United States
Environmental Protection-
Agency
Office of Transportation
and Air Quality
EPA420-R-06-012
June 2006
Summary and Analysis of the
2005 Highway and Nonroad
Diesel Fuel Pre-Compliance
Reports
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EPA420-R-06-012
June 2006
Summary and Analysis of the
2005 Highway and Nonroad Diesel Fuel
Pre-Compliance Reports
Assessment and Standards Division
and
Transportation and Regional Programs Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
NOTICE
This Technical Report does not necessarily represent final EPA decisions or positions.
It is intended to present technical analysis of issues using data that are currently available.
The purpose in the release of such reports is to facilitate an exchange of
technical information and to inform the public of technical developments.
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Table of Contents
I. Executive Summary i
II. Highway Diesel Pre-Compliance Reporting Requirements 2
III. Highway Summary Statistics 5
A. Nationwide Analysis 5
1. Number of Refineries and Importers 6
2. Availability of 15 ppm Highway Diesel Fuel 8
3. Projected Credit Generation and Use 11
4. Production Versus Consumption 11
5. Project Timing 13
6. Revamp Versus Grassroots Projects 15
7. Small and GPA Refiner Options 16
B. PADD Analysis 18
1. PADD 1 22
2. PADD 2 26
3. PADD 3 30
4. PADD 4 34
5. PADD 5 38
IV. Nonroad Diesel Program Overview 43
V. Nonroad Pre-Compliance Reporting Requirements 45
VI. NRLM Summary Statistics 46
VII. Appendix 52
A. List of Acronyms 52
B. References 53
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I. Executive Summary
I. Executive Summary
Any refiner or importer planning to produce or import highway diesel fuel after June 1,
2006 and/or 15 ppm nonroad, locomotive, or marine (NRLM) diesel fuel after June 1, 2010 is
required to submit to the U.S. Environmental Protection Agency ("EPA" or "the Agency")
annual pre-compliance reports. Reports were due from 2003 through 2005 for the highway
diesel rule and are due from 2005 through 2011 for the nonroad diesel rule by June 1 of each
year. This report summarizes the results of the June 2005 pre-compliance reports, the final set of
the highway reports and the first set of the nonroad reports. An overview of these results was
presented at the 2005 ULSD Workshop, November 10-11, 2005.
Refiners' highway diesel pre-compliance reports must contain estimates of the volumes
of 15 parts-per-million (ppm) sulfur highway diesel fuel and 500 ppm sulfur highway diesel fuel
that will be produced at each refinery or imported by each importer from June 2006 through May
2010. Refiners' nonroad pre-compliance reports must contain estimates of total (highway +
NRLM) 15 ppm diesel fuel and total (highway + NRLM) 500 ppm diesel fuel produced or
imported from June 2010 through December 2014. For those refiners and importers planning on
participating in the credit trading program, the reports must contain a projection of how many
credits will be generated or used by each refinery or importer, under both the highway and
NRLM diesel regulations. The pre-compliance reports must also contain information outlining
each refinery's timeline for complying with the 15 ppm sulfur standards and provide information
regarding engineering plans (e.g., design and construction), the status of obtaining any necessary
permits, and capital commitments for making the necessary modifications to produce ULSD.
The 2003 and 2004 highway diesel reports indicated that refiners were on target for
complying with the 15 ppm sulfur standard by June, 2006 and that 15 ppm sulfur diesel fuel
would be widely available nationwide. The reports submitted for 2003 and 2004 were
projections that were based on more preliminary plans and several refiners have changed their
plans from those reports to 2005. The highway diesel pre-compliance reports and information
received in June 2005 were all from refineries that produced highway and/or nonroad diesel fuel
in 2004. The 2005 highway reports indicated that total production of ULSD will be greater than
reported in 2003 and 2004, and that 90 percent of the total diesel fuel produced will be 15 ppm or
less. Our conclusions here are based on the information provided in these reports, which
includes projections of diesel fuel production, credit generation, and credit use plans as of June 1,
2005.
The 2005 nonroad pre-compliance reports provided a very preliminary estimate of
expected NRLM diesel production beginning June 1, 2010. Many refiners are still developing
plans to produce 15 ppm NRLM diesel, so no definite conclusions can be drawn from the 2005
nonroad pre-compliance reports. EPA expects the 2006 nonroad pre-compliance reports to
present a clearer picture of refiners' plans to produce 15 ppm NRLM diesel.
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II. Highway Pre-compliance Report Requirements
II. Highway Diesel Pre-Compliance Reporting Requirements
The 2007 highway diesel final rule (66 FR 5002, January 18, 2001) requires that any
refiner or importer planning to produce or import highway diesel fuel in 2006 must submit
annual pre-compliance reports to the Agencya. Reports were due on June 1, 2003, June 1, 2004,
and the final highway diesel pre-compliance reports were due on June 1, 2005.
The pre-compliance reports must contain the following information:
1. Any changes in the refiner's or importer's basic company or facility information since
registration.
2. Estimates of the volumes of 15 parts-per-million (ppm) sulfur diesel fuel and 500 ppm
sulfur (if applicable) diesel fuel to be produced from crude oil by each refinery and/or
imported by each importer, as well as the volumes of each grade of highway diesel fuel
produced from other sources.
3. Estimates of the numbers of credits to be generated and/or used, if at all.
4. Information regarding engineering plans (e.g., design and construction), the status of
obtaining any necessary permits, and capital commitments for making the necessary
modifications to produce ultra-low sulfur highway diesel fuel, and actual construction
progress. Additionally, the reports summarized here, are required to provide an update of
the progress in each of these areas.
We recognize that the pre-compliance reports may still contain some preliminary
information and final decisions on desulfurization plans may not have been made in all cases as
of the June 1 reporting deadline. Our conclusions in this summary and analysis are based on the
information from the reports received for 2005, and reflect updated information from the 2003
and 2004 pre-compliance reports1. As the highway diesel regulations go into effect on June 1,
2006, we expect that the information in the 2005 pre-compliance reports contains refiners'
finalized plans for complying with the rule, although actual operations may still varyb.
In addition to the information listed above that is required for all refiners, small refiners
and Geographic Phase-in Area (GPA) refiners are also required to provide additional information
in their pre-compliance reports. For small refiners, the required information varies according to
which small refiner option the refiner plans to use. The following paragraphs summarize the
supplementary information required for small and GPA refiners.
a The primary purpose of these reports is to help facilitate the market for credit trading under the highway diesel fuel
program's temporary compliance option (TCO) which is described in the preamble to the 2007 highway diesel final
rule at 66 FR 5065, January 18, 2001.
b This report does not include the effect of any changes made to refiners' plans as a result of the hurricanes which
struck the Gulf Coast in August and September of 2005. Based on subsequent conversations, the hurricanes have
impacted a number of refineries. However, in all but a few cases, refiners have been able to take the necessary
actions to recover to, or near to, their pre-hurricane schedules. Thus, we do not anticipate any major change from
the results predicted here.
2
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II. Highway Pre-compliance Report Requirements
Small Refiners
In the highway diesel fuel regulations, a small refiner is defined as a refiner who 1)
processes highway diesel fuel from crude oil; 2) employs no more than 1,500 people, based on
the average number of employees for all pay periods for 1999; and, 3) has an average crude oil
capacity less than or equal to 155,000 barrels per calendar day (bpcd).
The highway diesel final rule provided three alternative compliance options for refiners
that qualify for small refiner status: 1) 500 ppm sulfur option, 2) small refiner credit option, and
3) diesel/gasoline compliance date option. A description of the additional reporting requirements
for each of these options follows.
500 ppm Sulfur Option (Option a)
The 500 ppm sulfur option allows an approved small refiner to continue to produce and
sell highway diesel fuel meeting the 500 ppm sulfur standard through May 31, 2010, provided
that the refiner supplies information showing that sufficient alternate sources of 15 ppm sulfur
highway diesel fuel will exist in the marketing area(s) that the refiner serves.
The pre-compliance report for a small refiner planning to use this option must make a
showing that sufficient sources of 15 ppm sulfur highway diesel fuel will likely exist in the area.
Small Refiner Credit Option (Option b)
Under the small refiner credit option, an approved small refiner that chooses to produce
15 ppm sulfur highway diesel fuel prior to June 1, 2010, may generate and sell credits under the
TCO. Since small refiners have no requirement to produce 15 ppm sulfur highway diesel fuel
prior to June 1, 2010, any fuel that they produce at or below the 15 ppm sulfur standard will
qualify for credits under this option. (Additionally, the small refiner could then sell its remaining
highway diesel fuel under the 500 ppm sulfur option described above.)
The pre-compliance reporting requirements for small refiners choosing this option are the
same as those for the 500 ppm sulfur option (that is, if the small refiner is also producing 500
ppm sulfur highway diesel fuel), with the additional requirement that the refiner must also report
on any credits it expects to generate and sell.
Diesel/Gasoline Compliance Date Option (Option c)
Under the diesel/gasoline compliance date option, approved small refiners that are also
subject to the Tier 2/Gasoline Sulfur program (40 CFR Part 80, Subpart H) may extend the
duration of their applicable interim gasoline sulfur standards by three years (until January 1,
2011), provided that at least 95 percent of the highway diesel fuel that they produce meets the 15
ppm sulfur standard as of June 1, 2006.
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II. Highway Pre-compliance Report Requirements
Pre-compliance reports from any small refiners expecting to use this option must provide
information showing that diesel desulfurization plans are on track for compliance with the 15
ppm sulfur standard by June 1, 2006. In addition to the information required above for all
refiners regarding the expansion of desulfurization capacity, the pre-compliance reports for small
refiners expecting to use this option need to reasonably show that the refiner will be in a position
by June 1, 2006 to produce 95 percent its highway diesel fuel at the 15 ppm sulfur standard0.
Further, the refiner must show that its total highway diesel fuel production will be at least 85
percent of its highway diesel fuel baseline volume.
GPA Refiners
The GPA refiner option in the highway diesel regulations, allows refineries in the GPA to
extend the duration of their applicable interim gasoline sulfur standards by two years (until
January 1, 2009), provided that 95 percent of their highway diesel fuel production meets the 15
ppm sulfur standard beginning June 1, 2006
Similar to the pre-compliance reporting requirements for small refiners that choose to use
the diesel/gasoline compliance date option described above, pre-compliance reports from refiners
or importers expecting to use the GPA refiner option must provide information showing that
their diesel desulfurization plans are on track. In addition to the information about the expansion
of desulfurization capacity required above for all refiners, the pre-compliance reports for
prospective GPA refiners need to reasonably show that the refiner will be in a position by June 1,
2006 to produce 95 percent of its highway diesel fuel that is compliant with the 15 ppm sulfur
standard and that its total highway diesel fuel production will be at least 85 percent of its
highway diesel fuel baseline volume.
