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OCTANE ENHANCING PETROL

ADDITIVES/PRODUCTS

LITERATURE REVIEW AND ANALYSIS

September 2000

DUNCAN SEDDON & ASSOCIATES PTY LTD.


116 KOORNALLA CRESCENT
MOUNT ELIZA
VICTORIA 3930

TEL 03 9787 4793


FAX 03 9770 1699
E-mail: seddon@ozemail.com.au
Duncan Seddon & Associates has been retained by Environment Australia to provide a
literature survey and analysis of octane enhancers that may be used in Australia and help the
nation to implement better fuel quality standards.

The report has been prepared for the sole benefit of Environment Australia. Any third party
in the possession of the report may not rely upon its conclusions without the written consent
of Duncan Seddon & Associates.

Duncan Seddon & Associates conducted this analysis and prepared this report utilising
reasonable care and skill in applying methods of analysis consistent with normal industry
practice. All results are based on information available at the time of the study. Changes in
factors upon which the study is based could affect the results. There is no implied warranty
or merchantability or fitness for a particular purpose shall apply.

Acknowledgment

Duncan Seddon & Associates expresses its sincere thanks to contributions from Dr. John
Harris of RMIT for his assistance and analysis of the blending of oxygenate additives and
gasoline.

I would also like to thank Professor Jorma Ahokas and Peter Jackson of RMIT for useful
commentary on the toxicity of additives and for providing a reference to NOHSC data.

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EXECUTIVE SUMMARY

Overview

The move to harmonise Australian fuel standards with those of Europe will
have a profound effect on the manufacture and supply of petrol. Amongst other
factors, harmonisation requires an increase in motor octane. This is the subject
of this Review.

As well as increasing octane, harmonisation will require limits to be placed on


the levels of aromatics and olefines in the petrol. These components have a
naturally high octane and the new limits will make the manufacture of high-
octane petrol more difficult. Whilst this can be achieved, it will only be done
so at an increased cost to the motorist and an increased cost to the environment.

In order to ameliorate these costs, octane-enhancing additives may prove useful


to Australian refiners and importers. The availability, cost and environmental
impact of these additives are reviewed.

We are concerned with the production of petrol, which has no other use than as
a fuel for transport. Petrol comprises a mixture of many thousands of different
hydrocarbon compounds plus additives that may contain other elements. Very
few are non-toxic or unhazardous in some way or other. Although used in large
quantities by the motorist, the general public rarely comes into contact with
petrol. It is always confined to sealed vessels, and modern-filling techniques
minimises fugitive emissions and splashes.

Like the components of petrol, each of the octane-enhancing additives present


environmental and health issues. All of the problems are solvable within the
boundaries of fuel production, storage, transport and distribution.

Fuel harmonisation is occurring across the world. Whilst the primary aim is to
facilitate the introduction of better emission standards for vehicles, there will be
another effect, namely an increase in trade of fuels as opposed to basestocks
and refinery intermediates.

Because fuels will be produced to similar standards across a range of countries


(eg South Asia), there will be an opportunity for refiners to benefit from
economies of scale and supply several markets with petrol. This will serve to
benefit the motorist by holding down price rises that would otherwise occur as
a result of the increased costs of production of the better quality fuel.

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Although there will be opportunities for the larger and more modern Australian
refineries, the increased cost of producing the higher quality fuels may create
difficulties for the smaller and older refineries. Market share currently supplied
by the latter refineries may be lost to interstate refineries and imports.

Because of the large volume use of petrol, and to minimise shipping costs, it is
shipped in relatively large vessels. To permit effective trade and prevent
shortages, we have to guard against using Australian fuel standards as a means
of unfairly discriminating against imported product.

The danger is the tendency to ban specific petrol components as a reaction to


adverse media coverage or to pacify local political pressure. Obviously local
bans of specific components is contrary to fuel harmonisation.

A specific case in point is the ether additive MTBE. This is the most widely
used octane-enhancing additive, but is currently under suspicion in the US as a
contaminant of water supplies. Because of the contamination of vessels,
banning MTBE (and similar ethers) could effectively present a barrier to
importing lower cost petrol.

Further, banning ethers (or any other additive) would require extensive testing
of product. Because of the scale of import, refusal of entry of a contaminated
vessel, would result in disruptions to the local petrol supply chain, inevitably
increased prices for the motorist, and potentially shortages and rationing.

Taking all of these points into consideration, and aiming to achieve the
optimum outcome for the motorist, refiner, importer and the environment, the
direction of the recommendations is to facilitate maximum flexibility in the
supply of petrol to the proposed new, higher-octane petrol standards.

Review Findings

It is technically feasible for Australia to adopt Euro-3 petrol standards without


resorting to octane enhancers. However, this will constrain the industry to
producing petrol high in aromatics.

Mass production of high octane 98 RON and Euro-4 fuel will probably require
octane enhancers.

Suitable octane enhancers are alcohols, ethers and organometallics such as the
additive MMT.

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Of the alcohols, methanol is to be avoided. Ethanol is the alcohol of principal
interest. It is used in petrol in Australia and elsewhere. Ethanol can be
produced from biomass, but to remain competitive would require a subsidy -
ethanol is currently free of excise.

However, there are serious issues with the use of ethanol, which remain to be
addressed. These include air toxicity and water contamination. It is highly
likely that it will be difficult, if not impossible, for ethanol - petrol blends to
meet Euro-3 specifications from the standpoint of summer RVP (60 kPa limit).
Waiving this limit for ethanol would undermine the reasoning for a low RVP
value in Euro-3 and Euro-4.

The use of higher alcohols (propanols, butanols) will be constrained by supply


but may be able to make an occasional contribution in selected instances.

Of the ethers, MTBE is the preferred oxygenate of world oil industry. It is


widely used in Europe, the USA and the Far East. It is not currently used in
Australia.

The controversy surrounding the use of MTBE is a consequence of the failure


to properly control petrol transport and storage. All oxygenates (including
ethanol) are likely to suffer a similar level of concern if they were widely used.

The MTBE controversy may lead to the phase out of MTBE in the USA. This
is likely to severely disrupt world markets for oxygenates and petrol feedstocks.
It will cause a major worldwide reappraisal of the approach to octane.

It is doubtful if Europe could adopt the new standards (Euro-3 and Euro-4)
without the use of MTBE.

Other ethers (TAME, ETBE, DIPE) are likely to be useful in occasional


circumstances. Their use is likely to be constrained by supply. Their use is
likely to be marred by the MTBE controversy.

The use of the manganese additive MMT is highly controversial but has
growing acceptance in the refining industry. MMT may be useful in producing
lead replacement petrol and to achieve the lower Euro-4 aromatics level.

Optimum results may be obtained by using a mixture of additives so as to


ameliorate the deficiencies of each of the additives.

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RECOMMENDATIONS

1. MTBE is the preferred octane enhancer of the world oil industry and
would be suitable for use in Australia. In order to ameliorate concerns
with groundwater contamination, a national audit on the status of gasoline
transport (pipelines) and storage should be conducted with the object of
identifying issues that would lead to pollution of water supplies by any
gasoline component.

2. Prima facie the use of ethanol is incompatible with proposed standards


with respect to oxygen content and RVP at the commonly used 10% level.
Waivers specifically for ethanol in these areas are not in line with the aim of
the standards. Nevertheless, we recognise the social desire to see ethanol
included in the Australian gasoline pool. The use of ethanol in future
Australian gasoline pool should be subject to further analysis, particularly
defining how the required RVP from ethanol blends can be met using
Australian basestocks.

3. In order to maximise the flexibility for refiners or importers to provide


high octane gasoline, it is possible that ETBE and TAME could be used,
once these chemicals have been notified by potential manufacturers and
importers to NICNAS and assessment certificates have been issued. ETBE
and TAME are not currently listed on AICS.

4. The widespread introduction of 98 octane fuel would require a substantial


review of octane production in Australia, implying a major overhaul of
refinery operations. It is not clear if 98 octane will result in a net global
emissions improvement. Until this is clarified by additional work, the
widespread introduction of 98 octane gasoline should not be encouraged
by automakers and regulatory agencies.

5. There should be no in-principle objections to the use of either MMT or


ferrocene. MMT is the best researched and most widely used and would
offer the refiners a method of ensuring the final gasoline is of the required
octane (trimming). There is increasing interest in ferrocene, however, the
depth of analysis is much less that that for MMT. Further there are several
alternative suppliers of ferrocene and quality standards of the additive may
be a concern.

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6. To facilitate flexibility, the following oxygenates should be permitted in
Australian petrol. These oxygenates could be used alone or in
combination with other oxygenates or permitted organometallic compounds
(MMT, ferrocene). The maximum level should be set by the Euro-3
maximum oxygen content of 2.7%:

Oxygenate Chem. Abstract No.

Ethanol 64-17-5
TBA 75-65-0
MTBE 1634-04-4
DIPE 108-20-3
ETBE 637-92-3
TAME 994-05-8
ETAE 919-94-8
Isopropanol 67-63-0
n-propanol 71-23-8
Isobutanol 78-83-1
n-Butanol 71-36-3
sec-Butanol 78-92-2

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CONTENTS
APPROACH ...............................................................................................................1
Objectives ..............................................................................................................................................................1
Nomenclature ........................................................................................................................................................2

IDENTIFICATION OF CHEMICAL ADDITIVES .........................................................5


History....................................................................................................................................................................5
MTBE and Water Contamination .......................................................................................................................6
Other Oxygenates and Other Additives ..............................................................................................................7
Octane Boosters to be Studied .............................................................................................................................8
Non Oxygenate Octane Boosters .......................................................................................................................11
High Octane Hydrocarbons ...............................................................................................................................12

EFFECTS ON PETROL CHARACTERISTICS, ENGINE EFFICIENCY,


COMPATIBILITY, AND EMISSIONS PROFILE.......................................................15
Background to Octane Boosters ........................................................................................................................15
Fuel Blending Overview .....................................................................................................................................18
Blending Studies..................................................................................................................................................19
Climate .................................................................................................................................................................21
Alcohol and Ethers Emissions profiles ..............................................................................................................22
Greenhouse ..........................................................................................................................................................23
Ferrocene .............................................................................................................................................................25
MMT ....................................................................................................................................................................25
Automotive Finishes and Parts ..........................................................................................................................27
Automotive Industry Views................................................................................................................................29

FINANCIAL COSTS OF THE ADDITIVES ...............................................................31


Background .........................................................................................................................................................31
Methanol ..............................................................................................................................................................32
Ethanol.................................................................................................................................................................33
MTBE...................................................................................................................................................................34
Other Oxygenates................................................................................................................................................35
Implication of Californian and US Ban on MTBE...........................................................................................35
Trade in Gasoline Components (BTX, Alkylate)..............................................................................................37

ENVIRONMENTAL AND HEALTH EFFECTS OF ADDITIVES ...............................39


Background .........................................................................................................................................................39
NICNAS and AICS .............................................................................................................................................40

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Methanol (CAS 67-56-1).....................................................................................................................................40
Ethanol (CAS 64-17-5)........................................................................................................................................42
TBA (CAS 75-65-0) .............................................................................................................................................43
Other Alcohols.....................................................................................................................................................44
MTBE (CAS 1634-04-4) .....................................................................................................................................48
Proposed US MTBE Phase-Out - Blue Ribbon Panel......................................................................................49
TAME and Other Ethers....................................................................................................................................51
Comparison to BTEX and Alkylate...................................................................................................................52
Comparative Data ...............................................................................................................................................52
Ferrocene (CAS 102-54-5) ..................................................................................................................................54
MMT (CAS 12108-13-3).....................................................................................................................................54
Gasoline Components .........................................................................................................................................56

IMPEDIMENTS OF HARMONIZATION WITH EUROPEAN UNION QUALITY


STANDARDS ...........................................................................................................59
Overview ..............................................................................................................................................................59
Environmental Impact of Increased Aromatics in Gasoline Pool ...................................................................62
Issues ....................................................................................................................................................................62

STAKEHOLDER INPUTS ........................................................................................67


Motoring Organisations .....................................................................................................................................67
Australian Institute of Petroleum ......................................................................................................................67
Federal Chamber of Automotive Industries .....................................................................................................69

RECOMMENDATIONS ............................................................................................71
REFERENCES .........................................................................................................73
EXHIBITS .................................................................................................................75

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APPROACH

Objectives

This report is concerned with identifying and describing octane boosting chemicals that might
be used in Australia for the production of high octane petrol. The petrol specifications are
delineated in the Fuel Quality Report [COFFEY] and are aimed at harmonising Australian
fuel quality and standards with European Union standards for petrol, the so-called Euro-3 and
Euro-4 fuels.

The report conducted by RMIT University [RMIT] of November 1994 detailed the use of
octane enhancers to that time. Although this early report was primarily concerned with the
elimination of lead additives in petrol, the descriptions and use of alternative octane boosters
to lead alkyls is still largely valid.

The Study Objectives were:

1. Identify chemical additives/products that may be added to lead replacement petrol and/or
unleaded petrol to increase its octane number.
2. Identify the potential:
− Effects on petrol characteristics, eg RON, MON, volatility etc;
− Effects on engine efficiency (in terms of fuel consumption) and performance;
− Effects on compatibility with current and future motor vehicle emission reduction
technologies;
− Effects on other vehicle and engine components, eg spark plugs, fuel systems,
exterior paint and ornamentation; and
− Changes to the vehicle tailpipe and evaporative emissions profile
Which may arise from the use of these additives/products in Australian petrol.
3. Compare the financial cost of each of the additives/products to reach the desired octane
number.
4. Provide details on, and advise on the significance of, environmental and health effects of
the chemical additives/products.
5. Identify impediments to Australia’s objective to harmonise with European Union petrol
quality standards due to the use of these additives/products
6. Provide recommendations on octane enhancement additives/products that could be
suitable for use in petrol in Australia, for both unleaded petrol and lead replacement
petrol. This should include consideration of the various climatic conditions experienced
in Australia.

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Literature and Information Available

Since the earlier RMIT study, there has been a revolution in the availability of information,
primarily as a consequence of the explosive growth in the Internet.

Three sources of basic information have been used in this Study:

• Reports from government agencies and industry bodies published on the Internet.
Obviously some of this data may in the light of subsequent analysis be proved misleading.
Nevertheless, the data pertinent to this Study is substantial, principally from organisations
operating in the USA. These reports are presented in EXHIBITS as an annexe to the
Study.

• Articles and reports in academic journals and learned society publications. These are
subject to peer review and can be considered to give data to a high level of accuracy with
assumptions, etc, delineated in the article. Because of the nature of publication, even with
modern electronic publishing methods, there is a considerable time lag between an
observation and a publication, often as much as two years. This data was accessed using
the Chemical Abstracts database via RMIT University. These data sources are referenced
in [SQUARE BRACKETS] and listed at the end of this report.

• Patents and industrial know-how which may become available to those in the trade.
Patents have a similar time lag to academic papers and are not critically reviewed.
Pertinent know-how on major issues was also obtained from the major stakeholders. This
data is referenced with the data source as necessary.
Nomenclature
Gasoline and Petrol

In the industry gasoline is the universal term for the liquid fuel used in spark ignition engines.
Petrol is a trademark, however, the term petrol is used almost exclusively in Australia and
other former British colonies. In this report, generally we adopt the industry term gasoline.

Chemicals

The several chemical compounds studied are usually known by older (non IUPAC) names.
For most compounds there are a variety of synonyms, abbreviations and acronyms1. Since
IUPAC nomenclature can be cumbersome and rather esoteric, the most commonly used name
abbreviation or acronym is used. To avoid confusion, the Chemical Abstract reference
number (CAS) is used to identify the specific chemicals. As well as Chemical Abstracts,
many databases and Internet sites can be searched on CAS number. This helps avoid
confusion as a consequence of poor nomenclature.

The aromatic chemicals benzene, toluene and xylenes are often referred to as BTX. In this
usage, the xylenes component is the C8 aromatics fraction made by reforming. The fraction is

1
The United States Environment Protection Authority gives a good list of alternative names for alcohol and ether
octane boosters at http://www.epa.gov.swerust/oxygenat/oxytable.htm

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often referred to as virgin xylenes or mixed xylenes. This fraction also contains significant
volumes of ethylbenzene as well as the three isomers of xylene (dimethylbenzene) in a ratio
which reflects the relative thermodynamic stability (ie about 50% meta-xylene and about 25%
ortho- and para-xylene).

In some instances this group of aromatics (benzene, toluene, ethylbenzene and xylenes) is
referred to as BTEX.
Gasoline Extender

In the USA and Brazil, ethanol is used in relatively large volumes in the gasoline, namely
more than 10% of the final product. In some parts this use is described as a gasoline
extender, because the locally produced ethanol displaces what would be otherwise imported
gasoline or crude oil. This term is also used in Australian ethanol blending operations. In
other words the term gasoline extender is used to describe the use of an additive which
displaces refinery produced gasoline from the market and is done irrespective of
considerations of the octane requirements and air quality requirements.

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IDENTIFICATION OF CHEMICAL ADDITIVES

PRODUCTS THAT MAY BE ADDED TO LEAD REPLACEMENT AND/OR


UNLEADED PETROL TO INCREASE OCTANE NUMBER

History

This Study concerns the identification of additives, which may be used as octane boosters to
gasoline. Since the mass production of the automobile in the early 1920s, octane boosters
have been part of the fuel supply chain. The efficacy of lead additives was identified early in
the industry and lead based additives became the universal octane booster.

The first drive for the elimination of lead based octane boosters came during the 1970s. It
was realised that air pollution in many of the cities of the USA was a consequence of vehicle
emissions. The prime technology for ameliorating these emissions was catalytic converters
and lead is inimical to catalysts.

In order to use catalytic converters, but maintain the level of octane in the gasoline (important
for maintaining efficiency - miles per gallon), new octane boosters were required.
Consequently, there was a large research effort into octane boosters, which could be
compatible with catalytic converters.

Concomitant with this was the realisation of the problem with lead in the urban environment,
particularly in large cities where the distribution of lead correlated with traffic densities.
There was then a movement, which became worldwide, for the elimination of lead in gasoline
on health grounds. Again this forced a search, particularly by European based organisations,
for additives which could assist lead replacement by boosting octane.

The 1970s period saw the identification of alcohols, ethers and the manganese additive MMT
and the iron additive ferrocene as possible alternatives to lead. The era also saw the
identification of MTBE as being the most widely acceptable alternative. From this time
MTBE started to be used as a gasoline additive in many parts of the world at typically 1 ~ 2%
level.

In the early 1980s, it became evident that catalytic converters were not controlling the level of
air pollution in certain cities in the USA. These cities suffered from photochemical smog, the
main contributors to this was carbon monoxide, unburnt hydrocarbons, nitrogen oxides and
fugitive emissions of certain gasoline components, referred to as volatile organic compound
(VOCs).

The city with most problems was the Los Angeles area of California and California became a
pioneering state in terms of analysis, promotion and legislation of alternative (clean burning
fuels such as methanol) and reformulated gasoline.

The US Clean Air Act Amendments (CAAA 1990) attempted to solve the air pollution
problem by mandating formulae for the component mix of gasoline, so called reformulated
gasoline (RFG). Of particular interest was the mandated introduction of certain levels of

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oxygen in the gasoline. This could be supplied by the octane booster MTBE at about the 10 ~
15% level. This caused an enormous increase in demand for MTBE and plants were built in
many parts of the world (eg Middle East) to supply the US and particularly the Californian
demand.

California is the world’s largest single market for gasoline and the demand for MTBE caused
a massive expansion in plants producing MTBE to supply this market. Because of costs and
possible shortages of MTBE oxygenate, opportunities for other alternatives were considered.

Ethanol has a long history for use as both a gasoline extender, octane booster and as an
alternative fuel. The momentum for using ethanol was helped by its ease of production from
a wide variety of agricultural sources, hence can be considered a sustainable fuel. The
world’s largest use of ethanol is in Brazil, where ethanol is used as an indigenous fuel supply
following the oil shocks of the early 1970s. There has been extensive research on the use of
ethanol as a fuel in the USA and Europe. The largest promotion for ethanol use is by the so-
called corn states of the USA (centred on Nebraska). Their powerful industry lobby has
successfully secured tax-breaks for the use of ethanol produced from corn, allowing it to
compete with MTBE in the US market. Ethanol is widely used as an additive in the corn-belt
states.

To help promote the use of ethanol in gasoline, the ether derivative ETBE can be produced in
MTBE plants.

One of the problems with production of MTBE is the supply of the C4 olefine isobutene
feedstock. In order to supplement supplies, C5 olefines (pentenes, old name amylenes) can be
used, this produces TAME.

Where refinery operations have an excess of propylene, the ether DIPE can be produced in
place of MTBE.

Parallel to the use of alcohols and ethers was the progressive development of MMT as a
replacement for lead and its use in a small number but widespread locations. The additive
ferrocene has received spasmodic interest.

MTBE and Water Contamination

After about five years of use in reformulated gasoline in the USA, MTBE was detected in
ground water in several states (eg California and Maine). The primary source of
contamination was from leaks or illegal drainage from underground gasoline storage tanks. A
second source was from leaking pipeline systems, which supply the very large Californian
market with gasoline. A third source was from older recreational watercraft operating on
lakes and waterways.

In California there are a large number of private wells and other schemes, which use the
ground water as potable water. The MTBE contaminant tainted the water (it can be detected
by taste at the parts per billion levels).

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In May 1997 the California Legislature considered discontinuing the use of MTBE in the
State. This has generated a substantial level of activity on how best this might be achieved
and what are the alternatives to MTBE as both the provider of oxygen and as an octane
booster. Much of the reported work is available on the Internet [EXHIBIT 26].

Momentum continued to build up national for action and the US Environment protection
Authority (EPA) set up the “Blue Ribbon Panel” to consider the issue of MTBE
contamination of water supply on a national basis.

This activity is continuing with the US Executive promoting bills in Congress that would lead
to MTBE being phased out.

Other Oxygenates and Other Additives

The emphasis of this Study is on materials which might be added to gasoline in order to boost
octane.

It should be realised that there is a large range of materials added to gasoline before use in a
vehicle. These additives are added to the basestock within the refinery, at the rack by the
fuel-distributor or on the forecourt by the motorist. These additives contain detergents and
other compounds containing elements in addition to carbon and hydrogen. Such additive
packages claim to improve gasoline and offer product differentiation in the market from the
same refinery source. The role, impact and environmental fate of such additives are beyond
the scope of this Study.

As well as boosting octane, alcohols and ethers also add oxygen to the gasoline. There may
be a need to add materials, which add oxygen but not necessarily improve octane. There may
be a group of materials, which have not been studied in this report, which may be effective
for this duty and not harm the final product. There are several possible additives.

For example, one of these products, marketed as Fuel Effect, contains fatty acid esters. This
product is primarily marketed as a combustion improvement aid, particularly for diesel
engines. In addition, when used in spark ignition engines, Fuel Effect is claimed to lower the
carbon monoxide emission - one of the principal reasons for incorporating oxygen in fuel
[data provided by GRAF ENTERPRISES PTY LTD - EXHIBIT 14].

As witnessed by a visit to a typical auto-shop there are many additives that can be added to
fuel which are claimed to improve engine performance. It would seem churlish to proscribe
their use in gasoline provided that the gasoline met the appropriate standard and no adverse
effects to the longevity of the engine and ancillary parts resulted.

Because these materials, in general, do not cause a significant lift in octane they are not
studied further.

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Octane Boosters to be Studied

The octane boosters and a brief history of their use as fuels are:
ALCOHOLS

Methanol: CAS 67-56-1

Methanol is a major commodity chemical with some 25 million tonnes produced annually
(Mt/a). Its main use (ca. 50%) is in the production of formaldehyde, which is used with urea
for the production of adhesive, which is used to make particleboard. The remaining 50% is
spread across a wide variety of industries of which the production of MTBE is prominent.

The main driver for the use of methanol is that it is made from natural gas and is easily
transported as a liquid. It can potentially be made in very large volumes and delivered at
broadly similar costs to conventional fuels.

Methanol can be used as a fuel in its own right. Its very high octane makes it attractive for
specialist auto sports enthusiasts (drag racing). It has occasionally been used with ethanol in
Brazil when that country has failed to produce sufficient agricultural ethanol for its own
needs. Methanol is a clean burning fuel and there have been extensive trials in California and
elsewhere on the use of methanol fuels. These uses are not subject to this Review.

Methanol can also be used as an octane booster in commercial gasoline. However, it is not
very fungible (stable) because traces of water cause it to separate. However, this problem can
be ameliorated by the addition of higher alcohols such as TBA. Again there have been
extensive trials, particularly in California.

Methanol addition is permitted under the US EPA rules for the production of reformulated
gasoline2.

In Australia3, methanol is produced in a small research plant at Laverton in Victoria; there are
several proposals for major facilities to be established in WA and NT.

Ethanol: CAS 64-17-5

The use of ethanol as a fuel for spark-ignition engines dates from the advent of the motor
vehicle industry. The more widely available and cheaper petroleum products displaced
ethanol. Interest in ethanol fuels was rekindled after the 1970s oil price shocks and the
growing interest in renewable fuels.

World production capacity is 24 Mt/a (560,000 bbl/d) with a further 0.8 Mt/a (17,700 bbl/d)
planned. Most fuel grade ethanol is produced in Brazil (45%) and the USA (20%) with these

2
Federal Register Vol. 62. No. 133, 37388, July 1997 re proposed Rules for Gasoline.
3
The National Energy Research Development and Demonstration Program (NERDDP) supported work on the
production and use of fuel methanol in Australia. Seven technical reports and consultancy reports are listed as
available in the March 1990.

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countries dominating world usage. There is also some production in France and Canada,
India and China and small amounts in Australia.

Brazil requires that all gasoline sold contains 24% ethanol and approximately 4 million cars
are designed to operate on 100% hydrous ethanol (95% ethanol, 5% water). This creates a
demand of 220,000 bbl/d.

The US consumption of ethanol is dominated by the corn producing states of the mid-west
where it is used as a component of Federal reformulated gasoline and as a gasoline extender4.
The current demand is about 80,000 bbl/d

In Australia there have been extensive trials of ethanol in gasoline5. There are several
producing facilities for ethanol.

TBA (Tertiary Butyl Alcohol; 2-Methyl-2-Propanol): CAS 75-65-0

Work during the 1970s indicated the superior properties of TBA to other alcohols from the
standpoint of gasoline compatibility.

TBA is produced within the petrochemical industry as an intermediate and for specific uses.
The production is small, mainly in the US Gulf Coast and Europe. Total annual production is
about 2.6 Mt/a (60,000 bbl/d).

TBA can be produced in the same plant as MTBE and can often be a contaminant of
commercial MTBE. The small amount of TBA in the MTBE has little effect on the latter
additive's efficacy.

IPA (Iso Propyl Alcohol, 2-Propanol) CAS 67-63-0

This is listed as an acceptable additive for Euro-3 and Euro-4 fuels6.

Over 2 million tonnes of IPA are produced annually, mainly in USA, Europe and Japan. It is
used as a solvent and to produce other chemicals. At present a major portion of IPA is
produced from acetone (which in turn is produced as a byproduct from the manufacture of
phenol). A small amount of acetone (hence potentially IPA) is produced in Melbourne.

Refineries can produce considerable quantities of propylene and this can be the immediate
precursor to the production of IPA. This would be an attractive route to refiners with no
alternative use for propylene.

4
Marketed as gasohol, 10% ethanol in gasoline.
5
The National Energy Research Development and Demonstration Program (NERDDP) supported a
considerable amount of work on the production and use of fuel ethanol in Australia. 35 technical reports,
workshop reports and consultancy reports are listed as available in the March 1990.
6
Environment Australia “Setting National Fuel Quality Standards - Paper 2, Proposed Standards for Fuel
Parameters (Petrol and Diesel)” April 2000, p. 56 (Table 6.4)

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Other Alcohols:

The following alcohols are used within the petrochemical industry. The main interest in these
materials is that they can be produced from synthesis-gas (carbon monoxide and hydrogen).
This in turn can be produced from any carbon source such as natural gas or even municipal
and agricultural waste. The process is a variant on the Fischer-Tropsch process for the
production of synthetic fuels. It was practiced during the early 1950s to produce iso-butanol7.
During the 1980s, especially in Europe, there was considerable research into improving the
process and a modern plant would probably produce a range of lower alcohols centred on
butanol.

Some of these alcohols can be produced by fermentation processes and can be classified as
sustainable fuels. Nowadays these materials are produced by a variety of different
petrochemical processes.

n-Propanol (1-Propanol): CAS 71-23-8

This is listed as an acceptable oxygenate for reformulated gasoline in the USA8. The alcohol
is produced by OXO process from ethylene or by direct oxidation of propane. It can be
produced as a byproduct of fermentation processes.

n-Butanol (normal butyl alcohol, 1-Butanol): CAS 71-36-3

Produced by the OXO process from propylene and several other routes.

sec-Butanol (secondary butyl alcohol, 2-Butanol): CAS 78-92-2

Produced by hydration of butenes (byproducts in production of ethylene). This alcohol is


produced in large quantities for the production of the solvent MEK (methyl ethyl ketone).

iso-Butanol (isobutyl alcohol, 2-Methyl-1-Propanol) CAS 78-83-1

This is listed as an acceptable additive for Euro-3 and Euro-4 fuels. Nowadays made by the
Reppe process from propylene but would be the principal product of modern Isosynthesis
plants.

ETHERS

MTBE (Methyl-Tertiary-Butyl Ether): CAS 1634-04-4

MTBE is the principal oxygenate and octane boosting additive with worldwide use.
Manufactured by the addition of methanol to the olefin isobutene (2-methylpropene). The
latter is produced as a byproduct to refinery and petrochemical operations and can be made
from the butane component of LPG.

7
Known as Isosynthesis.
8
Federal Register Vol. 62. No. 133, 37388, July 1997 re proposed Rules for Gasoline.

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World production capacity of MTBE is 21 Mt/a (522,141 bbl/d) with a further 7 Mt/a of
capacity in construction or planning. MTBE has no other significant use other than as a fuel
additive.

TAME (Tertiary-Amyl-Methyl-Ether): CAS 994-05-8

TAME is used extensively as a supplement to MTBE in the USA for reformulated gasoline
and as an octane booster in Europe. World production capacity is 2 Mt/a (46,819 bbl/d) of
which 50% is in the USA, with a further 0.7 Mt/a (6,364 bbl/d) planned.

ETBE (Ethyl-Tertiary-Butyl-Ether): CAS 637-92-3

ETBE is widely used as an additive in the USA and Europe (France, Russia). The principal
driver is to produce an ethanol derived additive that is better suited to gasoline blending than
ethanol.

World production capacity is 3.7 Mt/a (91,000 bbl/d) with an additional 0.8 Mt/a (20,800
bbl/d) under construction. Most capacity is in the USA and (except European plants) are
flexible operations, which can switch between MTBE and ETBE.

DIPE (Di-Iso-Propyl-Ether): CAS 108-20-3

DIPE is a permitted additive under US Federal reformulated gasoline regulations and the
proposed Euro-3 and Euro-4 rules. It is made from propylene and water. Isopropanol is a
byproduct. The world capacity is unknown but probably small.

DIPE production and blending properties have been described [McNally].

ETAE (Ethyl-Tertiary-Amyl Ether): CAS 919-94-8

This is the ethanol variant of TAME, permitted under US Federal reformulated gasoline rules.
There is a paucity of data on this additive.

Non Oxygenate Octane Boosters

Organometallic compounds boost octane but contribute negligible oxygen content (if any) to
the finished gasoline. Until now, lead alkyls have been dominant. Many other
organometallic compounds have been tried, but only two have emerged with potential. An
iron based additive, ferrocene, and a manganese additive, MMT.

Ferrocene (dicyclopentadienyl iron): CAS 102-54-5

Ferrocene is a dark orange coloured powder, freely soluble in hydrocarbons. It is available


from Associated Octel as the additive PLUTOcen(R). To date, ferrocene additive has

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struggled to gain industry acceptance. The basic problem appears to be the erosive nature of
the combustion products. Several companies in China also sell the product.9.

MMT (Methylcyclopentadienyl Manganese Tricarbonyl): CAS 12108-13-3

MMT is a liquid octane enhancer for unleaded and lead replacement petrol. It is a pure
compound of low vapour pressure (0.05 mmHg @ 20C), high flash point (96C) and thermally
stable to its boiling point (232C). MMT has extremely low solubility in water, but is freely
soluble in gasoline.

MMT is the principal metal-based octane booster considered in this Study. This has been
extensively research from the 1950s and is in widespread use in several countries. All of the
oil majors have had some experience in using MMT overseas.

High Octane Hydrocarbons

There are several components of gasoline of high octane which a widely traded. These could
be used as octane boosters and blendstocks and are considered in this Study where
appropriate for comparative purposes. These materials are:

Butane: CAS 106-97-8: This is one of the two principal components of LPG, also produced
in refineries as byproduct in various unit operations. Many millions of tonnes are traded
annually.

Benzene: CAS 71-43-2: This is a major commodity chemical (world annual trade about 15
Mt/a). Benzene is the basic building block for the manufacture of styrene and nylon.

Toluene: CAS 108-88-3: This is a major intermediate with principal use the production of
benzene. Often used to boost octane in gasoline for the premium unleaded grades.

Xylenes (mixed): CAS 1330-20-7: This is traded to produce ethyl benzene (for production of
styrene) and ortho- and particularly para-xylene. The latter isomer is used for the production
of polyester.

Isooctane (traded as alkylate): CAS 540-84-1: This is not widely traded but central to the
production of high octane, low benzene, low sulphur gasoline and jet-fuel.

The additives subject to this review are summarised in Table 1.

9
The recent use of the additive in China is reported by industry sources to have resulted in the widespread
damage to the cylinder and valves of vehicles. This is speculated to have been the result of too much additive
(many times the recommended dosage) being used.

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TABLE 1
SUMMARY TABLE

COMPOUND CAS No Mentioned in Legislative Rules


as Gasoline Additive
US Europe

Methanol 67-56-1 yes yes


Ethanol 64-17-5 yes yes
TBA 75-65-0 yes yes
MTBE 1634-04-4 yes yes
DIPE 108-20-3 yes yes
ETBE 637-92-3 yes yes
TAME 994-05-8 yes yes
ETAE 919-94-8 yes yes
Isopropanol 67-63-0 yes
n-propanol 71-23-8 yes
Isobutanol 78-83-1 yes
sec-Butanol 78-92-2
n-Butanol 71-36-3
MMT 12108-05-8
Ferrocene 102-54-5
Benzene 71-43-2
Toluene 108-88-3
Butane 106-97-8
Isooctane 540-84-1
Xylenes (mixed) 1330-20-7

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EFFECTS ON PETROL CHARACTERISTICS, ENGINE EFFICIENCY,
COMPATIBILITY, AND EMISSIONS PROFILE

Background to Octane Boosters

Octane is a measure of a fuels tendency to knock in a test engine when compared to other
fuels [MAPLES, p.25]. Knocking occurs when the fuel/air mixture explodes on the
compression stroke of the engine cycle, ie before the application of the spark. This creates a
loud knocking noise within the engine and can lead to engine damage.

For ranking fuels, the fuels are compared to certain standards in a special test engine (CFR
test-engine). Isooctane (2,2,4-trimethylpentane) has a low tendency to knock and is given an
octane number value of 100. Normal heptane, on the other hand, has a great tendency to
cause knocking and is given an octane number value of zero. The octane number of a fuel is
that value which will give the same knocking tendency of a proportional mixture of isooctane
and n-heptane.

Research Octane Number (RON) is determined in the test engine at a relatively low speed
(600 rpm). This is to simulate city driving at low speed with frequent acceleration. Motor
Octane Number (MON) is measured at higher speed (900 rpm) which simulates highway
driving. For most fuel components RON is greater than MON.

