Conversion could be behind Colorado rationing

The Trucker News Services

8/16/2006

Conversion to ultra-low sulfur diesel (ULSD) may have been the cause of a temporary fuel shortage in some parts of the country, particularly Colorado, according to authorities.

Some trucking companies the week of Aug. 7 were advising their drivers to avoid Colorado or refuel before arriving there.

Trucks typically need 100 to 300 gallons of fuel to fill up, but some Colorado truck stops were rationing fuel to 50 to 75 gallons per truck, said Colin Heupel, safety manager for HVH Transportation Inc. truckload division in Henderson, Colo. HVH is advising its drivers to refuel before driving to Colorado.

The shortage reportedly was also due, in part, to a higher demand from farms during harvest season, difficulties complying with a new federal clean-air rule, and a summer storm that knocked out a large refinery in Illinois.

As of June 1, the Environmental Protection Agency mandated that refineries slash the sulfur content of diesel to 15 parts per million (ppm) from 500 ppm, said Stan Dempsey Jr., president of the Colorado Petroleum Association.

In Colorado, the conversion of diesel to meet the new EPA requirement “has not been exactly smooth,” Dempsey said.

Storage tanks along the diesel pipeline system must be “shut down and steamed and cleaned” to adhere to the new, lower-sulfur standard, said Roy Turner, executive vice president of Colorado/Wyoming Petroleum Marketers Association.

As might be expected, the shortages have had an influence on diesel prices in Colorado. The average price of diesel in that state late last week was $3.20. Nationally, it was $3.06 a gallon. Wholesale diesel fuel has risen steadily since July 1.

Steve Douglas, general manager of supply and marketing at Suncor Energy Inc., said his company is trying to make more diesel. Suncor has a new $445 million ultra-low-sulfur diesel facility.

“It was certainly expected there would be some hiccups,” Douglas said. “When you spend hundreds of millions of dollars on new equipment, you do not flip a switch and produce the fuel.”

Suncor supplies roughly 20,000 barrels of fuel per day for Colorado, where total demand is about 60,000 barrels a day, Douglas said. He said Suncor will limit the amount of fuel its customers can purchase and is looking for diesel that it can bring into Colorado by a pipeline.

— By Jerry Breeden

The Trucker Staff