We live in a period of unprecedented change in the base stock business, with new capacity, rationalization, new players entering the business, changing supply routes and increasing lubricant performance requirements, said Cox.

ExxonMobil, the worlds largest Group I supplier, recently announced changes mirroring industry trends. By 2015 it expects to complete significant expansions of Group II capacity at its Baytown, Texas, and Singapore refineries. (See Lube Reports Feb. 6 and June 26 stories for details.)

If youre a blender, do you stay the course, or change base stock supply strategies? Cox asked.

Base oils make up about 50 percent of direct engine oil production costs, and 75 percent of industrial oils production costs, so a smart base stock choice improves your bottom line. In selecting base stocks, blenders must indentify limiting technical requirements. They must maximize cost effectiveness by minimizing the number of stocks and tankage, leverage existing product formulations, and selecting base stock slates for base oil interchange and viscosity grade read across. And finally, they must assess supplier capability.

Engine oils tend to frame the dialogue about base oil selection, Cox continued, but other lubricants are equally important. At present, Group I can be used in about 90 percent of all applications, while Group II can be used in close to 97 percent. Thus a majority of lubricant applications can be blended with Group I or Group II. Group IIIs role is limited to high viscosity index, light viscosity applications, and its still a small segment, despite its oversupply.

Looking at evolving base stock demand through 2030, Cox noted that marine and some industrial formulations will continue to prefer Group I. Premium automotive lubes are moving to Groups II/II+ and III, but there will be very limited use of III+ or polyalphaolefins. The majority of applications can use either Group I or II – both work – and on the demand side, the pace of change is expected to be consistent but slow.

Cox cited ExxonMobils base stock slate to show how approved base oil interchange within the slate allows blending the same product with a different base stock mix, with no extra testing. Likewise, approved viscosity grade read across within the slate allows blending a range of viscosity grades without extra testing. A well designed slate means you can cover all these products – from 0W to monogrades on the passenger car engine oil side and from 5W to SAE 40 on the heavy duty side – with a slate of four base stocks.

Solutions should be tailored to your business and your geography, said Cox. He pointed to the marked differences between lube demand in Japan vs. India:

Source: ExxonMobil

Cox recommended a base stock strategic approach. Group I has a long and useful life, and is suitable for most applications. Use it as long as youve got it, and work with your supplier to evaluate long-term supply security. Group II is growing in availability and use. Its important to work with your supplier on when and how to increase Group II use to assure reliable supply and minimize conversion costs.

Group III is in oversupply, Cox noted, with limited applications as a trim stock and for low viscosity engine oils. And Group IV continues to be an important niche product; secure long-term supply as needed.

Involve your base stock suppliers in strategic discussions, Cox concluded. You may regret it if you dont.