Whereas RON and MON are determined in a laboratory test engine, road octane is properly
determined by road tests of vehicles or dynamometer testing of vehicles. Road octane is not
the same as the average of RON and MON with which it is sometimes confused. The
relationship between the road octane and RON and MON is dependent upon the vehicle being
tested.

In other words, vehicles with the same nominal compression ratio may require different levels
of octane for optimum performance. To avoid the issue of vehicle variability it is usual
practice to produce (ie. sell) a gasoline octane slightly higher than that required from a
consideration of vehicle compression ratios (often referred to as octane premium or octane
give-away)

There have been several attempts to solve the problem of relating RON and MON to road
octane [MAPLES 1993, page 26].

As well as RON and MON the difference between them is used to judge fuel quality. This is
known as the sensitivity of the fuel and a maximum value is specified for the gasoline;
typically the sensitivity should be less than 10.

In the USA the average of RON and MON (referred to as (R + M)/2 or blending octane BON)
is often quoted.

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Chemistry

From the standpoint of fundamental chemistry we are concerned with the propensity of an
explosive mixture of air and fuel to detonate. The chemistry of flames is well known
[SEMENOV]. Flames and explosions have three phases - initiation, propagation and
termination. The chemistry is dominated by free radical reactions in all stages.

In considering octane, we are concerned about the suppression of the initiation of the process
until application of the spark. An obvious method is to provide a fuel with an innately high
resistance to the formation of free radicals (eg aromatics) or a component, which acts as a free
radical trap or quench.

It is in this latter role that organometallic compounds act. These compounds are relatively
thermally unstable and easily produce low energy free radicals with a low propensity to form
free radical chains but will act as free radical scavengers. Thus if chain forming free radicals
are formed, these are quenched by the low energy free radicals formed from the additive.
Quenching continues until the application of the spark, which produces a massive wave of
high-energy free radicals, which initiates the explosion.

Free radical quenches and traps are very efficacious and are used in very small amounts,
typically in the parts per million range.

The most widely used octane booster has been an alkyl lead compound. Many other
organometallic compounds have been studied of which one, MMT has emerged as a realistic
alternative. Other organometallic compounds based on iron have been used.

As might be expected from the above discussion, the effectiveness of the octane booster is
dependent on the nature of the hydrocarbon components in the fuel. This is well known for
lead alkyl compounds which have been extensively studied [GARY 1984, page 199]. The
adverse influence of aromatics on the effectiveness of MMT has also been reported [RMIT
1994]; high aromatics lowers the effectiveness of MMT.

By contrast, alcohols and ethers primary role is to provide high-octane blendstock. Alcohols
and ethers have octane values typically greater than 110 RON. Thus when blended into a
basestock of octane value about 90, in volumes of several percent (ie many orders of
magnitude higher than used for the organometallic compounds) an octane boost occurs.

Although these oxygenates are not primarily radical quenches, they may serve a role in this
action (especially given the high concentration at which they are used). This is evidenced by
the higher blending octane values of oxygenates than the natural octane when used as a fuel in
their own right [RMIT 1994].

Octane Values of Oxygenates

Again there is some variation in the efficacy of the oxygenate with the composition of the
fuel. This was demonstrated in the Australian context by research in 1982 [BRAUN]. This
work determined the blending octane for various octane boosters with three different
basestocks.

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The salient data from this work is given in Table 2.

TABLE 2
EFFICACY OF OXYGENATES ON PETROL OF DIFFERENT COMPOSITION
Petrol A B C
RON 89.2 88.4 86.1
MON 80.0 82.3 78.3
Saturates (%) 57.3 68.4 50.7
Olefins (%) 7.3 0.6 28.3
Aromatics (%) 35.5 31.0 21.0
Blending RON
MTBE 121 120 120
Methanol 135 140 135
Ethanol 132 138 135
TBA 107 107 114
Toluene 115 113 114
Blending MON
MTBE 103 109 102
Methanol 100 111 98
Ethanol 105 115 102
TBA 91 88 93
Toluene 92 96 94

These results clearly demonstrate that the alcohol additives are sensitive to the composition of
the gasoline. Particularly note the Sensitivity (RON - MON) for ethanol which is much larger
than the sensitivity for MTBE. This underlies refiners concerns that ethanol may be
inadequate for lifting MON values and maintaining final gasoline sensitivity within
specification.

Inspection of the literature indicates a wide variation of octane values for the additives of
interest. This is presumed mainly due to the variation in the chemical composition of the
base stocks used in the determination (often not given). In this Study we have used data
presented in the RMIT report for blending calculations: Table 3.

TABLE 3
EFFECTIVE BLENDING VALUES
sg (kg/L) % O2 (wt.) RON MON RVP (kPa)
Methanol 0.796 49.9 130 100 250
Ethanol 0.794 34.7 115 100 130
IPA 0.789 26.6 117 100 70
TBA 0.791 21.6 100 90 65
MTBE 0.744 18.2 110 100 55
ETBE 0.770 15.7 112 100 28
TAME 0.770 15.7 105 100 7

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Fuel Blending Overview

In refineries, gasoline is made from several refinery streams. Traditionally these were mixed
in a tank. The modern practice is to use in-line blending (ie mixing in a pipeline), which
eliminates costly storage and tankage. To the final gasoline is added butane. This raises the
RVP level to the limit of the fuel specification.

MTBE and other ethers (TAME, ETBE, DIPE) are compatible with the gasoline blend
streams and can be blended along with the other streams within the refinery.

Water is a common contaminant of streams within refineries and tanks. As well as process
contamination it enters the system by condensation of water vapour in the storage tanks and
tanker trucks. Because water is heavier than and substantially insoluble in gasoline, the water
separates at the bottom of the tank. The water can be drained off and properly sent to a water
treatment unit.

A fully anhydrous blending and distribution system is technically feasible but is very
expensive and is only used in the transport of chemicals where water contamination is a
serious problem or hazard.

Unlike ethers and the hydrocarbon components of gasoline, alcohols are very soluble or
miscible with water.

Traces of water in a gasoline will cause substantially all of any methanol present to separate.
This is often referred to as the fungibility problem of methanol. Ethanol is somewhat better,
but the presence of water at the bottom of a tank results in a large portion of the ethanol
separating from the gasoline. Propanols (IPA and n-propanol) are better, and separation of
the butanols is slow and can be handled like ethers.

Because of the problems with ethanol, it is not added within the bounds of the refinery, rather
it is added at the distribution centre, which would supply individual retail outlets. This
minimises water contamination in the distribution train.

This method is often referred to as splash blending and is often performed in a storage tank or
a road tanker. In some cases mixing within lines feeding a tank controls the mixing more
precisely.

Non-Ideal Behaviour:

Because gasoline hydrocarbons and the lower alcohols (methanol and ethanol) are dissimilar,
their mixtures show non-ideal behaviour as far as vapour pressure is concerned. This non-
ideal behaviour is well known. Its main consequence is the vapour pressure above an
ethanol-gasoline blend is higher than would be expected (given a consideration of the pure
liquid vapour pressures and the relative concentrations in the mixture).

The consequence is that it is very difficult for ethanol-gasoline mixtures to achieve the sought
after vapour pressure limits of the proposed gasoline standards, namely 60 kPa maximum in
the summer period for Euro-3 and 55 kPa for Euro-4.

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Blending Studies

In order to illustrate the main issues, we have conducted some simple blending estimates for
the oxygenate additives [EXHIBIT 19]. In the first simulation (Table 4) we estimate the
properties of a final gasoline resulting from the addition of oxygenates. The oxygenates were
added in the volumes that have typically been used in Europe and the USA. The base
gasoline had properties similar to the composition of the present Australian pool average.
This shows how oxygenates might be used to lift the present gasoline to the 95 RON octane
requirement.

TABLE 4
SIMULATION 1

Adding Lower Alcohols to Australian 1998 Pool Gasoline10


Petrol Methanol Ethanol Ethanol IPA
Volume % 100 3 5 10 10
LHV (MJ/L) 32.68 32.55 33.30 32.63 31.86
Oxygen (%wt.) ~0 1.57 1.81 3.61 2.75
RON 91.6 92.8 92.8 93.9 94.1
MON 82.5 83.0 83.4 84.3 84.3
RVP 60.0 78.2 67.8 74.6 61.7
Adding TBA and Ethers to Australian 1998 Pool Gasoline
Petrol TBA MTBE ETBE TAME
Volume % 100 7 15 15 15
LHV11 (MJ/L) 32.68 32.23 31.55 32.0 32.0
Oxygen (%wt.) ~0 1.57 2.68 2.38 2.38
RON 91.6 92.2 94.4 94.7 93.6
MON 82.5 83.0 85.1 85.1 85.6
RVP (kPa) 60.0 60.5 59.1 55.0 51.8

Our results show that starting from a typical ULP gasoline with a 92 RON, 95 RON is
effectively achieved using ethers at about 15% by weight. The final gasoline sensitivity
(RON - MON) is <10 and the target MON > 85 is achieved. Ethers do not compromise the
proposed specification concerning oxygen content (2.7% max.) or RVP (target 60 kPa). In
respect of RVP, the data illustrate that it may be possible to add additional butane to the final
mixture.

None of the alcohols achieve the target specification. Ethanol and IPA at 10% are the best at
approaching the 95 RON target. However, for ethanol at 10%, the RVP value is well over the
60 kPa target and even exceeds 60 kPa at 5%. At 10% ethanol, oxygen is well over the 2.7%
limit but the heating value of the fuel is only marginally less than the basestock. Using
alcohols, sensitivity declines slightly and none of the alcohols achieve the 85 MON target.

10
RON and MON data for Regular Unleaded Petrol as detailed in “Setting National Fuel Quality Standard”
Paper 2, page 51; base gasoline assumed available at RVP 60 kPa.
11
Lower heating value or net heating value expressed on an energy per unit volume basis.

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In a second simulation, we start with the target petrol with 95 RON, a sensitivity of 10, and an
RVP of 60 kPa (as required using the Euro-3 standard) and containing the above volumes of
additive. We then estimate the properties of the basestock when the oxygenate is backed out
of the gasoline. This gives a view of the quality of the basestocks required when using the
various oxygenates. The results are given in Table 5.

TABLE 5
SIMULATION 2

Subtracting Alcohols from Euro-3 Gasoline


Petrol Methanol Ethanol Ethanol IPA
Volume % 100 3 5 10 10
Basestock required
RON 95 93.9 93.9 92.8 92.6
MON 85 85.9 85.9 84.8 84.6
RVP 60 39.8 51.2 41.5 58.0
Subtracting Ethers from 95 Euro-3 Gasoline
Petrol TBA MTBE ETBE TAME
Volume % 100 7 15 15 7
Basestock Required
RON 95 94.6 92.4 92.0 93.2
MON 85 86.6 84.4 84.0 85.2
RVP (kPa) 60 59.5 61.0 65.9 69.7

This illustrates the superior value of the ethers because the blendstock that is required is
generally inferior to that required when blending with alcohols. Excepting ethanol and IPA at
10% level, the alcohols require a basestock not too different from the Euro-3 target. Ethanol
at the 10% level contains oxygen in excess of the Euro-3 target level.

Ethanol Blending

The blending of ethanol has received a considerable amount of attention with respect to the
influence of the ethanol concentration on the finished gasoline RVP and the distillation curve.
Mathematical simulation is difficult because of the non-ideal behaviour of ethanol/gasoline
mixtures and complicated interactions with the various components of the gasoline.

Extensive modelling work has been conducted for the Californian Energy Commission by
Math Pro. Inc. [EXHIBIT 18]. The work presented data for RVP and distillation curve for
Californian gasoline. Note this gasoline would have considerably lower aromatics than those
proposed for Australia under the Euro-3 standards.

The Math Pro Inc. work shows that the actual RVP is dependent on the nature of the gasoline
and that the increase in RVP is higher at lower concentrations of ethanol. This confirms
earlier work [EXHIBIT 22, figure 9] that shows a major rise in RVP when up to 5% ethanol
is added.

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To get a better understanding of this issue we have produced estimates for the RVP at various
levels of ethanol addition using blendstock of varying RVP; Table 6.

TABLE 6
SIMULATION 6

RVP at 5% (vol.) Ethanol into Gasoline (kPa)


RVP of base stock gasoline (kPa) 40.0 45.0 50.0 55.0 60.0
RVP of final blend (kPa) 50.0 54.5 58.9 63.4 67.8
Delta RVP (kPa) 10.0 9.5 8.9 8.4 7.8

Our results indicate that splash blending ethanol causes a bigger increase in RVP the lower
the RVP of the base stock gasoline. The above table indicates that if we target 60 kPa in the
final gasoline (Euro-3) then using 5% ethanol we need gasoline basestocks with an RVP of 50
kPa or less.

Selecting base gasoline for this duty is a complex procedure but we get some idea of the
issues by considering the RVP of some of the streams that might contribute to gasoline.
Selected properties of typical refinery streams are given in Table 7.

TABLE 7
TYPICAL PROPERTIES OF REFINERY STREAMS

Refinery Stream RVP Olefins Aromatics RON


(kPa) (% Vol.) (% Vol.)
Butane 358 0 0 94
Light Straight Run 88.2 1.0 3.9 75
Isomerate 108.2 0.4 0.9 83
FCC gasoline 48.9 29.4 29.3 92
Alkylate 53.8 0.5 0.4 93
Reformate 31.7 0.7 66.2 99

The table illustrates that to achieve a base gasoline of RVP of 50 kPa or less would require
the use of major volumes of Reformate and FCC gasoline, both of which are high in
aromatics and have a naturally high octane.

A preliminary conclusion is that ethanol may not contribute to octane if an RVP cap of
60 kPa applies, because the base gasoline would have very high octane as a consequence of a
high aromatic and olefin content.

Climate

Australia does not suffer the cold weather drive-ability problems of parts of Europe and USA.
The drive-ability issues (volatility) concern hot weather drive-ability and the specifications
for volatility in hot climatic conditions (summer and northern Australia).

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The main problem is with carburettor fitted vehicles. The issue has been extensively
researched in Europe [CONCAWE 99/51; EXHIBIT 21]. The report sets out a detailed
analysis of RVP versus the E70 value for the individual countries.

In simple terms, the drive-ability can be classified in terms of Vapour Lock Index (VLI)
Where:

VLI = 10 x RVP (kPa) + 7 x E70

RVP is the Reed Vapour Pressure


E70 is % of fuel distilled at 70C

The VLI should be less than 900 for hot climates.

From the standpoint of oxygenates, the main issue is raising the RVP and minimising the
volume distilled below 70C.

Further analysis of this issue relies on a detailed knowledge of the basestock and is beyond
the scope of this work.

Alcohol and Ethers Emissions profiles

The improvement in emission profile when oxygenates are used in gasoline is well known
and the basis for the US RFG Program. Data is substantial on the use of the additives in a
wide range of vehicles and conditions. These were reviewed in the earlier study [RMIT].

One of the issues that has arisen in the recent controversy on the use of MTBE is analysis by
University of California workers who have suggested that gasoline can be formulated to give
the required air quality benefits without using MTBE (or other oxygenates) [EXHIBIT 24].
This view is disputed by several other groups; this will be discussed in more detail when the
environmental impact of the additives is considered.

Of pertinent interest is the Australian situation with a relatively large number of carburettor
fitted vehicles which would use lead replacement petrol.

Braun has presented extensive data on CFR test engines. Full vehicle tests have been
performed by Repco [BRAUN].

The salient feature of the data is shown in the attached data; Table 8. This shows the
emissions profile produced by using various additives on the three petrol formulations given
above in Table 2. Tests were performed at 600 rpm (typical for determining RON) and 900
rpm (typical for determining MON) at fuel rich (air/fuel ratio = 13.5) and a fuel lean (air/fuel
ratio = 16).

The three petrol types without additive did not differ markedly from each other. Data is given
relative to the emission without additive.

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The general observations were:

• Additive reduced CO emissions and hydrocarbon emissions under lean burning conditions
• Under lean burning conditions, hydrocarbon emission depended on the petrol
composition. High aromatics being associated with an increase in the amount of
hydrocarbon emission.
• Nitrogen oxides increase under fuel rich conditions but fall under fuel lean conditions. A
similar observation is made for aldehydes.

The data reveals there are differences in emissions between the additives. However, the
additives were all used at the same level (10%) and after correcting for oxygen content, there
does not appear to be much difference between MTBE and ethanol.

This work was extended to include engine tests on multi-cylinder engines. This showed little
difference in the torque developed. One engine showed problems with MTBE additive which
was judged to be due to an unusual carburettor geometry, this being affected by the lower
viscosity of the fuel containing MTBE (resulting in a richer mixture). In other respects the
full engine tests confirmed the CFR test engine results.

Modern engines fitted with lean burn systems and catalytic converters would substantially
reduce the noxious gases (unburnt hydrocarbons, nitrogen oxides and carbon monoxide) from
the tailpipe.

Greenhouse

Focusing on the vehicle greenhouse benefits arise by improving fuel octane and thereby
allowing the use of higher compression, more fuel efficient vehicles. The downside is that
higher octane, inevitably requires higher greenhouse emissions in the refinery. This is
discussed elsewhere.

From the standpoint of the additives themselves ethers and alcohols, other than ethanol, are
produced by energy intensive processes and result in considerable greenhouse emissions. As
a very rough guide, based on process thermal efficiencies, each tonne of additive produced
will cause a tonne of carbon dioxide emission.

From the standpoint of Australia (and Europe) most of the additives will be produced in
countries that are not signatories to the main Kyoto protocols (eg Saudi Arabia) and so these
emissions would not count to the overall emission levels. Thus boosting octane by using
imported additives may help Australia (and Europe) achieve its Kyoto commitments because
this action will require less intensive operations within the nations refineries.

Ethanol can be produced by petrochemical processes or from biomass. For the most part we
are concerned with biomass produced ethanol. Proponents claim the use of bio-ethanol
produces significant greenhouse savings because the resource is renewable.