0 In the NRLM diesel final rule, we changed the volume requirement (for small refiners and GPA refiners choosing
the diesel/gasoline compliance option) from 100 percent to 95 percent to account for the change in volume
determination from the point of production to the point of delivery. Consequently, refiners that were previously
required to produce 100 percent of their highway diesel fuel to the 15 ppm sulfur standard are now provided with an
allowance to deliver a small amount of 500 ppm sulfur diesel fuel to the next downstream party (e.g., pipeline).
4
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I. Highway Summary Statistics
III. Highway Summary Statistics
A. Nationwide Analysis
According to the Energy Information Administration (EIA), 140 refineries reported
producing either high or low sulfur distillate (or both) fuels in 2003. Of these distillate-
producing refineries, 115 produced highway-compliant diesel fuel (less than or equal to 500 ppm
sulfur) in the year 2003. This number includes data for four refinery/importers that are located
outside of the continental United States (i.e., in the U.S. Virgin Islands, Puerto Rico, and Eastern
Canada) whose production is targeted to the U.S. market. We received 2005 pre-compliance
reports for all of the 115 refineries that produced highway-compliant diesel fuel in 2003, and we
received reports for 121 refineries in all.
As noted in the 2003 and 2004 Summary and Analysis of the pre-compliance reports, in
addition to the reports that we received from current highway diesel fuel producers, we also
received reports from six refineries that plan to enter the market at some point by 2010. Of these
six refineries, three will be entering the market in 2006, one in 2008, and the last two will be
entering the market in 2010 (which is a slight change from what these refineries reported in
2004).
The reported totals for all refineries and importers planning to produce highway diesel
beginning June 1, 2006 are summarized below in Tables 1 and 2. These tables show that for
2006, 111 refineries reported that they intend to produce over 2.9 million barrels per day
(bbls/day) of highway diesel fuel (both 15 ppm and 500 ppm sulfur) which is slightly higher than
the total production from the 2004 pre-compliance reports'1. Over 2.6 million bbls/day, or 90
percent of the national total, is anticipated to be 15 ppm sulfur highway diesel fuel and 300
thousand bbls/day is anticipated to be 500 ppm sulfur highway diesel fuel. This percentage is
slightly less than the 95 percent 15 ppm production calculated from the 2004 pre-compliance
reports, but still well above the 80% requirement for most refiners.
Over the duration of the TCO, refineries plan to generate an average 411 thousand
bbls/day of credits, and plan to use an average of 98 thousand bbls/day of credits. The remaining
unused credits would be available to use in case of any unplanned compliance difficulties.
The following sections discuss this information in more detail.
d Diesel fuel volume information was submitted in units of gallons per day pursuant to the pre-compliance reporting
requirements under § 80.594. We converted volumes to barrels per day by dividing by 42 gallons per barrel.
Highway diesel credits were reported in gallons per year. Since the compliance periods in 2006 and 2010 are not
full years, we converted the reported values to equivalent barrels per calendar day to compare the aggregated
volumes and credits on an equal basis from 2006 through 2010. Credits were converted from an annual basis to a
daily basis by dividing by the number of days in each compliance period, and then converted from gallons to barrels
by dividing by 42 gallons/barrel. The aggregated credits for 2006 were divided by 214 days (the 2006 compliance
period is from June 1, 2006 through December 31, 2006), and the aggregated credits for 2010 were divided by 151
days (the 2010 compliance period is from January 1, 2010 through May 31, 2010).
5
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Highway Summary Statistics
1. Number of Refineries and Importers
In the highway diesel final rule, we evaluated compliance costs for refiners to produce 15
ppm sulfur highway diesel fuel under two scenarios: 1) all current producers of highway diesel
fuel continue to do so, and 2) some refineries increase production of highway diesel fuel while
some refineries shift out of the highway diesel fuel market due to relatively high desulfurization
costs. To be conservative, our cost projections for the highway diesel final rule were based on
the first scenario. However, we also performed a sensitivity analysis based on the second
scenario. Under this scenario, some refineries that currently produce relatively small volumes of
highway diesel fuel would face relatively high costs per gallon to desulfurize a given volume of
diesel fuel. At the same time, other refineries that currently produce no (or a relatively small
volume of) highway diesel fuel could convert their diesel production from high sulfur (i.e.,
greater than 500 ppm sulfur) down to 15 ppm sulfur at a relatively low cost. Consequently, in
our sensitivity analysis we projected that a number of refineries would shift into, or significantly
expand their presence in, the highway diesel fuel market. The pre-compliance reports appear to
be supporting this projection.
As shown in Table 1, below, 111 refineries reported that they intend to produce highway
diesel fuel in 2006 (up one refinery from the 110 refineries in the 2004 reports). Three refineries
reported they will enter the highway diesel market in 2006, and seven refineries reported they
will shift out of the market in 2006. The 2004 pre-compliance reports projected that in 2006 four
refineries would enter the highway diesel fuel market and nine would shift out. The decrease in
the number of refineries projected to shift out of the market in 2006 is a significant factor in the
increase in total highway diesel fuel production, from 2.8 to 2.9 million bbls/day.
Of the seven refineries that anticipate shifting out of the market, four refineries noted that
they are still studying options on whether or not to desulfurize their higher sulfur fuel to 15 ppm.
The three remaining refineries did not state their intentions for desulfurization, though it is likely
that these refineries may shift into the NRLM diesel fuel market. Lastly, it was noted in the
Summary and Analysis of the 2004 reports that the Shell Bakersfield refinery would be shut
down due to declining crude oil supplies for the refinery2. The Bakersfield refinery has been
purchased by another refiner, and that refiner has indicated that it plans to produce highway
diesel fuel in 2006.
While some refineries may be shifting out of the highway diesel fuel market, others are
planning to shift into the market. The pre-compliance reports project that some refineries will
shift into the market during the TCO (three in 2006, plus three additional refineries by 2010),
resulting in a total of 114 refineries that will be producing highway diesel fuel in 2010.
Though small refiners have the option to delay desulfurization until the year 2010 (small
refiner option a), the 2005 reports indicate that only four refineries owned by small refiners plan
to utilize this option. The remaining small refiners will be producing diesel fuel at some point
prior to 2010, as the other two small refiner options allow refiners to either generate credits
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I. Highway Summary Statistics
(option b) or receive a relaxation of their gasoline sulfur standard (option c) for production of 15
ppm highway diesel fuel prior to 2010.
Table 1.
U.S. Aggregated Report Information
Highway Diesel Fuel Refinery Statistics 2006-2010
Year
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
2003
115
:ffiil.l,.l,.Rlfy
115
si :
:a>:'i> '•
$M
ill!
p(p|8p
2006
111
84
16
11
69
3
49
7
57
11
2007
111
87
12
12
72
3
46
7
59
7
2008
111
88
9
14
76
4
43
8
61
5
2009
111
91
9
11
76
4
43
8
62
4
2010
114
98
7
9
81
6
40
7
3
Figure 1 shows that approximately 60 percent of the refineries that reported data in 2005
are planning to increase their production of highway diesel fuel in 2006 compared to their 2003
production (based on EIA), nine more refineries than projected in the 2004 pre-compliance
reports. Further, we expect that refiners will continue to increase their production of highway
diesel fuel. The 2005 reports indicate that by 2010, approximately 70 percent of those refineries
that submitted reports are planning to increase their highway diesel fuel production.
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I. Highway Summary Statistics
2010
D Increasing Production • Decreasing Production I
Figure 1. Number of Refineries Increasing or Decreasing
Production Relative to the Year 2003
2. Availability of 15 ppm Highway Diesel Fuel
As depicted in Figure 2 below (and stated above in Table 1), 111 refineries are planning
to produce highway diesel fuel in 2006; 84 of these refineries will be producing 100 percent 15
ppm highway diesel fuel. Another 11 plan to produce a mix of 15 and 500 ppm fuel, and 11
refineries will be using credits to assist their compliance (three of these will be utilizing credits
until May 31, 2010 to meet the standard). Sixteen refineries are planning on producing
exclusively 500 ppm fuel. These 16 refineries are in markets where 15 ppm fuel will be readily
available from other sources, therefore, we do not expect that these refineries would create any
15 ppm availability problems.
As shown in Figures 3 through 5, 90 percent of the highway diesel fuel production in
2006 is expected to meet the 15 ppm sulfur standard, which is slightly lower than the 95 percent
from the 2004 pre-compliance reports. However, the percentage is still greater than the 80
percent required in the highway diesel sulfur regulations. Thus, we anticipate that sufficient 15
ppm highway diesel should be available beginning in 2006. In 2007 and later, the projections
return to mirror almost identically the results from the 2004 pre-compliance reports, with over 95
percent of highway diesel at 15 ppm sulfur.
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I. Highway Summary Statistics
90--^
80-
1 70-
8" 60-
s 50 -
i
* 40-
fe 30-
1 20-
\o-
o
/
/
/
/^
/
//
f=*
^ j
P
^
^
1
HI
1
100% 500 ppm Mix of 15 and 500 I
00% 15 ppm
ppm
Type of Highway Diesel Fuel
• 2004 reports B2005 reports
Figure 2. Number of Refineries Producing Highway Diesel Fuel in 2006
100% -
^ 90% -
^ 80% -
as
'^ 70% -
'•§ 60% -
1 50% -
^ 40% -
C4
•g 30% -
S£ 20% -
AJ
^ 10% -
0% -
~
% 15 ppm
I
\
\
% 500 ppm
D 2004 reports • 2005 reports
Figure 3. Highway Diesel Fuel Grades by Percent of Production Volume, 2006
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I. Highway Summary Statistics
100%
^ 95%
I
1
I
90%
85%
D 2004 reports
• 2005 reports
2006 2007 2008 2009 2010
Year
Figure 4. 15 ppm as Percentage of Total Production- 2004 vs. 2005 Refiner Reports
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2003 2006 2007 2008 2009 2010
Year
D 500 ppm sulfur
• 15 ppm sulfur
Figure 5. Projected U.S. Diesel Fuel Production, 2006-2010
10
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I. Highway Summary Statistics
3. Projected Credit Generation and Use
Given that a large majority of highway diesel fuel is anticipated to meet the 15 ppm
sulfur standard, a credit surplus is expected within each PADD, as shown in Table 2 below. This
credit surplus will help to accommodate off-spec distillate material and will also provide a
supply "safety valve" by allowing for additional production of 500 ppm sulfur highway diesel
fuel without violating the TCO requirements. In 2006, projected total credit generation is 381
thousand bbls/day, and projected credit usage is approximately 170 thousand bbls/day. Projected
credit usage decreases to approximately 31 thousand bbls/day by 2010.
