Ethanol, Gasoline, and ULSD Supply Issues in 2006.ppt

Ethanol, Gasoline, and ULSD Supply Issues in 2006 State Heating Oil and Propane Conference August 2006 John Hackworth Joanne Shore Energy Information Administration Overview MTBE to Ethanol Shift Challenges Progress to date Gasoline Supply Issues Refinery limitations MTBE to ethanol issues Import changes ULSD Supply Implementation so far Areas to watch MTBE Elimination: Northeast Texas Eliminating MTBE and Replacing with Ethanol MTBE mainly used in RFG (11.4% volume per gallon) Both MTBE and ethanol have good octane and are clean Issue is ethanol relative to MTBE. Ethanol has: Higher blending RVP (VOCs problem) Higher toxics (MSAT issue) Higher affinity for water, which means shipping separately from petroleum and blending at terminals VOCs: Summer Gasoline Capability Loss When Switching from MTBE to Ethanol RFG Outside of CA – net 5-6% loss Lose 11% MTBE Gain 10% ethanol Lose 5% light ends to compensate for ethanol’s increased RVP CARB RFG – net 10% loss Lose 11% MTBE Gain 6% ethanol Lose 5% light ends to compensate for ethanol’s increase RVP May also need small additional volume to compensate for lower energy of ethanol vs. MTBE Longer term, refiners will make changes to compensate MTBE Bans Increased Ethanol Use Use of Ethanol-Blended Gasoline Increased in May as Industry Eliminated MTBE RFG Gasoline in 2006 MTBE being eliminated and replaced with ethanol About 130 KB/D of additional ethanol needed to replace MTBE Added ethanol not all available from domestic production Move ethanol from E10 sold in conventional gasoline markets and use in RFG More ethanol imports? May reduce RFG ethanol blend from 10% to 5.7% for a time Ethanol distribution terminal preparation challenges Shift in RBOB supply to East Coast (Less East Coast production, more from Gulf Coast and imports) RFG v. conventional gasoline differentials could be high – possible price surges “Room” for 400 KB/D of Ethanol Ethanol Production Increasing Historical Ethanol Imports Ethanol Generally Fo