The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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SPRING LITERATURE SHOWCASE 2015 www.fueloilnews.com | FUEL OIL NEWS | SPRING LITERATURE SHOWCASE 2015 3 mately the local diesel customers—rests on using a cheap feedstock. The feedstock is the largest operating cost. One of the advantages with Grayrock's platform is that it is feedstock flexible, and can make use of natural gas, ethane, propane, butane and other similar hydrocarbons. That allows a plant operator to use the cheapest BTUs available at any point in time dictating the production costs and ultimately the margins. "A lot of our projects moving forward are in areas where natural gas is significantly oversupplied, and ethane has become a major problem for a lot of the producers and midstream players because there is so much of it in areas like the Bakken and Marcellus and in Utica," said Schuetzle. You can produce fuel substantially below what a traditional production method could achieve by taking advantage of such opportunites." He noted that the diesel product produced should be cost competitive, even lacking the government supports found with products like bio- diesel. With application such as addressing flare gas, which is typically burned off, there might be supports provided in the future. The fuel meets ASTM D975 specifications and is said to offer three premium properties: ultra-high cetane (above 70); zero sulfur; and very good lubricity. On the downside the same properties that give it ultra-high cetane reduce its flow qualities in extremely cold weather. Grayrock part- nered with Lubrizol to develop a cocktail of cold flow addi- tives to meet winter specifications in those environments. The distributed production model of many small plants often located in more remote areas, mainly will serve a more localized market which creates some challenges and advantages. "The way it's working out, where you have the low natural gas prices you tend to have higher diesel prices," Schuetzle said. "There are a few reasons. The transport from a major refining center or diesel fuel hub is extended in some of the shale areas. There are a lot of oil and gas activities consuming diesel in these areas. So in most cases you would sell into the local market. You would have to deploy many plants in an area before you affect the eco- nomics." He noted that fuel logistics would typically be facilitated by tanker truck, and that the potential plant operators are looking most often at selling this diesel to a rack either as a neat fuel or a blendstock where its lubricity or zero-sulfur add appeal. Locally, there can be many specific market opportunities to leverage small scale production and those properties. One opportunity supporting heating oil dealers in the Northeast could be in leveraging the blossoming low sulfur and biofuel blending requirements. Schuetzle confirmed that there are already potential customers looking at that opportunity. Marine diesel is now lower sulfur, and Schuetzle noted there has been interest in that aspect. Similarly, locomotive users have shown a lot of interest in many cases for public relations efforts with a cleaner burning fuel. Of course, the next step as the fully commercial units start coming online is to see just how fully such an exciting concept plays in actual practice. l F O N