Canadian refiners cite sulfur rule threat

New rules unveiled by Canada's federal government to reduce sulfur content in gasoline could have severely damage the competitive position of Canadian refineries, says the Canadian Petroleum Products Institute (CPPI).

Federal Environment Minister Christine Stewart said that the amount of sulfur in gasoline must be cut to 150 ppm from a current 1,000 ppm across Canada by 2002. An additional cut to 30 ppm will be mandated by 2005.

The CPPI and a number of refinery operators said the cuts could sharply increase refinery costs and put Canada's refineries at a competitive disadvantage with U.S. refineries. Ottawa says the changes are needed to impove air quality.

CPPI stance

The CPPI said it has urged Ottawa not to unilaterally establish a Canadian standard but to recognize the importance of aligning Canadian and U.S. standards, both for sulfur levels and timing of implementation. It said Ottawa's implementation plans are premature, because the U.S. is expected to set a standard and implementation dates in 1999.

It said the regulations could add more than 4¢ (Canadian)/gal to the price of gasoline at the pump and lead to refinery shutdowns and jobs losses at some of Canada's 17 refineries.

"CPPI will continue to support the need for reduced levels of sulfur in gasoline that are aligned with U.S. standards," CPPI Director Brian Fischer said. "We will also continue to work closely with government authorities to develop specific regulations that ensure air quality objectives are met, while maintaining the competitiveness of the Canadian refining industry."

CPPI said there are recent independent studies that question whether lowering sulfur content will result in measurable improvements in public health related to air pollution.

Refiners' views

Three Calgary refiners also chimed in with their views on the proposed rule. Petro-Canada said it supports sulfur reductions in gasoline but is concerned by the timing and extent of Ottawa's new regulations and their effects on the industry.

Shell Canada Ltd. said it supports sulfur cuts, but any changes should be coordinated with the U.S.

Husky Oil Ltd. said the changes could have a serious effect on its 10,000 b/d refinery at Prince George, B.C. It said the viability of the refinery would be threatened by a standard of 150 ppm, and it would likely be shut down at 30 ppm.