ExxonMobil Chemical yesterday said it expects to resume production of polyalphaolefin at its Beaumont, Texas, plant by the end of this year, welcome news for blenders of premium lubricants. The 82,000 metric ton per year plant, representing more than a third of North American PAO capacity, was shut down as Hurricane Ike approached on Sept. 13 and then was waterlogged when the nearby Neches River flooded its banks.
While the loss of output from Beaumont has pinched sorely, shortness in the PAO market in fact predates that event. According to Jim Herman, PAO global business manager at Chevron Phillips Chemical in The Woodlands, Texas, “Low-viscosity PAO has been balanced to tight for several years, and high-viscosity PAO really tightened up mid-year 2008.”
The reason, he told Lube Report: “PAO capacity growth has not kept up with demand growth, partly because monomer (normal alphaolefin) supply has been constrained due to other plant closures.” PAO building-blocks include the monomers C10 (also called decene and the most widely used for low-vis PAO), as well as C8 and C12, which go into heavier PAOs.
U.S. producers of low-vis PAOs, which typically range up to 10 centiStoke in weight, include Chevron Phillips Chemical, ExxonMobil Chemical and Ineos Oligomers. However only two North American companies, ExxonMobil Chemical and Chemtura, have manufacturing capacity to produce the high-viscosity grades, such as 40 and 100 cSt. These often are used as “correction fluids” to balance lower molecular weight PAOs and achieve viscosity targets.
Herman, who will speak about PAO supply and demand at the upcoming ICIS Pan American Base Oils and Lubricants Conference, Dec. 3-4 in New York City, says that tight supply has been affecting “all sorts of lubricant products, from engine oils to gear oils, hydraulic fluids to wind turbine lubes.”
As Lube Report described last week, the most high-profile product affected is undoubtedly ExxonMobil Lubricants’ lineup of Mobil 1 synthetic engine oils. Mobil 1 distributors are on strict allocation at least until Beaumont’s PAO supply is restored.
When will that be? “Efforts to restore the Beaumont chemical plant are well under way,” said ExxonMobil Chemical spokesman Jeff Neu in Houston. “A network of teams are working diligently to repair or replace damaged equipment. Restart planning has commenced to expedite a return to normal operations.
“ExxonMobil is committed to reestablishing our supply capabilities for the portion of our synthetics, olefins and aromatics business produced by our Beaumont, Texas, facility,” he continued. “At this time, we expect our Beaumont synthetics and catalyst plants to resume operations by year end 2008.”
Meanwhile, other PAO producers have been trying to pick up some of the slack. However, said Herman, “in low-viscosity PAO, since feedstock constraints drive much of the tightness, other producers can’t really step in with long-term solutions. For short-term problems however- usually logistics-caused constraints- frequently they can.”
Feedstock tightness is an unfortunate side-effect of how monomers are produced, explained Vanessa Zapata, product manager, Americas, for higher olefins at Shell Chemical in Houston. Full-range alphaolefin plants such as Shell’s and others cannot dial up production of C10 alone, she said; they also have to make C4, C6 and other molecules at the same time, and these all must find markets. So until demand grows for its co-products, the supply of PAO-friendly monomers will remain finite.
On the other hand, she added, “about every seven years the global market seems to need a new full-range alphaolefin plant,” so the cycle may be due to turn again.
Could continuing shortages hurt PAO growth, and spur blenders to reformulate using other blend stocks? “There is always that risk,” Herman conceded, “although the unique set of properties offered by PAO limit the risk of alternate products taking market share.”
More hopefully, he pointed to another event on the horizon: More normal alphaolefins capacity is coming to market by way of Q-Chem II, a full-range AO plant Chevron Phillips and its joint venture partners are constructing in Qatar. Q-Chem II will enlarge the supply of monomers suited for making PAO.
Meanwhile, a PAO capacity expansion at Ineos Oligomers in Feluy, Belgium, is moving towards completion by 2010, and Chemtura has made gains in heavyweight PAO production at its facility in Elmira, Canada.
Until all these projects come to fruition, as Herman will describe to the upcoming ICIS Pan American meeting, expect the market to remain tightly balanced.
In addition to Herman’s presentation, the ICIS Pan American Base Oils and Lubricants Conference will also hear from Charles Conconi of Mercedes Brasil, regarding the growth of Latin America’s automotive industry and its lubricant needs. Ricardo Barreto of independent blender Industrias Venoco will describe Venezuela’s market for lubricants and base oil, and Amy Claxton of the consultancy My Energy will cover the shrinking supply of API Group I base stocks and waxes.
Also at the conference, Infineum Brasil’s Jorge Manes will speak on how Group II and Group III oils are penetrating Latin American markets; Jamie Brunk of Solomon Associates offers insights into base oil refining economics; and executives from Nynas, Petrobras, Petronas and SKE&Pwill address supply issues in the Americas region.
The 4th ICIS Pan American Base Oils and Lubricants Conference is Dec. 3 and 4 at New York’s Roosevelt Hotel. Co-moderators for the conference are Gerry Jackson of Renkert Oil and Citgo’s Ernie Henderson; Lubes’n’Greases magazine is a media sponsor of the event. For information about the full conference agenda or to register, e-mail Pamela.Wilkinson@rbi.co.ukor visit the conference website: http://www.icisconference.com/panamericanbaseoils