FUELSNews 360° - Q2 2018 by FUELSNews

M A R K E T

N E W S

I N F O R M A T I O N

2nd QUARTER

Table of Contents FUELSNews 360° Quarterly Report Q2 2018 FUELSNews 360°, published four times annually by Mansfield Energy Corp, analyzes and summarizes the prior quarter’s activity in the oil, natural gas and refined products industries. The purpose of this report is to provide industry market data, trends and reporting – both domestically and globally to provide insight into upcoming challenges facing the energy supply chain.

Executive Summary

Overview 6

April through June 2018

Economy & Demand

Fundamentals

Global Production Trends

Inventories

Supply and Markets

Risk, Regulation and Exports

Canada

Nate Kovacevich

Alternative Fuels 26

Renewable Fuels

Debunking Three Biodiesel Myths Sara Bonario

Natural Gas

Supply, Demand, Storage Martin Trotter

Legal 18

Ozone Standards Impact Fueling

Congress Passes Onmibus Bill to Fund Government

Viewpoints 30

Implications of Today’s Growing Truck Driver Shortage Nikki Booth

How Laws of Nature Impact Fuel Procurement Madi Burton

Regional Views 20

Regional Views continued 25

Gulf Coast & Southeast

Chris Carter

Hurricane Season is Here – Are You Prepared? Will Shinn

Northeast

Fuel Quality Matters

Central

Impact of IMO 2020 on Fuel Prices

Josh Wakeman Nate Kovacevich

Clint Hamlin

Alan Apthorp

West

Amy Nguyen

FUELSNews 360˚ Supply Team

Q2 2018 Executive Summary Oil Market Summary

The second quarter brought new heights for oil prices, with American crude oil rising from a beginning price of $63 to $74 by quarter’s end. Geopolitics was the resounding trend throughout the quarter – Syria, Libya, Iran and Venezuela each took their turn in propelling oil prices higher. The most notable event of the quarter was President Trump’s withdrawal from the Iran nuclear deal in early May – sending oil prices hurdling above $70 for the first time in years. Fresh sanctions on Iranian oil output will effectively remove 1 million barrels per day from the market – a major blow to a market that was roughly in balance at the end of Q1. Other production outages in Venezuela, Canada and Libya combined to keep prices elevated throughout the quarter, despite OPEC’s commitment to mitigate supply shortages by increasing production by 1 million barrels per day. At the fuel price level, refined products continued their steady rise as well. Diesel prices for the quarter were 11.5% higher than in Q1, while gasoline prices zoomed 13% higher. Around the country, refiners pumped out fuel at record pace, with refinery utilization rising to its highest level in a decade in June. Looking ahead to Q3, markets are expected to cool as the numerous supply outages from Q2 are slowly corrected. Check out what major banks and analyst is groups are expecting for the second half of the year on page 8. While supply is expected to normalize in Q3, consumers should be prepared for unexpected price shocks – spare production capacity around the world is limited, so a surprise pipeline outage or export disruption could easily cause prices to rise even higher than Q2 highs. Regional Summary

At the regional level, outages created disparate price impacts for consumers. The Colonial Pipeline, the dominant supply source for markets between Houston and Maryland, took Line 3 and Line 4, which transport gasoline and diesel from Greensboro, NC, to Linden, NJ, offline for maintenance in early March. The outage was short-lived, but consumers felt the price impact temporarily, particularly in premium gasoline prices. Colonial also announced Line 25, which feeds western Virginia, will be shut down in September, creating additional fuel costs for those living in Roanoke, VA. Check out Chris Carter’s article on the Gulf Coast and Southeast on page 20.

In the Great Lakes region, an explosion at Husky’s Superior refinery has taken a significant portion of local supplies offline, requiring fuel to be shipped via pipeline from the Twin Cities. While fuel supplies are available in the Duluth-Superior area, trucking capacity has been stretched thin. Read more in Nate Kovacevich’s article on page 23. On the West Coast, numerous refinery outages contributed to strong upward pressure on fuel prices. Additionally, the Olympic Pipeline in the Pacific Northwest experienced a 4-day outage, interrupting supplies. California already has strong demand during the summer, so any unplanned supply outages amplify the pressure pushing prices higher. Amy Nguyen provides more details on page 24. Market Insights

One question frequently asked of Mansfield’s customer team is why fuel delivery tickets show two different gallon quantities – net and gross. On page 31, FUELSNews analyst Madi Burton provides insight into what those different quantities mean, why they came about, and which metric is most common in your area. Summer is upon us, and with it comes the risk of hurricanes wreaking devastation and disrupting fuel supplies. The NOAA predicts a high probability of hurricane activity being at or above average this season, meaning fleets must be proactive to ensure last year’s challenges are not repeated. Emergency response expert Will Shinn provides best practices on page 32 to help fleets ensure reliable fuel supplies during emergency situations. Do you know what’s in your tank? According to EPA studies, 83% of tanks have moderate to severe corrosion. Dirty fuel can have a hidden impact on your vehicles, robbing you of fuel efficiency and causing engine malfunctions. Clint Hamlin explains on page 34 how to test your fuel and restore vehicles back to full efficiency.

Closing this quarter’s FUELSNews 360° is a report from FUELSNews lead writer Alan Apthorp on the effects of IMO 2020 on fuel prices. This change in maritime fuel specifications has been described as the “biggest change in the history of the oil market” according to researchers at Energy Aspect. Find out how fuel prices will be impacted in 2019 and 2020 by this marine law change, and what you can do to get ahead of the increase. •

OVERVIEW April through June 2018

The second quarter brought significant changes in crude markets, with the overall trend being towards higher prices. The quarter began with crude trading at $63, down from its March highs of $65, as markets feared Trump’s trade war with China would take off. At the time, Trump was threatening to impose tariffs on $60 billion of Chinese imports. Throughout Q2, the tariff threat between China and the U.S. escalated, reaching some $200 billion by quarter’s end. Oddly, the market’s reaction to threats cooled as the quarter marched on and threats grew. The general expectation was that Trump was using the so-called trade war to increase negotiating leverage over the Chinese, so the end result would be better trade, not less trade. Right in time for China’s early-April call for open trade and negotiations, markets were rattled by geopolitical tension in Syria. A chemical attack killing 48 individuals caught America’s attention, and Trump’s reaction was closely scrutinized. Led by the level-headed Defense Secretary Jim Mattis, America launched a missile attack in conjunction with allies on Syrian chemical manufacturing warehouses. While missile strikes in the Middle East are rarely good for fuel consumers, in this case, markets considered the reaction surprisingly mild, and responded by letting prices fall. By late April, direct geopolitical conflicts had ended, leading markets to focus more on fundamentals – as well as the organization allegedly manipulating those fundamentals. Trump tweeted that OPEC was artificially propping up oil prices – not exactly false, though OPEC is not 6

the only culprit behind high oil prices. In fact, Trump’s own foreign agenda was about to cause prices to rise even higher. In early May, ahead of the May 12 deadline to renew sanction waivers for Iran, President Trump announced the U.S. was withdrawing from the Iran nuclear deal, triggering sanctions to be imposed on Iran. Throughout Q2, the State Department showed rigorous commitment to sanctions, telling countries they must comply no later than November, 2018. Sanctions prevent Iranian oil from reaching the market, creating a functional supply shortage. Not long after withdrawing from the Iran nuclear deal, the U.S. threatened sanctions on a different country – Venezuela. Venezuela has been undergoing significant political and economic stress, such that investment in Venezuelan oil has plummeted. When their sitting president Maduro emerged victorious in an election widely regarded to be fraudulent, America threatened to cut off exports of oil diluents, very light liquids that help Venezuela’s heavy crude oil flow more efficiently through pipelines. While America did not impose oil sanctions on Venezuela, they did sanction any purchases of Venezuelan bonds, causing the economy to decline further. Venezuela’s oil output, which averaged 2.4 MMbpd in 2016, fell to just 1.3 MMbpd in June. The IEA expects Venezuelan production to fall even lower, to nearly 1 MMbpd, by the end of 2018, representing a 600 kbpd loss for the year.

Overview

WTI Crude Oil Prices

Source: New York Mercantile Exchange (NYMEX)

Between Iran sanctions taking 1 million barrels per day off the market, and Venezuela’s loss of 600 thousand barrels per day, markets panicked about how expensive oil prices could get. This propelled WTI crude into the $70 range, and Brent crude oil even passed $80 for a brief stint. To allay concerns of market tightening, OPEC stepped up to calm the markets, offering to increase production to offset losses in Iran and Venezuela. The potential increase helped alleviate market fears – bringing prices back to the $64-$67 range. But the reprieve from higher prices would only be temporary. As the quarter neared its close, Libyan production began to plummet in response to rebel forces taking control of their main export facilities. Output fell by 850 thousand barrels per day. At the same time, an outage at Canada’s Syncrude facility set global supplies back another 350 kbpd in June and into July.

