Summary and Analysis of the 2009
Nonroad Diesel Fuel Pre-Compliance
Reports
United States
Environmental Protection
Agency
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Summary and Analysis of the 2009
Nonroad Diesel Fuel Pre-Compliance
Reports
Compliance and Innovative Strategies 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 the exchange of technical information and to inform the public of
technical developments.
SER&
United States
Environmental Protection
Agency
EPA-420-R-09-018
November 2009
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Table of Contents
I. Executive Summary 1
II. Nonroad Diesel Program Overview 1
III. Nonroad Pre-Compliance Reporting Requirements 4
IV. NRLM Summary Data 5
A. Nationwide Analysis 5
1. Refineries and Importers - Numbers and Production 5
2. Projected Credit Generation and Use 8
3. Project Scope and Timing 9
4. Small Refiner Options 10
B. PADD Analysis 11
1. PADD 1 14
2. PADD 2 15
3. PADD 3 16
4. PADD 4 17
5. PADD 5 18
C. Comparison of 2008 and 2009 NRLM Pre-Compliance Reports 19
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II. Nonroad Diesel Program Overview
I. Executive Summary
Any refiner or importer planning to produce or import nonroad, locomotive,
or marine (NRLM) diesel fuel containing 15 ppm sulfur or less after June 1, 2010 is
required to submit to the U.S. Environmental Protection Agency (EPA) annual pre-
compliance reports. Reports are due annually by June 1 from 2005 through 2011
under the diesel sulfur regulations. This report summarizes the results of refiners'
June 2009 pre-compliance reports.
Refiners' and importers' nonroad pre-compliance reports must contain
estimates of all 15 ppm diesel fuel and 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 and/or used by each refinery or importer. The
pre-compliance reports must also contain information outlining each refinery's
timeline for complying with the 15 ppm sulfur standard and provide information
regarding engineering plans (e.g., design and construction), and capital commitments
for making the necessary modifications to produce 15 ppm NRLM diesel fuel.
The 2009 nonroad pre-compliance reports showed that:
- 117 refineries are planning to produce 15 ppm diesel fuel by June 1, 2014
- 23 refineries are either undecided as to their plans, or are choosing to stop
producing NRLM diesel fuel by June 1, 2014
refiners are taking advantage of the flexibilities offered by the regulations
(19 refineries said they generated high sulfur credits in 2006 and 2007, 27
refineries plan to generate 500 ppm credits in 2009 and 2010, small
refiners are utilizing all of the options available to them)
total highway and NRLM diesel fuel ("total diesel fuel") production and
importation is projected to grow from 2010 through 2014
- total diesel fuel production and importation beginning June 1, 2010 is
projected to decrease compared to the 2008 nonroad pre-compliance
reports.
Many refiners have developed firmer plans to produce 15 ppm NRLM diesel
fuel than what they indicated in their 2008 pre-compliance reports, although these
plans are still subject to change. EPA expects that next year's nonroad pre-
compliance reports will contain more definite information on refiners' plans to
produce 15 ppm NRLM diesel fuel.
II. 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,
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II. Nonroad Diesel Program Overview
2007, refiners and importers were 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.
The rule includes provisions for refiners and importers to generate credits for
early NRLM diesel sulfur reduction efforts. "High sulfur" credits could 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 beginning June 1, 2012. For
both high sulfur credits and 500 ppm credits, one credit is equivalent to one gallon of
diesel fuel that meets the respective standard earlier than required. In addition, "high
sulfur" credits can be converted into "500 ppm" credits for use in 2010 and later.
NRLM 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 criteria for qualification as an NRLM small
refiner are similar to those under the Gasoline Sulfur and Highway Diesel rules. To
qualify as "small", a refiner must: 1) process NRLM diesel fuel from crude oil; 2)
employ 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) have a
corporate crude oil capacity less than or equal to 155,000 barrels per calendar day
(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 gasoline sulfur standards. These small refiner options are
described in more detail below.
Option 1 - Delay 500 ppm NRLM production
This option allows approved small refiners an additional 3 years to comply
with the 500 ppm NRLM diesel fuel sulfur standard. Small refiners have a 500 ppm
NRLM compliance date of June 1, 2010, compared to a compliance date of June 1,
2007 for non-small refiners. Small refiners may continue to produce high sulfur
(greater than 500 ppm) NRLM diesel fuel until June 1, 2010. However,
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II. Nonroad Diesel Program Overview
production of high sulfur NRLM diesel fuel from a small refiner's refinery between
June 1, 2007 and June 1, 2010 is limited to 105 percent of the refinery's average
NRLM diesel fuel production from 2003 through 2005.
