New Platts Netbacks Methodology

Platts and the international downstream consulting firm of Turner, Mason & Company have combined forces to provide Platts Daily Yield , daily yield value assessments of actively traded crude oil grades in eight worldwide regional refining centers. Platts Daily Yield, to be introduced Jan 2, 2002, will be produced using two of the industry's most highly-regarded information services: the spot prices and freight rates of Platts, and Turner, Mason's TMMS refinery modeling platform, configured to represent actual processing capabilities in specific regional centers based on a survey of operating refineries to be updated annually.

While Platts has long provided crude oil yields and netbacks to its subscribers, the new refining models in Platts Daily Yield take their accuracy to a far greater level. Executives from Turner Mason and Platts have been working for more than a year to launch Platts Daily Yield and provide the industry with superior refinery yields and netbacks models. What has emerged is a modeling system that accurately reflects the far greater level of complexity present in refineries today.

Platts Daily Yield will provide yield and netback information for the following key refining centers:

• US Gulf Coast
• US Atlantic Coast
• US West Coast
• US Midcontinent
• Caribbean
• Amsterdam-Rotterdam-Antwerp
• Italy
• Singapore

The daily yields and netbacks provided by Platts Daily Yield will be calculated through the TMMS system, and will be produced using the following components, to guarantee a high degree of accuracy.

• Platts daily assessments of refined products values in each region will be the basis for determining the value of refined products sold into the market of a key refining area. If no such price is available, in most cases a Platts price netted back to the refining center will be used, or a Platts price from another region will be used with no freight component, due to the small percentage of the yield accounted for by the product in question.

• For freight calculations, Platts spot tanker rates will be applied against Worldscale 100 rates, to determine accurate shipping costs necessary to provide a reliable netback. Where spot tanker rates are not relevant, such as for US pipeline grades, a regular survey of current pipeline tariffs will be conducted by Platts to keep transportation variables current. For Urals and ANS netbacks, where crude is sold on a delivered basis, no freight component will be calculated.

• The crude grades modeled in each region will be international and regional grades, actively traded and processed in each region.

• Separate cracking and coking models will be used in the US and Caribbean; separate cracking and visbreaking models will be utilized in Europe and Singapore.

• Seasonal adjustments in refinery yields and operations consistent with seasonal product quality shifts will be part of Platts Daily Yield.

• There will be annual updates to reflect product specification changes and shifts in refining economics, provided through an ongoing relationship between Platts and Turner Mason.

• Incremental operating costs are built into the models, incorporating both current assessments and long-term prices of energy costs in each region for power and natural gas.

• In print publications, Platts Dispatch and on Global Alert, summer yields will be produced March 1-August 31. Winter yields will be produced the remainder of the year.

Where?

Platts Daily Yield calculations will be available through several Platts products.

Crude Oil Marketwire: Rotterdam, Singapore and US Gulf Coast yields and netbacks will be provided daily. Other refining centers will rotate on the following basis: Monday, US Atlantic Coast; Tuesday, Caribbean; Wednesday, US Midcontinent; Thursday, Italy; Friday, US West Coast.

Platts Global Alert: All seasonal yields and netbacks will be found on existing PGA pages, as well as additional pages that may become necessary due to current space constraints. All crudes from all eight refining centers will be displayed each day.

Platts Oilgram Price Report: The Feeder Crudes table yields and netbacks will be calculated using Thursday product prices and freight rates. Spot crude assessments are a five-day average of daily prices, or for weekly assessments, set via an assessed differential to the relevant benchmark, e.g., Gullfaks would be set against the dated Brent five-day average.

The FOB Breakeven price in the monthly World Crude table will be calculated using monthly product price averages and monthly spot tanker rate averages. Mock-up versions of how these new tables will appear are available at World Crude Table—sample layout and Feeder Crudes Table—sample layout.

Platts Dispatch: All yields for all seasons will be calculated and distributed to customers each day.

Freight assumptions

• All tanker rates, except where noted, are assessed against the base rate provided by the Worldscale Association, the so-called Worldscale 100 rate.

• The WS 100 rate is applied against Platts daily spot tanker rate assessments.

• A standard table of bbl/metric ton conversions is used to determine the $/bbl tanker rates.

