Review of the Research Strategy for Biomass-Derived Transportation Fuels (1999)

Manufacturers interested in entering the bioethanol market will rely on economic analyses to facilitate company decision making. Although a market may exist for bioethanol as a blending agent with gasoline, manufacturers must take into account the dissimilar nature of alcohol and the hydrocarbons in which it is blended. The disadvantages of using ethanol as a gasoline blend agent are ethanol's higher affinity for water and its high Reid vapor pressure. Because of manufacturers' reluctance to transport ethanol blends by pipeline to avoid potential contact with water, ethanol must be blended with specification-grade gasoline at the terminal. This results in an ethanol-gasoline blend that exceeds octane requirements and leads to some excess product octane (octane giveaway).

The transportation and storage systems used for ethanolgasoline blends must be essentially water free. Even moderate quantities of water can cause ethanol-gasoline blends to separate into two phases, which can reduce engine performance. Ethanol can also act as a cosolvent that facilitates the incorporation of small quantities of water into the ethanolgasoline blend. Water can collect in low spots of hydrocarbon-handling systems, such as pipelines, storage systems, and vehicle fuel systems. The water typically contains rust and other particulates but normally does not cause a problem because the water remains in place when contacted by hydrocarbons and can be periodically drained. The ''scouring" action of ethanol-gasoline blends can incorporate this dirty water into the gasoline. Once the dirty water has been eliminated, the system remains clean as long as ethanol is present, but the periodic use of ethanol blends can result in a recurring problem. Initial ethanol use in a geographic region has been reported to cause batches of off-specification gasoline and plugged automobile fuel filters, as well as occasional damage to fuel injectors.

To avoid potential problems with water, most refiners do not transport ethanol-gasoline blends by pipeline. Thus, considerable "splash blending" of ethanol takes place at distribution and storage terminals instead of at the refinery where gasoline is normally blended to final specifications. Ethanol blends are then shipped by truck from terminals to retail service stations. Common carrier pipelines transport only fungible products (i.e., products that meet standard product specifications and are, therefore, interchangeable with products from other sources). Thus, when ethanol is blended at a terminal, the blend stock is specification-grade gasoline. The addition of 10 percent ethanol to regular gasoline produces a blend with an octane number about two units above the number required for regular gasoline. This causes an octane giveaway when the ethanol blend is sold as regular gasoline.

If terminals are supplied by proprietary pipelines or trucks from a refinery, octane giveaway can be avoided by blending with a gasoline blend stock with lower than specification octane. The nonoxygenated blend stock used in reformulated gasoline is fungible and can be shipped by common carrier pipeline to terminals for blending without octane giveaway. When 10 percent ethanol is added to regular gasoline, octane giveaway can be essentially eliminated if the resulting blend is sold as midgrade gasoline; when ethanol is blended with midgrade gasoline it can be sold as premium gasoline. Octane giveaway in the U.S. market is estimated to range from 25 percent to 50 percent of the product sold.

Transportation systems could also be cleaned up to permit the shipment of ethanol-gasoline blends from a refinery by pipeline, but most companies are reluctant to invest the funds for this system upgrade, possibly because the future availability of ethanol is considered to be uncertain. Ethanol from corn is only economical because of government

subsidies, and the federal subsidy is scheduled to be eliminated by 2007. In addition, the price of grain is unrelated to the price of crude oil, and a price squeeze on grain could force some ethanol manufacturers to shut down their manufacturing plants.

Even though ethanol alone has a relatively low vapor pressure, when used as a gasoline blend agent its effective vapor pressure is quite high. The Reid vapor pressure for ethanol-gasoline blends is about 18 psi for 10 percent ethanol content. This high vapor pressure is a disadvantage for ethanol-gasoline blends. When ethanol is added to a properly formulated gasoline blend stock, as it is with refinery blending, low boiling hydrocarbon components, such as butanes and even pentanes, must be reduced to meet gasoline vapor pressure specifications. The removal of these low boiling hydrocarbons is expensive because gasoline is their highest value use. Blending of ethanol at the terminal can result in a blend that exceeds vapor pressure specification, especially during the summer, when a 1-psi waiver is currently granted for ethanol blends (except in reformulated gasoline).

Lower gasoline vapor pressure reduces evaporative emissions during tank filling and fuel storage. Because of this environmental benefit, the summer vapor pressure specification for gasoline has been, and is expected to continue to be, lowered over time. For a vapor pressure specification of less than about 7.6 psi, there is no room for butane in a 10 percent ethanol-gasoline blend. To meet specifications, therefore, pentane must be removed. This so-called "pentane backout" causes a step increase in the cost of gasoline because the amount of pentane required to offset the addition of ethanol is about five times the amount of butane, and the alternative value of pentane is much lower than for butane. In general, companies consider it to be impractical to meet summer vapor pressure specifications below about 7.6 psi with 10 percent ethanol blends.

The vapor pressure of ethanol blends can be reduced by using special coblending agents, such as higher alcohols, or by blending to higher ethanol concentrations. However, either of these approaches to reducing vapor pressure also reduces the value of ethanol as a gasoline blend agent.