Toward the resilient petroleum industry

24 November 2015

Sinya Okuda

Petroleum Association of Japan

Petroleum is indispensable “energy” and “resources” to life

Petroleum is indispensable energy, in all sectors, such as transport, household, commercial and industrial, including in an emergency.

At the same time, petroleum is essential "resource" in people's lives, such as raw material (plastic, lubricating, etc.).

Petroleum Demand in Japan (FY 2014)

Gasoline 29%

Jet 3%

Kerosene 9%Gas oil 18%

Fuel oil 17%

Naphtha 24%

Lubricant 1%

542 Mil. KL(COE*)

Oil 40%

LPG 3%

Coal 24%

Nuclear 0.4%

Natural Gas 24%

Renewable 8%

Primary Energy Supply in Japan (FY 2013)

EnergyResource

1Source : Ministry of Economy, Trade & Industry, Japan* Crude Oil Equivalent

Source : Ministry of Economy, Trade & Industry, Japan

184 Mil. KL

Characteristics of energy supply (Japan and Indonesia)

Oil 35%

LPG 2%

Coal 26%

Renewable 26%

Other 0.2%

Natural Gas 15%

Japan

Indonesia

542 Mil. KL(COE*)

Oil 40%

LPG 3%Coal 24%

Nuclear 0.4%

Natural Gas 24%

Renewable 8%

254 Mil. KL(COE*)

Primary Energy Supply (2013) Refinery NumberRefinery Capacity

*End of August 2015

Crude OilSelf-sufficiency ratio**

2013(Thousand

B/D)

Production 824Import 324Export 322Supply (Domestic) 826

23(Places)

3,917(Thousand B/D)

FY 2014(Thousand

B/D)

Production 11Import 3363Export -Supply (Domestic) 3392

0.3%

Excluding changes in stocks

Excluding changes in stocks

*2013

10(Places)

1,157(Thousand B/D)

100%

Source : Ministry of Economy, Trade & Industry (Japan) Ministry of Energy and Mineral Resources (Indonesia)* Crude Oil Equivalent ** Self-sufficiency ratio = Production / Supply(Domestic) 2

Petroleum supply system in Japan

In most cases, refineries are located close to the major cities. As most of petroleum products are delivered to consumers in the following way. (a) Refinery - tank trucks - consumers (b) Refinery - coastal tankers - oil terminals - tank trucks - consumers Pipelines for petroleum products supply are not laying with the exception of a

few. 　

Major city

Refinery 23 : 3.9 million B/D

Main oil terminal

Refinery

Tank trucks

Oil terminal

Coastal tanker

Consumer(gas station)

Oil supply chain in Japan

(August 2015)

Tokyo

8 Refineries(1.6 million B/D)

3

Collapse of the seawall

Shipping facilities for tank trucks Gas station

Access road to the refinery

Able to ship

Suspended shipment

Partial shipment

TohokuArea

KantoArea

Petroleum-related facilities and social infrastructures (such as road and harbor) were seriously damaged.

In some areas, stable supply of petroleum products became difficult temporarily.

Impact of the Great East Japan Earthquake

Damages of petroleum-related facilities Operating situation aftermath of the quake

4

Focal Area

Immediately after the disruption of electricity and city gas, petroleum industry 　received many supply requests as the “distributed energy”.

Infrastructures (road ,port, etc.) and petroleum companies were suffered severe damage, but we made a maximum effort to the petroleum supply.

Response to the Great East Japan Earthquake

Operating Situation of Refineries and Oil Terminals

Fuel (Oil)29%

General supplies71%

Evacuation centersHospitals

25%

AmbulanceFirefighting

Police20%

Dealer29%

LogisticsTelecom company

etc.26%

Source : Ministry of Economy, Trade & Industry, Japan

Emergency requests from the disaster area

Shipment by the drum

Joint Operation room(The corresponding to the fuel supply request)

Interoperate of oil terminal

5

Damage and affairs in petroleum industry

(c) Build a cooperative relationship among companies against emergency.

(b) Strengthening of distribution network considering emergency.

(d) Joint exercise of government, petroleum companies and other relevant organizations.

(a) Enhance the resilience of refineries and shipping facilities, in order to keep minimum supply of products in an emergency.

The lessons of the Great East Japan Earthquake

Lessons of the Great East Japan Earthquake

1. Loss of power for the receiving and the shipping pump.

2. Damage to the information and communication facilities.

3. Many fuel supply requests by the drums (almost no needs in normal times ).

4. Extraordinary joint operation of oil terminal.

5. Supply shortage for consumers by the destruction of tank trucks and service stations.

6. Took time to get the traffic permit of tank trucks.

7. It was difficult to access to refineries and oil terminals.（ Deposition of sediment to the channel, etc.) 6

Reinforcement of emergency response capability on refinery and oil terminal

< Refinery, Oil terminal > < Refinery >

Construction or expansion of pipeline and pump

Development of Emergency set

High-pressure gas plant

Product tank

Shipping facilities

Refining plant

Seawall (public or private)

Piled jetty

Anti-seismic reinforcement Prevent liquefaction

Pipeline

Seismic strength evaluation of brace (spherical tank)

Adaptation of the latest standards for important facilities (earthquake-resistance)

Installation of automatic shutdown system

Emergency power

Emergency communication tool

Facility of drum

shipment

Emergency set

scheduled to be completed in FY 2015

⇒Total about 750 million US$ (90 billion yen)* of initiatives in seven years

(1) Anti-seismic reinforcement, prevent liquefaction, safety shutdown of refinery and oil terminal.

