Copyright 1999 The Houston Chronicle Publishing Company
The Houston Chronicle
November 14, 1999, Sunday 2 STAR EDITION
SECTION: BUSINESS; Pg. 1
LENGTH: 2276 words
HEADLINE:
SULFUR IN GASOLINE;
Time to clean up their
act;
Reduction movement will cut pollution, but refiners, public will pay
SOURCE: Staff
BYLINE: NELSON
ANTOSH
BODY:
Oil companies have come to the
expensive realization that they're going to have to start producing
low-sulfur gasoline.
"The regulators, public and
automakers want the sulfur out of gasoline,"
said Gil Greenwood of Phillips Petroleum. "The message is very loud, and it is
very clear."
It's hard to argue against a change that would be the
environmental equivalent of taking one out of every four cars off the road.
But the refiners are quick to add they'll need more time than
environmental regulators are offering. The refining technique needs work, it
requires billions of dollars worth of investments and the resulting fuel may
reduce auto engine performance. Motorists may be only vaguely aware of the
environmental debate over sulfur. The prime combatants in this
campaign to get rid of the polluting chemical from gasoline are
the automakers on one side, and the refiners and gasoline
marketers on the other.
The automakers are calling
sulfur the "lead of the 1990s" and want oil companies to get
levels down as soon as possible, while refiners call it the biggest challenge
since reformulated gasoline and want to move more slowly.
Their reluctance for quick action is understandable.
The stakes
on the refiners' side are refinery upgrade costs estimated at $ 4 billion to $ 6
billion. Getting the sulfur out is described as the biggest
single technical and cost challenge ever, a task that will be compressed into a
too-short time frame.
A couple of Texas refiners say they are each
facing costs exceeding $ 100 million, and one warns that proposed schedule for
phasing in low-sulfur gasoline could lead to
gasoline supply disruptions and price spikes. To make matters
worse, taking sulfur out can mean lower octane - leaving
motorists with pinging motors.
The automakers, who say they can't build
cleaner cars without lower-sulfur fuel, appear to have the
upper hand as the Environmental Protection Agency prepares to act. Next month
the agency will publish its final regulations on this issue -
the first-ever nationwide effort to crack down on sulfur in
gasoline as a pollutant.
They are expected to ask the
refineries to slash sulfur to one-tenth of its current level
within four years, which ranks in difficulty with the reformulated
gasoline edict, said Terry Higgins, technical director of the
National Petrochemical and Refiners Association.
The 30-parts-per
million standard matches the California standard. Currently,
gasoline for sale outside of California averages from 330 to
350 parts per million of sulfur, although the
sulfur content can range as high as 1,000 parts per million.
Taking the lead out in the 1970s was far less difficult than this, said
Higgins.
Job must be done
Refiners accept the
fact that this job must be done.
The issue is the deadline. The
industry's proposal on sulfur is to phase in the cleaner
gasoline on a regional basis, dealing with the more polluted
areas first, over a longer period of time period than the EPA wants. This is
similar to the phase-in used when reformulated gasoline was
introduced beginning in 1995.
That plan would have split the country
into east and west, with Interstate 35 the dividing line. The east would be
tackled first.
The 1,000 parts per million is an unofficial guideline to
keep sulfur below the level that damages engines.
The
EPA's proposed average of 30 parts per million isn't low enough to suit
manufacturers of cars and light trucks. Even before the EPA proposal becomes
official, the automakers are pushing for a deeper cut.
The auto industry
petitioned the EPA in 1997 to set a 30-parts-per-million standard, and last
February amended that petition to 5 parts per million, or even lower if
possible, said Gary Herwick, a fuels expert in General Motors' Public Policy
Center in Detroit.
Automakers have done virtually all they can do to
reduce pollution given the fuels that they must work with, according to the
Alliance of Automobile Manufacturers, an organization that was put together
early this year to lobby with the world's big carmakers.
The pollution
benefit of going to an average sulfur content of 30 parts per
million would be immense. It would be equivalent to removing 54 million vehicles
from the highways, according to Marion Herz, spokeswoman for the EPA office of
mobile sources.
This would be like taking one in four vehicles off the
road, based on the Alliance's estimates that there are 200 million vehicles in
use.
