with new higher-efficiency aircraft, the rate of growth is slowing. In addition to these “base load” demands, there are periodic requirements for distillates as the “fuel of last resort” to generate electric power. At the same time, demand for distillate heating fuels is contracting. In nearly all sectors, sulfur specifications are continuing to tighten. Overall, PIRA expects that global end-user demand for distillate products will grow more slowly over the next 10 years than the last 10, but it will still be the fastest growing of the major oil products.

On the supply side of the equation, the story is also changing. A tremendous surge in refinery conversion capacity — much of it diesel-oriented — is being built. This step change is more than what is needed to balance incremental supply with demand growth and will eliminate today's shortage of distillates. However, capacity additions and supply impacts will vary greatly by region. Substantial changes in distillation utilization, conversion utilization, and yield shifts will result. Trading patterns will shift.

• An in-depth outlook on the factors driving global/regional middle distillate product usage. Demand trends by region/country and by end-use sector will be examined to show why growth has been so strong but is now expected to slow in most areas and even decline in some sectors.
  
  
• Analysis of the impact of tightening sulfur specifications. The continuing rapid shift to lower sulfur will be more challenging as demand for higher sulfur distillates sharply declines.
  
  
• A detailed look at the production of middle distillate products, examining changes in crude slate, refinery runs, and refinery conversion capacity.
  
  
• Analysis of interregional trade flows for jet/kero and diesel/gasoil and how they will evolve as supply, demand, and product quality requirements change.
  
  
• Regional price forecasts relative to crude and other products, product quality differentials, prices relative to competing fuels, arbitrage opportunities, and the key factors that will drive these relationships.
  
  
• Regional Reference Case projections through 2020, by year, as well as alternative scenarios that test the impact of key variables on those projections.

• Country-level demand by sector for jet/kero and diesel/gasoil, with breakouts by sulfur level and other qualities where applicable. Covering multiple products, spread across 145 countries and five end-use sectors, and spanning 25 years from history through forecast (1995 to 2020), the database’s scope and level of detail will be unmatched compared to other studies.
• Regional middle distillate supply, with the impact of refinery capacity changes broken out. Annual refinery unit capacities and distillate production for jet/kero and gasoil/diesel will be reported for each of 13 regions spanning the globe. Crude production by type and total regional refinery runs will be included.
• Inter-regional jet/kero and diesel/gasoil trade flows. Net trade between the 13 trading regions will show how demand and refinery production changes lead to evolution in trading patterns.
• Price forecasts, both absolute and relative to crude/products, by region and quality for annual averages from 1995 to 2020.

• Crude producers know the importance of product supply/demand balances that set relative values for products and consequently impact crude-quality price differentials. This study will help them identify and evaluate the future refinery value for heavy versus light, and distillate-rich versus naphtha-rich, crudes and thus the potential value of different heavy crude upgrading processes.
  
  
• Refiners need to plan capacity changes based on the outlook for product demand and relative crude/product pricing. By providing a firm basis in evaluating future changes in these factors, which define refinery conversion margins, the study will help refiners evaluate the future profitability for different refinery configurations.
  
  
• Trading companies want to anticipate regional supply/demand changes and price dynamics. This analysis will aid in planning terminal and shipping infrastructure needs to best capture trading opportunities.
  
  
• Shipping companies know that their single largest expense is for bunker fuel, and they face uncertainty both on its price and regulations on sulfur content.  "Heart of the Barrel" will provide a distillate fuel oil bunker price basis under different demand/regulatory scenarios.
  
  
• Policy makers need timely insight into how proposed changes in product quality regulations will affect supply, demand, price, and industry profitability. This study will enable them to better evaluate the impact of future regulatory changes.
  
  
• Airlines, diesel consumers, and other end-users constantly consider how changing price dynamics will influence service choices and future capacity decisions. The study will make these end-users better equipped to adapt to supply and price shifts, and it will help new project developers make more effective evaluations of fuel supply options and project viability.
  
  
• Manufacturing companies need a sound understanding of jet/diesel/heating oil pricing in order to develop products (aircraft, autos, etc.) that will best meet future market demand.
  
  
• Financial institutions must make sound evaluations of how changing market conditions will affect the economics and financing of new refining, oil infrastructure, and marketing ventures. This study will allow for more informed decision-making on potential projects.
  

Richard Joswick (Study Leader; Managing Director, Global Oil Group) develops PIRA’s outlook for crude and products pricing, refinery margins, and inter-regional supply balances. He authors PIRA's monthly European Oil Market Forecast and numerous special projects. Last year he was the study leader for the multi-client study: Bottom of the Barrel: The Future for Residual Fuel Oil. He joined PIRA in 2004 after 20 years with ExxonMobil in supply logistics, planning, refining, and engineering. During his time at ExxonMobil, he had assignments developing near-term oil market forecasts, designing heavy oil upgrading processes and evaluating refining economics. Rick has M.S. and B.S. degrees from Rutgers University in chemical engineering.

