NGI The Weekly Gas Market Report
A key ingredient in reformulated gasoline, methyl tertiary butyl ether, or MTBE, may soon be in short supply because of the rising price of natural gas. Friday, independent Valero Refining Corp. said it has cut its MTBE production 7,000 bbl/d from its only production plant because of the high costs.
Valero’s Corpus Christi, TX plant had been producing 21,000 bbl/d but reduced it to 14,000 bbl/d last week. Instead, Valero plans to sell the gas without stripping out components to make the MTBE. Another large U.S. MTBE producer, Enron Corp., has had its MTBE plant shutdown for repairs for several weeks. No announcement was made on when the plant would resume production or if production would be curtailed.
Other MTBE producers also are reducing output of the reformulated gas, and that trend is expected to impact supplies at the pump within a few months. The U.S. Environmental Protection Agency mandates reformulated gasoline in certain parts of the country. It reduces the level of exhaust pollution from automobiles, according to EPA, and is required in certain cities of the United States as part of their pollution prevention programs.
Last June, the already high natural gas prices began to claim other industrial casualties. Industries using ammonia, urea and methanol for production were cutting back as a result of higher feedstock prices and poor domestic and international sales (see NGI, July 3, 2000). Ammonia is the main feedstock for phosphate production and natural gas makes up about 75% of the cost of ammonia — 80% when gas prices are high.
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