Table 2.
Projected Volume of Credits (average bbls/day)
Generated and Used by PADD, 2006-2010
Credits (bbls/day)
Generated
Used
Net
PADD1
54,409
(1,000)
53,409
PADD 2
108,961
(14,510)
94,451
PADD 3
221,516
(78,603)
142,914
PADD 4
8,213
0
8,213
PADD 5
17,971
4,200
13,771
Total US
411,070
(98,313)
312,758
4. Production Versus Consumption
Table 3, below, shows the projected total production of highway diesel fuel for 2006
through 2010. The 2005 pre-compliance reports indicate that a total of over 2.9 million bbls/day
highway diesel fuel will be produced in 2006, and that highway diesel production will increase to
over 3.2 million bbls/day by 2010. Projected total production from the 2005 pre-compliance
reports for 2006 through 2010 was greater than comparable production from the 2004 reports.
Given the fact that the highway diesel fuel regulations begin June 1, 2006, we believe that these
projections are reasonably accurate. From refiners' 2005 reports, 69 refineries anticipate
increasing highway diesel fuel production and 49 refineries anticipate decreasing highway diesel
fuel production compared to 2003. Corresponding changes in highway diesel fuel production are
illustrated in Figure 6. Overall changes result in a projected net production increase of 111
thousand bbls/day of highway diesel fuel nationwide in 2006. Highway diesel fuel production is
projected to increase by approximately 445 thousand bbls/day by 2010.
As with the 2003 and 2004 summary and analyses, this summary and analysis is focused
on projected highway diesel fuel production values. EIA's Annual Energy Outlook (AEO), which
we have used in the past to estimate projected diesel fuel demand, reports projected energy
consumption values by sector and source. We used the growth rate in transportation distillate
consumption (AEO reports transportation distillate consumption as a combination of the
highway, locomotive and marine sectors) from AEO 20053 between the years 2005 and 2010, to
calculate a projected demand in 2006 of just over three million bbls/day. As shown below in
11
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I. Highway Summary Statistics
Table 3, refiners reported an estimated production of 2.9 million bbls/day of highway diesel fuel
for 2006. Although, some diesel fuel may not be accounted for here due to lack of reporting
from spot market importers. In 2003, approximately 2.8 million bbls/day of highway-compliant
(less than or equal to 500 ppm sulfur) diesel fuel were supplied in the U.S. Of that total supply,
imports accounted for 135 thousand bbls/day or 4.8 percent. The refineries located outside of the
U.S. from which we received pre-compliance reports produced approximately 88 thousand
bbls/day, or 65 percent of the total volume of highway diesel fuel that was imported in 2003 and
about three percent of the total volume of highway diesel fuel that was supplied in the U.S. in
2003. Therefore, approximately 35 percent of imports, or two percent of the total supply of
highway diesel fuel, is currently unaccounted for based on the pre-compliance information
received to date.
Table 3.
U.S. Aggregated Report Information
Highway Diesel Fuel Volume and Credits 2006-2010
Year
Total 1 5 ppm, bbls/day
Total 500 ppm, bbls/day
Total 15+500 ppm, bbls/day
Net volume change vs. 2003 bbls/day
% change from 2003 highway volume
% 500 of total 15+500 ppm
Credit generation, bbls/day
Credit usage, bbls/day
2006
2,621,359
302,481
2,923,841
111,238
4.0
10.3
381,031
170,539
2007
2,837,377
157,494
2,994,871
182,269
6.5
5.3
414,123
81,930
2008
2,882,114
135,205
3,017,319
204,717
7.3
4.5
410,603
57,255
2009
2,958,735
119,759
3,078,494
265,892
9.5
3.9
432,108
52,235
2010
3,189,273
68,304
3,257,577
444,974
15.8
2.1
31,292
12
-------
I. Highway Summary Statistics
^ 1,000,000
11: 80o,ooo
^ 3 600,000
I S 400,000
•S5 ^
jg> I 200,000
.5 "i °
§io ^, -200,000
J l§ -400,000
U -600,000
2006
2007
2008
Year
2009
2010
D Volume increase D Volume decrease D Net volume change vs. 2003
Figure 6. Nationwide Highway Diesel Fuel Volume Change vs. 2003
5. Project Timing
In addition to providing highway diesel fuel volume and credit projections, refineries
must also include information outlining both their timeline for compliance with the 15 ppm
sulfur standard and their engineering plans (e.g., design and construction) in their pre-
compliance reports. The 2003 pre-compliance reports indicated that most companies were in the
planning stage and expected to make final decisions before the first quarter of 2004.
For the 2004 pre-compliance reports we requested that refineries report more specific
information to us on the status of their highway diesel fuel compliance plans, and we again asked
for this information for the 2005 reports. We provided refineries with the following five stages
on which to report: 1) strategic planning, 2) planning and front-end engineering, 3) detailed
engineering and permitting, 4) procurement and construction, and 5) commissioning and start-up.
As this new reporting requirement was not requested until May 2004 (via the Nonroad Diesel
final rule), not all refineries were able to report their data according to these five stages in last
year's pre-compliance reports. While some refineries had reported that they were still in the
planning stages or had completed all work, the majority of refineries were either in, or beginning,
the planning and front-end engineering stage or engineering and permitting state.
In the 2005 reports, some refineries that submitted reports still did not provide
information on the five stages of their compliance plans. However, the majority of the refineries
13
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Highway Summary Statistics
did report information on when their engineering and construction was expected to be completed,
and their projected unit start up date. Eighty-three refineries indicated that their engineering
either was complete or would be completed by the end of the year. Seventy-five refineries have
completed engineering, and an additional 8 refineries indicated that they expected engineering to
be completed by December 2005. Eighty-eight refineries reported that they will have either
completed construction, or anticipated completion by May 2006. Eight refineries reported that
their construction would not be completed until after the June 1, 2006 program start date.
The majority of the refineries that sent in pre-compliance reports reported some
information on their project timing. Most of these indicated that they were nearing completion,
and would be done prior to the June 1, 2006 program start date. However, some refineries
reported that they would not be done prior to June 1, 2006 or that they were still evaluating
options for meeting the highway diesel fuel sulfur standards. These refineries were either using
credits to comply or were using the small refiner delay option.
Figure 7, below, shows projected start-up dates by quarter for each PADD. Eighteen
refineries projected a unit start-up date prior to September 2005, and another six refineries
projected that they would have desulfurization units capable of producing 15 ppm sulfur
highway diesel fuel in operation by January 2006.
14
-------
I. Highway Summary Statistics
'5
fc
I
5
90
80
70
60
3)
40
30
20-
10
0
• PACD5
DPACD4
DPACD3
• PACD2
DPACD1
Date
Figure 7. Projected Start-up Dates for Producing 15 ppm Highway Diesel Fuel6
6. Revamp Versus Grassroots Projects
In the final highway diesel rule, we projected that, in order to meet the 15 ppm sulfur
standard, refiners would use similar hydrotreating technology to that which is currently being
used to meet the 500 ppm sulfur standard. In doing so, refiners would either need to install new
hydrotreating equipment or revamp their current hydrotreaters/desulfurization equipment.
Eighty-two refineries reported that they would either be revamping existing equipment or
constructing new facilities to produce 15 ppm highway diesel fuel. Fifty-four of these refineries
reported plans for revamping existing equipment, 18 refineries reported that they would be
installing new equipment, and 10 refineries reported they would be doing both. This is similar to
plans that refiners reported last year. In the 2004 pre-compliance reports, 50 refineries reported
While some refineries reported their projected start-up date on a monthly basis, others reported on a quarterly basis. For those that reported on a
quarterly basis, we assumed the month that would correspond with the end of the quarter to be conservative.
15
-------
Highway Summary Statistics
plans for revamping existing equipment, 19 refineries reported plans to install a new unit, and 10
refineries reported that they would be doing both.
Eleven refineries indicated they did not need to do any additional work to produce 15
ppm highway diesel. Also, 22 refineries reported they would be producing 15 ppm highway
diesel by 2010, but did not report specific information on their project scope.
7. Small and GPA Refiner Options
Small Refiners
As discussed in greater detail above, the highway diesel fuel regulations contain three
options which provide qualified small refiners with additional flexibilities to the TCO. Option
A, the 500 ppm Sulfur Option, allows a refinery owned by an approved small refiner to delay
production of 15 ppm sulfur fuel until May 31, 2006. This option would enable a refinery to
continue to produce all of its highway diesel fuel at the 500 ppm sulfur level until the end of the
TCO, provided the refiner shows in its pre-compliance report that adequate supplies of 15 ppm
sulfur highway diesel fuel will be available in the refinery's marketing area. Option A was
chosen by four refineries. Based on the reports received from these refineries, it is expected that
their total production for 2006 will be seven thousand bbls/day of 500 ppm highway diesel fuel.
Option B, the Small Refiner Credit Option, allows a small refiner to generate credits for
any 'early' (since small refiners have until 2010 to comply with the 15 ppm standards under the
highway diesel rule) production of 15 ppm sulfur highway diesel fuel. This option was chosen
by six refineries. Refineries using this option will likely have a mix of 500 ppm and 15 ppm
highway diesel fuel in 2006. Based on reported data, it is anticipated that in 2006 the six
refineries choosing this option will produce a total of 19 thousand bbls/day.
Lastly, option C, the Diesel/Gasoline Compliance Date Option, allows a refinery owned
by a small refiner the ability to delay its compliance date for the Tier 2 gasoline sulfur standards
for up to three years if the refinery produces 95 percent of its highway diesel fuel (above a
minimum volume limit tied to the refinery's baseline volume) at 15 ppm or less by June 1, 2006.
In the 2004 pre-compliance reports, nine refineries anticipated using option C, with a total
production of 99 thousand bbls/day of 15 ppm highway diesel fuel beginning in 2006. The 2005
reports indicated that eleven refineries anticipate using option C. These eleven refineries
reported that they expect to produce 158 thousand bbls/day of 15 ppm sulfur highway diesel fuel
beginning June 1, 2006.
The volumes reported by refineries regarding the small refiner options, and the number of
refineries by option chosen, are shown in Table 4 below.
