Clean Fuels Mandate Ignites Capital Spending At Refineries

ByDeb Austin U.S. refineries pursuing compliance with the Environmental Protection Agency's Clean Fuels Program could generate more than $7 billion in capital spending in 2002, forecasts Industrial Information Resources (IIR), a Houston-based information provider. The EPA program mandates phased-in lowering of sulfur concentration in gasoline to 30 ppm (parts per million) in the 2004-to-2006 time period -- and proposes lowering sulfur content in on-the-road diesel fuel to 15 ppm between 2006 and 2008. Application to off-road diesel fuel is not yet clarified. Refiners have studied two alternatives for compliance, says IIR: revamping existing distillate hydrotreaters or building new desulfurization units. Most have chosen to build, tapping newer technologies. And most have begun taking steps to reach compliance for gasoline by Dec. 31, 2003, while awaiting EPA clarification on diesel fuel. At the United States' 162 refineries, IIR has identified 96 new desulfurization units representing $6.6 billion in total spending -- plus 52 unit conversions, expansions or upgrades representing $812 million. Average estimated cost for a new desulfurizer unit: $68 million.