the right tool for the job… base stock optimization to...
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The Right Tool for the Job…Base stock optimization to help minimize cost and complexity
X B CoxFebruary 21, 2012
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Use the right tool for the job…
• Different tools for different purposes
• Using the right tool makes a job more efficient, safer and gives a higher quality result
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Or… the right vehicle…
• Different vehicles for different purposes
• Each one has different lubricant requirements
• Lubricants require different base stock characteristics
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Base stock choices…
• Period of unprecedented change• New capacity
• Rationalization
• New players
• Changing supply routes
• Increasing lubricant performance requirements
• Stay the course, or change base stock supply strategies?• When?
• How much?
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Lubes Value Chain
• Base oils ~50% - 75% of direct cost• Also impacts:
• Inbound freight• Additive technology• Storage and handling
• Smart base stock choice improves your bottom line
• Minimizes complexity
• Reduces costs
• Maximizes return on investments• Tankage and logistics• Formulation cost
* ExxonMobil assessment of typical cost distribution for example products blended in a medium sized European blend plant with waterborne access
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How to select your base stocks• Identify limiting technical requirements
• Sufficient viscosity range for all lubricants• Formulations/addpacks available• High VI corrector fluid for top tier engine oils
• Maximize cost effectiveness• Minimize number of stocks, tankage• Leverage existing product formulations• Base stock slates for BOI / VGRA
• Assess supplier capability• Local / regional supply• Compatible logistics• Reliability• Consistent quality• Supplier committed to base stocks• Consider global / pan-regional suppliers
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Engine Oils Frame the Dialog
• Automotive ~ half total lubricant volume
• Harmonized engine oil specifications• API/ILSAC
• ATIEL
• OEM’s
• Rapid pace of change• Categories
• Viscosity Grades
• Increasing performance requirements• Demanding higher VI base stocks
• Often set limiting base stock qualities
*Source: ExxonMobil assessment of publicly available information
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Other Lubricants Equally Important
• Almost half of the market
• Specifications not harmonized
• OEM specific requirements
• Updates seldom regulatory driven
• Diverse performance requirements
• Wide viscosity range
• Solvency can be important
• Many applications cost-sensitive
• Synthetic market small but growing
• Value conventional base stocks in many applications
*Source: ExxonMobil assessment of publicly available information
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Group I / II Widest ApplicationExxonMobil:
• Majority of lubricant applications can be blended with Group I or Group II
• Role of Group III limited to high VI, light viscosity applications
Source: Brent Lok, ICIS Middle East Conference, Dubai, October 2012, used with permission of the author.
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• Marine and some Industrial
formulations prefer Group I
• Premium PVL / CVL moving to Group
II / II+ /III
• Very limited use of Group III+ or PAO
• Majority of applications can use either
Group I or Group II
• Pace of change is expected to be
consistent but slow
Lubricants to Base stock Demand
*Source: ExxonMobil assessment of publicly available information
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VI and Viscosity are important
ExxonMobil
• Group II/II+/III cover most engine oil viscosity grades
• 0W30 and lighter need Group III and III+/PAO
• Corrector stocks may be needed for performance
• Heavier lubricants require brightstockor PIB
Source: Brent Lok, ICIS Middle East Conference, Dubai, October 2012, used with permission of the author.
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Illustration: Base Stocks Slate
• Approved Base Oil Interchange (BOI) within the slate allows different base stock viscosity grades to blend the base oil for a given formulation
EHCTM 45
EHCTM 50
EHCTM 65
EHCTM 110
Engine Oil Product
10W-30
10W-30
10W-30
Same Product, Different Base Stock Mix, No Extra Engine testing
Slate
Source: Charles Baker, ExxonMobil Research & Engineering, 5th Asia-Pacific Base Oil Conference, March 2011
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Illustration: Base Stocks Slate
• Approved Viscosity Grade Read Across (VGRA) within the slate allows blending a range of viscosity grades
+ additives =
10W-30
5W-30
20W-50
Engine Testing Typically Reads in One Direction
Different Products, Different Base Stock Mix, No Extra Engine testing
Slate
15W-40
Engine Oil Product
Source: Charles Baker, ExxonMobil Research & Engineering, 5th Asia-Pacific Base Oil Conference, March 2011
EHCTM 45
EHCTM 50
EHCTM 65
EHCTM 110
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Base stock Viscosity Range*
*ExxonMobil assessment of publically available data; Estimated typical industry average refinery yield by viscosity.
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Group II / II+ Value into Engine Oils
• Key: Use base stocks designed to cover the limiting requirements
• Broad viscosity coverage
• Group II / II+ slate allows read-across
• Limits the amount of more expensive Group III required
PVL CVL
Example - EHC 45/65 Blend Coverage* 2015
0W 5W-Dx
5W 10W
20W
. 5W 10W
15W
Mono
Rel
ativ
e V
olu
me
Gp III
EHC 110
EHC 65
EHC 45
PVL CVL
Example - EHC 45/65 Blend Coverage* 2015
0W 5W-Dx
5W 10W
20W
. 5W 10W
15W
Mono
Rel
ativ
e V
olu
me
Gp III
EHC 110
EHC 65
EHC 45
N Am Engine Oil Blend CoverageGrp II/II+/III
*Source: ExxonMobil assessment of publicly available information
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Industrial Oil Blend Coverage
• Group I slate covers full range of industrial oil viscosities
• Wide-vis Group II slate can cover up to ~80% of industrial oil
• Group I Brightstock also required
• Base stock choice depends on:• Base stocks used in other products
• Blend plant tankage
• Size of indoil business
• Existing indoil product approvals
• Specific performance requirements
*Source: ExxonMobil assessment of publicly available information. Relative volumes are for North America
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Solutions Tailored to Your Business
• Each market is different
• Product demand mix
• Product performance categories
• Viscosity grade mix
• Base stock availability
• Logistics and distribution modes
• Base stock solutions unique to your situation
• Industry trends don’t always align with individual company needs
*Source: ExxonMobil assessment of publicly available information
*
*
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• Group I: Base load to economic maximum; Work with supplier
to evaluate long-term supply security
• Group II: Work with supplier on when/how to increase Grp II
use, to ensure reliable supply, minimize conversion costs
• Group III: Limited volumes can be used as volatility / ccs trim
stock and for low viscosity engine oils
• Group IV (PAO): Secure long-term supply as needed
Base Stock Strategic Approach
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Conclusions
• Period of unprecedented change in the base stocks business
• Base stocks are important part of lubricant value chain
• Base stock selection should be a long-term, conscious decision• Decision involves more than cost or “newest” products
• One size does not fit all
• Involve your base stock supplier in strategic discussions
• Use the right tool for the job….• Group I has a long and useful life, and suitable for most applications
• Group II growing in availability and use
• Group III oversupply with limited applications
• PAO continues an important niche product for synthetic performance
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Group II growing in availability and use…
• EM changes mirror industry trends
• Growing Group II
• Reducing Group I
• EM: building on our strengths
• Growing economic capacity
• Improving operations
• Leveraging new technology
• Optimizing the network
• Balancing viscosity mix
• Broadening raw material selection
• Aligning slates for the future
*Source: ExxonMobil assessment of publicly available information