Option 2 - Delay 15 ppm NRLM production
This option allows approved small refiners additional time to comply with the
15 ppm NRLM diesel fuel sulfur standard. Small refiners have a single 15 ppm
NRLM compliance date of June 1, 2014, compared to compliance dates of June 1,
2010 and June 1, 2012 for NR and LM diesel fuel, respectively, for non-small
refiners. Small refiners may continue to produce 500 ppm NRLM diesel fuel until
June 1, 2014. However, production of 500 ppm NRLM diesel fuel from a small
refiner's refinery between June 1, 2010 and June 1, 2014 is limited to 105 percent of
the refinery's average NRLM diesel fuel production from 2006 through 2008.
Option 3 - NRLM Credit Option
The NRLM Credit Option allows approved small refiners additional time to
generate nonroad diesel sulfur credits, compared to non-small refiners. Small refiners
could generate "High Sulfur" credits if their refinery's annual average 500 ppm
NRLM diesel fuel production between June 1, 2006 and June 1, 2010 exceeded the
refinery's annual average NRLM diesel fuel production from 2003 through 2005
(non-small refiners could only generate High Sulfur credits between June 1, 2006 and
June 1, 2007). Small refiners could also generate "500 ppm" credits if their refinery's
annual average 15 ppm NRLM diesel fuel production between June 1, 2009 and
December 31, 2013 exceeded the refinery's average annual NRLM diesel fuel
production from 2006 through 2008 (non-small refiners could only generate "500
ppm" credits between June 1, 2009 and June 1, 2010). These credits can be banked
for future use or sold to another refiner.
Option 4 - NRLM Diesel/Gasoline Compliance Option
This option is available to small refiners that elect not to use Option 3. Under
this option, at least 95 percent of the NRLM diesel fuel produced at a small refiner's
refinery must meet the 15 ppm sulfur standard by June 1, 2006. Annual average
production of 15 ppm NRLM diesel fuel at the refinery must also be equal to or
greater than 85 percent of the refinery's annual average NRLM diesel fuel production
from 2003 through 2005. Small refiners choosing this option will receive a modest
relaxation in the refinery interim gasoline sulfur standards beginning January 1, 2004.
Specifically, the applicable refinery annual average and per-gallon cap standards
would be increased by 20 percent through 2007. A small refiner may elect to further
extend the duration of the refinery interim gasoline sulfur standards through 2010 by
producing all highway diesel fuel at the refinery containing less than 15 ppm sulfur or
less by June 1, 2006. However, in no case may the per-gallon gasoline sulfur cap
exceed 450 ppm.
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II. Nonroad Diesel Program Overview
Other Flexibilities
Unlike the Highway Diesel rule, the Nonroad Diesel rule did not provide any
specific flexibilities for refineries located in the Geographic Phase-in Area (GPA).
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. NRLM diesel fuel used in rural areas of
Alaska (a GPA state in the gasoline sulfur rulemaking) is exempt from the 500 ppm
NRLM diesel fuel sulfur standard beginning June 1, 2007, but must meet the 15 ppm
sulfur standard beginning June 1,2010*. This fuel is regulated under a special rule
for Alaska which was finalized in June 2006 (71 FR 32450, June 6, 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 to 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 of their NRLM diesel fuel to meet the 500 ppm
sulfur standard until June 1, 2014, and all of their LM diesel fuel to meet a 500 ppm
sulfur standard indefinitely.
III. Nonroad Pre-Compliance Reporting Requirements
The diesel sulfur regulations require 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 nonroad pre-compliance report was due on
June 1, 2005 and subsequent reports are due annually through 2011, or until the
refiner or importer begins producing or importing 15 ppm NR or NRLM diesel fuel.
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 (gallon) of each sulfur grade of
highway and NRLM diesel fuel produced at each refinery or imported at each
import 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.
Rural areas are defined as areas of Alaska not served by the federal aid highway system (FAHS)
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III. Nonroad Pre-Compliance Reporting Requirements
3. For refiners or importers expecting to participate in the NRLM 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 (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. 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, the information in this summary and
analysis is based on the best available refinery information as of June 1, 2009. The
information presented here will be updated with more current analyses with
information from the annual pre-compliance reports submitted in 2010.