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TABLE 8
CHANGES IN EXHAUST EMISSIONS AT 10% ADDITION
RELATIVE TO PETROL WITHOUT ADDITIVE [BRAUN]

%CO %O2 %CO2 %CO2 HCppm HCppm NOx ppm Aldehyde(ppm)


A/F ratio 13.5 16 13.5 16 13.5 16 13.5 16 13.5 16
Petrol A
600 RPM
MTBE -0.6 +0.4 +0.4 -0.4 -169 +165 +443 -277 0.0 -0.16
Methanol -1.8 +0.2 +1.1 -0.3 -410 +148 +1548 -73 +1.43 -0.55
Ethanol -1.3 +0.7 +0.8 -0.6 -278 +100 +1048 -573 +0.93 -0.25
TBA -0.9 +0.3 +0.5 -0.3 -133 +845 +707 -229 +0.33 -0.09
Toluene -0.3 +0.2 +0.3 -0.1 n +238 +161 +50 +0.10 -0.09
900 RPM
MTBE -0.6 +0.3 +0.3 -0.3 -49 -48 +1023 -180 +0.65 +0.03
Methanol -1.9 +0.9 +1.1 -0.7 -304 +125 +660 -771 +2.30 +0.22
Ethanol -1.2 +0.6 +0.7 -0.5 -196 -20 +594 -566 +1.33 +0.21
TBA -0.8 +0.3 +0.4 -0.3 -122 -28 +558 -246 n +0.35
Toluene -0.3 +0.1 +0.4 -0.1 -102 +25 +170 +49 +0.81 -0.04

Petrol B
600 RPM
MTBE -0.6 +0.5 +0.28 -0.35 n +743 +323 -291 n -0.15
Methanol -1.8 +1.0 +1.11 -0.65 -362 +33 +1556 -742 +2.4 +0.08
Ethanol -1.1 +0.7 +0.55 -0.45 -84 -3 +740 -561 +1.7 +0.13
TBA -0.8 +0.4 +0.42 -0.25 n -10 +557 -234 +2.4 -0.16
Toluene -0.2 +0.2 +0.27 -0.15 n +51 +239 +37 +1.9 +0.11
900 RPM
MTBE -0.6 +0.6 -0.5 +13 +344 -315 n -0.10
Methanol -1.8 +1.0 -0.7 +28 +157 -544 +0.8 -0.03
Ethanol -1.3 +0.6 -0.5 +40 +1128 -364 +1.1 +0.03
TBA -0.7 +0.4 -0.2 +33 +298 -134 -0.7 -0.03
Toluene -0.2 +0.2 0.0 +18 +106 -3 n -0.06

Petrol C

600 RPM
MTBE -0.5 +0.3 +0.3 -0.3 n -24 +299 -295 +0.40 -0.07
Methanol -1.9 +1.1 +1.2 -1.0 n -6 +1463 -246 +1.80 +0.10
Ethanol -1.2 +0.7 +0.6 -0.7 n -74 +829 -762 +1.70 -0.03
TBA -0.8 +0.4 +0.4 -0.4 n -2 +445 -442 n +0.01
Toluene -0.2 +0.2 +0.2 -0.1 n +61 +87 -66 n +0.04
900 RPM
MTBE -0.7 +0.6 +0.4 -0.4 n -51 +305 -201 +0.97 +0.01
Methanol -1.2 +0.9 +1.3 -0.8 -201 -3 +1567 -304 +1.06 -0.09
Ethanol -1.3 +0.6 +0.8 -0.4 -211 -6 +838 -233 +1.00 -0.01
TBA -0.8 +0.4 +0.4 -0.3 n -33 +500 -208 n +0.07
Toluene -0.4 +0.2 +0.4 0.0 -322 +77 +260 +70 -0.77 +0.10

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Ferrocene

Ferrocene additive is available as the additive PLUTOcen(R) by Associated Octel. Technical


literature provided by Octel [EXHIBIT 27] show the additive at 30 ppm to have a dramatic
effect on low octane basestocks. With a base of 80 RON an octane gain of 2 is achieved.
There is a slightly less impact on the MON. However, with a base of 90 RON, the octane
gain is 1.6, but the MON gain is only about 0.8.

Octel present comparative data against MMT. This demonstrates its higher efficacy from the
standpoint of metal content, but a lower efficacy towards the MON of the basestock.

The impact of gasoline hydrocarbon composition on the efficacy of the additive is not given.

Emissions Performance

Octel state that field performance trials substantiate all of the marketing claims. This data is
available on a confidential basis and has not been pursued at this stage.

Impact on Catalysts

Octel data indicates that there is no reduction in the efficiency of sensors or catalysts.
Catalysts equipped vehicles show catalyst efficiency is maintained (ie protects the catalysts
against aging). However, there is a small decrease in the conversion efficiency of nitrogen
oxides at low mileage (<60,000 km).

Impact on Spark Plug Fouling and On-Board Diagnostics,

Octel technical data refutes the belief that this additive is erosive. Extensive tests have shown
no detrimental damage to any engine part [EXHIBIT 28].

MMT

The use of MMT as an octane booster has been studied extensively for 30 years with about 20
years of “on road” experience with the additive.

MMT is produced by Ethyl Corporation and is available as a proprietary additive HiTEC®


3000. Ethyl have provided a substantial amount of documentation to this Study describing
many aspects of MMT [EXHIBITS 1,2 AND 25].
Efficacy

MMT is used in very low quantities, typically 18 mg Mn/L. Correlation curves for the
additive for different fuel blendstocks are known.

MMT produces an octane gain according to the following equations [RMIT 1994]:

RON Gain = 0.0615(Mn 0.5){42.75 - 0.3868(RON) - 0.02168(A)]

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Duncan Seddon & Associates Pty Ltd.
MON Gain = 0.01527(Mn 0.75){43.04 - 0.3868(MON)] -
0.003788(Mn)[0.06075(A) + 0.6409(SENS)]

Where:

RON = Research Octane Number (lead free)


MON = Motor Octane Number (lead free)
SENS = Sensitivity (RON - MON)
A = Volume percent aromatics
Mn = Manganese concentration mgMn/L

Application of these equations to the average basestock for the Australian gasoline pool
(Octane 91.6 RON) shows that MMT at 18 mg Mn/L will lift RON by about 1.5 and MON by
about 0.5. Thus, MMT cannot of itself be used to raise the octane to the Euro-3 level (95
RON).

However, MMT is not sensitive to the presence of materials other than aromatics (ie.
alcohols, ethers) and MMT could find a role in trimming gasoline blends, which may contain
oxygenates in order to ensure the minimum value of octane is obtained.

Emissions Performance

Emissions tests on the use of MMT indicated the following effects on tail pipe emissions
[EXHIBIT 1]:

• A small fall in the amount of carbon monoxide (CO) emitted.


• A more substantial fall in the level of nitrogen oxides emitted.
• No evidence for an increase or decrease in the amount of unburnt hydrocarbons emitted.
• Evidence of a reduction in other toxic gases (formaldehyde, acetaldehyde and benzene) as
a consequence of allowing refiners to optimise blending.

MMT has an impact on lowering global carbon dioxide emission by improving refinery
efficiency and hence internal fuel use. This could be as much as 3 or 4 %. Further the lower
nitrogen oxides of the tail-pipe emissions has an effect on lowering nitrous oxide emissions (a
major greenhouse gas).

Impact on Catalysts

Ethyl Corporation claims [EXHIBITS 1 & 2, supported by Ford SAE 821193 in EXHIBIT 25
item 2] that MMT maintains significantly higher catalyst conversion efficiency over the life
of the catalyst converter.

The mode of action seems to be by protecting the catalyst against the slow degradation and
poisoning by other components such as phosphorus and zinc. This is the complete contrast to
lead, which irreversibly poisons catalysts.

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Duncan Seddon & Associates Pty Ltd.
Valve Seat Recession

Higher than normal use of MMT (>0.018 mg Mn/L) provides protection from wear of soft
exhaust valve seats (valve seat recession). This is a particular problem for cars designed to
operate with leaded petrol.

The UK and French governments have approved MMT for VSR applications. It has been
extensively used in California for this use12.

From discussions with the industry, MMT is not used in Australia as an additive to produce
lead replacement petrol nor is it present in VSR additives currently available here.

Impact on Spark Plug Fouling and On-Board Diagnostics

Ethyl Corporation disputes early reports that MMT can cause spark plug fouling and
interferes with onboard diagnostics [EXHIBITS 1 and 3].

Automotive Finishes and Parts

One of the main concern of the auto makers is the impact of gasoline additives on finishes
(paint, varnishes, vinyl etc.) and engine parts (rubber hoses, metal components etc.). There is
a paucity of information on this problem.

A 1988 American Petroleum Institute publication [No. 4261); EXHIBIT 22] reviews the
effects of the additives on plastics and rubbers. When blended at the 10% level with gasoline
the additives cause elastomers (rubbers) to swell. The salient details are given in Table 9:

TABLE 9
IMPACT OF ADDITIVES ON ELASTOMERS

Volume % Swell, After 72h Immersion


10% additive in gasoline (30% aromatics)
Elastomer gasoline methanol ethanol MTBE
FKM (fluorocarbon) 0 27 3 2
Polyester urethane 11 42 37 13
Fluorosilicone 14 21 18 -
Acrylonitrile/butadiene 34 53 51 34
Polyacrylate 44 112 136 -
Chlorosulphon. polyethylene 49 41 56 48
EPDM 137 109 124 139
Natural Rubber 169 148 176 -

This data illustrates the advantages of MTBE when compared to methanol and ethanol.

12
[EXHIBIT 1; EXHIBIT 25 details the state of regulatory approvals in US, Europe, China, Canada Russia and
Argentina].

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Duncan Seddon & Associates Pty Ltd.
There is almost universal agreement that methanol is not a favoured additive for the general
vehicle fleet13. The main concern is the ability of the additive to act as a solvent. However,
irrespective of solvent powers, methanol is known to corrode (ie. react with) certain metals
high in the electrochemical series (zinc, aluminium and in particular titanium). Any
component containing these elements would be potentially attacked by methanol.

There is some concern that ethanol blends may promote rusting of gasoline tanks and anti-
rust additives have been proposed.

Gasoline contains hydrocarbons of generally low solvating power. When considering the
impact on paints and parts, the question is how far the additives differ from gasoline
hydrocarbons.

Solvent interactions are complex and a full analysis is beyond the scope of this review. Here
we present a simple view using the solubility parameter (SP, which is dependent on
fundamental thermodynamic properties of the solvent) and fractional polarity (FP, which is
dependent on the ionisation constant, dielectric constant and polarizability). The further the
additives depart from the values of hydrocarbons, the more likely a solvent issue is likely to
arise; Table 10

TABLE 10
SOLUBILITY PARAMETER AND FRACTIONAL POLARITY OF SOME ADDITIVES

SP FP
hexane 7.3 0
toluene 8.9 0.001
methanol 14.5 0.388
ethanol 13.2 0.296
n-propanol 11.9 0.152
IPA 11.5 0.178
butanols ~11 ~0.1
ethers ~10 ~0.1
Aggressive Solvents
acetone 10 0.695
nitromethane 12.6 0.780

This table illustrates that the additives would have greater solvating power than hydrocarbons.
Of most concern would be methanol and ethanol. It has been suggested that automotive
finishes can be affected, especially on older cars with lacquer finishes, with ethanol
concentration >20%. This is well out of the range being considered for the new standards.
Further, there is long history of use of ethanol at the 10% level in Australia with no apparent
problems. Elsewhere there is a long history of use with the other additives under
consideration

We conclude that there will not be a problem with oxygenates causing problems with
automotive finishes and fixtures.

13
Methanol fuel vehicles are specially made for that fuel.

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Duncan Seddon & Associates Pty Ltd.
MMT

MMT is a hydrocarbon soluble liquid, insoluble in water, and it would be expected to have
similar solvating powers to the main gasoline hydrocarbons. Further, it is only used in parts
per million amounts. It is generally introduced diluted in hydrocarbons (naphtha). We would
conclude that there would be no problems with MMT from the standpoint of attacking
automotive finishes.

Ferrocene

Ferrocene is slightly soluble in water (6.3 mg/L), but used in hydrocarbons in the ppm level.
We would not expect any problems with the use of this additive on automotive finishes.

Automotive Industry Views

The automotive industries views are expressed in the World-Wide Fuels Charter (WWFC)
[EXHIBIT 23]. In essence the WWFC expresses the opinion that ash-forming additives,
MMT and ferrocene, are to be avoided because of perceived detrimental effects on the engine
and ancillary systems.

As far as oxygenates are concerned, MTBE and ethanol (with restrictions) are acceptable.

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Duncan Seddon & Associates Pty Ltd.
FINANCIAL COSTS OF THE ADDITIVES

Background

Gasoline is an important and major traded commodity. There are three principal markets
from which all other local markets take their lead - US Gulf, Rotterdam and Singapore. At
any instant there are large volumes of gasoline at sea or in storage. Using this fluidity,
extensive real-time spot market trading ensures that the price differentials between the major
markets are minimised. Thus a sudden demand and price rise in one market is rapidly
satisfied by products supplied from another market that in turn results in price rises in the
supplying markets.

Gasoline is not traded as final product rather as blend stocks. This facilitates the safe
handling and transport by having a low vapour pressure. The final blender (gasoline
wholesaler) adds butane to boost the vapour pressure (RVP) to the allowable limit14.

Blend stocks are supplied with a range of properties, but for sales purposes all product is
corrected to the same density. The major characteristic is the octane value (RON clear15) of
the blend stock. The sales of gasoline in the major markets is so large that the blend stock is
available and sold over a wide range of octane numbers (typically from 87 RON to over 100
RON), although only the value of the higher volume grades are often reported16.

For example the Singapore averaged market quotes for 21 March 2000 (Petroleum Argus)

97 RON 30.15 US$/bbl


95 RON 29.65 US$/bbl
92 RON 28.95 US$/bbl

In considering the value of octane boosters we are concerned with the differential between the
grades of octane blend stock rather than the absolute value - which rises and falls with the
price of crude oil. The above figures illustrates that on this day there was a differential of 0.7
US$/bbl between the 92 and 95 RON grades and a differential of 0.5 US$/bbl between 97
RON and 95 RON. Thus from the standpoint of octane, the differential rises with increasing
octane.

In fact the recent oil price volatility has reduced these differentials and it is often found that
the differentials are 97 - 95 ~ 1 US$/bbl and 95 - 92 ~ 0.5 US$/bbl.

There is a marked cost penalty going over 95 RON. This is a consequence of the economics
of operation of reformers, which principally increase the octane of the blend stocks by

14
Plus proprietary additive packages.
15
Clear indicates lead free.
16
Examples of the main reporting agencies are Standard & Poor’s Platts, Reuters, Argus. Such agencies provide
electronic and hard copy market summaries.

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Duncan Seddon & Associates Pty Ltd.
increasing the level of aromatics. High severity reforming which produces octane numbers
over 95 RON have the consequence of large gas generation (waste) in the reformer.

We thus see that the “price of octane” is typically 0.16 US$/bbl to about 95 RON and about
0.5 US$/bbl over 95 RON.
Chemical Markets

For the larger volume chemicals (methanol, ethanol, BTX) there are well-established spot
markets from which markets of minor commodities take their lead. However, in contrast to
oil markets, a major part of production is sold on contract.
Shipping

Gasoline and chemicals are regarded as clean cargoes. There is a large dedicated tanker fleet.
Gasoline is often shipped in relatively large carriers (80,000 tonne parcels), whilst chemicals
such as methanol are shipped in multi-tank vessels in parcels of 2000 to 10,000 tonnes.

Shipping costs are complex and are a function of the size of the ship, the state of the shipping
market, geographic distance and location and the possibility of a back-haul cargo.

As a rule of thumb the cost of moving oxygenates into or out of Australia would be expected
to be in the region of US$ 30/t. The cost of shipping a somewhat larger parcel of gasoline
might be about US$ 15/t (c. $ 2/bbl). From the standpoint of shipping costs, there would thus
be an incentive to import the oxygenate already blended into a gasoline basestock.

Methanol

Methanol is a widely traded commodity chemical. Chemical prices are not directly related to
the prevailing price of crude oil or oil derivatives such as gasoline.

Chemical prices show pronounced variations based on business cycles. Thus although the
price of methanol can range between US$ 80/tonne and sometimes over US$ 300/tonne, the
long term average is about US$ 135/tonne.

At a notional exchange rate of A$ = 0.6 US$ this average value is about A$ 18 c/L.
Supply

Nowadays, most methanol is made from natural gas. The production of methanol demands
large volumes and large exporting plants have been constructed at locations where low price
gas is available.

World capacity is 33.6 Mt/a. Most plants service a specific market, with the trade being
dominated by a relatively small number of world-scale plants.

Australian production

There is a small methanol plant at Laverton in Victoria supplying the local demand (ca. 160
t/d). World-scale methanol plants have capacities of over 2000 t/d. There have been

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Duncan Seddon & Associates Pty Ltd.
proposals (there are two currently active to the knowledge of the author), to establish world
scale operations in northern Australia.

Ethanol

Traded Prices in Ethanol

Ethanol is extensively traded in the US with the price reported by specialist reporting
agencies. Because fuel ethanol is used as a gasoline extender, the price varies with the
prevailing price of gasoline.
Tax Incentives for Ethanol [EXHIBIT 12]

Ethanol in the US is subsidised by the Federal Government. The subsidy is paid mainly to the
sellers of gasoline. Each gallon of ethanol that is blended results in a US$ 0.54 tax credit.
This credit can be claimed either as an income tax credit or as an excise exemption. A caveat
on the subsidy is that the ethanol must be made from biomass not fossil fuels.

ETBE is regarded as using ethanol and receives a tax exemption based on the volume
equivalent of ethanol

These tax incentives are aimed at making ethanol price competitive with gasoline and MTBE.
At a present notional exchange rate of A$ = 0.6 US$, this subsidy is equivalent to A$ 0.238/L
(ie about 24 c/L or about A$ 190/t).