16
-------
I. Highway Summary Statistics
Table 4.
Intended Small Refiner Compliance Options by Number of Refineries and
Highway Diesel Fuel Production Capacity
Option
A.
B.
C.
Description
500 ppm sulfur Option
Credit Option
Diesel/Gasoline Compliance Date Option
Total
Number of
Refineries
4
6
11
21
2006 Highway Diesel Fuel
Production Capacity
(thousand bbls/day)
7
19
158
184
GPA Refiners
The highway diesel fuel regulations also contain an option that allows a refinery in the
GPA to delay its compliance date for the final Tier 2 gasoline sulfur standards by two years
provided that the refinery produces 95 percent of its highway diesel fuel (above a minimum
volume threshold tied to the refinery's baseline volume) at the 15 ppm sulfur standard by June 1,
2006. Ten refineries in the GPA reported that they would be using this option, with an
anticipated total production of approximately 96 thousand bbls/day of 15 ppm sulfur highway
diesel fuel beginning June 1, 2006.
17
-------
I. Highway Summary Statistics
B. PADD Analysis
This section presents information specific to each PADD. Tables 5 through 8 below
show the reported number of refineries producing highway diesel fuel and highway diesel fuel
production for each PADD for 2006 and 2010, and Figures 7 and 8 illustrate changes in highway
diesel fuel production by PADD in 2006 and 2010, compared to 2003. Please note that all
volumes from the 2005 pre-compliance reports are now being compared to volumes from 2003.
Highway diesel production in the 2003 and 2004 Summary and Analyses were compared to
refiners' production values from 2000.
As shown in Table 6, PADD 1 highway diesel production in 2006 is anticipated to
decrease by 41 thousand bbls/day compared to 2003. However, production increases in PADDs
2 through 5 result in a national production increase of over 111 thousand bbls/day of highway
diesel fuel in 2006. Table 8 shows projected highway diesel fuel production for 2010. In 2010,
PADD 1 highway diesel production is still less than 2003 production, by approximately 21
thousand bbls/day. However, production increases in PADDs 2 through 5 result in a national
production increase of 445 thousand bbls/day in 2010. At the start of the program in 2006, 57
refineries expect to generate 381 thousand bbls/day of credits, and 11 refineries expect to use 170
thousand bbls/day of credits. By 2010, only 31 thousand bbls/day of credits are expected to be
used by three refineries.
More detailed information by PADD is shown below in Tables 9 through 18.
Table 5.
Projected Number of Highway Diesel Fuel Refineries by PADD for 2006
PADD
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. EIA 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. EIA 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
1
12
9
2
1
7
1
7
2
9
1
2
24
17
4
3
16
1
9
1
14
2
3
40
29
8
3
26
0
16
2
24
6
4
15
13
1
1
8
0
7
0
4
0
5
20
16
1
3
12
1
10
2
6
1
Total U.S.
Ill
84
16
11
69
3
49
7
57
10
18
-------
I. Highway Summary Statistics
Table 6.
Projected Volumes of Highway Diesel Fuel Production by PADD for 2006
PADD
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15+500 ppm (bbls/day)
Net volume change vs. 2003 (bbls/day)
% change from 2003 highway volume
% 500 of total 15+500 ppm
Credit generation (bbls/day)
Credit usage (bbls/day)
1*
274,154
4,095
278,249
-41,443
-13.0
1.5
52,130
2,000
2
662,212
102,096
764,308
96,322
14.4
13.4
106,482
34,120
3
1,155,006
158,202
1,313,208
33,666
2.6
12.0
197,182
117,619
4
135,726
2,505
138,231
4,869
3.7
1.8
7,329
0
5
394,261
35,583
429,844
17,825
4.3
8.3
17,907
16,800
Total U.S.
2,621,359
302,481
2,923,841
111,238
3.8
10.3
381,031
170,539
* We expect that the change that is projected for PADD 1 will be offset by imports and inter-PADD transfers. As
discussed previously, our reports do not capture all imports, much of which come into PADD 1. Furthermore, PADD 3
has historically transferred fuel to PADD 1 in relatively large quantities.
120,000 i
&> innnnn
5S 1UJAAJU
^
era onnm
"g oU,UUJ
«c
^~ ^nnnn
OU,UUJ
5 /ifinnn
2 4U,uuj
*^
v ofinnn
i^. ZU,UUJ
"3 o
5 °
*»i TAnnn
^3 -zU,UUU
?
•a /innm
^r -£HJ,UUU
^nnm
„
-ou,uuu
1
1 I
1 i
2
PADD
3
4
5
Figure 7. Highway Diesel Fuel Production Change 2006 vs. 2003 (by PADD)
19
-------
I. Highway Summary Statistics
Table 7.
Projected Number of Highway Diesel Fuel Refineries by PADD for 2010
PADD 123
# refineries producing highway diesel fuel 12 25 41
# refineries at 100% 15 ppm 10 19 35
# refineries at 100% 500 ppm 024
# refineries with 15/500 ppm mix 242
# refineries increasing production (vs. 2003) 7 20 33
# refineries shifting into the highway market 112
# refineries decreasing production (vs. 2003) 7 5 11
# refineries shifting out of the highway market 203
# refineries generating credits
# refineries using credits 012
4 5 Total U.S.
15 21 114
14 20 98
1 0 7
0 1 9
8 13 81
02 6
7 10 40
02 7
00 3
Table 8.
Projected Volume of Highway Diesel Fuel by PADD for 2010
PADD
Total U.S.
Total 15 ppm (bbls/day)
297,848
810,907
1,485,729
136,191
458,597
3,189,273
Total 500 ppm (bbls/day)
452
27,740
37,327
1,534
1,250
3,303
Total 15+500 ppm (bbls/day)
298,300
838,647
1,523,056
137,726
459,847
3,257,576
Net volume change vs. 2003 (bbls/day)
-21,392
170,661
243,514
4,364
47,828
444,975
% change from 2003 highway volume
-6.7
25.5
19.0
3.3
11.6
% 500 of total 15+500 ppm
0.2
3.3
2.5
1.1
0.3
Credit generation (bbls/day)
* The change that is projected for PADD 1 will be offset by imports and inter-PADD transfers. Historically, PADD 3
has transferred fuel to PADD 1 in relatively large quantities.
20
-------
I. Highway Summary Statistics
1 300,000 -i
5s o^AAAA
js ZJU,UUU
"S ofifififin,
^ zuu,uuu
^J \ C(\ AAA
S ljU,UUU
•S innnnn
^ 1UU,UUU
CA AAA
>»^ JU,UUU
rs A _
I*H U
1 -50,000 J
•Si
— -— ^^
12345
£4/)D
Figure 8. Highway Diesel Fuel Production Change 2010 vs. 2003 (by PADD )
21
-------
I. Highway Summary Statistics
1. PADD1
Number of Refineries
Reported totals for all PADD 1 refineries and importers are summarized below in Tables
9 and 10. These tables show that for 2006, 12 refineries anticipate producing 274 thousand
bbls/day total (15 ppm sulfur + 500 ppm sulfur) highway diesel fuel. This is a slight increase
compared to the 269 thousand bbls/day production from the 2004 reports. Nine refineries
reported that they intend to produce 100 percent of their highway diesel fuel at 15 ppm or less of
sulfur in 2006, two refineries intend to produce 100 percent of their highway diesel fuel at the
500 ppm sulfur level, and one refinery reported that it intends to produce a mix of 15 ppm and
500 ppm sulfur highway diesel fuel. By 2010, ten refineries anticipate that they will be
producing 100 percent of their highway diesel fuel at or below 15 ppm and two refineries will be
producing a mixture of 15 ppm and 500 ppm fuel.
As shown in Table 9, seven refineries reported that they intend to produce more highway
diesel fuel than they did in 2003, and another seven refineries intend to produce less highway
diesel fuel than they did in 2003. Two refineries reported they will shift out of the highway
diesel fuel market in 2006 and one refinery reported they will enter the market in 2006.
Highway Diesel Fuel Production
As shown in Figure 9, the seven refineries planning to increase their highway diesel fuel
production reported a cumulative increase of over 77 thousand bbls/day and the seven refineries
planning to decrease production reported a cumulative decrease in production of nearly 119
thousand bbls/day. This results in a projected total net decrease of just over 41 thousand
bbls/day, or 13 percent, for 2006. This net reduction is expected to decrease to 21 thousand
bbls/day by 2010.
There are three potential sources of additional highway diesel supply outside of PADD 1
that can help compensate for the decreased production in PADD 1. Additional imports of 15
ppm diesel could be brought in. As noted previously, we do not capture all importers in our pre-
compliance reports, and much of the diesel fuel imported into the U.S. comes in to PADD 1.
Second, 500 ppm diesel could be brought into PADD 1 from outside the United States, and the
importer could use highway diesel credits to meet the requirement that 80 percent of his highway
diesel imports are 15 ppm diesel. This is discussed in more detail in the following section on
credit generation and use.
22
-------
I. Highway Summary Statistics
PADD 3 is a third potential source of additional highway diesel supply to PADD 1.
PADD 3 highway diesel production is projected to increase compared to 2003, however, the
projected PADD 3 production increase is less than the projected PADD 1 production decrease.
To supply more highway diesel to PADD 1, some of the highway diesel that PADD 3 has
historically supplied to PADD 2 could instead be diverted to PADD 1. PADD 3 has historically
transferred large volumes of highway diesel to both PADD 1 and PADD 2, and the pre-
compliance reports indicate that highway diesel production will increase significantly in PADD
2. Thus, the volume of highway diesel transferred from PADD 3 to PADD 2 could be reduced
without affecting total highway diesel supply to PADD 2.
Availability of 15 ppm Sulfur Highway Diesel Fuel
As shown below in Figure 10, nearly all of the highway diesel fuel produced in PADD 1
will meet the 15 ppm sulfur standard. Refiners have projected for 2006 that 99 percent (over 274
thousand bbls/day) of the highway diesel fuel produced or imported will be 15 ppm sulfur fuel.
In 2010, almost 100 percent of the highway diesel fuel produced or imported will be 15 ppm.
These percentages are similar to the percentages from the 2004 pre-compliance reports.
Credit Generation and Use
In 2006, PADD 1 refineries projected generating approximately 52 thousand bbls/day
credits, and using approximately 2 thousand bbls/day of credits. As previously stated, we
believe that importers could use some of this surplus in credits to offset the expected decrease in
highway diesel fuel production in PADD 1. Similarly, two PADD 1 refineries which reported
that they would be exiting the highway market in 2006 could continue to produce some volume
of 500 ppm highway diesel, and use credits to meet the requirement that 80 percent of their
highway diesel fuel production be 15 ppm.