IV. NRLM Summary Data
A. Nationwide Analysis
1. Refineries and Importers - Numbers and Production
According to the Energy Information Administration (EIA), 140 refineries
reported producing either high or low sulfur (or both) distillate fuels in 2003. This
reported production includes data from 4 refiner/importers that are located outside of the
continental United States (in the U.S. Virgin Islands, Aruba, and Eastern Canada) whose
production is targeted to the U.S. market. We received 2009 pre-compliance reports for
129 refineries, all of which produced high and/or low sulfur diesel fuel in 2003. The 11
refineries which did not send pre-compliance reports may be planning to produce high
sulfur distillate fuel for the heating oil market, or may be planning to sell their high sulfur
distillate fuel to other refineries that can desulfurize it.
Refiners indicated that, for most of their refineries, they have made decisions
whether or not to produce 15 ppm NRLM diesel fuel. Table 1 shows that a total of 121
refineries reported they anticipate producing 15 and/or 500 ppm diesel fuel beginning
June 1, 2010. The remaining 8 refineries that sent pre-compliance reports said they either
plan to produce only high sulfur distillate for the heating oil market, or are still deciding
whether to produce 15 ppm NRLM diesel fuel.
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IV. NRLM Summary Data
Table 1.
U.S. Aggregated Report Information
Highway and NRLM Diesel Fuel Refinery Data 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
2010
121
96
10
15
2011
122
98
9
15
2012
121
99
5
17
2013
120
112
4
4
2014a2
120
113
3
4
2014b
117
117
0
0
The 2009 nonroad pre-compliance reports indicated that production of 15 ppm
and 500 ppm total diesel fuel beginning June 1, 2010 is projected to be 4.17 million
bbls/day, as shown in Table 2 below. The reported information does not allow for any
distinction between highway and NRLM production. However, from EIA's weekly
supply estimates (http://tonto.eia.doe.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm),
production and importation of 15 ppm and 500 ppm diesel fuel for the third annual
compliance period in the highway diesel program (July 1, 2008 through June 30, 2009)
averaged approximately 3.89 million bbls/day. This average production and importation
includes all highway diesel fuel and nearly all NRLM diesel fuel produced in or imported
into the U.S. during the compliance period.3 Thus, by comparing total production and
importation from the 2009 reports with average production and importation from the third
annual compliance period, refiners and importers are planning to produce and import
approximately 280,000 bbls/day total additional 15 ppm and 500 ppm diesel fuel
beginning June 1, 2010.
Table 2 and Figure 1 also illustrate that national production of 15 ppm diesel fuel
is projected to increase by 400,000 bbls/day from 2010 to 2014, from 4.01 to 4.41 million
bbls/day. However, this projected increase is offset by a projected decrease in 500 ppm
NRLM diesel fuel production of 163,000 bbls/day from 2010 to 2014. Production of 500
ppm NRLM diesel fuel decreases from 163,000 bbls/day in 2010 to 54,000 bbls/day in
2012, as some refiners begin producing 15 ppm LM diesel fuel by June 1, 2012.
Production of 500 ppm NRLM diesel fuel ends completely by May 31, 2014, when the
flexibilities for small refiners and NRLM credit use end.
Projected total production should be sufficient to meet future demand of 15 ppm
and 500 ppm total diesel fuel. Although projected total production from the 2009 pre-
compliance reports has decreased compared to the 2008 pre-compliance reports,
projected total diesel fuel demand from EIA's Annual Energy Outlook (AEO) 2009 has
also decreased compared to projected demand from AEO 2008. Total demand for 15
ppm and 500 ppm diesel fuel calculated from AEO 2009 is 3.74 million bbls/day in 2010
Data from the pre-compliance reports is divided into two sections for 2014 throughout this summary and
analysis. In all tables and figures, data for the first five months of 2014 is labeled 2014a, and data for the
last seven months of 2014 is labeled 2014b.
3 The average does not include a relatively small amount of high sulfur NRLM diesel fuel produced by
small refiners and hardship refiners.
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IV. NRLM Summary Data
and 4.16 million bbls/day in 2015, compared to projected total diesel fuel production of
4.17 million bbls/day in 2010 and 4.41 million bbls/day in 2014.4
As mentioned previously, 140 refineries reported to EIA that they produced low
and/or high sulfur distillate fuel in 2003. Twelve of these refineries either reported that
they have no plans at present to produce 15 ppm diesel fuel by June 1, 2014, and 11
refineries did not send an NRLM pre-compliance report to EPA in 2009. In 2003, these
23 refineries produced a total of 122,000 bbls/day of diesel fuel containing less than 500
ppm sulfur, and 136,000 bbls/day of distillate fuel containing more than 500 ppm sulfur.
