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Posted on  

September 27, 2001

CALIFORNIA REFINERS ON SCHEDULE TO REPLACE MTBE WITH ETHANOL

"California's refining industry appears to have acted responsibly to eliminate MTBE from CBG3 and replace it in an orderly fashion with ethanol… it is entirely possible and beneficial to continue the MTBE phase-out timeline."

A report prepared for the Renewable Fuels Association (RFA) and National Corn Growers Association (NCGA) demonstrates all California refiners are on schedule to meet the January 1, 2003 date for the phase out of MTBE and its replacement with ethanol in California Phase 3 Cleaner Burning Gasoline (CBG3). The report, which was submitted to California Governor Gray Davis, documents the refinery preparations necessary to switch from MTBE to ethanol are modest in comparison with other more difficult and costly modifications such as sulfur control.

"The report demonstrates that the investments necessary to accommodate ethanol in California have largely been made and that there will be no significant infrastructure costs associated with using ethanol in CBG3," said Bob Dinneen, president of the RFA. "California's refining industry appears to have acted responsibly to eliminate MTBE from CBG3 and replace it in an orderly fashion with ethanol. Clearly, it is entirely possible and beneficial to continue the MTBE phase-out timeline in concert with the other, more difficult and costly, CBG3 requirements."

The report, Refining Preparation for California CBG3, was prepared by Dr. Michael Graboski, Colorado School of Mines, and Robert Reynolds, Downstream Alternatives, Inc., and is based on plans submitted by refiners in compliance with the California Environmental Quality Act (CEQA).

Key findings of the report, include:

Switching from MTBE to ethanol is only one of several issues refiners face while preparing for CBG3 use beginning on January 1, 2003.

Ethanol investments are relatively small compared to the modifications necessary to meet new low sulfur specifications.

No major technical hurdles to producing CBG3 with ethanol were identified in any of the submitted plans.

All plans submitted thus far indicate that modifications will be completed before the December 31, 2002 MTBE phase-out deadline allowing ethanol CBG3 to be available in the Southern District market on time.

Within California, ethanol can be shipped from storage facilities to terminals through existing pipelines as "neat ethanol."

Ethanol can be received from Jones Act tankers that currently carry MTBE to California from the Gulf of Mexico.

"The switch from MTBE to ethanol is only one of many changes with CBG3," said Dinneen. "This report demonstrates that California refiners will be ready for ethanol by January 1, 2003. This report, coupled with the California Energy Commission's report on ethanol production, should put to rest any doubt that the switch to ethanol can be made on time or that ethanol will have any price impact on California consumers. This analysis should be useful as Governor Davis considers whether to maintain or delay implementation of his Executive Order banning MTBE use by December 31, 2002."

All gasoline produced by Southern District refiners, which represent approximately 988,700 barrels per calendar day of refining capacity, must be oxygenated with ethanol. In the Northern District (approximately 909,505 barrels/calendar day of refining capacity), only about 28% of total production of gasoline will require ethanol.

The report can be found on the RFA web site at: http://www.ethanolrfa.org/carefinerreport.pdf
 

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