In Australia, fuel ethanol is excise free, which is equivalent to a tax benefit of about 45
cents/litre.
Supply

Ethanol can be made from either petrochemicals or from biomass. Total production is about
24 Mt/a (32,000 ML/a, 560,000 bbl/d). North America and Brazil dominate fuel ethanol
production. In the US the capacity is 107,000 bbl/d from biomass (mainly corn) and 13,000
bbl/d from petrochemicals. Brazilian capacity is around 260,000 bbl/d. Other centres of
production are France (8,000 bbl/d), Canada 2,700 bbl/d). The Far East has a capacity of
about 90,000 bbl/d mainly in China and India.
Ethanol in Australia

Total annual production is about 160 ML (ca. 2760 bbl/d)17. There are three main plants:

Manildra Group currently produces 70 ML with plans to expand to 100 ML in 2000.


CSR Distillers currently produce 50 ML, of which about 60% is exported.
Rocky Point produces 8.10 ML.

The 160ML annual production is less than 1% of Australian gasoline demand (18,033 ML).
To the oxygen limit of the Euro-3 standard (2.7% oxygen; 7.8% ethanol) an annual
production of 1320ML ethanol would be required.

17
Data provided by Fuel Ethanol Association of Australia.

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Duncan Seddon & Associates Pty Ltd.
Demand

World demand is about 486,000 bbl/d or about 87% of world capacity. Given plant outages
etc. this indicates that supply demand is approximately in balance.

The dominant user is Brazil where ethanol is used in all gasoline sold. The demand is about
220,000 bbl/d. This demand is satisfied by the nations own production and none is available
for export.

The next largest use is for industrial uses (solvent etc.) followed by the demand for fuel
ethanol and as a fuel additive in the USA. Beverage use accounts for the rest.

MTBE

MTBE is widely traded on the US and European fuel and chemical spot markets. Tracking
MTBE prices reveals that MTBE is linked to the prevailing price of regular gasoline with a
premium of about 15%.
Production

The production of MTBE involves the facile reaction of methanol with isobutene. Methanol
is a world commodity chemical readily available (see above). The main issue is the
availability of isobutene. There are three main sources:

The refinery operation of fluid catalytic cracking (FCC) produces a byproduct gas stream that
contains isobutene. This stream is often fed to an MTBE unit where the isobutene in the
stream preferentially reacts and is converted to MTBE. After purchasing methanol, this gives
the refiner a ready source of MTBE within the refinery boundary.

A more substantial source of isobutene is the C4 cracked gas stream from pyrolysis cracking
of gas oil or naphtha to produce ethylene. This stream contains a substantial volume (up to
50%) of the valuable commodity 1,3-butadiene and this extracted for further use. After
butadiene extraction, the residual stream contains a major portion (up to 50%) of isobutene
that can be converted into MTBE. This is a major source of traded MTBE.

Isobutene can be made from LPG. This requires the isomerisation of normal butane to
isobutane followed by dehydrogenation to produce isobutene. This route is energy intensive
and has high capital and operating costs. However, there are very large plants producing
MTBE using this route. These plants are based in the Middle East and Canada and export
MTBE to Europe, the USA and the Far East.

Supply

World capacity is about 21 Mt/a (522,000 bbl/d) with a further 7 Mt/a (172,000 bbl/d) either
under construction or in planning. Nearly 50% of the total is in North America.

Other major producers are in Europe and the Middle East. Many of the larger plants in the
world export to the USA.

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Duncan Seddon & Associates Pty Ltd.
Demand

World demand is about 390,000 bbl/d, this is about 75% of nameplate capacity and given the
number of plants under construction or planned clearly represents an excess of capacity.

US MTBE demand is about 250,000 bbl/d which is excess of its production and there is a
considerable import

Clearly MTBE phase-out in the USA will have a major impact on the MTBE market around
the world.

Other Oxygenates

Of the other oxygenates only ETBE, TAME and TBA are produced in significant volumes.
These materials are produced internally within refineries and petrochemical plants.

ETBE can be produced in the same plant as MTBE (3.7 Mt/a, 91,000 bbl/d). Many of the
newer refinery based plants can swing production between ETBE or MTBE (80,000 bbl/d).
Another 10,000 bbl/d ETBE is produced in France.

TAME capacity is about 2 Mt/a (47,000 bbl/d). TAME is produced in the refineries using the
C5 olefine stream from FCC operations (iso-amylene stream). Unlike isobutene there are no
other significant sources other than FCC off-gas and the production of TAME is limited.
Plants that produce MTBE cannot easily be converted to produce TAME. However, there are
some flexible MTBE/TAME plants in Russia.

TBA capacity is about 2.6 Mt/a (60,000 bbl/d). TBA is produced mainly in the USA and
Europe where it has some uses as petrochemical intermediate and solvent. Isobutene is again
the key precursor, which is reacted with water to produce the alcohol.

This data clearly indicates the dominance of MTBE and ethanol as oxygenates and octane
boosters.

Implication of Californian and US Ban on MTBE

A ban or phase-out of MTBE would have a major impact on the supply and availability of
oxygenated additives to Australia. Because of the dominance of the US position, a US or
Californian ban on MTBE would exacerbate the over-capacity already existing in the industry
and result in a fall in MTBE price.

In the Asia region, because of the presence of low cost producers, this may result in MTBE
falling below the price of gasoline. Such an event would have the consequence on pressure to
import and use MTBE in Australia, irrespective of the need for an oxygen booster or added
oxygen.

An MTBE ban would have a major impact on the trade in other additives. Almost certainly
the trade in TAME, ETBE, and possibly DIPE, would be interrupted because of their
similarity to MTBE.

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Duncan Seddon & Associates Pty Ltd.
At present it is uncertain if the US will persist with an oxygen requirement in the RFG
gasoline pool. (The Blue Ribbon Panel, see below, has recommended that the oxygen content
regulation should be waived.).

Irrespective of an oxygenate waiver, a US led MTBE ban is likely to cause an increase in


demand (hence price) of good quality blendstock such as alkylate.

If the US persists with the oxygen requirement, this will create an enormous increased
demand for ethanol. This US RFG market would set the world price for ethanol. Purvin &
Gurtz, Inc. and ESAI have, extensively addressed these issues and several future scenarios,
for the US for the California Energy Commission [EXHIBIT 17 and EXHIBIT 26]. A
detailed financial analysis was performed by ESAI for the US markets [EXHIBIT 13], which
attempted a comprehensive review of the supply, availability and price of alternative
oxygenates in the event of a California and a US wide ban.

Several supply/cost curves at different scenarios were developed. Using the notional value of
A$=0.6 US$, produces the estimates shown in Table 11:

TABLE 11

Prices for Oxygenates Delivered to California (Intermediate Term; from EXHIBIT 13)

California Ban on MTBE US Wide Ban on MTBE


US c/gal A c/L US c/gal A c/L
Gasoline (basis) 69.6 30.7 69.6 30.7
MTBE (1997) 94.5 41.6 94.5 41.6
Ethanol 160.8 70.8 171.6 75.6
TBA 98.7 43.5 91.3 40.2
ETBE 112.2 49.4 109.3 48.1
TAME 104.7 46.1 100.1 44.1
methanol (for reference) 17.9 17.9

For the longer term these values may fall.

For Australia these supply/costs curves would be different. It would be expected that the
sources for ethanol and ethers would be different. For instance there may be indigenous and
Far East supplies for ethanol and TAME may best be sourced from Europe. This analysis
should be repeated for an Australian scenario but the data presented here will give a ballpark
estimate.

Referencing the cost to gasoline, we see that the cheapest oxygenate is MTBE and the most
expensive oxygenate is ethanol. The cost implication of this for the blender is modified after
consideration of the different volumes of additive to be used to achieve a specific oxygen
level in the gasoline.

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Duncan Seddon & Associates Pty Ltd.
Trade in Gasoline Components (BTX, Alkylate)

Benzene toluene and xylene are heavily traded on the Far East Asian chemical markets.
There are significant differentials between the countries of SE Asia, which reflect the cost of
shipping from the countries of production (Taiwan, Singapore, Korea, and Japan).

Benzene and xylenes are highly sought after intermediates for the production of synthetic
fibres. Prices depend on the business cycle, with the floor price being determined by the
value as octane boosters in gasoline (ie. floor price typically gasoline plus c. 20%). Toluene
has no large direct uses in the chemical industry and the prevailing price tends to be near to
that of 15% plus the price of gasoline.

At present there is no substantial trade in alkylate.

Costs of MMT and Ferrocene

MMT and ferrocene additives are priced according to the effect they produce, ie the boosting
of octane. The price is determined so that the additive is cost competitive to an alternative
option such as the addition of toluene. The detailed pricing structure is not available.

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ENVIRONMENTAL AND HEALTH EFFECTS OF ADDITIVES

Background

The RMIT Study presented an analysis of the toxicity of petrol additives and emission
products (Study 5 of RMIT 1994). This reported extensively on the toxicity of the pure
materials as known at the time18.

A generalised conclusion of the earlier study would say that the additives were less toxic than
the products (ie. petrol, which contains benzene). However, it must be emphasised that this
generalisation may not be correct because it ignores synergism between the petrol
constituents and the additives. This may result in a product of higher toxicity. Nevertheless,
it would appear to be a useful hypothesis pending toxicity data on additive/petrol mixtures.

We have reviewed the literature from 1994 to the present. With the coming of the Internet,
and the widespread interest in environmental pollutants, there is a mass of information
available. We have found no information that would significantly alter the 1994 conclusions
about the health and environmental effects of the additives, other than with respect to water
pollution by MTBE which is discussed below.

One web based organisation Environmental Defense Fund (EDF) produces a database which
collates all of the information of chemicals as available from the various US government
agencies and other reliable sources. The data is extensively referenced. The product is called
Scorecard and is available @ www.scorecard.org [Downloads are presented as EXHIBIT 9].

This site seems to have semi-official sanction with links to it from government sites such as
the EPA site19 and private organisations such as the American Methanol Institute. However,
it should be noted that this private organisation does not appear to be subject to independent
assessment such as scientific peer review20

Scorecard data is used to overview the information on the toxicity of the octane enhancers.
Scorecard profiles on the chemicals of interest are presented [EXHIBIT 10].

Another useful data source is Spectrum Laboratories Inc (@ www.speclab.com) which is a


private analytical laboratory concerned with analysis air and water. The site contains useful
data tables on a range of chemicals found in air and water pollution studies.

Possibly the greatest concern to the general public is their exposure to carcinogens. The most
comprehensive list available appears to be the list compiled by the State of California

18
Since 1994 there has been further work reported on the principal octane boosters. Further, this Report details
other compounds, which were not subject to the 1994 review. Updating the earlier work to cover all published
papers on the compounds of interest was considered beyond the scope of this review.
19
Web address: http://www.epa.gov
20
Another site which is widely regarded is the International Program on Chemical Safety:
http://www.who.int/pcs/pubs/

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Duncan Seddon & Associates Pty Ltd.
Environment Protection Agency [EXHIBIT 11]. The only pertinent compound on this list is
benzene.

Another major concern is reproductive toxicity [also included in EXHIBIT 11]. On this list is
benzene and toluene. However, as a cautionary note on the interpretation of these lists, this
list also contains Aspirin and Ethyl Alcohol (in beverages).

Hazard Classification (NOHSC)

The National Occupational Health and Safety Commission (NOHSC) classify the hazardous
nature of materials. The NOHSC (Worksafe Australia) exposure standards are also available
for some of the additives. Ethanol, MTBE, TAME, ETBE, ETAE, Ferrocene have no OHSC
classification [NOHSC].

NICNAS and AICS

In Australia, the Commonwealth Department of Employment, Workplace Relations and


Small Business oversees the National Industrial Chemical Notification and Assessment
Scheme (NICNAS). NICNAS was established in 1990 under the Industrial Chemicals
(Notification and Assessment) Act 1989 to aid in the protection of people at work, the public
and the environment from the harmful effects of industrial chemicals by assessing the risks
associated with these chemicals. Searching of the NICNAS database can be performed by
CAS number. Although there is some overlap with the Scorecard data, there are some
differences and pieces of additional information.

The Australian Inventory of Chemical Substances (AICS) lists the substances that that do not
require notification as new chemicals to NICNAS.

NICNAS data on the chemicals is given in EXHIBIT 16.

Methanol (CAS 67-56-1)

NOHSC

Physico-chemical: F (Flammable); Risk: R11 (Highly Flammable)


Health: T (Toxic);
Risk: R23/25 (Toxic by inhalation and if swallowed);
Safety: 1/2 (Keep locked up and out of the reach of children), 7 (Keep container tightly
closed),16 (Keep away from sources of ignition), 24 (Avoid contact with skin), 45 (In case of
accident or if you feel unwell, seek medical advice immediately).
Cut-Offs: Concentration ≥ 20%; T (Toxic); Risk: R23/25 (Toxic by inhalation and if
swallowed)
Concentration < 20% and ≥ 3%; Xn (Harmful); Risk: R20/22 (Harmful by inhalation)
Environmental: Risk phrases not assigned.

TWA: 200 ppm or 262 mg/m3

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STEL: 250 ppm or 328 mg/m3
Carcinogen category: not categorised
Comment: Absorption through the skin may be a significant source of exposure

NICNAS

The chemical is on the AICS. No other information is held.

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value 10,000 (ug/m3)
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk 0.5 mg/kg/day
US water quality standard not covered

Scorecard reports no recognised health hazard. Scorecard reports methanol is suspected as


being a:

Ÿ Developmental Toxicant
Ÿ Gastrointestinal or Liver Toxicant
Ÿ Neurotoxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

The Fate of Methanol in the Environment

Because of blending problems with gasoline, methanol is unlikely to be a preferred additive


to gasoline in Australia. Nevertheless, this alcohol is used as an alternative fuel and additive
in California.

Further there is a considerable trade and industry in methanol and methanol derivatives and
the toxicity and environmental fate is of interest to a range of organisations. The American
Methanol Institute, which actively promotes the use of methanol as an alternative fuel, has
commissioned a major analysis of the fate of methanol in the environment [EXHIBIT 8].

This reports that the half-life for methanol in soil, surface water and ground water is 1 to 7
days and the half-life in air is between 3 and 30 days.

Because methanol and ethanol compete in the US market as alternative fuels, some of the
data presented concerns the comparison of methanol, ethanol and benzene in the environment
(eg comparison of rate constants for anaerobic and aerobic degradation, Table 3-2 of
EXHIBIT 8). This data has been subsequently used in information relating to ethanol’s
environmental fate presented to the Blue Ribbon Panel on MTBE (see below).

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Ethanol (CAS 64-17-5)
NICNAS

The chemical is on the AICS.

An article concerning a request by the Governor of Illinios to the US EPA to delay the
implementation of Phase II of the RFG program until the role of ethanol is clarified.
Human Hazards - Scorecard

Scorecard has no information on risk values for ethanol. Scorecard reports no recognised
health hazard.

Scorecard reports ethanol is suspected as being a:

Ÿ Carcinogen
Ÿ Cardiovascular or Blood Toxicant
Ÿ Developmental Toxicant
Ÿ Endocrine Toxicant
Ÿ Gastrointestinal or Liver Toxicant
Ÿ Neurotoxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

The Fate of Ethanol in the Environment

During its deliberations, Kavanaugh and Stocking [EXHIBIT 7] presented the Blue Ribbon
Panel (see below MTBE) with data concerning the fate of ethanol as a gasoline additive in the
environment. They state that the fate and transport of ethanol in the environment is well
understood, but the interaction between ethanol and other gasoline constituents is not clear.

Ethanol is miscible with water in contrast to ether additives. Although ethanol has a low
vapour pressure in the pure state (lower than MTBE) it shows marked deviations from ideal
behaviour and has a much higher effective vapour pressure when used in gasoline blends
(RVP 18 psi compared to MTBE 8 psi; see above blending study results; page 27). This
gives ethanol a greater tendency to volatilise from gasoline.

By contrast Ethanol’s very low Henry’s Law Constant means that evaporation from surface
water and off-gassing from ground water is unlikely. This is in contrast to other additives and
components of gasoline.

The rate of migration in groundwater is indicated by the octanol/water partition coefficient.


Ethanol is not adsorbed by soil particles and as a consequence will move at similar speeds to
ground water.

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Although at high concentrations ethanol is toxic to microbes, it is expected to biodegrade
rapidly in ground waters. Estimates of the order of biodegradability are in the order
(approximate half lives are given in parenthesis)21

Ethanol (4.1 days) > Benzene (22 days) > MTBE (>120 days)

As ethanol use becomes a more widespread alternative to MTBE, there is now concern in
California that water supplies are being contaminated by ethanol from gasoline (Oxy-Fuel
News, May 15, 2000). Such a situation may arise in Australia if ethanol is added here without
proper management of gasoline storage facilities

Co-Solvency and Benzene, Toluene, Ethylbenzene, Xylene (BTEX) Plumes.

One of the key issues with ethanol is the co-solvency effect with BTEX. This results in the
relatively insoluble BTEX increasing in solubility in groundwater containing ethanol. In
other words ethanol mobilises BTEX.

A further problem is that bacteria preferentially attack ethanol reducing the biodegradation
rate of BTEX. This results in BTEX plumes resulting from gasoline spills extending for
much further than would otherwise be predicted (estimates by 25 to 40% or in the order of
30m) from leaking tanks.

TBA (CAS 75-65-0)

The US NTP reports positive results in carcinogenicity bioassays in animals, however, TBA
is not recognised as a human carcinogen.
NOHSC

Physico-chemical: F (Flammable); Risk: R11 (Highly Flammable)


Health: Xn (Harmful);
Risk: R20; (Harmful by inhalation)
Safety: 2 (Keep out of the reach of children), 9 (Keep container in a well-ventilated place), 16
(Keep away from sources of ignition)
Cut-Offs: Concentration ≥ 25%; Xn (Harmful); Risk: R20 (Harmful by inhalation)
Environmental: Risk phrases not assigned.

Exposure standards not established


NICNAS

The chemical is on the AICS.

