ShinerBock wrote:
Well I guess the US Energy Information Administration just doesn't know what they are talking about.
"Refiners revamped (retrofitted) existing refinery units to produce ULSD, representing two-thirds of highway diesel production, and thatthe remaining refineries built new units. The capital cost of revamping is assumed to be 50 percent of the cost of adding a new unit.
The amount of ULSD downgraded to a lower value product because of sulfur contamination in the distribution system is assumed to be 7.8 percent at the start of the program, declining to 2.2 percent at full implementation. The decline reflects the expectation that the distribution system will become more efficient at handling ULSD with experience.
A revenue loss is assumed to occur when a portion of ULSD that is put into the distribution system is contaminated and must be sold as a lower-value product. The amount of the revenue loss is estimated offline based on earlier NEMS results and is included in the AEO2012 ULSD price projections as a distribution cost. The revenue loss associated with the 7.8 percent downgrade assumption for 2009 is 0.7 cents per gallon. The revenue loss estimate declines to 0.2 cents per gallon after 2010 to reflect the assumed decline to 2.2 percent.
The capital and operating costs associated with ULSD distribution are based on assumptions used by the EPA in the Regulatory Impact Analysis (RIA) of the rule 9. Capital costs of 0.7 cent per gallon are assumed for additional storage tanks needed to handle ULSD during the transition period. These capital expenditures have been fully amortized by 2011. Additional operating costs for distribution of highway diesel of 0.2 cent per gallon are assumed over the entire projection period. Another 0.2-cent cost per gallon is assumed for lubricity additives. Lubricity additives are needed to compensate for the reduction of aromatics and high-molecular-weight hydrocarbons stripped away by the severe hydrotreating used in the desulphurization process."
US EIA Petroleum Market Module
From articles I have read, it cost over $8 billion to revamp the refineries to make ULSD.
looks like more of a distribution issue then a refining issue along with poor execution of the process.
