A 2nd Opinion on CaRFG3T50 amp; Supply.ppt

A 2nd Opinion on CaRFG3T50 Supply Presented To: Air Resource Board Meeting to Discuss Issues Relating to the California Phase 3 RFG Regulations August 18, 2000 By: Cal Hodge, President A 2nd Opinion, Inc. Agenda What Has Changed C7 alkylate cost supply C8 alkylate isooctane cost supply Impact on emissions CaRFG3 T50 needs toallow C8 isoparaffins T50 Supply are Important ARB increased T50 limits tomaximize CaRFG3 blending flexibility. That was a good move! ARB traded T50 for tighter sulfur and benzene standards. California became more self sufficient.(2° reduced imports 10 to 15 kbd.) But there is more data 2000 is Different Federal Phase 2 RFG has arrived. YTD price differential is 6 to 7 ￠/gal. Summer differential is 9 to 11 ￠/gal. Phase 1 differential was 1 to 2 ￠/gal. Alkylate is worth more. 2000 quotes are typically 15 to 20 ￠/gal. over conventional regular. CEC used 12￠ over in earlier work. CEC’s C7 alkylate is 19￠ over. Propylene Used to Make C7 Alkylate is Now a Chemical Propylene Now Sells for Over One Dollar per Gallon Butylene is Worth Butane or about 60￠ per gallon C7 Alkylate costs 30￠/gallon more than C8 Alkylate Cost vs Blend Value( ￠/gallon) Cost vs Blend Value OverGC Conventional Regular Market Observations West Coast setting Gulf CoastC8 alkylate price. Variable cost isooctane from butane in converted Gulf Coast MTBE plants break even but no capital recovery. Buying propylene back from chemicals 17-18￠ out of market. Implications West Coast can continue buying C8 alkylate away from Gulf Coast. If Feds ban MTBE a West Coast refiner could lock up a supply ofisooctane by putting up the conversion capital to assure access if he can use it. The trend to chemicals and the economics make C7 alkylate availability doubtful. California needs to accommodateC8 alkylate and isooctane. Replacing MTBE Hurts Midpoint Change in Emissions for Adding 10% of Component to Flat Limit Change in Emissions (Adding 10% Compone