Originally created 01/26/99

BP Amoco chairman says low-sulfur gas to sell in 40 cities



DETROIT -- The oil giant BP Amoco will soon start selling a low-sulfur gasoline in 40 cities worldwide within two years as part of an effort to cut vehicle pollution.

Chairman John Browne said up to 16 of those cities will be in the United States, specifically identifying Detroit and Chicago. The low-sulfur gasoline will start selling in two years.

The reduction in the sulfur level will vary from city to city.

Browne, speaking to business leaders, did not specify if the reductions would involve bringing all brands below the current industry low of 200 parts per million for Amoco Ultimate. In the 40 cities, the low-sulfur gasoline will not be in all brands, but in a specific brand, such as Amoco Ultimate.

Browne said eventually the company intends to reduce sulfur parts per million to meet or exceed the 2005 European goal of 50 ppm. The industry average is 350 ppm, with a cap per gallon of 1,000 ppm, according to the American Petroleum Institute.

BP Amoco, which has 14,000 gas stations in the United States, intends to completely convert to lower-sulfur fuel within three to five years, Browne said.

The conversion process -- at an estimated cost of $1 million in the United States -- involves setting up refineries to specifically produce gasoline with lower-level sulfur.

Industry analysts say the move isn't unexpected.

Douglas Terreson, of Morgan Stanley Dean Witter, said a fragmented and competitive refining industry has contributed to low gas prices. As a result, consumers have been getting more environmentally friendly fuel without a boost in cost, he said.

"There has been a pretty coordinated effort ... to improve the quality of air" by the auto industry and oil companies, Terreson said.

The move follows last year's announcement by BP that it intended to reduce emissions from refineries, oil fields and petrochemical plants by 10 percent by 2010.

And in December, a dozen states urged the Environmental Protection Agency to require low-sulfur gasoline nationwide.

The cost of providing reduced sulfur fuel is unclear, Browne said. But Susan Hahn, of the American Petroleum Institute, said the gasoline will cost more because the refining industry will have to invest about $3 billion in new processing equipment.

BP Amoco's decision drew praise from President Clinton. "By using the latest technology to custom-tailor fuels to address the unique pollution concerns of these cities, the company will help produce cleaner, healthier air for millions of people worldwide," Clinton said in a statement released by the White House.

Environmental groups, which have called for significant reductions in sulfur, gave a mixed reaction to Browne's announcement.

"This is no substitute for national clean gasoline standards -- no substitute for national standards to remove most of the sulfur for gasoline," said Clean Air Trust executive director Frank O'Donnell.

While he praised BP Amoco's effort, he said high sulfur levels, which cause vehicles to emit higher levels of smog-forming pollutants, are "a national problem and we need a national solution."