EPA proposes sulfur cut in move toward California gasoline

US refiners would need to lower the sulfur content of gasoline to levels in place in Europe and elsewhere under a Mar. 29 proposal by the Environmental Protection Agency aimed at aligning federal regulations with those in effect in California.

The agency’s Tier 3 regulations call for a reduction in gasoline sulfur content to 10 ppm from a present average of 30 ppm. They also call for cuts in vehicle tailpipe and evaporative emissions in a package EPA said would move federal requirements toward strict standards in effect in California.

The proposed sulfur limit matches that of “Euro 5” gasoline in Europe. Comparable standards are in effect in Japan, South Korea, and several other countries, as well as in California. EPA said its Tier 3 proposal “is harmonized with the California Air Resources Board [CARB] Low Emission Vehicle program so automakers could sell the same vehicles in all 50 states.”

EPA’s Mar. 29 proposal omitted direct action on gasoline volatility, which had been part of earlier versions of the proposal. But reference to harmonization with CARB standards implies such a move might be necessary.

The CARB flat limit for gasoline Reid vapor pressure is 7 psi for oxygenated fuel and 6.9 psi for nonoxygenated. Volatility standards vary geographically across the US, but commonly are about 7.8 psi rvp during summer and 9 psi rvp at other times.

The proposal

EPA proposes that the 10 ppm gasoline sulfur limit take effect on an average annual basis by 2017. It also proposes either to maintain the current 80-ppm refinery gate and 95-ppm downstream caps or to lower those caps to 50 ppm at the refinery gate and 65 ppm downstream.

The proposal includes a program for averaging, banking, and trading to spread out investments through an early credit program and rely on nationwide averaging to meet the lower sulfur standard.

Small refiners and refiners processing 75,000 b/d of crude oil or less would receive a 3-year compliance delay.

EPA also proposes to adjust the federal emissions test fuel “to better match today’s in-use gasoline and also to be forward-looking with respect to future ethanol and sulfur content.” The new test fuel would contain 15 vol % ethanol, lower octane, and lower sulfur content. For the first time, EPA proposes test-fuel specifications for 85-15 ethanol-gasoline blends (E85).

For vehicles, EPA proposes to lower the fleet average standard for tailpipe emissions by light-duty vehicles of nonmethane organic gases (NMOG) and nitrogen oxides (NOX) by about 80% from current levels. It would cut allowable particulate matter (PM) emissions by about 60% per light-duty vehicle.

Proposed heavy-duty tailpipe standards represent reductions of about 60% for fleet average NMOG+NOX and per-vehicle PM. The proposal would extend the regulatory useful life period during which standards apply to 150,000 miles from 120,000 miles.

Tailpipe standards would phase in on schedules varying by vehicle class but generally would take effect between model years 2017 and 2025.

For fuel vapor-related evaporative emissions, EPA proposes about a 50% reduction for all light-duty and onroad gasoline-powered heavy-duty vehicles. The regulatory useful-life period during which the standards apply would increase as proposed for tailpipe standards.

Refinery adjustments

Lowering sulfur-content limits for gasoline mainly will require refiners to add hydrotreating capacity upstream and downstream of fluid catalytic crackers. The new capacity will require new inputs of hydrogen, which some refiners might have available in sufficient quantity from onsite steam methane reformers and catalytic reformers and others would have to purchase.

In a March 2012 study for the American Petroleum Institute, Baker & O’Brien Inc. predicted refinery hardware changes necessitated by a lowering of gasoline sulfur with no accompanying change in volatility standards.

Such a change, it concluded, would require one new FCC feed hydrotreater and 13 new FCC gasoline hydrotreaters in the US. It also would require revamps and expansions to 23 FCC feed hydrotreaters and 33 FCC gasoline hydrotreaters, requiring total investment of $9.766 billion.

Baker & O’Brien foresaw no refinery closures associated with a sulfur-only regulatory tightening. The annualized increase in net hydrogen purchases in that case would be 129 MMscfd (calendar).

In an earlier study, the consultancy examined a range of possible regulatory changes for gasoline involving both sulfur-content and volatility reductions. That study projected the closure of four to seven refineries, the higher number resulting from assumption of a 5 ppm sulfur cap and summertime 7 ppm rvp limit. In that case, Baker & O’Brien projected investment required for compliance totaling $17.343 billion.

Reasons and responses

EPA said lowering the sulfur content of gasoline would improve the effectiveness of emission-control systems aboard new and existing vehicles and “would enable more stringent vehicle emissions standards since removing sulfur allows the vehicle’s catalyst to work more efficiently.”

The agency said its proposed regulation would improve public health by lowering vehicle emissions of NOX, volatile organic compounds, direct PM, carbon monoxide, and air toxics.

It also would be “aligned with and designed to be implemented over the same timeframe” as its program for cutting greenhouse-gas (GHG) emissions from light-duty vehicles starting in model-year 2017.

EPA estimated its proposal would raise the price of gasoline by 1¢/gal.

The oil and gas industry disputed the need for new gasoline standards and warned of fuel prices higher than EPA’s estimate.

American Petroleum Institute Downstream Group Director Bob Greco said, “There is a tsunami of federal regulations coming out of the EPA that could put upward pressure on gasoline prices.” He said the new requirements would increase GHG emissions “because of the energy-intensive equipment required to comply.”

Citing the Baker & O’Brien study, an API statement estimated the sulfur-only proposal would raise the price of gasoline by 9¢/gal. If accompanied by tougher volatility standards, the increase could be as much as 25¢/gal, it said.

American Fuel & Petrochemical Manufacturers Pres. Charles T. Drevna said, “Tier 3 rulemaking that targets trace amounts of sulfur in gasoline is not worth the direct threat to our domestic fuel supply, consumer cost at the pump, and American jobs.”

Drevna said EPA “has not previously offered any cost-benefit analysis to justify this onerous rulemaking.”

AFPM estimates Tier 3 regulation would require investment of $10 billion in new infrastructure and new operating costs of $2.4 billion/year.

Contact Bob Tippee at bobt@ogjonline.com.

Related Articles

Shell cuts $15 billion in spending for 2015-17

01/30/2015 Royal Dutch Shell PLC has curtailed more than $15 billion in potential spending over the next 3 years, but is not “not overreacting to current low ...

Victoria extends drilling, fracing ban

01/30/2015 The new Victorian Labor government of premier Daniel Andrews has extended the coal seam gas (CSG) exploration and hydraulic fracturing ban in the s...

Chevron’s $35 billion capital budget down 13% from last year

01/30/2015 Chevron Corp. will allocate $35 billion in its capital and exploratory investment program for 2015, including $4 billion of planned expenditures by...

US Senate passes bill approving Keystone XL pipeline project

01/30/2015 The US Senate has passed a bill approving construction of the proposed Keystone XL crude oil pipeline by a 62-36 vote after 3 weeks of debate. Nine...

Oxy cuts capital budget by a third

01/30/2015 In the midst of falling oil prices, Occidental Petroleum Corp., Houston, expects to reduce its total capital spending for 2015 to $5.8 billion from...

MARKET WATCH: NYMEX natural gas prices drop after storage report

01/30/2015 US natural gas closed at its lowest price in more than 2 years on the New York market Jan. 29 following the government’s weekly gas storage report,...

Pennsylvania governor reinstates state forest drilling moratorium

01/29/2015 Pennsylvania Gov. Tom Wolf (D) signed an executive order fully reinstating a 2010 moratorium on new oil and gas leases in state forests and parks. ...

PwC: Low oil prices might drive surge in restructuring in 2015

01/29/2015 Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to a report f...

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts

On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected