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January 09, 2013
Deadline postponed for transmix facilities

The ability of processors and distributors of transmix diesel fuel (transmix) to market their product after 2014 has been assured by a new EPA rule.  Lacking the ability to market this product, the fuel distribution system would likely be disrupted by the need to transport relatively small amounts of transmix back to refineries for processing to remove sulfur.

Fuel in the middle

Transmix forms in a pipeline between two other fuels such as ultra-low sulfur diesel (ULSD) and jet fuel, which has a very high sulfur content.  Transmix is not compatible with either of the other fuels and must be removed from the pipeline.  Typically, it is uneconomic to transport transmix back upstream to the refinery for further processing to remove sulfur.  As a result, smaller transmix processors are stationed along the pipeline to receive the fuel, generally in amounts of about 5,000 barrels a day.  Currently, there is no desulfurization equipment that has been demonstrated to be suitable at a transmix processor or pipeline transmix gathering facility to lower the transmix to the 15 parts per million (ppm) sulfur limit that is gradually being required for most fuels. 

With no outlet, transmix would build up in storage tanks, and pipelines would need to cease operations.  The EPA addressed the problem by allowing transmix facilities to produce 500 ppm sulfur fuel for use in older locomotive and marine diesel fuel.  The current action postpones the scheduled expiration of that allowance in 2014.

The EPA estimates that approximately 750 million gallons of transmix is produced annually; about 60 percent of the derived product is distillate fuel and the remainder is gasoline.

Category 3 vessels

The EPA states that it believed it was feasible to terminate the transmix allowance for locomotive and marine fuel because transmix could still be marketed for Category 3 (C3) marine engines, which have a 1,000 ppm sulfur limit.  However, the Agency subsequently learned that most locations for refueling C3 marine vessels are not located near transmix facilities, and C3 marine terminals also do not lend themselves easily to the receipt of small batches of transmix product by tank truck.  “It might be possible over time to modify C3 terminals and fueling operations to receive transmix,” states the Agency.  “Until such time, the locomotive and marine diesel market remained the only viable market.”

‘Significant regulatory relief’    

EPA’s final rule specifically reinstates the provision allowing for the use of 500 ppm sulfur transmix in older locomotive and marine diesel fuel outside the Northeast Mid-Atlantic Area (NEMA) and Alaska.  The Agency has also expanded this provision to within the NEMA provided the fuel is used in older technology locomotive and marine engines that do not require 15 ppm diesel fuel and the fuel is kept segregated from other fuel.  The disposition of transmix in Alaska is not a concern since there are no refined product pipelines in Alaska.

“These amendments will provide significant regulatory relief for transmix processors and pipeline operators to allow the petroleum distribution system to function efficiently while continuing to transition the market to virtually all ultra-low sulfur diesel fuel and the environmental benefits it provides,” states the EPA.

The final modifications to the transmix provisions under the diesel sulfur program were published in the December 26, 2012, FR.

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