This chemical is on the current list for possible assessment as a priority existing chemical (ie
there are some concerns with its use).

21
These were estimated from the graphical data of the first order rate constants for biodegradation in the
submission by Kavanaugh to the Blue Ribbon Panel EXHIBIT 7.

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Human Health Hazard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value data gap
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk 0.1 mg/kg/day
US water quality standard not covered

Scorecard reports no recognised health hazard. Scorecard reports TBA is suspected as being
a:

Ÿ Development Toxicant
Ÿ Kidney Toxicant
Ÿ Neurotoxicant
The Fate of TBA in the Environment
TBA is a primary metabolite of MTBE and is also found in commercial MTBE supplies.
TBA is infinitely soluble in water (miscible) and difficult to biodegrade [OSTP 1997 and
STEFFAN]

Other Alcohols
IPA (CAS 67-63-0)

NOHSC

No hazard classification

TWA: 400 ppm or 983 mg/m3


STEL: 500 ppm or 1230 mg/m3
Carcinogen category: not categorised

NICNAS

The chemical is on the AICS. No other information held.

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value 7000 (ug/m3)
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk data gap
US water quality standard not covered

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Scorecard reports no recognised health hazard. Scorecard reports isopropanol (IPA) is
suspected as being a:

Ÿ Cardiovascular or Blood Toxicant


Ÿ Gastrointestinal or Liver Toxicant
Ÿ Kidney Toxicant
Ÿ Neurotoxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

The Fate of IPA in the Environment

No pertinent data is available. However, as a secondary alcohol, IPA is likely to degrade


slower than ethanol (a primary alcohol) but faster than TBA (a tertiary alcohol).
n-Propanol (CAS 71-23-8)

NOHSC
No hazard classification

TWA: 200 ppm or 492 mg/m3


STEL: 250 ppm or 614 mg/m3
Carcinogen category: not categorised
Comment: Absorption through the skin may be a significant source of exposure

NICNAS

The chemical is on the AICS. No other information held.

Human Hazards - Scorecard

Scorecard does not report any risk factors for n-propanol.

Scorecard reports no recognised health hazard. Scorecard reports n-propanol (n-propyl


alcohol) is suspected as being a:

Ÿ Cardiovascular or Blood Toxicant


Ÿ Gastrointestinal or Liver Toxicant
Ÿ Neurotoxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

The Fate of n-Propanol in the Environment

No pertinent data is available. However, as a linear alcohol, n-propanol is likely to degrade


quickly.

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n-Butanol (CAS 71-36-3)

NOHSC
Physico-chemical: Risk: R10 (Flammable)
Health: Xn (Harmful);
Risk: R20; (Harmful by inhalation)
Safety: 2 (Keep out of the reach of children), 16 (Keep away from sources of ignition)
Cut-Offs: Concentration ≥ 25%; Xn (Harmful); Risk: R20 (Harmful by inhalation)
Environmental: Risk phrases not assigned.

TWA: 50 ppm or 152 mg/m3


STEL: Peak Limitation
Carcinogen category: not categorised
Comment: Absorption through the skin may be a significant source of exposure

NICNAS
The chemical is on the AICS. No other information held.

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value data gap
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk 0.1 mg/kg/day
US water quality standard not covered

Scorecard reports no recognised health hazard. Scorecard reports n-butanol is suspected as


being a:

Ÿ Cardiovascular or Blood Toxicant


Ÿ Gastrointestinal or Liver Toxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

The Fate of n-Butanol in the Environment

No pertinent data is available. However, as a linear alcohol, n-butanol is likely to degrade


quickly.
Isobutanol (CAS 78-83-1)

NOHSC

Physico-chemical: Risk: R10 (Flammable)


Health: Xn (Harmful);
Risk: R20; (Harmful by inhalation)

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Safety: 2 (Keep out of the reach of children), 16 (Keep away from sources of ignition)
Cut-Offs: Concentration ≥ 25%; Xn (Harmful); Risk: R20 (Harmful by inhalation)
Environmental: Risk phrases not assigned.
TWA: 50 ppm or 152 mg/m3
STEL:
Carcinogen category: not categorised
NICNAS

The chemical is on the AICS. No other information held.

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value data gap
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk 0.3 mg/kg/day
US water quality standard not covered

Scorecard reports no recognised health hazard nor no suspected hazards.

The Fate of Isobutanol in the Environment

No pertinent data is available. However, as a branched alcohol, isobutanol is likely to


degrade slower than ethanol but faster than TBA.

Sec-Butanol (CAS 78-92-2)

NOHSC

Physico-chemical: Risk: R10 (Flammable)


Health: Xn (Harmful);
Risk: R20; (Harmful by inhalation)
Safety: 2 (Keep out of the reach of children), 16 (Keep away from sources of ignition)
Cut-Offs: Concentration ≥ 25%; Xn (Harmful); Risk: R20 (Harmful by inhalation)
Environmental: Risk phrases not assigned.

TWA: 100 ppm or 303 mg/m3


STEL:
Carcinogen category: not categorised

NICNAS

The chemical is on the AICS. No other information held.

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Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value data gap
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk 0.1 mg/kg/day
US water quality standard not covered

Scorecard reports no recognised health hazard. Scorecard reports sec-butanol is suspected as


being a:

Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

The Fate of sec-Butanol in the Environment

No data is available. However, as a secondary alcohol, sec-butanol is likely to degrade


slower than ethanol (a primary alcohol) but faster than TBA (a tertiary alcohol).

MTBE (CAS 1634-04-4)


NICNAS

The chemical is on the AICS. MTBE is on the current candidate list for assessment as a
priority existing chemical.
Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value 3,000 (ug/m3)
US air quality standard not covered
Ingestion cancer risk not recognised
Ingestion risk 0.3 mg/kg/day
US water quality standard 0.02-0.2 mg/L

Scorecard reports no recognised health hazard. Scorecard reports MTBE is suspected as


being a:

Ÿ Carcinogen
Ÿ Developmental Toxicant
Ÿ Gastrointestinal or Liver Toxicant
Ÿ Kidney Toxicant
Ÿ Neurotoxicant
Ÿ Skin or Sense Organ Toxicant

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Some stakeholders expressed particular concerns about the potential carcinogenicity of
MTBE22

Proposed US MTBE Phase-Out - Blue Ribbon Panel

Background: Oxygen in US Gasoline Pool

The US Clean Air Act Amendments of 1990 (CAAA) established the Federal Reformulated
Gasoline Program (RFG). This was implemented in 1995. The CAAA required RFG to
contain 2% oxygen by weight.

Because of unique air pollution problems, California adopted similar but more stringent
guidelines for Californian RFG (CaRFG). This required 2.7% oxygen in the gasoline.

In addition areas in both California and elsewhere which did not meet national air quality
requirements had to introduce a wintertime Oxyfuel program which required gasoline to
contain 2.7% oxygen by weight.

About 30% of gasoline sold in the US is RFG or Oxyfuel. The oxygen in the fuel is provided
by:
MTBE 76%
Ethanol 19%
TAME and ETBE 5%

The dominant oxygenate in the US is MTBE. Ethanol is mainly used in the corn-belt states
of the mid west USA. Ethanol tends to have a high use in winter oxygenated areas where it is
used to deliver about 3.5% oxygen to the final gasoline.
Groundwater Contamination

After the introduction of RFG, MTBE started to be detected in US water supplies. About 5 -
10% of the water in RFG areas showing contamination. The great majority was below the
levels for public health concerns (< 20 parts per billion). However, even at these levels there
was concern about odour and taste.

The major source of groundwater contamination was from leaking underground gasoline
storage tanks, which contaminated local wells. Other sources have been identified including
gasoline spills to surface water, pipeline leaks and contamination by recreational watercraft.

Blue Ribbon Panel

In response to these issues, the EPA (Administrator C. Browner) appointed the Blue Ribbon
Panel in November 1998 to investigate air and water quality issues relating to the use of
MTBE. The final report was issued in September 1999 [EXHIBIT 4].

22
See The International Program on Chemical Safety (Environmental Health Criteria No. 26).

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The key pertinent recommendations of the Panel were:

• that MTBE should be substantially phased out of gasoline in the USA


• in order to facilitate the phase out, the 2% limit on oxygenate level in RFG should be
waived.

There were two dissenting opinions on this issue:

Todd Sneller [Nebraska Ethanol Board, EXHIBIT 5] stated that the CAAA intended that
reducing aromatics in gasoline would attain air quality improvements. The removal of the
oxygen waiver for RFG would result in an increased use of aromatics. This would degrade
air quality.

Lyondell Chemical Company23 [ EXHIBIT 6] stated that the removal of MTBE was
unwarranted because no public health issue has been identified. The problem with
groundwater contamination had been effectively dealt with by the introduction of new storage
tank regulations in 1998. Further, the analysis used by the Panel to support the view that air
quality would be maintained was flawed and air degradation would result.

The Blue Ribbon Panel held several meetings and took many formal submissions24. The
following summarises salient findings of the Panel:

Water Contamination

The result of using MTBE in RFG was an increase in detection of the additive in drinking
water. Between 5 and 10% of drinking water in high oxygenate areas was contaminated. The
great majority was well below the level of concern, many near the detection limit. About 0.3
to 1.5% of analyses showed value of MTBE above 20 ppb. One study [GRADY] showed that
MTBE contamination was found principally in RFG areas25.

Several studies noted that MTBE was associated with detection of volatile organic (VOC)
compounds but not benzene, toluene, ethylbenzene and xylenes (BTEX) [GRADY,
SQUILLACE].

Sources of contamination were identified as releases from underground gasoline storage


tanks, pipelines, spills, improper disposal, and surface water contamination from storm water
run-off and watercraft.
Fate of MTBE in the Environment

Relative to other components of gasoline, MTBE is more soluble in groundwater, is adsorbed


less readily on soil particles and biodegrades less rapidly. In groundwater it moves more
quickly than other components [HAPPEL, SALANITRO].

23
Lyondell are a major supplier of MTBE.
24
These are available on the US EPA web site, follow the links to the Blue Ribbon Panel.
25
Interestingly there was some detected in non RFG areas but this could be from the widespread use of MTBE at
a lower level than that required for RFG.

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Air Quality Benefits

The efficacy of the RFG Program has been extensively studied. The most comprehensive
data used by the Blue Ribbon Panel was a report conducted by the Office of Science and
Technology [OSTP June 1997].

In Phase 1 of the program the achievements of the program have been better than anticipated
by the regulations. Indeed in some instances, better quality has been achieved than that
anticipated in Phase 2 of the program which started January 2000.
This observation is important because it permits the deduction that MTBE could be
removed and the compliance with CAAA still achieved.

However, it was recognised that removal of oxygenates may cause some problems and other
issues (eg CaRFG where there is also a low cap on the aromatics level).

Carbon Monoxide

The Panel recognised that if oxygenates are removed from fuel there would be expected to be
an increase in the level of CO emissions. However, the turnover of the vehicle fleet with
stricter compliance of tail pipe emissions (due to lean burning and catalyst changes) would
largely mitigate this effect.

From the Australian perspective, we have to acknowledge the relative large age of the
Australian vehicle fleet with significant number of vehicles without any form of emission
control. We may deduce that increasing olefines and aromatics in the fuel will result in air
quality deterioration especially in the large urban centres.

TAME and Other Ethers


NICNAS

DIPE is on the AICS. No other information held.

TAME, ETBE and ETAE are NOT on the AICS. No information held

There is no data in Scorecard on TAME or ETBE. DIPE is reported as a suspected


neurotoxicant.

Other ethers are likely to be similar, although not identical to MTBE, ie is highly soluble in
water, is poorly adsorbed by soil and have low biodegradation rates.

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Comparison to BTEX and Alkylate
NICNAS

Benzene is on the AICS and is under assessment as a priority existing chemical.

Toluene and xylenes are on the AICS and are on the candidate as a priority existing
chemicals.

Butane and isooctane are on the AICS, no other information is held

Behaviour in Water

Aromatics (BETX) from the standpoint of hydrocarbons are relatively soluble in water. The
saturation level is in the order of 1000 - 3000 ppm. Aromatics are readily biodegradable.

Alkylate (as exemplified by isooctane) is very much less soluble in water than aromatics. The
saturation level is typically 50 ppm.

Comparative Data

Data showing the relative potential of the various additives to contaminate potable water and
ground water is presented in Table 12:

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TABLE 12a
COMPARATIVE DATA
Contamination Potential of Potable Water26

BENZEN MTBE ETHANOL ETBE TAME TBA ISOOCT.


E
Solubility in Water
0.0178 4.8 MISCIBLE 1.2 1.2 MISC. <<0.01
(g/100g H2O)
Sol. from gasoline
<0.01 0.55 5.7 0.33 0.24 2.5 -
(g/100g H2O)
Taste in Water
500 20-40 - 47 128 - -
(ug/L)
Odour (ppm)
0.5 0.053 49 0.013 0.027 21 -

TABLE 12b
Contamination Potential of Groundwater

Solubility Vap. Pres. Henry’s law Log Koc


(mg/L) mmHg
Importance in rate of migration evaporation evaporation rate of migration
bioavailability from spills from water soil absorption
soil vapour
extraction
Methanol infinite 130 0.0001 0.7
Ethanol infinite 50 0.000252 0.7
TBA infinite 40 0.0005 1.6
MTBE 50000 245 0.02 1.15
ETBE 19000 180 0.1 1.6
TAME 16000 80 0.055 1.7
DIPE 4500 170 0.4 1.6
Benzene 2000 95 0.22 1.8
Toluene 540 28 0.2 1.8
Xylenes 180 8 0.3 2.5

The data in the first table (Table 12a) indicates that although MTBE is not the most soluble,
nor has the strongest odour, it can be detected in water by taste at extremely low levels.

The second table of data (Table 12b) complements the first. The first column indicates that
alcohols are miscible with water and the ethers are quite soluble in water. Gasoline
components are relatively insoluble.

The second column (vapour pressure) shows that the ethers and methanol are the most likely
components to evaporate from spills.

The third column gives Henry’s Law constants. Components with values <0.05 are unlikely
to evaporate from surface water (alcohols, MTBE, TAME).

26
Blue Ribbon Panel report EXHIBIT 4

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The values for the octanol/water partition coefficient are shown in column four. The
octanol/water partition coefficient (Koc) gives and indication of how strongly (or weakly) a
water contaminant is held by soil particles. A relatively low Koc indicates a lower attraction
to the soil. As the Koc value falls towards unity, the contaminant moves at the speed of
ground water.

Ferrocene (CAS 102-54-5)

Ferrocene is on the AICS list.

Scorecard reports no recognised health hazard. Scorecard reports ferrocene is suspected as


being a:

Ÿ Endocrine Toxicant
Ÿ Gastrointestinal or Liver Toxicant

The Fate of Ferrocene in the Environment

Octel has provided exhaust emission toxicological data on vehicles using gasoline containing
ferrocene. In none of the studies conducted, could differences in the toxic effects of the
exhausts, deriving from fuel without and with 30 ppm ferrocene (Octel recommended
maximum dosage), be detected. Particularly in the inhalation studies, using the highest
exhaust concentrations technically possible, no toxic effects from the exhaust from engines
equipped with 3-way catalysts, could be detected.

In another test, no significant differences were found in the regulated emissions of carbon
monoxide, hydrocarbons, nitrogen oxides, particulate matter, poly-aromatic hydrocarbons,
mutagenic activity and TCDD-receptor activity [EXHIBIT 29].

Iron is widespread in nature and a basic constituent of motor vehicles. Ferrocene emissions
from the tailpipe would be as iron oxide. Iron oxide emission would be expected from
normal engine wear and ferrocene use at the recommended levels may not add significantly to
the total levels of iron emission.

MMT (CAS 12108-13-3)

Manganese is an essential element for human health and is widespread in nature. Problems
occur in as a consequence of high exposure.

NOHSC

No hazard classification

TWA: 0.2 mg/m3


STEL:
Carcinogen category: not categorised
Comment: Absorption through the skin may be a significant source of exposure
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NICNAS

NICNAS has formally called for information from industry sources on the use of this
chemical in Australia to determine whether it should be assessed as a priority existing
chemical.

Scorecard reports no recognised health hazard. Scorecard reports MMT is suspected as


being a:

Ÿ Neurotoxicant
Ÿ Respiratory Toxicant

The Fate of MMT in the Environment

MMT has been used in Canadian gasoline since 1976 and MMT and manganese in the
Canadian environment has been subject to extensive review [EXHIBIT 20].

MMT was found to be oxidised very quickly in ambient air to manganese oxides and of itself
MMT did not pose a risk In this early study, the Canadian workers estimated that up to 40%
of the manganese present in the gasoline was emitted from the tailpipe as manganese oxides.
However, more recent data indicates that actual emission of manganese from the tailpipe is
much lower (12 - 16%) with the manganese being present as the more inert manganese
phosphates or silicates [EXHIBIT 25].

For cities in Canada with no major manganese emitting industries, the sampling of urban air,
water and dust was taken to represent the impact of MMT in gasoline.

The work found that urban air was below the benchmark levels at which no adverse effects
were to be expected. The analysis also included infants and the elderly who are more prone
to risk by manganese poisoning.

There was no correlation between the manganese content of particulate matter and the sales of
MMT gasoline. However, there was some association of manganese levels with city size and
traffic density.

For these cities MMT was found not to be entering the environment at a rate which would
cause concern.

For cities with manganese emitting industries (eg steel mills) average exposure was above the
level at which health problems may have occurred. This was deemed to be unrelated to MMT
in gasoline.

In Australia there is a major manganese mining operation at Groote Eylandt in the Northern
Territory, and major manganese dioxide production plant and steel mills in several cities in
Australia.

