Cover story: Diesel's winning formula

"You can get similar performance from a two litre turbocharged diesel engine as from a big old petrol V8."- Greg Engeler

"Better still, it'll use up to 30 per cent less fuel than a petrol engine for the same output," says Greg Engeler.

The Australia based Product Engineering Specialist for Chevron neatly describes two of the reasons demand for diesel is surging in Australia.

With new, super efficient engines becoming available in more and more cars, trucks and commercial vehicles, diesel is shaping up as the fuel of choice for hundreds of thousands of drivers.

Not only do today's diesel powered vehicles use less fuel, they're more environmentally friendly thanks to innovations like diesel particulate filter technology that eliminates soot from exhausts. They're less polluting, too, helped by the Caltex Clean Fuels Project which has reduced the amount of sulfur in the fuel to less than 50 parts per million (ppm).

The technological advances in diesel engines have been impressive. Those made today emit about 90 per cent fewer pollutants like nitrogen oxide (NOx) and fine particulates than engines made in 1970, according to the European Automobile Manufacturers Association.

Shift gathers pace

The change in users' preference is gathering pace. Australia's growing thirst for the fuel is very evident in sales figures.

Caltex's diesel sales grew by almost nine per cent in the six months ending 30 June this year, according to Managing Director Des King. Growth in diesel car sales in Australia over the same period was an astonishing 180 per cent.

At the same time manufacturers are producing more diesel vehicles. Peugeot, for example, has been selling diesels in Australia since 1978. In 2007 for the first time sales of its diesel powered cars will outstrip those of petrol models.

This year to date about 57 per cent of Peugeot sales are diesel, compared with 41 per cent in 2006, 23 per cent in 2005 and 12 per cent in 2004, says the company's National Public Relations Manager Mathew McAuley.

"Our newly launched 207 has a combined (city and country) fuel consumption of only 4.8 litres per 100 kilometres, so it's going to save you money at the pump," says Mathew. "And when you're filling up less you're obviously producing less carbon dioxide."

More for mining

The biggest growth in demand for diesel is coming from the mining and transport industries, mainly in WA and Queensland, as a result of the China driven commodities boom.

Caltex has good relationships with most blue chip miners including Rio Tinto, BHP Billiton, Leighton and Thiess. "This puts us in a great position to capture opportunities as mines continue to expand," says National Sales Manager Mining Scott Nicholls.

Without diesel Australia's mines simply couldn't run. It's used everywhere – in trucks, diggers, tippers, trains, fixed and mobile power plants.

Seizing the opportunity

Caltex recognises the need to respond to the growth opportunities diesel represents, in three main ways:

1. Expanding production
2. Upgrading infrastructure to handle greater volumes and
3. Trialling a new premium diesel fuel, Vortex Premium Diesel, to the market.

Boosting production of diesel and other fuels is among projects covered by the company's planned $1 billion plus investment in growth and improvement over the next three years. The expenditure will include the completion of refining improvement projects, the continued upgrading of terminals and depots as well as maintenance and compliance work on Caltex sites around the country.

About $250 million will be allocated to building a new diesel hydrotreater unit (DHTU) at the Lytton refinery, a key part of the diesel expansion process, says Refinery Performance Improvement Program analyst Adrian Moore.

When the new DHTU is complete in the first quarter of 2009, the unit will be able to produce another 3,000 tonnes of extra low sulfur diesel (10 ppm) a day, double the Lytton refinery's current production capacity, Adrian says.

The right infrastructure

As demand for diesel grows, Caltex's planners are thinking about implications for the company's future product slate and infrastructure. For example 91 octane petrol sales are forecast to decline while sales of diesel and premium petrol products like Vortex will increase.

Such changes will require continued adjustments to terminal, storage and handling operations, especially in relation to diesel.

"Having additional tankage gives us more flexibility in our supply arrangements, particularly in supplying direct sales customers," says Lisa Bendy, National Operations Development Manager.

"This is why we've built big new diesel tanks at Kurnell and Gladstone and why we're working on projects in Mackay and other locations round the country to increase our capability. It's critical to being a reliable supplier."

Vortex Premium Diesel

A first-to-market initiative from Caltex's fuels marketing team, the recently introduced Vortex Premium Diesel not only cleans vehicles' fuel systems, it helps create a better experience at the pump.

Vortex Premium Diesel, currently being trialled at 20 sites in Sydney and the Illawarra region of New South Wales, contains a detergent that removes fuel injector deposits, allowing it to burn more efficiently. The fuel also has an anti-foam agent that reduces the risk of "splashback" while a tank is being filled.

"Caltex is taking the lead in offering a premium diesel product for the new diesel cars and light commercial vehicles entering the market place," says Transport Fuels Product Manager Steve O'Halloran. "Vortex Premium Diesel is designed to make filling up a much cleaner experience."

