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An example of a high value, albeit low volume, opportunity is that provided by the processing of off-specification diesel that arises as a consequence of the transportation of fuel products by pipeline.
Different types of fuel with different levels of sulphur (e.g. gasoline, aviation fuel and diesel) may be transported through the same pipeline network. Where the different types of fuel overlap in transit in the pipeline, a blended fuel is created, referred to as “Transmix”. The Transmix is removed from the pipeline network and then fractionated into gasoline and diesel (with the aviation fuel component being split between the two products). The gasoline is then available for immediate resale. However, when diesel interacts with high sulphur aviation fuel the result is that sulphur from the aviation fuel contaminates the diesel by increasing its sulphur content. In the specific case of ultra low sulphur diesel exposed to aviation fuel in the USA pipeline network, the consequence is that the diesel (estimated minimum daily volume of 60,000+ barrels per day) ceases to be ultra low sulphur diesel and is rendered off-specification for the on-road market in the USA.
This high sulphur diesel can be sold as fuel for use in the USA marine market. However, to make the diesel suitable for sale for the on-road market, the sulphur content must first be reduced to 15 ppm or less to qualify as ultra low sulphur diesel.
Removing sulphur from off-specification diesel fractionated from Transmix is an attractive initial commercial application for the Ultrex® Process as the off-specification diesel fractionated from Transmix is an economically stranded product. The high cost of transport from pipeline terminals to refineries or the coast ensures that off-specification diesel fractionated from Transmix can be purchased at the terminals at a significant discount not only to the market price for on-road diesel but also to the price that the marine industry is prepared to pay for diesel. The ability of Ultraclean Fuel to locate Ultrex® Units adjacent to tank storage at pipeline terminals will allow Ultraclean Fuel and its customers to take advantage of this discount and to profit from processing the off-specification diesel into ultra low sulphur diesel.
The first commercial scale Ultrex® Unit in New Mexico will apply the Ultrex® Process to off-specification diesel fractionated from Transmix.
Low pressure hydrotreaters are generally capable of reducing the sulphur content of diesel to approximately 500ppm while newer high pressure hydrotreaters can remove sulphur to 15 ppm or less. Ultraclean Fuel believes there is significant potential to add value to diesel by using the Ultrex® Process to reduce the sulphur content to 15 ppm or less. A reduction in sulphur content to such a level would allow refiners to sell the diesel into higher value markets that require diesel to have a sulphur content of 15 ppm or less - e.g. USA, Canada, European Union, Japan, Australia and New Zealand.
In the longer term, as hydrotreaters become due for refurbishment or replacement and new refineries are commissioned, Ultrex® Units can be used in place of, or together with, older hydrotreaters or in substitution for new hydrotreaters.
As sulphur level specifications globally continue to require ever-lower sulphur content, those refineries unable to remove sulphur to new standards utilising low pressure hydrotreaters will find it increasingly difficult to find markets for their high sulphur products. The Ultrex® Process provides an opportunity for traders and refineries with insufficient access to high pressure hydrotreaters to access the Ultrex® Process as an alternative to upgrading their low pressure hydrotreaters to high pressure hydrotreaters.
Ultraclean Fuel will also market the use of the Ultrex® Process in conjunction with existing hydrotreaters to increase the hydrotreaters’ capacity and lower the refiner’s operating costs and carbon footprint. For example, savings can be achieved by a refinery running its hydrotreaters at lower pressure, targeting a reduction in sulphur to 500 ppm, with Ultrex® Units reducing the sulphur content of the diesel from 500 ppm to 15 ppm or less – which is the most difficult and expensive step in the process of desulphurisation by a hydrotreater. This approach allows a reduction of hydrogen consumption, reduced maintenance costs, extended run lengths between major refurbishments, reduced energy consumption and a lower carbon footprint of the hydrotreater.
One of the advantages of Ultrex® Units as compared with hydrotreaters is that Ultrex® Units can operate independently of a refinery. Ultrex® Units can be located within tank farms to provide a service to the owners of the diesel that is stored in the tank farms awaiting sale to distributors.