|SThe transition in 2006 to ULSD went well. In 2005, the production potential had taken
a backseat to concerns over distribution, but most ULSD made it to terminals
without contamination. In fact in some
cases, it made it to terminals well under the 15 ppm required at retail.
|SIn many cases, terminals opted to carry only ULSD. As a result, ULSD is being used to supply
diesel outside the highway market.
Some of the outages this past fall in PADD 2 that were occurring at
the end of the distribution system may have been exacerbated by the limited
flexibility this situation creates.
Suppliers were reporting stronger than usual seasonal demand in the
Midwest, which uses diesel fuel for farm use.
Even without the ULSD program this can create temporary terminal
outages. Some refinery problems
contributed to the tight supply. It
did not appear that ULSD was the main cause of the outages, but more a
|SThe other transition issue that emerged was the need to use
ultra-low-sulfur kerosene as a blending component in winter highway
diesel. Some marketers that normally
line up kerosene supplies in the summer, were not finding suppliers willing
to commit. ULSK suppliers were
focusing on the transition to diesel at that time. There was also some change
in supply sources, which adds to transition pressures.
|SWinter-quality diesel was supplied using the typical
means. In addition to blending with
kerosene at terminals, some suppliers produced a “winterized diesel” at the
refinery that already had lighter distillate material blended in to keep it
from gelling in colder weather; however, some suppliers used more additives
that prevent gelling than in the past.
|SWhen the cold snap hit in February, gelling issues popped
up in several areas. But these seemed
to be more issues of terminals and fleet operators getting caught with winter
product in their tanks that was not blended for temperatures as low as they
dropped. ULSK was moved to those
areas, but that does not happen quickly.