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Gasoline Components

The main interest is in the effects of benzene and other aromatics. Most of the additives are
compared with benzene and comparative data is included in the above information for MTBE
and ethanol. For comparison, the toxicity as reported by Scorecard are:

Benzene ((CAS 71-43-2)

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk 0.000029 (ug/m3)


Inhalation risk value 60 (ug/m3)
US air quality standard not covered
Ingestion cancer risk 0.1 mg/kg/day
Ingestion risk data gap
US water quality standard 0.005 mg/L

Scorecard reports benzene is a recognised health hazard:

Ÿ Carcinogen
Ÿ Development Toxicant
Ÿ Reproductive Toxicant

Scorecard reports benzene is suspected as being a:

Ÿ Cardiovascular or Blood Toxicant


Ÿ Endocrine Toxicant
Ÿ Gastrointestinal or Liver Toxicant
Ÿ Immunotoxicant
Ÿ Neurotoxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

Toluene (CAS 108-88-3)

NICNAS

Listed on the NICNAS candidate list for possible assessment as a priority existing chemical.

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value 400 (ug/m3)
US air quality standard not covered

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Ingestion cancer risk not recognised
Ingestion risk 0.2 mg/kg/day
US water quality standard 1 mg/L

Scorecard reports toluene is a recognised health hazard:

Ÿ Development Toxicant

Scorecard reports toluene is suspected as being a:

Ÿ Cardiovascular or Blood Toxicant


Ÿ Gastrointestinal or Liver Toxicant
Ÿ Immunotoxicant
Ÿ Kidney Toxicant
Ÿ Neurotoxicant
Ÿ Reproductive Toxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

Xylene (Mixed Isomers) (CAS 1330-20-7)

NICNAS

Listed on the NICNAS candidate list for possible assessment as a priority existing chemical.

Human Hazards - Scorecard

Scorecard reports the:

Inhalation cancer risk not recognised


Inhalation risk value 700 (ug/m3)
US air quality standard not covered
Ingestion cancer risk not covered
Ingestion risk 2 mg/kg/day
US water quality standard 10 mg/L

Scorecard reports xylenes are not a recognised health hazard: Scorecard reports xylene is
suspected as being a:

Ÿ Cardiovascular or Blood Toxicant


Ÿ Development Toxicant
Ÿ Gastrointestinal or Liver Toxicant
Ÿ Immunotoxicant
Ÿ Neurotoxicant
Ÿ Reproductive Toxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

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Other Components

Scorecard reports butane (CAS 106-97-8) as a suspected neurotoxicant

Isooctane (CAS 540-84-1) is reported as a suspected:

Ÿ Gastrointestinal or Liver Toxicant


Ÿ Kidney Toxicant
Ÿ Respiratory Toxicant
Ÿ Skin or Sense Organ Toxicant

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IMPEDIMENTS OF HARMONIZATION WITH EUROPEAN UNION
QUALITY STANDARDS
Overview

The Fuel Quality Review [COFFEY] sets out the approach to improve emissions from
Australian vehicles. This involves the regulations concerning the construction of vehicle
engines. However, if such vehicles are to achieve the envisaged improved performance, there
has to be concomitant improvement in the quality of the fuel. Since the improved engine
designs emanate from Europe it would be natural for Australia to harmonise with European
fuel quality standards, specifically Euro-3 and Euro-4 fuels.

This report addresses this issue from the standpoint of spark ignition engines (gasoline) and
reports on the substantive issue of lifting the octane value of the gasoline pool from the
current value of about 92 to 95 RON.

The World-Wide Fuel Charter (WWFC) promotes the harmonisation of fuels from the
standpoint of the vehicle manufacturers of USA, Japan and Europe. The WWFC has recently
been revised [EXHIBIT 23]. Whilst there is a lot of common ground between the Euro-3 and
Euro-4 specifications, there are some subtle differences which may impact on the use of
octane boosters.

As well as 95 RON, the WWFC gives specifications for a 98-octane fuel. Fuel of 98 RON
has not been the primary consideration of this Study.

The WWFC represents the considered opinion of the auto-manufacturers and is used by the
local industry in Australia to define the optimum fuels from their standpoint.

TABLE 13
THE PRESENT POOL AND THE TARGET27

ULP (1998) Euro-3 Euro-4 WWFC-3


RON 91.6 95 95 95
MON 82.5 85 85 85
Sulphur (ppm. max.) 150 150 50 30
Benzene (% max.) 2.6 1 1 1
Aromatics (%) 27.5 42 35 35
Olefins (%) 17.1 18 14 10
RVP (kPa, min.) 71 60 55 45 - 60
Oxygen (% max.) ~0 2.7 2.7 2.7

The data in Table 13 (above) illustrates that the 1997 pool average more or less met Euro-3
standards with respect to sulphur, aromatics, olefins, but fell short of the standards with
respect to octane (RON and MON), benzene and RVP.

27
From page 51 of draft “Setting National Fuel Quality Standards - Paper 2” and Fuel Quality Report, Table 5-1

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Note that although no minimum oxygen level is stipulated, the maximum oxygen content is
2.7%.

The WWFC specifies that ethers are preferred oxygenates. Where ethanol is used >C2
alcohols are limited to 0.1% and methanol is not permitted. The Charter specifically excludes
manganese additives.

Australia has eight major refineries producing about 18,300 million litres per year [AIP]. The
bulk of the petrol is made to approximately the above composition (Table 13) for the
unleaded grade and (after addition of lead) leaded petrol grades. Unlike the large European,
Singapore and US operations, the Australian refineries are largely stand-alone operations and
there is very limited ability to transfer intermediates between refineries. This means the
refineries are producing specification product within the boundaries of the refinery and places
them at a cost disadvantage relative to the larger integrated operations.

The preferred option of the refiners is to continue this practice and to produce the
specification fuels without resorting to import of additives or boosters. There are three ways
to boost octane28:

1. Isomerisation

Isomerisation will improve the octane value of the lighter hydrocarbons (C5 and C6),
commonly referred to as “light straight run gasoline” (LSR). LSR can have low octane eg 70
RON. However, isomerisation is limited to achieving a product of about 90 RON.
Nevertheless, this may be sufficient to get the finished gasoline to the target value.
Isomerisation product contains no olefines, benzene, aromatics and little if any sulphur and so
contributes well to all of the other criteria.

Isomerisation is costly and to achieve the higher octane (multiple pass operation) results in
feedstock losses - this ultimately results in increased greenhouse emissions.

Isomerisation is practiced at the Caltex refineries at Lytton and Kurnell, BP Kwinana, Mobil
Port Stanvac, Shell Geelong

2. Alkylation

Alkylation involves the reaction of light olefines (propylene and butylenes with isobutane to
produce highly branched paraffins. If isobutene is used, the product is isooctane with RON
and MON values of 100. If mixed olefines are used, the octane is typically about 95.

Alkylate is highly sought after by refiners because of its high octane (both RON and MON)
and no sulphur, aromatics or olefines. Most of the alkylate is used within refineries, but there

28
The construction of a finished gasoline is quite complex and this is a simplified view, which tries to get to the
essence of the problem. I have omitted fluid cat-cracking (FCC) which produces a very large volume of gasoline
blend stock rich in olefins with a final octane of about 92 RON. As well as olefins, FCC also produces some
aromatics. It is assumed that FCC operation is limited by the maximum olefin content of the finished gasoline
and this limits the refinery’s ability to increase FCC output. However, inspection of the table shows there is some
flexibility to do this for Euro-3 but not for Euro-4 fuels.

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is a small trade. As discussed above (under financial cost of additives), alkylate may become
a target product for US refiners wishing to eliminate MTBE.

All the refineries, which can produce and separate light olefines and isobutane, have an
alkylate producing facility. Only the Mobil refinery at Port Stanvac has no alkylation facility.
There are two types of alkylation process, one based on sulphuric acid and the other on
hydrofluoric acid. Both have their proponents and opponents and both have environmental
waste problems.

3. Reforming

Reforming produces aromatics from saturated hydrocarbons with six or more carbon atoms.
The feed stock is heavy naphtha with an octane of about 40 - 50 RON and the product is
called reformate with a RON of 98 or more. Reforming is thus the powerhouse of octane
boosting within the refinery. All major fuels refineries have a reformer.

Reforming produces BTX as the principal products. High severity reforming which gives
reformate >100 RON is usually only practiced by operations integrated into petrochemicals
where benzene is a desired product. Most refinery reformers operate at much lower severity.
Selecting the feed stock to avoid benzene (C6) precursors can reduce benzene content.

The reforming of hydrocarbons to produce aromatics is energy intensive and the increased use
of reforming or more severe reforming to increase aromatics inevitably leads to higher
greenhouse gas emissions.

Since the ability to use isomerisation and alkylation is limited, Australian refiners would rely
on increasing the use of reforming to lift octane to the target levels.

As a rule of thumb, a one number octane lift is achieved by a 2% rise in the level of
aromatics. Using this rule, we see that the present pool octane could be lifted to 95 RON by
an increase in 6% in the aromatics. Very roughly this would mean that the gasoline pool
would be about 34% aromatics. This is lower than the Euro-3 standard. We thus conclude
that:

Euro-3 95 Octane fuel can be achieved by increasing the level of aromatics.

However, we also note that this would produce a pool gasoline that would approach the Euro-
4 and WWFC - 3 limit for aromatics29. For these standards additional process plant -
increased isomerisation or alkylation capacity would probably be required or the refiners
would have to use of an octane booster.

An octane booster may be required to achieve Euro-4 standards.

Differences in process plant available, and hence base stock gasoline of varying quality, at the
different refineries in Australia raises the prospect that there is unlikely to be a universally
acceptable octane booster. In other words what might be necessary in one particular refinery
may not be required at others.

29
Note the aromatics level of PULP in 1998 was reported as 35.7%, ie higher than Euro-4

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Different octane boosters may be required at the different refineries

The problem of minimising aromatics is exacerbated when one considers the possibility of
98-octane fuel being widely introduced.

Environmental Impact of Increased Aromatics in Gasoline Pool

There is a substantial body of data (and opinion still being debated in the USA) that increased
aromatics in the gasoline pool leads to a degradation of air quality. This problem would be of
particular relevance to the larger urban centres in Australia.

Increased aromatics would not result in increased emissions from the new vehicle fleet built
to the design regulations for which the new fuel standards are designed. Such vehicles are to
be equipped with the latest lean-burn and catalytic conversion technology that will
substantially eliminate all of the pollutants. Rather, increased air pollution will arise from:

• fugitive emissions in the delivery chain form the refinery to the petrol tank
• emissions from vehicles not designed to the new standards

Of these the latter is probably more important because one of the distinguishing features of
the Australian automotive fleet when compared to the European and USA fleets is the number
of older (> 10 years) vehicles.

Increased aromatics in the gasoline pool may result in increased air pollution from the
older vehicle fleet.

As a consequence this may force the use of octane boosters to achieve the Euro-3 standard
before the introduction of Euro-4. Because of higher traffic densities, pressure to control
aromatics may particularly apply to Melbourne and Sydney first, with the prospect that
refineries supplying these markets will be the first to use additive octane boosters.

Issues
Octane and Greenhouse

Today there is a considerable amount of interest in the reduction of greenhouse gases with
most emphasis being placed on the principal greenhouse gas, carbon dioxide. For our
consideration, greenhouse gases in the transport sector arise from two sources:

1. At the refinery by converting crude oil into transport fuels, and


2. In the vehicle

Vehicle emissions are directly linked to the engine efficiency (km/litre). The engine
efficiency is related to the compression ratio - the higher the compression ratio the better the
efficiency. Higher compression ratio vehicles require higher-octane fuel. This is the position
under which the automotive manufacturers are working to achieve their commitments to
government to improve efficiency.

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From the standpoint of the refiners we have the opposite. On the basis of thermodynamics,
transport fuel is higher in energy30 than crude oil, and the more refined the transport fuel
(essentially higher the octane), the bigger the energy difference. This means that to convert
crude oil into higher octane gasoline requires more energy. Unfortunately, there is also a
mismatch in the carbon-hydrogen content of crude oil when compared to gasoline. Crude oil
contains more carbon than gasoline and the more refined the gasoline the less carbon it
contains31. Refinery operations achieve this balance by rejecting carbon as carbon dioxide.

This issue is particularly pertinent when producing higher-octane gasoline (98 RON). Such a
fuel would produce improved vehicle engine efficiencies but at the considerable cost of
carbon dioxide emissions in the refineries.

There is obviously an optimum, but to our knowledge there has been no attempt to determine
that optimum.

We do not know if increasing octane will result in a net (global) improvement or


increase in greenhouse gas emissions.

Greenhouse (2)

In addition to the above we note the potential use of oxygenates and MMT to lower the
Australian quantum of greenhouse emissions. This is because the oxygenates would be
produced in non Kyoto signatories or from biomass. MMT reduces vehicle emissions as well
as allowing refiners to operate at lower intensity and hence save energy.

Variance within Standards

The Euro-3 and WWFC - 3 fuels attempt to define world fuels, so that for example, the same
car will perform in the same manner wherever the fuel is available. However, inspection of
these fuels standards reveals that there is permitted quite a large variation in composition.
For instance, on the one hand, a fuel could comprise entirely hydrocarbons and on the other
could contain MTBE or ethanol (set by the maximum oxygen level of 2.7%) or MMT.

Even within the hydrocarbons there is some permitted variation. This is because the density
is permitted to range over a relatively large value. For example WWFC - Category 3, the
permitted range of density is 715 - 770 kg/m3. This should be compared to the density values
of isooctane (692 kg/m3) and toluene (867 kg/m3). This illustrates that fuels can be prepared
by mixing aliphatic hydrocarbons and aromatics in varying proportions.

As an aside we should note that a gasoline comprising substantially the use of alkylate
(isooctane), which many regard as the best gasoline blendstock, would not be permitted under
WWFC-3 (and possibly Euro-3), because the density would be too low.

30
Free energy
31
H/C ratio for crude oil typically <1.5; for isooctane H/C ratio >2.

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The consequence of this is in terms of the energy efficiency as measured in terms of km/L of
fuel32. Lower density fuels translates into a lower energy density and hence lower km/L.
One way to assist this problem would be to move to standards of fuel efficiency based on
km/kg of fuel.

Another consequence is that for large geographically spread areas served by a multitude of
gasoline sources (refineries and import in the case of Australia) there is unlikely to be one
“national” fuel without considerable further tightening of the standards.

This argument equally applies to Europe. The author believes it highly unlikely that the
gasoline sold to Euro-3 and Euro-4 standards will have the same composition across Europe
in terms of some of the key components such as MTBE content and the ratio between
aliphatic and aromatic hydrocarbons.

MTBE Bans and Phase Out - Shooting the Messenger

The present concern with MTBE stems from the contamination of ground water. The
principal culprit is leaking underground gasoline storage tanks near to wells and ground
potable water supplies. MTBE can be tasted in water at the parts per billion level and test
methods have been developed to detect MTBE at this extremely low level. At these levels
there has been no suggestion of human health problems.

Whilst we can sympathise with water authorities relying on the supply of water from
underground aquifers, banning MTBE may be too severe a reaction.

Since MTBE does not occur naturally, the detection of MTBE in ground water near to
gasoline storage tanks clearly indicates that there is a serious problem of leaking fuel.

Banning MTBE from the gasoline does not stop the root cause of the problem - leaking
tanks.

Banning MTBE implies that the regulation, inspection and maintenance of underground
storage tanks are deficient.

Further, it should be realised that other materials are likely to be detected from leaking tanks
(eg ethanol, which brings with the likelihood of increased benzene and aromatics33). Are
these other additives to be banned?
The controversy surrounding MTBE has sparked further research into its possible
carcinogenicity. Again there is much on-going debate. However, we should remember that
we are discussing an additive to petrol which itself comprises many highly toxic materials.

32
The vehicle manufacturers determine mileage by a process proscribed in ADR 79/00 Emission Control for
Light Vehicles. This process calls for a specific fuel, which is much more tightly defined from the standpoint of
density (0.741 to 0.755 kg/L).
33
Indeed, as ethanol use becomes a more widespread alternative to MTBE, there is now concern in California
that water supplies are being contaminated by ethanol from gasoline Oxy-Fuel News, May 15, 2000. Such a
situation may arise in Australia if ethanol is added here without proper management of gasoline storage facilities.

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Ethanol in Gasoline

The use of ethanol in gasoline has a long history in Australia and is practiced by several
groups. The normal practice is to use 10% ethanol as an extender to the gasoline with the
particular aim of producing premium unleaded fuel (ie 95 RON).

At 10% ethanol this fuel will not meet the European standards with respect to RVP and
oxygen content.

We have presented data to show that blending ethanol into gasoline at levels commensurate
with the Euro-3 oxygen limit (< 7.8%) will result in difficulties in meeting the proposed
lower RVP requirements (60 kPa falling to 55 kPa for Euro-4).

Prima facie the use of ethanol is not compatible with the proposed Euro-3 and Euro-4
standards.

Nevertheless, we have to recognise that there is a considerable amount of social pressure to


use ethanol in the gasoline pool. For this role the standards with respect to RVP may have to
be eased. Unfortunately, this will produce internal contradictions within the standards,
specifically with regard to the final RVP and the reason for capping RVP. This arises
because RVP is capped to improve air quality in the summer months, but ethanol is known to
exacerbate this problem and presumably would not be subject to the new RVP cap.
Ethanol - Familiarity Breeds Contempt

Australia has a long history of the use of ethanol in transport fuel. This has generally been in
controlled demonstration programs and in relatively small areas. For this use no excise is
applied to the ethanol component (equivalent to about 45-c/L subsidy).

Unfortunately, Australia has a long history of ethanol abuse. As beverage alcohol, ethanol
attracts an excise of about $35/L. There have been proposals to increase the excise to lower
ethanol consumption.

Whilst there is no evidence of fuel ethanol being illegally used as hooch, we must be aware of
the possibility, especially if the use of ethanol becomes more widespread.

As we have discussed above, ethanol is relatively easily extracted form gasoline by contacting
the gasoline with water. Unfortunately, there are also many recipes for removing
hydrocarbon contaminants from aqueous ethanol34. The attraction for removing ethanol from
gasoline for illegal use is exacerbated by the enormous tax differential35.

