A Time of Transition
The past 18 months have not been particularly wonderful for the active industries involved in keeping global economies ticking. The base oil industry has been affected in many ways throughout the pandemic, sometimes hastening changes in operations and working practices from production of base oils to the blending and distribution of finished lubricants.
Apart from the obvious holdups affecting supply chains, there have been many innovative practices that have evolved through necessity or forward thinking that have been adopted to protect personnel and the environment.
During the pandemic, the evolution of the base oil industry was sped up in many areas, with new production coming on stream, perhaps at the wrong time. But is there a wrong and right time for new facilities to emerge and for older, less efficient production units to close their doors? There are doubts that there is ideal timing for such events, but the industry has to grasp opportunities whenever and wherever it can.
In Europe, many new lubricant formulations for severe applications are shifting away from the workhorse grades in the Group l slate to Group II, Group III and polyalphaolefin. These applications include aircraft engines, space exploration equipment and wind turbines, in which extreme temperatures and longer lubricant life are requisite. PAO is in limited supply, and because of the expensive and lengthy process of producing these stocks from raw ethylene, the costs for the finished material can be prohibitive. Thus, these base stocks are only used when absolutely necessary.
Gas-to-liquid technology has been considered and is being discussed again at various locations around Europe. But the reckoning is that with this process being expensive in terms of capital investment, costs and the provision of suitable feedstocks, there may not be an expansion for this type of production. Instead, there may be further development for Group III+ base oils produced from conventional feedstocks at existing or new facilities.
With specifications constantly tightening to meet environmental standards, the move away from Group l base oils is in motion. With automotive requirements now demanding 0W-10 motor oils and the majority of industrial oils having a range between ISO 32 and ISO 100, Group II base stocks can meet these requirements without blending with another base oil. Group III can meet viscosities up to ISO 46.
The new specifications for lower-SAPS oils have contributed to a move away from Group l base oils being used to achieve higher viscosities; the restrictions on sulfur limits make Group l impractical, and Group III blends cannot reach the viscosity levels required for engine protection. Group II can be used in this context. With Group II displaying many features of Group III—low sulfur and aromatics—it is becoming the new “workhorse” base oil. According to industry sources, it will take over from Group I by 2025.
Group II base stocks can be used in around 95% of all formulations covering automotive and industrial lubricants, a feature that will ensure that this range of base oils will continue to support new product development.
Group I production in Europe will continue to run down with plant closures. There are moves being made to retain bright stock production, since it holds its own niche position in the base oil spectrum. That said, reports of the possibility for new Group II facilities at a refinery in Gdansk will also include the production of a Group II grade that can be interchangeable with bright stock. This may be a higher-viscosity base oil but with all the qualities of Group ll.
Bright stock may be difficult to separate from other Group l grades, although many refiners have said they will start by removing the lighter Group l grades, maintaining heavier viscosity base oils to serve export markets where finished lubricant specifications are not as sophisticated as the European market. SN 500 and SN 600 grades, along with bright stock, may be the last to desert the European Group l slate.
Environmental legislation has accelerated the adoption of Group II in both automotive and industrial lubricants. The latter, due to lower additive compositions, places the technical emphasis on the optimum type of base oil to meet stricter parameters for finished products.
Availability is important for the development of Group II and Group III markets in Europe. With this in mind—in addition to the recent expansion news in Poland, Spain and the Netherlands—other Group II and Group III facilities are being announced on a regular basis in regions like Russia. Forecasts for the longer term are that all countries will move their national oil companies from Group l production to Group II or a combination of Group II and Group III. This vision is still some way off but ultimately may become reality.
Those lubricant manufacturers making the decision to move to Group II and Group III will be able to better their supply chain economics while meeting the ever-increasing challenges of complex lower-viscosity lubricants and achieving the formulation balance required for the new generation of lubricants.
Base oil markets will continue to change. Through development of further Group III production, a new vista will open up in which emission targets will be more rigidly enforced. Whether the introduction of electric vehicle technologies will alter the base oil slate remains to be seen. With the move from internal combustion, a new generation of finished lubricants will be required, setting the scene for Group II and Group III base oils to be at the center of all developments.
Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Send him comments or topic suggestions at email@example.com