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U.S. Base Oil Output Slips

For U.S. base oil producers, 2012 seems to be shaping up a lot like 2010. Refinery output of lubricant base oils reached 29.3 million barrels in the first six months of this year, down from the 31.1 million barrels produced in the first half of 2011 but identical to what was manufactured in first-half 2010.

On the paraffinics side, production from January through June 2012 totalled 24.2 million barrels, versus 25.4 million barrels for those months in 2011. The same period of 2010 saw production of 24.1 million paraffinic barrels, according to the U.S. Energy Information Agency.

Naphthenic production in the first six months of this year was just under 5.1 million barrels, down more than 10 percent from last years nearly 5.7 million barrels. In 2010, naphthenics output for the first six months was 5.2 million barrels.

Numerous plant outages and turnarounds nibbled away at refinery output in the first half, observed Jamie Brunk of Solomon Associates in Houston. Those doing maintenance in the first half included Calumet, Cross Oil, Excel Paralubes, Motiva and San Joaquin Refining, to name a few.

These planned down-times may have dented output in the first half, agreed Stephen B. Ames, of SBA Consulting in Pepper Pike, Ohio. But remember, it doesnt mean supply is more erratic – just that production is more erratic. These refineries, before they go into a turnaround, will fill their tanks so their customers dont feel any disruption.

Niagara Lubricants, Buffalos Phoenix

Niagara Lubricants hopes to break ground this fall on a new factory in Buffalo, N.Y., to replace one that burned down in July 2011. It has operated from leased space since then, but according to company president Leon Smith III, Were going to have a brand new, 60,000 square foot, state-of-the-art manufacturing, compounding and greasemaking facility. Were replacing what burned to the ground, which is everything – production, lab, offices, warehousing, it will be all brand new. Itll be amongst the safest buildings in the world for our kind of products, thats for sure.

Smith said the project has support from New York State, Erie County and the city of Buffalo, including tax incentives and loan guarantees. It will rise on the same site as the old one, a former Quaker State grease plant in Buffalos Black Rock section that Niagara acquired in the 1980s. Groundbreaking should be this fall, before winter comes to Buffalo, he added, with completion within a year.

Tall Order for Nexeo Solutions

Starting Nov. 1, Nexeo Solutions will be the exclusive distributor of Arizona Chemicals Sylfat tall oil fatty-acid and Sylvatal distilled tall oils in the United States. Sylfat TOFA is used in a wide range of applications including lubricant esters, dimer acids, surfactants and other products. The Sylvatal products are used to make functional production such as metalworking fluids, cleaners, oil field chemicals and more.

Investors to Buy TPC

Polyisobutylene supplier TPC Group last month entered an $850 million merger agreement with investment funds sponsored by First Reserve and SK Capital Partners. The company, whose Houston plants have capacity to make an estimated 117,500 metric tons of PIB a year, said that the offer is worth $40 cash per share, a 20 percent premium to its stock price in late July before word of a possible merger became known.

The merger, which needs shareholder approval, enables TPC to undertake capital and expansion projects. On Sept. 13, the company said it will begin by refurbishing and restarting an idled dehydration unit to make isobutylene. Using that feedstock source, which will come on stream late in 2014, it will be able to make more PIB as well as MTBE, diisobutylene and other products. Total capital expenditure for this project is expected to be $265 million.

Quaker Chemical Refreshes Brand

Quaker Chemical debuted a new brand identity, logo and tagline last month at the IMTS show in Chicago. The new look is supported by an integrated marketing campaign that features graphic elements, black-and-white portraits, and the motto Its whats inside that counts, a message it hopes will resound with heavy industry.

The Conshohocken, Pa., supplier of metalworking, hydraulic and industrial oils, functional fluids and services, also refreshed its 10-year-old logo: a Q inside an outer circle. Quaker worked with the agency Gyro New York to develop the new identity and marketing campaign.

Safety-Kleen Maps Growth

In a recent initial public offering of up to $400 million in common stock, used oil collector and rerefiner Safety-Kleen outlined ambitious goals for growth. The company said it aims to expand its blending capabilities and continue generally migrating our product mix to blended products, specifically to our green engine oil brand, EcoPower, in order to capture higher value, enhanced volumes and the benefits of more stable pricing due to the more differentiated nature of blended products.

Other goals include adding 10 million gallons of used oil capacity to its rerefinery in Breslau, Ontario, this year, at a cost of $30 million. The Plano, Texas-based company will build a third rerefinery and blending facility in the Gulf Coast region, with approximately 50 million gallons of used oil rerefining capacity and blending capability for most of the rerefinerys lubricating oil production. Those projects will cost approximately $100 million through 2014, with the rerefinery starting up in early fiscal 2015.

Safety-Kleens IPO registration, filed with the U.S. Securities and Exchange Commission in August, said it hopes to grow through acquisitions, as well.