23
-------
I. Highway Summary Statistics
Table 9
PADD 1 Highway Diesel Fuel Refinery Statistics 2006-2010
Year
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
2003
13
13
^;1<:''
>%*[
I'KSP'tl
wwk
,;'<>,!!. ;•'", 'mi:
(.•ji.'ifflJ:1;'1; '
»>l i f mini t !< ,
iMiiv.mmv,^1**;
' "F. A >;
2006
12
9
2
1
7
1
7
2
9
1
2007
12
9
1
2
7
1
7
2
10
1
2008
12
8
0
4
8
1
6
2
11
0
2009
12
9
0
3
8
1
6
2
11
0
2010
12
10
0
2
7
1
7
2
0
Table 10.
PADD 1 Highway Diesel Fuel Volume and Credit Statistics 2006-2010 *
Year
Total 15 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15+500 ppm (bbls/day)
Net volume change vs. 2003 (bbls/day)
% change from 2003 highway volume
% 500 of total 15+500 ppm
Credit generation (bbls/day)
Credit usage (bbls/day)
2003
y,..,..,..,..,..,..,r
•,',;mmf!
319,693
319,693
1 " ;'/i
;'itttttttttttttttttt&
11'"'" """"•'
/> i,> i,> i,> i,> i,> i,> i,>
100.0
jv'jiljjjjjjjjji'^'i
^;;;;;;;;;;;;;;;;ff:->,
2006
274,154
4,095
278,249
-41,443
-13.0
1.5
52,130
2,000
2007
276,340
2,952
279,292
-40,401
-12.6
1.1
53,509
2,000
2008
291,710
3,147
294,856
-24,836
-7.8
1.1
54,440
0
2009
303,208
2,108
305,316
-14,377
-4.5
0.7
57,558
0
2010
297,848
452
298,300
-21,392
-6.7
0.2
0
* The change that is projected for PADD 1 will be offset by imports and inter-PADD transfers. Historically, PADD 3
has transferred fuel to PADD 1 in relatively large quantities.
24
-------
I. Highway Summary Statistics
8 ^
•a §*
H 3?
I i
•s ^r
*=
I
2010
CH Volume Increase •Volume Decrease CUN et Volume Change
Figure 9. PADD 1 Highway Diesel Fuel Volume Change vs. 2003
MM J JU,UUU
rs
LL -3 AA AOO
"^ jUU.UUU
1
5 -v
5^ ^ Z(j(j,(j(J(j
•? "§ 1 ^A AAA
.So "g lj(J,UUU
*fc^ 1 OO OOO
^> 1UU,UUU
Li. n
§
Hi. (J
2003
-
\ \ \
2006 2007 2008 200<
Year
• 15 ppm sulfur D 500 ppm sulfur
\
) 2010
Figure 10. PADD 1 Projected Highway Diesel Fuel Production, 2006-2010
25
-------
I. Highway Summary Statistics
2. PADD 2
Number of Refineries
The reported totals for all PADD 2 refineries are summarized in Tables 11 and 12, below.
These tables show that for 2006, 24 refineries reported a total production of approximately 764
thousand bbls/day total (15 ppm sulfur + 500 ppm sulfur) highway diesel fuel. This is greater
than the 718 thousand bbls/day total from the 2004 pre-compliance reports. Seventeen refineries
reported that they intend to produce 100 percent of their highway diesel fuel at or below 15 ppm
sulfur. Additionally, four refineries intend to produce 100 percent of their highway diesel fuel at
the 500 ppm sulfur level, and three refineries intend to produce a mix of 15 ppm sulfur and 500
ppm sulfur highway diesel fuel. Sixteen refineries reported that they intend to produce more
highway diesel fuel than they did in 2003 (including one refinery that produced no highway
diesel fuel in 2003), and nine refineries reported that they intend to produce less highway diesel
fuel than they did in 2003 (including one refinery that intends to temporarily shift out of the
highway diesel fuel market).
The refinery that reported it will be shifting out of the highway diesel fuel market in 2006
expects to shift back into the highway diesel fuel market in 2010, and reported that it will
produce all of its highway diesel fuel in 2010 to meet the 15 ppm sulfur standard.
Highway Diesel Fuel Production
As shown in Figure 11 below, the 16 refineries planning to produce more highway diesel
fuel in 2006 than they did in 2003 reported a cumulative increase in their highway diesel fuel
production volume of over 151 thousand bbls/day, and the nine refineries planning to produce
less highway diesel fuel than they did in 2003 reported a cumulative decrease in their highway
diesel fuel production volume of just over 55 thousand bbls/day. This results in a net increase of
over 96 thousand bbls/day of highway diesel fuel production. By 2010, the net increase rises to
over 170 thousand bbls/day.
Availability of 15 ppm Sulfur Highway Diesel Fuel
As shown in Figure 12, below, it is expected that over 662 thousand bbls/day highway
diesel production, approximately 87 percent of PADD 2 total production, will meet the 15 ppm
sulfur standard for highway diesel fuel in 2006. The remaining 13 percent (102 thousand
bbls/day) is anticipated to be 500 ppm sulfur highway diesel fuel. While the projected
26
-------
I. Highway Summary Statistics
production of 15 ppm highway diesel fuel in PADD 2 has decreased from 679 thousand bbls/day
in the 2004 pre-compliance reports, refiners projected in the 2005 reports that they will produce
nearly 811 thousand bbls/day of 15 ppm highway diesel fuel by 2010, slightly greater than the
projected production of 804 thousand bbls/day of 15 ppm highway diesel fuel from the 2004
reports.
Projected Credit Generation and Use
Over 106 thousand bbls/day of credits are anticipated to be generated for 2006 in PADD
2. Just over 34 thousand bbls/day of credits are expected to be used in 2006. This results in a
net generation of 72 thousand bbls/day credits in 2006. In 2007 through 2010, credit usage
decreases to 6 thousand bbls/day, and net credit generation from 2007 through 2009 increases to
approximately 100 thousand bbls/day. This is an increase in predicted credit use for 2006
compared to the 2004 reports, due to the fact that one refiner reported that it now plans to
produce more 500 ppm highway diesel fuel than it predicted in its 2004 reports (and thus it will
need to use credits to meet its 80/20 production requirement for 2006).
Table 11.
PADD 2 Highway Diesel Fuel Refinery Statistics 2006-2010
Year
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
2003
24
lifffiSp:
24
SftftftftftftftftftW^
&%^ftftftftftftft$-
Sftftftftftftftftft^Y
2006
24
17
4
3
16
1
9
1
14
2
2007
24
18
3
3
19
1
6
1
14
1
2008
24
18
3
3
18
1
7
1
14
1
2009
24
18
3
3
19
1
6
1
14
1
2010
25
19
2
4
20
1
5
0
;!||;|ig;a|li
1
27
-------
I. Highway Summary Statistics
Table 12.
PADD 2 Highway Diesel Fuel Volume and Credit Statistics 2006-2010
Year
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15+500 ppm (bbls/day)
Net volume change vs. 2003 (bbls/day)
% change from 2003 highway volume
% 500 of total 15+500 ppm
Credit generation (bbls/day)
Credit usage (bbls/day)
2003
667,986
667,986
100.0
2006
662,212
102,096
764,308
96,322
14.4
13.4
106,482
34,120
2007
746,222
37,737
783,959
115,973
17.4
4.8
110,242
6,120
2008
733,914
37,726
771,640
103,654
15.5
4.9
107,271
6,112
2009
755,577
36,803
792,380
124,394
18.6
4.6
111,850
5,568
2010
810,907
27,740
838,647
170,661
25.5
3.3
6,120
•S 1
200,000
150,000
100,000
50,000
0
-50,000
-100,000
2006
2007
2008
Year
2009
2010
] Volume Increase •Volume Decrease D Net Volume Change I
Figure 11. PADD 2 Highway Diesel Fuel Volume Change vs. 2003
28
-------
I. Highway Summary Statistics
.1
r
"5s
IP
I
1
f
-Q
900,000
800,000
700,000
600,000 -
500,000 -
400,000 -
300,000 -
200,000 -
100,000 -
0
2003
2006 2007 2008
Year
2009
2010
15 ppm sulfur D 500 ppm sulfur
Figure 12. PADD 2 Projected Highway Diesel Fuel Production, 2006-2010
29
-------
I. Highway Summary Statistics
3. PADD 3
Number of Refineries
Reported totals for all PADD 3 refineries are summarized in Tables 13 and 14, below.
These tables show that 40 refineries reported a total production of over 1.3 million bbls/day total
(15 ppm sulfur + 500 ppm sulfur) highway diesel fuel in 2006. In the 2004 reports, 39 refineries
reported that they would be producing highway diesel fuel in 2006. However, one of the three
refineries that reported it would shift out of the highway market in 2006 is now planning to
remain in the highway diesel market in 2006.
The 2005 reports show that 29 of the 40 refineries that will be producing highway diesel
fuel in 2006 intend to produce 100 percent of their highway diesel fuel to meet the 15 ppm sulfur
standard. Eight refineries intend to produce 100 percent of their highway diesel fuel at the 500
ppm sulfur level (up from six reported in 2004), and three refineries again reported that they
intend to produce a mix of 15 ppm sulfur and 500 ppm sulfur highway diesel fuel. No refineries
reported that they will be shifting into the highway diesel market between 2006 and 2009,
however, two refineries indicated that they do plan to enter the highway diesel market in 2010.
Highway Diesel Fuel Production
As shown in Figure 13, the 26 refineries planning to produce more highway diesel fuel
than they did in 2003 reported a cumulative increase in their highway diesel fuel production
volume of approximately 223 thousand bbls/day, and the 16 refineries planning to produce less
highway diesel fuel than they did in 2003 reported a cumulative decrease in their highway diesel
fuel production of approximately 189 thousand bbls/day. This results in a net increase of over 33
thousand bbls/day. By 2010, the projected net increase in highway diesel fuel production rises to
approximately 243 thousand bbls/day.
Availability of 15 ppm Sulfur Highway Diesel Fuel
Figure 14 shows that 1.3 million bbls/day of highway diesel fuel is expected to be
produced in 2006, and over 1.1 million bbls/day of this fuel (88 percent) is anticipated to be 15
ppm sulfur highway diesel fuel. The remaining 158 thousand bbls/day is anticipated to be 500
ppm sulfur highway diesel fuel.
