Renewable Fuels
Ethanol
In 2006, we substantially increased our use of ethanol as a
renewable oxygenate in reformulated gasoline (RFG) produced
for the U.S. market. This fuel comprises over 30 percent of
the U.S. gasoline market and is mandatory for use in certain
urban areas that currently do not meet EPA standards for
ground-level air quality.
The widespread introduction of ethanol as a renewable
oxygenate component also helped ConocoPhillips and other
refiners achieve a 2006 requirement that nearly 3 percent of
gasoline supplied in the United States be renewable fuel. We
met that target and are also on track to meet a somewhat higher
2007 requirement for the content of renewable components in
our gasoline products.
Ethanol must be blended into gasoline at the distribution
terminal in order to ensure product quality. Consequently,
many ConocoPhillips terminals have been equipped with special
ethanol tanks, corrosion-resistant pipes, pumps and metering
equipment. Others will be equipped similarly in the future.
Renewable Diesel Fuel
In April 2007, we announced a strategic alliance with
Tyson Foods, the largest protein producer in the United States,
to manufacture and market the next generation of renewable
diesel fuel for the U.S. market. The alliance will use beef,
pork and poultry by-product fat to create a high-quality
ultra-low-sulfur diesel fuel that meets all federal standards.
Production is expected to begin in late 2007, increasing to as
much as 175 million gallons per year.
Unlike biodiesel, renewable diesel fuel is produced using existing
refinery equipment and can be blended and transported with
petroleum-based fuel. The addition of animal fat also improves the
fuel’s combustion properties, while the processing step improves
its storage stability and handling characteristics when compared
to biodiesel. Our refining process also can be used to convert
rapeseed and other vegetable oils to renewable diesel fuel.
We developed the technology at our Bartlesville, Oklahoma,
research center and tested it successfully at our Whitegate
refinery in Cork, Ireland, in 2005. Commercial production of
renewable diesel fuel using soybean oil began at Whitegate in
2006. The refinery fuel currently is producing up to 1,000 barrels
per day of this fuel for the Irish market.
We also are working to develop the processing technology
needed to make second-generation renewable fuels by
thermochemically converting cellulosic biomass such as
wood, corn stalks and switchgrass.
Biofuels Research
We announced two significant biofuels research agreements in
2007, including an eight-year, $22.5 million program at Iowa
State University to develop new technologies for producing
biofuels. The program will include research on converting
biomass to fuel through fast pyrolysis, a process that uses heat
in the absence of oxygen to decompose biomass into a liquid
product. This bio-oil can be used as a heating oil or can
potentially be converted into transportation fuel at petroleum
refineries. The program also will explore other thermochemical
technologies to produce biofuels, and we will fund research to
understand and support environmental sustainability and rural
economies. Studies will emphasize crop improvement and
production, the harvesting and transportation of biomass and the
impacts of biofuels on economic policy and rural sociology.
We also are sponsoring research at the Colorado Center for
Biorefining and Biofuels (C2B2), to develop technologies for
the production of transportation fuels and other products from
biomass, such as agricultural fertilizers, synthetic fibers for
clothing and other uses, plastics and commercial chemicals.
Awards will be granted to other universities in the United
States and Europe to work on a variety of projects, including
thermochemical and biological processing of biomass and the
conversion of carbon to liquids.
Sulfur Reduction
At the Borger refinery in Texas, our clean fuels investment was
expanded to include installation of a new coking unit, due online in 2007.
While enabling ULSD production, it also will allow the processing of
heavier Canadian crude oil and a reduction in SO2 emissions.
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In the United States and Europe, we are producing low-sulfur
gasoline (LSG) and ultra-low-sulfur diesel fuel (ULSD) which
not only reduces vehicular sulfur emissions but also allows the
introduction of advanced emissions control systems that would
otherwise be damaged by sulfur.
Our U.S. clean fuels program will total $2.9 billion from 2002
through 2008, when our refineries will be removing more than
18,144 metric tons of sulfur per year from refined products.
Two-thirds of the investment is on diesel-fuel production and
the rest on gasoline production.
In January 2006, the allowable sulfur content of gasoline was
substantially reduced to an average of no more than 30 parts
per million (ppm), from former maximums of 500 ppm in
reformulated gasoline and 1,000 ppm in conventional gasoline.
Following major investment and construction efforts, several
of our refineries began producing the new clean fuel blends
before the deadline, and we also met the 30 ppm standard
across our impacted refineries for the year.
