A newly formulated gasoline that was intended to be a more environmentally-friendly product has caused nothing but headaches for oil company executives in Micronesia.
Automobile owners in the region were left scratching their collective heads in July and early August when gas gauges began going haywire.
Following extensive research by oil company scientists and engineers the culprit was finally cornered. It was a simple chemical reaction between an elevated sulfur content in regular gasoline and a micro-thin silver strip placed in gas tanks of mostly American-made automobiles.
The problem was not widely known until gas company executives in Guam went public on July 17 stating there was a problem with fuel that was allegedly causing fuel gauges to misread. This followed complaints first by owners of large fleet automobiles like Hertz Rent-A-Car National Car Rental Avis Rent-A-Car then by private owners.
The fuel in question was brought to Guam from an ExxonMobil refinery in Singapore. Each petroleum company in the region makes what in the industry is called “nominations” on the quantity of gasoline needed. Because of the cost the gasoline is jointly shipped. Fuel comes to Micronesia from refineries in Singapore and is transported to Guam either by Shell or Mobil both of which operate pipelines at the Port Authority of Guam. “Because of economies of scale it makes sense that it comes from the same place ” Stalker said.
Off-loaded gasoline is then divided between other suppliers. Each retailer has secret additives that are added prior to dispensing to station outlets for sale to the public. But the problem had not been identified when it arrived and industry officials believe possible as long as 60 days before things began to go wrong.
The Journal asked Jeffery C. Borja president and country manager for Mobil Oil Guam what he believed happened and if this was an isolated issue. He said that the gasoline supplied met all regulated standards. “The regular unleaded gasoline contained slightly elevated levels of free-sulfur which reacted with certain components found in some vehicle gasoline gauges.”
Borja said there was evidence that silver nickel and copper coated fuel system components are especially sensitive to elemental sulfur and can result in fuel gauge problems evident to customers.
However dissent exists between Mobil and Shell. Shell said the problem is a result of a reduced sulfur content.
Philip W. Stalker president of Shell Guam said that following tests performed by his company it was found that the fuel had a lower sulfur content in which a free sulfur ion existed. That bonded to silver when it entered the tank of some models of automobiles. “The chemical reaction occurred when the gas hit the tank of certain brands of automobiles because the newly-lowered sulfur — designed to burn cleaner — reacted with silver and caused corrosion thereby giving faulty readings.”
For the most part late model U.S.-made automobiles were affected but petroleum companies were reluctant to release too many details regarding affected vehicles. As of Aug. 24 the numbers were Shell — 50; Mobil — 45-50; SPPC 76 — 2. None of the companies had set a deadline for customers to file a claim.
Robert E. “Bob” Koeppen Jr. vice president of operations for South Pacific said his company had also received complaints but collectively a system has been put in place so there are no cross-claims.
“We are doing the same thing as Shell and Mobil are doing. We have customers fill out a form and then we reimburse them for the cost of whatever it was to repair their vehicles.”
The claim process is very detailed.
The claim forms supplied to the Journal by Shell and South Pacific are quite extensive and require sales receipts for fuel product purchases in order to be eligible for the repair process.
Federal Trade Commission rules state that oil competitors are forbidden to “talk shop” with one another due to anti-trust reasons however the three companies have worked out a mutual data base plan that is compared to check that multiple claims are not filed.
Which cars and trucks were affected most? Each company has its own opinion based upon claims filed with each of them. Koeppen said South Pacific has had a high number of claims by people driving the General Motors Buick Century.
“We had 15 to 20 complaints and about a third of those were from people with Buick Century ” he said. “This includes years 1999 on up to the present model year.”
Koeppen said that not all affected vehicles were American cars. A couple of complaints came from owners of what he would only term “foreign” models.
When asked how the gas gauge problem was discovered Koeppen said it was first noticed in the rental market. “The problem was discovered by one of the rent-a-car companies that Shell supplies fuel to. Because there was a bunch of complaints we all sent out our independent third party inspectors out to do some testing and found there was indeed a problem with the fuel.”
He said South Pacific let clients choose which action they took. “We prefer they would go to a dealer so we can substantiate claims. We are asking them to keep the parts but as long as they have everything and we can prove there really was a problem we will reimburse them for the fix.”
As of Aug. 26 South Pacific had processed two claims totaling $900.
“If someone comes in October and says my fuel sensor was messed up before we will still make them fill out the same paperwork and try to prove when it happened ” he said.
A rare industry meeting was held between legal representatives from each of the companies on July 16.
“We met and we had to be real careful not to talk about things we aren’t supposed to talk about ” Stalker said.
A plan was worked out so that cross claims could be immediately identified. Vehicle identification numbers are being used to identify claimants rather than actual customer names.
Borja said that safeguards have been put in place so that a reoccurrence is prevented. “A new test the silver corrosion test is being developed to detect minute amounts of free sulfur. While the test is not finalized a draft version has been rushed into law in Florida and Louisiana.” Those states saw similar problems in the summer driving months.
He anticipated the finalized test to be part of U.S. gasoline specifications by year’s end.
Stalker said Guam had been exempt from certain U.S. regulations required on the U.S. mainland regarding the sulfur content.
When asked if this could happen again Borja said “ExxonMobil has taken three additional steps. The first is we have provided technical advice to the local SGS laboratory so they could perform this test.”
He said that by working with SGS Guam Inc a local independent chemical validation testing company Mobil can rapidly detect and confirm any issues without having to fly samples elsewhere.
“Second the next few cargoes of gasoline into Guam will be tested on receipt to check our load port procedures.”
Third we will keep a local supply of the U.S. EPA-approved additive used to correct the problem in the unlikely event of a reoccurrence ” Borja said.
Each company said the ultimate damage reached tens of thousands of dollars.
Stalker said the typical repair for a gas gauge averaged $540 which made claims facing Shell to be around $75 000.
The only fuel that affected gauges was Regular. All three companies offered Premium for days while the problem was investigated.
Whether Shell and South Pacific will file a claim with the ExxonMobil refinery in Singapore has yet to be determined. MBJ