If the use of fuel ethanol in gasoline increases then the potential for an illegal industry should
be addressed. One option might be in incorporate addition higher alcohols in the blend that
would serve to contaminate any ethanol that was illegally extracted. We note that this may
not be acceptable to the WWFC-3 standard which limits higher alcohols to 0.1%.
34
In the USSR industrial ethanol was contaminated with benzene, with which it forms an azeotrope so cannot be
separated by distillation. There were several recipes for removing the benzene to make hooch.
35
60L of gasoline (a tank full) at 10% by volume would contain $210 worth of ethanol valued as beverage
alcohol.

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MMT - To Be or Not To Be

Although MMT is not permitted under WWFC-3 rules, we note that the Charter proponents
are intending to produce a position paper in the next few months.

However, MMT is gaining widespread acceptance from the refining side of the industry,
especially for formulating lead replacement petrol.

We have noted that because of the relatively high aromatics levels present in Australian
gasoline basestock, MMT may only contribute a minor value to the octane. Nevertheless,
MMT may be important in allowing refiners to “trim” the final gasoline to ensure a minimum
95 RON. For this end MMT may be used in lower than the normal dosage of 18 mgMn/L.

Further, we note that MMT can be used beneficially with oxygenate octane boosters (ie. both
contribute to octane). This may allow optimisation from several standpoints by using a mix
of additives such as MTBE, ethanol and MMT.

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STAKEHOLDER INPUTS

The following are summaries of views expressed to us during the course of the Study.
Motoring Organisations

Correspondence for various motoring organisations is presented in EXHIBIT 15.

Australian Historic Motoring Federation Inc. and Australian Automobile Association

The AHMFI and AAA expressed the view that forecourt additives that increase octane must
be mandated to the relevant Australian Standard and that only such products should be
allowed to be marketed and distributed in Australia.

From the standpoint of this Study, I assume that in essence this means that by addition of the
additive to the fuel by the motorist would not result in the fuel (in the tank) departing from
the fuel standard.

NRMA

MTBE is not supported because of its impact on groundwater.


MMT - not supported because its use is still controversial on a range of issues.
No objection to ethanol/methanol up to 10% but must not be subsidised.
Other compounds must be shown to be beneficial without excessive environmental
degradation and able to be produced at a competitive cost.

Australian Institute of Petroleum

The following are meeting notes. Draft notes and further commentary from participants are
given in EXHIBIT 15.

MEETING REPORT
MAY 10TH. 2000
@ BP AUSTRALIA; 360 ELIZABETH STREET, MELBOURNE
PRESENT:

Ewan Macpherson, Australian Institute of Petroleum


Natalie Smirk, BP
Frank Russell, BP
Geoff Davis, Mobil Australia
Adrian Moore, Caltex Australia Limited
Greg Engeler, Caltex Australia Limited
Leon Haliburton, Shell Australia
John Harris, Shell Australia
John Harris, RMIT
Duncan Seddon

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TOPIC: Octane Boosters

The objective was to ascertain the current industry views with regard to octane boosters. The
consensus was as follows:

• Australian refiners would want to have the greatest flexibility possible in their endeavours
to improve fuel quality standards and to boost octane.
• All the majors have had considerable experience in the use of MTBE in USA (where it is
added for air quality reasons), Europe and the Far East (where it is added for octane
enhancement), but all were of the view that they did not want to expand this usage and
hence did not favour the use of this additive in Australia. There was a similar position on
TAME and ETBE.
• Concern was expressed that the Euro-3 standards were developed within a framework of
the widespread use of MTBE (about 10%) and that removal of MTBE may cause
problems in achieving this standard in Europe.
• None would want to see the introduction of a 98 or 100 octane grade which would be
available at all outlets, although no problems with such high octane grades being available
at specialist outlets.
• Increased octane would generally be achieved by increasing the severity of reforming, ie.
increase in the level of aromatics. The addition of oxygenates was an option, but not the
preferred route. As a rule of thumb an increase in 1 octane was equivalent to an increased
in aromatics of 2%. An ideal refinery could achieve 95 octane by a combination of
isomerisation, alkylation and reforming. However, there was insufficient isomerisation
and alkylation capacity in Australian refineries. This left the local industry to rely on
reforming by increasing the aromatics level. Achieving low benzene levels would require
some changes to reformer operation or benzene extraction.
• The cost of octane was in the order of US$ 50 cents/octane barrel.
• All agreed that methanol would not be used because of safety, blending and corrosion
issues.
• Ethanol was the most acceptable oxygenate. However, there were major problems: MON
is an issue because ethanol does not lift MON very much; the use of ethanol would give
rise to problems in meeting summer vapour pressure specifications; cost is a problem as
ethanol is only economic because of its excise free status, and in low cost crude
environments ethanol could be uncompetitive.
• Although TBA and IPA was in use in Japan, there was no enthusiasm for using these
additives. The lack of infrastructure was a particular problem.
• In reaching the new specifications with regard to vapour pressure, this caused the
refineries to back out butane. The choices for the refinery for using the displaced butane
were LPG, which is opposed by some groups, internal use as fuel gas or flaring.
• The ferrocene additive being marketed by Associated Octel would not be used.
• There was interest in the use of MMT and all the majors had experienced its use in
Canada and elsewhere. However, most of the local refiners would not use this additive in
unleaded petrol unless the vehicle manufacturers sanctioned its use. However, for most
refiners this did not apply to the addition of MMT in Lead Replacement Petrol (Caltex,
Shell, Mobil). It was noted that lubricating oil and other fuel additive packages all
contained metals.
• If an additive had to be added, there may be issues with the import and tankage of the
additives.

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• Blending up gasoline from variously imported base stocks might result in drive-ability
index problems which was not the case for refinery produced product.

Federal Chamber of Automotive Industries

The following meeting report notes the attitude of the local vehicle manufacturers towards
octane enhancers.

MEETING REPORT
MAY 17TH. 2000
@ TOYOTA ENGINEERING CENTRE, 61 BERTIE STREET, PORT MELBOURNE
PRESENT:

Rex Scholar, FCAI


Keith Marsh, Mitsubishi
M. Preston, BMW
M. Frankie, Holden
S. McDonald, Ford
P. Stirling, Holden
P. Chear, Nissan
J. Lindsay, Rover
M. Morarty, Toyota

John Harris, RMIT


Duncan Seddon

TOPIC: Octane Boosters

The objective was to ascertain the current industry views with regard to octane boosters.

The consensus was as follows:

• Australian motor vehicle manufacturers are generally technology takers from the
standpoint of engine development. This means that engine performance standards are
generally determined by the overseas affiliates.
• This means that for fuel standards, the local industry takes the lead and opinions from
those expressed by internationally agreed procedures. Specifically, the approach to fuel
standards is taken from the World-Wide Fuel Charter (WWFC) developed by The
European Automobile Manufacturers Association, Alliance of Automobile
Manufacturers, Engine Manufacturers Association, and Japan Automobile Manufacturers
Association.
• The latest version (April 2000) states the latest industry view on aromatics, volatility,
MMT and oxygenates.
• Auto Industry is strongly opposed to MMT and is pessimistic re. use of metal additives
from the point of view of possible engine/emission control components contamination
and likely environmental objections.
• Oxygenates could be tolerated, but offer no direct benefit to the vehicle operator - they are
fuel diluents, rather than extenders and result in poorer fuel consumption. Local

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experience indicates that E10 (10% ethanol) could be tolerated. Ethanol in high
concentrations (>20%) had a detrimental effect on paint and finishes of some vehicles.
• In discussion, it was realised that the WWFC fuels standards permitted a significant
variation in fuel composition. This meant fuels may or may not contain oxygenates, allow
density to vary over a wide range (hence vary in the relative amounts of aliphatics (low
density) to aromatics (high-density) components). It was not immediately apparent what
this permitted variation would have on the agreed vehicle performance standards.
• DS expressed the opinion that the variance in WWFC standards would permit variations
in gasoline composition in Europe and Australia, ie there will not be a common fuel of the
same composition in apparently homogeneous, but large geographically spread, markets.
This impact of this on the industry was not clear.

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RECOMMENDATIONS

The principal objective of fuel harmonisation is to harmonise Australian fuel standards with
European Standards Euro-3 and Euro-4. This requires a minimum octane value of 95 RON.

Although this can be achieved using conventional fuels the European standards allow for the
use of oxygenate octane boosters to a level of 2.7% by weight oxygen. In Europe the
preferred oxygenate is MTBE.

MTBE is extensively used in the USA in the reformulated gasoline program. RFG is used in
30% of all gasoline sold in the USA. US RFG has a lower octane level than the European
Standards. The continued use of MTBE in gasoline is currently under considerable debate
and the US Executive is proposing MTBE phase out. The costs and practicality of MTBE
phase out is being studied extensively and is the subject of ongoing debate.

It is not clear if the US can maintain the benefits of the Clean Air Act without
oxygenates.

The cost of changing to new standards in Europe has been analysed [CONCAWE 99/56].
This analysis explicitly assumes the use of 2.7 million tonnes of MTBE in the European
gasoline pool in 2010, mainly in Germany, France, Italy and Greece.

It is not clear if the Euro-3 and Euro-4 standards could be achieved in Europe without
MTBE.

Because of these uncertainties the principal thrust of our recommendations is to permit


maximum flexibility for the industry to produce fuels to the Euro-3 and Euro-4
standards.

Of the oxygenates available, MTBE and ethanol are used extensively overseas. In some
places (mainly USA and Europe) the higher ethers TAME and ETBE make a contribution.
Other higher alcohols may make a contribution on an occasional basis.

We recommend36 the following:

1. MTBE is the preferred octane enhancer of the world oil industry and would be
suitable for use in Australia. In order to ameliorate concerns with groundwater
contamination, a national audit on the status of gasoline transport (pipelines) and storage
should be conducted with the object of identifying issues that would lead to pollution of
water supplies by any gasoline component.

2. Prima facie the use of ethanol is incompatible with proposed standards with respect to
oxygen content and RVP at the commonly used 10% level. Waivers specifically for

36
Our recommendations are based on an optimal response to the problem of fuel harmonisation involving costs
to the motorist, cost to the refiner and environmental impacts. It should be recognised that the health effects of
the chemicals are reviewed from secondary sources and it may be that recently published material has been
overlooked which may be prejudicial to one or more of the additives.
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ethanol in these areas are not in line with the aim of the standards. Nevertheless, we
recognise the social desire to see ethanol included in the Australian gasoline pool. The
use of ethanol in future Australian gasoline pool should be subject to further analysis,
particularly defining how the required RVP from ethanol blends can be met using
Australian basestocks.

3. In order to maximise the flexibility for refiners or importers to provide high octane
gasoline, it is possible that ETBE and TAME could be used, once these chemicals have
been notified by potential manufacturers and importers to NICNAS and assessment
certificates have been issued. ETBE and TAME are not currently listed on AICS

4. The widespread introduction of 98 octane fuel would require a substantial review of


octane production in Australia, implying a major overhaul of refinery operations. It is not
clear if 98 octane will result in a net global emissions improvement. Until this is clarified
by additional work, the widespread introduction of 98 octane gasoline should not be
encouraged by auto-makers and regulatory agencies.

5. There should be no in-principle objections to the use of either MMT or ferrocene.


MMT is the best researched and most widely used and would offer the refiners a method
of ensuring the final gasoline is of the required octane (trimming). There is increasing
interest in ferrocene, however, the depth of analysis is much less that that for MMT.
Further there are several alternative suppliers of ferrocene and quality standards of the
additive may be a concern.

6. To facilitate flexibility, the following oxygenates should be permitted in Australian


petrol. These oxygenates could be used alone or in combination with other oxygenates or
permitted organometallic compounds (MMT, ferrocene). The maximum level should be
set by the Euro-3 maximum oxygen content of 2.7%:

Oxygenate Chem. Abstract No.

Ethanol 64-17-5
TBA 75-65-0
MTBE 1634-04-4
DIPE 108-20-3
ETBE 637-92-3
TAME 994-05-8
ETAE 919-94-8
Isopropanol 67-63-0
n-propanol 71-23-8
Isobutanol 78-83-1
n-Butanol 71-36-3
sec-Butanol 78-92-2

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REFERENCES

AIP, Australian Institute of Petroleum Statistical Review 1999, Petroleum Gazette 3/1999,
p.39

Braun A., “Octane Boosters and Australian Petrols” SAE Australasia, Jan/Feb 1985 and A.R.
Braun, “Automotive Fuel Extenders from C4 Hydrocarbons” NERDDP report EG/83/201,
June 1983.

Coffey Geosciences Pty Ltd. “Setting National Fuel Quality Standards” March 2000

CONCAWE Report Number 99/56

FORD SAE Paper 821193

Gary, J.H. and Handwerk, G.E., “Petroleum Refining Technology and Economics, 2nd
Edition”, Marcel Dekker, New York, 1984

Grady, S., Osinski, M., “Preliminary Findings of the 12 State MTBE/VOC Drinking Water
Retrospective” presented April 1999 to Blue Ribbon Panel.

Happel, A.M. et al., “An evaluation of MTBE Impacts to Californian Ground Water
Resources” Lawrence Livermore National Laboratory report UCRL-AR-130897; presented to
Blue Ribbon Panel, March 1999.

Maples, R.E., “Process Refinery Process Economics” PennWell Books, Tulsa, Oklahoma,
1993

McNally, M.J., National Petroleum Refiners Association, Annual Meeting, mar 22-24, New
Orleans, 1992 reported in Oil & Gas Journal, 1992, May 25, p. 39

NOHSC: National Occupational Health and Safety Commission. Technical Report. List of
designated hazardous substances. NOHSC: 10005. Sydney. Commonwealth of Australia;
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OSTP (Office of Science and Technology Policy), National Science and Technology Council
“Interagency Assessment of Oxygenated Fuels,” June 1997

RMIT “Desk Study Octane Enhancers”, November 1994

Salanitro, J.P., “Understanding the Limitations of Microbial Metabolism of Ethers Used as


Fuel Octane Enhancers”, Curr. Opin. Biotechnol. 6, 337-340, 1995

Semenov, N.N (translated by J.E.S. Bradley), “Some Problems of Chemical Kinetics and
Reactivity - Volumes I & II “ Pergamon Press 1958 & 1959

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Squillace, P., “MTBE in the Nations Ground Water, national Water Quality Assessment
Program Results” presented to the Blue Ribbon Panel April 1999

Steffan, R.J., et.al., “Biodegradation of the Gasoline Oxygenates MTBE, ETBE and TAME
by Propane Oxidising Bacteria” Appl. Environ. Microbiol. 63(11), 4216-4222.

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EXHIBITS

1. Ethyl Corporation “ Comments on MMT” February 2000


2. A Aradi, J. W. Roos. B.F. Fort, Jr., T. E. Lee and R. I. Davidson “The Physical and
Chemical Effect of Manganese Oxides on Automobile Catalytic Converters”, SAE
Technical paper Series 94047, SAE 1994
3. J. W. Roos, D. L. Lenane, B.F. Fort, D.G Grande, K.L. Dykes “The Effect of Manganese
Oxides on OBD-II Catalytic Converter Monitoring”, SAE Technical paper Series 94047,
SAE 1994
4. “Achieving Clean Air and Clean Water” Report of the Blue Ribbon Panel on Oxygenates
in Gasoline; September 1999, EPA420-R-99-021
5. T.C. Sneller (Nebraska Ethanol Board) “Oxygen Standard Should be Maintained”
6. Lyondell Chemical Company Dissenting Report.
7. M.C. Kavanaugh and A. Stocking “Fate and Transport of Ethanol in the Environment”
Presentation to Blue Ribbon Panel, May 24 1999
8. Malcolm Pirnie Inc. “Evaluation of the Fate and Transport of Methanol in the
Environment” American Methanol Institute, January 1999, (Downloadable @
www.methanol.org)
9. Scorecard Lists of Known and Suspected Toxic Compounds with References
10. Scorecard data on additives and gasoline components of interest
11. State of California Environment Protection Agency - Chemicals Known to the State to
Cause Cancer or Reproductive Toxicity March 10, 2000
12. Supply and Cost of Alternatives to MTBE in Gasoline - Technical Appendices- Report on
Tax Incentives for Ethanol, California Energy Commission, October 1998.
13. Supply and Cost of Alternatives to MTBE in Gasoline - Technical Appendices- Report on
the Oxygenate market: Current production Capacity, Future Supply Prospects and Cost
Estimates, California Energy Commission, October 1998.
14. Graf Enterprises - Various data sheets relating to Fuel Effect as a gasoline additive.
15. Australian Historic Motoring Federation Inc. Submission.
16. Octane Enhancer Information held in NICNAS.
17. Supply and Cost of Alternatives to MTBE in Gasoline - Technical Appendices-Technical
Documents.
18. Supply and Cost of Alternatives to MTBE in Gasoline - Technical Appendices- Ethanol
Blending Properties For Task 3 Modelling Work, California Energy Commission,
October 1998.
19. RMIT blending calculations, May 2000
20. G. Wood and M.Egyed “Risk Assessment for the Combustion Products of
Methylcyclopentadienyl Manganese Tricarbonyl (MMT) in Gasoline” Health Canada,
November 1994
21. CONCAWE Report 99/51 “Proposal for Revision of Volatility Classes in EN 228
Specification in light of EU fuels directive.”
22. “Alcohols and Ethers, A technical assessment of their application as fuels and fuel
components” American Petroleum Institute, API Publication 4261, July 1988.
23. World-Wide Fuel Charter, April 2000.
24. “Evaluation of MTBE as a Component of Reformulated Gasoline” C. P. Koshland et alia.,
Submission to EPA Blue Ribbon Panel, March 1999: also University of California MTBE
Fact Sheet.
25. MMT Information Package - Ethyl Asia Pacific Company, May 2000

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26. Supply and Cost of Alternatives to MTBE in Gasoline - Executive Summary and Key
Findings, California Energy Commission, October 1998.
27. Octel PLUTOcen G Octane Improver - technical and hazard data sheets
28. Octel “The Impact on Emission System Durability of Plutocen G Treated Gasoline”.
29. Plutocen G: Exhaust Emissions – Toxicological data, September 1999

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