A study conducted for the Department of Energy predicts initial reformulated gasoline requirements in 1995 won't pose significant technical problems for U.S. refiners.
But nearly all refiners will have to make added investments.
Cambridge Energy Research Associates (CERA) prepared the study for DOE on critical issues affecting refiners and U.S. product supplies in the 1990s, particularly the effects of the 1990 Clean Air Act (CAA) amendments.
CAA REQUIREMENTS
CAA requires winter gasoline supplies in 41 metropolitan areas to contain 2.7 wt % oxygen beginning in November.
CERA predicts oxygenate supplies will be adequate.
"Production capacity during the winter will fall short of requirements by 41,000-126,000 b/d," it said, "but the industry. should be capable of building inventories to fill the gap."
CAA also requires the sulfur content of on-highway diesel fuel to be reduced to 0.05 wt % beginning in 1993.
The study said refiners should be able to meet those requirements, although at a cost of 4-7/gal, including capital recovery and operating costs.
And CAA requires gasoline sold in nine metropolitan areas to be reformulated to reduce emissions of ozone precursors by 1995.
The specifications of those reformulated fuels have not been set, although the law requires a maximum of 25 vol % aromatic compounds, 1 vol % benzene. and a minimum of 2 wt % oxygen.
REFINERS' COSTS
CERA said the average outlay for refiners meeting the reformulated gasoline and low sulfur diesel fuel requirements, and changing crude quality, is about $900/bbl of crude distillation capacity.
Refiners Representing 44% of U.S. distillation capacity estimate CAA requirements will cost them about $4.8 billion for reformulated gasoline, $2 billion for low sulfur diesel, and $300 million for crude quality changes.
Refiners' costs for reformulated gasoline are estimated to be 5.7/gal higher than conventional gasoline. The added expense is the sum of refinery capital costs and purchases of oxygenates that cannot be produced at the refinery.
The cost estimate does not reflect the effect of more stringent performance requirements to be imposed in 2000.
"A central potential barrier to achieving the goals of the 1990 amendments is weak coordination of federal, state, and local requirements for stationary facilities," CERA said.
"During 1991, the ambiguity of CAA regulation and permitting made it impossible for refiners to adequately estimate required costs and the effects on their operations, thus increasing costs and the time required to modify facilities and procedures."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
