# Presentation: 902165

## Future Automotive Fuels and Emissions

- NATT Conference
- Seattle, Washington
- October 24, 2000

- Chevron Products Company
- S. Kent Hoekman

## Outline of Presentation

**Introduction**
**Background/History of Air Quality and Emissions**
**Guidelines for Future Controls**
**Diesel Issues**
**Other Concerns**
**Longer-Term Outlook for Fuels**

## Issues  and Concerns for Fuel Suppliers

_**Automotive**_** **_**Fuels**_
**Mogas**
**Aviation**
**Diesel**

- Global Climate Change Concerns

- Toxic Air Contaminants (TAC’s)

- Local/National/Worldwide Fuel Specifications

- National Ambient Air Quality Standards (NAAQS)

- Alternative Fuel Mandates

- Oxygenate Contamination of Drinking Water

- Current & Future CAFE Standards

- Vehicle Emissions Standards

## Air Quality and Emissions

**Characteristics of Air Quality Problems:**
- Regional
- Seasonal
- Episodic
**In Most Locations, Air Quality is Improving**
- due to reductions of both mobile-source and stationary-source emissions
- fuel changes have helped, but improved engine/vehicle technology has been more important

## Maximum Hourly Ozone Levels in California

**Calendar Year**

- 0.00

- 0.05

- 0.10

- 0.15

- 0.20

- 0.25

- 0.30

- 0.35

- 0.40

- 0.45

- 0.50

- 0.55

- 0.60

- Ozone (parts per million)

**Maximum Hourly Ozone Levels in California**

- (1973-1999)

- Federal Standard

- California Standard

## Maximum Annual Geometric Mean PM10

- Calendar Year

- 0

- 20

- 40

- 60

- 80

- 100

- 120

- 140

- Geometric Mean PM10 (μg/m3)

**Maximum Annual Geometric Mean PM10**

**South Coast Air Basin (1985-1998)**

- California Standard

## Federal Exhaust Emissions Standards:Passenger Cars*

- * Approx. values only due to varying phase-in schedules, changes in test procedures, waivers, etc.

## Federal Exhaust Emissions Standards: Heavy-Duty Diesel Engines*

- * Approx. values only due to varying phase-in schedules, changes in test procedures, waivers, etc.

## Guidelines for Future Controls

**In some locations, continued emissions reductions (from all sources) are needed to achieve air quality standards**
**We support emissions standards and fuel requirements that satisfy the following conditions:**
- Necessary - address a real environmental problem
- Scientifically-based
- Feasible to comply
- Cost-effective
**Fuels, engines, catalysts, and control systems must be viewed as a single, complete package **
- entire system should be optimized for highest performance at a cost the consumer will accept
- unproductive to make arbitrary fuel changes without knowing what systems they will support

## Diesel Issues

**On-road heavy-duty engine emissions standards proposed by EPA will require use of advanced-technology emissions control systems for both NOx and PM**
**Sulfur in diesel fuel (and from other sources) poisons these emissions control systems**
**Hence the need for Ultra-Low Sulfur Diesel (ULSD) fuel **
**The “Big Question” -- How low is low enough?  **
- We don’t really know.  Currently, no technology has been demonstrated to achieve the proposed emissions standards
- From the standpoint of emissions control hardware, the lower the better, but:
- fuel production costs rise dramatically
- increased distribution problems
- potential supply shortfall

## Proposed Sulfur Levels for ULSD

- * Current Standard of 500 ppmS

*Organization*

*Sulfur Cap*

*Reduction*

*from Current*

*Standard**

*API*

*50 ppm*

*90%*

*EPA*

*15 ppm*

*97.5%*

*EMA*

*5 ppm*

*99%*

## Chevron’s Position On Future Diesel Fuels

**Accept intermediate sulfur level for ULSD**
- 15 ppmS average, with 25 ppmS cap_ _
- this represents 95% reduction from current standard
**EPA’s proposed timing of mid-2006 for ULSD creates untenable situation for small refineries in PADD IV**
- extending timetable for gasoline modifications would address this problem
**Non-Road diesel sulfur should be reduced to 500 ppmS when on-road ULSD is introduced **
- 90% reduction from current cap of 5000 ppmS
- this would provide substantial emissions benefits

