GM MOUNTS PUSH FOR REFORMULATED MOTOR FUEL NOW

General Motors Co., which brought unleaded gasoline to the U.S. scene, wants drivers of its autos to start using reformulated motor fuel immediately.

Refiners point out that reformulated gasoline has not yet been defined by the Environmental Protection Agency, and there probably will be a shortage of the fuel regardless of whether GM auto owners take the message to heart.

Lloyd E. Reuss, president of GM, told U.S. refiners at the National Petroleum Refiners Association annual meeting in San Antonio last week his company will immediately start recommending reformulated gasoline in all its existing and future cars. The recommendation will be in owner's manuals for 1992 model autos.

GM also will start an advertising campaign pushing reformulated gasoline.

Reuss said the action was taken "to take the automobile out of the air pollution equation."

Several refiners assessed the announcement as being inspired by political or public relations reasons and suggested GM and other auto makers could make some other major contributions to taking the auto out of the equation, one being solving the cold start emission problem.

Most pollutants escape while autos are being started and while their converters are cold.

In addition, research shows that only 10% of U.S. autos, so called "superemitters," account for about half of the auto emissions nationwide.

CLEAN AIR REQUIREMENTS

Although a number of U.S. refiners offer reformulated gasoline in selected markets, the composition of 1992 and 1995 gasoline to achieve carbon monoxide and ozone reduction is still being worked out.

Clean Air Act amendments of 1990 defined oxygen, aromatics, and benzene content. But olefins content, boiling range, and other characteristics have not been established.

The amendments require proposed rules covering reformulated fuel to be promulgated by next November.

Richard 1. Robinson, NPRA chairman and vice-president of Phillips 66 Co., said regulatory negotiations on the subject by many parties is a monumental effort that is being condensed into "an almost unrealistic time frame."

The auto and petroleum industries' costliest research program on auto emissions won't be complete by the time reformulated gasoline rules are written. Phase 11 of the joint auto/oil program is under way.

Research sponsors are feeding EPA their findings as soon as they are made.

One such new piece of information was released b . y J.J. Wise, vice-president of research for Mobil Research & Development Co. at the NPRA meeting.

New results show that low sulfur gasoline, containing about 50 ppm sulfur, cuts hydrocarbon, carbon monoxide, and nitrogen oxides emissions respectively 16%, 13%, and 8%, compared with those emitted when burning a high sulfur gasoline with 466 ppm sulfur.

Wise said the sulfur apparently is a temporary poison for catalytic converters because the poisoning effect disappears upon a return to low sulfur fuel. More research must be conducted, but the implication could be that refiners will have to desulfurize their gasoline more deeply.

OXYGENATE SHORTAGE

Though there are still major uncertainties-so major, in fact, they are delaying refinery work-there is little doubt there will be shortages of methyl tertiary butyl ether needed to produce reformulated gasoline.

John R. Hall, chairman and chief executive officer of Ashland Oil Inc., said last week in San Antonio that as a result of the Clean Air Act, "Never before has the industry been called upon to make such sweeping changes in so short a time."

He told a conference on octane markets and reformulated gasolines sponsored by Information Resources Inc., "Just 18 months from now, the industry must be prepared to convert about one third of the nation's gasoline pool to oxygenated fuels during four winter months.

"Just under 4 years from now we must be prepared to completely reformulate about 30% of the nation's gasoline pool year-round in the nine worst ozone nonattainment areas.

A firm analysis of supply and demand for oxygenates is full of unknowns even though it is only months to the first deadline of Oct. 15, 1992, when gasoline with a minimum oxygen content of 2.7 wt% must be sold during 4 winter months in 41 cities that are out of attainment for carbon monoxide.

A little more than 2 years later the industry will have to supply reformulated gasoline in at least the nine worst ozone nonattainment areas But both programs contain provisions for other areas to join in the program, and there are provisions to waive or delay requirements.

Some refiners fear last minute waivers may be granted, limiting their ability to recoup investments if their plant is built for an area that obtains a waiver.

Other complexities, Hall said, are:

Market spillover-Product terminals in some area will supply attainment and nonattainment ares. So areas that don't need reformulated motor fuel will demand it. Hall estimated a 20% spillover rate for his demand analysis.
Migration-This refers to movement 'of oxygenates from attainment to nonattainment areas. Hall assumes that all new capacity will be available in nonattainment areas. EPA has a confusing rule that sa s existing oxygenate supply being used elsewhere now cannot be diverted to nonattainment areas. Hall assumes a 50% migration rate, however. If none is allowed, shortages will be significantly higher.
Gasoline demand-Refiners could also be left holding the bag if the government enacts gasoline demand cutting measures such as harsh new corporate average fuel economy measures or a big new gasoline tax.

In short, the situation poses a planner's nightmare.

Ashland projects an oxygenate shortfall of 192,000 b/d in the winter of 1992. And the U.S. can't count on imports.

There is a large growth in MTBE supply in Europe, but supply is expected to fall short of demand because it will be used there as an octane booster to replace lead.

Once demand from the ozone areas kicks in on top of that from the CO areas, Ashland projects a deficit of 176,000 b/d in winter months (see table).

The oxygenate supply volume of 235,000 b/d assumes 50% migration of current supply, and all new North American oxygenate supply is available to nonattainment areas.

It's based on 113,200 b/d of existing MTBE capacity, 162,000 b/d of planned capacity, and 62,000 b/d of ethanol capacity operating at a 85% utilization rate.

If all 96 ozone nonattainment areas opt in, the deficit in the winter of 1995 will be 382,000 b/d.

The gasoline demand figure of 2.4 million b/d for winter 1995 in 41 CO nonattainment areas includes 1.337 million b/d within overlapping areas in ozone nonattainment cities.