Quarterly WTI Crude Prices

Markets needed OPEC to step up quickly to increase supply and alleviate the shortages – but their hopes were dashed when OPEC agreed to raise output only back to the original levels agreed upon in 2016 and 2017 under production quotas. The commitment from OPEC represented just a 1 million barrel per day increase, in the face of 1.6 MMbpd losses from Iran and Venezuela and another 1.2 MMbpd in temporary losses from Libya and Canada. Additionally, OPEC left markets unclear by refusing to clarify who would increase production – only Saudi Arabia and Russia have enough excess capacity to fill the 1 MMbpd increase promised by OPEC. Q2 ended with markets highly uncertain of the future for oil supplies. Prices opened the quarter at $63 and ended at a high of $74, a mighty $11 rise during the quarter. Prices averaged $67.91, more than $5 higher than the average Q1 2018 price and just shy of $20/bbl (or 50 cents per gallon) above Q2 2017. 7

Source: Energy Information Administration (EIA)

Overview Although OPEC (particularly Saudi Arabia) has committed to help balance the market when necessary, it’s unclear whether OPEC nations have enough spare capacity to bring the markets back to balance. American production continues rising, but pipeline constraints will keep most of that oil trapped in the U.S. until the end of the year and into 2019. Markets expect continued tightness for crude oil prices heading into Q3. Looking to the future, the consensus of major banks is that oil prices will likely remain elevated in the high $60s to low $70s over the next few months. A survey of 31 banks taken by Investing.com shows the average consensus price for Q3 2018 will be $68.44, meaning more of the same volatility seen in Q2. Prices are expected to weaken slightly heading into Q4 and through 2019 as supply constraints lighten up and more American oil can hit international markets.

Bank Crude Price Forecast Mean

Q4 18

$69

$67

$58

$68.44 $67.04

Median

Maximum Minimum

Q3 18

$78

# of forecasters

$81 31

Q1 19

$66.08

$66.44 $79

$53 26

Of course, many of the forecasts feeding this report were published at the beginning of the year and never updated, so there’s a mixture of perspectives in that survey. Some of the more recent updates skew a bit higher. Goldman Sachs in June estimated Brent crude (which typically trades $4-5 above WTI crude) would reach $82.50 over the summer, with price risk skewed to the upside. Conversely, JP Morgan estimated in June that WTI prices will sink to average $62.20 in the latter half of 2018. Merrill Lynch in May noted crude prices in the second half of the year will likely average $65-70, shooting to $85 in 2019. •

Fuel Prices Overview

Much of the fluctuation in fuel prices tracked along with the wild volatility seen in crude oil in Q2. Throughout the second quarter, diesel prices maintained their premium over gasoline, a change from gasoline’s preeminence in March. The two products have moved in very close proximity, though rising refinery output in June helped to bring gasoline prices relatively lower.

Quarterly Gasoline Prices

NYMEX diesel fuel began the month trading at $1.9802, and traded below $2/gal for just a few days before rising quickly to $2.10 in early April. Prices continued rising throughout April and through most of June, peaking at a high of nearly $2.30 before trending back down towards lower ground. Diesel prices ended the quarter at $2.21, a gain of 11.5% for the quarter. Diesel prices averaged $2.15 in Q2, the highest average price since Q4 2014 when prices were $2.32. Diesel prices rose 17 cents over Q1 levels, and 64 cents (42%) above diesel prices last year.

Quarterly Diesel Prices

Source: Energy Information Administration (EIA)

Gasoline prices began the quarter at $1.9660, just below diesel’s opening price. Like diesel prices, gasoline peaked at $2.27 in late May, before falling back down to nearly $2 in June. On June 21, gasoline prices dipped below $2/gal in intraday trading, but managed to bring prices higher once again. Gasoline prices closed the quarter at $2.18, gaining 10.8% during the quarter. Gasoline prices averaged $2.11 in Q2, the highest quarterly gasoline price since Q3 2014 when gasoline prices were $2.75 (by Q4 2014, prices had plummeted to just $1.98!). Gasoline prices this quarter were 25 cents (13%) higher than Q1 2018, and 53 cents (45%) higher than this same time in 2017. •

Source: Energy Information Administration (EIA)

Overview

Diesel Rack-to-Retail Spreads

Rack-to-Retail Spreads

At the retail level, fuel prices were a bit less volatile than wholesale prices. Rack-to-retail spreads, the difference between prices at the pump and prices for wholesale fuel delivered to a bulk tank, tend to fluctuate dramatically week-to-week. In general, retail prices tend to be slower to rise or fall than wholesale prices, so the increases in prices in Q2 helped narrow the gap between retail prices and bulk fuel. The exception was in early June, when fuel consumers buying at retail stations felt less savings when prices dropped than did bulk fuel buyers.

Source: Energy Information Administration (EIA)

Gasoline Rack-to-Retail Spreads

Diesel rack-to-retail spreads averaged 35 cents in Q2, ranging from 28 cents up to 44 cents at the end of the quarter. This represents a slight decrease compared to Q2 2017, when retail diesel prices averaged 37 cents above wholesale rates. Gasoline spreads have been quite volatile over the past year, particularly around August-September 2017 during Hurricane Harvey. This quarter, the average spread was 19 cents, a few cents below the 22 cent average from Q2 2017. â&#x20AC;˘

Source: Energy Information Administration (EIA)

ÂŠ 2018 Mansfield Energy Corp

Overview

Summary, Second Quarter, 2018

$2.2093 $2.1791

$74.15

24271.41

Source: New York Mercantile Exchange (NYMEX), Dow Jones Industrial Average

ÂŠ 2018 Mansfield Energy Corp

ECONOMY & DEMAND

Economic growth was strong in Q2, though IMF Chief, Christine Lagarde noted, “The clouds on the horizon…are getting darker by the day.” Economic data continued to show strong results despite political tensions laying the foundation for slower growth in the future.

U.S. GDP Growth GDP % Growth

Global growth is on track to add 3.9% this year, according to the IMF. This rate would be the fastest growth since 2011, and .1% higher than 2017 growth. Growth is being driven by a synchronization of global economies. All the major global economies – Europe, North America, China and Japan – outperformed growth expectations last year, setting the stage for big wins this year. U.S. GDP is on track to grow at over 4.5% on an annualized basis in Q2 according to the Federal Reserve, reviewing a range of indicators including trade, manufacturing, home sales and employment. That’s a significant improvement over forecasts for Q1, 2018, which registered at 2.3% in the Commerce Department’s latest report.

Source: U.S. Commerce Department, Federal Reserve Bank of Atlanta

U.S. Unemployment Rate

A leading indicator of economic growth in Q2 was unemployment rates, which continued to sink to their lowest level in decades. After stalling at 4.1% for Q4, 2017 and Q1, 2018, unemployment tracked even lower in April and May, dropping to 3.9% and 3.8%, respectively. Strong employment statistics helped to fuel economic demand throughout the country. • Source: Bureau of Labor Statistics

U.S. Economic Risks

Economy & Demand

While economic growth in the U.S. appears robust, there are certain risks on the horizon that could dampen prospects for continued growth. 1. Interest Rates The first significant dampener on economic growth is interest rates. The Federal Reserve increased interest rates in Q2 to between 1.75% and 2%, the highest level since 2008. The Fed also indicated at least two more hikes were coming before the end of 2018. We’ve spent a lot of time recently talking about OPEC and other oil supply/demand trends, so today we’ll quickly examine why interest rates matter to the economy and to oil prices. Interest rates are a lever used by the Fed to keep the economy running smoothly. During recessions, they lower interest rates to make it easier to borrow money – more borrowed money means more money flowing through the economy. As the economy strengthens, they increase interest rates to keep inflation in check. The near 0% interest rates from 2009-2015 was unprecedented in US economic history, so it will take a lot of rate increases to return to a historically “normal” level, around 5%. Interest rate increases cause a strengthening of the dollar. Higher interest rates in the U.S. mean American bonds have higher returns relative to other countries. As a result, investors rush to buy U.S. dollars so they can buy American bonds. The dollar and commodities such as crude are inversely correlated – as investors put their dollars into bonds, there are fewer dollars remaining to spend on oil contracts, weakening trading demand and causing prices to fall. Thus, this quarter’s interest rate hike has created headwinds for oil prices.

Additionally, as we noted interest rates are used as the economy grows to dampen its growth, smoothing out both the peak and the trough of the business cycle. Thus, higher interest rates will moderate the economy somewhat over the next few months, which in turn will reduce overall oil consumption for the U.S. 2. Tariffs Trade tariffs have been a major market mover for the past few months, with markets particularly focused on the rivalry between the United States and China. The dispute began with Trump imposing a tariff on steel imports last quarter, to which China responded with tariffs on $3 billion of American goods. Trump increased the threatened amount of taxed imports in April to $50 billion and then to $200 billion, which China matched step for step. In May, the White House announced they would follow through on imposing 25% tariffs on $50 billion of Chinese imports. Approximately $34 billion of imports are effective July 6, with more to come in future months. The timing is actually quite amusing. On June 14, analysts noted that India and China were both discussing ways to buy more American oil to diversify their supply portfolios. Less than a week later, Trump threatened to impose 10% tariffs on $200 billion of Chinese imports. China responded by publishing a list of their own, including American petroleum products, as tariff targets. American oil prices suffered in response to the threat of lower demand, with American crude falling to $10 below international Brent crude prices. •

Economy & Demand

U.S. Gasoline Demand Thousand Barrels Per Day

Source: Energy Information Administration (EIA)

Oil Demand

U.S. Diesel Demand Thousand Barrels Per Day

Strong economic activity helped to keep a steady pull on fuel supplies, both in the U.S. and globally. In the U.S., gasoline demand has been an example of strong consumer activity. Gasoline hit an all-time record high of 9.88 MMbpd on June 8, setting the tone for strong demand all summer long. Demand has been at the upper-edge of normal seasonal activity based on historical data, with some weeks peaking above the normal range. Gasoline demand typically plateaus in July or August, so expect demand to remain strong for the coming quarter. Diesel demand has been a bit more volatile, swinging up and down within the seasonal range. Diesel demand tends to be less responsive to seasonality, and more reactive to economic growth. In general, diesel demand was above average in Q2, though without the historic peaks gasoline experienced. Looking towards the future, even more diesel will be consumed by marine vessels leading up to IMO 2020, which you can read more about on page 36.