Dr. Mark Schwartz (President) works closely with PIRA's Global Oil and Natural Gas groups to evaluate the key assumptions underlying their outlooks and to develop plausible alternative assumptions and outcomes as part of PIRA’s Scenario Planning Service. Before joining PIRA in 2002, he was the Chief Economist of ExxonMobil Corp., where he was responsible for developing the company’s long-range economic and energy outlook. During his 25 years at Exxon he also had assignments in Upstream Planning, Treasurers, and Corporate Planning functions. Mark holds a Ph.D. in economics from the University of Pennsylvania.

F.W.A. (Bill) Fuller (Sr. Director, International Oil) had over 30 years of energy forecasting and analytical experience with Exxon International before joining PIRA in 1997. He now oversees PIRA’s analysis and forecasting of near-term industry oil balances, with particular emphasis on international supplies, and monitors events impacting PIRA’s oil market view. Bill has a B.S. in chemical engineering from Cornell University.

Gary Greenstein (Director, Global Oil Group) joined PIRA following 38-year career with ExxonMobil, where he was involved in all aspects of the refining business, including planning, operations, engineering, and research. Gary has a B.Ch.E. from City College of New York, an M.S. in chemical engineering from New Jersey Institute of Technology, and an M.B.A. from Fairleigh Dickinson University.

Peter Jaquette (Director, Global Oil Group) is a key contributor to PIRA's Scenario Planning Service, and was the coordinator for PIRA's Planning for Tomorrow study. He joined PIRA in 2007 with more than 25 years of experience in corporate strategic planning and economic consulting, including 14 years with ARCO and nine years with Weyerhaeuser, where he was involved in evaluating cellulosic ethanol and other energy projects. Peter has a B.A. in economics from Swarthmore College and an M.A. in economics from Stanford University.

David A. Zinamon (Managing Director, Refining and Environmental Affairs) specializes in refined products, refinery operations, NGLs, alternative fuels and environmental matters, particularly as they affect petroleum product markets. Among other activities he is responsible for PIRA’s World Refinery Database. Dave also authors PIRA’s monthly NGL market report. Dave joined PIRA in 1984 after seven years of international energy consulting experience with Chem Systems. This followed several years of manufacturing, marketing and planning positions with Celanese Chemical, GAF Corp., and Airco. Dave has a B.Ch.E. from City College of New York and an M.B.A. from Rutgers University.

Kenneth M. Bogden (Director, Freight Markets) is responsible for PIRA’s monthly Freight Market Outlook. Prior to joining PIRA in 2005, Ken worked for ExxonMobil for 27 years, primarily in its oil supply and trading and planning functions. He also served as Coordinator of Transportation Planning for Exxon International. Ken has a B.S. in chemical engineering from Lafayette College and an M.B.A. from Colombia University.

Joseph T. (Joe) Pezzino (Director) maintains PIRA's World Refinery Database, including capacity analysis, product quality implications, and margins. Before joining PIRA in 2000, he led refinery process tech services, economics, and planning during a 30-year career at Mobil. He also worked in Corporate Supply & Distribution and subsequently at Mobil Research specializing in supply chain optimization. Joe has an M.B.A. and B.S. in chemical engineering from S.U.N.Y. at Buffalo.

Clayton Vernon (Director of Energy Modeling) is responsible for PIRA's global energy demand model. Clayton came to PIRA from Bank of America, where he was in charge of Fundamentals Analysis for their Commodities Trading group. Prior to joining B of A, Clayton was Director of Fundamentals Analysis for Enron in Houston. Clayton has an M.S. in econometrics from the University of Texas at Austin and a B.S. in mathematical physics from Rice University in Houston.

Dr. Naing Oo (Associate Director) joined PIRA’s Global Oil Group in 1995. He focuses on quantitative and econometric analysis for forecasting oil demand and prices. He is also involved in analysis on crude and product balances and trade flows. Naing holds a Ph.D. in economics from the City University of New York.

Su Hyung Ryu (Associate Director) focuses on crude and product price forecasts. Ms. Ryu maintains and develops integrated oil demand and pricing models and information systems. Since joining PIRA in 1998, she has participated in numerous benchmarking and competitive analysis projects, crude and product marketing assessments, and asset valuations. Prior to joining PIRA, Su worked at Citibank Global Banking, where she analyzed and developed investment database applications. She holds M.S. in business computer information systems from Baruch College in New York..