BY MOST accounts, the full-scale rollout of ultra low sulfur diesel (ULSD) across the United States and Canada was about as uneventful as anyone in the trucking industry could have imagined. That's not ignoring a few hiccups, but they were relatively isolated.
Spot shortages of ULSD were reported in some areas. Petroleum haulers said terminals might have only low sulfur diesel (500 part per million sulfur) one day and then just ULSD (15 part per million sulfur) a day or two later. Loading arms at the terminals were sometimes mislabeled or were not clearly labeled to indicate which diesel product was being handled. Label confusion also has occurred at retail locations.
Much of the credit for the smooth rollout goes to an outstanding government/industry effort to resolve potential problems and issues ahead of the 2006 implementation schedule. Initiated by the Environmental Protection Agency and the American Petroleum Institute, three Clean Diesel Fuel Implementation Workshops (2002, 2004, and 2005) brought together key stakeholders to discuss the switch to ULSD. Among the participants were representatives from the Petroleum Marketers Association of America, National Tank Truck Carriers, American Trucking Associations, and Independent Liquid Terminals Association.
Minor glitches aside, participants in the ULSD supply chain reportedly were able to meet the three primary deadlines on schedule: Refiners and importers were on track with the June 1, 2006 deadline to ensure that ULSD accounts for 80% of the on-road diesel they provide for the US market. The process of building ULSD inventories at petroleum terminals was well underway by the September 1, 2006 deadline. In many cases, the first ULSD shipments reached retailers and fleet refueling locations well before the deadline of October 15, 2006.
Initial reports suggest that the ULSD being loaded at the racks is well within the sulfur minimums of 15 parts per million. In fact, some loading documents show sulfur content below 10 parts per million. If that holds, it's very good news for petroleum haulers.
Also good news: More petroleum fleets say they have experienced no problems switchloading with other fuels, which has enabled them to avoid using dedicated tank trailers for ULSD. It doesn't hurt that the ULSD is coming in well below the 15-ppm minimum.
When evaluating the initial reports from the field, it's important to remember that the ULSD rollout is still in the early stages. Some questions remain unanswered. For instance: How many retailers will continue to offer low sulfur diesel and for how long?
Marketers are not required to sell ULSD until June 1, 2010, which means petroleum haulers may have to coordinate shipments of two different diesel products for the next four years. Some marketers — as well as fleets with their own fueling stations — have said they want the flexibility to buy either ULSD or LSD, depending on the price, and drop it into a single storage tank. This is allowed by the regulation.
Others want to buy ULSD but label and sell it as LSD, but this could be more of a problem. As of October 15, dispensing facilities receiving ULSD became subject to downgrading limitations. If ULSD is dispensed from pumps labeled for LSD, it is considered a downgrade by the EPA. Downgrading is limited to 20% per downgrade period per location.
The EPA rules also state clearly that operators must change the dispensing pump labels to ULSD once a storage tank is fully converted to ULSD. Reportedly, this still hasn't been done at all locations, and that adds to driver confusion over ULSD handling.
Petroleum haulers certainly will face a few more challenges with ULSD in coming months. However, most of the issues seem to be relatively easy to address. Hopefully, the ULSD rollout will continue to be a big non-event.