# Presentation: 690594

## Cheryl J. Trench

- P.O. Box 230592    New York, NY  10023
- Phone:  (212) 787-6923    Fax:    (212) 721-9028
- ctrench@concentric.net

**November 20, 2002****Houston, TX**

**© **Cheryl** **J. Trench, 2002

***A Presentation by***
**Cheryl J. Trench**
**President**
**to the**
**NPRA/EPA Clean Highway Diesel****Implementation Workshop**
**Co-sponsored by SIGMA, AOPL,NACS, IFTOA and PMAA **

***Evaluating Supply Concerns: Regions, Batching, 15 ppm Kerosene***

## Regional Characteristics

***Regional Characteristics***

## E.g., Minimizing Products to Optimize Infrastructure (Current)

- Source: EIA, *Sales of Fuel Oil and Kerosene *and *Petroleum Supply Annual.  *Data are for 2000,
- latest sectoral/regional consumption available.  PADD 5 use adjusted for California's low sulfur requirement.

***PADD 5***
***West***
***Coast***

***PADD 4***
***Mountain***

***PADD 3***
***Gulf***
***Coast***

***PADD 2***
***Midwest***

***PADD 1***
***East ***
***Coast***

**% of Distillate**

## Infrastructure sized to fit market's characteristics
Terrain; Distances; Volumes; Sources; Demand mix
Transport one diesel for on-road and off-road
No tanks or piping for add'l grade during phase-in
Systems dictate break-out tanks

**Terrain; Distances; Volumes; Sources; Demand mix**
**Transport one diesel for on-road and off-road**
**No tanks or piping for add'l grade during phase-in**
**Systems dictate break-out tanks**

***Special Concerns ******in the Mountain and Plains States***

## California's Special Challenges

**Currently, all LSD**
**California reg applies 500 ppm to all uses, not just highway**
**Jet interface goes to LSD**
**Transmix tanks must have space: used for transmix and to meet DOT requirement for pressure relief capacity**

**Then, all ULSD**
**ULSD cannot accept jet interface**
**Must wrap ULSD in gasoline, transmix will double**
**No home for any accidental downgrade**

**Transmix issues**
**More customer/shipper truck trips to haul transmix **
**Increased truck traffic coincides with truck increase for ethanol shipments**
**If customers/shippers miss schedule, not enough space to meet DOT pressure relief requirement.  **

***LOCKOUT***

***LOCKOUT***

## Kero for Winterizing Diesel:An Issue in the North

***Kero for Winterizing Diesel:******An Issue in the North***

**Kerosene for "winterizing" diesel**
**Keep product flowing in cold weather**
**Common in cold climates**
**Must be 15 ppm in 15 ppm diesel**
**Currently, can use jet fuel or K1 (heating kero)**
**Share (optimize) tanks/piping **
**New requirement will require segregation (unless jet also at 15 ppm)**
**Reduce flexibility**
**Increase cost of handling small volumes**

## Sequencing and Interfaces: Nationwide Impact

**If/while LSD or HSD market available, use to buffer jet and ULSD **
**Impacts sequencing/cycles, but little impact on infrastructure**
**LSD (smaller market) will have larger % gain from downgrade**
**If sequence jet with ULSD, must remove interface to transmix**
**2x interfaces creating transmix (old + new), so double volume**
**Tanks required at new locations?**
**If no LSD or HSD market available, buffer jet and ULSD w/gasoline **
**Increases gasoline cycles, but decreases vol. to market**
**Increases transmix, and its infrastructure**
**If jet fuel spec reduced to 15 ppm**
**What of lubricity and other quality issues?**

## Downgrade Volume Larger, Even If Interface The Same

**% Gain/Loss**

- Excludes transmix and terminal tanks/piping.

## A Home for Downgrade:An Uncertainty Nationwide

***A Home for Downgrade:******An Uncertainty Nationwide***

**May not ship it, but may create it**
**Enough to merit a tank?**
**Will customers/shippers want LSD?  HSD?**
**More downgrade further downstream (%)**
**Need a home for downgrade at line's end every time**
**"Last" (most downstream) customer for LSD/HSD must take all**
**Stop line for slower delivery speed (cf. Atlanta's gasoline)**

## Uncertainties Now

**What will refiners produce?**
**What will marketers want?**
**Will tankage be adequate?**
**Will transmix infrastructure/processing be avail.?**
**What will the S content of the rest of dist. be?**
**What will the S content of jet be?**
**Will a new testing mechanism limit losses from protective cuts?**

## Uncertainties Later

**Every system and region has special issues **
**Universal: operations protocols more stringent; impact of error greater**
**Infrastructure – refining, transportation, distribution – stretched further**
**Flexibility and hence capacity decreased**
**Duration and severity of a price spike following a market imbalance increased**