In June 2006, our U.S. refineries also met the EPA’s new
ULSD standard of 15 ppm for at least 80 percent of all
production of diesel fuel for highway use, a 97 percent reduction
from the 500 ppm limit previously allowed. Nine refineries
beat the EPA deadline, and our Rodeo refinery in California
began producing ULSD a full year in advance.
We also were on schedule to meet the next sulfur reduction
target of 500 ppm for non-road diesel fuel in June 2007 and
are preparing for further phased reductions through 2012,
when all highway and non-road diesel fuel must meet a
uniform 15 ppm standard.
In addition to major projects at our refineries, significant
modifications were made to pipelines and terminals across the
United States to ensure ULSD product quality throughout the
distribution system. Work included the installation of piping to
segregate the new fuels and analyzers to measure quality.
Our refineries outside the United States also meet the regulatory
requirements of the markets where their products are sold
consistently achieving clean fuels standards ahead of regulation.
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In our Bartlesville Technology Center, Jane Yao evaluates a
sample of renewable diesel fuel made from soybean oil.
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Biofuels are produced from biomass such as plants or
organic waste and can be used as direct fuels or blended
into gasoline or diesel fuel. The most commonly used
biofuel in the United States is ethanol (ethyl alcohol),
produced by fermenting plant sugars extracted from corn.
Currently, most U.S. ethanol production is blended into a
reformulated gasoline (RFG) that contains 10 percent ethanol.
RFG is used primarily in areas that require an oxygenated fuel
in order to meet air quality standards. The Environmental
Protection Agency prohibits the use of higher concentrations
of ethanol in conventional vehicles due to the risk of damage
to engine and fuel system components. Specially equipped
flexible-fuel vehicles are permitted to use higher
concentrations of ethanol, such as E-85, a blend of 85 percent
ethanol and 15 percent gasoline by volume.
ConocoPhillips is expanding the accessibility and potential
use of E-85 by allowing marketers to offer an unbranded
product at fueling stations in the states of Iowa, Illinois,
Nebraska and Colorado. The pilot program is available to
about 1,300 sites in these states, which were selected in
response to marketer requests as well as the improving
local availability of ethanol supply.
In Europe, ConocoPhillips markets E-85 in Jet-branded
sites in Sweden, where demand is high due to government
financial incentives that encourage the public to buy cars
equipped to run on the fuel. Sweden’s tax subsidies also
make E-85 cheaper than gasoline. Swedish law requires
almost all service stations to offer renewable fuel by 2008.
High-volume sites are being converted first, with our
Jet-branded sites in the vanguard. The new fuel will be
available at all Jet service stations in Sweden by the end
of 2007.
However, in other countries only a small number of passenger
vehicles currently can use E-85, because of its incompatibility
with some automotive fuel system components.
Ethanol contains less energy than gasoline, so E-85 achieves
only about 75 percent of the fuel economy of gasoline.
Since E-85 currently is more expensive to manufacture,
it requires tax subsidies to compete with regular oil-based
fuels. Additionally, we are working with the American
Society of Testing and Materials, which sets U.S. fuel
standards, on revising E-85 specifications to address
concerns over its detergency, high-sulfate content and
corrosiveness.
Currently, the ethanol blended into gasoline can be
produced from crops such as corn, sugar cane, cereals,
soybeans, rapeseed oil and palm oil. Like any fuel, ethanol
burned in an engine results in emissions of carbon dioxide.
However, these emissions were offset by the amount of
carbon dioxide that was originally absorbed from the
atmosphere by the plants used to create the ethanol, making
biofuels theoretically carbon neutral. However, substantial
energy is needed to grow and harvest the plants, convert
them to biofuels and distribute the finished products.
In the United States, where most ethanol is distilled from
corn, about 14 percent of the nation’s corn crop currently
is used to make the fuel. This has raised concerns that
larger-scale corn-based ethanol production would divert
potential food supplies and encourage the intensive planting
of energy crops on the best farmlands. This could in turn
intensify the pressure placed on valuable ecosystems, such
as rainforests in which more land would be cleared in order
to grow more food for people and livestock.
However, ethanol need not be made from potential food
sources. It also can be made from any organic source
containing sugar or starch. Potentially, current biofuel
production methods could be replaced by second-generation
fuels derived from nonfood sources, such as woody
biomass, agricultural waste or plants grown on land not
suitable for food crops.
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