AFPM '14: Lower sulphur rules to cost refiners $10bn

30 March 2014 02:16  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--US refiners face a labour shortage in addition to a $10bn bill to bring their plants in compliance with the new Tier 3 rules, which require sulphur levels in gasoline to fall by more than 60% by 2017, the head of the American Fuel & Petrochemical Manufacturers (AFPM) said on Saturday.

The Tier 3 standards, announced by the US Environmental Protection Agency (EPA), aim to reduce sulphur levels in gasoline to 10ppm from 30ppm. The move will result in a reducing 260,000 tons (236,000 tonnes) of nitrogen oxide (NOx) emissions by 2018, the EPA said.

That reduction will unlikely provide environmental benefits, said Charles Drevna, president of the AFPM. He made his comments on the sidelines of the International Petrochemical Conference (IPC).

Moreover, that reduction in sulphur levels comes at a significant cost, at $10bn, Drevna said. Refiners will pay an additional $2bn-2.5bn/year in operating costs.

The cost figure came from a study by Baker & O'Brien, which the group prepared for the American Petroleum Institute (API).

"Those little sulphur molecules that remain in the crude just don't want to come out," Drevna said. "It takes intensive, intensive treatment, very robust."

The industry spent about the same amount to comply with the previous Tier 2 rules, which brought sulphur levels down to 30ppm from 300ppm.

In addition to extra costs, refiners will also face a potential labour shortage, Drevna said. There are a limited number of engineers and construction labourers who are available to design install the new equipment refiners will need to remove that extra sulphur.

As such, refiners are asking the EPA for more time to comply with the Tier 3 regulations, Drevna said.

Hosted by the AFPM, the IPC takes place 30 March through 1 April in San Antonio, Texas.

Additional reporting by Jessie Waldheim

By: Al Greenwood
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