Steady As She Flows

Much to the relief of refineries, pipelines and the trucking industry, the nation's transition to ultra-low sulfur diesel fuel (ULSD) has been smooth and uneventful. November marked the one-year anniversary of the new on-highway fuel, which has a sulfur content of less than 15 parts per million (ppm).

It was the largest fuel transition since the introduction of unleaded gas in the 1980s, and there had been considerable teeth gnashing throughout 2006 and early 2007 over the problems that might occur. There were concerns that refineries would not be able to produce enough fuel, that the fuel would be contaminated by other high-sulfur fuels transported in the same pipelines, and that the low sulfur content would create lubricity problems that would lead to gasket failures, leaks and other engine problems when used in older trucks.

Although there were some isolated problems and scattered price spikes, the transition to low-sulfur fuel exceeded most expectations. Since November 2006, more than 838 million gallons of ultra-low sulfur fuel have been refined and distributed. The federal Environmental Protection Agency (EPA) estimates that ultra-low sulfur fuel is now available at more than 90% of the retail stations that sell diesel, which is well above the 80% threshold established by the federal law mandating the new fuel.

"The transition to ULSD fuel has been nearly seamless, with virtually no supply interruptions or glitches," says Allen Schaeffer, executive director of the Diesel Technology Forum, a national clearinghouse on diesel issues.

Faster transition for off-highway?

ULSD replaces the 500 ppm fuel that had been used by on-highway trucks and now required for off-highway equipment. The off-highway market will have to switch to the 15 ppm fuel in 2010, but many observers expect the transition will occur more quickly, due to the difficulties in transporting, storing and selling both 15 ppm and 500 ppm diesel. Given the lack of problems reported with ULSD in older trucks, pipeline companies and terminal operators may elect to phase out 500 ppm fuel more quickly.

ULSD fuel is critical to meeting EPA's stringent particulate standards for 2007 trucks and 2011 off-highway equipment. Engine manufacturers based their design and aftertreatment technologies on the premise that some of the emission reductions would be achieved by lowering the sulfur content of the fuel itself. The low sulfur content is also necessary for the proper operation of the oxidation catalysts and other aftertreatment technologies needed to reduce particulate emissions.

No free lunch

These reductions don't come without a cost. The new ULSD fuel is more expensive, as are the 2007 trucks equipped with the new low-emission engines. Trucking companies have had little choice but to absorb the price premium for the fuel, but have been reluctant to invest in the new diesel engine technologies. As a result, sales of trucks dropped significantly in 2007, an indication of what the off-highway market can expect in 2011, when its new engines are phased in.

Schaeffer is confident the slowdown in truck sales is temporary. "Many factors influence the acquisition of new truck and engine technologies," he says. "However, real-world experience has demonstrated that a lack of confidence in the new clean diesel engine technology should not be one of them. Diesel truck drivers depend on their truck for superior fuel economy and power and early reports indicate that the cleaner fuel and engines will deliver both."

In addition to being necessary for the new on-highway trucks, ULSD will also increase the viability of particulate traps and other retrofits to existing equipment. This will be especially important in the off-highway market where mandatory, semi-voluntary and voluntary retrofit programs continue to expand exponentially. Not surprisingly, California is leading the way in this arena, using both carrots and sticks to force owners of off-highway equipment to reduce their emissions.