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May 10th, 2012

Heating Oil Is Becoming a Bit Cleaner

by Andrew Price, Senior Vice President

Number 2 heating oil will soon be a bit cleaner. States in the northeast are reducing the amount of sulfur that can be contained in the fuel. Sulfur dioxide is one of six “criteria pollutants”, along with ozone, lead, carbon monoxide, nitrogen oxides, and particulate mater that are subject to national standards established by the EPA. Sulfur dioxide, created by the combustion of fossil fuels like heating oil, is a major precursor of acid rain and fine particulate soot. Sulfur released from fuel combustion causes significant environmental and health impacts.

It is rapidly loosing market share to natural gas, but heating oil is still an important fuel in the northeast US, used mostly for space heating during the winter. Natural gas, electricity and propane dominate other parts of the US as show in the below map from the EIA.

 

 

In July 2012, New York will be the first state to require that all heating oil used in the state contain less than 15 parts per million sulfur. This is the same requirement as on-road ultra-low sulfur diesel (ULSD) and is a significant decrease from the current limit of 2,000 parts per million or higher. Other states, including Maine, Massachusetts, New Jersey and Vermont, will soon follow suit in stages between 2014 and 2018 as shown below.

 

Source: U.S. Energy Information Administration.
Notes:
New York and New Jersey regulations take effect in July of the year shown, and regulations in Maine take effect in January. The Massachusetts Department of Environmental Protection issued a commitment in their State Implementation Plan. The New Jersey Department of Environmental Protection proposed a one-year extension of the deadline for meeting Phase I limits of 500 ppm sulfur. Adopting this proposal would make Phase I limits effective July 2015. Under this proposal the 2016 Phase 2 deadline requiring ULSD would remain intact.


Connecticut, Pennsylvania and Rhode Island are also looking at reducing sulfur limits. In response to actions by the northeastern states, the DOE transitioned the 1,000,000 barrel Northeast Home Heating Oil Reserve to 15 ppm ULSD in November of 2011. The Reserve, split between Groton Connecticut and Revere Massachusetts, is designed to protect New England from possible supply disruptions.  

 Lower sulfur limits on heating oil will provide significant health and environmental benefits. The transition to 15 ppm promises to be a bit confusing as each state implements the requirements on a different time line and refiners and storage facilities move to the new product.

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