PetroChina's Dalian refinery boosts Phase 5 gasoline output

▪ PetroChina's Dalian refinery boosts Phase 5 gasoline output

The Dalian refinery in China's Liaoning province, owned by Dalian Petrochemical, a subsidiary of PetroChina, has announced a new 1 million metric ton (mt) a year gasoline etherification unit which went online on May 28. The overall capacity is 20.5 million mt/year, or 411,685 barrels per day (bpd). The new unit allows the refinery to boost production of Phase 5 standard gasoline.

The unit, which produces high-quality ethers to be blended with gasoline, came online a month ahead of schedule.

The Dalian refinery can now produce 4 million mt/year of Phase 5 gasoline, making it China's largest producer of the product, PetroChina said on its website. The refinery will be able to supply Phase 5 gasoline to Beijing, Shanghai and other cities, it added.

There has been significant government pressure on Chinese refiners to upgrade their fuel specifications to curb chronic pollution. The State Council, or Cabinet, announced in February 2013 that it would introduce Phase 5 emission standards for gasoline and diesel fuel across the country by 2017 while the Phase 4 standard would be implemented by next year. Some cities, including Beijing, have already started to adopt cleaner fuel specifications ahead of the national deadline.

China's emissions standards are broadly equivalent to Euro emissions standards. China's Phase 5 emissions standard caps the sulfur content at 10 ppm, while the Phase 4 standard caps the sulfur content at 50 ppm. (May 31, 2013)

▪ Are ethanol vehicle fuel mandates still working?

In April 2013, Chicago legislators called for major changes in the Renewable Fuel Standard (RFS), the U.S. federal program which has set the mandated levels of ethanol in U.S. fuels. Currently most U.S. automobile fuels contain at least 10% ethanol and the bill would seek to repeal that requirement, as well as eliminate the call for 15 billion gallons of corn ethanol to be blended into fuel by 2012.

The EPA has also called for a number of changes to the RFS aimed largely at improving the biofuel industry's ability to meet market demands. Included amongst these changes are proposals for renewable diesel, renewable naphtha, and renewable electricity produced from landfill biogas to be allowed to generate cellulosic or advanced biofuel Renewable Identification Numbers (RINs), which are used to track the production and use of renewable energy. Processed materials derived from plant matter still contain significant levels of cellulose, a sugar that can be broken down by microbes into methane. This sugar however, can also be processed into ethanol and some companies can yield up to 70 gallons of ethanol per ton of waste. The agency has also announced plans to address concerns regarding the rounding of test results for ethanol content violations.

Ethanol has generally had two properties to support its use. Traditionally, the biofuel was viewed as a way to reduce oil imports, and has more recently been considered as a way to ameliorate greenhouse gas emissions. Consequently, gasoline blended with ethanol has been subsidized since the late 1970s. A study from the European Environment Agency (EEA) has challenged this second notion of carbon neutrality. The study found that the source of the biomass has a profound impact on its carbon footprint. According to the study, "If bioenergy production replaces forests, reduces forest stocks or reduces forest growth, which would otherwise sequester more carbon, it can increase the atmospheric carbon concentration." Furthermore, since biofuels are less efficient than diesel fuel and gasoline, they may actually release more C02 per mile.

Ethanol has also come under fire by various environment groups for its sustainability with regards to water consumption and its impact on the displacement land allocated for food production. (April 13, 2013)

▪ High quality petrol, diesel products to be introduced in Sri Lanka

High quality petrol and diesel products will be introduced to the Sri Lankan market to provide a more environmentally friendly service, said Petroleum Industries Minister Anura Priyadarshana Yapa.

Participating in the opening ceremony of a new fuel station in Panduwasnuwara, Yapa said he has already provided directives to upgrade petrol products. According to these directives, octane 92 and 98 petrol will replace the existing octane 90 and octane 95 petrol. Super diesel and European standard diesel products will also be introduced to the market.

He also said the government will make it compulsory to clean underground fuel storage tanks at fuel stations once every two years. If fuel station owners are reluctant to do that, a new process of cleaning these tanks through Ceylon Petroleum Corporation will be introduced.

The minister has already provided direction to the Ceylon Petroleum Storage Terminals to monitor fuel transportation bowsers using a GPS.

