First, will there come a point at which there is actually a significant premium for Group I grades in applications for which Group I is a technical must-have, thereby saving the remaining plants?

In answering this question, it must be noted that some process oils and diluent oils really need the added solvency that Group I aromatics provide. While naphthenic stocks can supply some of this solvency, there is a limit to how much of a gap they can fill. Global naphthenic production is only about 3.5 million tons per year and Group I is around five times that.

U.S. Gulf prices for comparable grades of Group I and Group II show little, if any, differential. Indeed only Group I bright stock commands an obvious premium. This indicates that there is still a home for remaining Group I production and that it does not have to be heavily discounted to move. This fits with what we know; namely, that there is still a large volume of crankcase products, around API SG/CF performance levels and below, as well as marine and some industrial lubes, that are large consumers of Group I. That is unlikely to change any time soon.

The take-up of SAE 40 grade marine cylinder oils – more suited to Group II grade structures – has yet to take off, meaning there is a continuing need for bright stock-like viscosity grades to support SAE 50 cylinder oils.

Second, if we really wanted to, could we ever go back to making Group I base oils in some of the more modern plants set up for Group II?

Some of todays Group II plants are in fact the result of conversions in the other direction. In principle, hydrotreating technology can be applied to Group I production. Indeed, until recently, some plants in Europe and the Far East used just this approach in the upgrading stage. The types of catalysts needed for the aromatics saturation stage would certainly have to be nonsulfur-sensitive nickel and molybdenum types.

It is also possible to use catalytic dewaxing for Group I distillate grades, even if not routinely for bright stocks. Certainly, the older type of wax-cracking catalytic dewaxing has been used in the past for Group I, and if the waxy cuts were sufficiently sulfur- and nitrogen-free, noble metal isomersation catalysts could be considered.

What would be the advantages, if any, of such an approach? It would remove some of the constraints of high crude specificity needed for solvent processing of Group I stocks, which puts a cost premium on the feedstock to refineries. This is an advantage Group II already has. It would also go some way toward improving the yield pattern of Group I production because no extracts would be produced. Rather, they would largely be converted to base stock molecules, as is the case in Group II or Group III production.

Would there be any drawbacks? Certainly, the Group I base oils produced would be almost as sulfur-free as Group II base stocks, and that is not necessarily good for the type of aromatics compositions and levels found in Group I stocks. Some residual sulfur in Group I plays a part in maintaining the molecular integrity of Group I stocks. It also acts as a natural secondary antioxidant until the base stocks are additized, and sulfur can even boost finished lube performance after additization. While Group II and Group III are essentially sulfur-free, they do not suffer the same limitations because residual polyaromatics, the main culprits of instability, are low in concentration and normally hydrofinished away.

With the benefits of more crude flexibility and potential yield improvements when hydroprocessing Group I production, is it likely to happen? Only the market can dictate that. The technology is well established, so there is unlikely to be a technology push, only a market supply pull. Interestingly, Repsol is reported to have upgraded its Group I production facilities in Spain with the prospect of making hydrogenated Group I by 2017.

Third, could manufacturing economics ever improve enough to underpin continued Group I production?

Currently, a big plus for continued Group I production is the associated production of bright stock. Provided refiners can find uses for the distillate fractions when making bright stocks, there is the prospect of running bright stock-only plants if premiums hold. Indeed, some Group I plants include dedicated bright stock trains today.

The issue with bright stock production is the dewaxing step, which, in its current solvent-based form, is always a production bottleneck due to viscosity-derived wax filtration limits. While catalytic dewaxing can be used to set a pour point for bright stock, production from paraffinic feeds usually tends to look hazy because todays catalyst technologies just cannot cope with the heavy wax ends. Finding a catalytic solution to this issue would open up many new business opportunities.

In the final analysis, while bright stock production is a big plus for continued Group I production, even the distillate grades of Group I are far from redundant and could be made more cost-effective if need be.