## Why We Favor 15 ppmS Average Rather than 15 ppmS Cap

**Emissions benefits are nearly identical, but 15 ppmS average allows slight flexibility for Refiners and Blenders**
- potential for utilization of some cracked stock
- more reliable operation of diesel hydrotreater
- greater tolerance of refinery upsets
- reduced fuel integrity problems throughout distribution system
*Therefore: More Ratable, Reliable Delivery of Highway Diesel to the Marketplace at Somewhat Higher Production Volumes*

## Impacts of Proposed Diesel Rules on Nationwide NOx Emissions

**1998 NO****x**** Inventory**

**Projected NO****x**** Emissions Reductions**

**Thousand tons/year**

**Total = 24454**

**2676**

**445**

**1820**

**2528**

**11409**

**5089**

**2471**

**2809**

**Thousand tons/year**

**Years**

**Impacts of Proposed Diesel Rules on Nationwide NOx Emissions**

## Impacts of Proposed Diesel Rules on Nationwide PM10 Emissions

**1998 PM****10**** Inventory**

**Projected PM****10**** Emissions Reductions**

**Thousand tons/year**

**Total = 8815**

**152**

**34**

**35**

**79**

**111**

**106**

**83**

**105**

**301**

**160**

**8097**

**Thousand tons/year**

**Impacts of Proposed Diesel Rules on Nationwide PM****10**** ****Emissions**

**Years**

## Nationwide NOx Emissions Impacts of Diesel Fuel Options

**On-Road HDDE + Non-Road HDDE**

- Thousand tons/year

**Nationwide NOx Emissions Impacts of Diesel Fuel Options**

- Years

## Nationwide PM10 Emissions Impacts of Diesel Fuel Options

**On-Road HDDE + Non-Road HDDE**

- Thousand tons/year

**Nationwide PM****10**** Emissions Impacts of Diesel Fuel Options**

- Years

## Potential Impacts of EPA’s Proposed ULSD Regulations

**Economic modeling study conducted for API by Charles River Assoc. (CRA) and Baker and O’Brien (BOB)**
- analyze production volumes and costs of ULSD at each U.S. refinery
- supply curve constructed from likely responses of each refinery to EPA’s proposed rules
- set ULSD sulfur level at 15 ppm cap, with 10 ppm avg.
- also assume 30 ppmS for gasoline, and MTBE ban
- assess ways to bridge anticipated gap between ULSD supply and demand in 2007

## Key Findings from CRA/BOB Study

**EPA’s proposed regulations will cause significant loss in capacity to produce on-road diesel by 2007**
**Costs of producing diesel fuel, and the market prices for this fuel, will be much higher **
**Tight regional markets and price instability are likely**
**Reductions in capacity will occur in all types of refineries**

## CRA/BOB Study: Supply Not Sufficient to Meet Demand

## CRA/BOB Study:Shortfalls will exist in some regions. Not enough diesel to supply current market.

**CRA/BOB Study:****Shortfalls will exist in some regions. Not enough diesel to supply current market.**

- -18%

- -37%

- Adequate

## CRA/BOB Study:Price Increases and Market Instability

**US****	****Total****	**** 15  to 52**
**PADDs 1-3****	**** 15  to  80****	**
**PADD 4****	**** 13  to 228****	**
**PADD 5****	****      7.8****	****	**

**Price Increase           (Cents per Gallon)**

## Other ULSD Issues

**Gradual phase-in of ULSD is not advisable:**
- logistical nightmare
- stranded investment
- invites mis-fueling
**Averaging, Banking, and Trading (ABT) program would not be very useful**
**Potential areas of field performance problems:**
- lubricity
- seal leaks
- fuel economy

## Other Concerns

**Changes in non-road diesel are expected, but have not yet been defined.**
**Gasoline changes also occurring:**
- sulfur reduction for Tier 2 gasoline (average of 30 ppmS)
- eventual elimination of MTBE
**Sulfur content of lubricants:**
- typical levels today are >3000 ppm
- sources include basestocks, detergents, and anti-wear agents
- major re-formulation effort required to lower sulfur levels

## Chevron’s Conclusions Regarding Impending Diesel Fuel Regulations

**Going from a 15 ppmS cap to a 15 ppmS average would negligibly affect emissions (and air quality), but would increase the reliability of fuel supply.**
**Overlap of gasoline and diesel sulfur rules in the Rockies is untenable.  Extending the gasoline sulfur rules to all refiners in this area seems warranted.**
**Reducing nonroad diesel fuel sulfur to 500 ppm would provide substantial emissions reductions, while still permitting efficient supply and distribution of highway diesel fuel.**

