Alaska Diesel Strategy - North Slope Oil Producer Agreement
Reducing diesel emissions as soon as possible while dealing with the federal rules is a DEC priority. An obstacle, unique to the arctic, is finding ultra-low sulfur diesel (ULSD) that meets arctic grade specifications. Arctic grade fuel will not gel at temperatures as low as -60ºF, and is used in winter in most areas of the state. The state cannot force refiners to produce arctic grade ULSD for the regulated diesel market. For the North Slope Production area, this problem was potentially helped when oil producers presented DEC with a plan allowing flexibility with the federal rules, while providing an overall emission reduction by producing ULSD for use in all sources located at the North Slope facilities.
BP Exploration, ConocoPhillips, and Alaska Governor Frank H. Murkowski signed an agreement on June 17, 2005 with the following main points:
- The state will classify the North Slope areas north of Atigun Pass as “rural”. “Rural” is defined by our submittals to EPA on the federal fuel rules. This gives the North Slope producers until 2010 to comply with federal diesel requirements.
- In return for this flexibility, the North Slope producers will manufacture ULSD on site in January 2008.
- The producers will use ULSD in all North Slope vehicles and equipment, including equipment not subject to the federal rules.
- The producers will require their contractors to use ULSD.
- Excess ULSD will be sold into the general market, providing a possible source of ULSD for North Slope villages.
Between 2006 and 2010, sulfur dioxide emissions from enacting the agreement will be 40% less than emissions from compliance with the federal rules alone. In 2009, sulfur dioxide emissions will be under 10 tons per year, compared to 250 tons per year allowed under federal rules.
With this plan, sulfur dioxide emissions between 2006 and 2010 would be 40% less than emissions from compliance with the federal rules alone. In 2009, sulfur dioxide emissions would be under 10 tons per year, compared to 250 tons per year allowed under federal rules.
A delay in getting the topping plant to the north slope led to an amendment of the agreement. The amendment delayed the production of ULSD to January 2009. All other aspects of the agreement remained, including the requirement for contractors to use ULSD, and requiring excess ULSD to be sold into the general market. Additionally, in order to capture some emission reductions commensurate with what was lost by the delay, both producers agreed to spend $2 million each on retrofit projects designed to reduce diesel emissions.
In May of 2007, ConocoPhillips announced a second delay in constructing the topping plant to produce ULSD Link to: Letter explaining the second delay (PDF 828K). ADEC responded in June of 2007 (PDF). It required importation of ULSD for regulated sources starting January 1, 2009 in accord with paragraph 2(h) of the amended Agreement. Since then, ConocoPhillips announced to the media that they will not be upgrading their diesel refinery to produce ultra-low sulfur diesel on the North Slope at all. As such, DEC's requirement to truck ULSD to the slope for regulated sources beginning January 1, 2009 still stands.