In the news section we have an item submitted by Kevin O’Leary of Dennis K. Burke, Inc. discussing the issue of diesel exhaust fluid (DEF), which is basically a mixture of water and urea that will be injected into the exhaust of diesel vehicles to reduce emissions in a technology known as selective catalytic reduction.
The technology isn’t new – it has been used in power plants for some time now and in automotive applications in Europe for several years. It is also very effective. The goal is to reduce nitrous oxide emissions up to 90 percent, hydrocarbons and carbon monoxide emissions by 50 to 90 percent and particulate matter emissions by 30 to 50 percent. While similar to European requirements, the standard is actually far more stringent. All diesel vehicles from class I to class 8 are included in this requirement. Tank sizes for the DEF solution will be in the 13 to 25 gallon range. DEF consumption will be approximately 2 percent of diesel consumption.
A range of solutions will bring DEF to market, and work to provide a cost-effective entry point for the product that will meet current expected needs. These include 1-gallon jugs; 2-gallon jugs; 2 ½-gallon jugs; 55 gallon drums; 275 and 330 gallon totes; 725 gallon mini-bulk solutions; and conventionally dispensed above ground and below ground storage tank options.
It is an issue we have been covering across the aisle in our sister publication, <i>NPN Magazine</i>, and we have cross-posted a major article on the subject at the <i>Fuel Oil News</i> Web site, <i>www.fueloilnews.com</i>. When looked at from the petroleum marketer position (and there are more than a few diversified operations on the fuel oil side as well), the issues tend to be more supply and distribution orientated – does it make sense for me to look at supplying DEF to my customers? The answer is a well-qualified “maybe” depending upon how much diesel business the marketer or retailer does.
The good news is that margins will likely be notably better than gasoline on a per-gallon basis. The bad news is that volume will start out low, perhaps exceptionally low, and that even when it ramps up to full penetration it will still lag well behind motor fuels. The first vehicles will hit the road at the end of 2009 and build with a vehicle replacement cycle of perhaps 3 percent per year.
For distributors with a strong diesel and lubricant business carrying DEF makes sense. Product supply can scale from supplying jugs to totes and eventually, in some cases, pure bulk product.
For a more traditional and focused fuel oil dealer the issue will ramp up with the penetration of the new engines. So far, only Navistar is promoting a DEF alternative using exhaust gas recirculation, meaning that most diesel trucks sold after 2010 will require the fluid. So, buy a new truck and the issue arrives. Fortunately, for our industry implementing a DEF solution in-house should be a practical affair not out of place with other maintenance requirements and with limited operational impact.
Correction: In the July issue of <i>Fuel Oil News</i>, UEi’s SmartBell is listed on page 21, but the correct photo is found below the entry. Also, the address of the company should be Beaverton, Ore. We regret the error.