Conventional & Unconventional Gas Trends in Latin America - Impacts on Lubricants. Marcos Davi July 01st, 2015

Transcription

1 Conventional & Unconventional Gas Trends in Latin America - Impacts on Lubricants Marcos Davi July 01st, 2015

2 Presentation Contents Brief Oronite Introduction What s Natural Gas Gas Market Trends in Latin America Natural gas resources, policy initiatives for unconventional & non-natural gas utilization Brazil & Argentina Overview Emission & Dual Fuel Trends OEM Trends Impacts on Lubricants

3 Oronite Almost 100 Years Old The Oronite brand name has been synonymous with specialty petroleum-based products since 1917 when it was part of Standard Oil Company of California (SOCAL). Oronite evolved into a truly global business after the successive formation of non-u.s. Joint ventures (JV), JV buy-outs, building the Singapore manufacturing plant and strong organic growth. New technology is the lifeblood of the business. 3

4 Oronite A Heritage of Innovation 1998 Introduction of Polyether carrier fluids 1917 Global fuel and lubricant additives company was established 1935 First diesel fuel additive 1938 First compound oil for diesel locomotives 1954 Revolutionary gasoline additive to keep carburetors deposit free; first thermally stable phenate additives for marine engine lubricants 1960 Dispersant for natural gas engine oil 1998 Oronite acquired the PARATONE viscosity index improver business 1999 Built Asia s first world-scale lubricant additive plant in Singapore 2000 Oronite became wholly owned subsidiary of Chevron Corporation s Introduction of Zerolene F, an anti-chatter additive used to lubricate fabric transmission bands in the historic Model T Ford 1941 First detergent oil for passenger cars 1980 Fuel additive specifically for unleaded gasoline cars 1984 First engine oil formulation for Group II base oils 1989 Additive for multi-grade diesel locomotive engine oil 2004 First fully qualified ILSAC GF4 product 2005 Patented additive technology for new generation of low emission diesel engine oils Polybutene-based dispersant for CJ Patented Marine Trunk Piston Engine Oil Carboxylate Technology First railroad oil additive formulated for low sulfur fuels 2014 Chevron Oronite Company LLC. All rights reserved 4

5 What is Natural Gas? Typically a major portion of methane with lesser quantities of longer chain hydrocarbons such as - ethane, propane, butane, etc Wellhead, Landfill, Digester, Pipeline, Shale Gas, mine gas or coal seam gas, etc Some inert constituents of natural gas are carbon dioxide, nitrogen, hydrogen sulfide, etc Shorter chain hydrocarbons generate higher energy per weight % fuel Pipeline quality natural gas typically contains 90 % + of methane Digester and Landfill gas with much lower Methane content (50%)

6 Presentation Contents Brief Oronite Introduction What s Natural Gas Gas Market Trends in Latin America Natural gas resources, policy initiatives for unconventional & non-natural gas utilization Brazil & Argentina Overview Emission & Dual Fuel Trends OEM Trends Impacts on Lubricants

7 Remaining Natural Gas Resources Growth will be sustained by Unconventional 2013 Chevron Oronite Companies. All rights reserved. 7

8 Global Shale Gas Resources U.S. Energy Information Administration Technically Recoverable Shale Oil and Shale Gas Resources, 2013

9 Policies & Regulatory Initiatives Non-Conventional Fuel Sources Gas Plus Program implemented for promoting exploration of nonconventional sources More than 50 projects approved Investment of approximately US$ 4.2 billion Increased nonconventional gas utilization National Policy for Solid Residues converting dumps to landfill sites Developers to Expand in Peru After 2015 Renewable Power Auctions (Biomass included)

10 Presentation Contents Brief Oronite Introduction What s Natural Gas Gas Market Trends in Latin America Natural gas resources, policy initiatives for unconventional & non-natural gas utilization Brazil & Argentina Overview Emission & Dual Fuel Trends OEM Trends Impacts on Lubricants

11 Argentina Overview (1/2) Energy economy largely dependent on hydrocarbons (~88%) Drive to restore self sufficiency in hydrocarbons Became net gas importer in ~2008 Became net oil importer in ~2012 Recent legislative changes to accelerate shale oil and gas development Investment from o CNOOC, Sinopec, Gazprom o Chevron, Shell, Others Shale reserve estimates o Oil, 27 Billion Barrels o Gas, 802 TCF

12 Argentina Overview (2/2) Shale overview Initial development is in the Vaca Muerta shale (Neuquen Basin) focusing on oil rich areas o Loma Campana, and Loma La Lata areas are already producing ~30,000 bbl/day of oil and 4 million cuft/day of gas Initial vertical wells have been logged to provide geologic maps for placing horizontal wells Well drilling and completion costs are initially high, but expected to drop to NA norms when geological mapping is defined, and pad drilling techniques are used

13 Brazil Overview (1/2) Brazil is the 8th largest total energy consumer and 10th largest producer in the world ANP estimates Brazil has 15.6 billion barrels of proved oil reserves (2013) The largest importers of Brazilian crude in 2013 were; China, 115,000 bbl/d US, 110,000 bbl/d (however the US exported 179,000 bbl/d of petroleum products to Brazil in 2013) India, 49,000 bbl/d

14 Brazil Overview (2/2) Even though the ANP estimates that, at the end of 2013, Brazil had an estimated 16 TCF of proved natural gas reserves, second in South America after Venezuela, consumption still exceeds production.

