PEI research estimates E15 conversion costs for retail stations

By Erin Voegele | September 11, 2013

Responding to a request made by the USDA, the Petroleum Equipment Institute recently published results of its research into how much it costs to convert a station dispensing E10 to one that supplies E15. The results show the conversion costs are much lower than those projected by Big Oil, ranging from an average of $1,000 per station to just over $320,000, depending on specific upgrades needed.

According to information published by PEI, Todd Campbell, acting chief of staff for USDA Rural Development, provided PEI with several scenarios regarding the conversion of retail stations to E15 on Aug. 13 and asked for the organization’s response. In a Sept. 6 letter to Campbell, Robert Renkes, executive vice president of PEI, noted his organization conducted research from Aug. 22 to Sept. 5 via a survey of PEI members from across the nation, resulting in ballpark figures for each scenario.

Under the first E15 conversion scenario, all onsite equipment is compatible with E15, including underground storage systems, dispensers and hanging hardware. The conversion, however, might require labeling and signage changes. The PEI estimates the cost of those changes would average $1,167 with the respondents providing a median answer of $1,000.

Additional scenarios addressed by the PEI include one that assumes the underground storage tank is not E15 compatible, one that assumes a retrofit kit is needed to make the onsite dispensers compatible the fuel blend, and another that considers the expense of converting a site that must use a retrofit kit to make the dispenser E15 compatible, but does not require the replacement of hanging hardware. Additional scenarios assume both dispensers and underground storage systems need upgrading, or that existing dispensers are replaced with new E-15 listed dispensers. The research also addressed the cost to install a stand-alone E15 dispenser at an existing station, and cost difference required to build an entirely new fueling station that offers E15, compared to a new station that offers only E10.

According to the PDI’s research, the most expensive conversion scenario is one in which existing dispensers and hanging hardware must be replaced with new E15-listed dispensers and one underground storage system must be replaced with a secondarily contained E15 tank system and listed components, including cost of a closure assessment, but not contamination. Under this scenario, the PDI estimates the average cost would range from $156,667 for two dispensers to $321,778 for 10 dispensers. The median answers provided by those surveyed ranged from $166,000 for two dispensers to $310,000 for 10 dispensers.

Ron Lamberty, senior vice president for the American Coalition for Ethanol, has spoken out to thank the PEI and USDA for announcing details on the actual costs to install or upgrade equipment at fuel stations to supply E15. According to Lamberty, the PEI findings are another example of how reality is different from the wildly inaccurate rhetoric Big Oil uses.

“We appreciate that PEI and USDA have published neutral facts proving that retrofitting and preparing stations for E15 can cost as little as a thousand dollars – nowhere near the hundreds of thousands of dollars Big Oil and the American Petroleum Institute (API) have been telling reporters and elected officials. The only time the cost of adding E15 comes anywhere near the cost Big Oil has been using as part of their anti-E15 PR campaign is when a marketer builds a brand new station with brand new tanks and lines and 6 to 10 dispensers. And that estimate is actually for a new E85 compatible station with state-of-the-art blender pumps. Most existing two to four pump stations can be converted to handle E15 for less than $15,000 total cost – far below the dramatic price tag of hundreds of thousands of dollars that oil interests like to claim,” said Lamberty.

A press release issued by the Renewable Fuels Association notes that some biofuel opponents have said that adding E15 would cost retailers $200,000 to $300,000. “The ethanol industry has repeatedly stated that such estimates represent an absolute worst-case scenario that would be far from the norm. In fact, the stations that offer E15 today have spent an average of just $10,000 per station to add the product—or slightly less than $0.01 per gallon of gasoline sold for the average retail gas station,” said the RFA in its statement, noting that PEI’s research has underscored the ethanol industry’s point that E15 station conversions can be done affordably. In addition, the RFA pointed out that PEI cost estimates do not include any of the incentives available to help defray installation costs, such as the USDA’s Rural Energy for America Program, which provides grant funding to support the installation of blender pumps.

The PEI’s full letter to the USDA with results for each scenario can be downloaded from the PEI website