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This historical page is being kept for research or reference
purposes and will not be updated.

This historical page is being kept for research or reference
purposes and will not be updated.

Appendix B

Notes from the Teleconference on the Development of the Federal Low-Sulphur On-Road Diesel Fuel Regulations in Relation to Northern Communities, July 30, 2001

EMA expressed concern regarding not having a point-of-sale requirement. Users would have no way of knowing whether they would be purchasing the proper fuel for the 2007 model year vehicles. CVMA expressed the same concern. EC stated that CEPA itself has the point of sale requirement.

Shell indicated that ultra low sulphur diesel fuel (ULSD) with less than 15-ppm has been produced by Shell since 1984. In Shell's experience lubricity is successfully addressed with additives. ULSD has a slightly lower density than current 500-ppm diesel. However, the variability is within the range of existing diesel fuel. ULSD can be produced without impacting other uses such as heating and power generation.

The main fuel quality issue raised was regarding the current practice of re-branding on-road diesel to non-certified Jet A-1 fuel. ULSD fuel has not been tested on aircraft engines. It raises a safety concern.

The Territories indicated they would prefer not to segregate diesel fuels and continue the existing practice of using the on-road diesel fuel as multi-purpose fuel. Upgrading of the existing infrastructure to accommodate two grades of diesel fuels would be very expensive. EC noted that this issue was faced for the original 500-ppm diesel regulation, and that northern communities decided to purchase on-road diesel for all their distillate needs.

Issues were raised regarding potential cost premium to purchase low-sulphur diesel fuel prior to the coming into force of the proposed regulations. This would be required in order for northern communities to meet the point-of-sale compliance date of September 2006. The issue revolves around the limited infrastructure for fuel storage, the time needed to blend down existing stock, and the need to accommodate the fuel delivery schedule of summertime barges and wintertime ice roads.

EC noted that after the 15-ppm requirements come into effect internationally, there will not be much, if any, 500-ppm diesel in the market.

EC proposed a point-of-sale compliance date of September 2007 for northern communities, pending a review by the Department of Justice.

NWT indicated it is operating at capacity and fuel stocks are used within 18 months. NWT also indicated it will include the 15-ppm requirements in its next supply contract. If low sulphur diesel fuel can be supplied, NWT will be in compliance by September 2007.

Shell indicated that a refinery producing 300-ppm diesel today can conceivably make small quantity of ULSD to meet the northern requirements.

Shell indicated that the areas in Canada that will require a proposed point-of-sale compliance date of September 2007 would include areas north of 40th [sic, actually 60th] parallel as well as northern Quebec, Ontario and Manitoba.

In summary, the proposed point-of sale compliance date of September 2007 seems achievable for northern communities.

CPPI supports EC position of not having a special program for Alaska imports. Natural Resources indicated it was a non-issue as long as some 15-ppm diesel fuel is available in Alaska starting June 2006.

It was noted that Yukon government was not present on the teleconference and that their input on this issue should be asked for.

Action Item

Participants agreed that dyeing requirements were not required since the proposed regulations have simple requirements for level and timing.

Participants agreed that the National Round Table on the Economy and the Environment is the best mean of addressing incentives for early introduction of low sulphur diesel fuel.

Shell raised concerns regarding the re-branding of jet A-1 fuel which is sold to communities as multi-purpose fuel including on-road diesel fuel.

EC informed the group that EC would be moving forward to published the proposed regulations in the Canada Gazette in the fall.

Oil, Gas and Energy Branch

Environment Canada

August 1, 2001

Mark:

A few corrections to offer on your minutes.

Page 2: Under Timing: 3rd paragraph

Shell indicated that a refinery that produces LSD today may be able to produce a small quantity of less than 15 ppm ULSD. I don't know if all refiners could do this and I don't know if the volume would be adequate to meet northern requirements. It simply recognizes that diesel fuel is a blend of different components and selective blending could allow production of limited quantities of ULSD. It is very refinery dependent.

