Low sulfur diesel change starts today for suppliers
WASHINGTON -- The long and somewhat uncertain transition to ultra low sulfur diesel officially begins for petroleum companies across North America. Starting today, June 1, all diesel fuel refiners in Canada and 80 percent in the U.S. must ensure that the volumes of on-highway diesel they produce or import is 15 ppm (parts per million) ULSD -- down from the current 500-ppm sulphur content (a 95 percent reduction). "We are very pleased to now be producing low-sulfur diesel across the country," Imperial Oil Canada refining and supply vice-president Gilles Courtemanche said to mark the event. "Sulfur reduction is the latest step in the continuous improvement of fuel quality in Canada and the introduction of low-sulfur diesel will mean fewer emissions from the tailpipe and cleaner air for all of us." The company's Dartmouth, Sarnia, Nanticoke and Strathcona refineries have begun producing ULSD. U.S. service stations will have to start labeling their pumps accordingly to identify between ULSD and today's general diesel since about 20 percent of refiners -- mainly small, independently run facilities that may have a more difficult time meeting the precise spec -- have until the fall to comply. Because Canada, which is supplied mostly by a handful of large oil corporations, will not have two grades of on-road ULSD, there is no labeling requirement. However. According to the Canadian Petroleum Products Institute, their member companies will likely color code fuel pumps to identify ULSD to mitigate misfueling instances. The road to ULSD has been a bumpy one and some of the nervousness over the supply and availability of the 15 ppm standard has relaxed but not ceased -- especially in the U.S. where the complex network of pipelines and distribution facilities increases the chance ULSD may be contaminated by coming into contact with higher-sulfur products like furnace oil or jet fuel. That's why retail outlets south of the border have been granted an extension, from a Sept. 1, 2006 deadline to Oct. 15, 2006, in selling the fuel. In those six weeks they're permitted to market a 22 ppm standard to offset any contamination. (There's a good chance Canadian retailers could get the same extension in order to align with the reprieve in the U.S. regulation.) The American Trucking Association is still predicting a rough start out of the gates, however. "Transitioning to ULSD also initially may decrease domestic refining capacity. Increased imports are expected to make up for the shortfalls. This would further increase U.S. dependence on foreign energy," the ATA stated this week. The group estimates the new fuel will also cost truckers an extra 5 cents a gallon at the pumps above the 1 percent fuel economy penalty ULSD will carry.