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“Frankly, what [the American Petroleum Institute] and others were relying on was an outdated estimate based on what they thought we’d propose, not what we actually proposed let alone what we actually put in the regulation following public hearings and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

EPA proposes voluntary methane reduction program for gas industry

07/24/2015 The US Environmental Protection Agency proposed a voluntary methane reduction program for the natural gas industry that would allow companies to ma...

Petrobras workers stage 24-hr strike

07/24/2015 Workers at beleaguered Petroleo Brasileiro SA (Petrobras) staged a 24-hr strike across Brazil to protest plans by the state-owned company to liquid...

MARKET WATCH: Oil futures hover below $49/bbl

07/24/2015 Light, sweet crude oil futures prices settled under $49/bbl July 23 on the New York market, which means US prices have slid more than 20% since the...

EQT reports high IP from Utica dry gas well

07/24/2015 EQT Corp., Pittsburgh, said a deep, dry gas Utica well averaged 72.9 MMcfd with an average flowing casing pressure of 8,641 psi during a 24-hr deli...

Separate Murkowski bill addresses crude exports, OCS revenue sharing

07/24/2015 US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) introduced legislation that would end the ban on US crude oil expor...

OGUK updates guidelines for well abandonments

07/23/2015

Oil & Gas UK has released updated guidelines for abandonment of wells, including cost estimates.

MARKET WATCH: Oil futures plunge below $50/bbl

07/23/2015

Light, sweet crude oil futures prices plunged lower to settle below $50/bbl on the New York market on July 22.

Gazprom Neft advances Moscow refinery revamp

07/23/2015 JSC Gazprom Neft has gained final approval from Russian government regulators to begin construction on its long-planned combined oil refinery unit ...

Contract let for Chinese grassroots petrochemical project

07/23/2015 Ningxia Baota Chemical Fiber Co. Ltd. (NBCF), a subsidiary of privatized Ningxia Baota Petrochemical Group Co. Ltd. (NBPG), has let a contract to H...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

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


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