Source: Energy Information Administration (EIA)

World Liquid Fuels Consumption

Globally, liquid fuel consumption is expected to rise, surpassing 100 million barrels per day this year on an annualized basis. Year-over-year demand growth is on track to be just shy of two million barrels per day, in line with recent years. Historically, while the U.S. and China have been major drivers of global demand growth, a large portion of growth over the next few years is expected to come from other economies picking up steam and increasing demand. As countries develop, their need for additional oil to fuel more growth plateaus – increasing vehicle efficiency regulations keep demand relatively stable. In less developed nations, those regulations do not exist, leading developing countries to demand significantly more fuel as individuals join the middle class and purchase their own vehicles. •

Source: Energy Information Administration (EIA)

F U N D A M E N TA L S

Global Production Trends The U.S. continues to be a major player in global oil production, leading the charge among non-OPEC oil producers. While OPEC’s production cuts have given them spare capacity available to fill in future supply gaps, few other areas have the spare capacity to pick up the slack. Outside of OPEC, the U.S. is the only major producer rapidly growing output; many other larger producers have even been cutting production.

In late 2017, U.S. production reached a historic record, surpassing the previous 1970s record. Production has continued rising throughout Q2, with average production increasing by 570 MMbpd over Q1 2018. The trouble with American production is that producers struggle getting oil to the market. Crude oil in West Texas sank to a $10 discount to regular WTI crude oil. As pipelines come online later in 2018 and in 2019, that oil should flow to the market and help boost American oil prices.

Non-OPEC Crude Oil and Liquid Fuels Production Growth

Source: Energy Information Administration (EIA), Short-Term Energy Outlook, June 2018

Globally, total production rose from 98.65 MMbpd to 100.11 MMbpd in Q2 according to the EIA. If their assessment of Q2 production levels is correct, it would be a notable achievement for global demand to surpass 100 MMbpd for the quarter; market analysts expect 2019 production to average at least as high or higher. Strong production growth is necessary to keep up with robust oil demand, which has been rising in response to solid economic activity. The overall outlook for supply and demand appears quite balanced – although production is rising, demand is rising in lock-step. As we’ve noted before, a balanced market makes volatility likely. A number of geopolitical events are unfolding that could easily swing the balance towards oversupply or undersupply – Iran, Venezuela, OPEC meetings, North Korea and more. •

World Liquid Fuels Production and Consumption

Source: Energy Information Administration (EIA), Short-Term Energy Outlook, June 2018

Inventories

Crude Inventories

Source: Energy Information Administration (EIA)

Diesel Inventories 5-Yr Range

Oil inventories in the U.S. have been steadily increasing throughout Q2, going against the seasonal trend of declining stocks. Refinery maintenance season in the beginning of the year causes stocks to build, then as summer gasoline demand comes online, crude stocks are drawn down. While the stock build was not large, markets certainly took note of falling stocks. Contrast this quarter’s meager draws with the significant decline in Q2 last year. While crude stocks fell just 7.5 million barrels (-1.8%) this quarter, last year crude inventories plummeted from 535 million barrels to just 494 million barrels, a 31 million barrel (6.1%) decline. After a year of destocking, inventories are leveling off and trending steadily Of course, while a large focus has been placed on national crude stocks, an equally important source of market volatility was crude stocks in Cushing, OK, the delivery point for NYMEX WTI crude oil. Supply and demand in Cushing is uniquely important since it’s one of the largest crude storage hubs in the country.

Source: Energy Information Administration (EIA)

Gasoline Inventories 5-Yr Range

Source: Energy Information Administration (EIA)

In the latter half of 2017 and into 2018, Cushing inventories fell quickly, from 64 thousand barrels to less than 30 thousand barrels. That downward spiral ended in late January, switching to slight builds. However, Canada’s Syncrude production operations faltered in June, causing inventories to fall quickly and put upward pressure on inventories once again. The Syncrude production outage is covered in more depth on page 25. Stocks fell steadily throughout Q2. Inventories are 34 million barrels below last year’s level, with most of the tightness focused in the eastern half of the country. •

Fundamentals

Days of Supply

Days of Crude Supply vs. Crude Price

While inventories are a useful metric for markets, it does not take into consideration changes in demand. Crude inventories are higher now than they were in 2012, but demand has also increased. How can the two be compared? Days of supply, reported by the EIA, divides inventory levels by average daily oil demand, and serves as a way to standardize between different timeframes. When comparing days of supply against their corresponding oil price, an obvious pattern emerges – the fewer days of supply available, the higher prices tend to be. Economics 101 would tell us as much: low supply equates to higher prices. What’s interesting is that there tends to be a significant gap in prices when days of supply are above 25 days and when they’re below this level. Above 25 days of supply, the average WTI price is roughly $50. Below 25 days of supply, prices tend to be above $80. This quarter ended with days of supply at 23.7, a razor’s edge away from the high price arena. An increase in demand, or a reduction in supply, could easily tip markets towards rapid price increases. •

Source: Energy Information Administration (EIA) and New York Mercantile Exchange (NYMEX)

Markets Remain Backwardated

The forward curve continues to show steep backwardation – meaning future prices are estimated to be lower than current (prompt month) prices. While this would seem to mean prices will fall in the future, backwardation actually spurs prices to rise. Backwardation tells suppliers to sell inventories now, and refill them in the future when prices fall. It also incentivizes oil producers to invest in short-term production rather than long-term production. As prices slipped down to $30-40/bbl, the forward curve maintained a contango arrangement – that is, future prices were higher than prompt month prices. Once prices began rising above $50, the forward curve flipped to backwardation, and prices have been soaring ever since. As long as the forward curve continues to show backwardation, market pressure will keep oil prices elevated. • 16

Fundamentals

Geopolitical Risk

Over the past few months, markets have shifted from a focus on fundamentals to following geopolitical events. The marketplace in Q2 demonstrated the old trader adage, “Buy the rumor, sell the news.” Before Trump announced his response to Syria, markets were unsure what Trump would do. He had threatened to send missiles, but there was no indication of where or when he would send them. As a result, traders bid up oil prices, expecting a highly destabilizing strike and the possibility of a Russian response. The rumors turned out to be more severe than the actual news. Trump’s attack was coordinated with two major allies to increase credibility and was carefully targeted at chemical weapons manufacturing locations. While John Bolton has taken the position of National Security Advisor, the Syrian response was proposed and influenced by Defense Secretary Jim Mattis, known for having a cooler head. Although much more expansive strikes were considered, a measured yet forceful solution was achieved. In response to the restraint, markets cooled. This same story played out when the U.S. withdrew from the Iran nuclear deal. Markets feared the worst leading up to the event, but Trump chose to allow up to 180 days for companies to comply, giving time for traders to sort out their response. The day of the announcement, prices fell, though they continued rising the next day. The market trend is a good reminder that supply and demand does not move markets – traders move markets. Their perception of supply and demand often matters more than actual fundamental news. While traders generally try to follow important trends, they can become exuberant, pushing prices either too high or too low. The fact that traders, not fundamentals, move markets ensures volatility will continue, since consensus can quickly shift to a new position. •

Exports

Biofuel Regulation Changes Impact Refineries and Fuel Markets

While markets were hyper-focused on the Middle East, the White House made some significant changes in biofuel policies. For the past few years, renewable fuels like ethanol and biodiesel have been supported by a subsidy called RINs (Renewable Identification Numbers) put in place by the Renewable Fuels Standard (RFS). Those RINs are produced along with each gallon of biofuel, and must be purchased by refineries to offset petroleum production. This week, Trump announced a policy waiver allowing E15 gasoline to be sold year-round (previously, it could not be sold in the summer for environmental reasons). That means more demand for ethanol – a win for biofuels producers (because they can sell more) and a win for refineries (because more biofuel production will lower the price of RINs). It will also offset gasoline demand by up to 5% as suppliers replace more gasoline with ethanol. The net result would be lower prices for consumers. The move is seen as a major win for the biofuels industry and consumers.

Over the past year, exports of petroleum products – both crude and refined fuels – have been rising significantly. Part of that has been pushed out – as U.S. production rises near the Gulf of Mexico (for instance, in the Permian Basin in West Texas), it’s easier to export oil than to ship it to refineries in other parts of the country. The steep discount between crude oil in West Texas and WTI market prices shows the abundance of crude oil in the U.S. unable to get to the main market. As pipelines come online to move that crude towards ports, even more crude will be pushed to international markets. In addition to the push of increased production, supply disruptions around the world have created a pull on supplies from the U.S. While Venezuela is the most obvious culprit, other countries have also increased their imports from the U.S. For instance, exports to Mexico have risen to all-time highs over the past year as their national oil company, Pemex, has languished. •

U.S. Quarterly Crude Exports Rise

MMbpd

On the flip side, Trump is considering allowing exported biofuel gallons to qualify for RINs creation. Currently, only biofuels consumed in the U.S. qualify. Biofuel producers are more skeptical of this change, since it would dramatically lower the price of RINs (by increasing the supply of RINs-generating fuels) and would likely lead to retaliatory trade barriers from other countries targeting biofuels. Refiners, of course, are supportive of any policy lowering RINs’ prices. • 17

Source: Energy Information Administration (EIA)

LEGAL

Ozone Standards Impact Fueling

U.S. Gasoline Requirements As of January 2018

On May 1, 2018, the EPA issued a final rule designating 51 areas in the United States as “nonattainment” areas, meaning they are out of compliance with the 2015 National Ambient Air Quality Standards (NAAQS). The severity of air quality problems in each area is classified from “marginal” to “extreme.” Most of the areas were deemed to be in marginal nonattainment, and those areas have three years to lower pollution to levels that meet the standard. Two areas were designated as being in extreme nonattainment, much of the Los Angeles Region and the San Joaquin Valley. Those areas will have two decades to comply with the standard.

