I see my colleague John Kingston has written that not only is the US exporting record volumes of low sulfur diesel, but that in April it imported a healthy amount of high-sulfur diesel as well.
In the modern world, in the US and Europe especially, the users of high sulfur diesel are diminishing rapidly, and producers are becoming non-existent. A quick survey of sources in Houston yielded only one regular producer of anything but Ulta Low Sulfur Diesel (ULSD), the grade that federal standards now mandate you consume in everything from an 18-wheeler to a Mercedes.
A bunker seller we spoke to said that when he needs to buy the fuel ships use to run their electrical systems and diesel-powered devices while in port–which is traditionally known as marine diesel and is an offspec product known in the business as “a dog and cat” blend–he ends up buying more expensive ULSD anyway. Why? “Because no one makes anything but that,” he said.
That isn’t technically true, but the amount being produced is way down. For the first six months of this year, average production of diesel in excess of 500 ppm was 381,000 b/d. For all of 2006, it was 953,000 b/d. Meanwhile, what’s really collapsed is the production of diesel fuel between 15 and 500 ppm. In 2006, it averaged 1.62 million b/d; in a few recent weeks, US output of that grade didn’t even crack 100,000 b/d. You can see the data here.
So why would the US import higher sulfur diesel? Most likely, some of it is going to blend down the new 1%S grade of bunker fuel that will need to be used by ships operating inside of 200 miles from North American shores as of August 1. That defined area is known as an Emissions Control Area, ECA for short, and there has been a European ECA in place for several years (first in the Baltics, later in a larger area).
Bunker fuel historically is 3.5%S or higher, so, one option for a ship would be to use diesel inside that 200 mile zone. But another option could be to blend a lower-sulfur diesel fuel into higher sulfur heavy fuel oil to get it down to 1%. Remember, high sulfur fuel oil might be 500ppm, which is still 0.5%. So that diesel fuel, which is dirtier than probably every other barrel of diesel being consumed in the US, is still low sulfur enough to clean up a heavy fuel oil and make it ECA-compliant.
(In 2015, diesel fuel will be required by shipowners in the US, and 1% bunker fuel will be a thing of the past. The world as a whole is moving toward cleaner bunker fuel by 2021.)
So, in theory, the exporting and importing ships could pass in the night, low sulfur exported to Europe, and higher sulfur fuel coming in (overwhelmingly from Canada, according to the EIA’s import data).
Dear Mr. Sharp,
I found your article very informative, but I am a bit confused and maybe you could help me correct a mistake I am making. I have a fuel tire pyrolysis that is 0.889% Sulfur. By my calculations that is 8889 ppm , I used an online conversion table. You state that 0.5% is only 500 ppm . What am I doing wrong? This is very important information for me as I am trying to find a market for this product. Please help if you can.
Thank You
You are correct; 0.5%S is 5,000 ppm.I don’t believe a pyrolysis oil would be acceptable in bunker fuel, however, no matter what the sulfur.