The Department of Energy’s Strategic Petroleum Reserve Office (SPRO) retained MathPro Inc. to develop a spreadsheet-based model for quickly estimating current market values of crude oil blends stored in the Strategic Petroleum Reserve.

To meet SPRO’s requirements, we developed a fixed yield netback model, which computes the refining value of a particular crude oil in a given refining configuration (denoting a real or a notional" refinery) as a weighted sum of the (spot) market prices of refined products produced by the given refinery minus a per-barrel allocation of the refinery's direct (incremental) operating costs. The model represents

• A spectrum of crude oils (both sweet and sour), including seven (7) market crude oils and nine (9) SPR blends of crude oils;
• Summer and winter operations for a typical PADD 3 complex refinery;
• A refined product slate corresponding to the aggregate output of PADD 3 refineries; and
• The set of primary refining process units -- and corresponding capacities and yield profiles – that produces the aggregate PADD 3 product slate.

For a given crude and refinery configuration, the model calculates a set of seasonal refined product yields (called the yield vector) from the crude’s assay. Then, it calculates the corresponding crude netback value by applying the standard netback formula to (i) the yield vector and (ii) the current spot prices for the products represented in the yield vector.

SPRO installed the netback model in a larger system used for financial and operations planning.