Bp: Let's Support Ulsd, Avoid 'Boutique' Fuels Problem

Diesel Fuel News, June 11, 2001 by Jack Peckham

New Orleans -- U.S. EPA's 2006/7 highway diesel rule is "essential to avoid state 'boutique' fuels, maintain refining and distribution efficiency and reduce potential for fuel shortages," BP regulatory manager Bob Leidich told the Hart World Fuels Conference here.

EPA's rule allowing 20% low-sulfur (500 ppm) diesel sales for four years (2006 2010) alongside the 80% ultra-low-sulfur diesel (15 ppm ULSD) requirement "will help to improve the supply situation, allow diesel to compete with alternative fuels, and avoid a retail [ULSD] marketing mandate," Leidich said. "It also provides automobile companies an opportunity to introduce diesel light truck/sport-utility vehicles with better fuel economy and less [CO.sub.2] emissions," he said.

Meantime, refiners need to plan for both EPA highway and non-road diesel environ mental regulations.

"We must minimize uncertainty," he said. "We need a final non-road rule, giving us the timing" for possible desulfurization of non road diesel fuel, he said. "We also need to finalize the highway diesel rule and the lawsuits will delay this, unless a settlement is reached. We favor an expeditious settlement.

"Investment decisions in diesel desulfurization will be affected by the non-road rule. We need to plan for [diesel desulfurization] volume, and any phase-in requirements are critical to know. Total non-road demand is 30-40% of the No. 2 distillate pool, with 2,000 to 5,000 ppm sulfur, and processing requirements for non-road today require almost no hydrotreating. So it's a major sulfur sink for refining. Desulfurization [in non-road] could trigger major in vestment, so we encourage EPA to finalize this in an expeditious manner."

Meantime, continuing strong growth in fuels demand means that refiners may see an other 25% increase in refining capacity requirements over the coming decade. "Elimination of impediments [to refinery construction] may be critical to energy security, and there's considerable uncertainty in getting timely permits. So we encourage speedy implementation" of permit processing, he said.

"EPA also should establish a variance fee for non-complying fuel, similar to CARB regulations" that avoided giving refiners any incentive to produce cheaper, non-complying fuel, he said. With such assurances that regulators will reward compliance, this could "speed in vestment" in the ultra-low-sulfur fuels, he said.

If clean-fuel supplies become very tight, then EPA might allow non-complying fuel to be brought to market temporarily, but not at any economic advantage to the non-complying producer, he said.