Vehicle Fuel Quality Workshop Fuel Ethers in Europe

1. Vehicle Fuel Quality WorkshopFuel Ethers in Europe August 22, 2006 Graeme Wallace Director General, EFOA For further information, visit us at www.efoa.org

2. European Fuel Oxygenates Association www.efoa.org • Founded in 1985 • 9 members; representing 80% of European ether capacity • Non-profit, technical organisation • Dedicated to the responsible usage of ethers – MTBE, ETBE and TAME – in gasoline • Disseminates research on the benefits and impact of ethers on health and environment • Believes in the application of sound scientific principles and promotes constructive co-operation with all stakeholders: regulators, legislators, industry, NGOs

3. Oil Consumption Europe 15.6MBD OECD Pacific 8.63MBD North America 25.5MBD Source: IEA

4. Gasoline in Europe • Market around 120 million tonnes per year • Consumption slowly declining • Properties controlled by Fuels Directive 98/70/EC • Allows gasoline to contain up to 15% fuel ethers • Directive currently under review • No reduction in allowable ether concentration proposed

5. ULP95 ULR91 ULS98 European Gasoline Consumption by Grade EU-15 total Petrol Consumption = 109 Mill T/Y EU-25 “ “ “ = 120 “ “ EU-25 Fuel-Ethers Production Capacity = 5.85 “ “

6. Changing EU Fuel Quality Premium Unleaded Gasoline (EN228)

7. Comparison – EU & Philippines Unleaded Gasoline

8. Ether Use in EU25EU Fuel Quality Survey – Euro Super Source: European Commission

9. European policy in favour of biofuels • Directive 2003/30 “Promotion of biofuels for transport” • Establishes indicative targets of 2% in 2005 and 5.75% in 2010 • Reference value based on energy content of fuel • Each Member State to set national targets (report 2004 & 2006) • Commission to report progress by end-2006 • Biofuels officially include ETBE and bio-MTBE

10. EU-25 MSs National BioFuel Targets* 2005 EU Biofuels Directive 2003/30/EC Indicative Target ns ns ns ns ns ns EU-25 Average Implementation Plans’ Objectives *ETOH-equivalent Source: Lyondell – W.Mirabella

11. European Fuel-Ethers Market:“Bio” vs, Conventional … Bio-Ethers Share Increasing: Currently ~1/3rd Source: Lyondell – W.Mirabella

12. MTBE ETBE Planned Fuel Ether Production Capacities 2005 COLOGNE 31 HEIDE 12 KARLSRUHE 163 MARL 250 SCHWEDT 80 SCHWEDT 160 VOHBURG 37 WESSELING 65 STENUNGSUND 50 PORVOO 110 PORVOO 94 SCHWECHAT 65 BOTLEK 591 EUROPORT 98 GELEEN 138 PERNIS 153 MAZEIKIAI 80 PLOCK120 PLOCK b 204 ANTWERP a 183 ANTWERP b 204 204 KRALUPY 92 FAWLEY 122 GRIMSBY 100 KILLINGHOLME 82 MAZYR 106 NOVOPOLOTSK 41 50 DUNKERQUE 65 FEYZIN 84 FOS SUR MER 612 GONFREVILLE75 BRATISLAVA 52 80 SZAZHALOMBATTA a 55 SZAZHALOMBATTA b 53 TISZAUJVAROS 31 147 304 KREMENCHUG 24 ALGECIRAS 54 BILBAO 74 HUELVA 50 LA CORUNA 52 PUERTOLLANO 67 TARRAGONA a 54 TARRAGONA b 71 324 980 798 387 24 92 SISAK 24 52 836 65 SINES 50 180 220 24 TAME 35 MIDIA 35 ONESTI 100 PITESTI 40 PLOIESTI a 20 PLOIESTI b 25 82 50 579 422 GELA 45 MILAZZO 65 PRIOLO 41 RAVENNA 133 SANNAZZARO 41 SARROCH 237 110 BOURGAS 82 ASPROPYRGOS 65 CORINTH 45 NOVI SAD 35