(2) Strengthening the function of receiving and shipping for products (Emergency set*, Gas Station corresponding to the disaster, etc.)

Prevent liquefaction Installation of emergency

cut-off valve

The measures for enhance of resilience in refineries and oil terminals

* Emergency power, Emergency communication tool, Facility of drum shipment

7* Based on government budget

(1) Planning and drill of "The Oil Supply Coordination Plan in Disaster".(2) Constant review and improvement of “BCP*" including affiliated companies".

(3) Information sharing about the fuel supply of the important facilities (e.g. hospital) with local government.

(4) Assign "the designated public institution" to petroleum companies.

* BCP ： Business Continuity Plan

Designated in this

April

Coordinated response in petroleum industry

Local government of devastated area

Joint Operations Room(in Petroleum Association of Japan)

1. Information collection room (Information about supply capacity and stock)

2. Emergency request correspondence room　 (matching of supply and demand)

３． Joint oil terminal WG *as necessary

(schedule adjustment)

Content of Plan (Outline)(1) Contact person(2) Detail of shared information(3) Tank capacity(4) Cooperation method of

transport

Periodic training

Training of Joint operations room The simulated refueling in important facilities

National government(Headquarters for Emergency Disaster Control) Fuel supply for

devastated area

Fuel supply request

Fuel supply request

Fuel supply system based on “the Oil supply Coordination Plan in Disaster”

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(1) list of affiliated gas station complete with disaster response capability

(2) Check the damage

(3) Support system for the business continuity and early resumption

Japanese petroleum companies formulated the “BCP(*) including affiliated companies” and are going to constantly review, to supply minimal petroleum for maintaining the social function at the time of a Huge Nankai Trough Earthquakes and a Tokyo Inland Earthquakes. (*) BCP : Business Continuity Plan

Refinery Delivery Gas station(affiliate company)

Main contents of “BCP including affiliate company”

(1) Safety shutdown of plant(2) Anti-seismic reinforcement and

prevent liquefaction for receiving and shipping

(3) Continuation of sales operation(4) Procedure for quick restoration

(1) Alternate vehicle procurement plan at the time of tanker disaster.

(2) Preparation of qualified driver

(3) Procurement of drums and it’s delivery method

Preconditions and target

(1) Earthquake based on government scenario (maximum intensity 6 upper on the Japanese scale), grid power supply stop up to one month

(2) Maintain the minimal petroleum supply from refinery on the affected area.　⇒ Securing a supply about 1/2 from the normal times shipping volume (gasoline,

kerosene, gas oil, fuel oil A)(3) It covers the entire supply network (refinery - transportation - gas station

affiliated company)

Development of “BCP including affiliate companies”

9

Participants(approximation)

1 Lecture meeting about Tsunami Disaster Prevention (*1) 100

2Drills assuming the imposition of “the Oil supply Coordination Plan in Disaster” 300

3Operation check of the emergency power, the facility of drum shipment, etc.. 1700

4 Tabletop exercise about oil spill incidents 80

5 Disaster drill on each petroleum companies 5,500

6 Training for Earthquake Early Warning 3,000

Total Over 10,000

Petroleum Association of Japan and member companies implemented the following programs for this year‘s “Tsunami Disaster Prevention Day“ (5th November).

*1 Co-hosted with Japan Petrochemical Industry Association.

The training of “Tsunami Disaster Prevention Day”

10

0

2000

4000

6000

8000

10000

1973 1975 1978 1980 1985 1990 1995 2000 2005 2009 2010 2011 2012 2013 2014

The oil stockpile is equivalent to about 200 days or more of domestic demands, in combined with the government and the private.

The government revised the concept of the law after the Great East Japan Earthquake.

(1) Increase of government product stockpiles (2) Addition of release requirements : the shortage of the supply in the disaster (3) Obligated to formulate "The Oil Supply Coordination Plan in Disaster"

Oil Stockpiling in Japan

Trends of Oil Stockpiling in Japan (end of March each year)

Private Stockpiles

Government StockpilesGovernment Stockpiles

was started in 1978

9,043(168)

9,080(163)

8,953(150)8,278

(142)7,095(126)6,981

(100)6,197(89)

4,604(71)3,979

(56)

8,590(185)

8,343(197)

8,075(193)

8,302(199)

8,406(193)

8,147(199)

Government Product Stockpiles was started in 2009

(90)(85)(76)(54)(35)(10)

(78)(78)(74)(88)(92)(90) (80)(83)(83)(84)(79)(84)

(110)(102)(113)(114)(115)

(82)

(7)

the oil storage project with oil producing countries

(117)

10,000KL, (day)

* Totals may not match due to rounding Source : Ministry of Economy, Trade & Industry, Japan11

Key issue for the resilience in petroleum industry

people's safety and security

Energy Security

Economic Efficiency

Environment

Japanese energy policy designated “3E” as the Basic viewpoint. Toward the achievement of "3E", Japanese petroleum industry have addressed

many challenge, and will continue to promote various initiatives.

The enhance of “resilience” and emergency response capability

Structure improvement of refineries and industrial complex.

Promote the effective use of oil.

Improvement of refinery energy efficiency

Implementation of Action Plan for GHG

Japanese petroleum industry will continue to engage "the enhance of resilience“ and "the strengthening competitiveness“. 12