 8 percen

t (to 97,06 0 b/d ) ove

r th e 199 0 to 199 8 period . 

## Environmenta l Issue s an d Cost s Refining investmen

t in recen t year s ha s been driven largely b y th e environmenta l requirement s ofth e Clea n Air Ac t Amendments o f

199 0 (CAAA90) . The CAAA9 0 require d aphased reductio n i n vehicl e emission s o f

regulate d pollutants , met

primarily throug h th e us e o f reformulated gasoline . Phas e 1 o f

CAAA9 0 required refiner s to produc e oxygenate d gasolin e b y Novembe r of 1992 . Low

sulfu r diese l fue l wa s require d b y Octobe

r 1993 . B y Januar

y 1,1995 , reformulate d gasolin e ha d t o b e available . Thus , consistentl

y through th e first

hal f of th e 1990's , domesti c refiner s wer e face d wit h deadline s fo

r ne w product s requirin g ne w capita l investment . Sinc e reachin g adecad

e pea k i n 199 2 o f

$5. 2 billion , domesti c refinin g capita l expenditure s b y th e majo r U.S . oi l companie s hav e falle n a n averag e o f

1 5 percen t pe r year , reaching th e decade' s lo w poin t i n 199 6 a t $2. 1 billion . Correspondingly , investmen t relate d to pollutio n abatemen t als o peake d i n 199 2 an d ha s sinc e declined , accordin g t o information fromth e America n Petroleu mInstitute . (Not e 20 ) Nonetheless , complianc e wit h environmenta

l regulation s wil l mos t

likel y continu e to affec

t domesti c refiners . On

e recen t environmenta

l restrictio n affectin

g th e U.S . downstrea

mpetroleumindustr

y wa s th e Decembe

r 22,199 8 deadline fo

r upgradin g o

r replacin g undergroun d storag e tank s installe d a t marketin g outlet s prio r

to Decembe

r 22,1988 . (Not

e 21 ) Althoug h th e Environmenta l Protectio n Agenc y (EPA ) issued the regulatio n in 1989 , a n estimate d 20,00 0 outlet s (Not e 22 ) (abou

t 1 1 percent o f tota l U.S . outlet s according t o th e lates t National Petroleum News survey (Not e 23) ) ha d no t complete d th e necessar

y wor k b y th e Decembe

r 22,199 8 deadline . A grac e perio d announced b y EP A jus t prio r to th e deadline ha s le d t o criticis mb y some trad e association s an d create d uncertaint

y concernin g th e en

d ofth e grac e perio d a s well a s what , i f any , penaltie s will b e assesse d fo r non compliance . (Not

e 24 ) Tw o othe r significan t environmenta

l consideration s facing U.S . refiner s ar e Phas e 2 CAAA9 0 reformulate d moto

r gasoline (RFG) requirement s an d th e growing publi c oppositio n t o th e us e o f methy l tertiar

y butyl ethe

r (MTBE) . I

n orde r t o mee t Phas e 2 RF

G requirement s U.S . refiner s will incu r numerou s expense s an

d mak e substantia

l investmen

t (se e "Deman

d an d Pric e Outlook

fo r http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/0 0E_5 _ i n e u.o . reiroieu mKennin g an auasonn e iviarKeting : r*ag e 4 o i 1 4 Phas e 2 Reformulated Gasoline , 2000 " fo r amor e extensiv e discussio n ofth e effects of thes e requirements) . MTB E i s a

n additiv e tha

t increase s the oxyge

n conten t o f moto r gasoline , causin g mor

e complet e combustio n ofth e fue

l an d les s pollution . A relativel y inexpensiv e wa

y fo r petroleumrefiner s t

o mee t Phas e 1 CAAA9 0 RFG requirement s wa s to blend MTB E int o th e moto r gasoline . Sinc e late Marc h 1999 California' s governo

r ha s calle d fo

r a3-yea r phase-in of

aba n o n the us e of

MTB E (Not

e 25 ) an d U.S . representative s an

d senator s fromCaliforni aan d New Jerse

y hav e propose d simila

r Federa l legislatio n (Not

e 26) . I f MTB E wer

e banne d i n Californi aan

d othe r states , th e effects coul d b e widesprea d an d highl y variable . For

example , Californi amoto

r gasoline price s coul d increas e substantially a s mor

e costly alternative s t

o MTB E ar

e utilized , which a

t leas t initiall y will b e importe d fromother

region s ofth e Unite d States , exposing Californi at o productio n an

d pric e variabilit y fro mthos e region s (Not

e 27) . Anothe r interestin g developmen

t relate d to the environmen

t i s th e announcemen

t of tw o partnership s betwee n majo r U.S . oil companie s an

d U.S . aut o manufacturer s to ".. . develop cleane r an d mor e efficien t fuels. " (Not

e 28 ) Th e partnership s will focu s on improve d conventiona l fuel s in additio n to alternat e fuel s such a s fue

l cell s an d natura l gas . 

## Recen t Structura l Change s i n U.S . Refining : Join t Ventures , Mergers , an d Mega-Merger s Join t venture s ar

e one ofth e mechanism s tha t th e majo r U.S . oi l companie s (U.S . majors ) hav e use d to consolidat

e their downstrea m(Not e 29 ) petroleu

moperations . Suc

h deal s ma y provide thes e companie s wit

h awa y of reducin g their

cost s by sharin g asset s an

d operation s without

som e ofth e problem s of

afull-scale merge

r ofth e tw o companie s involved . (In additio n to formin g downstrea

m join t venture s an

d alliance s in th e Unite d States , som e ofth e U.S . majors als o ar e formin g alliance s abroad . (Not

e 30 ) The larges t

of recently complete d domesti c join t venture s combine s the U.S . refinin g an d marketin g asset s of Texaco , Sta

r Enterpris e ( ajoin t

ventur e betwee n Texac o an

d Aramco , th e Saud

i Arabia n stat e oi l company) , an

d Shell Oil (the U.S . subsidiar y of Roya l Dutch/Shell) . Th e join t

ventur e wa s announced i

n lat e 199 6 an d resulte d in th e creatio n of tw o companies , Equilo n Enterprise s L.L.C . an d Motiv aEnterprise s L.L.C . (i n Januar y an d May , 1998 , respectively) . Equilo n consist s ofth e companies ' wester

