MathPro Inc. conducted a refining analysis for EPA’s Office of Transportation and Air Quality (OTAQ) to assess the effects of various potential legislative and regulatory developments on the costs of supplying motor vehicle fuels in PADDs 1, 2, and 3.

The potential legislative or regulatory issues investigated included (i) a national Renewable Fuels Standard (RFS), consisting of a national ethanol mandate, a national ban on MTBE blending, and removal of the oxygen requirement for RFG; (ii) reducing toxics emissions by setting new benzene content or toxics emissions standards for conventional gasoline and/or RFG; (iii) setting a national gasoline sulfur standard of 10 ppm; (iv) reducing the number of distinct types of gasoline (“boutique fuels”) that may be sold in the U.S.; and (v) state programs for complying with the 8-hour ozone standard that may increase the volume share of low-RVP gasoline or RFG in the U.S. gasoline pool. Such programs could impose significant costs on the U.S. refining industry, and the analysis was designed to produce estimates of these costs (including both operating costs and investment requirements).

The analysis addressed refining operations and gasoline production in three regions – PADD 1, PADD 2, PADD 3 – by means of regional refinery LP modeling, using MathPro’s ARMS refinery modeling system.

In the course of the analysis, MathPro made a number of modifications and enhancements to ARMS to extend the system’s representations of refining processes for meeting stringent future emissions standards.

For each prospective regulatory initiative, the analysis produced estimates of regional refining costs and investment requirements; additions to refining capacity, by process and region; regional refining inputs and outputs, including gasoline and diesel fuel out-turns; average properties of the gasoline pool (including Complex Model properties, energy density, and DI), by region, gasoline type and grade; and marginal costs (shadow values) of gasoline pool properties and Complex Model emissions constraints.