Petroleum Industry Needs Great
Strides to Meet ULSD Requirement

WASHINGTON, D.C. - By the time this article hits the streets the first deadline related to the Clean Air Act's 2007 heavy-duty diesel engine regulations will be upon us. The first phase is the ability of petroleum refineries to produce ultra low sulfur diesel for market.

At this writing a professional petroleum association said the industry had "a long way to go" in reaching compliance.

As of June 1 all petroleum manufacturers must produce ULSD levels accounting for 80 percent of all diesel fuel supplied nationwide from refiners and importers. Sept. 1 is the deadline for ULSD to reach diesel terminals, and the fuel must be made available to retail outlets by Oct. 15.

Diesel engines manufactured for the 2007 model year must be calibrated to run on the lower-emission diesel. By 2010 all ULSD produced, delivered and sold must meet 100-percent levels of 15 ppm of sulfur, a requirement that will kick in for California only by this summer.

John Felmy, chief economist with the American Petroleum Institute, says a weekly survey of petroleum companies shows a current production increase of 30,000 barrels of ULSD per day as of mid April. The fuel meets the new federal requirement for 15 parts per million of sulfur, down more than 330 percent from current levels of 500 ppm of sulfur found in regular No. 2 diesel fuel.

"2.4 million barrels a day will have to be produced," Felmy adds.

An EPA annual refinery assessment report released over the winter showed over 90 percent of refineries would be ready by June 1.

While Felmy says API hasn't received any new developments on cost increases from the petroleum manufacturers, the Energy Information Administration reports that diesel prices could increase anywhere from 6.5 to 7.2 cents per gallon between 2007 and 2011, based on EPA assumptions.

"The widest price differential - 10.7 cents per gallon in 2011 - is projected in the Severe case, which is based on assumptions more consistent with industry views," the report states.

Allen Schaeffer, executive director of the Diesel Technology Forum in Frederick, Md., says despite the ambitious production schedule he is confident the petroleum industry will meet the refinery requirements for ULSD, but adds, "If there are to be any glitches . they would most likely come in the pipeline distribution system."

Source: School Transportation News, May 2006. All rights reserved.