Its worth understanding all the factors that contributed to this scenario because there are many. Group I still has the saving grace of high solvency and acceptable brightstock quality, but very little else.

In the past, reference has been made to impurities in Group I stocks as a limitation. Thats a loose term I dont especially like because the so-called impurities are in the feedstock at the time of production. The feedstock does contain some sulfur-bearing molecules that inhibit performance, but other sulfur species in Group I help stabilize base stocks during storage and in uninhibited applications, over and above what can be achieved with Group II or III.

On the other hand, Group I stocks do have some nitrogen-containing molecules that make no useful contribution to base stock performance. Indeed, in Group II production, nitrogen species from the crude are usually excluded early-on with hydro-denitrification treatments.

Group I base stocks must be made from specially selected crudes by removing what is not wanted – usually by solvent extraction. Extraction severely limits possible yields based on crude because if reasonable levels of the right molecules arent present in the first place, there is no mechanism to create them, as there is with Group II and III.

The better base oil components, that is paraffins, are concentrated in the lighter distillate grades, irrespective of whether they are high-sulfur Middle Eastern or low-sulfur European crudes. This means that making the heavier distillate grades of Group I requires relatively more extreme processing – hence yield loss – than for comparable Group II grades to produce the desired viscosity index in the finished base stock. This is a minor aspect of Group I manufacturing economics but still in the wrong direction.

To make economical yields of Group I grades, we have to be very selective about the crude being brought into the refinery. Refineries like flexibility, not constraints. In fact, to make matters worse, with the average yield of a Group I stock being around 10 percent on crude, there is a large multiplier on this refinery crude constraint. With lube crudes usually trading at a premium to general purpose crudes, its easy to see why refinery crude procurement teams dont like Group I plants in the complex.

Group II production has nowhere near the same constraints because the Group II process is not nearly so reliant on the intrinsic crude quality. Conversions to higher VI components, synthesized in the production process, address this issue.

Making different grades of Group I stocks normally requires adjusting the ratio of feed (distillate or residue) to solvent at the extraction stage for each grade. This slows the process because some kind manual intervention or change is usually required. It also means only one grade can be processed at a time, which is not the case in many Group II line-ups.

Similar solvent to feed ratio adjustments have to be made at the dewaxing stage for each grade. And for brightstock dewaxing, the sheer viscosity of the waxy raffinate at low temperature limits wax crystallization and, hence, filtration rates. This has a knock-on influence on effective unit capacity because brightstock and the easier-to-process distillates cannot be dewaxed at the same time. Some Group I plants have dedicated brightstock trains to remove these constraints, but that is expensive.

The list of constraints for Group I vs. Group II production just seems to go on and on. This is why we now see the inevitable overtaking of Group I by Group II in terms of global capacity.

There is a similar list of Group I deficits that are limiting factors in finished lube performance, such as soot dispersancy, air release and finished lube antioxidant demands.

But we cant ignore the saving grace of Group I production in terms of waxes and extract by-products, as well as brightstock. Without these benefits, Group II would have overtaken Group I even sooner.

Very well-run Group I trains will probably have a place in the base oil supply chain for some time to come. The plants were depreciated long ago and can be cash-cows for selected markets, including process oils. But this reasoning does suggest niche markets eventually, which may need to be supported by premiums for distillate grades as are currently being seen for brightstock.

How long the current 50:50 Group I to Group II balance takes to move to 30:70 or lower is anyones guess. But it could all be accelerated when acceptable Group II brightstocks can be produced on a routine basis.