It sounds so neat and tidy. In at least one way, however, this trend left the industry in a pinch. Output from Group II and III plants is lower on the viscosity spectrum than that from Group I facilities. Consequently, the closure of Group I plants has left the market with a shortage of bright stock, its heaviest grade. The dearth is felt most notably in regions such as the Middle East and southern Asia, which are particularly dependent on the fluid.

Several refiners have announced plans to increase production of bright stock. Buyers say this is encouraging, but many believe these moves may not fully address the supply imbalance. For the moment, the supply-demand mismatch is being reflected in the pricing of bright stock, and while viable synthetic and mineral alternatives are emerging, pricing and inconsistent supply are preventing a wholesale uptake.

Kline & Co. consultants says despite the superior performance characteristics of Group II/III products, there is nevertheless a divergence in price trends.

Pricing for 150 solvent neutral [a light grade] is depressed as this grade has Group II and Group III equivalents, and the market [for the Group I fluid] is shrinking, said Milind Phadke, industry manager in Klines Energy Practice. On the other hand, as bright stock doesnt have a Group II/III equivalent, its price is increasing. The net result is that the delta between bright stock and 150SN is expanding. According to Phadke, this year it will widen to around U.S. $40 per barrel.

Heavy Oil, Short Supply

Bright stock stands out from other mineral base oils because of its very high viscosity. The term was coined in the early days of petroleum refining, when the U.S. industry was concentrated in the state of Pennsylvania. Most, if not all of the countrys lubricating oils came from Pennsylvania crudes then, including cylinder stock, which was made from the heaviest refining residuals, and which was used to lubricate cylinders on railroad locomotives. Oil companies learned that they could further refine cylinder stock by removing the heavier hydrocarbons, wax and particles that imparted a dark color. The resulting fluid was clear and bright, and so was called bright stock.

Base stocks are categorized according to kinematic viscosity, which for Group I oils is typically measured in Saybolt universal seconds. A Saybolt universal second is the amount of time that it takes 60 cubic centimeters of fluid to flow through a calibrated tube at a controlled temperature. By convention, however, bright stock is measured at a higher temperature than lighter oils. As a result, the most common grade of bright stock is referred to as bright stock 150, even though it is much heavier than a 500 solvent neutral.

Kinematic viscosity can also be measured in centiStoke, and when done so, the same scale is used for all grades. The viscosity of bright stock can range between 450 and 1,200 cSt, compared to 90 cSt for a 500 solvent neutral.

High temperature and heavy load applications use large quantities of bright stock, with automotive and industrial gear oils accounting for about 33 percent of total demand, according to Kline. After that comes heavy-duty engine oil, at 15 percent, and process oils at 14 percent. Global demand for marine oils is around 2.2 million tons per year, and 90 percent of this is cylinder oil, which uses large volumes of bright stock. Bright stock is also widely used in hydraulic fluids.

Demand is particularly strong in hotter regions because oils thin in higher temperatures. Areas such as the Middle East, Africa and parts of Southeast Asia also have a prevalence of older vehicles that use monograde engine oils, and these are often formulated with bright stock.

Kline estimated global bright stock supply at roughly 3 million t/y in 2010, compared to demand of around 3.2 million t/y. Demand for bright stock is growing at around 2 percent per year, it said, yet supply is declining at an annual rate of 1 percent. The firm forecasts a bright stock deficit that could reach 1 million t/y by 2020.

Expansions on the Way

It has been decades since the refining industry made significant investment in bright stock – or indeed in any Group I capacity. In February, however, Luberef (Saudi Aramco Lubricating Oil Refining Co.) announced plans to expand its plant in Yanbu alBahr, Saudi Arabia, mostly for the addition of Group II oils, but also to increase its output of bright stock. In May, Total announced it would shift some capacity at its Gonfreville, France, plant from light grades to bright stock and other heavy grades. Kline said H&R AG is setting up a new deasphalting unit at its Neuhof, Germany, plant in order to make more bright stock.

All three companies declined to answer questions for this article, and none have disclosed the size of their bright stock expansions.

Kline, which is based in Parsippany, New Jersey, U.S., suggested that regions such as the Middle East will continue to absorb Group I production and that this may lead to further investment by refiners. The firm thinks this will ultimately halt the decline of Group I stocks, but in the interim the rising cost of bright stock will speed the search for substitutes.