We cannot tell at this time if or when these refineries might choose to produce 15 ppm
diesel fuel, or whether they will simply choose to produce heating oil indefinitely.
Table 2.
U.S. Aggregated Report Information
Diesel Fuel Production 2010-2014
Year
Total 15 ppm (highway +NRLM), bbls/day
Total 500 ppm NRLM, bbls/day
Total 15 ppm and 500 ppm (highway +NRLM),
bbls/day
2010
4,010,938
162,808
4,173,746
2011
4,227,617
97,273
4,324,890
2012
4,280,088
53,541
4,333,629
2013
4,353,095
12,379
4,365,473
2014a
4,413,598
9,379
4,422,976
2014b
4,412,417
0
4,412,417
Figure 1. Projected (Highway + NRLM) Diesel Fuel Production by Type, 2010-2014
c nnn nnn
4 500 000
fl)
£ 4,000,000 -
0
f\ •} ^nn nnn
o
ro nnn nnn
^ £
= •59 cnn nnn
+ s
r-" o nnn nnn
.c 1 c;nn nnn
*— - 1 nnn nnn
3
.0 c;nn nnn
n
~
2010 2011 2012 2013 2014a 2014b
Year
• 500 ppm sulfur
D 15 ppm sulfur
AEO 2009 projected a total distillate fuel oil demand of 4.08 million bbls/day in 2010 and 4.46 million
bbls/day in 2015 (see Table Al 1 in http://www.eia.doe.gov/oiaf/aeo/pdf/appa.pdf). These totals include
341,000 and 303,000 bbls/day respectively of distillate fuel oil (heating oil) for residential energy
consumption (see Table A2 at http://www.eia.doe.gov/oiaf/aeo/pdf/appa.pdf). EPA does not require
heating oil to meet either the 15 ppm or 500 ppm sulfur standard, so total demand for 15 ppm and 500 ppm
diesel fuel was calculated by subtracting heating oil demand from total distillate fuel oil demand.
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IV. NRLM Summary Data
2. Projected Credit Generation and Use
Table 3 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 for
the last 7 months of 2006 (refiners could not begin generating high sulfur NRLM credits
until June 1, 2006), the full calendar years 2007 through 2009, and the first 5 months of
2010. 500 ppm credits are shown for the last 7 months of 2009, the full calendar years
2010 through 2013, and the first 5 months of 2014. Nineteen refineries indicated they
generated a total of 1,982 million high sulfur credits (1 credit = 1 gallon diesel fuel),
mostly during the early credit generation period from June 1, 2006 through May 31,
2007, and including 4 refineries owned by small refiners who plan to continue generating
high sulfur credits after May 31, 2007. Eight refineries indicated they planned to use a
total of 2,256 million high sulfur credits from June 1, 2007 through May 31, 2010.
Twenty seven refineries indicated they plan to generate a total of 3,884 million
500 ppm credits, mostly during the early credit generation period from June 1, 2009
through May 31, 2010, including 3 refineries owned by small refiners who plan to
continue generating 500 ppm credits after May 31, 2010. Seven refineries indicated they
planned to use a total of 1,214 million credits from June 1, 2010 through May 31, 2014.
Table 3.
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, millions
High sulfur credit usage, millions
Year
# refineries generating 500 ppm credits
# refineries using 500 ppm credits
500 ppm credit generation, millions
500 ppm credit usage, millions
2009
26
^1,808
2006
18
724
2010
27
7
1,614
650
2007
19
8
973
526
2011
3
5
155
436
2008
4
7
126
773
2012
2
3
212
86
2009
4
6
113
685
2013
1
2
94
41
2010
3
5
46
272
2014
1
1
total
1,982
2,256
total
3,884
1,214
Figures 2 and 3 illustrate cumulative projected generation and usage of high sulfur
credits and 500 ppm credits by year. Although Figure 3 shows that 500 ppm credit
generation significantly exceeds 500 ppm credit usage, Figure 2 shows a projected
shortfall in high sulfur credits beginning in 2009. EPA has talked with refiners who had
indicated in their pre-compliance reports that they planned to use more high sulfur credits
than they generated, and learned that they have flexibility to use fewer high sulfur credits,
if necessary. Based on our conversations with these refiners, we believe they have
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IV. NRLM Summary Data
sufficient flexibility to reduce their usage of high sulfur credits in order to match the
available supply of high sulfur credits.