• Port charges are not included in the tanker rates.

• For crudes moved on pipeline, rates have been obtained either from the pipeline companies or from shippers on the line.

• For certain short routes where WS spot rates generally are not quoted, such as Indonesia-Singapore, Platts has obtained prevailing market rates from industry sources. Those rates will be updated every six months.

Platts and Turner Mason have decided to release all of the products used to calculate Platts Daily Yield. However, unlike the previous model Platts used for yields and netbacks, the actual weightings given to particular products in a refining center—for example, the amount of gasoline from Urals refined in Italy—will remain proprietary. Platts and Turner Mason are providing the breakdown for Brent crude under the winter cracking model in ARA, because we believe that by readers seeing the complexity in one model they will be assured that a similar degree of complexity is being used for other crudes in all locations. Please click the link here to see the breakdown.

Platts and Turner Mason direct customers with further questions to a FAQ located elsewhere on this site, at www.platts.com.. Further questions can be directed to Platts Global Director of Oil John Kingston at john_kingston@platts.com.

Listed below are each of the individual refining regions, the crudes modeled in each of those areas, and various cost and other input factors assumed in the Turner, Mason TMMS model.

US Gulf Coast
US Atlantic Coast
US Midcontinent
US West Coast
Amsterdam-Rotterdam-Antwerp
Italy
Singapore

US Gulf Coast

Calculated Crudes: Arab Berri, Arab Light, Arab Medium, Arab Heavy, BCF 17, BCF 22, BCF 24, Basrah Light, Brent, Cano Limon, Cabinda, Cusiana, Escalante, Isthmus, Kuwait, LLS, Mars, Maya, Merey, Mesa, Olmeca, Rabi Blend, Soyo, Statfjord, Troll, WTI, WTS

• Values are calculated for coking and cracking.

• Byproduct credits are assumed for sulfur and petroleum coke. Turner Mason
will supply annual updates on the value of both.

• A product quality adjustment is assumed for decant oil.

Product slate
The following products are assumed as the oil products produced by the refinery. In all cases, Platts daily or weekly assessments are inputted, except where noted.

• Propane (spot/pipeline, Mt. Belvieu)
• Propylene Chem Grade (FOB USGC)
• Normal Butane (spot/pipeline Mt. Belvieu)
• Isobutane (spot/pipeline, Mt. Belvieu)
• Unl 87 RFG (spot/waterborne, USGC)
• Prem Unl 93 RFG (spot/waterborne, USGC)
• Unl 87 (spot/waterborne, USGC)
• Prem unl 93 (spot/waterborne)
• Jet Kerosene 54 (spot/waterborne, USGC)
• LS No. 2 (spot/waterborne, USGC)
• No. 2 Oil (spot/waterborne, USGC)
• No. 6 0.7% S (spot/waterborne, USGC)
• No. 6 1.0% S (spot/waterborne, USGC)
• No. 6 3.0% S (spot/waterborne, USGC)
• No. 6 3.5% S (spot/waterborne, USGC)

Variable operating costs
Purchased fuel gas (Platts Natural Gas Market Report's Houston Ship Channel monthly average price.)
Purchased electricity (Platts is still working on determining this basis.)
Catalyst and chemicals to reduce corrosion from high naphthenic acid content of crude (Price provided by Turner Mason, updated annually)

US Atlantic Coast

Calculated Crudes: Arab Light, Arab Medium, Arab Heavy, BCF 22, Bonny Light, Brass River, Brent, Cabinda, Cusiana, Ekofisk, Forcados, Gullfaks, Hibernia, Mesa, Oriente, Rabi Blend, Palanca (includes comingles Soyo stream), Statfjord, Troll

• Values are calculated for coking and cracking.

• Byproduct credits are assumed for sulfur and petroleum coke. Turner Mason will supply annual updates on the value of both.

• A product quality adjustment is assumed for decant oil.

• No transportation adjustment for methanol or propylene is assumed from the Gulf Coast, nor is an adjustment made for NGLs from Mont Belvieu.

