US Refiners say EPA sulphur proposal goes too far too fast

US EPA's proposal to reduce the level of sulphur in gasoline could lead to gasoline supply problems and refinery closures if necessary changes are not made, the National Petrochemical & Refiners Association (NPRA) has warned.

“We expect capacity to decrease as a result of the proposal,” said NPRA’s president, Urvan Sternfels, “while the uniformly low national sulphur standards will further eliminate flexibility for operating refineries. If EPA does not amend the proposal from its current form, we fear that adverse consequences will result: fewer refineries, less certainty of supply and unpredictable market movements. We must have changes in the gasoline sulphur proposal. It goes too far too fast.”

NPRA restated its preference for the industry proposal to reduce gasoline in sulphur jointly advocated by NPRA and the American Petroleum Institute (API). NPRA is calling for a phased, regional approach which takes into account differing air quality needs in certain parts of the US. NPRA claims this would be more balanced and cost-effective than the EPA proposal.

The NPRA strongly criticized the timeframe for sulphur reduction in the EPA proposal: “The short timeframe available before the fall 2003 effective date is very unrealistic. The entire industry cannot meet the strict 30 ppm average sulphur requirement in EPA’s timeframe.”

Acknowledging that the EPA contends that its banking and trading program softens the impact of the short period for coming into compliance with the standards, Sternfels said that refiners nevertheless obtain little or no flexibility from the current banking and trading proposal. “The combined interim caps and averages and the short period to generate early credits are so restrictive that our members do not receive any meaningful relief,” Sternfels said.

NPRA urged EPA to change its proposal to allow time for necessary refinery maintenance and turnarounds, as well as unforeseen outages. “We need to build permanent flexibility into the proposal to allow for refinery outages and standard maintenance; relief from the caps will also be necessary,” NPRA said.

Citing the added strain of strict new sulphur rules on the historically high levels of capacity utilization in the refining industry, Sternfels urged “The proposal must be changed to reflect the fact that equipment cannot be run permanently at full capacity.” He added that recent gasoline market fluctuations in California indicate what could happen on a national scale if EPA does not make its proposal more realistic.

NPRA expressed its willingness to work with EPA to cure the deficiencies of the current proposal, including efforts to construct a fast-track mechanism for approval of permits which refiners will need to comply with the regulations in their eventual form. The EPA proposal concedes that timely securing of permits is crucial to enable refiners to comply with the regulation, but offers no effective mechanism to streamline the application and review process, Sternfels said.

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