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Ethanol, Gasoline, and ULSD Supply Issues in 2006. State Heating Oil and Propane Conference August 2006 John Hackworth Joanne Shore Energy Information Administration. Overview. MTBE to Ethanol Shift Challenges Progress to date Gasoline Supply Issues Refinery limitations

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ethanol gasoline and ulsd supply issues in 2006

Ethanol, Gasoline, and ULSD Supply Issues in 2006

State Heating Oil and Propane Conference

August 2006

John Hackworth

Joanne Shore

Energy Information Administration

overview
Overview
  • MTBE to Ethanol Shift
    • Challenges
    • Progress to date
  • Gasoline Supply Issues
    • Refinery limitations
    • MTBE to ethanol issues
    • Import changes
  • ULSD Supply
    • Implementation so far
    • Areas to watch

2

mtbe elimination northeast texas
MTBE Elimination: Northeast & Texas

Region served mainly by pipeline

3

eliminating mtbe and replacing with ethanol
Eliminating MTBE and Replacing with Ethanol
  • MTBE mainly used in RFG (11.4% volume per gallon)
  • Both MTBE and ethanol have good octane and are clean
  • Issue is ethanol relative to MTBE. Ethanol has:
    • Higher blending RVP (VOCs problem)
    • Higher toxics (MSAT issue)
    • Higher affinity for water, which means shipping separately from petroleum and blending at terminals

4

vocs summer gasoline capability loss when switching from mtbe to ethanol
VOCs: Summer Gasoline Capability Loss When Switching from MTBE to Ethanol
  • RFG Outside of CA – net 5-6% loss
    • Lose 11% MTBE
    • Gain 10% ethanol
    • Lose 5% light ends to compensate for ethanol’s increased RVP
  • CARB RFG – net 10% loss
    • Lose 11% MTBE
    • Gain 6% ethanol
    • Lose 5% light ends to compensate for ethanol’s increase RVP
  • May also need small additional volume to compensate for lower energy of ethanol vs. MTBE
  • Longer term, refiners will make changes to compensate

5

rfg gasoline in 2006
RFG Gasoline in 2006
  • MTBE being eliminated and replaced with ethanol
  • About 130 KB/D of additional ethanol needed to replace MTBE
  • Added ethanol not all available from domestic production
    • Move ethanol from E10 sold in conventional gasoline markets and use in RFG
    • More ethanol imports?
    • May reduce RFG ethanol blend from 10% to 5.7% for a time
  • Ethanol distribution & terminal preparation challenges
  • Shift in RBOB supply to East Coast (Less East Coast production, more from Gulf Coast and imports)
  • RFG v. conventional gasoline differentials could be high – possible price surges

8

gasoline supply issues
Gasoline Supply Issues
  • Lower utilization and higher imports
  • Focus on East Coast markets
    • Transition to ethanol
    • Imports (sources and volumes to meet demand)
  • Regional prices and implications

13

utilization patterns reflect maintenance hurricanes
Utilization Patterns Reflect Maintenance & Hurricanes

Typical Range is 10-year average 1995-2004 +/- 2 standard deviations

14

total gasoline imports year to date jan may
Total Gasoline Imports Year-to-Date Jan-May

Note: Total gasoline is finished product plus blending components.

Source: EIA, Form EIA-814

15

ultra low sulfur diesel ulsd
Ultra-Low Sulfur Diesel (ULSD)
  • Few basics
  • Production so far
  • Things to watch

Info website:

www.clean-diesel.org

24

clean fuel quality requirements supply
Clean Fuel Quality Requirements & Supply
  • Gasoline
    • Low sulfur requirements
    • MTBE elimination
    • Import impacts
  • Ultra-Low Sulfur Diesel (ULSD)
    • ULSD requirements (trending to all USLD)
    • ULSD implementation
    • Implications for other distillate fuels

25

ulsd phase in summary
ULSD Phase In Summary

Notes: LM – Locomotive and Marine; ppm – parts per million

Source: EPA Presentation ULSD Workshop Nov 2004

26

as ulsd requirements grow non ulsd pool shrinks production issues grow
As ULSD Requirements Grow, Non-ULSD Pool Shrinks & Production Issues Grow

Source: EIA estimates derived from EPA planned capacity survey, EPA Regulatory Impact Analysis, EIA Sector Demand, EIA AEO 2006 distillate projections.

27

number of refineries producing diesel by sulfur level
Number of Refineries Producing Diesel By Sulfur Level

Note: EPA data include all refineries. The EIA 6/30 reported data are from the weekly sample, which does not cover all refineries.

30

ulsd summary
ULSD Summary
  • Refinery production began in June. Refiners should average 80% for June through December.
  • Issues to watch
    • Distribution and contamination – next presentation
    • Kerosene/jet and winter diesel blending
    • Import availability
    • State interest in limiting heating oil sulfur content

31

wrap up year of record fuel prices
Wrap Up: Year of Record Fuel Prices
  • Record crude oil prices
  • High refinery limitations – hurricane and maintenance
  • Two difficult fuel specification changes – MTBE to ethanol and ULSD

32