Areas which do not meet the NAAQS requirement are required to use a unique gasoline blend with a lower Reid Vapor Pressure, meaning it gives off less vapors which are harmful to our air quality. Diverse fuel blends add complexity to the supply chain. For example, when shortages occur in areas requiring low RVP fuel, gasoline cannot be trucked in from nearby cities if those cities have different requirements; instead, the area must wait for low RVP fuel to become available again. •

This map is not intended to provide legal advice or tobe used as guidance for state and/or federal fuel requirements. Including but not limited to oxy fuel or RFG compliance requirements. ExxonMobile makes no representations or warranties, express or otherwise, as to the accuracy or completeness of this map. B.K Larson IN#013018

Source:Source: American Fuel & Petrochemical Manufacturers

House Hearing: Future of Transportation Fuels and Vehicles On March 8, the House Energy and Commerce Subcommittee on the Environment held a hearing titled, “The Future of Transportation Fuels and Vehicles.” John Eichberger, Executive Director of the Fuels Institute, testified at the hearing. Eichberger believes vehicle and fuel markets will evolve gradually in the future, without the influence of strong external factors such as policy or regulations. He also outlined the key factors that could impact the adoption of EVs by the market including increases in oil prices, advancements in the efficiency of internal combustion engines and changes in battery prices. The hearing touched on many topics including the future of gas stations, EVs, ethanol, the Renewable Fuel Standard (RFS) program, CAFE standards and internal combustion engines. When asked what gas stations may be like ten years from now, Mr. Eichberger said he expects them to generally remain the same, but may have higher-level ethanol blends and more EV charging stations available. Some of the members were interested in discussing EV acceptance by the market, its effect on the electric grid, environmental effects and its relationship to the gas tax. 18

Legal Regarding ethanol, witnesses agreed E15 and other higher-level blends of ethanol will play a growing role in the future, but members were split on the value of these fuels. Some expressed concerns over the marketing of E15, noting it can be very confusing. Mr. Eichberger agreed, but emphasized there can be confusion on all fuels and consumers need to be better educated.. Others argued E15 is very sellable and retailers should make sure the product is labeled correctly. Regarding internal combustion engines, EIA projects internal combustion engines engines will remain the primary power source for vehicles over the next few decades. Hybrid vehicles and EVs are likely to increase their market shares, but many consumers prefer the status quo. Improvements in efficiency, emissions profiles and economy of internal combustion engines will also play a significant role, as these positive developments can help lower fuel prices for consumers, making it hard for emerging technologies to compete with internal combustion engines in a meaningful and cost-effective way. •

Congress Passes Omnibus Bill to Fund Government In April, the Senate passed omnibus legislation to fund the federal government through September 30, 2018. President Trump had threatened to veto the legislation citing its failure to fund a border wall or address the immigration status of people who were brought to the U.S. illegally as children. Trump did sign the bill, though, stating it provided much needed funding for the military. The 2,232-page bill drew criticism from members of both parties, who claimed there was insufficient time to thoroughly review its contents. The omnibus bill largely continues FY17 funding levels for federal agencies and rejects the severe cuts proposed in the Trump Administration’s budget request.

The EPA’s operational budget will remain the same, although the agency would receive several hundred million in additional funding for grants and loans to states for environmental cleanups. The bill does not include funding requested by the president for large-scale buyouts of existing EPA personnel. Also, a provision that would have protected EPA’s repeal of the 2015 Waters of the U.S. (WOTUS) rule from legal challenges was dropped from the bill. The Department of Energy would receive $34.5 billion (an increase of nearly $3.8 billion) including an increase of $47 million for the Advanced Research Projects Agency, which President Trump had proposed to eliminate, and an increase of $868 million for the Office of Science.

The omnibus contains $27.3 billion in discretionary funding for the Department of Transportation (DOT), an $8.7 billion increase, including $45 billion from the Highway Trust Fund to be spent on the Federal-aid Highway Program ($1 billion increase). In addition, the bill provides an extra $2.5 billion in discretionary highway funding (an increase of $3.5 billion) for roads and bridges. DOT transportation safety programs and agencies would receive the following funding: $947 million for the National Highway Traffic Safety Administration (an increase of $36 million) $845 million for the Federal Motor Carrier Safety Administration (an increase of $201 million) 272 million for the Pipeline and Hazardous Materials Safety Administration (an increase of $8 million)

Within these amounts, the bill provides more than $100 million for automated vehicle research and demonstrations. The bill also increases DOT’s TIGER grant program funding to $1.5 billion. The Trump Administration proposed to eliminate the TIGER grant program, which provides funding to states and localities for repairs and improvements to freight, port and transportation projects that are not otherwise eligible for federal funding. •

REGIONAL VIEWS Chris Carter,

Supply Manager See his bio, page 38

Gulf Coast & Southeast

On March 2nd, Colonial Pipeline shut down Lines 3 and 4, which run from Greensboro, NC, to Linden, NJ, to investigate possible issues. During the shutdown, Colonial also closed spur Lines 25 and 27 running through Mitchell Junction to the Montvale and Norfolk area. Even though the shutdown lasted less than 24 hours, it still impacted the delivery of batches across the entire system. Suppliers rely on the cycles remaining ratable in order to properly manage inventory levels. Batches on Colonial normally run on a 5 to 6 day delivery cycle but the shutdown pushed batch delivery cycles to 6 to 7 days along the main line and 7 to 8 days on spur lines. Many terminal areas experienced tighter supply due to the change in delivery dates. Premium gas allocations were impacted the most as the majority of suppliers were already running on very lean inventory levels. •

Jones Act Rates Continue to Fall In 2015 – 2016, the Jones Act vessel market skyrocketed. The high costs for tankers during these years were driven by many factors including: high crude prices, St. Croix refinery closing, an aging Jones Act fleet and a spike in demand for domestic crude shipments. Many refined product vessels were converted to crude vessels to keep up with rising demand in those years. Tankers were trading over $100,000 per day - that is if a tanker was even available to rent.

Fast forward to 2018, where we are experiencing lower crude prices, increased pipeline connections, less restrictions on U.S. crude exports and a larger Jones Act fleet, resulting in lower costs and larger numbers of vessels looking for work. The combination of these factors have cut the daily vessel rate to under $45,000. Fuel buyers in the Florida market have benefited as prices have decreased drastically over the past three years. Marketers believe vessel rates have finally found their floor value and they expect the current rates to continue for the next few years. • © 2018 Mansfield Energy Corp

Regional Views

PADD 3 Expectations

I expect Q3 to be bearish for prices in PADD 3 as no major turnarounds are expected and refineries are running at full capacity. I anticipate basis values for both gas and diesel to remain flat for most of the summer months. As we transition out of LRVP season, basis values will begin to weaken. •

Colonial Line 25

Colonial officially announced Line 25 will be shut down on September 30, 2018. Colonial plans to stop shipping all products to the Montvale market, leaving terminals in the area without fuel supply. The Roanoke market will continued to be supplied by the Plantation Pipeline. Plantation is working on increasing capacity on the Roanoke line to help with the additional demand from the Montvale market. Greensboro, Richmond and Knoxville terminals are also expected to see an increase in demand as Montvale shuts down. •

Natural Gas Competitive Prices Reliable Service Dedicated Support

Trust Mansfield Energy as your partner to manage and optimize every aspect of your energy needs. From procurement, storage and risk management strategies, Mansfield provides competitively priced solutions backed by the highest level of customer care.

www.mansfield.energy • 800.695.6626 21

Regional Views

Josh Wakeman, Supply Manager See his bio, page 38

Northeast

Last quarter, diesel netbacks shrunk while the NYMEX increased driving the overall market higher. As winter and refinery maintenance ended, diesel became more plentiful narrowing the spread between local racks and the New York Harbor benchmark. The forecast for next quarter is a bearish diesel market (prices are expected to remain lower) with diesel product continuing to flow strong in the region. Gas, on the other hand, has a bullish forecast (prices are expected to increase) with the summer driving season underway. •

Bilateral Proposal for the Laurel Pipeline

The Laurel pipeline continues to be a topic of debate for Pennsylvania. After PUC’s recommendation to deny the reversal of the pipeline, Buckeye has proposed a bilateral option. The proposal suggests physical product be shipped from the Midwest refineries to the Altoona area consistently. The idea behind the proposal is to have “actual” volume move in either direction (from the Midwest to Altoona or from the East coast to Pittsburgh) while the physical product flows in only one direction west to east. This goes against the PUC’s recommendation and is awaiting FERC approval. Midwest refiners would consider this a win as they would be able to get their product further east. •

Boutique Gases to Continue to Shrink

The long standing low RVP summer gas requirement continues to lose its presence across the country. Over the past few years, some states have completely removed the requirement for summer gasoline blends. Pennsylvania is also trying to remove the requirements in various counties. The attempt is in the final stages and is waiting for EPA approval. If approved, Pennsylvania will continue to work on standardizing gas requirements across the state, requiring less blends and boutique fuels. As a result, gas prices could fall slightly as refiners have less additional outlets for excess gas production, pushing more product into the market. Potential impacted counties in Pennsylvania include: Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland. • 22

Regional Views

Nate Kovacevich,

Senior Supply Manager See his bio, page 38

Central

Husky Calumet Refinery Down for Extended Period of Time Due to Explosions and Fire

