Wednesday, May 08, 2013

Refiners: API Exaggerates Cost of Meeting EPA Proposed Clean-Gasoline Standards

A growing number of refining companies now say the American Petroleum Institute is exaggerating the costs of meeting EPA's proposed Tier 3 low-sulfur gasoline standards.

Keep reading for some examples:



CVR: "CVR Energy Subsidiary CVR Refining Reports Minimal Investment Required To Meet EPA Proposed Tier III Standards"
Northern Tier Energy: “No Capital Spending Required” http://www.prnewswire.com/news-releases-test/northern-tier-energy-lp-comments-on-epas-proposed-tier-iii-standards-201294311.html

Alon USA Partners: "Increased operating costs associated with the incremental desulfurization processes are not expected to be material to the Company's performance.'

Calumet Specialty Products Partners: “capital spending requirements, if any, will be immaterial to comply with the proposed updated standards.” http://www.thestreet.com/story/11891713/1/calumet-specialty-products-partners-lp-comments-on-epas-proposed-tier-iii-standards.html
These and other refinery comments were summed up nicely in a piece published online this week by the publication InsideEPA. (Sorry, you need a subscription for this one, though you can purchase the piece at http://environmentalnewsstand.com/ )
Here is a very brief excerpt:
A split is emerging within the refining industry over the American Petroleum Institute's (API) claims of massive costs in meeting EPA's “Tier III” fuel rule that could add up to 9 cents per gallon to gas prices, with some refiners saying the actual costs will be much lower -- potentially undermining API's bid to block the rule.
Observers suggest the division among refiners on the projected costs of the proposed rule could make GOP critics of the policy leery to launch a major effort to block the agency from finalizing the rule. Much of the debate over Tier III has centered on the agency's proposal to limit the sulfur content in fuel from the existing 30 parts per million (ppm) cap down to 10 ppm, which supporters say will reduce motor vehicle emissions, benefiting public health...
The refining sector sources say the $10 billion cost number in the API-touted study appears too high. One source says based on recent estimates by the firm Valero -- the nation's largest refiner -- it is hard to expect the costs to be as high as $10 billion to comply with Tier III if EPA finalizes it as proposed. Valero says it will cost the company between $300 million and $400 million to comply with Tier III, says the source. Industry observers say the costs for other large refinery companies, such as Tesoro, are also expected to be lower than API's projections.

 

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