15 WORLD LNG ESTIMATED SEP 2014 LANDED PRICES Gas Price : A challenge for LA industry growth! Argentina s & Global Shale Gas Reserves Brazil s Pre- Salt & Onshore reserves Incentives on Biomass, Landfill & Renewable Souces Investments on stationary power plants & increase of gas usage in mobile & transport applications Source: Waterborne Energy, Inc. Data in $US/MMBtu

16 Presentation Contents Brief Oronite Introduction What s Natural Gas Gas Market Trends in Latin America Natural gas resources, policy initiatives for unconventional & non-natural gas utilization Brazil & Argentina Overview Emission & Dual Fuel Trends OEM Trends Impacts on Lubricants

17 Emissions Pollutants Gas Engines Burn cleaner than diesel with no particulate emissions NO x nitrogen oxides, a criteria pollutant Primarily a mixture of NO and NO 2 in exhaust Toxic, precursor to ground level ozone, and photochemical smog CO carbon monoxide Toxic Precursor to photochemical smog Hydrocarbons (VOC) Methane, other hydrocarbons, and HAPs (hazardous air pollutants) Precursor to photochemical smog 2014 Chevron Oronite Company LLC. All rights reserved.

18 Possible Future Trends-Dual Fuel A seismic shift is underway in the diesel engine market place which will have profound effects on the lubricant and additives businesses Three major segments impacted - Change is driven by large price differential between diesel fuels and natural gas on an equal energy content basis, but fueling infrastructure limited 1. Marine Deep Draft (freighter, tanker) Trunk Piston (workboats, ferries)- very active area in Europe and NA 2. Automotive (on-road) Heavy Duty (truck and bus)- primarily SI so far 3. Off Road Railroad- FRA holding up the show in NA Inland marine- strong interest, testing Oil and Gas Industry- rapidly moving into drilling and fracturing fleets Mining Industry- gaining traction

19 Dual Fuel - Lubricant Concerns Some Examples Soot Effects Lower dispersant requirement Excess dispersant from diesel engine oils may Increase water retention, emulsion formation and nitration of excess aminic material Lower soot wear may also result in different anti-wear appetite and shift in UOA metals TAN Could be better (low sulfur) Could be worse (oxidation/nitration) TBN High probability of lower TBN requirements High ash may result in combustion chamber deposits (Knocking, Valve issues)

20 Engine Market Trend Industry Consolidation GE acquires Dresser Inc. (Waukesha Engine) Previously acquired Jenbacher Caterpillar acquires MWM Previously acquired MaK Perkins Dresser-Rand acquired Guascor Dresser-Rand is now to be acquired by Siemens Previous acquisitions are still being digested No major changes in approval processes yet But are sure to come

21 Presentation Contents Brief Oronite Introduction What s Natural Gas Gas Market Trends in Latin America Natural gas resources, policy initiatives for unconventional & non-natural gas utilization Brazil & Argentina Overview Emission & Dual Fuel Trends Gas Engine Trends Impacts on Lubricants

22 Diesel Vs. Gas Engines On the Lubricants & Additive Perspective! Diesel Engine Oil Additive Soot Dispersancy Piston Deposits Valve Train Wear Higher Zinc Corrosion Control (Fuel S) Higher Ash ( % ash) Higher Phosphorus (>800 ppm) API performance designation Gas Engine Oil Additive Oxidation/Nitration Control Valve Seat/Guide Wear Performance Low Combustion Chamber Deposits Minimize Spark Plug Fouling Minimize Piston Deposits Catalyst Compatible Low ash (~0.5% ash) Low Phos & Zinc (<300ppm) Performance measured by field performance

23 Landfill Gas Application Increasing Severity on Lubricants LFG : A by-product of the decomposition of organic solid waste o ~50% Methane; ~50% CO2; <1% organic compounds o Normally saturated with water and contains contaminants such as HCl, HF, H 2 S, Siloxanes OEM Recommendation to Minimize Harmful Effects o Engine configuration Corrosion resistant metallurgy / Higher engine operating temperatures o Maintenance practices Shortened oil drain intervals Routine gas analysis / Regular and careful spark plug maintenance High BN lubricants specifically formulated for Landfill Gas applications

24 OEM Trends for Conventional NG Increasing Severity on Lubricants Relative ease of meeting strictest emissions levels with three way catalyst may lead to more large stoichiometric engines (new Waukesha P9394GSI) High nitration May require EGR Maximize engine volumetric efficiency Lowest possible emissions Comparatively high cost of SCR may push adoption of the above trend High BMEP Engines Increased knock sensitivity Combustion chamber deposits Oil mist/vapor can cause pre-ignition Steel pistons with high set rings needed for high pressures and temperatures Higher temperature and pressure in ring belt Groove and land deposits Oxidation and nitration High under crown temperature Under crown varnish/deposit

25 Thank You! A Global company with nearly Market leadership 100 years of experience in several major product segments Strategically positioned and aligned for Future Growth Technology and Innovation are the lifeblood of our business 25