MWF Study Sees Uptick

Metalworking fluids account for approximately 6 percent of the 38 million ton global lubricants market, says Parsippany, N.J.-based Kline & Co. And while these products suffered through the global economic crisis, as automotive and metals production faltered, the recent rebound of the automotive industry has brought a significant uptick in demand.

Looking ahead, market drivers including regulation, application and innovation are having an impact on the metalworking fluids industry, finds a new study from the consulting and research firm. Volume-wise, the consultancy predicts a growth rate of 3 percent; not enough to recoup the significant tonnage lost in 2008 and 2009. From a revenue perspective however, robust growth is anticipated thanks to higher-value metalworking fluids such as synthetics, semi-synthetics/synthetic blends and water soluble products. Geographically, Asia, Russia, and Brazil are predicted to be the growth engines of the industry in the near future.

The study notes that the metalworking fluids market is extremely fragmented, with over 50 percent served by smaller players. These smaller but well-established and trusted marketers represent potentially lucrative turn-key acquisition targets, Kline noted. For example, Houghton became the global market leader after the addition of the DA Stuart and Shell metalworking fluid businesses.

Klines study is available as the stand-alone Metalworking Fluids Global Series and as a part of Global Lubricants: Market Analysis and Opportunities. For information, visit www.klinegroup.com.

Veedol: Tide Waters Springboard

Having pocketed the historic Veedol lubricant brand last year, Indias Tide Water Oil is moving quickly to expand in markets around the world. The company is selling Veedol products in the Middle East, is arranging toll blending operations in Germany and is seeking a partner in Mexico.

Tide Water, based in Kolkata, India, bought Veedol from BP last October, saying it would use the brand as a vehicle for growth in Europe, the Middle East, Latin America, Africa and Asia. Tide Water Managing Director R.N. Ghosal recently told Lube Report that production of Veedol-branded lubes will begin in Germany early next year, via a toll blender.

Tide Water has posted an expression of interest on its website inviting contacts from potential partners in Mexico. And according to the Hindustan Times, Tide Water has set up a Veedol operation in the United Arab Emirates to serve as its Middle East hub. The company has also begun exporting Veedol products from India to Nepal and Bangladesh.

The Veedol brand is nearly a century old, and Henry Ford used Veedol engine oils for factory fill in his Model T. Tide Water has marketed under the Veedol brand since its formation in 1928.

$20 Million Expansion at Whitmore

Whitmore Manufacturing Co., a maker of industrial lubricants, has begun an $20 million expansion at its Rockwell, Texas, headquarters. The construction, to wrap up in 2013, will add 120,000 square feet of warehouse and office space and improve production and laboratory facilities, reported company President and CEO Jeff Kilpatrick. Whitmore, which is owned by the Dallas-based business development company Capital Southwest Corp., makes specialty lubricants, greases, coatings, sealants and contamination control breathers.

Plans include building a 70,000 sq.ft. warehouse that will house corporate offices, and include the production and R&D facilities for its Air Sentry division, which makes contamination control breathers. The former Air Sentry space will be converted into R&D, quality control and production lines for making mining, railroad, industrial and food-grade lubricants.

Kilpatrick said the expansion will add 20 to 40 employees to Whitmores workforce over the next three to five years. Approximately 100 people work at the Rockwell facility, which the company has occupied since 1982.

Avista Buys Dutch Facility

Avista Oil AG, one of Europes biggest producers of rerefined base oils, became majority owner of the Dutch North Refining and Trading rerefinery in Delfzij, Netherlands, after buying the 33 percent stake of co-owner Dutch Van Gansewinkel Groep on Aug. 20. The Dutch facility accepts used oils for the production of lube distillates, which can be used as a feedstock for producing API Group I base oil and for making flux oils. It can process up to 200,000 metric tons of waste oil a year, and Avista officials said they would use its output to boost base oil production in the next few years.

Germany-based Avista has two other rerefineries in Europe: Mineralol-Raffinerie Dollbergen GmbH in Dollbergen, Germany, and Dansk Olie Genbrug A/S in Kahlundborg, Denmark. It also owns a 50 percent stake in Universal Environmental Services LLC, which is building a rerefinery in Peachtree City, Ga.

Serbian Refiner Adding Group II

Naftna Industrija Srbije (NIS) plans to upgrade its closed base oil plant in Novi Sad, Serbia. The U.S. $100 million modernization will enable the Novi Sad refinery to process 180,000 tons [3,600 daily barrels] of high-quality base oils annually, with a significant amount of that earmarked for export, NIS said Aug. 29. Construction will begin next year and be complete by 2015. Novi Sad will produce API Group II paraffinic base oils, using Chevron Lummus Global base oil production technology, and naphthenic base oils as well, a spokesman said. Feedstocks will be Velebit crude from Serbias Pannonian Basin and heavy hydrocracker residues from another refinery NIS owns in Pancevo.

NIS is a subsidiary of Russian oil giant Gazprom Neft, which bought 51 percent of the company for $545 million in 2009. The balance is held by the Serbian government. Novi Sad had a small, 1,000 b/d pale oil plant but it closed a few years ago.

