NO PLAN = NO FUTURE

2012-06-08   来源：润滑油情报网 网友评论 0 条

By 2020, API Group I base oil capacity will decline to just 40 percent of total capacity, down from 60 percent today, and Group I plants need to plan wisely to survive, a lube and wax technology expert cautions.

Will solvent-refined Group I survive? Absolutely, Amy Claxton, principal of My Energy, told the ICIS Pan-American Base Oils & Lubricants Conference in Jersey City, N.J., last month. Heavy neutrals, bright stock and wax are very profitable and likely to continue so.

But new Group II and III capacity and Group I shutdowns make it likely that Group I will account for just 40 percent of total capacity by the end of the coming decade, predicted the registered professional chemical engineer. And while Group I plants have a variety of options for navigating the challenges ahead, she added emphatically, they won’t succeed without a plan.

Global base oil capacity today totals about 950,000 barrels per day. About 60 percent is Group I, 25 percent is Group II, 6 percent Group III, and 9 percent naphthenic, said Claxton, of Hummelstown, Pa. But the distribution of these products varies by region.   North America has a majority of Group II with significant Group I capacity. Asia is mostly Group I but has significant Group II and almost all of the world’s Group III capacity. “And for South America, Western Europe and the rest of the world, it’s a Group I world out there,” she continued.

Reasons for these regional differences are numerous, including local quality needs, different fuel refining investments and varying parent company   strategies. But going forward, crude type is a major driver shaping global base oil supply.

“What you put into the refinery matters,” Claxton explained, “and the Americas don’t have the good waxy crudes, so our region is import-dependent for higher quality lube crudes.” To feed its refineries, the region imports crudes from the Middle East such as Arab Light and Basrah, which are 60 to 65 percent paraffinic — good but not tops for making lubes. Its indigenous crudes, like West Texas Intermediate or Isthmus, are even worse: only about 50 percent paraffin, which reduces the lube yield even further.

By contrast, Asia is cost-advantaged for high quality base oil production, with access to native crudes such as Daqing, Minas and Tapis that are at least 70 percent paraffinic and ideal for turning into lubricants. “They don’t have to pay longhaul fees for these crudes, [and] they get yield and viscosity index advantages,” Claxton pointed out.  

Regions with marginal-to-good lube crudes and that have made little investment in refining technology — such as Europe and South America — today are predominantly Group I, Claxton went on. In North America, with Middle East crude imports and investments in technology, Group II dominates. And in Asia, areas with Middle East crude imports and investments make Group II, while   those with high-paraffin Asian waxy crudes produce Group III and III+.

Since the Arab crudes imported to North America are not as waxy as Asia’s, it’s difficult for refiners to boost their base oils’ viscosity index without costly yield losses. This leaves base oil players in the Americas facing a “make versus buy” decision when it comes to high V.I. base oils, said Claxton. They need to decide whether to invest in facilities and imported crudes to make their own high V.I. products, or whether to buy imports from Asia. These are reasonable strategies, she conceded, but won’t be palatable to every company.

Turning to the options that Group I plants face, Claxton stressed that “doing nothing becomes a self-fulfilling strategy.” The worst path, she suggested, is the “head-in-sand strategy, which we see in Mexico, South America and Europe as well.” Many plant owners are doing nothing, spending zero maintenance dollars and making no investment in sustaining or improving quality. “They are harvesting the business by default,” Claxton declared, in effect cannibalizing   their plants.

Other Group I refiners, however, are exercising zero-capital-investment options, thus keeping the door open for future options. “They may not be making any capital investment, but they do  the maintenance,” she said. “They are harvesting the business on purpose,” and their tactics include:

1) Planning to exit the lubes business over a several-year period, with constant maintenance spending to keep future options open.

2) Buying high quality base oils when needed, while keeping up with maintenance, to maintain the status quo.

3) Buying high quality base oils when needed and skewing their own product slate towards the most profitable products, plus increasing maintenance and energy spending in targeted areas.

A big hurdle base oil plant owners face is their own corporate ego, which clouds the “buy versus make” decision, Claxton observed. Being self-sufficient in base stocks may be a bragging point, but is it worth it? “No one wants to buy from anyone else — but maybe you only need to target a small piece of your product portfolio. Would it be OK to buy then?

 “If management is interested, Group I plants also have some low-to-moderate capital investment options,” Claxton continued. These include making the plant into a “hybrid” by adding highpressure hydroprocessing to the Group I train, or adding it just to the existing Group I light neutrals. Such plant configurations also can continue to employ solvent dewaxing, keeping intact their valuable wax stream as well as heavy   neutrals and bright stock. “These are in high demand now, and you get to keep them, because you hydroprocess only [the light] part of the slate,” Claxton pointed out.

A shared hydrocracker for fuels and lubes is another option, if it’s justified on a fuels basis. This is the technology many Asian refiners are using, and it’s expected to spread to other regions as they upgrade their fuels refining. However, this option does require that a high-paraffin crude be available to make Group II or Group III stocks.

Above all, “maintain your plant. Otherwise there are no other options,” Claxton said. “It’s OK to wait and see, as long as you maintain the plant.” Meantime, buying high V.I. base stocks is a reasonable move for those who can see past their corporate ego.

 “Just don’t put your head in the sand — have a plan,” she urged. “Don’t stay in corporate paralysis mode, or for sure you’ll be shutting down.”

Looking ahead, Claxton noted that about 92,000 b/d of new Group II and III capacity is currently under construction and scheduled to stream by 2014 or 2015. An additional 200,000-plus b/d has been announced, although some of these projects are unlikely to be built. “This new capacity puts pressure on the highest-cost producers, that is, the least well maintained plants.” An oversupplied market   means prices will fall, plants will run at reduced rates and the high-cost producers will shut down.

While the coming decade will bring some new naphthenic plants, there will be no new Group I capacity, said Claxton. And global base oil demand will grow very slowly, perhaps around 1 percent per year, with growth in developing countries offset by contraction in mature economies.

The result, by 2020, is likely to be total global base oil capacity around 1,050,000 b/d, only a little larger than today. But Group I will account for just 40 percent of that total. Expect Group II to rise to 30 percent and Group III to expand robustly to 20 percent, Claxton said; some of this will be new-built capacity, but at least some of it will be retrofits of existing Group I plants. Naphthenics, meanwhile, will have a healthy niche with 10 percent.

  “If you’re a Group I player, you won’t be alone next year,” Claxton concluded. “Group I won’t go extinct in my lifetime.” However, she warned, “poorly maintained plants should be very nervous, and well-maintained facilities less so.” In geographic terms, “Western and Eastern Europe has the biggest overhang of Group I capacity, and will be hurt most when all this new capacity comes on stream.”