Puralube plans to upgrade one of its rerefineries in Troeglitz, Germany, to enable production of API Group III base oil in the first quarter of 2017. The company intends to deliver the product to existing customers in the country and Europe and consider exporting base oils out of the region as well.
Group III production capacity will be 50,000 metric tons per year, the company stated in a news release. Its two existing rerefineries at the site currently each have 50,000 t/y Group II+ base oil production capacity.
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What we are doing is to modify the technology of one of our two plants which we operate on our site at the [Zeitz Chemical and] Industrial Park, Puralube President and CEO Andreas Schueppel told Lube Report. That means … after startup, we convert 50 percent of our annual production from the API Group II quality into premium Group III base oils. We are able to do this after a development phase of our technology together with our partner UOP a Honeywell Company.
He said the company can produce Group III base oils from standard used motor oils. That is one of the strengths of our technology – that we do not separate special feedstocks to process it in our plants, he added. That will further increase our flexibility.
He recounted that Puralube started its first base oil plant in Germany back in 2004 and launched its second plant at the same location in 2008. It uses patented HyLube catalytic processing technology developed by Des Plaines, Ill.-based UOP, a Honeywell company. Puralube acquired exclusive rights to the technology in 1995.
We have already delivered to our international customer base about 1.3 million tons of high quality Group II+ base oils, Schueppel said. The future shows growth in the demand of Group III. After startup of our plant on the end of quarter one in 2017, we will deliver our products to our existing customer base in Germany and Europe. We also think about exporting base oils out of Europe.
The company has focused on continuously improving the quality of its products. I can only speak for Puralube, but what we see is that it absolutely make sense to stay focused on this issue and try to find a strategy to serve the future demand of the car industry, he said. Driven by the increase of the demand for high quality products for the future in combination with a lower carbon footprint, what that means is that we save a significant amount of carbon dioxide emissions during our production process compared to the virgin [base oil] producers, so we feel that we found a strategy to be ready serve the future demand.
He noted that demand for Group III base oils is growing faster worldwide than the supply basis. There will be no differences between our quality and the quality of products based on crude, he claimed. Combined with the carbon dioxide-saving effect, we feel were in very good position for the future.
In 2013, Puralube said it was investing 40 million to build a third rerefinery at its Troeglitz site. As of July 2014, the company said the project was on hold – although permits and financing were ready – as the company watched profit margins in the rerefining industry. At the moment, we are not following the plan to extend our existing used oil capacity in Germany, Schueppel said last week. The extension plan is still on hold.
Frankfurt, Germany-based Puralube GmbH is a subsidiary of Puralube Inc. in Wayne, Pa.
Stephen B. Ames of SBA Consulting, Pepper Pike, Ohio, noted that Puralubes base oils are currently very high quality, verging on Group III. A lot of that has to do with the high quality base oils used in the automotive lubricants within their Baufeld Oel subsidiarys waste oil collection system, Ames said. Puralubes Baufeld Oel subsidiary is one of the largest waste oil collectors in Europe and the primary source of feed to the Troeglitz plant. They also have supply contracts with other collectors in the region to more than assure full plant loading.
Group IIIs main appeal is likely the steady decline in Group II base oil prices. I am sure the reasons behind the change are economic and also for customer relations benefits, Ames said. Group III has maintained a $200 to $300 per ton higher price in Europe than the equivalent Group II grades.
He asserted Puralube would not capture the full Group III price margin fully unless it obtains approvals showing that engine oils formulated with its base stocks meet the requirements for a number of specifications used in Europe. That is a costly exercise given Puralubes volumes, but it would be well worth it, Ames added.
Ames anticipates Puralube will probably focus Group III marketing to its long standing customers in Europe. Even with the recent streaming of the SK-Repsol Group III plant in Cartagena and of course Nestes Porvoo [Finland] production, Europe remains a large net importer of Group III, he pointed out. That is not about to change in the near- or medium-term.
Puralubes production will be limited, so it should be easily absorbed into the marketplace without impacting prices, he suggested. In my estimation there should be a very good market for Puralube and high probability they will achieve their goals, Ames said.