EPA finalizes Tier 3 motor fuel, other requirements

The US Environmental Protection Agency issued final Tier 3 emissions control requirements for motor fuels and vehicles to meet by Jan. 1, 2017. The regulations address one major concern from refiners by keeping sulfur limits per gallon at existing levels, EPA Administrator Gina McCarthy said.

“Frankly, what [the American Petroleum Institute] and others were relying on was an outdated estimate based on what they thought we’d propose, not what we actually proposed let alone what we actually put in the regulation following public hearings and extensive public comments,” McCarthy said during a Mar. 4 teleconference.

“The per gallon sulfur cap will remain at existing levels,” McCarthy stated, adding, “I think folks need to take a close look at what we’ve actually done.”

The regulations include provisions to help refiners meet the requirement to reduce gasoline sulfur levels to 10 ppm from 30 ppm by 2017, she continued. “We listened very closely to small refiners and delayed the start date for 30 of them until 2020 because it’s important for them to be able to keep operating and supplying products for their customers,” she told reporters.

Other provisions include:

• A credit averaging, banking, and trading (ABT) program that will allow refiners to spread out their investments from 2014 through 2019 and provide for a seamless transition from the Tier 2 ABT program to the Tier 3 ABT program, including the ability to carry over “banked” credits from Tier 2.

• A 1-year deficit carry-forward provision that allows an individual refinery that does not meet the 10 ppm standard in a given year to carry a deficit forward for 1 year if necessary, as long as it makes up the deficit the following year.

• Hardship provisions which allow refiners to petition for compliance assistance on the basis of extreme hardship or extreme unforeseen circumstances.

The regulations also certified gasoline with a 10% ethanol blend and fuel that is 85% ethanol as test fuels under the program, providing additional certainty for refiners and automakers, McCarthy said.

She said EPA was doing more than standing by its estimate that Tier 3 requirements would add 1¢/gal to the cost of gasoline by 2025: It was reducing it.

“Based on additional research and comments, we estimate this will increase costs for gasoline by about 0.65¢/gal and for new cars and light-duty trucks by about $72/vehicle by 2025,” she said. “In 2017, when this fuel is available, cars will be cleaner. It will provide an opportunity for automakers to use more efficient catalytic converters. The costs won’t be immediate, but gradually ramp up.”

The requirements also potentially will affect natural gas liquids plants, NGL and refined petroleum products pipelines, gasoline additive manufacturers, petroleum bulk stations and terminals, ethyl alcohol and denaturant manufacturers, and other basic chemical manufacturing and wholesaling operations.

Reiterate concerns

API and American Fuel & Petrochemical Manufacturers officials reiterated concerns that the new requirements would be costly and unnecessary.

“This rule’s biggest impact is to increase the cost of delivering energy to Americans, making it a threat to consumers, jobs, and the economy,” API Downstream Group Director Bob Greco said on Mar 3. “But it will provide negligible, if any, environmental benefits. In fact, air quality would continue to improve with the existing standard and without additional costs.”

Greco said a study conducted by consulting firm Baker & O’Brien for API determined the new rule could require $10 billion in capital costs and $2.4 billion/year in compliance expenses, equating to a potential 6-9¢/gal increase in the cost of gasoline production. Another study that Environ did for API found the new rule would produce negligible environmental benefits, Greco said.

“We’re also concerned about the timeline of EPA’s new rule,” he added. “The rushed timeframe leaves little opportunity for refiners to design, engineer, permit, construct, start up, and integrate the new machinery required. This accelerated implementation only adds costs and potentially limits our industry’s ability to supply gasoline to consumers.”

AFPM Pres. Charles T. Drevna said EPA’s decision to issue the final Tier 3 rule “is yet the most recent example of the agency’s propensity for illogical and counterproductive rulemaking. Tier 3 not only lacks scientific justification, but in fact will lead to higher greenhouse gas emissions due to the greater energy-intense refining process required to reduce sulfur in gasoline from 30 to 10 ppm.”

