With an investment of $63 million, Tesoro officially opened its new Distillate Desulfurization Unit (DDU) at the company’s Kenai Refinery.
The refinery is now the only producer of ultra-low sulfur diesel in the state.
Approximately 150 company executives, elected officials and refinery employees attended a dedication ceremony just outside the perimeter of the diesel fuel production unit Wednesday.
“The investment of over $60 million in the DDU is indicative of Tesoro’s commitment to serving the transportation needs of the state of Alaska,” said Tesoro Chief Operating Officer Bill Finnerty.
“This is truly a significant event for Tesoro, for the refinery and for the contractors,” he said.
Refinery manager Steve Hansen said the new process unit will take the amount of sulfur in diesel from 1,000 parts per million to 8 ppm.
An Environmental Protection Agency regulation that goes into effect this year requires that diesel fuel for on-road use contain less than 15 ppm of sulfur, according to process engineer Jason Hofseth.
The new unit actually began producing ultra-low sulfur diesel May 17, he said.
Hofseth said Alaska had been exempt from the EPA’s lower sulfur standard, but will lose its variance from the regulation Sept. 15.
Another EPA regulation pertaining to sulfur in diesel requires non-road locomotive diesel fuel to have less than 500 ppm, according to refinery operations manager Rolf Manzek.
“We chose to make all our diesel 8 ppm ... at a cost,” he said. Added costs for making the lower sulfur fuel include cost of the catalyst used in the process, energy and run length, he said.
All diesel fuels, including locomotive and marine fuels, will have to be 15 ppm by 2012.
Manzek said the DDU “can pull about 4 tons of sulfur per day” from the diesel being produced.
Depending on the type of crude oil being processed through the plant, the entire refinery averages about 10 to 12 tons of sulfur a day, he said.
“We strip it out as (hydrogen sulfide) and turn it into elemental sulfur,” he said.
Manzek said the inert sulfur is stored at the refinery until there is enough volume to ship out a barge load.
Because there is no market in Alaska for elemental sulfur, it is shipped to the Far East, the Lower 48 or to Canada.
“We have to ship sulfur out about every three years,” he said.
Design capacity of the new diesel unit is 10,000 barrels per day. A petroleum barrel is 42 gallons.
On hand at the dedication ceremony was Alaska Lt. Gov. Sean Parnell, who said the state is thankful for Tesoro’s $63 million investment.
“It means more jobs for the community here,” Parnell said. “We look forward to many years in the future of Tesoro’s presence in Alaska.”
Phil Hermanek can be reached at email@example.com.
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