California plans to ban MTBE from gasoline

Anne Rhodes
Associate Managing Editor-News

California Gov. Gray Davis has issued an executive order to ban the use of methyl tertiary butyl ether in gasoline sold in the state by Dec. 31, 2002.

Davis has requested that the California Environmental Protection Agency implement the executive order, and that the California Energy Commission and California Air Resources Board (CARB) devise a timetable for the gasoline additive's removal by 2003.

The move should be seen a step toward the eventual prohibition of MTBE use in the state, and not as a definitive decision.

The order is the result of the discovery of MTBE-contaminated groundwater in certain areas of the state. It also follows a University of California at Davis study of the use of MTBE in California gasoline, which concluded, among other things, that its emissions effects are minimal and its health risks significant.

Houston-based consulting firm Bonner & Moore Inc. says the order pushes refiners and oxygenates producers worldwide into turmoil by raising more questions than answers: "Once again, the refining industry is presented with the specter of having to modify gasoline formulation for the largest U.S. gasoline market."

The regulations

According to federal law, gasoline sold in the Los Angeles basin and in San Diego-areas considered out of attainment with federal ozone standards-must contain at least 2 wt % oxygen. But California has implemented its own laws governing gasoline quality.

CARB instituted its Phase 2 reformulated gasoline (RFG) standards in 1996. In general, the CARB gasoline requirements, which apply to the entire state, are stricter than the federal specifications. Where oxygen is concerned, however, they are slightly more flexible, with a range of 1.8-2.2 wt % oxygen being permissible.

Under federal and California laws, the means of adding the mandatory oxygen is not specified. Refiners have, for the most part, chosen to blend MTBE into gasoline, with ethanol being the next most-popular alternative.

To facilitate his MTBE ban, which under federal law would be illegal in the Los Angeles and San Diego areas, Gov. Davis plans to request that California be granted a waiver from the federal oxygenate requirement. This would allow refiners to choose from a variety of methods of producing CARB Phase II RFG (OGJ, Jan. 18, 1999, p. 18).

The U.S. EPA is reportedly reviewing the order and intends to make a recommendation this summer.

Davis has also called for a study on ethanol's ability to replace MTBE.

Meanwhile, at the federal level, Sen. Dianne Feinstein (D-Calif.) and Rep. Brian Bilbray (R-Calif.) have introduced joint legislation calling for the removal of overlapping federal and California gasoline requirements.

Questions raised

According to Bonner & Moore, Davis's action "opens up the possibility that other states will distance themselves from federal mandates and MTBE."

The consulting firm listed the more-serious questions raised by Davis's move. Among them were:

Will the U.S. EPA grant California an oxygenate waiver? If so, how will refiners make gasoline with equivalent air-quality benefits? And will EPA extend such a waiver to other states that wish to follow California's lead?
If the waiver is not granted, how will California meet oxygen requirements without MTBE, and how will this decision affect gasoline costs? Will refiners switch to ethyl tertiary butyl ether (ETBE) and tertiary amyl methyl ether (TAME), or will they be deterred by the similar chemical nature of these components? And, if ETBE and TAME are welcomed, how much can realistically be produced by the time the ban takes place?
If ETBE and TAME are shunned, can ethanol suppliers double their production capacity to satisfy increased demand in California without severe price increases?
How will refiners change their gasoline blends to account for the high volatility of ethanol, particularly in the summer, when this property contrib- utes to smog-forming emissions? And how much will these changes cost?
Because ethanol's strong affinity for water prevents it from being shipped by pipeline, how will the logistics of moving ethanol to California, storing it, and blending it be accomplished?
What options do current producers of MTBE have to reconfigure their processing facilities to allow them to remain in business?
What will be the implications to the upstream chemicals producers of MTBE; for example, such as methanol suppliers?
What costs will be incurred by refiners in meeting the new California gasoline formulation guidelines? Can, and will, these costs be passed through to the consumer?

And finally, Bonner & Moore asks, "Is the ban good science or merely good politics?"

Other responses

Chevron Corp. Chairman Ken Derr says he and Sen. Feinstein have developed a plan to replace current California gasoline blends with a combination of oxygenate-free and ethanol-blended fuels. "But it requires proposed legislation such as Senator Feinstein's and Congressman Bilbray's," Derr said.

"While we believe that MTBE poses no significant health risk, we also believe that is does pose an environmental concern," said Derr. "We have the need and the ability to make cleaner-burning gasoline in California without adding MTBE or other, similar oxygenates."

Chevron's three-part plan comprises:

Passage of the federal legislation necessary to waive the oxygen requirement in California, at which point Chevron will cut its MTBE use in the state by half, says Derr.
Institution of a requirement that all California refiners cut MTBE use by 50%.
Passage of state legislation implementing a state-wide MTBE ban.

Stamford, Conn.-based Tosco Corp., operator of two California refineries, supports Davis's action. Chairman and CEO Thomas O'Malley said, "We applaud the governor's bold action to order an MTBE phase-out to safeguard California's water resources while preserving the benefits of the California cleaner-burning gasoline program. Tosco pledges to work closely with the governor and all other parties to ensure a smooth transition away from MTBE at the earliest possible date."

Tosco has been test-marketing MTBE-free California RFG for almost a year now (OGJ, Apr. 27, 1998, p. 24).

The Western States Petroleum Association says its members will abide by any legislation that is passed: "However, we urge the governor to heed the recommendations of the University of California and (the California) Energy Commission on this matter.

"The Energy Commission and UC study findings specifically recommend against an immediate MTBE ban, urge a full environmental assessment of alternatives before a ban is imposed, and recommend the passage of federal legislation and changes in California cleaner-burning gasoline regulations to give refiners greater flexibility, which could help reduce costs of an MTBE phaseout."