Tier 3 octane loss Q&A

The following questions were asked in two web conferences this summer

Are US refineries tight on octane supply?

•Yes.
•In the RefComm webinar poll, July 2020, there were 9 responses:
•44% are tight on octane
•33% are not tight on octane
•22% don’t know
•In the AFPM Summit webinar poll, August 2020, there were 20 responses:
•45% are tight on octane
•25% are not tight on octane
•30% don’t know

Are events going on that impact gasoline pools and make octane balances go off tilt?

•Yes
•Many constraints must be met simultaneously in gasoline processing and blending
•Tier 3 reduces gasoline production and destroys octane barrels
•Deep desulfurization for Tier 3 causes 5 times more octane loss than was expected
•It is not easy or cheap to replace that many octane barrels.

Didn’t refiners foresee that deeper desulfurization would destroy octane?

•Yes
•But it was underestimated by a factor of five
•This is crucial because octane loss was the biggest factor for estimating Tier 3 cost
•And octane loss was the least certain cost factor
•We found no hard data supporting the estimated octane loss of 0.5
•That was a big reason for our three-year research project
•Our pilot plant and field tests show typical octane loss is 2.5

Is 2.5 octane loss really what refiners are seeing today?

•Yes
•Many refineries are starting to hurt from Tier 3 octane loss
•2.5 is a typical number for US refineries making 10 ppm sulfur
•Many refineries are losing more than 2.5
•0.5 octane loss is a best-case
•This is confirmed by many field tests we have done since 2016
•It hurts profits because octane is very valuable and its price keeps rising

Next post – more Q&As from the RefComm and AFPM conferences

For more information, watch these short videos:
Tier 3 – a wolf in sheep’s clothing?
contact: George.hoekstra@hoekstratrading.com +1 630 330-8159

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Hoekstra Trading LLC

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