Briefly Noted

Jiffy Lube franchisee Heartland Automotive Services has agreed to spend almost $47 million to settle a class-action lawsuit alleging it texted more than 2.3 million consumers in April 2011 with a commercial message without their express consent. The U.S. District Court in San Diego was expected to give preliminary approval for the settlement agreement in mid-September. The settlement calls for each mem-ber of the class – the 2.3 million who received the promotional text – to receive by mail a certificate good for $17.29 off any goods or service provided. Irving, Texas-based Heart -land Automotive operates more than 515 Jiffy Lube outlets coast-to-coast.

Japans Idemitsu Kosan is opening a lube manufacturing and sales company, Idemitsu Lube Vietnam Co. Ltd., in Haiphong City, Vietnam. Capitalized with $23.3 million, it will construct lubricant blending facilities with approximately 35 million liters of yearly capacity and focus initially on making engine oils for motorcycles and automobiles, general industrial lubricants and other related products.

Calumet Specialty Products Partners last month unveiled plans to add a 1,000 b/d gas-to-liquids plant at its site in Karns City, Pa., to start up by second-half 2014. The GTL plant will make a waxy distillate for use as a refinery feedstock, but Calumet did not say if it would further process that material into either fuels or base oils. Karns City makes white oils, petrolatums, sulfonates and solvents, fuels and other specialties.

In separate news, in August Calumet acquired Montana Refining of Great Falls, Mont., from Connacher Oil and Gas for $120 million.

Marco Peruana of Chile will distribute Bel-Rays mining and marine lubricants in Peru and Panama.

Everspring Industry in Taiwan is now D-A Lubricants exclusive distributor in Asia.

Tullytown, Pa.-based Ivanhoe Industries Inc. has picked Dowd and Guild, San Ramon, Calif., to represent and distribute its line of industrial chemicals in the western and southwestern United States, effective Aug. 20. Ivanhoes products are used in metalworking fluids, greases, antifreeze and other lubricant applications.

Faces in the News

On Sept. 1, Greg Morris took the newly created position of director of base oil sales at Heritage-Crystal Clean in Indianapolis, responsible for manag-ing sales of base oil produced at its new 2,000 b/d rerefinery. Morris joins H-CC from Pinnacle Oil, and brings over 13 years of sales and marketing experience, including eight in the lubricants industry.

David Ruff has joined the Sea-Land Chemical Company as its newest account manager. He has over 20 years of experience in distribution, including roles in management and marketing. Based in Belleville, Mich., Ruff will be responsible for business development and sales in western Michigan and select accounts in the Detroit area.

Todd Peterson on Aug. 1 became president of Scottsdale, Ariz.-based North American Lubricants. He has over 20 years experience, including as a managing partner with the national public accounting and consulting firm McGladrey & Pullen and as CEO of a highway construction company. Petersons areas of exper-tise include strategic planning and organizational development. Also, Aaron Read, who has been with the company for over seven years, was promoted to the new role of supervising all U.S. distributor sales managers.

Colonial Specialty Chemical hired Scott Cerny as regional sales manager for the Midwest, excluding Michigan. Scott brings over 15 years of distribution sales experience, including at both Chem Central and Univar, to the Tabernacle, N.J.-based distributor of specialties for the metalworking and industrial marketplace.

Lubricant manufacturer and distributor Hydrotex has added Matt Smith as a logistics and distribution manager in its Tulsa manufacturing plant. Smith, who previously managed nationwide logistics in the U.S. oil and gas industry, holds a bachelors degree in Business Administration from Northeastern State Univ.

Frank Rutten last month joined Gulf Oil International UK as vice president, international. Most recently executive lubricants director for Lukoil, Rutten has been in the oil industry for more than 26 years, including with major European brands and in base oil sales and marketing.

Specialty chemical distributor Lintech International has two additions to its technical sales team. Heather Terwillegar brings 10 years of technical sales experience, plus R&D experience, and will handle markets in North Carolina and Virginia. Charles Livingston joins Lintech with eight years of experi-ence in chemical distribution territory management, and will focus on the South Carolina area.

Correction

Septembers article on viscosity index improvers (The Never Ending Puzzle of Flow, page 30) included some inaccuracies regarding the background of polymethacrylates. Rohm and Haas supplied Acryloid brand V.I. Improvers in North America, while Viscoplex was the brand name of products supplied by Rohm GmbH in Europe. When these two companies formed a joint venture in 1996 called RohMax, the Viscoplex brand name (not Dynavis) was chosen for the V.I. improver and pour point depressant lines. Rohm and Haas then sold its share of the j.v. to Rohm GmbH, which retained the RohMax name and brand identity. Through a series of other mergers and acquisitions, RohMax became a business line within Evonik Industries and is now called Evonik Oil Additives. Dynavis brand V.I. improvers, points out company spokesman Dick Williams, are a newer technology developed by Evonik and represent a step forward in performance over earlier polymers, especially in industrial applications.

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