April 14, 2003

Shell takes nationwide lead in low-sulfur gasoline production at its eastern refineries

Shell Canada last week officially opened low-sulfur gasoline production units at its Sarnia and Montreal East refineries. These new gasoline hydrotreaters enable Shell to reduce sulfur in gasoline by 90%, making it the first Canadian refiner capable of producing low-sulfur gasoline across the country.

The completion of the $150 million gasoline hydrotreater projects in Ontario and Quebec in December 2002 allowed Shell to meet federal low-sulfur gasoline regulations more than two years ahead of Environment Canada's deadline. The regulation requires Canadian refiners to produce gasoline with a cumulative average of 150 parts per million (ppm) of sulfur between July 1, 2002 and December 31, 2004, falling to an average of 30 ppm on January 1, 2005.

Shell's decision to build the units was based both on its own commitment to sustainale development principles and on the need to reduce sulfur in gasoline to ensure compatibility with advanced emission-control systems in Tier 2 vehicles. These are expected to be introduced in model year 2004. Low-sulfur gasoline used in combination with Tier 2 vehicles will result in much lower vehicle emissions, in turn contributing to improved air quality.

Construction of the gasoline hydrotreaters was the biggest project at both the Sarnia and Montreal East refineries in more than a decade. In addition to being ahead of schedule and on budget, the December 2002 start-up of the new units marked close to one million hours of work without a lost-time incident for the combined projects.

"Our customers want assurance that our products are produced in an environmentally and socially responsible way," said Shell president and CEO Tim Faithfull. "I am especially proud of the many dedicated people who are responsible for the success of this project," he added.

The gasoline hydrotreater projects had economic benefits for Shell's local communities. In Sarnia and MontrĂˆal, for example, the company created work for up to 600 contractors and spent more than $85 million on local suppliers for materials and general services.

More information is available from Lesley Taylor in Ontario, 416/227-7146, Sonia Larin in Montreal, 514/356-7041, or on Shell's Web site, www.shell.ca.

In Washington DC meanwhile, the Sulphur Institute, an international organization concerned with market development, is urging oil and gas companies to concentrate on developing markets for the large quantities of sulfur they are recovering from their products in order to avoid a worldwide glut of this commodity.

"In North America alone, about 17 million tons of sulfur are recovered annually from oil and gas refining and the growth of recovered sulfur will continue," Institute president Robert Morris said recently. "Unless sulfur markets are developed, global sulfur supplies could exceed demand by over five million tons by 2010," he added.

To comply with clean air regulations, oil and gas companies have been recovering sulfur from their products to the point where recovered sulfur has become virtually the sole source of elemental sulfur in North America. Moreover, Morris continued, "regulations also prohibit stockpiling recovered sulfur in many areas. Oil and gas companies need to develop sulfur markets or face extensive disposal costs or even refinery disruptions," he said.

Sulfur has historically been used worldwide as a valuable commodity in making fertilizer and other products ranging from plastics to paper. The construction industry is another lucrative market for sulfur, said Don Messick, the Institute's director of agricultural and market studies programs. He noted that markets have been developed in China, whose sulfur imports have increased about 70% per year since 1995. Messick said China is now the world's largest importer of sulfur, using it mainly to make sulfuric acid for use in producing phosphate fertilizers.

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