## Long-Range Outlook for Vehicle/Fuel Systems

**Alternative fuels are not needed to achieve low emissions**
- LEVs and ULEVs are common today, SULEVs and ZLEVs have been demonstrated -- all using today’s gasoline!
- ULSD will enable very low emissions from diesel engines/vehicles -- both LD and HD
**Hybrid electrics are already here -- using today’s gasoline**
**Fuel cells on the horizon -- many advantages for using liquid hydrocarbon fuels**

## Chevron’s Long-Term Commitment

**Supply high quality products and services to help meet our nation’s energy needs**
** **
**Provide expected value to our stakeholders:**
- Customers
- Shareholders
- Employees
**Continually improve the environmental, health, and safety performance of our business**

## Slide 28

## 1998 US NO.2 Distillate Fuel Sales

## Why Is Sulfur In Diesel Fuel?

**Sulfur Is Naturally Present In Crude Oil**
**Sulfur Exists In Many Different Hydrocarbon Species**
**Catalytic Cracking And Coking Form Ringed HC-Sulfur Compounds**

***Mercaptans          R-S-H***

*Disulfides          R-S-S-R*

## How 350 ppmS Average Diesel Is Produced

**DISTILLATE**
**DESULFURIZATION**
**UNIT**
**95%**
**DESULFURIZATION**

**HIGHWAY**
**DIESEL**
**FUEL**

**UNTREATED STRAIGHT RUN, 12.4%**
**2,000 ppm**

-  **HYDROCRACKED STOCK, 4%**
**85 ppm**

-  **STRAIGHT RUN, 51.8%**
**5,000 ppm**

-  **CRACKED STOCK, 22.5%**
**15,000 ppm**

-  **COKER DISTILLATE, 9.2%**
**20,000 ppm**** **

- Ex-California

**300 ppm**

## How 30 ppmS Average Diesel Will Be Produced

**REVAMPED**
**DISTILLATE**
**DESULFURIZATION**
**UNIT**
**99%**
**DESULFURIZATION**

**HIGHWAY**
**DIESEL**
**FUEL**

-  **HYDROCRACKED STOCK, 4%**
**85 ppm**

-  **STRAIGHT RUN, 51.8%**
**5,000 ppm**

-  **CRACKED STOCK, 22.5%**
**15,000 ppm**

-  **COKER DISTILLATE, 9.2%**
**20,000 ppm**** **

- Ex-California

-  **STRAIGHT RUN, 12.4%**
**2,000 ppm**

**NEW**
**CAPACITY**

**30 ppm**

## How 7 ppmS Average Diesel Will Be Produced

**REVAMPED**
**DISTILLATE**
**DESULFURIZATION**
**UNIT**
**99.9%**
**DESULFURIZATION**

**HIGHWAY**
**DIESEL**
**FUEL**

-  **HYDROCRACKED STOCK, 4%**
**85 ppm**

-  **STRAIGHT RUN, 51.8%**
**5,000 ppm**

-  **CRACKED STOCK, 22.5%**
**15,000 ppm**

-  **COKER DISTILLATE, 9.2%**
**20,000 ppm**** **

- Ex-California

-  **STRAIGHT RUN, 12.4%**
**2,000 ppm**

**OTHER**
**USES**
**OR**
**EXPORT**

**? ppm**

**LOWER COST/LOWER VOLUME EXAMPLE**

## How 7ppmS Average Diesel Will Be Produced

**HIGHWAY**
**DIESEL**
**FUEL**

-  **HYDROCRACKED STOCK, 4%**
**85 ppm**

-  **STRAIGHT RUN, 51.8%**
**5,000 ppm**

-  **CRACKED STOCK, 22.5%**
**15,000 ppm**

-  **COKER DISTILLATE, 9.2%**
**20,000 ppm**** **

- Ex-California

-  **STRAIGHT RUN, 12.4%**
**2,000 ppm**

**? ppm**

**NEW**
**HIGH**
**PRESSURE**
**DESULFURIZATION/**
**CRACKING**
**UNIT**
**99.95%**
**DESULFURIZATION**

**HIGH COST/HIGH VOLUME EXAMPLE**