ChevronTexaco Fires Up Group II-plus


Citing demand from the evolving U.S. motor oil market, ChevronTexaco announced this week that it is resuming production of Group II-plus base oils at its Richmond, Calif., refinery.

The plant – which already produces Group II and Group III stocks – will add a single cut of Group II-plus, named Neutral Oil 5R and designed specifically for use in 5W engine oils. These oils have been claiming a growing share of the U.S. engine oil market, at the same time as specification upgrades – the GF-3 spec adopted in 2001 and GF-4, which is scheduled to go into effect next year – require use of higher quality base oils.

The combined effect of those trends, ChevronTexaco officials said, has been to increase demand for Group II-plus.

With the growing demand for 5W grade motor oils, and the upcoming GF-4 specifications, Group II-plus availability has become tight, Vice President for Base Oils Brian Chase said. Many of our customers have been asking for this product.

For the past 10 years, sales of 5W-20, 5W-30 and 5W-40 multigrade engine oils have grown steadily, especially as auto makers began to recommend lower-viscosity oils to meet fuel economy targets. In 1991, 5W oils accounted for less than 7 percent of the U.S. gasoline engine oil market; by 2001, they made up nearly 20 percent, according to the National Petrochemical & Refiners Association.

The Richmond refinery first produced Neutral Oil 5R in 1998 but stopped doing so two years ago in order to increase production of Group II. Officials acknowledged that the re-introduction of Group II-plus will sacrifice overall volume – it requires more refining than Group II – but maintained that capacity creep will make up for the loss.

ChevronTexaco joins three other suppliers in the North American Group II-plus market: ExxonMobil, Motiva and Petro-Canada Lubricants. Further competition comes from Lithcon Petroleum USA Inc., which markets Group III stocks produced by SK Corp. in South Korea. ConocoPhillips plans to begin marketing Group III from another South Korean supplier, S-Oil Corp.,during the third quarter of this year.

The market was already snug at the start of 2003, but tightened further because of supply disruptions. ExxonMobil and Motiva underwent maintenance turnarounds at their respective refineries at Baytown and Port Arthur, Texas, and ExxonMobils Baytown plant was hamstrung by operational problems afterward. Those immediate factors played a role in ChevronTexacos decision.

Indirectly it did, said Brent K. Lok, manager of base oil product technology. We had said that we need to be a full-line supplier to our customers on the West Coast, so we planned to review [production of Group II-plus]. But our internal customer [Havoline] was hounding us, and our other customers were getting pretty desperate. It probably moved up our timeline by three to six months.

ChevronTexaco said the major lubricant additive suppliers have already qualified its Group II-plus product for use in GF-3 engine oils, so blenders can use Neutral Oil 5R without incurring additional testing costs.

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