Future Automotive Fuels and Emissions

1
Future Automotive Fuels and Emissions

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

Chevron Products Company S. Kent Hoekman
2
Outline of Presentation

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

3
Issues and Concerns for Fuel Suppliers
Vehicle Emissions Standards
National Ambient Air Quality Standards (NAAQS)
Global Climate Change Concerns
Automotive Fuels Mogas Aviation Diesel
Alternative Fuel Mandates
Oxygenate Contamination of Drinking Water
Current Future CAFE Standards
Local/National/Worldwide Fuel Specifications
Toxic Air Contaminants (TACs)
4
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

5
Maximum Hourly Ozone Levels in California
(1973-1999)
0.60
0.55
0.50
0.45
0.40
0.35
Ozone (parts per million)
0.30
0.25
0.20
0.15
Federal Standard
0.10
0.05
California Standard
0.00
Calendar Year
Source CVS NEWS, July 2000 - Published by Sierra
Research, Inc.
6
Maximum Annual Geometric Mean PM10
South Coast Air Basin (1985-1998)
140
120
100
80
Geometric Mean PM10 (µg/m³)
60
40
California Standard
20
0
Calendar Year
Source CVS NEWS, July 2000 - Published by Sierra
Research, Inc.
7
Federal Exhaust Emissions StandardsPassenger
Cars
Approx. values only due to varying phase-in
schedules, changes in test procedures, waivers,
etc.
8
Federal Exhaust Emissions Standards Heavy-Duty
Diesel Engines
Approx. values only due to varying phase-in
schedules, changes in test procedures, waivers,
etc.
9
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

10
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 dont 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

11
Proposed Sulfur Levels for ULSD
Organization
Sulfur Cap
Reduction
from Current
Standard
API
50 ppm
90
EPA
15 ppm
97.5
EMA
5 ppm
99
Current Standard of 500 ppmS
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Chevrons 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
• EPAs 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

13
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

14
Impacts of Proposed Diesel Rules on Nationwide
NOx Emissions
1998 NOx Inventory
Projected NOx Emissions Reductions
Thousand tons/year
2528
11409
1820
Thousand tons/year
2676
2471
445
2809
5089
Total 24454
Years
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Impacts of Proposed Diesel Rules on Nationwide
PM10 Emissions
1998 PM10 Inventory
Projected PM10 Emissions Reductions
Thousand tons/year
111
106
83
79
8097
152
105
Thousand tons/year
301
34
35
160
Total 8815
Years
16
Nationwide NOx Emissions Impacts of Diesel Fuel
Options
On-Road HDDE Non-Road HDDE
Thousand tons/year
Years
17
Nationwide PM10 Emissions Impacts of Diesel Fuel
Options
On-Road HDDE Non-Road HDDE
Thousand tons/year
Years
18
Potential Impacts of EPAs Proposed ULSD
Regulations

• Economic modeling study conducted for API by
  Charles River Assoc. (CRA) and Baker and OBrien
  (BOB)
• analyze production volumes and costs of ULSD at
  each U.S. refinery
• supply curve constructed from likely responses of
  each refinery to EPAs 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

19
Key Findings from CRA/BOB Study

• EPAs 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

20
CRA/BOB Study Supply Not Sufficient to Meet
Demand
21
CRA/BOB StudyShortfalls will exist in some
regions. Not enough diesel to supply current
market.
-37
-18
Adequate
22
CRA/BOB StudyPrice Increases and Market
Instability
Price Increase (Cents per Gallon)

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

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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

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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 gt3000 ppm
• sources include basestocks, detergents, and
  anti-wear agents
• major re-formulation effort required to lower
  sulfur levels

25
Chevrons 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.

26
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 todays
  gasoline!
• ULSD will enable very low emissions from diesel
  engines/vehicles -- both LD and HD
• Hybrid electrics are already here -- using
  todays gasoline
• Fuel cells on the horizon -- many advantages for
  using liquid hydrocarbon fuels

27
Chevrons Long-Term Commitment

• Supply high quality products and services to help
  meet our nations energy needs
• Provide expected value to our stakeholders
• Customers
• Shareholders
• Employees
• Continually improve the environmental, health,
  and safety performance of our business

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(No Transcript)
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1998 US NO.2 Distillate Fuel Sales
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Why Is Sulfur In Diesel Fuel?
Mercaptans R-S-H

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

Disulfides R-S-S-R
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How 350 ppmS Average Diesel Is Produced
HIGHWAY DIESEL FUEL
HYDROCRACKED STOCK, 4 85 ppm
UNTREATED STRAIGHT RUN, 12.4 2,000 ppm
STRAIGHT RUN, 51.8 5,000 ppm
DISTILLATE DESULFURIZATION UNIT 95 DESULFURIZATIO
N
CRACKED STOCK, 22.5 15,000 ppm
300 ppm
COKER DISTILLATE, 9.2 20,000 ppm
Ex-California
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How 30 ppmS Average Diesel Will Be Produced
HIGHWAY DIESEL FUEL
HYDROCRACKED STOCK, 4 85 ppm
STRAIGHT RUN, 12.4 2,000 ppm
NEW CAPACITY
REVAMPED DISTILLATE DESULFURIZATION UNIT 99 DESUL
FURIZATION
STRAIGHT RUN, 51.8 5,000 ppm
CRACKED STOCK, 22.5 15,000 ppm
30 ppm
COKER DISTILLATE, 9.2 20,000 ppm
Ex-California
33
How 7 ppmS Average Diesel Will Be Produced
LOWER COST/LOWER VOLUME EXAMPLE
HIGHWAY DIESEL FUEL
HYDROCRACKED STOCK, 4 85 ppm
REVAMPED DISTILLATE DESULFURIZATION UNIT 99.9 DES
ULFURIZATION
STRAIGHT RUN, 12.4 2,000 ppm
STRAIGHT RUN, 51.8 5,000 ppm
? ppm
OTHER USES OR EXPORT
CRACKED STOCK, 22.5 15,000 ppm
COKER DISTILLATE, 9.2 20,000 ppm
Ex-California
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How 7ppmS Average Diesel Will Be Produced
HIGH COST/HIGH VOLUME EXAMPLE
HIGHWAY DIESEL FUEL
NEW HIGH PRESSURE DESULFURIZATION/ CRACKING UNIT 9
9.95 DESULFURIZATION
HYDROCRACKED STOCK, 4 85 ppm
STRAIGHT RUN, 12.4 2,000 ppm
STRAIGHT RUN, 51.8 5,000 ppm
CRACKED STOCK, 22.5 15,000 ppm
? ppm
COKER DISTILLATE, 9.2 20,000 ppm
Ex-California