If you're in the business of selling or handling fuel, or your firm operates a fleet of trucks or heavy equipment, your life is about to change.
"Things are going to change, and change dramatically," said Tom Chapple, a senior state environmental official.
New U.S. Environmental Protection Agency rules requiring use of ultra-low sulfur diesel fuel for on-road use kick in next July. The 2006 rule applies only to on-road use, but in 2010 it will be extended to off-road construction equipment and marine diesel.
Eventually stationary diesel engines, used in small power plants, will be included.
The new fuel will not only cost more but will bring requirements for separate storage with dedicated tank and fuel handling systems.
There will also be a complex set of new EPA tracking and reporting requirements. "We're going to need 50 new accountants to keep track of all this," groaned one fuel distributor who attended a Sept. 16 briefing on the new rules by EPA and state officials.
The meeting, held in Anchorage, was sponsored by the state chapter of the Air and Waste Management Association, a professional group.
The new rules have been long in coming. They are aimed at reducing cancer-causing particulates, or soot, in diesel exhaust. New truck engines, beginning with 2007 models, will be required to have pollution-contol equipment to reduce particulates, but the catalysts used to accomplish that goal cannot tolerate sulfur.
To keep sulfur out of the fuel stream, EPA is requiring that refineries produce 80 percent of their diesel with a sulfur content of no more than 15 parts per million as of July 2006. Refineries will be able to produce some diesel with 500 ppm sulfur, but no more than 20 percent of their output.
Much of the diesel in Alaska, and the jet fuel used as "Arctic grade" diesel for winter use, has far higher sulfur levels, as much as 3,000 ppm. EPA rules requiring 500 ppm diesel have been in effect in the Lower 48 states for several years, but Alaska has had a special exemption.
There will be no exemption for Alaska from the new 15-ppm rule because it primarily applies to engines, not the fuel.
Requirements to have to fuel available and in segregated storage to insure its purity will apply in parts of Alaska connected by the road system. The state is recommending that these rules be delayed until 2010 for rural Alaska, according to Ron King, the Department of Environmental Conservation official in charge of the program.
That would coincide with extension of the rule to off-road and marine uses so rural Alaska can make the changeover all at once, King said.
EPA officials at the Sept. 16 briefing acknowledged the new rules are imposing large costs on the nation's refineries, fuel distributors and transporters. But the benefits to health far outweigh the costs.
"On a national level, the cost of the program will be $7.5 billion for refineries, $1 billion for fuel distributors and $250 million for retail sellers of fuel," said Paul Machiele, an official in EPA's fuel regulatory program.
"The cost/benefit analysis shows a $60 billion benefit, however, in avoided health expenditures and premature deaths," he said.
DEC's Chapple said that, in the past, the state has attempted to exempt Alaska from costly requirements like this, but the EPA's new evidence of the connection between diesel particulates and cancer has now become overwhelming.
EPA has identified diesel exhaust from heavy trucks and buses in major U.S. cities as a major source of urban air pollution and a health risk. In Alaska, the DEC has just launched a study of potential adverse health effects of diesel exhaust in rural villages, Chapple said.
In many villages the diesel-fueled power plant is right in the middle of the community, he said.
There are still uncertainties as to how much the new fuel will cost in Alaska. In the Lower 48 states, refineries are already gearing up to make the fuel available and the average added cost is estimated at 7 cents per gallon, King said.
Much of Alaska will need a special Arctic grade of diesel that will flow at very low temperatures. Lower 48 refineries will be unlikely to make this fuel unless in a special batch, which will be expensive. Tesoro Alaska Petroleum will make the fuel at its Kenai refinery but has not indicated what the price will be, he said.
Refineries in Canada will made Arctic-grade 15 ppm diesel for northern communities there, but getting the product to Alaska could cost 40 cents per gallon, he said.
Like any regulatory program there are arbitrary impacts. The state's major urban and highway-connected communities are being treated just like the rest of the nation, mainly because 2007 model trucks and buses will be arriving by highway, and the fuel will have to be available.
Coastal communities on the state ferry system are being considered "on the highway," with the rule effective in 2006, King said. But while Kodiak is considered "on the highway" because of its regular ferry service, Unalaska is considered "rural" because its ferry service is less frequent, King said.
"But even though the full rules will not affect rural communities before 2010, remember if you take a new-model truck or bus out to rural Alaska you have to take the fuel with it," King said.
If diesel with a higher sulfur content is used it will ruin the pollution-control equipment and can also damage the engine, he warned.
There will be an inevitable period of confusion as the new fuel is phased in. Unlike the government's rules to switch to unleaded from leaded gasoline, which was done gradually, the switch to ultra-low sulfur diesel for on-road use is being done all at once nationwide. There will still be plenty of the older fuel on the market, but the EPA's intent is to push the new fuel into the market so that it will be available in plentiful quantities when 2007 trucks and buses show up, Machiele said.
"You can run your older equipment on 15 ppm diesel and it works fine, but you can't run the newer equipment on higher-sulfur diesel," he said.
Eventually all diesel-powered engines will run on the new fuel, but until that happens, a new record-keeping, tagging, and quality-certification and reporting system is being set up, said Erv Pickell, another EPA official at the Sept. 16 briefing.
Refiners, distributors and fuel retailers will have to retain records and sign product transfer documents on batches of 15 ppm and the higher-sulfur diesel including heating oil, which so far is completely unregulated by the EPA, Pickell said.
"Pumps will have to be labeled right so customers know what they're getting," he said. EPA inspectors will be in the field checking records and sampling fuel at bulk storage facilities and retail outlets, he said.
In theory, violators are subject to the full fines levied for violations of the Clean Air Act, or $32,500 per day. Fines this high won't really be imposed, Pickell said, but violators aren't going to get away with a simple slap on the wrist either.
Meanwhile, there are opportunities for the fuel to be contaminated with sulfur at each stage in the distribution system. If a tank previously held a higher-sulfur diesel, gasoline or jet fuel, residual sulfur in the tank will contaminate the new fuel.
Getting the sulfur out of older tanks will be time-consuming. Tank-washing is expensive and creates issues of how to dispose of fuel-contaminated water, but otherwise it will take about four cycles of running 15 ppm diesel through a tank so that the residual sulfur is largely removed.
Any ultra-low sulfur diesel that has absorbed more sulfur, by any percentage above 15 ppm, will have to be sold as higher-sulfur fuel, Pickell said.
Crowley Marine Services, which transports and sells fuel to coastal communities, says tank washing is not an option because of the contaminated water disposal issue. It will have to maintain separate tanks and hoses for the 15 ppm diesel on its barges and tanks farms to prevent contamination, said Mark Smith, a Crowley manager.
Tim Bradner can be reached at
tim.bradner@alaskajournal.com.
