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Tough Diesel Rule Fuels Opportunity

Another reduction of sulfur in diesel fuel provides new market for additive suppliers

by Marc S. Reisch, C&EN Northeast News Bureau
September 5, 2005 | A version of this story appeared in Volume 83, Issue 36

KEEP ON TRUCKIN'
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Credit: LUBRIZOL PHOTO
As diesel fuel requirements change, additives will be essential to keep trucks rolling.
Credit: LUBRIZOL PHOTO
As diesel fuel requirements change, additives will be essential to keep trucks rolling.

Back in 1993, U.S. government regulations required petroleum refiners to lower the sulfur content of diesel fuel from 5,000 parts per million to 500 ppm to reduce harmful emissions. But then unanticipated problems turned up. In some cases, the lower sulfur fuel caused fuel pumps to fail and clogged the nozzles that spray fuel into the combustion chambers.

The fear is that these problems could crop up again with a vengeance once regulations go into effect next year that lower sulfur content in diesel fuel to 15 ppm. The answer: chemical additives to restore in low-sulfur diesel the natural lubricity of high-sulfur diesel.

In the early 1990s, investigators discovered that the hydrotreating process refiners use to remove sulfur also removes nitrogen and certain aromatics. These three components give diesel fuel natural lubricating qualities. Regulations that just went into effect earlier this year require diesel fuel marketers to test fuel and add lubricity improvers to ensure trouble-free engine performance. Until then, savvy drivers bought after-market lubricity improvers to protect their engines or counted on the additives of certain premium brands of diesel fuel.

"Diesel fuel has needed lubricity improvers for the last decade," says fuels and lubricants consultant Maurice E. Le Pera of Le Pera Associates. He expects that the market for lubricity additives will increase as sulfur levels in diesel fuel drop--and he predicts that 2006 will be a banner year. In particular, oleochemical-based additives may be the key to keeping the next generation of diesel vehicles percolating down the road.

The Environmental Protection Agency says the benefits of its new rule will outweigh the costs, which are considerable. By 2030, according to the agency, annual emissions of nitrogen oxides, nonmethane hydrocarbons, and particulate matter from heavy-duty vehicles will drop 2.6 million, 115,000, and 109,000 tons, respectively, compared with today.

Outfitting large diesel trucks in 2007 and beyond will add $2,000 to the more than $100,000 cost of such vehicles. The U.S. Energy Information Administration estimates that refiners will have to spend between $6 billion and $9 billion to comply with the new regulations. EPA says compliance will add 5 cents per gal to the cost of producing and distributing the new low-sulfur diesel fuel.

Desulfurization and distribution will account for the lion's share of the cost increase, says Thomas R. Weyenberg, global business manager for diesel fuel additives at Lubrizol, a supplier of fuel performance enhancement packages. According to Weyenberg, additives that improve diesel fuel's performance and lubricity characteristics, measured in parts per million, will make up a small fraction of the 5-cent cost increase.

But the addition of small volumes of lubricity improvers to huge quantities of fuel could mean a hefty market for oleochemical suppliers. One such supplier, Uniqema, a unit of ICI, expects to get substantial new business in the U.S. market for lubricity improvers.

Bruce Calvert, senior technical adviser for Uniqema's lubricants and oil-field chemicals unit, points out that diesel trucks and cars annually consume 40 billion gal of diesel fuel on U.S. highways. By Calvert's count, the addition of just 100 ppm of the right lubricity agent to a gallon of diesel fuel presents a 30 million-lb-per-year market opportunity for chemical suppliers, worth "tens of millions of dollars."


Oleochemical-based additives may keep the next generation of diesel vehicles percolating down the road.


UNDER CURRENT lubricity standards, about 50% of diesel fuel sold for highway use requires an additive, says Alan Millard, industry liaison adviser at fuel additives supplier Infineum. "By 2006," Millard predicts, "all highway diesel fuel will contain lubricity additives."

Four basic types of additives to restore lubricity are available: biodiesel, fatty acid-derived amides, fatty acid esters, and synthetic esters. The first three are the most economical, industry sources say.

Splitting animal fats or vegetable oil with methanol yields a fatty acid methyl ester known as biodiesel. It burns like conventional diesel and is compatible with the petroleum-derived fuel. Incorporated into conventional diesel at 20,000 ppm, or 2%, biodiesel can restore fuel lubricity. Alternatively, fatty acids can be further refined to yield a variety of amides and esters that can restore lubricity at much lower levels of between 50 and 500 ppm.

As the North American market for lubricity additives gets larger, oleochemical suppliers such as Uniqema and Cognis hope to benefit. Both already supply the agents to major fuel additive formulators--such as Lubrizol, Infineum, Chevron Oronite, and Afton Chemical--that have been serving the European market. And oleochemical makers also supply the additives to refinery and fuel terminal service firms such as Nalco; General Electric's infrastructure, water, and process technologies unit; and Baker Petrolite.