Product slate

• Propane (spot/pipeline, Mt. Belvieu)
• Propylene Ref Grade (Ex Tank FOB USGC)
• Normal Butane (spot/pipeline, Mt. Belvieu;)
• Isobutane (spot/pipeline, Mt. Belvieu)
• Unl 87 RFG (spot/barge, NY)
• Prem Unl 93 RFG (spot/barge, NY)
• Unl 87 (spot/barge, NY)
• Prem Unl 93 (spot/barge, NY)
• Jet Kerosene (spot/barge, NY)
• LS No. 2 (spot/barge, NY)
• No. 2 Oil (spot/barge, NY)
• No. 6 0.3% S high pour (spot/barge, NY)
• No. 6 0.7% S (spot/barge, NY)
• No. 6 1.0% S (spot/barge, NY)
• No. 6 2.2% S (spot/barge, NY)
• No. 6 3.0% S (spot/barge, NY)

Feedstocks
MTBE (East Coast)
Methanol (spot, USGC; no transportation adjustment made)
Natural Gas to H2 Plant, MMBTU (Platts Transco Zone 6 natural gas monthly average price)

Variable operating costs
Purchased fuel gas (Platts Transco Zone 6 natural gas monthly price)
Purchased electricity (PSE&G retail electricity rates)
Catalyst and chemicals to reduce corrosion from high naphthenic acid content of crude (Price provided by Turner Mason, updated annually)

US Midcontinent

Calculated Crudes: Arab Berri, Arab Light, BCF 24, Basrah Light, Bonny Light, Bow River, Cabinda, Cano Limon, Cusiana, Forcados, LLS, Maya, Mesa, Canadian Mixed Light Sour, Olmeca, Canadian Mixed Light Sweet, WTI, WTS

• Values are calculated for coking and cracking.

• Byproduct credits are assumed for sulfur and petroleum coke. Turner Mason will supply annual updates on the value of both.

• Residual fuel prices are netted from the Gulf Coast, which is a more liquid market. Barge rates will be checked on a semi-annual basis.

• Due to the absence of a spot RFG market, RFG values are provided by using Koch 10% ethanol blend rack prices.

• No transportation adjustment is assumed between Conway and the Chicago area for LPG.

Product slate

• Propane (Conway pipeline)
• Normal Butane (Conway pipeline)
• Isobutane (Conway pipeline)
• Unl 87 RFG (Koch rack Price)
• Prem Unl 93 RFG (Koch rack Price)
• Unl 87 (Chicago Pipeline)
• Prem Unl 93 (Chicago Pipeline)
• Jet Fuel (Chicago Pipeline)
• LS No. 2 (Chicago Pipeline)
• No. 2 (Chicago pipeline)
• No. 6 0.7% S (spot/waterborne, USGC)
• No. 6 1.0% S (spot/waterborne, USGC)
• No. 6 3.0% S (spot/waterborne, USGC)
• No. 6 3.5% S (spot/waterborne, USGC)

Feedstocks
Ethanol (Midwest rack price)
Natural Gas to H2 Plant, MMBTU (Price is Platts Natural Gas Market Report's Chicago city gate monthly average)

Variable Operating Costs
Natural gas (Platts Natural Gas Market Report's Chicago city gate monthly average)
Electricity (Commonwealth Edison retail rates)
Catalyst and chemicals to reduce corrosion from high naphthenic acid content of crude (Price provided by Turner Mason, updated annually)

US West Coast

Calculated Crudes: ANS, Arab Berri, Arab Light, Basrah, Escalante, Kern River, Line 63, Maya, Oriente, Canadian Mixed Light Sweet, THUMS

• Values are calculated for coking and cracking.

• Byproduct credits are assumed for sulfur and petroleum coke. Turner Mason will supply annual updates on the value of both.

• Propane, normal butane and isobutane are not netted back from Mt. Belvieu.

• MTBE and methanol are not netted back from the Gulf Coast.

• No freight component for ANS is calculated, since it is always purchased delivered. A comparison of the cost of the crude and the yield would therefore not include a freight component.

• The refinery model is constructed from refinery patterns found in all major refining areas of the West Coast. As a result, crude yields are supplied for Canadian mixed light sweet crude, even though the Puget Sound area is the only West Coast region where it is refined. However, Seattle light ends prices are used for the Canadian Mixed Light Sweet assessments where possible.

