Washington Refiners Prepared for Fuel Regulations

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Washington Refiners Prepared for Fuel Regulations

SEATTLE -- Thanks to relatively clean air, Washington and six other Western states get a break on federal low-sulfur gasoline regulations until 2006. But the state's refineries are not waiting until the deadline to make major upgrades, and neither will possible price increases at the pump. At the BP Cherry Point refinery, the state's largest, work is under way on a $110 million project aimed at meeting the low-sulfur requirements.

A nationwide transition to cleaner gasoline begins in 2004. The move is expected to cut gasoline supplies nationwide to some degree, according to The (Wash.) Olympian. That is likely to translate into higher gas prices, even for the West, said Janet Ray, spokeswoman for AAA Washington. "We know that whenever a new refinement of fuel is mandated, there is an increase in cost at the pump," she said.

Ray added that it's hard to quantify the amount of the possible increase because the market variables that drive the price of gasoline are complex and difficult to predict. The price pressure comes on the heels of a 5-cent-a-gallon Washington State gas tax added July 1. The state tax per gallon is now 28 cents. After an initial bump in price in early July, gas prices in Washington have stabilized and even decreased somewhat in some areas.

"Just looking at our own state, there was a spike three or four days after the tax took effect," Ray said. "Of course, the tax is still in there, and without it, gas prices would be even lower."

There are five refineries in Washington -- BP in Cherry Point near Bellingham, Tesoro and Shell in Anacortes, ConocoPhillips in Ferndale and U.S. Oil & Refining Co. in Tacoma. The Tacoma refinery primarily produces jet fuel. The refineries are able to pump out about 618,000 barrels a day, making Washington state a net exporter of refined petroleum -- shipping or piping gasoline to Oregon, California, Canada and overseas.

A barrel of crude oil is 42 gallons, up to 85 percent of which can be refined into gasoline -- depending on the particular refinery and how it is set up. The remaining crude is refined into diesel, heating oil and other petroleum products.

Sulfur in fuel "poisons" catalytic converters in cars, making it harder for converters to remove the nitrous oxide that creates smog and ozone, according to James Randles, director of the Northwest Air Pollution Authority.

Based on current sales, the motorists who use BP's cleaner gas at Arco stations in Washington and Oregon will be getting rid of 620 tons of nitrous oxide in the air per year -- equivalent to removing 40,000 cars from the road every day, according to BP. The oil company has been using part of its Cherry Point facility to produce "near-zero sulfur" premium unleaded gasoline since 2001.

But the new facility was needed to be able to produce the same low-sulfur-content gasoline for every grade of gasoline made at the plant. At the new facility, fuels will be exposed to a catalyst that removes sulfur. The BP refinery produces about 225,000 barrels daily. The sulfur-related upgrades will not add to overall production.

BP moved ahead on the project well in advance of the deadline to increase its flexibility in exporting low-sulfur gas to California.

ConocoPhillips in Ferndale also has made extensive low-sulfur upgrades.