n an d midwester

n U.S . operation s a s well a s their nationwide trading , transportation , an

d lubricant s businesses . (Not e 31 ) Par t ofth e consen

t agreemen t wit h th e U.S . Federa l Trad e Commission reduce d Equilon' s assets . (Not e 32 ) I n particular , Texac o agree d to sell 60 retai l outlet s in souther

n Californi aand Hawai

i (Not e 33 ) and Shell Oi

l agree d t o sell it s Anacortes , Washington refiner

y (108,20 0 barrel s pe

r da y (b/d ) capacity) . (Not

e 34 ) Motiv aconsist s ofth e companies ' easter

n an d Gulf Coas t U.S . operation s (wit

h th e exceptio n of

Shell' s Dee

r Park , Texa s refinery , which als o i s operate d a s ajoin t ventur e betwee n Shell Oil an

d th e stat e oi l compan

y o f Mexico , Petroleo s Mexicanos) . The resultin g venture s ha s combine d asset s wit h abook valu e o f approximatel

y $1 0 billion . Equilo n ha s 7 refinerie s wit

h atota l crude oi l distillatio n capacit y o f approximately 846,00 0 b/

d an d slightly mor e tha n 9,00 0 retai l outlet s in 3 2 states . Motiv aha s 4 refinerie s wit h atota l crude oi l distillatio n capacit y o f 819,000 b/

d an d almos t 14,00 0 retai l outlet s in 2 7 states . (Not e 35 ) Overall , th e Texaco

Star-Shell allianc e i s anticipate d to reduc e th e aggregat e operatin g cost s ofth e companie s b y $80 0 millio n annually . (Not

e 36 ) A s of Januar y 1,1998 , USX-Marathon Group , asubsidiar y ofth e US X Corporation , an d Ashland Oil , a n affiliat e o f Ashlan d Inc. , merge d their

downstrea masset s int

o ajoin t ventur e (calle d Maratho n http://www.eia.doe.gOv/emeu/finance/usi_J:to/downstream / 12/1/00 /-JP. 6

in c u._> . reiroieui n Kennin g an auasonn e Marketing : Pag e 5 o f 1 4 Ashlan d Petroleu mL.L.C) . USX-Maratho n Grou p i s operatin g th e join t ventur e an d i s th e majority partne r with acontrollin g interes t o f 6 2 percent . (Not e 37 ) Th e ventur e ha s acombine d refinin g capacit y o f

924,30 0 b/ d (Not e 38 ) an d mor e tha n 3,00 0 retai l outlets . (Not e 39 ) Th e join t ventur e i s anticipate d t o resul t

i n saving s o f

$20 0 millio n annuall y i n operatin g costs . Othe r join t venture s ar e mor e limite d i n thei r scope , involvin g asingl e refiner y with eac h partne r havin g a50-percen t

shar e ofth e venture . A s with th e large r ventures , the y to o ar e aime d at reducin g cost s eithe r

throug h reducin g o r

eliminatin g redundancies , reducin g logistica l costs , o r reducin g unuse d capacity . Amerad aHes s an d Petroleo s d e Venezuela , S.A . (PdVSA) , th e stat e oi l compan y o f Venezuela , forme d arefinery join t

ventur e i n 1998 . Hes s provide d it s St . Croix , Virgi n Island s 495,00 0 b/ d refinery , (Not e 40 ) receivin g $62. 5 millio n i n cas h an d a10-yea r not e i n th e amoun t

o f $562. 5 million . A delaye d cokin g uni t wil l b e constructe d a t

th e refinery . Th e resultin g join t ventur e company , Hovens aL.L.C , signe d along-ter msuppl y contrac t wit h PdVS A unde r

whic h i t wil l receiv e 155,00 0 b/ d o f

Venezuela n crud e with anothe r 115,00 0 b/ d o f

heav y Venezuela n crud e after th e delaye d cokin g uni t

i s completed . (Not e 41 ) Mobi l an d Citg o (th e wholly-owne d U.S . affiliate o f PdVSA ) forme d ajoin t

ventur e durin g 199 7 t o operat e Mobil' s Chalmette , Louisian arefiner y beginnin g i n 1998 . Mobi l contribute d th e 159,00 0 b/ d refinery (Not e 42 ) an d PdVS A wil l contribut e at leas t par t ofth e crud e oi l processe d at th e refinery . (Not e 43 ) Alon g th e sam e lines , i n lat e 199 8 Phillip s Petroleu man d PdVS A finalize d arefiner y join t ventur e involvin g Phillips ' 200,00 0 b/ d Sweeny , Texa s refinery . (Not e 44 ) Phillip s an d PdVS A wil l eac h ow n 5 0 percen t

o f a$450-million , 58,00 0 b/d cokin g uni t schedule d t o b e operationa l b y th e en d o f 2000 . Th e uni t upgrade s th e refinery' s ability t o proces s heav y crud e oil . (Not e 45 ) Additionally , PdVS A wil l suppl y a s muc h a s 165,00 0 b/ d o f heav y Venezuela n crud e oi l fo r processin g a

t th e refinery . Wit h th e announcemen t

o f tw o mega-mergers , th e year 199 8 wa s on e ofth e mor e eventfu l year s i n U.S . petroleu mhistory . Th e first was th e acquisitio n ofth e U.S.-base d Amoc o Corporatio n b y th e UK-base d Britis h Petroleum , resultin g i n th e creatio n o f B P Amoc o p.l.c , a t

th e tim e th e second

larges t oi l compan y i n th e worl d behin d Roya l Dutch/Shell . However , i f th e secon d merger , Exxon' s acquisitio n o f

th e Mobi l Corporatio n (both U.S.-base d companies) , i s approve d b y regulator y authorities , i t

wil l resul t

i n th e creatio n o f

world' s larges t

oi l company . Th e merge r

o f B P an d Amoc o wa s approve d o n Decembe r 30,199 8 b y th e U.S . Federa l Trade d Commission , subjec t

t o aconsen t

agreement . Th e consen t

agreemen t

require d th e sal e o f

9 terminal s an d 13 4 retai l outlets , mostl y i n th e southeaster n Unite d States , an d guarantee d 1,600 independen t brande d outlet s th e opportunit y t o chang e brand s shoul d the y wish . B P stockholders receive d ownershi p o f