Page 2 Under Timing: 4th paragraph

Shell indicated that other areas would have issues with compliance timing. I don't know if they require a Sept 2007 compliance date. They may need more time or they may need less time. Shell did indicate that areas north of 60 deg latitude (not the 40th parallel) as well as Quebec Ontario and Manitoba could be impacted.

Page 2 Timing: 2nd paragraph

It was noted that capacity and fuel stocks are used in 18 months. It should also be noted that many areas particularly in the East receive one shipment a year. If their supplies are sized to last 18 months this would mean that their annual fill is going into a tank one third full.

It has been Shells experience that the tanks are typically 15-25% full when we deliver fuel. In some cases it could be half full if the heating demand is low in a given year. Facilities could try to manage down the inventory, but in cases where there is a single shipment per year this risk and cost of running out of fuel is a significant consideration.

It should be recognized it will take at least 3 years for a tank with a minimum of 25% to reach <15 ppm if it starts with 300 ppm S in LSD and is supplied with 10 ppm ULSD.

Page 2 Timing: 1st paragraph

It says EC is proposing Sept 2007 as a compliance date pending a review by the Justice Department. It was unclear whether the one year extension was a policy decision by EC or whether there was some basis in CEPA that limited the time allowance for the diesel fuel. In addition there was a question concerning the time allowance for the application of the diesel vehicle requirement in the North. The EMA said this would address their vehicle issue but I don't know what EC said in response to this.

Page 2 Timing: 5 th paragraph

The summary says that compliance in Sept 2007 is achievable for northern communities. This statement is true but somewhat misleading. It is likely true if northern communities can access and are supplied with ULSD no later than January 2005.( assuming their tanks on fill are no greater than 25% full and they are starting with 300 ppm LSD and supplied with 10 ppm ULSD)

Page 3 Rebranding Jet A-1:

Shell raised this issue with respect to the future concerns. The Jet A-1 that is being rebranded today may well meet the requirements of LSD (i.e. if it meets 500 ppm). We don't know if it is or isn't. In the future it highly unlikely that Jet A-1 will meet the needs of ULSD so this practice is likely not viable in the future.

General:

Shell/CPPI wanted to clarify that the onus of timing issue in the North will rest largely with those who directly market the fuel. For the most part the refiners or fuel suppliers are not the direct marketers in the areas of concern. These are usually the coops or the governments. Refiners do some direct marketing in areas like Hay River, Yellowknife, Churchill, Whitehorse etc. These are hub areas and the timing concerns rest more with the areas serviced out of the hubs. Generally the fuel suppliers are not the marketers in these areas. I hope this helps.

If there are any questions please contact me.

Thank you for the opportunity to follow the discussion during the conference call earlier today. My one specific comment (or recommendation) is that EC may want to look more closely into the definition of 'north'. It seems to me that it should include the coastal villages of northern Ontario and those settlements which are services by barge from Moosonee.

I work for the James Bay Cree (on the eastern side - in Québec). In this case, the four coastal communities in James Bay are now all connected by road to the rest of Québec (or in the final stages of being so connected, in the case of Waskaganish). I suspect that the existence of the roads will effectively displace barge traffic, but there is still quite a bit of interest in using James Bay staging points for servicing the Inuit communities of eastern Hudson Bay. The issues raised in the teleconference may not affect the coastal communities in James Bay, but are relevant to Whapmagoostui/Kuujjuaraapik and communities further north. In any case, I will be bringing the matter of the sulphur regulation to my colleagues in these communities.

One other technical point. The USA EPA dioxins and furans reassessment notes the relatively low production of D/F from coal and oil fired generation. The discussion of the chemistry involved in D/F production identifies the possibility that sulfur acts as a 'poison' in the catalytic route leading to the formation of both D and F. There is a possibility, therefore, that the more one is effective in removing sulfur from fossil fuels, the more one is likely to augment the production rate of D and F. Perhaps something which should be taken into account in the analysis of the impact of the regulation.

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2022-09-16