ExxonMobil Follows Major California Refiners In Early MTBE Ban

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). ExxonMobil's (NYSE: XOM)(Irving, Texas) announcement to switch from MTBE to ethanol came as no surprise earlier this month as they are behind the other major refiners in California in announcing banning MTBE in Reformulated Gasoline markets.

ExxonMobil says it is committed to providing California consumers with gasoline that meets the state's environmental standards.

BP(NYSE: BP)(London, England), Shell/Royal Dutch (NYSE: RD)(Rotterdam, Netherlands), Phillips(NYSE: P)(Bartlesville, Oklahoma), and now ExxonMobil will adhere to California's original MTBE ban deadline of January 1, 2003 and start blending ethanol with gasoline by early 2003 despite Gov. Gray Davis decision to delay the ban to January 1, 2004.

That leaves Valero (NYSE: VLO)(San Antonio, Texas) and ChevronTexaco (NYSE: CVX)(San Francisco, California) as the only major California refiners left without a decision to make the switch early. Valero, one of the largest MTBE producers, plans to convert by the 2004 deadline stating the third-party terminals they use will not be ready to convert to ethanol by 2003. ChevronTexaco is currently working on infrastructure and transportation issues.

Fears of gasoline supply shortages and price increases drove the Governor to delay the ban one year in an announcement made back in March of this year.

Jay Brunson, Industrialinfo.com's Synthetic Fuels Manager, said, "California consumes about one million barrels per day of petroleum gasoline. At a 5.7% blend of ethanol, the state will need around 43,000 additional barrels of petroleum gasoline and other additives per day to make up the difference of a 10% MTBE blend in fuel. The gasoline shortfall is where the supply and price increase fears are coming from, not the ethanol. Ethanol producers are building new plants and expanding to meet California's demands."

Kinder Morgan, California's only common pipeline and terminal operator, halted ethanol modifications earlier this year because it had no clear sign that refiners were going to make the switch early. With the announcement of the world's largest oil company planning to make the switch, installation of blending systems and ethanol storage tanks at the terminal level should begin proceeding again. Kinder Morgan operates about 15 gasoline terminals in California.