MTBE banned after California scheming

The future of MTBE as a petrol oxygenate is in the balance after California's Governor Gray Davis ordered its phase-out by 2002. Citing studies that claimed MTBE (methyl tert-butyl ether) poses an `environmental threat to ground water and drinking water,' he did acknowledge that air quality has benefited from its use.

After ratification by state legislature, the US Environmental Protection Agency (EPA) must still wave the motion through before the law is enacted. The industry fears that an EPA decision against MTBE may set a precedent for the rest of the US and perhaps even globally.

The problem with MTBE is not its combustion but its non-combustion, and contamination through leaky underground storage tanks and from boats into reservoirs. Although MTBE has an extremely strong taste and odour it does not have a health-based drinking water standard. Californian health services has a secondary, taste- and odour-based standard of 5ppb. A primary drinking water standard is expected in July 1999.

Limited quantities have been used in petrol in California since the 1970s. In 1992, oil companies began using it extensively in California to meet requirements of the State Air Resources Board. California accounts for about 33 per cent of US MTBE demand at around 13million tpa.

One note of hope is that in Europe, MTBE is only used in low concentrations (5 per cent) mainly to boost octane levels for petrol performance rather than as an oxygenate (15 per cent in the US) to improve VOC emissions.

MTBE and methanol producers are already looking at alternative options for their assets. Major MTBE producers like Huntsman and Lyondell are looking into it. TBA (tert-butyl alcohol), the precursor to MTBE, is itself a coproduct of propylene oxide and markets for PO/TBA are being investigated. TBA can be converted to alkylate or the cheaper iso-octane but neither commands great demand.

Next to suffer is the main feedstock - methanol- which would lose demand of about 1.5million tpa in California alone and 7million tpa world-wide. Methanex, the world's largest producer, has seen a downturn in prices, partly in reaction to the MTBE ban, and is looking at alternative applications such as ammonia, hydrogen or synthetic gasoline. Conversion to ammonia is possible but would create an oversupply. Synthetic gasoline needs methanol but cannot compete with the real thing in terms of price.

The obvious oxygenate substitute for MTBE is ethanol. It is estimated that 500-600million gal per year would be required for California alone. Unlike MTBE, ethanol is highly biodegradable and as we all know, can barely be tasted at concentrations less than 1 per cent. But using ethanol has its own set of problems. It has a high vapour pressure, causing high VOC emissions at the pump, and increases overall petrol prices.

Ethanol, which is produced by fermentation of cellulose products such as corn and sugar beet, has been successfully used as an oxygenate in Chicago. The increase in ethanol use corresponds to a crop of 5000 tpa of corn for Californian demand alone. The US Government is already looking into ways to develop a biomass ethanol industry by the end of the year.