He said AFPM was pleased with EPA’s decision to make E10, instead of E15 as was originally proposed, the certified Tier 3 test fuel. “Unlike E10, which constitutes more than 95% of all gasoline sold, E15 is not widely available in the market and is damaging to the majority of vehicles on the road today,” Drevna said on Mar 3. “EPA’s decision is the right choice because there is no market for E15 for one reason: Consumers don’t want the fuel.”

Ignored problems

He said AFPM met with numerous administration officials to outline problems with the proposed standards’ potential impacts and compliance schedule that EPA chose to ignore. “Tier 3 will provide little, if any, benefit, while increasing fuel manufacturing costs on the backs of American consumers,” Drevna said. “Like the Renewable Fuel Standard, [it] not only adds to uncertainty in the market and to potential supply problems, but actually increases greenhouse gas emissions.”

But McCarthy and others who participated in the teleconference said the new regulations provide the most economic and immediate air pollution reductions possible.

“EPA effectively has harmonized the state and federal agencies’ emissions requirements, which allows us to build and calibrate vehicles on a national basis,” said Mike Robinson, vice-president for sustainability and global regulatory affairs at General Motors. “We support lower sulfur emissions requirements for fuels because this is one of the easiest ways to reduce emissions.”

Hundreds of state and local air pollution regulators welcome the new requirements, according to George (Tad) S. Aburn, Jr., co-president of the National Association of Clean Air Agencies and director of the Air and Radiation Management Administration in Maryland’s Department of the Environment. “We know of no other strategy that can clean the air as cost-effectively as Tier 3,” he maintained.

The new requirements will achieve the equivalent of taking 33 million cars off the road in their first year, Aburn continued. “I can say we’ll never achieve air quality attainment standards without the Tier 3 program,” he said, adding, “It will reduce emissions within the necessary time frames at a reasonable cost. It’s particularly important because the federal government is best equipped to tackle mobile source emissions.”

Contact Nick Snow at nicks@pennwell.com

Related Articles

US Forest Service withdraws proposed groundwater directive

06/22/2015 The US Forest Service withdrew a proposed directive on groundwater resource management on June 19, and announced it would hold public discussions o...

Petronas lets technology contract for RAPID project

06/22/2015 Malaysia’s state-run Petronas has let a contract to Axens to provide processing technology for its proposed refinery and petrochemical integrated d...

Salerno considers same-season relief wells basic Arctic offshore tool

06/22/2015 US Bureau of Safety and Environmental Enforcement Director Brian Salerno disagreed with oil and gas industry comments that a requirement in propose...

Williams rejects unsolicited bid from Energy Transfer Equity

06/22/2015 Williams Cos. Inc., Tulsa, has rejected an unsolicited all-equity acquisition proposal valued at $53.1 billion from Dallas-based Energy Transfer Eq...

WPX Energy adds to acreage in Gallup oil play

06/22/2015 WPX Energy Inc., Tulsa, has added to its San Juan Gallup acreage in New Mexico with the purchase of another 14,300 net acres from an undisclosed se...

Lundin appoints president, chief executive officer

06/22/2015 Lundin Petroleum AB reported that its board has appointed Alex Schneiter as president and chief executive officer following Ashley Heppenstall’s de...

MARKET WATCH: NYMEX, Brent crude oil price fall on Greece’s debt concerns

06/22/2015 US crude oil futures for July delivery dropped back below $60/bbl on the New York market in June 19 trading, and analysts said concerns over Greece...

Nationalism may restrict climate efforts, Statoil economist warns

06/22/2015 Growing national confrontations could undermine efforts to meet goals to reduce global climate change impacts, Statoil’s chief economist warned.

Watching Government: Considering energy R&D

06/22/2015 Moving from research to development (R&D) became a recurring question as the US Senate Energy and Natural Resources Committee considered 43 sep...
White Papers

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

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
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

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