Product slate

• Propane (spot/pipeline, Mt. Belvieu)
• Normal Butane (spot/pipeline, Mt. Belvieu)
• Isobutane (spot/pipeline, Mt. Belvieu)
• Unl 87 (spot/pipeline, Los Angeles)
• Prem Unl 92 (spot/pipeline, Los Angeles)
• CARB Unl (spot/pipeline, Los Angeles)
• CARB Prem (spot/pipeline, Los Angeles)
• Jet Kerosene (spot/pipeline, Los Angeles)
• LS No. 2 (spot/pipeline, Los Angeles)
• CARB Diesel (spot/pipeline, Los Angeles)
• No. 6 0.5% S (spot/waterborne, West Coast)
• No. 6 1.0% S (spot/waterborne, West Coast)
• No. 6 2% S (spot/waterborne, West Coast)
• High sulfur No. 6 fuel oil. (This price is calculated by taking the Platts assessment for 380 CST spot/cargo Los Angeles less the difference between Houston 380 CST and Houston 3.5% S No. 6)
• 380 CST (spot/cargo, Los Angeles)

Feedstocks
MTBE (spot/waterborne, USGC)
Methanol (spot, FOB USGC)
Natural Gas to H2 Plant, (based on Platts Natural Gas Market Report's SoCal border monthly average)

Variable operating costs
Natural gas (Platts Natural Gas Market Report's SoCal border monthly average)
Electricity (SoCal Edison's industrial electricity price)
Purchased diesel is assumed as a cutter stock in the bunker fuel where necessary, and a value is calculated.
Catalyst and chemicals (Price provided by Turner Mason, updated annually)
Chemicals to reduce corrosion from high naphthenic acid content of crude (Price provided by Turner Mason, updated annually)

Amsterdam-Rotterdam-Antwerp

Calculated Crudes: Arab Heavy, Arab Light, Arab Medium, Azeri Light, Basrah Light, Brent, Ekofisk, Flotta, Forties, Gullfaks, Iran Heavy, Iran Light, Kuwait, Statfjord, Urals

• Values are calculated for visbreaking and cracking.

• Byproduct credits are assumed for sulfur. The price of sulfur will be adjusted annually by Turner Mason.

Product slate

• Propane (spot, FOB ARA)
• Propylene Chem Grade (CIF NWE)
• Butane (spot, FOB ARA)
• Isobutane (Butane, spot, FOB ARA)
• Reg Unl (spot/barge, FOB Rotterdam)
• Prem Unl (spot/barge, FOB Rotterdam, for cracking yields. Premium
• unleaded is not part of the visbreaking model.)
• Naphtha (spot/barge, FOB Rotterdam)
• Jet Kerosene (spot/barge, FOB Rotterdam)
• Gasoil EN 590 (spot/barge, FOB Rotterdam)
• Gasoil 0.2% S (spot/barge, FOB Rotterdam)
• No. 6 1.0% S (spot/barge, Rotterdam)
• NO. 6 3.5% S (spot/barge, Rotterdam)
• 180 CST (Rotterdam)
• 380 CST (Rotterdam)

Variable operating costs
Natural Gas (Platts daily 1-month Zeebruge natural gas price)
Electricity (Platts daily Netherlands system base price)
Catalyst and chemicals (Price provided by Turner Mason, updated annually)

Italy

Calculated crudes: Arab Heavy, Arab Light, Arab Medium, Azeri Light, Basrah Light, Es Sider, Iran Heavy, Iran Light, Urals, Zueitina

• Values are calculated for visbreaking and cracking.

• Byproduct credits are assumed for sulfur. The price of sulfur will be adjusted annually by Turner Mason.

• Regular and premium unleaded gasoline is netted back from the Platts FOB NWE price.