13. Cost-effective Excellent Octane Improvers • Have high octane rating and low volatility, enabling substitution of other octane components such as aromatics * 5% in gasoline: derived from Abengoa data

14. Good for the environment Improves Air Quality • MTBE reduces emissions from all types of petrol vehicles, regardless of their emission-control technology • Fuel ethers widely used all over the world for over 30 years as a safe and clean “octane enhancer”, substituting lead

15. Good for the environment Best environmental outlet for C4’s • FCC units & steam crackers produce mixed (linear and iso) C4 stream as co-product • Direct use in gasoline is greatly reduced because of: • High vapour pressure • High atmospheric reactivity • Ethers best environmental outlet

16. Good for the environment Best environmental outlet for C4’s • For a refinery integrated with petrochemical industry most economic approach is; • Convert isobutylene into a fuel ether • Use linear butylenes to make alkylate • Both alkylate and fuel ethers are clean, high octane, non-aromatic components • Ethers superior octane performance offers refiner better blending flexibility

17. Cost-effective Compatible • California State Water Resources Control Board’s Advisory Panel literature assessment for the period 1975-97 • No documented materials incompatibility issues for retail stations dispensing reformulated fuels containing ethers up to 15% v/v MTBE • At 15% in gasoline, the effects of MTBE (on polymer compatibility) do not compromise equipment integrity

18. Cost-effective Problem-free for Existing Car Park • Car makers current and draft worldwide fuel charters state • On the basis of emissions benefits, vehicle performance and existing regulations when oxygenates are used ethers are preferred • Ethers have been successfully used in Europe for 30 years at levels up to 15%

19. Ethers a sustainable option Ethers: fit as gasoline components • European policy focuses on science and facts relating to health, environmental and fuel specification topics • MTBE: European Risk Assessment conducted • No risks to human health, consumers and atmosphere expected • Specific measures to limit the risks in relation to the aesthetic quality of ground water (taste and odour) • Proposals mainly dealing with the construction and operation of petrol underground storage and distribution facilities at service stations

20. Ethers a sustainable option Ethers: fit as gasoline components • ETBE: comprehensive physico-chemical, environmental and health data set supplied to EU • Data under assessment by EU Competent Authorities • Same conclusions as for MTBE • TAME: European Risk Assessment conducted • Similar conclusions to MTBE

21. Ethers a sustainable option EU Risk Reduction Strategy: Main recommendations • Environment • Establish monitoring programmes to permit early detection of contaminated groundwater • Establish minimum requirements for technical and operational aspects of petrol underground storage and distribution facilities at service stations • Include rules for MTBE-containing waste waters • Workers protection (maintenance operations and automotive repair) • Prescribe adequate protection to avoid skin irritancy • Exposure to man via the environment • Above measures, aimed at protecting groundwater, are considered sufficient to prevent the contamination of drinking water

22. Ethers a sustainable option MTBE Risk Reduction Strategy • Actions taken by Member States/EU • EU: SCOEL proposing OEL of 50ppm (8h TWA) • FIN: Service stations require environmental permit which includes groundwater monitoring requirements • FIN: On-going project aimed at optimising monitoring design and practice for service stations • FIN:Mandatory technical requirements on equipment, construction and safe operation of service stations put in place Q3, 2003

23. Ethers a sustainable option MTBE Risk Reduction Strategy • Actions taken by Industry • The Institute of Petroleum has produced Guidelines for Soil, Groundwater and Surface Water Protection and Vapour Emission Controls at Petrol Filling Stations which covers issues of design, construction, operation & maintenance at such sites. They have also issued Guidelines for Risk Assessment for the Water environment at Operational Fuel Storage & Dispensing Facilities. • CONCAWE published in 2003 revised guidelines for a risk assessment process for site clean up in the event of spills or leakage. • All these documents deal with the overall issue of petrol storage and handling and so incorporate components such as MTBE. • Individual operators have extensive operation and maintenance procedures along with spill response strategies for petrol storage and distribution facilities.