When it comes to permitting, "A proper methodology has been adapted for the establishment of new fuel stations with the support of the Moratuwa University. So hereafter, fuel station permits will be given with more transparency," he said.

Yapa also said that several reforms in the petroleum industry are needed to enhance the efficiency of Ceylon Petroleum Corporation and make it a government institution with competitive business practices. President Mahinda Rajapaksa offered his fullest support for these reforms in the petroleum industry. (May 17, 2013)

▪ Volvo to produce DME trucks in 2015

Volvo Trucks is the first manufacturer to announce plans for the commercial production of dimethyl ether (DME) powered vehicles in 2015. According to Göran Nyberg, president of Volvo Trucks North American Sales and Marketing, "the addition of DME-powered vehicles to our previously announced CNG and LNG offering, Volvo's Blue Power line-up will offer the industry's most comprehensive approach to the developing North American alternative fuel market."

Although DME is generally used as a substitute for propane in household LPG, minimal modifications are needed to make it a viable fuel for diesel engines. DME can be produced from a number of sources including biomass and natural gas. Furthermore, the fuel is comparable to diesel with regards to performance and efficiency, produces no soot which allows for decreased weight with the removal of a diesel particulate filter (DPF) and lastly, DME tanks also weigh less than their LNG counterparts. DME also wins out over LNG because it does not require cryogenic temperatures for storage, can be safely stored on-site for a long time and performs very well in cold temperatures. Although the new DME engine will be identical to the D13 13-liter diesel engine, a new injection system will be required due to the differences in energy density between DME and diesel fuel.

Volvo also announced plans for a partnership with Safeway Inc., a food and drug retailer, and Oberon Fuels in order to test out DME-powered heavy vehicles. Oberon has been developing new ways to produce DME. Oberon President Rebecca Boudreaux explained, "You can make DME from anything that contains methane." Volvo has expressed its support for DME, with Nyberg emphasizing it as "one of the world's most promising and sustainable fuels for the heavy duty industry." (June 7, 2013)

▪ China's new national fuel standard to officially launch in July`

Starting from next month the minimum quality of diesel fuel sold across China will be lifted to "National Standard III" (国三标准), the equivalent of Euro III standards, according to a report in Beijing News.

The paper reported that most refineries owned by China National Petroleum Corporation (CNPC) and Sinopec have the capacity to produce diesel fuel that are compliant with the new standard and that the companies are prepared to meet the July 1 switch over.

Privately owned refineries, however, might find it difficult more difficult to meet these more stringent and costly requirements, the report said. Diesel fuel sold by the two state-owned oil giants to most provinces in the country already meet the new national standard, but some regions in the northwest and southwest are still supplied with lower quality diesel fuel. Much of this diesel fuel is used in industry, infrastructure, mining and thermal power generation. Diesel fuel sold in Beijing and Shanghai already meets National Standard IV and National Standard V.

One of the main differences between National Standard III diesel and the current standard is the level of sulfur in the diesel fuel. The latter has a sulfur content of 2,000 parts per million (ppm), while the former's sulfur level cannot exceed 350 ppm. Reducing the sulfur content helps lower emissions and improve air quality. Beijing News also reported that the price of diesel did not go up in places like Fujian province, which has already adopted the new standard. (June 6, 2013)

▪ Hong Kong TAC discusses phasing out heavily polluting diesel commercial vehicles

The Hong Kong Transport Advisory Committee (TAC) was briefed on March 26, 2013, on the Administration's more comprehensive and vigorous approach in optimizing bus routes to better meet passenger demand, enhance bus operation efficiency, reduce pressure on fare increase, alleviate traffic congestion, and reduce roadside emissions. This is a policy initiative announced in the policy address from January 2013.

"In view of the need for and benefits of rationalizing bus services from both transport and environmental perspectives, the TAC supports the government and franchised bus companies to pursue route rationalization measures with greater vigor and determination," TAC Chairman Larry Kwok said.

TAC members were also briefed on the government's proposal to phase out heavily polluting diesel commercial vehicles by an incentive/regulatory approach. The service life of newly registered diesel commercial vehicles would be set at 15 years as announced in the 2013 policy address, in order to improve roadside air quality and protect public health.

