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Big Oil Sees The Future And It's Clean Gasoline


Cover Story

BIG OIL SEES THE FUTURE--AND IT'S CLEAN GASOLINE

Motorists charging up electric cars at home. Natural-gas pumps at every service station. In the brave new world of alternative fuels, some even dream of solar- and hydrogen-powered vehicles replacing today's gasoline-powered cars.

But Big Oil doesn't see it that way. "Gasoline will remain the dominant fuel," says Allen Kozinski, vice-president for research at Amoco Oil Co. Oil companies are betting that gasoline "recipes" can be recooked enough for conventional cars to meet toughening federal and state air-quality standards, in conjunction with improved catalytic converters. To ensure this, Detroit's Big Three and 14 oil companies formed the Auto/Oil Air Quality Improvement Research Program in 1989. So far, they've committed $40 million to study 29 new gasoline formulas.

At the labs of General Motors Corp. and Ford Motor Co., researchers are testing new fuel mixes on some 2,200 cars and light trucks, including prototypes of models not due out for years. Set on machines that simulate road movement, they are bumped, jolted, and jiggled. Some are placed inside air-collection chambers that trap exhaust, which undergoes a variety of tests including chemical analysis by mass spectrometry. Computers try to analyze which blends--with different proportions of oxygenates, ethylenes, and even methanol--are least polluting given various climatic or road conditions.

SMOG-BUSTERS. These new, clean-burning fuels will be far harder to develop than the "reformulated" gasolines released with great hoopla last year. Those were relatively easy rejiggerings of existing formulas. Under new clean-air rules, refiners must do much more: reduce hydrocarbon emissions 15% by 1995, and 25% by the year 2000. And they must replace dirty compounds with cleaner ones. For instance, octane-boosting aromatics, which contribute to smog, would be held to 25% of fuel content, vs. 32% today.

This change may not sound like much, but just reducing aromatics means switching to costlier refining processes. And to boost a fuel's oxygen content, as mandated, refiners will have to toss in such additives as methyl tertiary butyl ether. Some fuels already use MTBE. But current capacity would meet just 16% of demand for it if the entire market switches to clean gasoline, according to a study by Houston energy consultants Bonner & Moore Associates Inc.

That isn't the only problem. In the research program's first phase, which ended in December, hydrocarbon emissions rose in some older cars when aromatics were slashed. Gasoline apparently takes longer to burn using carburetors instead of fuel injectors. Another complexity: Regional pollution varies greatly. Joseph M. Colucci, director of fuels research at GM and co-chairman of the joint task force, says two formulas might be needed, one to fight smog and another to combat carbon monoxide, which also causes respiratory problems.

RIGHT TRACK. Colucci and Co-Chairman John J. Wise of Mobil Research & Development Corp. have assembled the largest data base ever on the subject--and more is coming. In November, the Environmental Protection Agency will release its own data on pollution from gasoline--and set new standards for future mixtures.

Change won't come cheap. Big Oil estimates that developing clean-burning gas and retooling refineries could cost $20 billion to $40 billion. Still, it argues, that's better than replacing gasoline with some other fuel--a move that would require abandoning huge investments in refineries, service stations, car designs, and assembly lines that all are based on gasoline power. Salomon Brothers Inc. oil analyst Bernard J. Picchi puts the cost of just modifying this infrastructure at several hundred billion dollars.

Because the major oil companies also own vast reserves of natural gas, they are funding research and development on cars that burn it. But this is pocket change against what they're pumping into gasoline research. Such a one-sided strategy might backfire if gasoline proves harder than expected to reformulate. But the industry rose to a similar challenge in the 1980s, when it eliminated most lead from gas. Oil companies are betting that, having done it once, they can do it again.Mark Ivey in Houston, with Robert Buderi in New York and Lois Therrien in Chicago


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