PC-10 Shocker: $24 Million for Tests?


PC-10, the diesel oil upgrade due out in June 2005, “has to be finished on time,” ChevronTexaco’s Jim McGeehan told ASTM’s Heavy Duty Engine Oil Classification Panel last week. “But we have to face, and resolve this year, a huge problem.” It may cost from around $10.8 million toas much as $24 million to conduct the testing matrix for this new oil category.

There’s no way around this cost:a “precision matrix” is a hard and fast requirement for any new engine oil test. During the matrix, each test is run repeatedly, even dozens of times, to demonstrate its precision.

Without a completed precision matrix for a new test, the American Chemistry Council will not accept it into its Code of Practice. The American Petroleum Institute, in turn, will not license an oil unless it has been tested under the provisions of ACC’s Code of Practice. And PC-10 could have up to six new engine sequence tests, noted McGeehan, who chairs the panel.

McGeehan opened the April 2 meeting in Chicago by pointing out that the multicylinder tests that have been proposed will cost between $90,000 and $120,000 per test run. “We need to consider the cost of establishing precision, base oil interchange and viscosity grade engine testing guidelines,” he said.

Lubrizol’s Lew Williams next addressed the group, with the blunt question, “Is it feasible to fund the matrix testing needed to develop the PC-10 Category as currently proposed with six new tests?”

Already, he observed, five new tests are being developed by engine manufacturers, and a sixth (for catalyst aftertreatment compatibility) is being considered. The five under way are:

1. The Caterpillar C-12 test for iron piston deposits and oil consumption;

2. The Mack T-12 for corrosive ring and liner wear, and bearing corrosion;

3. The Cummins ISB test for soot-related valve train wear in slider follower designs;

4. The Cummins ISM EGR, for abrasive and corrosive soot-related valve train wear in engines equipped with exhaust gas recirculation; and

5. The Mack T-11 for soot-related viscosity increase.

Williams calculated that each of these six new tests costs about $100,000 to run. How should the matrix be structured? Williams presented two hypothetical cases — Case A and Case B — plus one “bare bones” suggestion.

In Case A, with 28 test runs for each of the six tests, the cost would be $16.8 million, he said. Case B, using a more robust test pattern of 40 tests each, would cost $24 million. Both of these options would provide enough data to achieve precision and additionally to set base oil interchange and viscosity grade “read-across” guidelines. Base oil interchange and viscosity grade engine testing are important to engine oil formulators because they provide some flexibility in base stock selection without requiring additional candidate engine oil tests.

Three industries will share the costs of PC-10 matrix testing: heavy-duty engine manufacturers, represented by the Engine Manufacturers Association; additive companies, through the American Chemistry Council; and engine oil manufacturers and marketers, represented by the American Petroleum Institute.

Customarily, the engine manufacturers pay a flat rate, and the balance is split between ACC and API. Williams suggested that arbitrarily assigning a $500,000 fee to EMA would leave API and ACC to share costs ranging from $8.15 million to $11.75 million. In fact, these costs are far beyond what anyone anticipated

In Williams’ final scenario — with even fewer tests than were used for the CI-4 diesel oil category’s test matrix — only test precision would be evaluated, not base oil interchange or viscosity grade engine testing. In this “bare bones” scheme, only 18 runs per test would be conducted, and testing laboratories would contribute a substantial number of test runs for calibration. The laboratories would recover the costs of these evaluations by including them in charges for candidate oil tests.

Under this bare bones proposal the 18 test runs per new test — amounting to 108 test runs — would cost a total of $10.8 million. Of this, the laboratories would “donate” 72 tests costing $7.2 million. The remaining 36 tests would cost $3.6 million, which, after a flat fee of $500,000 paid by EMA, would be split 50-50 by API and ACC; that is, $1.55 million apiece.

By way of comparison, the only test under development for the new gasoline engine oil category, GF-4, is the Sequence IIIG test to measure high-temperature deposits, wear and oxidation. It costs just $35,000 per run. So the full cost of GF-4 matrix testing is just $420,000, a tiny fraction of the cost projected for PC-10.

This will be a hard nut for diesel engine oil marketers to swallow. The cost to evaluate new tests for PC-10 — not to mention the millions spent by individual engine manufacturers like Cummins, Mack and Caterpillar to develop the tests — will be at least 25 times that of GF-4. Yet there are far fewer gallons of engine oil over which marketers will be able to spread the costs. According to the NPRA annual report on U.S. Lubricating Oil Sales, roughly 70 percent of all automotive engine oil sales are for gasoline engines and only 30 percent is diesel engine oil.

By the next meeting, to be held in June in Norfolk, Va., EMA and ACC will have considered the funding available to conduct the matrix. Both obtain their share from contributions of individual member companies.

API, on the other hand, has tapped into licensing fees from the Engine Oil Licensing and Certification System for its share. Since API does not intend to raise licensing fees, it’s not likely that there will be enough in the annual $2 million EOLCS budget to meet this commitment, after applying nearly $1 million annually for API staff support and a few hundred thousand for aftermarket engine oil auditing.

So individual API member companies may have to cough up a special assessment to cover its share — just as the other trade associations do.

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