Early indications are that customers welcome the product. "Consumers have come to appreciate the advantages of premium high-octane petrol such as Caltex Vortex, and I've no doubt diesel car owners will come to the same conclusions once they try the new premium diesel," says Peugeot's Mathew McAuley. "Caltex is taking the lead in offering a premium diesel product for the new diesel cars and light commercial vehicles entering the market place."

Real environmental benefits

One of the greatest advantages of new generation diesel vehicles is that because they're high-tech, economical and efficient they produce fewer greenhouse gases like CO2 and pollutants like NOx (oxides of nitrogen) and fine particulate matter.

The advantages will be even more evident as engines continue to evolve and after 2009 when Caltex will produce more extra low sulfur diesel (less than 10 ppm) as part of the Clean Fuels Project.

The relative cleanness of diesel is increasingly being supported by technology like exhaust gas recirculation and selective catalytic reduction (SCR) that all but eliminates NOx from exhaust emissions.

Particulate filters on exhausts are also becoming the norm. Most new diesel cars sold in Australia today are fitted with them. Soot and invisible very fine particles have traditionally been a problem with diesel exhausts. The new filters eliminate these pollutants in much the same way that catalytic converters have been cutting emissions from petrol vehicles for over 20 years.

One of the greatest advantages of modern diesel engines, which ignite fuel by compression rather than spark, is their inherent efficiency. While diesel engines traditionally were made for heavy duty vehicles like buses and trucks, in the past decade they've become much sportier, boasting better torque (force that causes rotation) than their petrol counterparts.

Some of this is a result of the evolution in high pressure "common rail" and "piezo-electric" fuel injection systems. In a traditional petrol engine the injector sprays a squirt of fuel to mix with air before entering the combustion chamber. In a diesel the injector injects directly into the chamber, with up to seven injections in one combustion stroke, resulting in greater efficiency, fewer emissions and less noise.

However a diesel engine is more complex so it's more expensive to make, costing about $2,500 more on average. Policy in Europe encouraging vehicle efficiency will continue to make diesel attractive. In France around 65 per cent of new vehicle sales are diesel.

New generation diesel – ‘A great success story'

Illustrating the company's commitment to developing sustainable fuel products, Caltex's New Generation Diesel – fuel enhanced with two per cent biodiesel – today accounts for the entire diesel supply from the Newcastle terminal.

More than 550 million litres a year of New Generation Diesel is sold in large areas of north and northwestern New South Wales. It will also be supplied from other Caltex terminals when biodiesel supply arrangements and infrastructure modifications have been completed.

"New Generation Diesel is a great success story," says Transport Fuels Product Manager Steve O'Halloran. "It's part of Caltex's strategy to meet our commitment to the Australian Government's biofuels action plan targets, and it's helping to position us as a leader in the biodiesel market."

New Generation Diesel is available at 164 Caltex service stations from sites in the Hunter region, the Central Coast, up to Grafton and as far west as Cobar, as well as to commercial customers in the mining industry.

Suitable for all diesel engines, it meets the Australian diesel standard as well as Caltex's strict quality standards, says Steve.

In addition Caltex sells B5 and B20 (diesel containing five and 20 per cent biodiesel) to customers around Australia. It's been supplying B5 to three Adelaide bus companies since 2004, for example. These may soon move to B20.

Customer's embrace 'Retrofit' program

A $450,000 donation by Caltex to the NSW Environment Trust, administered by the Department of Environment and Climate Change, is helping reduce the environmental impact of customers' truck fleets.

In partnership with the department and the Roads and Traffic Authority, the money is being used to fund a diesel engine retrofit program, fitting particulate filters (also known as oxidation catalysts) to the exhaust systems of trucks of big customers like building materials giant Boral and transport companies.

Not surprisingly many customers are seeing the advantage in funding the filter installations with the Caltex grant. "The project has been an excellent opportunity for Caltex Commercial Sales to add value and help strategic customers reduce emissions," explains Jeff Hickson, Commercial Sales Business Manager.

Boral, whose business relationship with Caltex dates back to 1946, has installed 11 of the cylindrical steel devices in its truck fleet in western Sydney. Boral Transport's Fleet Engineering Manager Merv Rowlands agrees with Jeff. "We greatly appreciate this opportunity to fit the filters to some of our fleet and reduce our particulate emissions," says Merv.

"Caltex and Boral share similar values, one of which is to operate in a manner that respects the environment."

"Boral is well aware of the environmental impacts of diesel powered trucks and our obligations to do what we can to minimise regulated emissions like NOx and particulates, as well as greenhouse gases. Caltex’s support is helping us achieve that."

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