Figure 2. Total U.S. High Sulfur Credits
2,500
j2 2,000
$ 1,500
| 1,000
S 500
H
^
0_
1
s—
p* 7
p
—
~|
—
I-
2006 2007 2008 2009 2010
Year
• cumulative HSC generated • cumulative HSC used
Figure 3. Total U.S. 500 ppm Credits
2009 2010
2011 2012
Year
2013 2014
D cumulative 500 ppm credits generated • cumulative 500 ppm credits used
3. Project Scope and Timing
In addition to providing diesel fuel production and credit projections, refiners
must also include information outlining both their timeline for compliance with the 15
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IV. NRLM Summary Data
ppm sulfur NRLM standard and their engineering plans (e.g., design and construction) in
their pre-compliance reports. We requested that refiners report their progress according
to the following five stages: 1) strategic planning, 2) planning and front-end engineering,
3) detailed engineering and permitting, 4) procurement and construction, and 5)
commissioning and start-up. In the 2008 nonroad pre-compliance reports, most refiners
indicated they had ordered long lead time equipment like reactor vessels and were well
into the detailed engineering and permitting stage, or did not plan to produce any more 15
ppm diesel fuel than indicated in their highway pre-compliance reports.
In the 2009 NRLM pre-compliance reports, refiners indicated they have plans to
install new desulfurization capacity at 22 refineries specifically to produce 15 ppm
NRLM diesel fuel. Most of these refineries are generally in the final stages of their
projects to produce 15 ppm NRLM diesel fuel. Most have completed their detailed
engineering, and are well into the procurement and construction stage.
All 22 refineries are planning to either revamp existing hydrotreating or
hydrocracking units, or install new hydrotreating or hydrocracking units. Twenty of
these refineries indicated specific project scopes to produce 15 ppm NRLM diesel. Of
these 20 refineries, 10 are planning to install a new desulfurization unit, 6 are planning to
revamp an existing desulfurization unit, and 4 refineries are planning to both install at
least one new desulfurization unit and revamp at least one existing desulfurization unit.
The other 2 refineries did not report detailed project information.
4. Small Refiner Options
As discussed previously, the diesel sulfur regulations contain 4 options which
provide qualified small refiners with flexibilities regarding production of 500 ppm or 15
ppm NRLM diesel fuel. Option 1 allows a refinery owned by an approved small refiner
to delay production of 500 ppm NRLM diesel fuel until June 1, 2010. Refiners chose
Option 1 for 9 refineries. These 9 refineries produced 37,000 bbls/day high sulfur
distillate fuel in 2003.
Option 2 allows a refinery owned by an approved small refiner to delay
production of 15 ppm NRLM diesel fuel until June 1, 2014. Refiners chose Option 2 for
7 refineries. These 7 refineries produced 22,000 bbls/day high sulfur distillate fuel in
2003. (Options 1 and 2 are not mutually exclusive, small refiners may choose both
Options 1 and 2.)
Option 3 allows a small refiner to generate credits for 500 ppm NRLM diesel fuel
produced between June 1, 2006 and May 31, 2010, and also allows a small refiner to
generate credits for 15 ppm NRLM diesel fuel produced between June 1, 2009 and
December 31, 2013. Refiners chose Option 3 for 4 refineries. These 4 refineries
produced 9,000 bbls/day high sulfur distillate fuel in 2003.
10
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IV. NRLM Summary Data
Lastly, Option 4 allows a small refiner the ability to increase their refinery
gasoline sulfur standards by 20 percent, provided they begin producing 15 ppm NRLM
diesel fuel by June 1, 2006 at their refinery, and their refinery's annual average 15 ppm
NRLM diesel fuel production is at least 85 percent of the refinery's annual average
NRLM diesel fuel production from 2003 through 2005. Refiners chose Option 4 for 4
refineries. These 4 refineries produced 11,000 bbls/day high sulfur distillate fuel in 2003.
The number of refineries owned by small refiners, and the production of high
sulfur distillate fuel from these refineries in 2003, are shown below in Table 4 for each
option.
Table 4.
Intended Small Refiner Compliance Options by Number of Refineries and
High Sulfur Distillate Fuel Production
Option
1.
2.
3.
4.