Kline cites polyisobutene and naphthenic bright stocks as promising alternatives. Others, such as polyalphaolefins and polyalkene glycols, suffer from pricing/availability issues or a combination of both. The use of PAG is largely confined to high-end compressor fluids. PIB is emerging as a viable substitute and crucially is available in high viscosity ranges. Kline says PIB has a better viscosity index as well as a better oxidative stability, although it notes that availability has tightened recently.

PIB is currently used in two-stroke engine oils, monograde engine oils, marine oils and grease. As a result of its wide-spread application, demand competition is likely to intensify, and regional petrochemical giants such as SABIC in Saudi Arabia and Borouge in the United Arab Emirates are said to be closely watching developments.

Naphthenics are promising because multiple pale oil suppliers have introduced high-viscosity products in recent years, targeted specifically as bright stock replacements. In addition, their prices are more attractive than some other alternatives.

Blenders Wait and Watch

Yet T. R. Kumar, manager of lubricants technology at Emirates National Oil Co. in Dubai, said credible alternatives to bright stock are still some way off.

Some development work is going on, but so far the data does not support a replacement, and it will take some time as the problem with naphthenics is that their viscosity index is low. He added that PIB has some performance strengths but at least one drawback. The film strength of PIB does not match that of bright stock, and that is why people are not using it so much, particularly in automotive applications.

Kumar conceded that marine oil formulations using PIB are gaining ground but added that the costs of field testing may act as a drag on rapid uptake. How many oil companies can afford [U.S.] $300,000 to $500,000 for each test, although we must be aware that some day bright stock will disappear, and therefore this problem needs to be attended to quickly.

The slow reaction of Group I manufacturers to expand capacity is partly explained by the better performance of Group II/III products and fact that the process to produce bright stock involves high investment.

Bright stock is produced by heating paraffinic crude and subjecting the vacuum residue to propane deasphalting, a process that removes asphalt, metals, aromatics, and carbon residue from the desirable oil.

Though it is a straightforward manufacturing process, the relative inefficiency has prompted many Group I refiners to upgrade to Group II/III and produce higher volumes with higher added value. Prices for bright stock are around 1,150 per ton, and this, combined with the impact of the global recession, goes some way to explaining the commercial dilemma facing many refiners. Bright stock production is intensive and requires a very high amount of solvent compared to feedstock. Additionally the deasphalted oil runs much slower in the solvent extraction unit due to its high viscosity, and this reduces production throughput and consequently increases costs.

These factors provide little incentive for existing Group I refiners to expand capacity, but as the value of bright stock rises, the economics of Group I production have improved markedly.

Some blenders say they are already experiencing a shortage of supply in the Middle East. Sanjay Agarwal, deputy general manager of Gulf Petrochem in Sharjah said it is a recent phenomenon.

We do use bright stock in our lube and grease production, and we sell bright stock to other blenders, he said. We have experienced shortages on some occasions. Agarwal called the recent announcement by Luberef positive but said it is important to watch the outcome.

On its face, this may help in getting more supplies of bright stock in the market, and that should help us as well, he said. However the exact situation would be known once the product is made available in the market. Bright stock and heavy neutral grades are rapidly becoming valuable commodities.

Maurice Batikha, operations manager for Sharjah National Lube Oil Co., said bright stock availability is different for those blenders that lock into annual supply contracts. We have agreed yearly contracts, so we have not noticed any supply problems. But the current prices of bright stock are high. He also suggested that alternatives will have a difficult time competing on price.

We faced a serious shortage of bright stock in 2007, but after we calculated the cost of additives to produce substitute products that meet the same formulation as bright stock, we found them to be uncompetitive.

The addition of capacity by Luberef, Total and H&R may not be enough to allay supply concerns. M. B. Menon, general manager of sales and marketing for Asia-Pacific at General Petroleum Products in the U.A.E., is skeptical. I dont think it will make a difference to the market. Yes, if SN500 production goes up, it would make a difference to the price, but bright stock?

The imbalance between bright stock supply and demand looks set to continue in the medium term and supply uncertainty to cast a shadow over price. The question remains whether suitable alternatives can be found that combine performance, economy and availability. Realistically the solution probably will be multi-pronged – a combination of synthetic and mineral substitutes and opportunistic refiners investing in the shrinking Group I category. Such Group I investment could occur despite largertrends in the global market.