In late April, a series of explosions and fires were reported at Husky Energy’s Superior, WI, refinery sending a black plume across the Duluth-Superior area. The Wisconsin refinery was shutting its 38,000 bpd refinery in preparation for a five week turnaround. Fortunately no fatalities were reported. The U.S. Chemical and Safety Board said the fire began at the 11,000 bpd catcracker (FCC) unit. However, very few details have been released in regard to the extent of the damage or when the refinery is expected to resume operations. It could be months before the refinery is operating and producing gasoline and diesel fuel for the region. The refinery shutdown will put additional stress on the northern tier refining network and will likely elevate prices through harvest season for the Central region. While a Magellan pipeline extending from the Twin Cities refining complex into the Duluth-Superior area will help feed local demand, there will likely be an increase in truck activity from the Minneapolis area into Duluth to offset the expected long lines at terminals in Northern MN, especially during times of high demand. •

HollyFrontier Completes Refinery Turnarounds

It has been a busy first half of the year for HollyFrontier as the company took both its El Dorado and Tulsa refineries offline for planned maintenance. In mid-February, the Tulsa plant was initially taken down for a six-week maintenance schedule, but was extended another two weeks. The refinery’s 85,000 bpd crude unit, 11,000 bpd coker, and 45,000 bpd diesel hydrotreater were all included in the turnaround. In addition, HollyFrontier began a small turnaround at its El Dorado, KS, refinery in late April. The work lasted two weeks and only included its 19,000 bpd coker. The company will be taking down most of the El Dorado refinery this fall for a six-week turnaround. Regardless of the turnarounds, we did not see much price increase in the Midwest as these were both planned maintenance events. Even the extended delay at the Tulsa refinery was muted by a delayed planting season in the Midwest due to higher than average snowfall and colder temperatures in April. However, I expect to see prices start to increase this fall in anticipation of more refinery turnarounds and harvest demand. • 23

Regional Views

Amy Nguyen,

Supply Optimization Supervisor See her bio, page 38

West

Fuel Prices Reached 3-Year Highs as Supply Tightened

The region experienced numerous refinery shutdowns this quarter due to both planned and unplanned maintenance. In Northern California, Shell's Martinez refinery underwent major planned maintenance for the entire month of May. In Southern California, both Andeavor’s Los Angeles refinery and Phillip 66's Wilmington refinery experienced unplanned repairs in May. Olympic pipeline in the Pacific Northwest shut down for four days because of unplanned maintenance while BP's Cherry Point refinery in Ferndale, WA ceased operations for two months with planned maintenance. Shell's refinery in Anacortes, WA was forced to cut production during the first half of May before completely shutting down for a few days due to a leak. The accumulation of refinery shutdowns decreased production substantially within the region this quarter, limiting supply and increasing prices throughout the West Coast. Although refinery operations are beginning to come back online, I expect prices to continue to rise through the upcoming quarter with the transition to more expensive summer blends along with increased summer demand. •

HollyFrontier's Wood Cross refinery caught fire in March. The refinery is located in West Bountiful, Utah, just north of Salt Lake City. No injuries were reported; however, the refinery has been running at a reduced rate for over two months. Operations are expected to be limited through July. The Wood Cross refinery makes up one fifth of Utah's total refining capacity and supplies both diesel and gasoline to Wyoming, eastern Washington and Nevada markets. Supply has been further restricted by frozen pipelines running from Los Angeles to Las Vegas and Phoenix. Fuel prices soared throughout Idaho, Nevada and Utah as a result of increased demand and reduced production. Prices in Utah reached 3-year highs as gasoline surpassed $3. •

California could Repeal the Fuel Tax Increase

Near the end of 2017, the fuel tax increase S.B.1 took affect and has remained a popular topic of debate. Many California residents understand the need for the tax increase as it is intended to fund a number of transportation projects including repairs for public roads and bridges. On the other hand, many residents feel taxes were raised without their consent - arguing against the increase as the State's taxes on fuel and car ownership are already one of the highest in the country. Subsequently, an amendment to repeal the tax increase has been proposed. The proposal has already received nearly twice the number of signatures required to be placed on the November voting ballot.

The tax debate has also become a popular political discussion. Republicans are making an effort to support the amendment in hope of gaining support during the June 5th primary. Democrats are combatting these efforts, arguing the necessity of the tax increase to improve California's transportation infrastructure. Without improvements to the infrastructure, traffic, congestion and the roadways will continue to worsen. S.B. 1 will be a key factor for the future of fuel prices in California and will remain in the limelight leading up to the November ballots. • 24

Regional Views

Nate Kovacevich,

Senior Supply Manager See his bio, page 38

Canada

Refinery Turnarounds Cause Supply Shortages in Ontario

Ongoing refinery turnarounds in Quebec and Ontario put significant pressure on supply this quarter. Finding product in a tight supply environment was challenging, but the worst should be behind us. Valero, Suncor and Shell refineries shut down at various times throughout the spring for planned maintenance; however, due to local fuel shortages and tight supply, Shell came back online roughly three weeks earlier than expected. To minimize shortages, product was shipped into the region via barge. Supply tightness occurs annually in Ontario and generally lasts a few weeks due to seasonal maintenance. We don’t expect any long-term supply issues once the refineries are able to resume their normal operations. •

Canadian Outage Ripples through North America

Canada’s Syncrude operation ships roughly 350,000 barrels per day of crude oil to the U.S., with much of that crude shipped directly to Cushing, OK. Recall that WTI prices are really a representation of the cost of a barrel of crude in Cushing, OK. If you buy a barrel of WTI crude on the NYMEX futures market, you’re agreeing to receive a barrel of crude in Cushing on a particular date in the future. So when regular supply can’t make it to Cushing, it directly impacts America’s primary crude oil index. The outage has taken Syncrude’s entire operation offline temporarily. Markets expect supplies to be offline until late July. Barclays expects output from the company to be 200,000 bpd in Q3, two-thirds the output of their previous forecast. •

Canadian Government to Purchase Trans Mountain Pipeline

Prime Minister Justin Trudeau announced plans for the Canadian government to acquire the Trans Mountain pipeline project from Kinder Morgan for $4.5 billion. The Texas-based company will work with the government to find a third party buyer for the assets. The agreement guarantees work will resume on the project for the summer construction season. The move by Prime Minister Trudeau is seen as a victory for the Canadian oil industry. The Trans Mountain transportation project was delayed and later suspended by Kinder Morgan as activists and environmental groups have been successful in stalling the project that would bring oil from the Alberta tar sands to British Columbia. The decision puts the Canadian government in opposition to British Columbia who has attempted to block the construction of the pipeline in court. Furthermore, the government will extend federal indemnity to the new buyer for any additional costs associated with politically motivated delays. • 25

A LT E R N AT I V E F U E L S Sara Bonario, Supply Director

See her bio, page 38

Renewable Fuels

Debunking Three Biodiesel Myths

Summer time driving season is upon us – lifting fuel demand nationwide. Seasonally, this is the best time to take advantage of biodiesel blends. Before increasing consumption of biodiesel, it is important to understand its benefits as well as debunk some of the product’s common misconceptions. Biodiesel is America’s first domestically produced, commercially available, advanced biofuel that meets EPA requirements for use under the Renewable Fuel Standard (RFS2). Biodiesel is a renewable, clean burning diesel alternative produced from a wide range of renewable feedstocks such as soybean and canola oil, corn oil, poultry and other animal fat, white and yellow greases and tallow. It is easy to use and is available through traditional terminal and logistic infrastructure. Fuel blends containing up to 20% biodiesel may be used in any on-road diesel engine without modification according to manufacturers’ recommendations. Engines utilizing biodiesel blends demonstrate reduced emissions of sulfur, carbon monoxide, hydrocarbons and particulates. Biodiesel fuel contains higher levels of cetane which improves combustion by causing the fuel to ignite quicker and to burn

EPA Lifecycle Analysis of Greenhouse Gas Emissions from Renewable Fuels, Washington, D.C.: U.S. Environmental Protection Agency.

more completely, reducing the amount of exhaust. In fact, emissions decrease as the amount of biodiesel in the blend is increased. All finished biodiesel fuel sold in the United States must meet the American Society for Testing and Materials (ASTM) specification for biodiesel, D6751. ASTM is made up of fuel producers, engine equipment manufacturers, consumers, government agencies and consultants who must all come to consensus before a standard is adopted. This is a rigorous and time consuming process. ASTM standards are recognized and adopted worldwide. The ASTM standard for biodiesel was adopted in December, 2001, and covers B100 for blending with petroleum diesel in levels up to 20%. ASTM D6751 currently includes 20 tests covering both quality and performance indicators that represent the minimum acceptable quality. There is no specification that restricts feedstock options. In fact, the U.S. Environmental Protection Agency does not differentiate among the various biodiesel feedstocks—vegetable oils and waste fats, greases and oils — in defining biodiesel as an advanced fuel.1 According to the Renewable Energy Group, “Production skill, not feedstock, determines biodiesel quality.”2 •

Alternative Fuels

Myth #1 Biodiesel Clogs Fuel Filters B5, or diesel with up to 5% biodiesel content meets the ASTM D975 standard for low sulfur diesel. Yet, despite the benefits of biodiesel mentioned thus far, there is still hesitation surrounding increasing the content of biodiesel in fuel blends. Filter clogging is a commonly voiced concern among our customers contemplating biodiesel. Biodiesel acts as a solvent in fuel systems and in some cases, may cause existing deposits accumulated from previous (petroleum) diesel use to be released into the fuel. The release of these deposits, while providing the benefit of cleaning the fuel system, can cause fuel filters to clog initially so as a preventative, proactively monitoring and replacing clogged fuel filters until the buildup is eliminated is required. Implementing a fuel quality program which includes tank cleaning and a detergency additive package can ease the pain of this process.

