Officials: ULSD Supply Problems Minimal

By Andrea Fischer

Pipeline companies said avoiding contamination of ultra-low-sulfur fuel when it is transported is less of a problem than originally thought and that they have not had problems obtaining enough of the new fuel.

Meanwhile, trucking and fuel officials said they have not seen significant shortages of ULSD, which is required for trucks with 2007 engines. Fears of ULSD shortages, based partly on concerns the fuel would pick up too much sulfur in pipelines that also carry higher-sulfur fuels, contributed to fleets' large advance buying of trucks with 2006 engines.

However, "We're having no trouble finding ULSD to run our 2007 engines," said John Drake, fleet manager for Duplainville Transport, a Sussex, Wis., truckload carrier. "Today, ULSD is all over the country, and it's not an issue at all." Drake said four of his company's 95 trucks have the new engines.

"Had we known two years ago what we do today . . . we would not have planned our purchasing around the introduction of the new engines. We would have followed our normal purchasing schedule instead of pre-buying," Drake said.

"We're having no issues at all finding ULSD," said Dennis Beal, vice president of physical assets for FedEx Freight. "It's available everywhere - we're not having trouble getting it in bulk and we're finding it on the road" across the nation. Colonial Pipeline, the nation's major ULSD transporter, said it would seek to raise the amount of sulfur it allows in ULSD from refiners because pipeline contamination is less of a problem than feared.

Other pipeline companies also said obtaining a reliable supply of fuel from refiners with no more than 15 parts per million of sulfur has not been as large a problem as they had expected.

"We've gotten a constant, reliable supply of ULSD that meets entry specifications," said Mark Salcedo, of Chevron Pipe Line Co. "In general, the issues that everyone involved in transporting ULSD were worried about have not happened."

Michael Leister, manager of fuels technology for Marathon Petroleum Co., a ULSD refiner and pipeline owner, said. "The fact that pipelines are raising their sulfur tolerance levels means that the ULSD [transport] system is working better than initially expected."

Colonial said upgrades to its pipeline network "have enabled Colonial to ship ULSD with very little sulfur increase and with lower volume losses than originally projected."

The company said it would ask the Federal Energy Regulatory Commission to raise the maximum sulfur level of ULSD supplied by refiners to 10 ppm from 8 ppm.

Before last year's October deadline for retail stations to begin selling the fuel - required in engines designed to meet 2007 federal emission standards - trucking and oil industry officials expressed concern that exposure to higher sulfur fuels as ULSD moved through pipelines could bump its sulfur content above the 15-ppm limit. Because of that, Colonial set a "conservative" 8 ppm sulfur limit for refiners to allow for additional sulfur contamination, said Colonial spokesman Steve Baker.

But, "we have had better than expected results in moving ULSD - we're experiencing very little increase in sulfur as the fuel moves through the pipeline," Baker said. "We have upgraded our system to deal with ULSD and it looks like the changes worked." Chevron's Salcedo said his company would not change its sulfur limits for refiners, "because we started out at a 10 ppm level."

Salcedo said sulfur contamination levels in the Chevron pipeline were "almost exactly what we expected."

Bill Holbrook, spokesman for the National Petrochemical Refiners Association, would not comment on how sulfur limit changes would affect refiners.

"It's been smooth sailing in terms of matching up the cleaner fuel with new trucks," said Allen Schaeffer, executive director of the Diesel Technology Forum. "There are certainly not any issues with fuel availability."

Schaeffer said 90% of the highway retail outlets surveyed by the Environmental Protection Agency earlier this year were selling ULSD.

Domestic ULSD production reached 2.91 million barrels in the week ended June 1, according to the Department of Energy.

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