6 0 percen t

ofth e resultin g company , B P Amoc o p.l.c . (Not e 46 ) Th e tw o companie s produce d atota l o f

1.8 9 millio n barrel s o f

crud e oi l an d natura l ga s liquid s ( 3 percen t o f worl d productio n (Not e 47) ) an d 5.6 6 billio n cubi c feet o f natura l ga s ( 7 percen t

o f worl d productio n (Not e 48) ) pe r day durin g 1997 . Als o durin g 199 7 th e mergin g companie s sol d 4. 5 millio n barrel s pe r da y o f petroleu mproduct s throug h 27,20 0 outlet s worldwid e (15,96 0 o f whic h wer e i n th e Unite d State s an d constitute d 9 percen t

o f al l domesti c moto r

gasolin e retai l outlet s (Not e 49)) . Th e companie s reporte d combine d revenue s o f $10 8 billio n an d ne t

incom e o f

$7. 3 billio n fromasset s value d a t $5 3 billion . (Not e 50 ) O n Decembe r

1,1998 , Exxo n announce d tha t i t ha d signe d amerge r

agreemen t

wit h Mobi l tha t woul d creat e th e world' s larges t oi l compan y wit h $8 0 billio n o f assets . Th e tw o companie s ha d join t revenue s o f

$203. 1 billio n durin g 1997 , resultin g i n ne t incom e o f

$11. 8 billion . Th e companie s ha d worldwid e crud e oi l an d natura l ga s liquid s productio n o f 2. 5 millio n barrel s (Not e 51 ) ( 3 percen t o f worl d productio n (Not e 52) ) an d 10. 9 billio n cubi c fee t o f natura l ga s productio n pe r da y (1 4 percen t o f worl d productio n (Not e 53)) . Als o durin g 199 7 th e tw o companie s sol d 8. 7 millio n barrel s pe r da y http://wvvw.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/0 0 £^F_7 _ 1 h e U.S . Petroleu

mRetinin g an

d Gasoline Marketing : Page 6 oi ' 1 4

of petroleumproduct s through 48,50 0 moto r gasoline retai l outlet s (15,90 0 o f which wer

e i n the Unite d State s an

d amounted t

o 9 percen t o f al l domestic moto

r gasolin e retai l outlet s (Not e 54)) . I n addition , during 1997 an

d 199 8 substantia

l mergers hav e occurre d betwee n independen

t refiner s an d marketer s i

n th e United States , an

d th e resulting companie s als o appea r t o b e intereste d i

n pursuin g join t

ventures . Fo

r example , i

n Octobe r 199 8 the independen

t refiner/markete

r Ultrama r Diamond Shamroc

k (UDS) , which acquired Tota l Petroleu mNort h Americ ain 199

7 (including 3 refinerie s an

d mor e tha n 2,10 0 marketin g outlets) , announced ajoin t ventur e wit h Phillip s Petroleum . (Not e 55 ) However , the ventur

e wa s abandoned i

n Marc h 199 9 whe

n th e firms could no t

reac h agreemen t o n th e final terms . (Not

e 56 ) Thi s effor

t represente d Phillips ' second unsuccessfu l attempt t o for madownstrea

mjoin t venture . I n 1996 , Phillips ' attemp t t o for madownstrea

mjoin t ventur e wit h DuPont/Conoc o wa s thwarted , a s th e companie s wer e unabl e to agree on th e valu e ofth e asset s eac h woul d contribut

e t o th e venture . (Not

e 57 ) Thus , a s th e 1990' s dra

w t o aclose , distinction s i

n downstrea

mpetroleumoperation s betwee n th e majors an d th e independent s ar

e substantiall

y les s tha n a t th e outset ofth e decade . (See th e sectio n "U.S . Downstrea

mIndependent s Acquir

e Nationa l Prominence " fo

r mor e extensiv e discussio n ofth e reduce d difference s betwee n th e U.S . majors an

d independen

t refiners. ) 

## Consolidatio n o

f Marketin g Operation s Gasoline marketing i

n the Unite d State s ha s undergon e dramati c change s ove

r th e pas t 1 5 years . Th

e majo r U.S . oil companie s hav e refocused thei r marketing operations , narrowing their focu s to thos e region s i n which they hav e ha

d th e mos t success , i.e. , th e greates t

profitabilit

y o r th e greates t

marke t share . Th e averag e decline i

n state s o f operatio n pe

r majo r oi l compan

y wa s from3 2 state s in 198 4 t o 2 3 state s in 1997 , adecline o f

2 8 percent . However , thi s decline i s onl y par t ofth e consolidatio n story , a s th e majors als o hav e substantially fewe r brande d outlets . The majors ' brande d outlet s declined from92,344 i

n 198 4 to 33,75 3 i

n 1997 , a63-percen

t decline . (Not

e 58 ) Th e 5-percen t averag e annua

l decline in th e numbe

r ofth e majors ' branded outlet s between 199 1 an d 1997 wa s muc

h greate r tha n th e 2-percen

t averag e annua

l declin e in th e tota

l numbe r of U.S . gasolin e station s (regardles s of ownership ) betwee

n 199 1 an d 1997 . (Not

e 59 ) I n othe

r words , a s aresult

of consolidatin g an

d refocusing their

gasoline marketin g efforts , the majors hav e close d gasolin e station s a t arat e mor e tha n twic e a s fas

t a s th e nationa

l average . •*•* • I n contras t to the majors , foreign-owned an d independen

t refinin g and marketin g companie s hav e expande d thei

r scop e o f operations , eithe

r throug h th e acquisitio n o f

refineries , outlets , or

both . For example , Citgo , awholly-owne d subsidiar y ofth e Venezuela

n stat e oi l compan

y PdVSA , ha s expanded it s operation s from3 1 state s in 1984 , jus t prior t o it s 198 6 acquisitio n by PdVSA , t o 4 8 state s i n 1997 , a

n increas e o f

5 5 percent . Similarly , th e Connecticut-base d Tosc o ha s gone fromretai l operation s i n n o state s in 199 0 (the y onl y ha d wholesal e operations ) to 3 7 state s in 1997 . (Not e 60 ) (Se e th e sectio n "U.S . Downstrea mIndependent s Acquir

e Nationa l Prominence " fo

r amor e extensiv e discussio n ofth e expansio n o f foreign-owned an

d independen

t U.S . refiner s durin g th e 1990's. ) 