Myth #2 Biodiesel has Poor Cold Weather Performance The second most common myth around biodiesel blends at higher concentrations is poor cold weather performance. However, this is not the case. According to the Maryland Energy Association, “Twenty percent biodiesel blends have been used in the upper Wisconsin area and in Iowa during -25 degree F weather without issues. Solutions to biodiesel winter operability problems are the same solutions used with conventional #2 petro-diesel (use a pour point depressant, blend with #1 diesel, use engine block or fuel filter heaters on the engine, store the vehicles near or in a building, etc.). 3”

Myth #3 There are Bugs in Biodiesel There are no bugs in biodiesel. Biodiesel is, however, hydroscopic which means it has a tendency to absorb moisture from the air. This phenomenon occurs more readily at high temperatures found inside storage tanks. As the air within the tank cools, water precipitates out. If this process repeats, an accumulation of water may occur. The organic nature of biodiesel and the existence of water creates an environment where algae and other organic matter may begin growing on tank walls. This is one reason why the proper storage and handling of biodiesel fuel is so important. For instructions and tips on proper tank maintenance, read Clint Hamlin’s article on page 34. In conclusion, biodiesel is better for the environment, promotes energy independence, supports farm and rural economies and is the cheapest and easiest alternative fuel to implement. To learn more about biodiesel, visit www.biodiesel.org, www.afdc.energy.gov/fuels/biodiesel or contact me with questions at sbonario@mansfieldoil.com. • A Practical Guide to Using B20 in Your Fleet. Prepared by Greg Zilberfarb for ASG Renaissance by the Maryland Energy Association.

Alternative Fuels

Martin Trotter,

Natural Gas

Pricing & Structuring Analyst See his bio, page 38

SUPPLY

Price, Production and Rig Count

Despite falling rig counts, production has been steadily rising in the Utica region. Production increased by 23% from 2016 to 2017 and increased by a nearly identical amount between 2017 and April 2018. The steady increase can be credited to increased productivity per well. Lateral drilling techniques as employed in Haynesville and Marcellus have bolstered output of wet wellheads in Utica. In addition, the average lateral pipe length has increased by over 85% since 2011, with the average length now reaching north of 8,500 feet. April, 2018, marked the highest level of producitivity for Utica at an average of 5.8 Bcf/day. The combination of increased lateral length and efficient drilling techniques will add future production capability in the Utica formation. •

Source: Energy Information Administration (EIA), Baker Hughes, and Natural Gas Intelligence

DEMAND

Natural Gas and Renewables Make Up Most of 2018 Electricity Capacity Additions

For the first time since 2013, renewables may not be the primary driver of additional electric capacity. Newly published EIA data suggests the largest annual increase in electric capacity may be driven by growing numbers of gas-fired generators. Should current production and implementation schedules remain on track, these generators will contribute to 65% of the annual capacity increase. The vast majority of these additional natural gas units will service the PJM regional area, along the Transco, Dominion and Texas Eastern pipelines. •

STORAGE

Q1’s sustained periods of below-average temperatures put pressure on U.S. national supply. On the coldest days, spot prices tested the $100 mark in some regions, leaving suppliers scambling to optimize their position. As a result, natural gas stock withdrawals reached their all time high. Heating Degree Days (a measure of cold weather related demand) for the first week of the calendar year 2018 reached 273, garnering net withdrawals from inventory of 359 billion cubic feet. The previous record withdrawal occurred during the polar vortex in January of 2014 where 288 bcf of natural gas was withdrawn. January, as a whole, saw just shy of 1,000 bcf in withdrawals. February saw continued demand and withdrawals totaling more than 500 bcf. Inventory levels are below-average despite natural gas inventories ending the 2017 heating season 15% above the five year average and injection season providing larger surpluses than the previous two years. •

Source: Energy Information Administration (EIA), Preliminary Monthly Electric Generator Inventory

U.S. Natural Gas Winter Season Working Inventories (2008 – 2018)

Source: Energy Information Administration (EIA)

VIEWPOINTS By Nikki Booth, Senior Logistics Manager, Carrier Relations

Implications of Today’s Growing Truck Driver Shortage

According to the American Trucking Association, more than 70 percent of goods consumed in the U.S. are moved by truck. No matter where you fall in the supply chain, purchased goods will most likely be transported via truck somewhere along the route. Those of us in the fuel distribution industry depend extensively on truck transport for completing critical fuel deliveries. However, the United States is currently experiencing a significant truck driver shortage which is not expected to improve any time soon. Every industry that is reliant on the transportation infrastructure is feeling the impact of the shortage. Especially now as our economy strengthens, consumers make more purchases which increases inventory turnover and in turn, shipments for products are in higher demand. The combination of a strong economy and a rise in online shopping has increased demand for long-haul shipping. Trucking companies are struggling to meet demand for these shipments due to the lack of drivers. Although truckers are the back-bone in the U.S. economy, the industry is having a hard time attracting new drivers. Professional truck driving has lost its appeal to the emerging workforce. The industry is also experiencing high turnover rates, deepening the shortage issue. Overall, the trucking industry needs to hire almost 900,000 more drivers to meet rising demand.

to ensure best practice safety standards. Boosting pay, improving benefit packages, offering signing bonuses and other enticements are steps many companies are taking to retain and attract professionals to the industry. Companies should also consider reimbursing soon-to-be truckers for their training which currently costs an individual $5,000 to $10,000. Organizations across North America are becoming more aware how the driver shortage impacts their business both directly and indirectly. The ever-widening gap between demand and driver availability is impacting delivery schedules, raising payroll costs and increasing procurement costs across most industries. Proactive planning, legislative changes and modifying consumer expectations are necessary to solve the driver shortage and keep the economy strong. •

Transportation companies are now challenged to find a better way to recruit new drivers, retain quality drivers and create training programs 30

Nikki A. Booth Senior Logistics Manager, Carrier Relations Nikki manages the strategic direction of Mansfield’s full truck load network across the U.S. and Canada. Her team works closely with fuel transport companies to handle freight procurement, address logistical concerns, and identify cost-saving solutions. Nikki has been with Mansfield since 2007 and has over 14 years of experience in supply chain management, with 11 years focused on energy transportation and logistics.

Viewpoints By Madi Burton, Market Intelligence Analyst See her bio, page 38

How Laws of Nature Impact Fuel Procurement Net Versus Gross Gallons – What’s the difference?

Have you ever questioned why there are two different gallon amounts listed on a BOL (Bill of Lading) for the same delivery? You may have ordered a specific gallon amount (gross) but then were invoiced for a net amount. It’s a common quandary for fuel purchasers.

How Laws of Nature Impact Your Fuel Bill

The discrepancy between net and gross fuel purchasing stems from a law of nature called Thermal Expansion. When molecules are heated, they begin to move more quickly, causing the substance to expand. Conversely, when the molecules cool they move more slowly and the substance contracts. It’s what happens when you bring a helium balloon into a cold room. As the molecules cool, they lose energy and condense – decreasing the volume inside the balloon and causing it to shrivel and sink. Like these substances, fuel also expands and contracts depending on the temperature. For example, when 1,000 gallons of fuel is delivered to a location in Texas on a hot summer day, the fuel is pumped into a cool underground storage tank with an average temperature of 50 degrees. The fuel loses volume as it cools. In this situation, a full 1,000 gallons may have been delivered, but the location will have less than 1,000 gallons in its tank.

How to Measure Fuel Volume Variances

Since the physical amount of fuel can vary between the loading destination and the delivery destination, there could be a discrepancy between the gallons purchased and the physical product delivered. To protect both parties from the fluctuating fuel volumes, the Petroleum industry set a temperature standard by which petroleum product volume would be measured. In the U.S., 60°F is considered the temperature at which fuel is “normal” in weight, volume and energy content; thus it is the standard temperature used to measure true fuel volume. One gallon of fuel occupies 231 cubic inches of space at 60°F. Fuel expands as it exceeds 60°and contracts as it falls below 60°. What does that mean for fuel purchasers? There must be an adjustment made in the measurement of fuel to determine an accurate measure of volume. The amount of fuel dispensed at the rack is called “gross gallons.” The gross gallon amount is adjusted for temperature variance based on its specific gravity using a calculation called the thermodynamic formula. The result of this calculation is what you see listed on the BOL as “net gallons.” In simple terms, Net Gallons = Temperature Adjusted Gross Gallons.

How It Impacts Your Bottom Line

The gross-to-net conversion ensures organizations receive exactly what they purchased. If net gallons is the temperature adjusted amount, shouldn’t that measurement always be used for billing? Not necessarily. Remember, using net gallons adjusts the volume of fuel to the gallon volume at 60°. If the temperature is below 60°, there would be less physical gallons delivered than represented by the net gallon calculation. For example, a company in Minnesota purchasing 7500 gallons of fuel on a cold winter day should be billed gross gallons rather than net gallons. This is because net gallons are automatically temperature adjusted to the amount of volume that would exist at 60°F. However, temperatures are generally below 60° in northern states, especially during the winter months. Billing this customer in net gallons would result in the customer paying for 7500 gallons (the volume at 60°), but only receiving 7300 gallons (the actual volume at a lower temperature) due to the contraction of the fuel caused by colder weather. For this reason, it is important to verify your billing terms with your fuel provider. As a general rule, companies located in warmer, southern regions should be billed on net gallons, while those in cooler, northern regions should be billed by gross gallons. Mansfield uses the Mason-Dixon Line to determine billing approaches, unless requested otherwise by the customer. I hope this sheds some light on an interesting phenomena in fuel procurement. If you have any questions, please let me or your Mansfield representative know. •

Gross Gallon States Mason Dixon Line Net Gallon States

Viewpoints By Will Shinn, Product Marketing Specialist

Hurricane Season is Here – Are You Prepared?

