With about seven months to go, the mandatory rollout of ultra low sulfur diesel (ULSD) looks like it is going to face a rocky start.
A growing number of diesel shippers and marketers have now announced that they will require dedicated tank trailers for ULSD.
Dedicated tankwagons also may be needed by marketers that distribute ULSD in addition to other fuels, such as heating oil and kerosene. Fleet refueling trucks that handle on-road and off-road diesel probably will need dedicated tanks, meters, and pumps for ULSD. All of this will bring significant cost increases for ULSD distribution.
Dedicated equipment will be needed for the following reasons: Pipeline companies have set a minimum sulfur content level of eight parts per million for ULSD shipments from the refinery but they say the ideal sulfur level is six parts per million.
Sulfur content will be at 13 ppm or greater by the time the ULSD reaches the loading rack at a terminal. Even a slight amount of retained sulfur in a cargo tank, piping, hoses, pumps, or meters could be enough to put the fuel out of spec.
These were some of the conclusions of speakers at the Ultra Low Sulfur Diesel Implementation Workshop November 9-11 in Phoenix AZ.
The workshop was co-sponsored by the Environmental Protection Agency, American Petroleum Institute, National Tank Truck Carriers, Independent Liquid Terminals Association, American Trucking Associations, Association of Oil Pipe Lines, National Association of Truck Stop Operators, National Association of Convenience Stores, Independent Fuel Terminal Operators Association, Petroleum Marketers Association of America, and the Society of Independent Gasoline Marketers of America.
ULSD problems actually start at the refineries. More than $8 billion has been invested in refinery upgrades for ULSD production, but some of the projects are behind schedule due to hurricane damage along the Gulf Coast. Reportedly, 111 refineries across the United States have said they will produce ULSD. Seventy-five of the refineries have completed the upgrades needed for ULSD.
Of the 75 that are ready to go, 49 have the ability to produce 10 ppm diesel, and 26 are set up for 7 ppm or lower. Total production capacity would drop by about 5.2% if all of the refineries had to make ULSD that didn’t exceed 7 ppm sulfur content. Production would fall by 22% if the minimum was lowered to 5 ppm. The result would be fuel shortages on the East Coast and in the Midwest.
API has a task force working on a new product loading sequence chart that will incorporate ULSD into the overall mix of fuels transported in tank trailers. The chart should be available by April 2006. In addition, the major oil companies are developing ULSD handling procedures and driver certification requirements.
Major truck stop operators also plan to set up carrier qualifications for hauling ULSD, including a requirement for dedicated equipment. The greatest oversight will be required for 500-ppm diesel shipments. Procedures for storage tank switchovers also are under development.