30
-------
I. Highway Summary Statistics
Credit Generation and Use
In 2006, anticipated credit generation is approximately 197 thousand bbls/day. Projected
credit usage is approximately 117 thousand bbls/day, yielding a net credit generation of nearly
80 thousand bbls/day.
Table 13.
PADD 3 Highway Diesel Fuel Refinery Statistics 2006-2010
Year
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
2003
42
I1;;';;;1;;;1;;;1;;;1;;?:
42
iW'"rrai
M.;:v'J
!t;^i
'iVvWff!;; ff;
^ %
il ?,mm'"J| [I
.;...........;)[! I
i'hnnnnnL',:
2006
40
29
8
3
26
0
16
2
24
6
2007
40
30
7
3
27
0
15
2
25
5
2008
39
29
5
5
29
0
13
3
25
4
2009
39
31
5
3
28
0
14
3
26
3
2010
41
35
4
2
33
2
11
3
2
Table 14.
PADD 3 Highway Diesel Fuel Volume and Credit Statistics 2006-2010
Year
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15+500 ppm (bbls/day)
Net volume change vs. 2003 (bbls/day)
% change from 2003 highway volume
% 500 of total 15+500 ppm
Credit generation (bbls/day)
Credit usage (bbls/day)
2003
^?>?M?M?M?
illlllll;
1,279,542
1,279,542
fc==$
ii.'J.'J.'J.'J.'J.'J.'.ip $i
U* M« M« M« M* M* M* *l!'j|
«,•«•«•«•«•«• «•«-,'''
100.0
j'.'mmmmmfeji'
/ ',lWAWAWAWAW> M
;immmm^
2006
1,155,006
158,202
1,313,208
33,666
2.6
12.0
197,182
117,619
2007
1,259,183
103,489
1,362,671
83,129
6.5
7.6
223,963
73,810
2008
1,281,168
83,068
1,364,236
84,694
6.6
6.1
222,338
51,142
2009
1,319,695
69,701
1,389,396
109,853
8.6
5.0
236,166
46,668
2010
1,485,729
37,327
1,523,056
243,514
19.0
2.5
''iKHKHKHKHKHKHKl'
25,172
31
-------
I. Highway Summary Statistics
2010
Volume Increase D Volume Decrease D Net Volume Change I
Figure 13. PADD 3 Highway Diesel Fuel Volume Change vs. 2003
32
-------
I. Highway Summary Statistics
•1
ti
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2003 2006 2007 2008 2009 2010
Year
15 ppm sulfur D 500 ppm sulfur
Figure 14. PADD 3 Projected Highway Diesel Fuel Production, 2006-2010
-------
I. Highway Summary Statistics
4. PADD 4
Number of Refineries
Reported totals for all PADD 4 refineries are summarized below in Tables 15 and 16.
These tables show that for 2006, 15 refineries reported a total production of over 138 thousand
bbls/day total (15 ppm sulfur + 500 ppm sulfur) highway diesel fuel. Thirteen refineries intend
to produce 100 percent of their highway diesel fuel with 15 ppm or less of sulfur (up from 12
refineries in the 2004 pre-compliance reports) and one refinery still intends to produce a mix of
15 ppm sulfur and 500 ppm sulfur highway diesel fuel. Similar to the 2004 reports, the 2005
reports indicated that for 2006 eight refineries anticipate an increase in their production of
highway diesel fuel, and seven refineries anticipate a decrease in their production of highway
diesel fuel relative to 2003.
Highway Diesel Fuel Production
Total projected highway diesel production from the 2005 pre-compliance reports is 138
thousand bbls/day in 2006, approximately 20 thousand bbls/day greater than total 2006
production from the 2004 pre-compliance reports. Total highway diesel fuel production remains
essentially constant in PADD 4 from 2006 to 2010, similar to the 2004 pre-compliance reports.
Figure 15 below shows that the eight refineries planning to produce more highway diesel
fuel in 2006 than they did in 2003 reported a cumulative increase in their highway diesel fuel
production volume of nearly 18 thousand bbls/day, and the seven refineries planning to produce
less highway diesel fuel in 2006 than 2003 reported a cumulative decrease in their highway
diesel fuel production volume of 13 thousand bbls/day. This results in a net increase of
approximately 5 thousand bbls/day, which stays essentially constant through 2010.
Availability of 15 ppm Sulfur Highway Diesel Fuel
As shown in Figure 16, below, in 2006, nearly 136 thousand bbls/day, or 98 percent of
the PADD 4 total highway diesel production, is anticipated to contain 15 ppm sulfur or less. The
portion of total highway diesel fuel in PADD 4 that is expected to be 15 ppm increases to 99
percent by 2010.
34
-------
I. Highway Summary Statistics
Credit Generation and Use
Refiners' reports indicate that approximately 7 thousand bbls/day of credits will be
generated in PADD 4 in 2006. No credits are anticipated to be used in PADD 4, similar to the
2004 pre-compliance reports. One refinery will be producing 100 percent of its highway diesel
fuel at 500 ppm. However, this refinery is owned by a small refiner that will be using small
refiner option a. Thus, this refinery will not need to use credits during the period that it plans to
continue producing all of its fuel at the 500 ppm sulfur level.
Table 15.
PADD 4 Highway Diesel Fuel Refinery Statistics 2006-2010
Year
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
2003
15
WTO'TO'?'
15
/^'iiiii'ii
!• .MWA'V1?.
««' '*'7< lim
k»i
Wfe!
ij Mi;1",!'}!:!
'O^.'vii
i! ",l,l,l,l,l,l,l,l,l,l,l,jrj 1
Y ' *
2006
15
13
1
1
8
0
7
0
4
0
2007
15
14
1
0
8
0
7
0
4
0
2008
15
14
1
0
8
0
7
0
4
0
2009
15
14
1
0
8
0
7
0
4
0
2010
15
14
1
0
8
0
7
0
0
Table 16.
PADD 4 Highway Diesel Fuel Volume and Credit Statistics 2006-2010
Year
Total 15 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15 + 500 ppm (bbls/day)
Net volume change vs. 2003 (bbls/day)
% change from 2003 highway volume
% 500 of total 15 + 500 ppm
Credit generation (bbls/day)
Credit usage (bbls/day)
2003
>l"'i '!'!'!'!'!'!'!'
133,362
133,362
1 i ' i ' i ' i ' i ' i i
( tl
E E E E E E E E E E E E E E E
100.0
'*'"" " " "" '""''
i!, ';';'; ';';' ' ';';';'; ^
'<
2006
135,726
2,505
138,231
4,869
3.7
1.8
7,329
0
2007
137,670
1,534
139,204
5,842
4.4
1.1
8,502
0
2008
135,952
1,534
137,486
4,124
3.1
1.1
8,513
0
2009
135,494
1,534
137,028
3,666
2.7
1.1
8,507
0
2010
136,191
1,534
137,726
4,364
3.3
1.1
0
35
-------
I. Highway Summary Statistics
§>
£
^^ ™^i
tit
2006 2007 2008 2009 20\0
Year
D Volume Increase D Volume Decrease D Net Volume Change
Figure 15. PADD 4 Highway Diesel Fuel Volume Change vs. 2003
36
-------
I. Highway Summary Statistics
Volume of Highway Diesel Fuel
(bbls/day)
H^ H^ H^ H^
to-^ONOooto-^ON
oooooooo
"o "o "o "o "o "o "o "o
oooooooo
III
2003 2006 2007 2008 2009 2010
Year
D 15 ppm sulfur D 500 ppm sulfur
Figure 16. PADD 4 Projected Highway Diesel Fuel Production, 2006-2010
37
-------
I. Highway Summary Statistics
5. PADD 5f
Number of Refineries8
Reported totals for the refineries in PADD 5 are summarized in Tables 17 and 18, below.
These tables show that 20 refineries reported an anticipated production of 430 thousand bbls/day
of total highway diesel fuel in 2006. Sixteen of these refineries indicated that they expect to
produce 100 percent of their highway diesel fuel at the 15 ppm sulfur standard in 2006. In 2006,
two refineries anticipate that they will be shifting out of the highway diesel market and one
refinery expects to enter the highway diesel market. A second refinery intends to enter the
highway diesel market in 2008.
Highway Diesel Fuel Production
Twelve refineries reported that they intend to produce more highway diesel fuel for 2006
than they did in 2003. Ten refineries indicated they will be producing less highway diesel fuel
from 2006 to 2010 than they did in 2003, including two refineries that intend to shift out of the
highway diesel fuel market. As shown in Figure 17 below, the 12 refineries planning to increase
their highway diesel fuel production in 2006 reported a cumulative increase in their highway
diesel fuel production volume of nearly 49 thousand bbls/day, and the ten refineries planning to
produce less highway diesel fuel in 2006 than they did in 2003 reported a cumulative decrease in
their highway diesel fuel production volume of 31 thousand bbls/day. This results in a net
increase in production of nearly 18 thousand bbls/day in 2006, which rises to nearly 48 thousand
bbls/day by 2010.
Availability of 15 ppm Sulfur Highway Diesel Fuel
As shown in Figure 18, below, in 2006, approximately 394 thousand bbls/day, or 92
percent of the PADD 5 total highway diesel production, is anticipated to be 15 ppm sulfur
highway diesel fuel, and approximately 35 thousand bbls/day is expected to be 500 ppm sulfur
highway diesel fuel. By 2010, the percentage of highway diesel fuel at the 15 ppm sulfur
standard is expected to increase to over 99 percent of the total volume of highway diesel fuel
produced in PADD 5.
f Alaska refineries are included in this analysis
g The 2004 Summary and Analysis erroneously showed that 22 refineries in PADD 5 produced highway diesel fuel
in 2003. The correct number of refineries, 21, is reflected in the discussion of PADD 5 refineries in this Summary
and Analysis document.
38
-------
I. Highway Summary Statistics
Credit Generation and Use
The reports for PADD 5 projected that for 2006, credit generation will total nearly 18
thousand bbls/day. The 2004 pre-compliance reports indicated that no credits were expected to
be used in PADD 5 during the TCO. However, two refineries reported in 2005 that they will be
producing mostly 500 ppm highway diesel fuel in 2006, and will be using credits to comply with
the highway diesel standards. These two refineries will both be producing more than 80 percent
of their highway diesel at 15 ppm or less from 2007 to 2010, so projected credit usage in PADD
5 drops to zero after 2006.
Table 17.
