Prestanda och karaktäristik för Grupp I- basoljor. Henrik Marits, Nynas AB, Naphthenics Underhållsdagen 24 november 2015

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1 Prestanda och karaktäristik för Grupp I- basoljor Henrik Marits, Nynas AB, Naphthenics Underhållsdagen 24 november 2015

2 Outline A brief overview of base oils API Groups I to V and their applications A closer look at Group I base oil availability and base oil markets drives Some suggestions on how to secure supply of base oils with Group I properties, now and in the future

3 API classification of base oils Group I VI = Sats<90% and/or S>0.03% Wide chemical spectrum Group II Paraffinic Oils VI = Sats>90% and S<0.03% Group III VI > 120 Sats>90% and S<0.03% Narrower chemical spectrum Group IV PAO Specific molecule type Group V All other oils

4 Group I base oils Main base oil for 100+ years Very suitable for Industrial Lubricants Hydraulic fluids Industrial gear oils Some metalworking applications Straight grade heavy engine oils Marine engine oils (high viscosity) Greases Process oils Remember: Thus, if it s big, moves slowly under heavy load, that oil had better be thick

5 Group I Key properties SN 100 SN 150 SN 600 Bright Stock Viscosity at 40 C, cst VI Pour Point, C Saturates, % Noack Volatility, wt % NA

6 Group II base oils Group II is the new Orange Production has exploded in the last 20 years New main automotive engine base oil Very dominant in North America for cars (PCMO) and trucks (HDDO) Growing importance in Europe for trucks (HDDO)

7 Group II Key properties 100 SUS 220 SUS 600 SUS Viscosity at 40 C, cst VI Pour Point, C Saturates, % >98 >98 >98 Noack Volatility, wt %

8 Group III base oils Used for Synthetic engine oils, gear, transmission and hydraulic for almost 20 years Made from slack wax, or from GTL wax, via hydro isomerization Unlike cracking processes, that changes the properties of the fluid without losing viscosity (cracking makes small molecules out of large ones)

9 Group III Key properties 100 SUS 250 SUS Viscosity at 40 C, cst VI Pour Point, C Saturates, % >98 >98 Noack Volatility, wt %

10 Group IV base oils- PAO The poly-α-olefin is a true synthetic fluid Made from the oligomerization of 1-Decene High VI Low volatility Good low temp properties High cost

11 Nynas was founded in 1928 Nynas is the largest specialty oil producer in Europe Offices in more than 30 countries around the globe Net Sales: 3 Billion USD Average number of employees: 1000 Refineries in Nynäshamn (SE), Gothenburg (SE), Harburg (DE), Eastham JV (UK), Antwerp JV (BE), Isla JV (Curacao) Base Oils

12 Nynas: The Different Oil Company Typical oil company 12% Fuel 18% Specialty oils 96% Fuel 70% Bitumen 4% Bitumen, Specialty oils and Lubes

13 Global Oil Consumption Other Lubricants, 97% (39 Mio tons / y) Tyre oils, 3% (1.3 Mio tons / y) Only 0.03% of total global oil demand Lubricants, 1% including motor oils, base oils, process oils, tyre oils 3.9 Billion tons / y

14 IEO-Ind. Engine Oils GIO- General Ind. Oil HF- Hydraulic fluids PO- Process Oils Source: Kline 2015

15 What is happening in the base oil market? The base oil market is rapidly changing! The needs of the automotive industry, driven by fuel economy legislation, is driving the major shift away from traditional Group I base oils towards Gr. II and Gr III The needs of the industrial lubricant market is inconsequential to this development Collateral damage is caused to industrial lubricants blenders (and users), if they cannot resolve their supply issue Currently, 70% of Group I go into industrial lubricants 30% into automotive engine oils and transmission fluids Global Usage of Group I Oils 2013 (total market approx. 17 million tons) Source: Kline Consulting

16 World Naphthenic market share: A significant part of the global oil market The Global lubricant demand is 40 M Ton/y Ca. 1% of the total petroleum market Automotive Lubricants 56% Industrial Lubricants 44 % Global naphthenic potential: About 10% of total base oil demand (3.6 M Ton) (Source Fuchs Petrolub AG presentation at 18th ICIS- LOR World Base Oils conference Feb 2014 in London) Naphthenic Usage, %

17 Main applications of naphthenic oils (I) Lubricant Industry (30%) Lubricating greases Metal Working Fluids (MWF) As a component in other industrial lubricants (hydraulic fluids, gear oils, etc.) Electrical Industry (ELI) (30%) Insulating oils for industrial transformers Finished products for direct end use

18 Main applications of naphthenic oils (II) Process oils (40%) Adhesives and sealants Printing inks Battery separators Insoluble sulfur (as oil dispersion) Antifoams Tyre Industry Used as extender oil in tyre rubber Oil extended polymers

19 Evolution of the global base oil pool f cast 1% 11% 28% 9% 51% Group I Group II Group III PAO Naphthenic 1% 10% 11% 34% 44% Group I Group II Group III PAO Naphthenic 1% 12% 13% 48% 26% Group I Group II Group III PAO Naphthenic The global base oil demand scenario is here assumed to remain around 36 M mt/pa for the period Source. SBA Consulting

20 What is driving the change? Several supply related factors external to the lubricant industry have a negative impact on Group I plants: Mandatory clean low sulphur fuel investments Clean base oil (low Sulfur, low polyaromatics) Crude oil cost and availability Refining economics Of scale and of method/technology Technological paradox Gr I more expensive to make Thus, the Group II and III market is growing at the expenses of Group I oils, which are required for industrial use 70% of all Group I is currently utilized for Industrial lubricants 30% remains in use in Automotive lubricants