## U.S . Downstrea m Independent s Acquir e Nationa l Prominenc e i n th e 1990' s Significan t Redistributio n o f Refinin g Asset s http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 A ,P. 8

Ih e U.S . Petroleu mKetining an d Gasoline Marketing : Pag e 7 o f 1 4 Du e to along perio d o

f lo w profitabilit

y i n th e refining/marketing lin e o f business , th

e U.S . majors bega n aproces s durin g th e 1990' s o f selectiv e refining/marketing divestiture . I n 1990 , the U.S . majors (includin g thei

r join t ventures ) held 7 2 percen

t o f U.S . refining capacity . Th

e independen

t refiner/marketer s who pursue d acquisitio n growt h strategie s i

n th e 1990' s (the "fast-growin g independen

t refiners" ) the

n hel d onl y 8 percen t o f domesti c capacity , wit

h 2 0 percen

t being held b

y all othe r refiners . B y Octobe

r 1998 , the U.S . majors ' shar e of domesti c crud

e distillatio n capacit

y ha d falle n to 5 4 percen t

(60 percen

t including their

joint ventures) , an

d th e fast-growing independen t refiner s ha d earne d their

nam e by increasing their

shar e to 2 3 percent , a

n almos t threefold increase . The remainin g capacit

y (1 8 percent

) i s stil l hel d b

y al l othe r refiner s (Figur

e 4) . The majors ' divestiture s of

downstrea masset s created opportunitie s fo r smaller , independen

t U.S . refiner/marketer s t o acquir

e domesti c refinerie s an

d petroleummarketin g outlet s an d to mov e int o market area s formerly dominate d b y th e U.S . majors . (Fo

r th e purpose s ofthi s discussion , a n independen

t refiner/markete

r i s on e tha t ha s n o significan

t crud e oi l production. ) Th e first independen

t to acquir e arefiner y from aU.S . majo

r wa s Tosc o Corporation , wh o acquire d Exxon' s 200,00 0 b/

d Bayway , Ne

w Jerse y refiner y in Apri l 1993 . (Not

e 61 ) Severa

l othe r independent s subsequently pursued asimila r acquisitio n an

d growt h strategy . A s aresult , alarg e amoun t ofth e U.S . majors ' refinin

g an d marketing asset s changed hand s i n th e 1990's . A n examinatio n ofth e dataindicat e tha t the U.S . major s hav e adde d som e capacit y to the refinerie s tha t they retained , an

d othe r capacit y gain s hav e bee

n mad e by th e sam

e independen

t refiner/marketer s wh

o undertook

agrowt h strategy i n th e 1990's . Among independen t refiners , growt h ha s bee n largely concentrate d i n th e following grou p of companies : Citgo/PD V America , Clar k Refining an d Marketing , Ultrama r Diamon d Shamrock , Koc

h Industries , Tesor

o Petroleum , Tosc o Corporation , an

d Valer o Energ y (Figur e 5) . (Not e 62 ) A s agroup , thes e companie s owned 1 2 refinerie s wit

h acombined refining capacit y of slightly mor

e tha n 1. 3 millio n barrel s pe

r da y i n 1990 , abou t 8 percent o f tota l U.S . refinin

g capacity . (Not

e 63 ) B y Octobe

r 1998 , th e companie s owne d a tota l of 2 9 refinerie s wit

h acombined refining capacit y of approximately 3. 7 millio n barrel s pe r day , abou t 2 3 percent

o f tota l U.S . refinin

g capacit y (Figur e 4) . (Not e 64 ) Th e nea r triplin g ofth e refining capacit y ofthi s grou

p wa s largely accomplishe d through acquisitio n o f refining capacit

y (8 8 percent) , 6 6 percen

t of whic h wa s acquire d fromth e U.S . majors (Tabl e 4) . Acquisition s b y Tosc o (sinc e April 1993 ) includ e si x refinerie s fromth e major s (Exxon-1 , BP-2 , an d Unocal-3 ) wit

h atota l refiner y capacit y o f 747,00 0 barrel s pe

r da y (b/d) . Sinc e th e 199 6 merge r o f Ultrama r wit h Diamond Shamrock , (Not e 65 ) th e resultin g compan

y (Ultrama

r Diamon d Shamrock

) ha s acquire d Tota

l Petroleum' s distillatio n capacit y o f 141,600 b/d . (Not

e 65 ) UD S als o attempte d t o gain contro l o f

Phillip s Petroleum' s 345,00 0 b/ d capacit y throug h th e formation o f

ane w Ultramar

Phillip s join t

venture , Diamond 66 . (Not e 67 ) However , agreemen

t b y bot h companie s on th e final term s ofth e ventur

e coul d not

b e reache d an

d the ventur

e wa s abandone d in March 1999 . The rat e of refining capacit

y acquisitio n i n th e Unite d State s wa s especiall y hig h durin g 1998 , a s thirty-thre e percen t ofth e capacit

y acquire d betwee

n 199 1 an d 199 8 wa s acquire d durin g 199 8 alone . 

