The Control Technologies and Options Workgroup of the Ozone Transport Assessment Group (OTAG) retained MathPro Inc. to estimate the refining economics of producing various proposed cleaner-burning gasolines, including the so-call OTAG fuel (i.e., low-sulfur gasoline). In this engagement, we (1) estimated the incremental costs of producing the OTAG fuel and six other cleaner-burning fuels defined by the Workgroup (where the estimated costs included refinery investment costs, operating costs, ancillary costs, and social costs associated with changes in energy content); (2) estimated the associated average composition and energy content of the resulting gasoline pool in the OTAG region, for the OTAG fuel and each of the six variants; and (3) conducted various sensitivity analyses in connection with the production of OTAG fuel.

In addition, MathPro Inc. conducted a sensitivity analysis to assess the cost of the proposed OTAG fuel standard for refineries that now produce gasolines with sulfur content lower than and higher than the average for PADDs 1, 2, and 2. This sensitivity analysis recognized the diversity of the refining sector with respect to desulfurization capabilities and crude oil quality.

The study employed formal refinery LP modeling using the ARMS refinery modeling system. Results of the analysis informed the recommendations of the Workgroup and OTAG as a whole with respect to gasoline reformulation and sulfur control.

The recommendations produced by the OTAG process were the first step in the regulatory process that led to the Tier 2 gasoline sulfur control program.