Description
Delay 500 ppm NRLM Production
Delay 1 5 ppm NRLM Production
NRLM Credit Option
NRLM Diesel/Gasoline Compliance Option
Number of
Refineries
9
7
4
4
2003 High Sulfur Distillate
Fuel Production
(thousand bbls/day)
37
22
9
11
B. PADD Analysis
This section presents information specific to each PADD. Tables 5 and 6 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 June 1 through December 31). The
total number of refineries producing diesel fuel decreases by 4 from 2010 to 2014, as 1
refinery enters the diesel fuel market in 2011, and 5 refineries exit by 2014. In 2010, 25
refineries are using flexibilities in the rules (producing 500 ppm LM diesel fuel,
producing 500 ppm NR diesel fuel using NRLM credits, small refiner flexibilities) to
produce some or all 500 ppm diesel fuel. However, by June 1, 2014, all of these
refineries will only be producing 15 ppm diesel fuel and/or heating oil.
Tables 7 and 8 show, by PADD, anticipated production of 15 ppm and 500 ppm
total diesel fuel for 2010 (from June 1 through December 31) and 2014 (from June 1
through December 31), and Figure 4 illustrates the average anticipated production of 15
ppm and 500 ppm total diesel fuel by PADD from June 1, 2010 through December 31,
2014. Tables 7 and 8 show that from 2010 through 2014, projected total diesel fuel
production increases in PADDs 1 through 4 and decreases in PADD 5.
11
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IV. NRLM Summary Data
Table 5.
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
12
8
0
4
2
25
21
3
1
3
44
36
4
4
4
14
11
0
3
5
26
20
3
3
Total U.S.
121
96
10
15
Table 6.
Projected Number of Highway and NRLM Diesel Fuel Refineries by PADD for 2014b
PADD
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
1
12
12
0
0
2
26
26
0
0
3
42
42
0
0
4
14
14
0
0
5
23
23
0
0
Total U.S.
117
117
0
0
Table 7.
Projected Production of (Highway + NRLM) Diesel Fuel by PADD for 2010
PADD
Total 15 ppm (highway +NRLM), bbls/day
Total 500 ppm (highway + NRLM), bbls/day
Total 15 ppm and 500 ppm total (highway +NRLM),
bbls/day
1
363,304
8,310
371,613
2
902,942
47,425
950,367
3
2,064,882
68,171
2,133,053
4
180,346
8,500
188,846
5
499,463
30,403
529,866
Total
U.S.
4,010,938
162,808
4,173,746
Table 8.
Projected Production of (Highway + NRLM) Diesel Fuel by PADD for 2014b
PADD
Total 15 ppm (highway +NRLM), bbls/day
Total 500 ppm (highway +NRLM), bbls/day
Total 15 ppm and 500 ppm total (highway +NRLM),
bbls/day
1
424,205
0
424,205
2
1,023,862
0
1,023,862
3
2,277,361
0
2,277,361
4
189,465
0
189,465
5
497,525
0
497,525
Total
U.S.
4,412,417
0
4,412,417
12
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IV. NRLM Summary Data
Figure 4. Projected (Highway+NRLM) Diesel Fuel Production by PADD, 2010-2014
0)
8!
0)
Q
re
-o
+ .a
>-°
ra
f
ai
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
• PADD 5
D PADD 4
D PADD 3
• PADD 2
D PADD 1
2010 2011
2012 2013
Year
2014a 2014b
More detailed information for each PADD is shown below in Tables 9 through
13.
13
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IV. NRLM Summary Data
1. PADD1
Reported totals for all PADD 1 refineries and importers are summarized below in
Table 9. Table 9 shows that for 2010, 12 refineries anticipate producing approximately
372,000 bbls/day total (15 ppm and 500 ppm sulfur) diesel fuel. Eight refineries reported
they intend to produce all of their diesel fuel containing 15 ppm sulfur or less, and 4
refineries reported they intend to produce some 500 ppm NRLM diesel fuel between
2010 and 2014. Table 9 also shows that total diesel fuel production in PADD 1 is
projected to increase by approximately 53,000 bbls/day from 2010 through 2014.
Table 9
PADD 1 Diesel Fuel Data: 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 1 5/500 ppm mix
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15 ppm and 500 ppm (bbls/day)
2010
12
8
0
4
363,304
8,310
371,613
2011
12
8
0
4
406,229
12,476
418,705
2012
12
8
0
4
423,729
5,643
429,372
2013
12
11
0
1
423,729
476
424,205
2014a
12
11
0
1
423,729
476
424,205
2014b
12
12
0
0
424,205
0
424,205
14
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IV. NRLM Summary Data
2. PADD 2
The reported totals for all PADD 2 refineries are summarized below in Table 10.
