Friday, November 11, 2005

Oil Giants: "We Can Make the Clean Diesel Fuel:

An interesting item that didn’t get much attention when the five oil giants appeared this week before a Senate panel:

They all said they would have no trouble meeting EPA’s ultra-low-sulfur diesel requirements at their refineries next year. (See transcript, below.)

In response to questions by Senator Richard Burr (R-NC), the heads of ExxonMobil, Shell, ConocoPhillips, Chevron and BP ALL said they would be able to meet the clean-fuel requirements. “We can meet it at the refinery,” noted ExxonMobil Chairman and CEO Lee Raymond.

This is extremely positive news. Oil industry lobbies previously have raised continuing concerns about the standards, but these comments by the oil giants should put those concerns to bed for good.

The oil executives did note there are still some issues regarding the need to flush older, dirtier fuel from pipelines. But as you probably know, the U.S. EPA has issued a rule that would grant a brief delay in the distribution requirements in order to work those kinks out of the system. That should be enough to allay any lingering concerns.

We are now quite optimistic that the clean-diesel standards will move ahead, and dramatically cleaner trucks and buses will be on the roads within a little more than a year.

These clean-fuel requirements are crucial for reducing the health risk from diesel fumes. EPA has noted that its highway and offroad diesel requirements eventually will prevent about 20,000 premature deaths a year. Having cleaner fuel available will also enable us to tackle the problem of existing diesel engines.

NOVEMBER 9, 2005

[Senator Richard] BURR [R-NC]: …

Let me move, if I could, to several of you have mentioned that the new ultra-low sulfur diesel regulations that will take effect soon, which set new specifications for on-road highway diesel fuels that would allow new heavy duty trucks to reduce emissions by 90 percent, older trucks to run cleaner and light duty diesel vehicles such as SUVs to get significantly better fuel mileage and for a greater range of diesel retrofit technologies to be used, that this is problematic right now from a standpoint of the date certain that's set.

Can I have each one of you comment on whether you can meet that date certain?

BURR: Let's start with Mr. Hofmeister?

[John] HOFMEISTER [President, Shell Oil Company]: Technically, we can. I think our big concern is in the distribution of the fuel and the fact that as it moves through pipelines, it could pick up other sulfur molecules.

BURR: Mr. Pillari?

[Ross] PILLARI [President and CEO, BP America]: That's a real issue for us as well. We can make it, but moving it is still problematic.

[James] MULVA [Chairman and CEO, ConocoPhillips]: Same issue for us.

[David] O'REILLY[Chairman and CEO, Chevron]: Yes, we can meet it at the refinery.

[Lee] RAYMOND [Chairman and CEO, ExxonMobil]: Same comment, Senator. We can meet it at the refinery.

The National Petroleum Council made some comments on that in the last year with some suggestions to the EPA as to how that be managed.

BURR: Well, my hope is, and I would encourage all of you -- if we can solve the refinery issue, which you've said there's not an issue, hopefully collectively we can solve the distribution issue, which is moving it through a pipeline.

I think it's important that we remember that just like you have suppliers, there are manufacturers out there that have developed engines that are designed with the intent of running on low sulfur diesel. And anything that does not meet a time line that is in sync cheats one side or the other.

Mr. Chairman, I thank you for your indulgence. I yield back the balance.


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