US ethanol drive could undermine refining - NPRA

08 May 2007 21:19  [Source: ICIS news]

WASHINGTON (ICIS news)--US refiners warned on Tuesday that efforts by the White House and Congress to increase US production and consumption of biobased ethanol are undermining and discouraging planned gasoline refining expansions.

 

Charles Drevna, executive vice president at the National Petrochemical & Refiners Association (NPRA), told a congressional panel that various ethanol stimulus plans being advanced by President George Bush and various members of Congress might not appreciably reduce US dependence on foreign oil but could halt US refining expansions.

 

Drevna noted in particular Bush’s announced goal of having the US produce 35bn gal/year of ethanol and other renewable fuels by 2017. Current US production of biobased ethanol is nearly 6bn gal/year from grains feedstock.

 

While proponents of biobased ethanol and US energy independence claim that 35bn gal/year of renewable fuels would replace 2.25m bbl/year of imported oil, Drevna challenged that assumption. “Since ethanol contains only two-thirds the energy content of petroleum, the oil import savings would be as little as 1.5m bbl/day,” he said.

 

“This would not appreciably alter the nation’s dependence on foreign oil, which DOE [the Department of Energy] forecasts to be nearly 13m bbl/day 

in 2017,” Drevna said.

 

In addition, he said, federal mandates for vastly increased output of biobased fuels could undermine conventional US gasoline refining.

 

“The domestic refining industry is likely to look upon rapidly rising ethanol and other biofuels requirements in the coming years as adding significant more risk to investments in [refining] capacity expansions,” Drevna said.

 

If Bush’s 35bn gal/year ethanol goal is reached in 2017, Drevna said, it would require a 20% reduction in forecast gasoline use by that year to some 129bn gal. As current US gasoline production is already at 136bn gal/year, he said, “domestic and undoubtedly some foreign refiners currently supplying the US market will be pressured to postpone or cancel new investments in petroleum refining capability”.

 

Drevna testified before a House Energy and Commerce Committee subcommittee that is examining new alternative fuel legislative proposals.

By: Joe Kamalick
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