PADD 5 Highway Diesel Fuel Refinery Statistics 2006-2010
Year
# refineries producing highway diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
# refineries increasing production (vs. 2003)
# refineries shifting into the highway market
# refineries decreasing production (vs. 2003)
# refineries shifting out of the highway market
# refineries generating credits
# refineries using credits
2003
21
iffffffffffff
f'.Y.Y.Y.Y.Y.'i
21
•i ^S;'j| ' jT'Jji'
']>• • ".i'ui;
y '$i,!>i]) , •
SM'.
n*(''4j.rj jt'wf
!**>' '•>:»:('
iiiiik'.j Illlu4'
iW$
•• iV|Ty ,; •<••;' •
iiW
2006
20
16
1
3
12
1
10
2
6
1
2007
20
16
0
4
11
1
11
2
6
0
2008
21
19
0
2
13
2
10
2
7
0
2009
21
19
0
2
13
2
10
2
7
0
2010
21
20
0
1
13
2
10
2
0
Table 18.
PADD 5 Highway Diesel Fuel Volume and Credit Statistics 2006-2010
Year
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15+500 ppm (bbls/day)
Net volume change vs. 2003 (bbls/day)
% change from 2003 highway volume
% 500 of total 15+500 ppm
Credit generation (bbls/day)
Credit usage (bbls/day)
2003
ISlSiSiSiSiSiSS
lllllllllllllllii;
«««««««&
412,019
412,019
i' 'llllllllllllllllllllll',
SSSSSii;
100.0
«Ki
jl)!'1 "<'<1J1
2006
394,261
35,583
429,844
17,825
4.3
8.3
17,907
16,800
2007
417,963
11,782
429,745
17,725
4.3
2.7
17,907
0
2008
439,370
9,730
449,100
37,081
9.0
2.2
18,042
0
2009
444,762
9,613
454,375
42,356
10.3
2.1
18,027
0
2010
458,597
1,250
459,847
47,828
11.6
0.3
I'l'wWwHwi'i'l'i'i'ii'
!\VWW'W'W'W'W'!('
0
39
-------
I. Highway Summary Statistics
2006 2007 2008 2009 2010
Year
Volume Increase D Volume Decrease D Net Volume Change
Figure 17. PADD 5 Highway Diesel Fuel Volume Change vs. 2003
40
-------
I. Highway Summary Statistics
I
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2003 2006
2007 2008
Year
2009 2010
15 ppm sulfur D 500 ppm sulfur
Figure 18. PADD 5 Projected Highway Diesel Fuel Production, 2006-2010
41
-------
-------
IV. Nonroad Program Overview
IV. Nonroad Diesel Program Overview
The nonroad diesel final rule (69 FR 38958, June 29, 2004) contains a two-step approach
to reducing the sulfur content of nonroad, locomotive, and marine (NRLM) diesel fuel from
uncontrolled levels down to 15 ppm. Beginning June 1, 2007, refiners and importers are
required to produce or import NRLM diesel fuel with a maximum sulfur content of 500 ppm.
Beginning June 1, 2010, refiners and importers are required to produce or import nonroad (NR)
diesel fuel with a maximum sulfur content of 15 ppm. Beginning June 1, 2012, refiners and
importers are required to produce or import locomotive and marine (LM) diesel fuel with a
maximum sulfur content of 15 ppm.
This rule includes provisions for refiners and importers to generate credits for early
NRLM diesel sulfur reduction efforts. "High Sulfur" credits may be generated for early
production of 500 ppm NRLM diesel fuel between June 1, 2006 and June 1, 2007. Similarly,
"500 ppm" credits may be generated for early production of 15 ppm NRLM diesel fuel between
June 1, 2009 and June 1, 2010. "High Sulfur" credits could be used to comply with the 500 ppm
NRLM standard beginning June 1, 2007, while "500 ppm" credits could be used to comply with
the 15 ppm NR standard beginning June 1, 2010 and the 15 ppm LM standard that begins June 1,
2012. Under this program, sulfur credits may be transferred nationwide. No credit trading area
restrictions exist such as those found in the Highway Diesel rulemaking.
Small Refiner Flexibilities
Additional compliance flexibilities are provided for small refiners in the nonroad diesel
sulfur regulations. The definition of a small refiner in this rule is similar to the definition under
the Tier 2/Gasoline Sulfur and Highway Diesel rules. A small refiner is defined as a refiner who:
1) processes NRLM diesel fuel from crude oil; 2) employs no more than 1,500 people corporate-
wide, based on the average number of employees for all pay periods from January 1, 2002 to
January 1, 2003; and, 3) has a corporate crude oil capacity less than or equal to 155,000 bpcd for
2002.
The small refiner relief options provide additional time for compliance and, for small
refiners that choose to comply earlier than required with the NRLM requirements, the option of
either generating diesel fuel sulfur credits or receiving a limited relaxation of their Tier
2/Gasoline Sulfur standards. These small refiner options are described in more detail below.
NRLM Delay Option
This option allows approved small refiners to delay compliance with the NRLM diesel
fuel sulfur standards as follows. Instead of a 500 ppm NRLM compliance date of June 1, 2007,
small refiners would have a compliance date of June 1, 2010. Instead of separate 15 ppm NR
and LM compliance dates of June 1, 2010 and June 1, 2012, respectively, small refiners would
have a single 15 ppm NRLM compliance date of June 1, 2014.
43
-------
IV. Nonroad Program Overview
NRLM Credit Option
An approved small refiner may choose to use the NRLM Credit Option in combination
with the NRLM Delay Option. The NRLM Credit Option allows approved small refiners the
opportunity to generate nonroad diesel sulfur credits for early production of compliant NRLM
diesel fuel. These credits can be banked for future use or traded to another refiner. Small
refiners could generate "High Sulfur" credits for producing any volume of 500 ppm NRLM
diesel prior to June 1, 2010. Small refiners could also generate "500 ppm" credits for producing
any volume of 15 ppm NRLM diesel prior to June 1, 2014.
NRLMDiesel/Gasoline Compliance Option
This option is available to small refiners that produce greater than 95% of their NRLM
diesel fuel at the 15 ppm sulfur standard by June 1, 2006 and elect not to use the NRLM Credit
Option described above. Refiners choosing this option will receive a modest relaxation in their
interim gasoline sulfur standards beginning January 1, 2004. Specifically, the applicable small
refiner annual average and per-gallon cap would be increased by 20 percent for the duration of
the interim program. The interim program is through either 2007 or 2010 depending on whether
the refiner elected to extend the duration of its interim gasoline sulfur standards by producing 15
ppm highway diesel fuel by June 1, 2006. However, in no case may the per-gallon gasoline
sulfur cap exceed 450 ppm.
Other Flexibilities
Unlike the Highway Diesel rulemaking, the nonroad diesel sulfur regulations do not
provide any specific flexibilities for refineries located in the Geographic Phase-in Area. Refiners
located in the Rocky Mountain states (ID, MT, ND, WY, UT, CO and NM) must comply with
the 500 ppm and 15 ppm NRLM sulfur standards within the compliance deadlines discussed
above. However, diesel fuel in rural areas of the state of Alaska (a GPA state in past
rulemakings) is exempt from the NRLM fuel sulfur standards'1. This fuel will be regulated under
a special Alaska Rule that will be finalized in late May 2006.
Transmix processors distill off-specification interface mixtures of petroleum products
from pipeline systems into gasoline and distillate fuel and are considered refiners by EPA. Their
simple refinery configuration does not make it cost effective for them install and operate a
hydrotreater to reduce distillate fuel sulfur content. As a result, they have been provided with
additional flexibility to comply with the diesel sulfur standards. Transmix processors may
choose to continue to produce all of their highway diesel fuel to the 500 ppm sulfur standard
until 2010. They may further choose to continue to produce all of their NRLM diesel fuel as
high sulfur diesel fuel until June 1, 2010, all their NRLM diesel fuel to the 500 ppm sulfur
standard until June 1, 2014, and all of their LM diesel fuel to a 500 ppm sulfur limit indefinitely.
h Rural areas are defined as areas of Alaska not served by the federal aid highway system (FAHS)
44
-------
V. Nonroad Pre-Compliance Reporting Requirements
V. Nonroad Pre-Compliance Reporting Requirements
The nonroad rule requires that any refiner or importer planning to produce or import 15
ppm NRLM diesel fuel after June 1, 2010 must submit annual pre-compliance reports to EPA.
The first pre-compliance report was due on June 1, 2005 and subsequent reports are due annually
through 2011, or until the production of 15 ppm sulfur NR and LM diesel fuel commences,
whichever is later.
The pre-compliance reports must contain the following information:
1. Any changes in the refiner's or importer's basic company or facility information since
registration.
2. Estimates of the average daily volumes (gallons) of each sulfur grade of highway and
NRLM diesel fuel produced (or imported) at each refinery (facility). The volume
estimates must include both fuel produced from crude oil and other sources for the
periods of June 1, 2010 through December 31, 2010, calendar years 2011-2013,
January 1, 2014 through May 31, 2014, and June 1, 2014 through December 31,
2014.
3. For refiners or importers expecting to participate in the credit program, estimates of
the number of credits generated and/or used during the periods above.
4. Information on project schedule by known or projected completion date (by quarter)
for each stage of the project. For example strategic planning, front-end engineering,
detailed engineering and permitting, procurement and construction, and
commissioning and startup.
5. Basic information regarding the selected technology pathway for compliance, e.g.
conventional hydrotreating versus other technologies, revamp versus grassroots, etc.
6. Whether capital investments have been made or are projected to be made.
7. The pre-compliance reports due in 2006 and later years must provide an update of the
progress in each of these areas.
We recognize that the pre-compliance reports contain preliminary information and that
final decisions on desulfurization plans may not have been made in all cases as of the reporting
deadline. Accordingly, our conclusions in this summary and analysis are based on the best
available refinery information as June 1, 2005. The information presented here will be updated
with more current analyses as subsequent pre-compliance reports are received annually in 2006
through 2011.
45
-------
VI. Nonroad Summary Statistics
VI. NRLM Summary Statistics
A. Nationwide Analysis
Many refiners are still in the process of developing their plans to produce 15 ppm NRLM
diesel, so our overall assessment of supply after June 1, 2010 is in large part incomplete. In
many cases we did not receive reports, or we received reports stating that decisions had not yet
been made. Table 19 shows the number of refineries that reported that they intend to produce 15
ppm and/or 500 ppm diesel fuel beginning June 1, 2010, and the number of refineries that intend
to generate or use credits under the nonroad diesel sulfur regulations. A total of 116 refineries
reported they anticipate producing 15 and/or 500 ppm diesel fuel beginning June 1, 2010, two
more than the 114 total refineries from the highway diesel pre-compliance reports. Beginning
June 1, 2012, when the LM diesel fuel sulfur standard decreases to 15 ppm, the total decreases to
115 refineries, as one refinery exits the LM diesel fuel market.
