Some US refiners are still uncertain as to the types of capital investments they will make to satisfy new ultralow-sulfur diesel highway-fuel regulations, according to a survey from the Clean Fuels Clearinghouse. Responses show that refiners have made little progress compared to a previous survey.
The study, entitled "Delivering business solutions for cleaner fuels," released the results on Jan. 5, 2004, of a November 2003 survey.
The Clearinghouse has conducted six surveys since January 2002 to track the progress that refiners are making to comply with clean gasoline and diesel regulations.
According to the survey, 35% of the responders said they disagreed when asked if their companies had finalized plans for complying with ultralow-sulfur diesel regulations. Most refiners agreed that distribution of ultralow-sulfur diesel would create a significant challenge to the production of the clean fuel.
The survey included questions on Tier 2 gasoline, ultralow-sulfur diesel, and off-road diesel. Survey responses were ranked from 1 for "strongly disagree" to 5 for "strongly agree." The survey reportedly represents companies with more than 70% of the gasoline produced in the US.
Gasoline
When asked if the flexibility provided for in the Tier 2 gasoline rule was adequate, 80% of respondents either strongly agreed or agreed.
This was an increase from a 69% agreement in a survey conducted in January 2002.
Fully 75% of the respondents said their companies had finalized plans for Tier 2 gasoline sulfur compliance. Only 31% had responded positively in the January 2002 survey. The weighted average level of agreement rose to 4.05 in November 2003 from 2.69 in January 2002.
When asked if their companies had made technology selection for gasoline desulfurization, 80% of the respondents gave positive responses.
This was up from 38% in the January 2002 survey and 74% in the May 2003 survey.
Capital cost was the most important element in technology selection for 70% of the respondents, outweighing product yield, octane loss, operating cost, and reliability.
In the January 2002 survey, only 31% of respondents listed capital cost as the most important factor.
When asked how difficult implementation of Tier 2 gasoline would be, 60% of the respondents felt that implementation would be moderate, 30% felt that it would be difficult, and 10% felt that it would be easy.
In the May 2003 survey, 53% felt that implementation would be easy, 11% said it would be extremely easy, and 26% said it would be difficult.
Diesel
When asked if their companies had finalized plans for complying with ultralow-sulfur diesel, 45% strongly agreed or agreed, up from 25% in an April 2002 survey.
Fully 35% said that they disagreed or strongly disagreed with that statement, down from 75% in April 2002 and 64% in May 2003.
Almost all refiners (90%) agreed or strongly agreed that product distribution would present a significant challenge to the production of ultralow-sulfur diesel.
The responses in the latest survey did not change since the April 2002 survey, when 89% of respondents either agreed or strongly agreed.
"One of the overall biggest issues will be the supply and distribution of diesel from the refinery gate to the product terminals," according to the Clean Fuels Clearinghouse.
According to the survey, 60% of refiners indicated that they have chosen the technology to produce ultralow-sulfur diesel.
Only 21% had selected a technology according to the April 2002 survey. The weighted average response increased to 3.4 in November 2003 from 2.5 in April 2002.
That 60% of refiners have selected a technology and only 45% agree that they have finalized plans suggest that even though the technology is selected, the timing of the investment has not been resolved.
Fully 70% of the survey respondents said that the implementation of on-road ultralow sulfur diesel would be extremely difficult or difficult.
Only 5% responded that the implementation would be easy. In the January 2002 survey, 92% of respondents said that it would be difficult or extremely difficult.
When asked if the proposed off-road diesel rule provided adequate flexibility, 15% agreed and 85% were neutral. In the May 2003 survey 32% agreed and 68% answered neutral.
Off-road diesel includes nonroad, locomotive, and marine ultralow-sulfur diesel.
According to the survey, 55% said that the implementation of off-road diesel regulations will be extremely difficult or difficult, and 45% said the implementation will be moderate. The May 2002 survey reported almost exactly the same results.
When asked if their companies had clear plans addressing the supply and distribution of on-road and off-road diesel fuels, 75% disagreed or strongly disagreed, 10% strongly agreed or agreed, and 15% were neutral. In the previous survey, 63% disagreed or strongly disagreed, 26% agreed, and 11% were neutral.
According to the Clean Fuels Clearinghouse, "numerous uncertainties still exist, but the good news is that a considerable amount of time, over 2 years, remains before the first of the clean diesel standards take effect, leaving refiners with time to study and optimize compliance strategies."