ALEXANDRIA, Va. -- As the petroleum industry enters into the second phase of ultra-low-sulfur diesel (ULSD) implementation, the truckstop and travel plaza industry remains confident that all sectors of the industry can work together to successfully complete the transition, but it still anticipates challenges along the way, said NATSO Inc., the trade association representing travel center and truckstop owners and operators of more than 900 locations nationwide.
NATSO President and CEO Lisa Mullings said, The truckstop and travel plaza industry supports [image-nocss] ultra-low-sulfur diesel as a means to achieve cleaner air, and we've been preparing for this transition for years. At the same time, we remain concerned that there will be challenges, including supply disruptions, during the transition period and following the retail implementation deadline.
Beginning on September 1, facilities that carry ULSD from refineries through fuel terminals must meet the 15-parts per million (ppm) sulfur requirements for ULSD. As of June 1, 80% of the fuel that is refined or imported had to be ULSD. The retail implementation deadline takes effect on October 15.
The transition has let to some supply disruptions in recent weeks, Mullings said. We hope these are minimal and short lived, she said.
Historically, every time the nation has made a transition to a new on-highway fuel, there have been temporary, localized supply shortages, she added. The U.S. Environmental Protection Agency's (EPA) pre-compliance report indicated that ULSD supplies may be insufficient in certain geographic markets, especially in the areas farthest from the refinery, because the risk of contamination increases when fuel travels greater distances and passes through several distribution points.
In an August 23 report, the U.S. Department of Energy's (DOE) Energy Information Administration (EIA) reported that the transition to ULSD had already resulted in some temporary regional dislocations. These dislocations can occur for many reasons, including anything from difficulty in making ultra-low-sulfur diesel fuel at a particular refinery, to issues with storage terminals as they may draw down inventory levels of regular diesel fuel to make room for ultra-low-sulfur diesel fuel, to potential problems with the distribution of ultra-low-sulfur diesel fuel through pipeline systems, the report said.
Despite the challenges, truckstops and travel plazas are committed to getting product to their customers, said NATSO. Retailers are working closely with distributors to gain supply. The truckstop industry plans to use the next several months to prepare retail outlets. This preparation includes transitioning underground storage tanks (USTs) from low-sulfur diesel to ULSD. Truckstops have tanks with lots of sulfur in them from years of use, Mullings said. The amount of time needed to flush that sulfur from the tank will depend on the volume of fuel a location sells. It could also vary based on the sulfur level of the fuel being put into the retail tank.
Most NATSO members plan to transition tanks by drawing down the amount in the tank through normal use, then refilling with ULSD, NATSO said. They will go through this process several times and the resulting product will continue to be labeled as low-sulfur diesel until operators are certain the sulfur levels meet the 15-ppm requirement. We want the transition at the retail pump to be seamless for drivers. By drawing down the tanks and then refilling with ULSD, truckstops will not have to shut down any tanks and stop the flow of fuel, Mullings said.
NATSO anticipates that most retailers will not begin marketing ULSD until mid-October. Retailers first want to ensure there is a consistent, adequate supply of ULSD before transitioning tanks. Retailers also want to ensure all parties in the distribution chain have minimized contamination risks before switching their tanks. Once a truckstop has invested the time and expense to transition a tank to ULSD, it cannot easily switch back and forth between the products, said Mullings.
One outstanding concern for truckstop operators is that fueling terminals will be delivering the product near the 15-ppm limit, which means there could be zero downstream contamination. NATSO could ask EPA for enforcement flexibility in the first months after implementation if terminals are delivering fuel near or at the 15-ppm level or if pipelines are unable to deliver compliant fuel, said NATSO.
Mullings said that despite the remaining concerns, she is confident that at this time next year, all the outstanding challenges will be resolved. I am encouraged by the amount of communication between everyone in the petroleum industry, she said. During the last several years, NATSO has worked closely with the Environmental Protection Agency, other marketing groups and refinery and pipeline associations to identify and remedy as many concerns as possible. We will use the next several months to evaluate trouble areas in the distribution system and ways we can work together to minimize supply disruptions.
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