### Gasolin e Marketin g Operation s Als o Redistribute d No t only ha s th e crud

e distillatio n capacit

y ofth e fast-growin g independen t refiner s grow

n markedl y sinc e 1990 , s o to o ha s their presenc e in gasolin e retailing , a s measure d b y numbe r o f moto r gasolin e retai l outlets . I

n contras t to th e U.S . majors , th e fast-growin g independen t refiner s hav e expanded their scop e o f operations , bot

h through acquirin g an

d buildin g new outlets . The numbe r of brande d outlet s ofth e fast-growing independen t refiner s nearly double d from199 0 t o 1997 , to 2 5 thousand (Tabl e 5) . Rathe

r ma n consolidatin g th e geographi c scop e o f their gasolin e marketin g network s (the concentratio n strategy pursue d by th e majors) , the fast-growin g independen t refiner s hav e expande d their scope . For

thos e independen

t refiner s ownin

g gasolin e outlet s i n 1997 , th e averag e numbe r o f state s in whic h the

y retai l gasolin e increase d from1 4 state s in 199 0 to 2 4 state s in 1997 . http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 " ^E_a _ l n e u.5 . Petroleu mKennin g an auasoiin e Marketing : Page 8 oj " 1 4 Recen t gasolin e marketin g acquisition s b y independent s includ

e Tosco , whic h ha s added approximately 2,00 0 outlet s (63 2 fro mB P and 1,31 7 fro

mUnocal) sinc e April 1993 . Additionally , i n 199 6 Tosc o acquire d th e Circle K convenienc e stor

e chain an d it s 1,90 0 gasolin e outlets . Prio

r t o thi s acquisition , Tosc o ha

d owne d relativel y fe w convenienc e stor

e operations . Also , th e 199 6 merge r of Ultrama r (which ha d 42 0 outlet s i

n Californi ai

n lat e 1996 ) an d Diamon d Shamroc k (which ha d 1,32 4 retai l outlet s i

n eigh t differen t Midwester

n States ) merge

d wit h Ultrama r create d Ultrama

r Diamond Shamrock

(UDS) . Sinc e then , UD S ha s acquire d Tota l Petroleum(wit

h atota l of 560 outlets) , (Not

e 68 ) but faile d i n attempt s t

o creat e join t venture s wit

h Petro-Canad ain 1998 , an d wit h Phillip s Petroleu min 1999 . (Not e 69 ) Despit

e thes e tw o recen

t setbacks , th e significanc e o f UD S and , mor e generally , th e grou

p o f fast-growing independen

t refiner/marketer s in th e U. S downstrea m petroleu mindustr

y ha s becom

e greate r durin g th e 1990's . Nea l C Davis , Energy Information Administration , April 199 9

Fo r informatio n on EI

A forecast s fo

r th e year s 1999 an

d 2000 , see th e projection s i n EIA' s ShortTerm Energy Outlook. Longer-ter mforecast s ca

n b e foun d in EIA' s Annual Energy Outlook 1999 an d International

Energy Outlook

1999. If you like d thi s report , yo

u ca n b e automaticall

y notified vi ae-mai

l o f update s t o i t

an d to othe r Energy Financ e products . Simpl y click here , click

o n th e butto n fo

r "Financia l and Industr

y Analysis, " click

o n th e butto n "Joi

n fia," ente

r you r e-mail address , and the n choos e "Save. " Yo u wil l then b e notifie d withi n a

n hou r o f an y updates . Thi s documen

t wa s prepared b

y th e Energy Information Administratio n (EIA) , th e independen t statistica l an d analytica

l agenc y ofth e Departmen

t o f Energy . Th

e informatio n herei n should no t b e construe d a s advocatin g o

r reflecting an

y polic y positio n ofth e Departmen t o f Energ y or an y othe r organization . 

## Relate d EI A Document s Se e Energy Information Administration , "Th e U.S . Petroleuman

d Natura l Ga s Industry " (June 28 , 1999) , fo r arevie w ofth e domesti c upstrea mpetroleumindustry . Energy Information Administration , Annual Energy Review 1997, DOE/EIA-0 3 84(97 ) (Washington , DC , Jul y 1998) . Energy Information Administration , "Financia l Performance : Lo w Profitabilit y i n U.S . Refinin

g an d Marketing, " (Novembe

r 3,1997) . Energy Information Administration , "Th e Impac t o f Environmenta

l Complianc e Cost s on U.S . Refining Profitability, " (Novembe r 3,1997) . Energy Information Administration , International Energy Annual

1997, DOE/EIA-0219(97 ) (Washington , DC , April 1999) . http://vv-ww.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 <£P.1 0

fiie U.S . mroieu mKenning an d Uasolin e Marketing : Pag e 9 of 14 Energy Informatio n Administration , Performance Profiles of Major Energy Producers 1997

(pd f format ) (DOE/EIA-0206(97) ) (Washington , DC , Januar y 1999) . Energ y Informatio n Administration , Petroleum Supply Annual 1997, Volum

e 1 , DOE/EIA-038 4 (97/1 ) (Washington , DC , Jun e 1998) . Energy Informatio n Administration , Petroleum Supply Annual 1996, Volum

e 1 , DOE/EIA-038 4 (96/1 ) (Washington , DC , Jun e 1997) . Energy Informatio n Administration , Privatization and Globalization of

Energy Markets (DOE/EIA

0609 ) (Washington , DC , Octobe r 1996) . Energy Informatio n Administration , "Wh y D o Moto

r Gasoline Price s Var

y Regionally ? Californi a Cas e Study, " (June9,1998) . 

## Endnote s 1 . See "Financia

l Performance : Lo w Profitabilit y i n U.S . Refining an

d Marketing, " fo

r amor e complet e discussio n o f

domesti c refining an

d marketing profitabilit

y ove r th e las t severa l years . 2 . Energ y Information Administration , Performance Profiles of Major Energy Producers 1997 (pd f format) , DOE/EIA-0206(97 ) (Washington , DC , Januar y 1999) , Tabl e 12 . 3 . Energ y Information Administration , Short-Term Energy Outlook (pd f format ) (April 8,1999) , Tabl e A2 . 4 . Energy Information Administration , Performance Profiles of Major Energy Producers 1997 (pdf format), DOE/EIA-0206(97 ) (Washington , D C Januar y 1999) , Figure 13 . 5 . For example , se e Exxo n Corporation , Annual Report 1997, (Octobe

