Shell spots 'premium diesel' opportunity for GTL blend

Diesel Fuel News, Feb 4, 2002 by Jack Peckham

Shell is tapping a portion of its ultra-clean gas-to-liquids (GTL) Malaysian diesel fuel to create a "premium diesel" blend in Thailand, commanding a (U.S.) 7.5 cents/gallon ($3.1 5/barrel) retail price premium.

While Shell isn't revealing the percentage amount of its Shell Middle Distillate Synthesis (SMDS) GTL blend in the "Pura" diesel, it reportedly trims the sulfur content in Thai diesel by about 25%, from 400 ppm (conventional petroleum diesel) to 300 ppm. Hence it's reasonable to guess that "Pura" is a blend of 25% zero-sulfur SMDS/GTL and 75% conventional crude-based refinery diesel.

Given the retail price premium on "Pura," this would boost Shell's profit on diesel by $3.15/barrel - rather handsome, especially if the GTL portion (the costliest part of "Pura") is just 25% of the volume of the final blend. Shell produces GTL diesel from its 15,000 barrel/day SMDS plant in Bintulu, Malaysia.

Perhaps the more impressive change for "Pura" customers is its cetane number -- over 60, compared to the regular 53-cetane Shell diesel, against a 47 cetane minimum for Thailand. "Pura" also contains an undescribed "top-tier" fuel additive package that "can remove even injection system deposits." The company is silent on whether the blend requires a lubricity enhancer to compensate for typically poor-lubricity GTL diesel fuels, although it's possible that the conventional diesel fuel portion of the blend would provide enough lubricity.

"Motorists should experience better performance of their vehicles within 2-3 tank-fulls of Shell Pura diesel," said Shell-Thailand chairman Khun Tipaphot Vajrabhaya. "From our road tests on diesel-engine vehicles in both Thailand and the United Kingdom, black smoke was satisfactorily reduced."

Shell cites the blend as providing "more complete combustion to reduce smoke emissions and restore lost engine performance."

Initially available at 150 Thai Shell stations, "Pura" will spread to the rest of the country soon.

Shell projects that initially 5% of diesel customers will switch to "Pura," although this percentage could rise dramatically in future, according to an interview in the Bangkok Post.

The other major diesel marketers in Thailand are state-owned PTT, Esso (Exxon) and Caltex (Chevron-Texaco). Both Exxon and Chevron also have claimed stakes in the emerging GTL diesel market, with Chevron having formed a world-wide GTL development joint venture with Sasol. So it's reasonable to imagine these companies at some point rising to the Shell challenge to market "premium" blends of GTL and conventional diesel, in various parts of the world.

Diesel already accounts for 44% of all refined product sales in Thailand, and it's twice the volume (260,000 barrels/day) of gasoline sales there. But pressure is mounting to cut air pollution from diesel and other vehicles especially in the capital, Bangkok.

Particulate matter (PM) emissions are so bad in some parts of the city that the former city governor Bhichit Rattakul was quoted in the Bangkok Post last month as urging motorists to avoid traveling on 10 major city roads. He also urged the replacement of smoke-belching public buses, an idea that would become even more feasible with introduction of ultra-low sulfur diesel (ULSD of less than 50 ppm sulfur), as is possible with GTL.