Pub.1 2019-2020 Issue 3

W ith HollyFrontier’s announcement to produce Tier 3 fuels at their Woods Cross refinery, Utah’s petroleum industry is celebrating increased Tier 3 fuel capacity and strides made to improve air quality across the state. Moves by Utah refineries to invest and produce Tier 3 drives air quality benefits locally (rather than at out of state facilities) to meet the Environmental Protection Agency’s low-sulfur standards, and responds to Governor Gary Herbert’s and our legislature’s leadership on air quality and ozone issues. Holly Frontier’s recent announcement is more evidence that industry is stepping up to partner with policymakers, regulators and consumers to improve the environment and everyone’s quality of life. Big West Oil has also announced that Teir 3 production is in their five-year investment plan. Chevron, Marathon and Silver Eagle are already producing Tier 3 fuels. Burned in a Tier 3 vehicle, Tier 3 gasoline results in an average 80% reduction in tailpipe emissions. According to Utah’s Division of Air Quality, this is equivalent to taking four out of five vehicles off the road today. “This is a very proud moment for our retailers across Utah. Tier 3 gasoline burns cleaner and is directly responsible for improvements to our air quality and ozone. This is a reminder that industry is a committed partner on energy and environment,” said Rick Reese, Vice President of Sales at Kellerstrass Oil. “With today’s announcement from HollyFrontier, I am particularly pleased retailers are putting consumers in the driver seat when it comes to choices that improve air quality in our community.” Despite current events and protocols in place driven by the historic COVID-19 response, the industry continues to ensure Utah’s access to stable fuel supplies and deliver on Tier 3 fuels’ air quality improve- ments. As we move forward, the industry will continue to do its utmost to meet safety guidelines and environmental standards. “At times like these when most are thinking about business continuity and getting through COVID-19, it is Downstream Updates remarkable to see the Utah oil and gas sector expanding availability of T3 fuels to consumers,” said Utah Representative V. Lowry Snow. “This is the result of a multi-year partnership between advocates, policymakers and industry to improve air quality in Utah. I think it speaks to the innovation and ingenuity at play when we all pull together on practical solutions.” Our downstream members are also preparing for changes to the Renewable Fuel Standard (RFS) program due to a decision by a three-judge panel of the U.S. Court of Appeals for the Tenth Circuit. If allowed to stand, the decision could put small refineries in the Tenth Circuit, which includes Utah, under severe financial strain and thousands of jobs at risk if EPA were to require those refineries to make up the renewable fuel volumes they were previously exempted from. In Utah, the refining industry employs nearly 1,200 individuals and contributes $1.2 billion dollars to the Utah economy. Nationwide, it likely would have meant that only a handful of the smallest refineries, likely no more than 7, would have been eligible for the exemption. This significant challenge is on top of the knock-on impacts the abrupt global economic downturn is bringing to downstream markets and potential local supply instability the plummeting oil prices could bring in the medium term. UPA recently worked with the Governor’s Office and themselves also wrote a letter to the Trump Administration urging an appeal of this decision to an en banc panel of the Tenth Circuit and, if necessary, the U.S. Supreme Court. The outcome of these cases will affect how EPA administers the RFS program more widely and increase RFS compliance costs for refineries, thus adversely impacting Utah consumers through potentially increased gasoline and diesel prices. In March, President Trump announced his intent to appeal the decision, which marked a reversal in his previous position noting that he would accept the decision and apply it nationwide. 6 UP DATE