r 2 5 1998) , pp . 1 and 3 ; an

d Coasta l Corporation , "Refining , Marketing , an d Chemicals " (Octobe

r 25 , 1998) , p . 2 . 6 . Thi s tren d continue d through 199 7 a s Texac o reporte d tha t i t receive d $ 1 3 millio n fo

r th e sal e o f it s credi t car d operation . Se

e Texaco , 1997

Annual Report, p . 31 . 7 . For example , durin g 199

7 bot h Exxo n an

d Phillip s mentione d i n their annua l report s tha

t cogeneratio n plant s ha

d bee n complete d a

t refineries , or

wer e unde r construction . Se

e Exxon Corporation , 1997

Annual Report, p . 1 2 and Phillip s Petroleum , 1997 Annual Report, p . 16 . 8 . Financia

l Analysi s Team , Offic

e o f Energy Market s an

d End Use , Energy Information Administration , Financia

l Reportin g System . 9 . Energ y Informatio n Administration , Performance Profiles of Major Energy Producers 1997 (pd f format) , DOE/EIA-0206(97 ) (Washington , DC , Januar y 1999) , Tabl e 14 . 10 . Catalyti c cracking i s th e refining proces s o f breakin g down th e larger , heavier , an d mor e complex hydrocarbo n molecule s into simple r an d lighte r molecules . Catalyti c cracking i s accomplishe d b y th e us e o f acatalyti c agen

t an d i s a n effective proces s fo

r increasin g th e yiel d o f gasolin e fromcrud

e oil . Catalyti c cracking processe s fresh feed s an d recycle d feeds . A fresh http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 &/P.1 1

Th e U.S . Petroleu mRefinin g an d Gasolin e Marketing : Pag e 1 0 oi " 1 4 fee d i s crud e oi l o r

petroleu mdistillates , whic h ar e bein g fed t o processin g unit s fo r th e first time . A recycle d fee d i s on e that i s continuousl y fe

d bac k for additiona l processing . Catalyti c reformin g i s arefinin g proces s usin g controlle d hea t an d pressur e with catalyst s t o rearrang e certai n hydrocarbo n molecules , thereb y convertin g paraffmi c an d naphtheni c typ e hydrocarbon s (e.g. , low-octan e gasolin e boilin g rang e fractions ) int o petrochemica l feedstock s an d highe r

octan e stock s suitabl e fo r blendin g int o finishe d gasoline . Catalyti c reformin g i s reporte d i n tw o categories , lo w pressur e and hig h pressure . A low-pressur e uni t operate s wit h les s tha n 22 5 pound s pe r

squar e inc h gaug e (measure d at th e outlet

separator ) an d ahigh

pressur e uni t

operate s with 22 5 (o r

more ) pound s pe r

squar e inc h gauge . Se e Energ y Informatio n Administration , Petroleum Supply Annual 1997, Volum e 1 , DOE/EIA-0340(97)/ 1 (Washington , DC , Jun e 1998) , pp . 126-127 . 11 . Highe r

qualit y product s ar e thos e suc h a s moto r gasoline , je t

fuel , an d aviatio n gasoline . Alternatively , lowe r

qualit y product s ar e thos e suc h a s residua l fuel oil . 12 . Th e qualit y cos t

sprea d i s th e differenc e betwee n th e price s o f highe r quality (i.e. , lighte r

an d sweeter ) crud e oi l an d lowe r qualit y (i.e. , heavie r

an d mor e sour ) crud e oil . Th e relativ e viscosit y o f

crud e oi l i s determine d b y it s AP I gravity . Ligh t crud e generall y ha s a n AP I gravity o f 38 , o r greater . Heav y crud e oi l ha s a n AP I gravit y o f

22 , o r less . Intermediat e crud e ha s a n AP I gravit y tha t

fall s betwee n 2 2 an d 38 . Th e amoun t o f sulfu r i n crud e oi l determine s whethe r th e crud e i s considere d swee t (i.e. , i t ha s alo w percentag e o f

it s weigh t

contribute d b y sulfur) , o r sou r (i.e. , i t ha s ahig h percentag e o f

it s weigh t

contribute d b y sulfur) . 13 . PEME X ha s aprospectiv e join t ventur e with Mobi l involvin g th e Beaumont , Texa s refinery , whic h ha s acapacity o f

157,50 0 b/d . Se e Petroleum Intelligence Weekly, Volum e 37 , Numbe r 2 3 (Jun e 8,1998) , p . 3 . 14 . Petroleum Intelligence Weekly, Volum e 37 , Numbe r 2 4 (Jun e 15,1998) , p . 8 . 15 . "Venezuela : U S Operations, " IA C (SM ) Newslette r Database , Ara b Pres s Servic e Organisation , APS

Review Downstream Trends, Volum e 49 , Numbe r 2 5 (Decembe r

22,1997) . 16 . Hillary Durgin , "Coasta l Corp . Say s I t Intend s T o Mak e Canadia n Acquisitions, " The Houston Chronicle (May 8,1998) , p . 2 . 17 . Product s suc h a s suc h a s moto r gasoline , je t

fuel , an d diese l fuel . 18 . Debottleneckin g investment s ar e upgrade s t o on e o r mor e part s o f

arefiner y tha t thereb y allo w fuller us e o f othe r part s ofth e refinery withou t makin g an y direc t

change s t o them . Suc h relativel y inexpensiv e investment s i n arefiner y ma y resul t

i n substantia l increase s i n th e capacity ofth e refinery . 19 . Capacity cree p i s th e increase d capacit y o f refinin g unit s resultin g fromdebottleneckin g investments . 20 . America n Petroleu mInstitute , Petroleum Industry Environmental Performance 6th Annua l Report (pd f format ) (Washington , DC) . 21 . Mitche l Benson , "Ga s Station s Imperile d b y Tan k Law, " The Wall

Street Journal (February 11 , 1998),pXAl ^ .. . . __.. . r _ 22 . Gas Station s Fac e Closur e o n EP A Tan k Rule s Today, " The Wall Street Journal (Decembe r

22 , 1998) . http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/0 0 

# PP.1 2

Th e U.S . Petroleu mRefinin g and Gasolin e Marketing : Pag e 1 1 o f 1 4 23 . National