Product slate

• Propane (spot, FOB W Med ex-ref/stor)
• Propylene chem grade (CIF NWE)
• Butane (spot, FOB W Med ex-ref/stor)
• Reg Unl (spot/cargo, FOB NWE)
• Prem Unl (spot/cargo, FOB Med)
• Prem 0.15 G/L (spot/cargo, FOB Med)
• Naphtha (spot/cargo, FOB Med)
• Jet Kerosene (spot/cargo, FOB Med)
• Gasoil EN 590 (spot/cargo, FOB Med)
• Gasoil 0.2% S (spot/cargo, FOB Med)
• VGO 2% S (Cargo CIF North Africa/NWE)
• VGO 0.5-0.6% S (Cargo CIF North Africa/NWE)
• No. 6 1.0% S (spot/cargo, FOB Med)
• No. 6 3.5% S (spot/cargo, FOB Med)
• 180 CST (spot, Genoa)
• 380 CST (spot, Genoa)

Feedstocks
Methanol (spot, T1 FOB Rotterdam)
Natural gas to hydrogen plant (Basis still to be determined)

Variable operating costs
Electricity (Switzerland Laufen Base rate, initially quoted by Platts in Euros per megawatt hour, converted using prevailing euro/$ rates)
Fuel gas: Basis still to be determined
Catalyst and chemicals (Price provided by Turner Mason, updated annually)

Singapore

Calculated Crudes: Arab Heavy, Arab Light, Arab Medium, Attaka, Dubai, Duri, Kuwait, Minas, Oman, Tapis

• Values are calculated for visbreaking and cracking.

• Byproduct credits are assumed for sulfur. The price of sulfur will be adjusted annually by Turner Mason.

Product slate

• Propane Mogas 92 Unl (spot/cargo, Singapore)
• Mogas 97 Unl (spot/cargo, Singapore)
• Jet Kerosene (spot/cargo, Singapore)
• Gasoil 0.25% S (spot/cargo, Singapore)
• LSWR Mixed/Cracked (spot/cargo, Indonesia)
• HSFO 180 CST 2% S (spot/cargo, Singapore)
• HSFO 180 CST (spot/cargo, Singapore)
• HSFO 380 CST (spot/cargo, Singapore)
• Naphtha(spot/cargo, Singapore)

Variable Operating Costs
Purchased Electricity (Singapore retail rates)
Purchased Fuel Gas (Basis still to be determined)
Catalyst and chemicals (Price provided by Turner Mason, updated annually)

Caribbean

Calculated Crudes: Arab Berri, Arab Heavy, Arab Light, Arab Medium, BCF 17, BCF 22, BCF 24, Basrah Light, Bonny Light, Brass River, Brent, Cabinda, Cano Limon, Cusiana, Escalanta, Forcados, Isthmus, Kuwait, Maya, Merey, Mesa, Olmeca, Rabi Blend, Soyo, Statfjord, Troll

• Values are calculated for coking and cracking.

• Byproduct credits are assumed for sulfur and petroleum coke. Turner Mason will supply annual updates on the value of both.

• Light ends, MTBE and NY harbor residual fuel prices are netted back from NY harbor using Platts spot freight assessments in conjunction with Worldscale 100 rates.

• The marine fuel 180 CST AND 380 CST prices are based on the price relationships of marine fuels in Houston compared to the high sulfur residual fuel prices in the US Gulf Coast.

Product slate

• Normal butane (Mont Belvieu)
• Unl 87 RFG (spot/cargo, NY)
• Prem Unl 93 RFG (spot/cargo, NY)
• Unl 87 (Spot/cargo, NY)
• Prem unl 93 (Spot/cargo, NY)
• Naphtha (spot/cargo, Caribbean)
• Jet Kerosene (spot/cargo, NY)
• LS No. 2 (spot/cargo, NY)
• No. 2 Oil (spot/cargo, NY)
• No. 6 0.3% S high pour (spot/cargo, NY)
• No. 6 0.7% S (spot/cargo, NY)
• No. 6 1.0% S (spot/cargo, NY)
• No. 6 2.0% S (spot/cargo, Caribbean)
• No. 6 2.8% S (spot/cargo, Caribbean)
• Marine Fuel Oil 180 CST (formula - see note above)
• Marine Fuel Oil 380 CST (formula - see note above)

Variable Costs
Fuel (No. 6 2.8% S, spot/cargo Caribbean)
Catalyst and chemicals to reduce corrosion from high naphthenic acid content of crude (Price provided by Turner Mason, updated annually)