The cost to the average motorist would be about $ 24 a year, Herz
estimates. Slashing the sulfur content would add from 2 to 5
cents a gallon to the selling price of of gasoline, with oil
industry sources offering the higher estimate.
The actual cost is hard
to get a handle on, but for this struggling industry that's big money.
It is impossible to estimate accurately at this point, but the
Lyondell-Citgo joint venture in Houston will have to invest at least $ 100
million for its single location, said spokeswoman Anne Knisely.
"That
would be easily half of the capital budget for the next four years, not making
any kind of economic return," she said. The expenditure won't expand output, and
it won't result in more hiring.
And meeting the 2004 deadline would
require that the permitting, engineering, procurement and construction would all
go flawlessly, said Knisely. That's not how it usually happens.
Sulfur level varies
Sulfur is a naturally occurring component in
crude oil. The amount varies with the type of crude.
The Lyondell-Citgo
venture could be a worst-case example because it handles a heavy,
high-sulfur crude oil from Venezuela. But because of
improvements made in 1997, the refinery's output contains 200 parts per million
of sulfur, well below the national average.
Valero
Energy of San Antonio, the second-largest independent refiner in the United
States and supportive of clean gasoline, will have to spend $
125 million to comply, said spokeswoman Mary Rose Brown.
Its Corpus
Christi refinery is now producing gasoline containing 150 parts
per million, she said.
Without enough time to upgrade, Valero said in
testimony, "the results could be devastating, far-reaching and costly to
consumers leading to gas supply interruptions and price spikes."
Many
big refiners already have the capability of producing California-type
gasoline, but only in limited amounts, said Jeff Dietert, an
analyst who follows the refining industry for Simmons & Co. in Houston.
Sulfur has become a target because it hurts the
performance of catalytic converters, which generally get the credit for cutting
pollution from vehicles by 95 to 98 percent from the uncontrolled days,
according to Herwick of General Motors.
In theory, you could run the
converter at temperatures high enough to burn off the sulfur,
but that would shorten the life of converters.
Modern cars carry
three-way converters to deal with unburned hydrocarbons, carbon monoxide and
oxides of nitrogen - the latter more challenging to deal with.
If the
hydrocarbons and oxides of nitrogen are not removed by the converter, those
pollutants form smog.
The oxides of nitrogen are supposed to be trapped
on the surface of the precious metals within the converter, said Herwick.
But sulfur interferes because the molecules of
sulfur dioxide compete with the oxides of nitrogen for the
available sites on the catalyst, said Herwick. There are only a limited number
of sites available for the molecules to attach.
When all the available
sites are filled, the nitrogen pollution spills out of the tailpipe into the
air.
There is new auto emission technology in the works, but without
improvements in fuel, "we can't go further," Herwick said. One such improvement
is lean burn direct injection, which promises miles-per-gallon gains of 15 to 25
percent. Another would be cars using fuel cells that use
gasoline as a source of hydrogen. Both require
extremely-low-sulfur fuel.
"Is 30 parts per million
good enough (for new technologies) - every piece of data we have says not," said
Herwick. Car makers would like to see sulfur levels cut to as
close to zero as possible, whatever that level is, he said.
Another barrier
The barrier to reaching those
low levels is more than the cost. Cutting sulfur also cuts
octane and reduces the volume of gasoline produced using the
most common piece of sulfur-removing equipment, the
hydrotreater.
The hydrotreater adds hydrogen at high temperatures, which
converts sulfur into hydrogen disulfide, which can then be
removed. The problem is the more hydrogen you use, the more you hurt the octane
rating.
"Put more hydrogen into the molecule, and the octane value goes
down, fairly significantly sometimes," said Greenwood of Phillips Petroleum.
Low octane in gasoline causes engines to ping,
resulting in damage to parts if allowed to continue in excess.
Any
reduction in octane comes at a bad time as regulators try to get rid of MTBE, an
oxygenate added to gasoline to make it cleaner-burning, that
has the beneficial side effect of boosting octane.
MTBE has caused
contamination of drinking water, especially in California, which has outlawed
its use - although it is still trying to figure out how to implement that
without violating the federal Clean Air Act requirement for oxygenates.
Already, the octane rating nationwide is down substantially from the
days when tetraethyl lead was blended into gasoline. Unlike
lead, sulfur has no beneficial use in
gasoline.