Petroleum News, Volum e 90 , Numbe r 8 (mid-Jul y 1998) , p . 124 . 24 . "Association s Oppos e Dela y i n EPA' s US T Rule, " Oil and Gas Journal, Volum e 97 , Numbe r 1 (Januar y 4 , 1999) . 25 . "Cali f

Go v Davi s Order s Ban o f Fue l Additiv e MTBE, " Do w Jone s Newswire s (Marc h 25 , 1999) . 26 . "N.J . Congressma n Introduce s Bil l t o Ban Us e o f MTBE, " Do w Jone s Newswire s (Apri l 12 , 1999) . 27 . Hart's Oxy-Fuel

News, Volum e 11 , Numbe r 1 2 (Marc h 29,1999) . 28 . "Ford , Mobi l T o Mak e Cleane r Fuels, " Associate d Pres s (Marc h 5 , 1998) . 29 . Downstrea mpetroleu mrefer s t o petroleu mrefining , marketing , an d transportation . However , transportatio n (chiefl y pipeline s an d marin e transport ) i s omitte d fro mthi s discussion . 30 . Se e Energ y Informatio n Administration , Performance Profiles of Major Energy Producers 1997 (pd f format) , DOE/EIA-0206(97 ) (Washington , DC , Januar y 1999 ) fo r adiscussio n o f on e ofth e mos t

significan t

ofth e foreig n alliances . I n particular , se e th e Chapte r 3 Highligh t entitle d "BP-Mobi l Allianc e o f Europea n Refinin g Operations. " 31 . Shel l Oi l own s 5 6 percen t o f Equilo n an d Texac o ha s a44-percen t share . Se e "Shell , Texaco , an d Saud i Refinin g Inc . Announc e Approva l o f Eastern/Gul f

U.S . Downstrea mAlliance : Motiv aEnterprises, " Busines s Wir e (May 2,1998) . 32 . Shel l Oil , 1997

Annual Report, p . 5 2 an d Texaco , 1997 Annual Report, p . 20 . 33 . Shell/Texac o Seekin g Buye r o f 6 0 U.S . Ga s Stations, " Reuter s Worl d New s Servic e (Jul y 7 , 1998) . 34 . Energ y Informatio n Administration , Petroleum Supply Annual 1996, Volum e 1 DOE/EIA

0340(96)/ l (Washington , DC , Jun e 1997) , Tabl e 40 . 35 . Shell , Texaco , an d Saud i Aramc o Announc e Formatio n an d Operationa l Start-U p o f Motiv a Enterprises, " Busines s Wir e (Jul y 2,1998) . 36 . Hillar y Durgin , "Marketing , Refinin g Pac t Signed ; Texaco , Aramco , Shel l Teamin g Up, " The Houston Chronicle (May 28,1998) , p . 1 . 37 . "Ashland , Maratho n In k Merge r Agreemen t

Afte r FT C Clear s Deal, " Octane Week, Volum e 12 , Numbe r

4 9 (Decembe r

15,1997) . 38 . Energ y Informatio n Administration , Petroleum Supply Annual 1996, Volum e 1 DOE/EIA

0340(96)/ l (Washington , DC , Jun e 1997) , Tabl e 40 . 39 . National

Petroleum News, Volum e 90 , Numbe r 8 (mid-Jul y 1998) , p . 47 . 40 . Energ y Informatio n Administration , Petroleum Supply Annual 1996, Volum e 1 DOE/EIA

0340(96)/ ! (Washington , DC , Jun e 1997) , Tabl e 40 . http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/0 0 /(P.1 3

Ih e U.S . PetroleumRefinin g an d Gasoline Marketing : Pag e 1 2 o i 1 4 41 . "AmeradaHes s Announce s Establishmen t o f Refiner y Join t Ventur e wit h Petroleo s d

e Venezuela, " PRNewswire (Novembe r 2,1998) . 42 . Energy Informatio n Administration , Petroleum Supply Annual 1996, Volum

e 1 DOE/EIA

0340(96)/ l (Washington , DC , Jun

e 1997) , Table 40 . 43 . Mobil Corporation , 1997 Annual Report, p . 42 . 44 . "Phillips , PdVS A Agre e to Build Coke r a t Phillips ' Sweeny , Texa s Complex, " Phillip s New s Releas e (Novembe

r 2 , 1998) . 45 . "Phillips , Corpove

n Sign Principle s of

Agreemen t To Buil d Ne

w Coker, " Phillip s New s Releas e (Augus t

22 , 1997) . 46 . To mDoggett , "U.S . Approve s BP-Amoc o Merger , Seeks Divestitures, " Reuter s (Decembe r 30 , 1998) . 47 . Energy Information Administration , International Energy Annual

1997, DOE/EIA-0219(97 ) (Washington , DC , Apri l 1999) , Table Gl . 48 . Britis h Petroleum , BP1997: BPStatistical Review of

World Energy (June 1998) , p . 23 . 49 . National

Petroleum News, Volum

e 90 , Numbe

r 8 (mid-Jul

y 1998) , pp . 44,124 . 50 . B P Amoco , p.l.c , "B P an d Amoc o Merge t o Ente

r Globa l To p Tri o of Oil Majors (Augus t

11 , 1998). " 51 . Exxon Corporation , "Exxon an d Mobil Sig

n Merge r Agreemen

t (Decembe

r 1,1998). " 52 . Energy Information Administration , International Energy Annual

1997, DOE/EIA-0219(97 ) (Washington , DC , Apri l 1999) , Tabl e Gl . 53 . Britis h Petroleum , BP1997: BPStatistical Review of

World Energy (June 1998) , p . 23 . 54 . National

Petroleum News, Volum

e 90 , Numbe

r 8 (mid-July 1998) , pp. 44,124 . 55 . "Ultrama

r Diamon d Shamroc k an d Phillip s Petroleumto For mJoint Ventur e Creatin g Larges t Independen

t Refining and Marketing Compan y i n Nort h America, " Phillip s New s Releas e (Octobe r 8,1998) . 56 . "Phillips , UD S Scratch Diamon d 6 6 Plans, " The Oil

