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Hudson River Navigator A Regional Conference to Address Air Quality: Smart Fuels & Technology 03/29/ 2006 Solutions to the Issue: Real World Applications Supply & Infrastructure Steven J. Levy Sprague Energy Sprague Energy Overview • Sprague Energy has been servicing the Northeastern U.S. as the leading independent wholesale distributor of energy products for over 130 years • Revenue in excess of $2 billion • Owns 20 terminals – Over 7 million barrels of capacity • Throughput, exchange and purchase product at 100 plus terminals • 475 employees • Wholly owned subsidiary of Axel Johnson Inc., a member of the Axel Johnson Group of Sweden – Energy – Environmental – Telecommunications Sprague’s Core Businesses Fungible Petroleum Products Clean Fuels ULSD Biofuel Ethanol Natural Gas Coal Materials Handling Risk Management / Fuel Management What is driving fuel choice? Emission reductions Energy dependence Who is driving fuel choice? Environmentalists Federal regulations State legislation Local legislation Consent Decrees Obstacles to Alternative Fuels • Availability of supply • Lack of a fueling infrastructure – Infrastructure cost – Cost to supply fuel – Lack of demand • Equipment range limitations • New equipment cost and availability • Equipment cost of conversion • Fuel Cost • Lack of experience, education, training, etc. Fuel Alternatives Hydrogen Electricity Natural Gas Propane Oil Wind Biomass Biofuel Oxydiesel Emulsified Fuel ULSD Solar Ethanol Uranium Methanol Fischer Tropsch Coal Liquid Petroleum Gas Hydroelectric Power Countries throughout the world are moving to lower sulfur fuels to reduce worldwide emissions and provide product consistency What is Currently Happening? Sulfur Level 50,000 ppm 5,000 ppm 2,000 ppm 500 ppm 15 ppm Low Sulfur Diesel Regulations 2004 On-road Diesel 2006 500 ppm Non-road Diesel 5000 ppm Locomotive & Marine Diesel 5000 ppm Home Heating Oil 5000 ppm 2007 2010 80% 15 ppm, 20% 500 ppm 500 ppm 500 ppm 5000/500/15 ppm ? 2012 15 ppm 15 ppm 15 ppm 500/15 ppm ? Why ULSD • • • • • Environmental acceptance Meets EPA regulations Immediate emission reductions Supply readily available Unlike other alternative fuel options, ULSD has no infrastructure or fleet changes/modifications • Least costly alternative fuel option • Meets/exceeds OEM fuel specifications • Most ULSD, we know Sprague’s does, exceeds ASTM and engine manufacturers’ lubricity specifications • Enabler to new emission reduction technology ULSD Proven Emission Reductions* ULSD Base Fuel Only ULSD with DPF Retrofit ** THC 76% 92% CO 29% 94% PM 23% 88% KEY: PM = Particulate Matter CO = Carbon Monoxide THC= Total Hydrocarbons *Society of Automotive Engineers, Inc. 2001-01-0511: “Performance and Durability Evaluation of Continuously Regenerating Particulate Filters on Diesel Powered Urban Buses at New York City Transit” ** 99% reduction in PM particle counts across all size ranges, including the smallest particles. ULSD vs Conventional Diesel Big Dig Job Site ULSD Applications ULSD Typical Applications Local ULSD Users • County of Westchester/Liberty Lines • City of New York – – – – • • • • • • • • Department of Sanitation Department of Transportation Department of Parks & Recreation Police Department City of New York Department of Education State of New York MTA New York City Transit Katonah-Lewisboro Schools Wappingers School District Keyspan Silverstein Properties Construction Major Users of ULSD What is Ethanol? • Ethanol is grain alcohol, readily obtained from sugar or starch in crops such as corn • Blended with gasoline for use as a fuel – Clean-burning – High-octane – Renewable resource • E10 – 10% ethanol and 90% unleaded gasoline – Approved for use in any make or model vehicle sold in the U.S. • E85 – 85% ethanol and 15% unleaded gasoline – An alternative fuel for use in Flexible Fuel Vehicles • Increasingly used as an oxygenate for gasoline, replacing MTBE What is Biodiesel? • Biodiesel is the name of a clean burning alternative fuel, produced from domestic, renewable resources • Soy – Most common in U.S. – Largest availability – Best cold temp ops 35 • Poultry / Tallow – – – – Lower feedstock cost Full tax benefit Limited supply Poorer cold temp ops 45 / 50 • Recycled oils / fats – Lower cost / ½ tax benefit – Limited supply – Mid cold temp ops 40 / 45 • Imports: Palm – Very large supply – Full tax benefit – Worst cold temp ops 60 Why Biofuel • Energy Dependence • Emission benefit with higher sulfur fuels • Economical in conjunction with tax incentives and high conventional fuel costs • Renewable • Stimulates economy Why ULSD, Biodiesel, Bioheat, E85? • Supply readily available • Fueling infrastructure in place • No equipment range limitations • Additional fuel cost is minimal, if any • Transparent to the user • Most cost effective choices Clean Fuels Supply • Ultra Low Sulfur Diesel Fuel – Bulk deliveries – Mobile refueling – October 15, 2006 available at the retail service station as diesel is today • Biodiesel/Bioheat – – – – Available today Key is to make sure it meets industry quality standards ASTM 6751 quality Biodiesel realizes cold temperature operability issues faster than most petroleum diesel • E85 – Available for bulk delivery – Local infrastructure will be based upon demand – Adverse reaction toward water as well as certain materials in the infrastructure – Scouring effect of ethanol requires high-performance filtration of contaminants Contact Information Steven J. Levy Sprague Energy 4 New King Street White Plains, NY 10604 Phone: 914.328.6770 Toll Free: 877.723.3425 Fax: 914.328.6701 Email: [email protected] www.spragueenergy.com