24. Ethers a sustainable option MTBE Risk Reduction Strategy • Actions taken by Industry • EFOA has produced an MTBE Resource Guide, which explains how to prevent contamination by gasoline containing MTBE, and describes emergency response and remediation techniques • EFOA also provides seminars and advice to interested parties on a regular basis • The MTBE resource guide is available on the EFOA website: www.efoa.org

25. Ethers a sustainable option USA vs Europe • The American situation is unique • Detection tolerances meant that a spill of up to 5 gallons of gasoline per tank, per day (18.9 litres/tank/day) was possible at US service stations. A leak of that amount would not be tolerated in Europe. • In the US the dispensing system is pressurised to achieve high volume delivery. This will exacerbate any leaks. • In Europe all service stations must have drainage to a separator • In the US, important economic interests in favour of alternative octane enhancers, such as ethanol, drove the campaign against MTBE.

26. Ethers a sustainable option USA vs Europe • In the United States, significant improvements to the underground storage tank (UST) program seem to have successfully reduced most MTBE detections to concentrations far below the 20 to 40 ppb suggested by the US EPA to avoid MTBE's unpleasant odour and taste. • The U.S. Geological Survey has testified before the U.S. Congress that MTBE contamination is at very low concentration levels and in summary considered MTBE to be a minor problem. • According to the California Department of Health Services, UST upgrades have dramatically improved groundwater protection. Data indicate that as USTs are upgraded the concentration level and frequency of MTBE detections is levelling off and beginning to decline.

27. Ethers a sustainable option Conclusions • Europe leads the world by remaining focused on sound science and good management of infrastructure and logistics • MTBE and the other fuel ethers will remain key gasoline components in the EU25 at levels up to and possibly beyond 15%

28. Maraming Salamat Po

29. Ethers a sustainable option EU Risk Assessment Report:Main Conclusions • Risks are not expected and risk reduction measures already being applied are considered sufficient for: • Human health • Consumers • Atmosphere and terrestrial ecosystem • Micro-organisms in sewage treatment plants • Need to limit risks for: • Workers in car repair industry exposed to local skin effects • Groundwater contaminated due to leaking storage tanks • Population potentially exposed to contaminated drinking water due to leaking storage tanks

30. Ethers a sustainable option ADL Report • Report for the European Commission on “MTBE and the Requirements for Underground Storage Tank Construction and Operation in Member States” • Two key conclusions: • “Widespread MTBE contamination on the same scale as in the USA (especially California) is unlikely. The risk of groundwater contamination is unlikely to increase, given important differences between the USA and the EU, although robust enforcement of the existing Member State regulatory framework is required to ensure this risk remains low in the future.” • “Adequate enforcement of Member State requirements for the construction and operation of UST systems is the key to safeguarding water quality in the EU”

31. Manufacturers Importers Data: Hedset Data compilation: IUCLID Priority Lists Rapporteur: Class & Lab Industry comments Drafts RARs proposals Further info Further testing Technical Meetings ("TMs") Several versions Final version of the RAR (TM level) Recommendations affecting OELs SCHER Competent Authorities Final version + Summary OJ Draft OJ Publication Risk reduction strategy RA on internet Risk reduction measures SCOEL Classification OEL Directive and labelling EU Risk Assessment: Flowchart Risk reduction measures

32. Ethers a sustainable option EU Regulatory Status of MTBE, ETBE & TAME

33. Ethers a sustainable option Groundwater 100 Ether & Refining Industry must continue to improve UST’s Source: Gibbs, L., 1998.  Oxygenate Use in Gasoline

34. Ethers a sustainable option MTBE - Remediation • The large array of well-proven remediation technologies for treating soil and groundwater contaminated by conventional gasoline are applicable to gasoline containing MTBE but more treatment is required. • air-stripping, • adsorption using activated carbon • biological degradation. • Traditional pump-and-treat technologies available for water plants have also proven effective for dealing with water contaminated with gasoline containing MTBE. • MTBE is a biodegradable substance • Aerobic decomposition occurs in natural conditions • Anaerobic decomposition of MTBE is slow, but can often be readily improved by oxygen feed, extra nutrients and microbe augmentation