Daily, Volum

e 49 , Numbe

r 5 5 (March 23 , 1999) . 57 . "Conoc o CE

O See s Compan

y Going It Alone i n U.S . Downstream, " Do w Jone s New s Servic e (Novembe r 10,1997) . 58 . Energy Information Administration , Performance Profiles of Major Energy Producers 1997 (pd f format) , DOE/EIA-0206(97 ) (Washington , DC , Januar y 1999) , Tabl e B30 ; an

d Energ y Information Administration , For mEIA-2 8 (Financia

l Reportin g System) . 59 . National

Petroleum News, Volum

e 90 , Numbe

r 8 (mid-July 1998) , p . 12

0 an d National Petroleum News, Volum

e 84 , Numbe

r 7 (mid-Jun e 1992) , p . 119 . http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 l*~\P.1 4

Th e U.S . Petroleu

mRefining an

d Gasolin e Marketing : Pag e 1 3 o f 1 4 60 . National

Petroleum News, Volum

e 77 , Numbe

r 7 (mid-June 1985) , pp . 44-5 1 an d National Petroleum News, Volum

e 90 , Numbe

r 8 (mid-Jul

y 1998) , pp . 44-52 . 61 . Energy Informatio n Administration , Petroleum Supply Annual 1993 Volum

e 1 (DOE/EIA

0340(93)/l ) (Washington , DC , Jun e 1994) , Tabl e 49 . 62 . During 199 6 Ultrama

r an d Diamon d Shamroc k merged , formin

g Ultrama r Diamon d Shamrock . 63 . Energy Informatio n Administration , Petroleum Supply Annual 1990, Volum

e 1 , DOE/EIA

0340(90)/ l (Ma y 1991 , Washington , DC) , Table s 3 6 an d 39 . 64 . Energy Informatio n Administration , Petroleum Supply Annual 1996, Volum

e 1 DOE/EIA

0340(96)/ l (Jun e 1997 , Washington , DC) , Table s 3 6 an d 4 0 an d Energy Information Administration , Petroleum Supply Annual 1997, Volum

e 1 , DOE/EIA-0340(97)/ 1 (Jun e 1998 , Washington , DC) , Table 38 . 65 . Ultrama

r als o ha d substantia

l Canadia n operation s tha

t becam e par t o f Ultrama r Diamond Shamroc k afte r th e merger . Ultrama

r owned a150,000 b/

d refiner y i n Quebec , an

d atota l of 1,34 1 retai l outlet s in Canada . Energ y Information Administration , Petroleum Supply Annual 1996, Volum

e 1 DOE/EIA-0340(96)/ 1 (Washington , DC , June 1997) , Tabl e 40 ; an d National Petroleum News, Volum

e 88 , Numbe

r 8 (Mid-Jul

y 1996) , p . 80 . 66 . Ala n Kovski , "B P quitting Northwes t wit h sal e of refinery , outlet s t

o Tosco, " The Oil

Daily, Volum e 43 , Numbe

r 187 (Septembe

r 29,1993) , p . 3 ; Robi n Sidel , "Tosc o to Sta y o n Growt

h Track, " Reuter s Financia

l Servic e (Februar

y 16,1996) ; and "Ultrama

r to Announc e Purchas e o f Tota l U.S . Assets, " Reuter s Financia l Servic e (April 15,1997) ; Energy Information Administration , Petroleum Supply Annual 1996, Volum

e 1 DOE/EIA-0340(96)/ 1 (Washington , DC , June 1997) , Tabl e 49 ; an d Energy Informatio n Administration , Petroleum Supply Annual 1997, Volum

e 1 , DOE/EIA-0340(97)/ 1 (Washington , DC , June 1998) , Tabl e 38 . 67 . "Ultrama

r Diamond Shamroc

k and Phillip s Petroleumto For mJoint Ventur e Creatin g Larges t Independen

t Refining an

d Marketing Compan

y in Nort h America, " Busines s Wir

e (Octobe r 9 , 1998) . 68 . Ala n Kovski , "B P quittin g Northwes t wit h sal e o f refinery , outlet s to.Tosco, " The Oil Daily, Volum e 43 , Numbe

r 18 7 (Septembe

r 29,1993) , p . 3 ; Robi n Sidel , "Tosc o to Sta y o n Growt

h . Track, " Reuter s Financia

l Servic e (Februar

y 16,1996) ; and "Ultrama

r to Announc e Purchas e o f Tota l U.S . Assets, " Reuter s Financia l Servic e (Apri l 15,1997) ; Energ y Information Administration

^ Petroleum Supply Annual 1996, Volum

e 1 DOE/EIA-0340(96)/ 1 (Washington , DC , Jun e 1997) , Tabl e 49 ; an d Energy Informatio n Administration , Petroleum Supply Annual 1997, Volum

e 1 , DOE/EIA-0340(97)/ 1 (Washington , DC , Jun e 1998) , Tabl e 38 . 69 . "Phillips , UD S Scratch Diamon d 6 6 Plans, " The Oil

Daily, Volum

e 49 , Numbe

r 5 5 (March 23 , 1999) . Fil e las t modified : Septembe

r 6,200 0 Contact : Nea l C Davi s neal.davis@eia.doe.go v Fax : (202 ) 586-975 3 http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 /J P. . P.1 5

Th e U.S . Petroleu

mRefinin g an d Gasolin e Marketing : Pag e 14 ot-1 4 O R Nationa l Energ y Information Cente

r Phone : (202 ) 586-8800 URL : http://www.eia.doe.gov/emeu/finance/usi&to/downstream/index.htm l

Bac k to Financ e Hom

e Fo r hel p wit h technica l problems , pleas e contac t

th e webmaster : wmaster@eia.doe.go v Phone : (202 ) 586-895 9

Overvie w Petroleu m I Natura l Gas | Coa l I Nuclea r I Electricit y | Renewable

s I Alternat

e Fuel s I Internationa l I Environment I Forecast s | Hom e |

http://www.eia.doe.gov/emeu/finance/usi&to/downstream / 12/1/00 

# H