A new ultra-low sulphur petrol and diesel plant in Alaska is to ramp up production of the fuels in response to the new regulations being imposed by the Environmental Protection Agency (EPA).

Flint Hills Resources is to invest more than $170 million on updating its refinery site near Fairbanks as it seeks to meet the expected jump in demand for the clean fuels.

A company spokesman told the Alaska Journal of Commerce that construction is scheduled to begin in 2005, ahead of a January 2007 deadline for the production of the low-sulphur petrol.

One of the key functions of the plant will be to produce low-sulphur fuel and diesel that can work in the freezing temperatures of the arctic regions.

The EPA rules call for a limit of 30 parts per million sulphur content, while diesel will be required to have 15 ppm or less.

According to the EPA the fuel will be crucial in extending the life of catalytic convertors, which are now a pre-requisite in new diesel-fuelled vehicles.

The Agency insists that the US is still on course to meet its schedule for implementing ultra low-sulphur highway diesel fuel, recently reiterating its target of 2006 for the production of 95 per cent of all transport diesel - 3 million barrels per day - in line with the 15 ppm sulphur-content standard.

Under its "Clean Diesel Programme" the EPA is aiming to reduce 2.6 million tons per year of nitrogen oxides emissions from diesel exhaust.