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HPIn Brief

02.01.2011  |  Thinnes, Billy,  Hydrocarbon Processing Staff, Houston, TX

Keywords: [ethanol] [news] [downstream] [trading] [joint venture] [refining] [catalyst] [biodiesel] [tax]

Ethanol infrastructure lacking

The US does not have the infrastructure to meet the federal mandate for renewable fuel use with ethanol but could meet the standard with significant increases in cellulosic and next-generation biofuels, according to a Purdue University study.

The report’s authors used US Department of Energy (DOE) and Environmental Protection Agency (EPA) data to determine that the US is at the “blending wall,” the saturation point for ethanol use. Without new technology or a significant increase in infrastructure, the study predicts that the country will not be able to consume more ethanol than is being currently produced.

The US federal renewable fuel standard requires an increase of renewable fuel production to 36 billion gallons per year by 2022. About 13 billion gallons of renewable fuel was required for 2010, the same amount the report predicts is the threshold for US consumption.

The study contends that there simply are not enough flex-fuel vehicles, which use an 85% ethanol blend, or E85 stations to distribute more biofuels. According to EPA estimates, flex-fuel vehicles make up 7.3 million of the 240 million vehicles on the nation’s roads. Of those, about 3 million of flex-fuel vehicle owners aren’t even aware they can use E85 fuel.

There are only about 2,000 E85 fuel pumps in the US, and it took more than 20 years to install them. In order for the US’ infrastructure to match the numbers in the federal mandate, the study’s authors say 2,000 pumps a year would need to be installed through the year 2022. They also note that E85 needs to be substantially cheaper than gasoline to entice consumers to use it, because E85 gets lower mileage.

The report says that advances in the production of thermo-chemical biofuels, which are created by using heat to chemically alter biomass and create fuels, would be necessary to meet the renewable fuel standard.

Marathon Oil Corp. is moving forward with plans to spin off Marathon’s downstream business, creating two independent energy companies. Marathon Petroleum Corp. (MPC), to be headquartered in Findlay, Ohio, is expected to be the fifth largest US refiner with a downstream portfolio of strategically aligned assets concentrated mainly in the Midwest, Gulf Coast and Southeast regions of the US. The spin-off is expected to be tax-free and to be effective June 30, 2011. Marathon Oil Corp. will be a global upstream company with a portfolio of assets delivering defined growth leveraged to crude oil production and with exploration upside. It will continue to be based in Houston, Texas.

PetroChina International is forming a partnership with INEOS for new trading and refining joint ventures related to refining operations in Grangemouth, Scotland, and Lavéra, France. All companies will work toward the formation of the proposed joint ventures by the end of June 2011. Underlying the international importance of PetroChina’s and INEOS’ collaboration, the official signing ceremony for the agreements was witnessed by Nick Clegg, the British deputy prime minister, and Li Ke Qiang, the Chinese vice premier. The deal will create a strategic partnership between the two companies, and INEOS believes it will improve the long-term sustainability of its refineries, enhance security of supply for customers, and secure jobs in both the UK and France.

Axens North America has signed an agreement with Criterion Catalysts and Technology and Shell that allows for the purchase of Criterion’s catalytic reforming catalyst business. The specifics of the deal allow Axens to obtain Criterion’s Willow Island, West Virginia, manufacturing plant for reforming catalyst and appropriate intellectual property rights to pursue such business.

KBR and SK Innovation started up an advanced catalytic olefins (ACO) demo plant in Ulsan, South Korea. Operations to date have met the companies’ expectations for olefins production, particularly propylene, with improved economics relative to steam cracking due to the technology’s higher total olefins yields and increased propylene/ethylene ratios approaching 1.0. The startup marks the first commercial demonstration of the ACO process. The demonstration unit achieved a design feed rate as scheduled in late October 2010. The ACO process provides an alternative to naphtha steam crackers, and, according to KBR, not only does it offer higher olefins production, the process also produces a lower emissions footprint than a conventional cracker.

Iraq’s South Oil Co. has awarded Emerson Process Management a contract to provide crude-oil metering systems and related technologies for the new Al-Basra oil terminal now under construction in the Persian Gulf. The new terminal, which includes both onshore and offshore facilities, will boost Iraq’s oil-export capacity by 2.7 million bpd. The added capacity will give Iraq increased access to global markets as it expands production from its southern oil fields. Emerson’s metering systems will measure the amount of oil as custody is transferred from producers to shippers through the Al-Basra terminal. The systems combine ultrasonic measurement technology with diagnostic software that can detect potential problems before they affect accuracy.

Gushan Environmental Energy, a producer of biodiesel in China, is in the process of assessing the effect of a recently issued notice on consumption tax from the Chinese Ministry of Finance and the Chinese State Administration of Taxation. The notice regarding the exemption from consumption tax on pure biodiesel made from waste animal fats or vegetable oils was issued on December 24, 2010, and became effective immediately. It clarifies that pure biodiesel made from waste animal fats or vegetable oils is exempted from consumption tax in China, and that such exemption will be implemented retroactive to January 1, 2009. HP

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