But engineers have some ideas on ways to
avoid the calamities predicted when new rules are announced.
Phillips
Petroleum, headquartered in Bartlesville, Okla., in August announced what it
described as a "breakthrough" technology to take the sulfur out
of gasoline.
It already has tested the technology in a
small pilot plant, and plans to build a semi-commercial facility at its refinery
in Borger as soon as possible. The unit will be capable of handling 6,000
barrels per day.
Construction of the unit will begin during the first
quarter of 2000 and is expected to be completed in early 2001. A prime goal is
to show other refiners the patented technology, called S Zorb, and license its
use.
S Zorb uses a sorbent to "pluck out the sulfur"
with little loss of octane and very little loss of gasoline
volume, said Greenwood, in the licensing group at Phillips.
Energy
Biosystems of The Woodlands has developed a way to take the
sulfur out of diesel fuel using the enzymes from bacteria, but
the technology isn't ready for gasoline yet because the
bacteria needs to be genetically modified.
Small refineries like
Houston-based Frontier Oil, which have a deadline of 2008, are waiting to see
what new technology is developed.
"Our take is, the longer it can be put
off, the less expensive it will be," said investor relations director Larry
Bell. Frontier owns one refinery in Cheyenne, Wyo., and is buying another in
Kansas.
Some refiners are already voluntarily moving to meet the
standards, but are unsure of the payoff.
Koch Petroleum Group in
September introduced its "Blue Planet" low-sulfur gasoline, in
all three grades, in the Minneapolis-St. Paul market. The result will be the
environmental equivalent of taking 40,000 cars off the road in the Twin Cities,
said privately held Koch.
The gasoline is being sold at
the same price as before, said spokeswoman Mary Beth Jarvis in Wichita, Kan.
This will help people in the industry find out if customers prefer
low-sulfur gasoline.
"We want to see if it's what
people want. We would rather have the consumer pulling than the government
pushing," said Jarvis.
Koch's action is a case study for what the
industry is saying, according to Jarvis. Upgrading just a clean fuels portion of
its refinery at Rosemount, Minn., took nearly 10 years and cost $ 300 million,
she said.
This year, BP Amoco has started selling low-sulfur
gasoline, but only in the premium grade, in the Chicago and Atlanta
areas. It couldn't offer it in all three grades because it doesn't have that
much low-sulfur gasoline, said spokesman Howard Miller.
On Jan. 1, Houston gasoline stations will start getting
gasoline with 150 to 160 parts per million
sulfur under the second phase of reformulated
gasoline, said Bill Jordan, an official of the Texas Natural
Resources Conservation Commission in Austin.
Reducing
sulfur allows you to get at nitrogen oxides, which are a big
part of Houston smog problem, said Jordan.
Benefits on a percentage
basis should be similar to other cities he said, adding: "A car here is a car
there."
Lowering
sulfur levels
Sulfur
accumulates in catalytic converters, hindering their function to reduce
automobile emissions that can cause smog and health problems. A look at the
amount of sulfur in gasoline, in parts per
million (ppm), with target amounts for various groups:
Sulfur parts per million / Explanation
1000 / Maximum recommended by the American Society of Testing and
Materials to prevent engine damage
350 / National average reported by
the Energy Information Administration
80 / Koch Petroleum maximum
30 to 80 / Environmental Protection Agency's proposed national standard
would limit the average sulfur content to 30 ppm, with a
maximum of 80 ppm starting in 2004
30 / Current California standard, and
the California Air Resources Board is considering cutting levels further to an
average of 10-20 ppm. In North Carolina, stations will be required to sell 30
ppm fuel by 2004
30 / BP Amoco's target for all grades of
gasoline
25 / Maximum average level targeted by
Phillips Petroleum
2 to 5 / Auto industry target
GRAPHIC: Photo: 1. As traffic crawls along the
North Loop, pollution triggered by sulfur in
gasoline is released into Houston's air. Considered the "lead
of the 1990s," sulfur is an expensive problem for refiners to
solve. (color); Graph: 2. Lowering sulfur levels (color, TEXT);
1. Carlos Antonio Rios / Chronicle, 2. Houston Chronicle, Sources: Alliance of
Automobile Manufacturers, Energy Information Administration, Environmental
Protection Agency, company reports
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