CHEVRON 'CLEAN' DIESEL GETS CALIFORNIA NOD; UNOCAL MOSTLY OPTS OUT OF STATE'S DIESEL MARKET

Chevron U.S.A. Products Co. has received California's first certification for reformulated diesel fuel under toughened air emissions standards to take effect in 1993.

At the same time, Unocal Corp. has decided against additional capital spending needed to supply the reformulated diesel, in effect ail but withdrawing from California's diesel market.

That development may prove ominous for claims by state air quality officials that the new rules won't result in shortfalls of diesel supplies in the state.

CHEVRON CERTIFICATION

Chevron received certification under new standards the California Air Resources Board (CARB) will require for diesel fuel sold in the state beginning in October 1993. California currently has the toughest diesel air emissions standards in the U.S.

The new standards, approved in 1988, call for diesel to have no more than 10 vol % aromatics, compared with the current level of 30-35 vol %. In addition, diesel sulfur limits are to be slashed to 0.05 wt % from current levels of an average 2.8 wt %.

CARB set those limits as part of its three part diesel emissions reduction program, which includes new specifications for diesel engine standards as well as the new fuel formula. The emphasis on the fuels side is obtaining a substantial reduction in emissions of nitrogen oxides (NOx) and sulfur dioxide, benzene and other toxics, and to a lesser extent a cut in particulate matter (PM) emissions.

Under the program, a refiner could opt for an alternative formula if it could achieve the same reduction in emissions the CARB formula seeks.

Chevron's new formula has an aromatics content of 19 vol %, very low sulfur levels, and a cetane rating of 58.

Chevron said its research showed that improving fuel cetane provides more air quality benefits than reducing aromatics alone. Chevron conducted the research through its subsidiary Chevron Research Technology Co. in Richmond, Calif. It involved testing many diesel fuel composition variables in an engine similar to the one required by CARB for certification.

Chevron's formula not only passed CARB's test for NOx and PM but performed better than the benchmark standard in several other areas, including total hydrocarbon and carbon monoxide emissions.

"Even though Chevron has filed for a patent on the formulation, we are making the formulation public and are prepared to offer the rights to other California producers," said Chevron U.S.A. Products Pres. Dave Hoyer.

"By effectively developing a fuel formulation that meets the 1993 rules, we hope this will start to relieve customers' anxiety over the adequacy of diesel fuel supply.

"If the current specter of insufficient supplies becomes reality, CARB may have to reconsider the 1993 rule. Chevron urges CARB to clear away the uncertainties so we and others can proceed with orderly development and commercialization of low aromatics diesel."

CARB VIEW

CARB contends the new diesel emissions standards will cut sootlike emissions from existing trucks and buses by about 17% as well as help engine manufacturers meet current tailpipe standards that require sootless new models.

The tailpipe standards, which CARB adopted in 1986, call for a 90% cut in PM emissions, requiring sootless urban bus engines in 1992 and new model trucks beginning with the 1994 model year.

CARB noted that by juggling diesel components Chevron was able to be more flexible in using its refinery capacity and thus rein costs, producing an equally clean diesel fuel with greater cost effectiveness.

CARB Chairwoman Jananne Sharpless said the agency expects other oil companies to follow Chevron's example, thus ensuring an adequate supply of cleaner diesel in the state by the CARB deadline.

"Some oil companies are reevaluating their place in the diesel market, and they may make individual decisions based on the status of their refineries and after considering the types of products they want to provide," she said.

"But as long as there is a market for diesel fuel, we are confident there will be enough suppliers to meet the demand."

UNOCAL DECISION

One refiner that has reevaluated its place in California's diesel market is considerably less optimistic than CARB about its ability to meet its diesel customer needs.

"Unocal cannot economically justify the investment required in new facilities to manufacture and sell the low aromatic diesel product," said Unocal Chairman Richard Stegemeier.

Unocal, which produces 20,000 b/d of diesel at its San Francisco and Los Angeles refineries, said complying with the CARB diesel rules could cost it at least $100 million and take 3 years of planning and construction.

Stegemeier said his company evaluated the options for producing a diesel fuel to meet the CARB standard, but all proved uneconomic. In addition, the company failed to get its current aromatic level, low sulfur diesel certified by CARB.

"Based on the new regulation, Unocal will produce only a very limited amount of diesel for vehicular use in California after September 1993," Stegemeier said.

Last week Unocal notified CARB and its dealers, marketers', and Auto/TruckStop operators it could not assure its California customers that diesel supplies could be obtained from alternate sources once the new regulation takes effect. At the same time, Unocal said it believes projected production levels are sufficient to cover expected demand for diesel in its non-California markets.

Unocal noted the U.S. Environmental Protection Agency has not found it necessary to sharply limit aromatics in diesel. EPA's standard calls for a minimum 40 cetane index or a maximum aromatics content of 35 vol %.

"We believe the EPA specifications are realistic, and we can produce sizable quantities of low sulfur diesel fuel product that complies with the federal requirements," Stegemeier said.

"If CARB enforces the aromatics regulation, we plan to sell our diesel production in markets outside California."