No one can predict the when or where of a hurricane; however, we do have the ability to prepare. For those needing fuel, last year’s hurricanes caused both supply and freight scarcity – one compounding the other. However, the compounding effects of Harvey and Irma highlighted key risks organizations face with natural disasters. Fuel supply has been a foreseen issue in the past with major hurricanes, but in the current market place, freight has become more scarce and costly. And with nationwide driver shortages, freight becomes even more valuable and risky.

The 2017 hurricane season created trying times for those of us in the fuel industry as well as for those who depend on reliable fuel supply for business continuity. While it may not be likely we will have another one-two punch like hurricanes Harvey and Irma, the National Oceanic and Atmospheric Administration, NOAA, is predicting a 75% chance for a near or above normal hurricane season with an expected one to four major hurricanes this year.

Viewpoints Mitigating these risks, requires a proactive plan to ensure you have fuel when and where it’s needed – regardless of what Mother Nature or other forces send your way. Creating an Emergency Fuel program is no longer a simple insurance policy, but is a necessity for ensuring business continuity. In today’s market place, unforeseeable and unexpected events are no longer excuses for breaks in supply chains or services. Companies must prove to their stake holders they are able to continue daily business activities during and shortly after an emergency event.

Here are a few things to consider when preparing for an emergency event.

To ensure you are partnering with the right fuel provider, here are some questions to consider:

• Consider contracting dedicated assets in advance to support operations while supply and carrier capacity is tight.

Does your current fuel provider do what it takes to work with you during emergency events, or do they call in force majeure?

Does your fuel provider offer solutions for both supply and freight in times of scarcity?

Does your current fuel program take into account freight shortages, or do you have to depend on the spot freight market?

Do your company’s stake holders have expectations for fueling in emergency environments?

What resources and planning activities are being implemented for these events?

• Work with your fuel supplier to top off all tanks and vehicles. • Start using retail fuel before the storm, and use any back yard fuel after retail becomes unavailable. • Contact your fuel provider before an emergency event to go over your emergency fuel plan.

We encourage our customers to have a strategy for an emergency fuel event. If you do not feel prepared, or your current fuel provider does not offer these services and consulting, reach out to the Mansfield team. For questions and information on Emergency Fueling and Emergency Planning, contact your Mansfield Sales Rep or Will Shinn at wshinn@mansfieldoil.com. • Will Shinn Product Marketing Specialist Will is responsible for planning and executing the emergency fuel program at Mansfield. He also works in Product Marketing focusing on LTL and Mobile fueling pricing and analysis. Will joined Mansfield in 2015, and has served as both an account manager and supply analyst. Will earned is BSBA in in Finance and Economics from Liberty University.

800.695.6626 | arsenal@mansfieldoil.com | www.mansfield.energy 33

Viewpoints By Clint Hamlin, Arsenal Fuel Quality Specialist

Fuel Quality Matters

Fueling assets represent a significant financial and operational investment. From vehicles and tanks, to pumping systems and fuel itself, the costs of running a fuel operation can add up to thousands, even millions of dollars. To preserve the value of these assets, it is necessary to employ solutions that lower the lifetime costs of fueling equipment and prevent fuel operability problems. Organizations that implement proactive fuel quality and tank maintenance programs can prevent costly operational downtime and ensure the quality, performance and reliability of fueling systems.

Improper tank maintenance and poor fuel quality can lead to expensive and dangerous complications. In extreme cases, environmentally hazardous leakage can occur which is expensive to repair. Replacement of a simple submersible pump can cost between $1000 and $1500. Poor fuel quality can also lead to costly vehicle issues such as complete engine failure ($12,000 +), injector replacement ($4000-$6000) or even frequent fuel filter replacements which can add up over time. To keep diesel fleets running in top shape, Mansfield recommends organizations implement a Fuel Quality Program. It is a preventative maintenance program to improve the operation of the diesel storage facility and diesel fueled equipment. The program should be customized to fit the needs of individual facilities based on several key factors including the number of tanks, throughput volume, type of product stored, tank system design and facility location.

A fuel quality program should include:

1. Quarterly fuel quality testing and analysis

2. Tank inspections and equipment maintenance 3. Fuel tank cleaning and fuel polishing 4. High performance diesel additives

Fuel Quality Testing and Analysis

Quarterly tests should be conducted on tank bottom fuel samples to assess any contamination issues related to sediment, water and microbial growth. During the winter and in applicable zones, monthly nozzle samples should be tested for both water content and cold flow operability. Together, these tests ensure personnel can actively monitor the operability of diesel fuel year-round.

ÂŠ 2018 Mansfield Energy Corp

Viewpoints

High Performance Diesel Additives

High performance diesel additives can provide superior fuel quality and support a tank environment conducive for optimal operational efficiency. Fuel additives can:

Tank Inspections and Equipment Maintenance

In-depth visual inspections of the diesel storage tank facility should be performed regularly. Mansfield recommends performing these inspections on a quarterly basis, but the frequency can vary depending upon the throughput and condition of the facility. Detailed site inspection services should include:

1. Manways – bolted and sealed 2. Vent caps – missing or leaking 3. Risers – missing or damaged 4. Containment sumps – water ingress or leakage 5. Spill buckets free from water 6. Equipment corrosion 7. Monitor wells for ground water level 8. Filters – free of inordinate contamination

• Keep tanks clean • Eradicate and prevent microbial growth • Remove entrained water • Prevent filter blockage • Remove injector deposits • Ensure winter operability • Optimize engine performance Keeping fuel and fueling systems clean and operating at maximum efficiency is key to protecting the environment from fuel release contaminating soil or water, preventing costly downtime on equipment, restoring lost fuel economy and saving on maintenance costs. Implementing an exceptional Fuel Quality Program can minimize headaches caused by operational malfunction and lower your overall cost of fuel. •

Skilled and reputable technicians should provide detailed reports on inspections, offer guidance to on-site personnel and recommend when repairs or additional maintenance is required.

Fuel Tank Cleaning and Fuel Polishing

The severity of contamination in a tank determines the level of cleaning required. A simple bottom sweep can remove debris and water from the tank. A full cleaning can restore a tank to almost new by removing and filtering the fuel, then physically scrubbing the inside of the tank using water jets. A full tank cleaning is generally best for tanks which have been untouched for more than 9 months. The inspection and sampling process will help provide clarity on which process is best for each tank. A full tank cleaning should include:

1. Vacuum heavy solids and debris from tank

2. Remove viable fuel from existing tank to storage

Clint Hamlin Arsenal Fuel Quality Specialist

3. Filter stored fuel to a 4 micron minimum and remove water

Clint is responsible for Mansfield’s customer fuel testing program, additive product inventory and logistics, and Arsenal product marketing. He analyzes companies’ fueling methods, geography, and fuel samples to prescribe fuel additives and services that meet their fuel quality needs. Clint has been with Mansfield for over nine years, working previously as an inventory management specialist and operations specialist.

4. Pressure wash compartments 5. Diesel rinse compartments

6. Remove and properly dispose of all waste 7. Change dispenser filters if necessary

Viewpoints By Alan Apthorp, Chief of Staff to the President See his bio, page 38

Impact of IMO 2020 on Fuel Prices

IMO 2020 is upcoming legislation that impacts marine transportation, however its indirect impact is forecasted to extend to U.S. ground fleets that are likely to experience tighter low-sulfur diesel supply and higher prices.

There’s a huge change coming for oil. No, it’s not electric vehicles or CNG. This change is more obvious, more immediate – and yet much less frequently discussed. The coming alteration will cause substantial price shockwaves for oil products including gasoline and diesel. The change – often referred to as IMO 2020 – is the conversion of maritime fleets from 3.5% sulfur levels down to .5% sulfur.

Introducing IMO 2020

The International Maritime Organization (IMO) is a branch of the United Nations that sets global standards for international shipping. Their regulations cover a range of requirements, including fuel standards, ship designs, labor requirements, disposal and more. The upcoming policy change, which will affect all maritime vessels on the open seas, poses significant challenges for refineries, suppliers and maritime fleets. The reason for the policy change is environmental – Goldman Sachs indicates the maritime industry accounts for over 90% of transport sector sulfur emissions. International Maritime Organization research shows the reduced SOx emissions from IMO 2020 will prevent 570,000 premature deaths globally between 2020 and 2025.

How Do Vessels Currently Fuel?

Maritime vessels use what’s called “bunker fuel”, or residual fuel oil, which is the bottom heavy gunk in a barrel of crude. If gasoline is the lightest part of crude (i.e. the shortest hydrocarbon molecule and most likely to combust) and diesel is in the middle, bunker fuel is just barely above asphalt – super viscous, dark and heavy.

This isn’t the first time the maritime industry has faced a changing emissions standard, though this is orders of magnitude larger than previous changes. In 2010, global sulfur caps were dropped from 4.5% to 3.5%. In the Emissions Control Area (maritime area immediately surrounding Europe and North America), sulfur requirements are quite stringent, currently at 0.1% sulfur. Vessels leaving Europe, for instance, must burn low-sulfur fuel oil until they are outside the ECA, at which point they can burn higher sulfur bunker fuels. Individual countries such as China have imposed their own ECAs on their surrounding bodies of water.

IMO Sulfur Limits

The refining process is complex. Refineries take crude oil and heat it, cracking the crude molecules into various components and separating the heavy types of fuel (bunker fuel) from the lighter fuels (like gasoline). In newer, complex refineries, bunker fuel is reprocessed in various ways to extract every bit of lighter hydrocarbon possible, since gasoline, diesel, kerosene and jet fuel are all far more valuable than the heavier residual fuels. In fact, the name “residual fuels” is a clue to the fact that bunker fuel is simply a leftover.