Members noted that there are about 86,000 pre-Euro IV diesel commercial vehicles in Hong Kong accounting for 66% of the diesel commercial vehicle fleet. These vehicles together emit about 90% of suspended particulates and 63% of nitrogen oxides from all diesel commercial vehicles. (March 26, 2013)

▪ Russian MTBE exports down on higher domestic demand

MTBE is a chemical compound that is manufactured by the chemical reaction of methanol and isobutylene. MTBE is produced in very large quantities (over 200,000 barrels per day in the U.S. in 1999) and is almost exclusively used as a fuel additive in motor gasoline. It is one of a group of chemicals commonly known as "oxygenates" because they raise the oxygen content of gasoline. At room temperature, MTBE is a volatile, flammable and colorless liquid that dissolves rather easily in water.

Exports more than halved from 393,000 metric tons (mt) in 2007 to 180,000 mt in 2012. Over the same period, production rose from 693,000 mt to 868,000 mt.

Consumption will rise, "as the car fleet and the share of high octane gasoline increases," said Stanislav Gatunok, the head of Creon Energy's hydrocarbons department.

Russia's car fleet totaled 37.4 million vehicles in 2012 and is expected to increase to 55 million vehicles in 2021, Gatunok said.

Gasoline consumption is set to increase to 48.2 million mt by the end of the decade, from 38.2 million mt currently, with high-octane gasoline already accounting for more than 90% of that total, he said.

Exports follow the seasonal domestic demand patterns in Russia, whereby consumption rises "during the summer," he added.

As a result, exports dwindle in the summer months, when imports become necessary to cover shortfalls.

Meanwhile, the Russian oxygenates market, of which MTBE has a majority share, is expected to see shortages come 2014-2015, when a host of new refinery units will come online, and around 2021, said Gatunok. (April 2, 2013)

▪ Indonesia cuts fuel subsidies

After many years of heavy subsidies, Indonesia has decided to raise the prices on gasoline. The country's popular low-octane "Premium" fuel saw a 44% price increase to IDR 6,500 per liter (US$0.65), and "Solar" diesel fuel rose 22% to IDR 5,500 (US$0.55). Fuel subsidies were poised to hit US$30 billion this year had President Susilo Bambang Yudhoyono not decided to address the issue.

The government proposed a 33% hike in 2012 which was met with severe political opposition as well as violent protests. Despite the opposition, the president believes that Indonesia's "fiscal stance and budget will become healthier, and [the] economy will become more resilient, [they] will have more money to improve the people's welfare, and the subsidy policy will be more fair and better targeted."

Although the move to cut subsidies is applauded internationally, it will most likely contribute to inflation within Indonesia. The price hike has the potential to raise the current rate of inflation from 5% to between 7 and 8%. Despite the initial difficulty in accepting higher fuel prices, the move is generally considered to be a good long-term move on the part of the government. (June 27, 2013)

▪ Air quality a developing concern for Europe

A meta-analysis led by 60 international scientists, with funds from the World Health Organization (WHO) has revealed the previously underestimated impact of air pollution. Among the adverse effects linked are diabetes, asthma, impaired neurodevelopment and cognitive function in children, as well as premature death. Perhaps most worrying among these findings according to the report is the fact that these negative reactions can occur "at levels below existing EU limit values. The consequences for entire populations, including people with existing respiratory and heart problems, would be significant."

Harmful matter in the air include: NO2, PM10 and PM2.5, ozone and sulfur dioxide. Wood fires and railed transports such as the tube in London were found to be significant contributors to particulate matter in the air. The UK in particular has come under fire from the group ClientEarth. Alan Andrews, a lawyer from ClientEarth, said "The Supreme Court has already ruled that the government is failing in its legal duty to meet EU air quality standards, and now the WHO is telling us that even those standards need to be much stricter to protect our health. What more will it take?" Andrews added "The government needs to act at home to tackle carcinogenic diesel fumes, by far the biggest source of pollution, and work with the EU to make sure it delivers laws which adequately protect our health."

Concern over air quality isn't limited to Europe however, as the Lancet medical journal found that exposure to air pollution has been associated with more than 430,000 premature deaths worldwide. (July 9, 2013)

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