Table 19.
U.S. Aggregated Report Information
Highway and NRLM Diesel Fuel Refinery Statistics 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
2010
116
103
3
10
2011
116
104
3
9
2012
116
104
3
9
2013
115
110
2
3
2014
115
110
2
3
The 2005 nonroad pre-compliance reports indicated that production of total (highway +
NRLM) 15 ppm and 500 ppm diesel fuel beginning June 1, 2010 would be approximately 3.7
million bbls/day, as shown in Table 20 below. In comparison, total production of 15 ppm and
500 ppm highway diesel fuel from January 1, 2010 through May 31, 2010 from the highway
diesel pre-compliance reports was approximately 3.3 million bbls/day. Thus, by difference, the
2005 nonroad pre-compliance reports indicate that for those refiners that reported, they are
planning to produce approximately 400 thousand bbls/day of 15 ppm and 500 ppm NRLM diesel
fuel beginning June 1, 2010.
Table 20 and Figure 19 illustrate that production of total (highway + NRLM) 15 ppm
diesel increases by approximately 100 thousand bbls/day from 2010 to 2014. However, this
increase is offset by a decrease in the production of 500 ppm NRLM diesel by approximately
150 thousand bbls/day from 2010 to 2013. This decrease in 500 ppm production occurs when
the 15 ppm sulfur standard for LM diesel takes effect on June 1, 2012, as some refiners that are
planning to produce 500 ppm LM diesel prior to June 1, 2012 shift out of the LM diesel market.
These refiners have indicated that they may produce 15 ppm diesel for the LM market by June 1,
2012, but that their production plans for 15 ppm LM diesel are still uncertain.
46
-------
VI. Nonroad Summary Statistics
As mentioned previously in the highway diesel fuel summary statistics, 140 refineries
reported to EIA that they produced low and/or high sulfur distillate fuel in 2003. Twenty four of
these refineries either reported that they are still developing plans to produce 15 ppm diesel fuel,
or did not send an NRLM pre-compliance report to EPA in 2005. In 2003, these 24 refineries
produced a total of approximately 109 thousand barrels/day of diesel fuel containing less than
500 ppm sulfur, and approximately 194 thousand barrels/day of distillate fuel containing more
than 500 ppm sulfur. We cannot tell at this time whether these refineries will choose to produce
15 ppm NRLM diesel fuel, or whether they will choose to produce only heating oil.
We did not receive any specific information from refiners on their project plans
(technology, scope, timeline, etc.) to produce 15 ppm NRLM diesel. We expect that future
nonroad pre-compliance reports will contain more detail on project plans, as refiners further
develop their plans to meet the June 1, 2010 compliance date for the 15 ppm NR diesel standard.
Table 20.
U.S. Aggregated Report Information
Diesel Fuel Volume 2010-2014
Year
Total 15 ppm (highway + NRLM), bbls/day
Total 500 ppm NRLM, bbls/day
1 5 + 500 ppm total (highway + NRLM), bbls/day
2010
3,488,134
189,029
3,677,163
2011
3,492,571
186,136
3,678,707
2012
3,509,981
95,120
3,605,101
2013
3,520,943
28,399
3,549,342
2014
3,593,954
28,399
3,622,353
47
-------
VI. Nonroad Summary Statistics
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,000,000
500,000
2010
2011
2012
Year
2013
2014
DTotal 15 ppm BTotal 500 ppm
Figure 19. Projected (Highway + NRLM) Diesel Fuel Production by Type, 2010-2014
Table 21 shows total reported nonroad diesel sulfur credits generated and used for each
year of the nonroad diesel sulfur credit program. High sulfur credits are shown in equivalent
barrels/day for the last 7 months of 2006, and the full calendar years 2007 through 2010. 500
ppm credits are shown for the last 7 months of 2009 and the full calendar years 2010 through
2014. Five refineries indicated they plan to generate approximately 104 thousand barrels/day of
high sulfur credits during the credit generation period from June 1, 2006 through May 31, 2007,
including a refinery owned by a small refiner who plans to generate approximately 7 thousand
barrels/day of high sulfur credits from June 1, 2006 through May 31, 2010. Four refineries
indicated they plan to generate approximately 55 thousand barrels/day of 500 ppm credits during
the credit generation period from June 1, 2009 through May 31, 2010.
48
-------
VI. Nonroad Summary Statistics
Table 21.
U.S. Aggregated Report Information
Nonroad Diesel Fuel Credits 2006-2014
Year
# refineries generating high sulfur credits
# refineries using high sulfur credits
High sulfur credit generation, bbls/day
High sulfur credit usage, bbls/day
Year
# refineries generating 500 ppm credits
# refineries using 500 ppm credits
500 ppm credit generation, bbls/day
500 ppm credit usage, bbls/day
•:<" ';.;;
i '.•;-;;;.;;;',<';'
,; V!.,t,t,t I';'.)'
jA&SEH
2009
4
I ,^' VsvX'S'wi,''*
I " .•
55,336
f l'' " HHHHHHHHHHH^, '•.'*
'•> ",.,.',
2006
5
i^ '";'•
104,178
« ^'V "'',/ !<
2010
4
0
22,892
0
2007
5
2
47,236
23,703
2011
0
0
0
0
2008
1
2
6,884
23,742
2012
0
0
0
0
2009
1
2
6,884
23,742
2013
0
0
0
0
2010
1
1
6,884
16,000
2014
! ,.; K K K K K , f
, V. V. V. V
0
• Vv ',",","> i
,'i'i'i'i'i'i'i'
0
B. PADD Analysis
Tables 22 and 23 show, by PADD, the number of refineries producing 15 and/or 500 ppm
diesel fuel for 2010 (from June 1 through December 31) and 2014 (from January 1 through May
31). The total number of refineries decreases slightly from 2010 to 2014, as one refinery exits
the NRLM market in 2012. Also, the number of refineries producing 100 percent 15 ppm diesel
increases by seven from 2010 to 2014, and the number of refineries producing some amount of
500 ppm diesel decreases by eight from 2010 to 2014.
Table 22.
Projected Number of Highway and NRLM Diesel Fuel Refineries by PADD for 2010
PADD
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
1
13
12
0
1
2
24
23
0
1
3
42
36
2
4
4
15
12
0
3
5
22
20
1
1
total U.S.
116
103
3
10
49
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VI. Nonroad Summary Statistics
Table 23.
Projected Number of Highway and NRLM Diesel Fuel Refineries by PADD for 2014
PADD
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
1
13
12
0
1
2
24
24
0
0
3
41
39
1
1
4
15
14
0
1
5
22
21
1
0
total U.S.
115
110
2
3
Tables 24 and 25 show, by PADD, production rates of total (highway + NRLM) 15 and
500 ppm diesel fuel for 2010 (from June 1 through December 31) and 2014 (from January 1
through May 31), and Figure 20 illustrates the annual average production of total (highway +
NRLM) diesel by PADD beginning June 1, 2010 through May 31, 2014. Tables 24 and 25 show
that the most significant increase in diesel fuel production is in PADD 1, an increase of
approximately 64 thousand bbls/day. Production of total (highway + NRLM) diesel fuel also
increases slightly in PADDs 2, 4 and 5. However, production of total (highway + NRLM) diesel
fuel in PADD 3 decreases by approximately 146 thousand bbls/day, due primarily to a
significant decrease in 500 ppm diesel fuel production as some refineries shift out of the LM
market in 2012.
Table 24.
Projected Volumes of (Highway + NRLM) Diesel Fuel by PADD for 2010
PADD
Total 15 ppm (highway + NRLM), bbls/day
Total 500 ppm (highway + NRLM), bbls/day
15+500 ppm total (highway + NRLM), bbls/day
1
300,822
71
300,893
2
866,782
1,083
867,865
3
1,700,533
173,265
1,873,798
4
149,822
11,510
161,331
5
470,176
3,100
473,276
total U.S.
3,488,134
189,029
3,677,163
Table 25.
Projected Volumes of (Highway + NRLM) Diesel Fuel by PADD for 2014
PADD
total 15 ppm (highway +NRLM), bbls/day
total 500 ppm (highway +NRLM), bbls/day
15+500 ppm total (highway +NRLM), bbls/day
1
364,589
71
364,661
2
875,424
0
875,424
3
1,709,876
27,461
1,737,338
4
158,889
767
159,655
5
485,176
100
485,276
total U.S.
3,593,954
28,399
3,622,353
50
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VI. Nonroad Summary Statistics
4,000,000
3,500,000
3,000,000
2,000,000
1,000,000
500,000
2010
2011
2012
Year
2013
2014
] PADD 1 • PADD 2 D PADD 3 O PADD 4 • PADD 5
Figure 20. Projected (Highway + NRLM) Diesel Fuel Production by PADD, 2010-2014
51
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VII. Appendix
VII. Appendix
A. List of Acronyms
AEO
bbls/day
bpcd
CTA
EIA
EPA (or, "the Agency")
FR
GPA
LM
NR
NRLM
PADD
ppm
TCO
ULSD
Annual Energy Outlook
barrels per day
barrels per calendar day
Credit Trading Area
Energy Information Administration
U.S. Environmental Protection Agency
Federal Register
Geographic Phase-in Area
Locomotive and Marine
Nonroad
Nonroad, Locomotive, and Marine
Petroleum Administrative Districts for Defense
parts-per-million
Temporary Compliance Option
Ultra Low Sulfur Diesel
52
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VII. Appendix
B. References
Summary and Analysis of the Highway Diesel Fuel 2003 Pre-compliance
Reports, U.S. Environmental Protection Agency, EPA420-R-03-013, October
2003, http://www.epa.gov/otaq/regs/hd2007/420r03013.pdf.
- and -
Summary and Analysis of the Highway Diesel Fuel 2004 Pre-Compliance
Reports, U.S. Environmental Protection Agency, EPA420-R-04-014, September
2004, http://www.epa.gov/otaq/regs/hd2007/420r04014.pdf
Article: "Shell Reaches Agreement to Sell Bakersfield Refinery"
http://www.sheH.com/home/F ramework? siteId=us-en&FC2=&FC3=/us-
en/html/iwgen/news and library/press releases/2005/bakersfield update 3 1001
2005.html
Energy Information Administration, Annual Energy Outlook 2003,
DOE/EIA-0383(2003), January 2003.
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