Source: International Maritime Organization

Bunker fuel is usually blended with a bit of high-sulfur diesel to make it flow more easily and burn more quickly. Remember, high-sulfur diesel was once legal for use by over-the-road transportation, before the 2006 conversion to ultra-low sulfur diesel (ULSD). Most fuel burned by maritime vessels is some combination of high sulfur diesel and bunker fuel, though in Emission Control Areas ships are already using low-sulfur blends.

Viewpoints

What Will Ship Owners Do?

With the mandate from the IMO, ship owners are faced with choices on how to comply. Overall, analysts from Wood Mackenzie expect compliance to add $60 billion in costs for the maritime industry. Goldman Sachs estimates a total cost of $240 billion when accounting for higher fuel prices in other industries. So how are ship owners choosing to respond to new fuel standard? They have a few options: 1. Use Compliant Fuels. Use marine gasoil (MGO) or other lowsulfur diesel-like blends to meet compliance. 2. Use After-Treatment to Scrub Sulfur. Install “scrubbers”, or Exhaust Gas Cleaning Systems, to remove the douse emissions with alkaline water and remove the sulfur. At an expected price tag of $5 million per ship, scrubbers are a hefty capital expense.

far more processing to clean. Analysts expect sweet crudes to become relatively more expensive compared to sour crudes due to the IMO 2020 change. Regardless of which group is right, the overall expectation is that around 2.5 million barrels per day of additional low-sulfur diesel fuel will be needed by the maritime industry. Contrast that additional demand, against total global diesel demand, which is less than thirty million barrels per day. While some refineries can change their production methods and increase their diesel output, many others cannot, which means a large portion of that two million barrels per day will need to be siphoned away from existing demand, such as over-the-road and off-road diesel.

3. Switch to Liquefied Natural Gas. LNG is a low-sulfur alternative to bunker fuel. However, converting a fleet to LNG is extremely costly and cuts into a ship’s total available capacity. This is akin to converting a truck fleet to CNG due to high diesel prices. 4. Ignore the requirement and use high-sulfur fuel. Of course, operators can choose to use non-compliant fuels and risk the punishment. IMO 2020 implementation is left to member nations, so some countries could be lax in enforcement. Ships can only be penalized by the country whose flag they fly. Stillwater Associates estimates cheating could account for 10% of total fuel consumption. For the rest, the alternative will likely choose the first option, at least initially. Large maritime vessels have a life expectancy of roughly 20-25 years, so older ships will not last long enough to benefit from retrofitting with LNG engines or scrubbers. Wells Fargo research forecasts only 10% of vessels will move to scrubbers. Estimates vary widely depending on the source, but few analysts expect more than 20% of the global maritime fleet to switch to scrubbers or LNG. The rest, then will need to find compliant fuels.

With more diesel being used by the maritime industry, there will be less available for use by land-based diesel consumers. The initial challenge will be price increases. Expected price impacts are the subject of extensive debate. Depending on your opinions on how well refineries can adapt, forecasts range from little/no impact to $10-20/bbl increases. The rival study mentioned above noted that because global refining capacity could not keep up with higher demand, pressure would build for all types of fuel, not just diesel, causing prices to rise $10-20 per barrel. Per gallon, that equates to a 25—50 cent increase in diesel and gasoline prices.

Is There Enough Fuel?

All of these changes have led markets to wonder – will there be enough low-sulfur fuel to meet the requirements? As noted earlier, residual fuel is already processed and reprocessed to extract every bit of low-sulfur gasoil possible. How much more can they eke out? Market analysts disagree.

Wells Fargo takes a somewhat more conservative approach, estimating prices could increase by around $5 per diesel barrel ($.12 per gallon) and $2 per gasoline barrel ($.05 per gallon). It’s worth noting both of these prices are on top of any changes in underlying crude prices.

The IMO relies on the research of CE Delft, a European research company specializing in environmental studies. That study found there would be enough refining capacity globally to keep up with demand, assuming all refineries have the required sulfur processing capacity. Other studies point out how older refineries cannot simply change how they process fuels.

Beyond price risk, there’s a credible question of supply reliability, especially in coastal markets. With 10% of global diesel being apportioned elsewhere, trucking fleets will need to work harder to find supply. Fortunately, U.S. refineries are among the most sophisticated in the world, making them better equipped to handle the changes. Unfortunately, this sophistication will put American fuel in high demand, leading to higher export levels and less fuel available for consumption in traditional on-road uses.

Newer refineries, such as those in the U.S. Gulf Coast, are able to adjust their input and process out more sulfur. Other refineries may not be able to accomplish this. A rival study submitted to the IMO notes roughly 60% more sulfur plants need to be built to accommodate the change. There’s also a crude oil problem. “Sweet” crudes like American WTI or European Brent fuel have relatively low sulfur rates already, which make them ideal for blending into low-sulfur fuels. “Sour” crudes such as blends from Mexico or Venezuela are laden with sulfur and require 37

How Does This Impact the Rest of Us?

Although IMO 2020 does not directly effect on-road and off-road trucking fleets in North America, the resulting impact on prices and supply reliability will surely be felt in late 2019 and into 2020. The worst impacts will be felt next year as markets scramble to make last-minute adjustments to accommodate maritime needs. Fleets that lock in reliable supply at a predictable price now will be best positioned to weather the stormy conditions that are coming for fuel prices. •

Mansfield National Supply Team Contributors

Mansfield’s supply team brings unique experience and industry expertise to the table. From contract pricing and hedging to trading of fuel, renewables and alternatives such as CNG and LNG, the Mansfield supply team covers the gamut of knowledge required to manage today’s complex national fuel supply chain. Although they work as a national team, each member’s regional focus enables Mansfield to deliver geographic-based supply solutions by more efficiently managing market-specific refining, shipping and terminal/assets.

Andy Milton

Joshua Wakeman

Andy heads the supply group for Mansfield. During his tenure, the company has grown from 1.3 billion gallons to over 3 billion gallons per year. His industry experience spans all aspects of the fuel supply business from truck dispatch, analytics, and index pricing to hedging and bulk purchasing. Andy’s expertise in purchasing via pipeline, vessel, and the coordination via futures and options for hedging purchases enables him to successfully lead a team of experienced and motivated supply personnel at Mansfield. His team handles a wide geographic area of all 50 states and Canada, including all gasoline products, ULSD, kerosene, heating oil, biodiesel, ethanol, and natural gas. •

Joshua joined Mansfield’s Supply Team following the recent acquisition of The Earhart Company. Joshua is responsible for gasoline and diesel supply in the northeast. At Earhart, Joshua managed the company’s gasoline, diesel, and propane hedging and supply needs. •

Supply Manager

Senior VP of Supply & Distribution

Martin Trotter

Pricing & Structuring Analyst

Martin is responsible for handling natural gas and electricity pricing, deal flow, and analytics for Mansfield’s Power & Gas division. Before his current role, he served as the Sales Analytics Supervisor and held various roles on the Risk & Analysis Team. •

Nate Kovacevich

Sara Bonario

Senior Supply Manager

Supply Director

Before joining the company, Nate worked as a Senior Trader, where his responsibilities included managing refined product and renewable fuels procurement, handling all hedging-related activities, and providing risk management tools and strategies. He performed commodity research and analysis for customers with agricultural- and petroleum-related risk, devised and implemented risk management programs, and executed futures and option orders on all the major exchanges. •

Sara manages the team responsible for procurement and optimization of all refined fuels for Mansfield’s Great Lakes, Central, and Western regions. She is also responsible for nationwide purchasing, hedging, and distribution of renewable fuels. Sara has an extensive supply and trading background, with over 25 years of experience in the oil industry. •

Alan Apthorp

Chris Carter

Chief of Staff to the President

Supply Manager

Alan is responsible for content editing, research, and data analysis and visualization at Mansfield, and is an editor for FUELSNews Daily andFUELSNews 360. He is responsible for providing insights to the executive team, including market trends and analysis. Before his appointment to Chief of Staff, Alan worked in data analysis and visualization as a Market Intelligence Analyst. •

Amy Nguyen

Madi Burton

Amy is responsible for both refined product purchasing for contract customers and bulk pipeline movements within California, Oregon, Washington, Idaho, Nevada, and Arizona. She is also responsible for scheduling, hedging, supply bids, and other optimization efforts throughout the West Coast. Amy joined Mansfield in 2014 as an optimization analyst. •

Madi is responsible for industry-specific market research and analysis, generating relevant fueling insights based on developing trends. She also works with the Marketing team to create customized solution recommendations for key customers. Madi joined Mansfield in 2016, and has worked closely with teams in business development, operations, and supply. •

Chris is responsible for refined product purchases, including contracts, day deals, and rack purchases in the Northeastern United States. His responsibilities also include supply contracts and current bids. Chris joined Mansfield in 2009 as a Supply Optimization Analyst. •

Market Intelligence Analyst

Supply Optimization Supervisor

Download Our App Android Market

* Some of the information provided is owned and licensed by OPIS. In no event shall any user copy, modify, publish, retransmit, or otherwise reproduce information from OPIS. Copyright 2018. All rights reserved. Disclaimer: The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures, or options contract.

FUELSNews 360° M A RKE T N EW S & IN FORMATION

Mansfield Energy Corp www.mansfield.energy www.fuelsnews.com 678.450.2000 1025 Airport Pkwy SW Gainesville, GA 30501 United States of America

Teamwork • Innovation • Integrity • Excellence • Conscientiousness • Personal Ser vice