Uniqema's Calvert acknowledges that adding 2% biodiesel to diesel fuel is an attractive alternative to amide and ester lubricity agents. At $3.50 per gal, biodiesel costs more than conventional diesel, but a federal excise tax credit for biodiesel use enacted earlier this year improves its competitiveness.

Capacity constraints, however, will limit biodiesel use in the near term. Capacity to produce the fuel is now about 100 million gal and is expected to increase another 100 million gal by next year, according to the National Biodiesel Board. But even if all this capacity ran flat out, it would only be able to supply about 25% of the U.S. diesel market with 2% biodiesel. And even if capacity could be ramped up further, "the amount of available vegetable oil and animal fat is too small to supply fuel and other uses," Calvert says.

IN THE MEANTIME, traditional oleochemical makers are choosing sides. Some, such as Procter & Gamble, Dow Chemical, and Stepan Co., are directing oleochemical capacity to biodiesel production. Others, such as Uniqema, Cognis, and Chemtura, see an opportunity in specialty fatty acid derivatives.

"Unprecedented change means unprecedented opportunity," Calvert of Uniqema says. "We're basic in esters and amides," he adds, and able to supply everyone. Nigel A. J. Cooban, global market segment manager for additives at Cognis, says his firm largely supplies Infineum with fatty acid derivatives, which "we manufacture for Infineum using their technology."

Kirk Schlup, emulsifiers and detergents business director at Chemtura, says his firm has nothing that is commercial yet, "but we would like to participate. The requirement for diesel additives ultimately will be huge." Chemtura is working on multifunctional additives that might offer both cold-flow and lubricity benefits.

One fatty acid derivatives maker cautions that a lot of work will have to go into qualifying lube additives both to meet regulatory requirements and to make sure they do their job well. "Only a handful of things work," says the source, who didn't want to be identified. "And Infineum, being Infineum, has patented everything." More than 10 years ago, when Sweden was the first country to lower sulfur content in diesel fuel to 50 ppm, fuel system failures were widespread. Infineum found the solution and patented it, he adds.

Asked about Infineum's patent position in lubricity additives, Laura Oliver, the firm's fuels marketing manager in the Americas, says only that "we have an extensive patent portfolio."

However, Uniqema is betting that Infineum doesn't have the lubricity agent market entirely tied up. Because the same pipelines that carry diesel fuel from refineries to distribution terminals also carry jet fuel, many pipeline operators have prohibited the introduction of lubricity additives for fear of contaminating jet fuel.

As a result, 2,000 U.S. terminal operators must inject lubricity improvers into diesel before it is delivered to customers. The need to add chemicals at the terminal, Calvert says, should open up the market by creating more points of entry for lubricity agents. And terminal operators can figure out how much of a lubricity additive they need to inject with a simple test run on a relatively inexpensive machine known as a high-frequency reciprocating rig (HFRR).

Results correlate well with actual wear on fuel pumps and injectors, Calvert says. So a fuel terminal operator can independently choose its additive supplier and add the agents to meet fuel standards. And a wider range of additive suppliers can more easily test and begin to qualify a new lubricity agent.

Because it simulates wear on sliding parts, the $50,000 or so tool allows suppliers of a lubricity chemical to inexpensively run any number of tests on a potential lubricity candidate. The earlier standard required a full engine test just to get initial results on each lubricity agent and cost as much as $40,000 per test, Calvert points out. "The small instrument maker who supplies this bench tool is making out like a bandit," he observes.

RIGGED
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Credit: PCS INSTRUMENTS
The high-frequency reciprocating rig test will ensure that diesel fuel doesn't clog engine pumps and spray nozzles.
Credit: PCS INSTRUMENTS
The high-frequency reciprocating rig test will ensure that diesel fuel doesn't clog engine pumps and spray nozzles.

That supplier is London-based PCS Instruments. Marketing Manager Rich Baker says his firm has sold about 600 HFRRs worldwide to oil companies and terminal operators. North American orders took off last year in anticipation of the new diesel fuel lubricity standard, Baker says. The 75-minute test requires only 2 mL of lubricant.

Dennis Hess, fuel additives specialist at Infineum, says that equipping terminals with HFRRs and testing every batch of diesel fuel to determine the required lubricity additive rates is not a viable option. A firm such as Infineum could more cost- effectively recommend safe lubricity levels based on extensive testing of fuel field samples, he says.

Beginning in 2006, "we expect a demand surge for lubricity agents," Uniqema's Calvert says. He is sure that diesel vehicle owners don't want to repeat the experiences of 1993. Given the low-cost tests made possible by HFRRs, chemical producers like Uniqema may have a shot at enlarging their business and helping customers qualify new lubricity agents for diesel fuels that hit the market next year.

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