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Supply Impact of Losing MTBE & Using Ethanol PowerPoint Presentation
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Supply Impact of Losing MTBE & Using Ethanol

Supply Impact of Losing MTBE & Using Ethanol

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Supply Impact of Losing MTBE & Using Ethanol

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  1. Supply Impact of Losing MTBE & Using Ethanol Joanne Shore Energy Information Administration OPIS National Supply Summit San Antonio, Texas October 2002

  2. ON THE BOOKS Low sulfur gasoline 2004-2006 Gasoline toxics controls (MSAT) 2002 Ultra-low-sulfur diesel (on- road) 2006-2010 Limitation on ether use (States) 2003-2004 UPCOMING? Increased ethanol use (mandated or otherwise) Improved diesel fuel quality (higher cetane, lower gravity) More ULSD (off-road) Further fuel type proliferation & associated distribution system strain Other product clean up (sulfur reduction jet fuel, home heating oil) Key Product Quality Changes Source: DOE Policy Office

  3. Where We Are Today Source: EIA

  4. Refinery Closures Continue Source: EIA

  5. Closure Rate Slowed And Capacity Growth Increased Note: Historical shutdowns are for years 1990-1994 and 1995-1999. Source: EIA

  6. Atlantic Basin is Important Source of Gasoline Imports Source: EIA

  7. Potential Increases in Gasoline Demand 2000 - 2007 Source: EIA

  8. Time Period Annual Average Shutdown Capacity (MB/CD) Annual Growth of Continuously Operating Capacity 1990-1995 139 0.5% 1995-2000 96 2.0% 2000-2007 60 2.0% Historical shutdowns are for years 1990-94, 1995-1999. Domestic Capacity Is Expected To Grow Source: EIA

  9. 2007 U.S. Balance With MTBE Source: EIA

  10. Losing MTBE – Not Just MTBE Volume Loss • MTBE represents over 10% RFG, 3% total gasoline supply • But physical & chemical properties are critical factor – No other hydrocarbon or oxygenate equals MTBE’s emission and engine performance characteristics

  11. Emission Performance • CARB Predictive and Federal Complex models establish regulated emissions as function of chemical and physical properties • Emissions: VOCs, NOx, Toxics • Physical Properties that drive emissions: • RVP • Distillation profile (E200, E300 or T50, T90) • Chemical properties that drive emissions • Sulfur • Olefins • Aromatics • Benzene • Oxygen

  12. Table Comparing Emissions (Complex Model) Note: Fractions of specific components in the hydrocarbon blend are the same in all cases. Emissions reductions are based on comparisons to 1990 industry average baseline fuel composition. Source: EIA

  13. MTBE and Ethanol Property Comparison • Both good octane and clean relative to other gasoline components • Issue is Ethanol relative to MTBE: • Higher oxygen content, so less volume needed for RFG oxygen requirement (5.8% v. 11.2% for MTBE) • Higher blending RVP than MTBE (VOCs problem) • Higher toxics than MTBE (MSAT issue) • Higher NOx in California model, not Federal model

  14. LOSS OF GASOLINE YIELD Substitute Ethanol for MTBE But Only Need Half As Much Ethanol for Same Oxygen Remove “Light Ends” to Keep RVP Down Remove “Heavy Ends” to Reduce Distillation Profile (Lower T50 & T90) BALANCE BY INCREASING: Crude Oil Throughput (utilization increase) Production & Purchase of Clean Streams (Iso-octane, alkylate) Volume of Ethanol Used Product Imports If Available MTBE Ban Gasoline Yield Impacts

  15. 2007 Loss of Volumes When Moving from MTBE to Ethanol – Add Backs (Constant Inputs, MB/D) Assumes MSAT volume issues are resolved and rule does not hinder RFG production. Source: EIA

  16. 2007 Loss of Volumes When Moving from MTBE to Ethanol – Further Losses (Constant Inputs, MB/D) (1) Assumes MSAT volume issues are resolved and rule does not hinder RFG production Source: EIA

  17. To Make Up Volumes • Increase refinery crude oil inputs • Increase imports • Increase ethanol use • Increase alkylation production

  18. Meeting U.S. Gasoline Demand: 2000-2007 Input and Import Increases With and Without MTBE Source: EIA

  19. Comparison of 2000-2007 Gasoline Imports and Production Production Net Total Imports Source: EIA

  20. Conclusion • MTBE bans with ethanol create an RFG gap – at least 170 MB/D • MSAT adding another potential very large volume problem not accounted for in the 170 MB/D gap • Making up that gap is not easy • More alkylate than “readily available sources” • More imports from diminishing availability of clean streams • More crude inputs in tight U.S. capacity system • More ethanol blending • Challenges are large, and the nature of the solution is not clear at this time