Table 10 shows that for 2010, 25 refineries anticipate producing approximately 950,000
bbls/day total (15 ppm and 500 ppm sulfur) diesel fuel. Twenty one refineries reported
they intend to produce all of their diesel fuel containing 15 ppm sulfur or less, and 4
refineries reported they intend to produce all or some 500 ppm NRLM diesel fuel
between 2010 and 2012. Table 10 also shows that total diesel fuel production in PADD 2
is projected to increase by approximately 74,000 bbls/day from 2010 through 2014,
including one refinery which enters the diesel fuel market in 2011.
Table 10.
PADD 2 Diesel Fuel Data: 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15 ppm and 500 ppm (bbls/day)
2010
25
21
3
1
902,942
47,425
950,367
2011
26
23
2
1
992,927
13,091
1,006,018
2012
26
23
0
3
1,020,364
5,314
1,025,678
2013
26
26
0
0
1,032,998
0
1,032,998
2014a
26
26
0
0
1,032,558
0
1,032,558
2014b
26
26
0
0
1,023,862
0
1,023,862
15
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IV. NRLM Summary Data
3. PADD 3
Reported totals for all PADD 3 refineries are summarized below in Table 11.
Table 11 shows that 44 refineries anticipate producing 2.13 million bbls/day total (15
ppm and 500 ppm sulfur) diesel fuel in 2010. Thirty six refineries reported they intend to
produce all of their diesel fuel containing 15 ppm sulfur or less, and 8 refineries reported
they intend to produce all or some 500 ppm NRLM diesel fuel between 2010 and 2014.
One refinery plans to exit the diesel fuel market in 2011, and another refinery plans to
exit the diesel fuel market in 2014. Total diesel fuel production is projected to increase
by approximately 144,000 bbls/day from 2010 through 2014.
Table 11.
PADD 3 Diesel Fuel Data: 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15 ppm and 500 ppm (bbls/day)
2010
44
36
4
4
2,064,882
68,171
2,133,053
2011
44
36
4
4
2,141,855
32,803
2,174,659
2012
43
37
2
4
2,148,430
20,199
2,168,629
2013
43
41
2
0
2,203,762
5,000
2,208,762
2014a
43
42
1
0
2,271,861
2,000
2,273,861
2014b
42
42
0
0
2,277,361
0
2,277,361
16
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IV. NRLM Summary Data
4. PADD 4
Reported totals for all PADD 4 refineries are summarized below in Table 12.
Table 12 shows that 14 refineries anticipate producing approximately 189,000 bbls/day
total (15 ppm and 500 ppm sulfur) diesel fuel in 2010. Eleven refineries reported they
intend to produce all of their diesel fuel containing 15 ppm sulfur or less, and 3 refineries
reported they intend to produce some 500 ppm NRLM diesel fuel between 2010 and
2014. Table 12 also shows that the projected total diesel fuel production in PADD 4
remains relatively constant from 2010 through 2014.
Table 12.
PADD 4 Diesel Fuel Data: 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15 ppm and 500 ppm (bbls/day)
2010
14
11
0
3
180,346
8,500
188,846
2011
14
11
0
3
183,667
8,500
192,167
2012
14
11
0
3
186,294
4,982
191,276
2013
14
13
0
1
189,667
500
190,167
2014a
14
13
0
1
189,049
500
189,549
2014b
14
14
0
0
189,465
0
189,465
17
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IV. NRLM Summary Data
5. PADD 5
Reported totals for all refineries in PADD 5 are summarized below in Table 13.
Table 13 shows that 26 refineries anticipate producing approximately 530,000 bbls/day
total (15 ppm and 500 ppm sulfur) diesel fuel in 2010. Twenty of these refineries
indicated they expect to produce all of their diesel fuel containing 15 ppm sulfur or less,
and 6 refineries reported they intend to produce all or some 500 ppm NRLM diesel fuel
between 2010 and 2014. Total diesel fuel production is projected to decrease by
approximately 32,000 bbls/day from 2010 through 2014, as one refinery plans to exit the
diesel fuel market in 2012 and another two refineries exit the market in 2014.
Table 13.
