For Immediate Release: June 28, 1999
Media Contact: Claudia Chandler -- 916 654-4989



Deadline for MTBE Phase out Affirmed



The removal of MTBE from gasoline in California should not occur earlier than the last day of 2002, the California Energy Commission voted Monday, June 28, 1999.

In a unanimous 5-0 vote, the Energy Commission approved a staff report setting the timetable for the phase out of MTBE, and affirmed the deadline earlier set by Governor Gray Davis to remove the oxygenate from California gasoline supplies.

MTBE (methyl tertiary butyl ether), in use since the 1970s, had been found to contaminate a portion of California's groundwater aquifers. In response to potential health concerns and high cost estimates to clean up drinking water resources raised by a University of California study, Davis last March 25, directed the phase out of MTBE no later than December 31, 2002.

In setting the stage leading to December 31, 2002, the Commission report said the state's gasoline refiners will require ample time to undertake major modification projects before they can produce comparable volumes of California reformulated gasoline (RFG) without MTBE. "Planning and engineering for these projects will require up to six months to complete, followed by the permitting process, ordering major equipment, construction, and testing of the modified equipment," according to the report. "In total, these activities will optimistically require, on average, about three years to complete."

Yet, even before these projects are started, the report said refiners are confronted with areas of uncertainty that limit their time frame to produce gasoline without MTBE. These include the potential removal of the federal requirement for RFG to contain a minimum amount of oxygen at all times; the viability of ethanol as a potential replacement for MTBE and the proposed Phase 3 RFG regulations.

Federal law requires that the most polluted regions in the United States use RFG containing minimum amounts of oxygen. Such areas include Sacramento, Los Angeles and surrounding areas, and San Diego. These regions collectively account for about 70 percent of gasoline sold in the state, or about 10 percent of the gasoline sold nationally. It is projected that without the federal requirement, at least 30 percent of the gasoline in California would be without MTBE. However, if this federal requirement remains in effect, ethanol will be the most likely oxygenate to replace MTBE, the report said.

Ethanol is currently being assessed as an acceptable substitute for MTBE, but the studies will not be complete until this December. If ethanol becomes the alternative oxygenate, the report said the distribution infrastructure for gasoline in the State will also have to be modified for ethanol blending at terminals, a task that will require up to two years to complete.

California's demand for ethanol of 35,000 barrels to 92,000 barrels a day could be met with sufficient lead time, according to the report. But the availability of ethanol supplies would become an "issue if other areas of the country were also to ban MTBE while the federal minimum oxygenate requirement remains in place for gasoline." The shortfall could be covered with the start- up of idle facilities and the building of new facilities, the report said.

The Governor's Executive Order also specified the Air Resources Board to adopt specifications for California RFG that will provide additional flexibility to refiners to remove MTBE and maintain current emissions and air quality benefits, while allowing compliance with the State Implementation Plan. Since new specifications for California RFG will not be completed until December, refiners will most likely have to refrain from finalizing any MTBE phase out plans until the start of 2000.

The report approved June 28 will be sent to Governor Davis on July 1. The report resulted from a series of meetings conducted by Energy Commission and ARB staff with refining companies, petroleum product pipeline operators, environmental groups, permitting agencies and the ethanol industry. A public workshop was held on June 18 to hear comments on the staff draft document.



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