PADD 5 Diesel Fuel Data: 2010-2014
Year
# refineries producing diesel fuel
# refineries at 100% 15 ppm
# refineries at 100% 500 ppm
# refineries with 15/500 ppm mix
Total 1 5 ppm (bbls/day)
Total 500 ppm (bbls/day)
Total 15 ppm and 500 ppm (bbls/day)
2010
26
20
3
3
499,463
30,403
529,866
2011
26
20
3
3
502,938
30,403
533,341
2012
26
20
3
3
501,271
17,403
518,674
2013
25
21
2
2
502,938
6,403
509,341
2014a
25
21
2
2
496,401
6,403
502,803
2014b
23
23
0
0
497,525
0
497,525
5 Alaska refineries are included in this analysis
18
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IV. NRLM Summary Data
C. Comparison of 2008 and 2009 NRLM Pre-Compliance Reports
Total reported production of 15 ppm and 500 ppm diesel fuel in the 2009 pre-
compliance reports decreased, compared to the 2008 pre-compliance reports. Table 14
shows the projected production of 15 ppm and 500 ppm diesel fuel from the 2008 and
2009 pre-compliance reports for 2010 (from June 1 to December 31). Total production
of diesel fuel from the 2009 reports was approximately 223,000 bbls/day less than total
production from the 2008 reports. Most of this decrease occurred in PADDs 1 and 2,
while reported production in PADDs 3, 4, and 5 showed little change. Projected total
diesel fuel demand in 2010 has also decreased so that production is expected to be
sufficient to meet demand. Projected total diesel fuel demand from AEO 2008 was 4.04
million bbls/day, while projected total diesel fuel demand from AEO 2009 was only 3.74
million bbls/day, a decrease of 300,000 bbls/day.
Table 14.
Projected Production of (Highway + NRLM) Diesel Fuel by PADD for 2010
PADD
2008 NRLM reports
Total 1 5 ppm, bbls/day
Total 500 ppm, bbls/day
Total 15 ppm and 500 ppm , bbls/day
2009 NRLM reports
Total 1 5 ppm, bbls/day
Total 500 ppm, bbls/day
Total 15 ppm and 500 ppm , bbls/day
Change in reported production, bbls/day
1
480,001
20,476
500,478
363,304
8,310
371,613
-128,864
2
1,028,534
13,425
1,041,959
902,942
47,425
950,367
-91,591
3
2,092,135
53,844
2,145,980
2,064,882
68,171
2,133,053
-12,927
4
182,284
7,500
189,784
180,346
8,500
188,846
-938
5
507,592
11,326
518,918
499,463
30,403
529,866
10,948
Total
U.S.
4,290,547
106,571
4,397,118
4,010,938
162,808
4,173,746
-223,372
Table 15 shows the projected production of 15 and 500 ppm diesel fuel from the
2008 and 2009 pre-compliance reports for 2014 (from June 1 to December 31). Total
production of diesel fuel from the 2009 reports was approximately 144,000 bbls/day less
than the total production from the 2008 reports. Most of this decrease occurred in PADD
1, with lesser decreases in PADDs 2, 4 and 5, and an increase PADD 3. Projected total
diesel fuel demand in 2015 has also decreased so that production is expected to be
sufficient to meet demand. Projected total diesel fuel demand from AEO 2008 was 4.32
million bbls/day, while projected total diesel fuel demand from AEO 2009 was only 4.16
million bbls/day, a decrease of 160,000 bbls/day.
19
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IV. NRLM Summary Data
Table 15.
Projected Production of (Highway + NRLM) Diesel Fuel by PADD for 2014b
PADD
2008 NRLM reports
Total 1 5 ppm, bbls/day
Total 500 ppm, bbls/day
Total 15 ppm and 500 ppm , bbls/day
2009 NRLM reports
Total 1 5 ppm, bbls/day
Total 500 ppm, bbls/day
Total 15 ppm and 500 ppm , bbls/day
Change in reported production, bbls/day
1
530,105
0
530,105
424,205
0
424,205
-105,900
2
1,050,024
0
1,050,024
1,023,862
0
1,023,862
-26,162
3
2,261,308
0
2,261,308
2,277,361
0
2,277,361
16,053
4
192,584
0
192,584
189,465
0
189,465
-3,119
5
522,926
0
522,926
497,525
0
497,525
-25,402
Total
U.S.
4,556,947
0
4,556,947
4,412,417
0
4,412,417
-144,529
20
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V. Appendix
Appendix - List of Acronyms
bbls/day
bpcd
EIA
EPA
FR
LM
NR
NRLM
PADD
ppm
ULSD
AEO
barrels per day
barrels per calendar day
Energy Information Administration
U.S. Environmental Protection Agency
Federal Register
Locomotive and Marine
Nonroad
Nonroad, Locomotive, and Marine
Petroleum Administration for Defense District
parts-per-million
Ultra Low Sulfur Diesel
Annual Energy Outlook
21
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