21 The market will have to find a way to deal with an unbalanced supply-demand situation As base oils represent less than 1% of the output of a fuel refinery, the fate of base oil plants will mostly depend on operations and viability of the fuel mothership With a growing market and a good fit with fuel strategies and crude flexibility, Group II and III plants are generally in a better position With a shrinking market and production cost disadvantages compared to Group II and III, Group I plants have a more challenging future

22 Base oil Market in Europe No closures of Group I refineries took place in 2014 Europe has 15% of the overall global base oil capacity Europe has 25 % of the overall global Group I capacity Group I closures announcements Europe for 2015: Company Location Capacity (tpa) Shell Pernis, Netherlands Total Gonfreville, France Colas Dunkerque, France Nynas Hamburg, Germany

23 The majority of Group I producers have an inhouse lubricant business to care for. Non -lubricant producers, 11% Lubricant producers, 89% 89% of the global base oil production thus originates from producers that have an in-house lubricant business

24 The collateral damage of the paraffinic quality shift Group II and III paraffinic oils are excellent base stocks for the formulation of modern engine oils However, Group II and III paraffinic oils display lower solvency compared to Group I paraffinic oils Moreover, there is a limitation in the maximum viscosity that can be reached in Group II and III plants Therefore, the shift from Group I to Group II and III paraffinic oils will pose challenges to industrial lubricant formulators, as it will lead to a loss of solvency and viscosity range availability

25 The widening Solvency Gap Solvency is an important property in most industrial lubricant applications In general, the base oil solvency affects the oil s capability of dissolving additives, oxidation products and prevent varnish and deposit formation In lubricating greases, the base oil solvency affects the soap yield and the oil-soap interaction In Metalworking fluid emulsions, the base oil solvency affects the emulsion stability

26 The growing high viscosity deficiency API group Light neutral Medium neutral Heavy neutral Brightstock Group I 38% 13% 33% 16% Group II 55% 25% 20% none Group III 80% 20% none none The ongoing shift in capacity will generate availability issues for heavy Solvent Neutrals and for Brightstock This is already evident from the price development of Brightstock and SN 500/600 and Group II 500 SUS in markets across the regions

27 How is the market going to move away from Group I? Conversion to Group II or Group III? Conversion to Naphthenics? Conversion to Group II/III Naphthenic blends?

28 Which are the most important base oil properties? Viscosity (KV) Viscosity Index (VI) Solvency Aniline Point (related to aromatic content) C A Carbon Type (ASTM D 2140) C A Carbon Type by FTIR And, of course, availability it must be available in the market

29 Solvent power / Solubility Solvent power = The ability to solvate other molecules Solubility = The ability of being dissolved by other molecules From the user s perspective, it affects: Compatibility with polymers & resins Pigment & filler wetting Additive loading Emulsion stability Solution of impurities Solution of oxidation products Solute molecule Solvent molecule

30 The oil solvent power in the Technical Data Sheet Properties & Measurements: Aniline point Aromatic content (C A ) Naphthenic content (C N ) Viscosity

31 Aniline point The lowest temperature at which equal volumes of aniline and oil are miscible Stirrer Thermomete r U-tube

32 Aniline point 90ºC 80ºC 68ºC 70ºC 60ºC 50ºC 40ºC 30ºC 20ºC 10ºC 0ºC

33 Aniline point 140ºC Aniline is a polar solvent The lower the point temperature: Paraffinic oils 130ºC 120ºC The more polar the oil 110ºC The higher the solvent power 100ºC Substantial overlap between Group I and Naphthenics Naphthenic oils 90ºC 80ºC Increasing solvent power 70ºC 60ºC 50ºC Aromatic oils 40ºC 30ºC 20ºC

34 C A (ASTM D 2140 method) X Increasing solvent power X C A = 12 %

35 Aromatic content (C A )

36 Solubility comparison

37 Solubility comparison

38 Solubility comparison

39 Solubility comparison

40 Effect of C N and viscosity on solvent power A higher naphthenic content (C N ) contributes to a higher solvent power The lower the viscosity, the higher the solvent power

41 Nynas Oils and Group I Replacement the new speciality base oil range

42 A new specialty base oil product range Can be widely applied in industrial lubricant formulations Main advantages of the New Range (NR) Most similar (and available) product to Group I oils High degree of flexibility in blending Optional tailor-made blends readily available Superior low temperature performance Main challenges vs Group I base oils Slightly higher volatility Lower flash point Slightly lower VI Lower Sulphur content

43 Basic requirements of the New Range The New Range range should: Closely match the Kinematic Viscosity 40 C) and Aniline Point of a representative reference base oil range of Solvent Neutral (SN) Group I paraffinic base oils Allow industrial lubricant manufacturers to maintain key properties of their products Allow direct replacement, with as little re-formulation and re-working of labels, PDS and other marketing material as possible (drop-in replacement) Or allow for as easy reformulation work as possible

44 Viscosity Range Limitations Overcome API Group Group III Gr. III Group II Heavy Naphthenics Group II Group I New fluid range Group I Bright Stock Viscosity at 40 C (SUS) Viscosity at 40 C (cst)

45 The New Range vs. SN reference base oils

46 The New Range (NR) vs. SN reference base oils NR 70 SN 70 NR 100 SN 100 NR 150 SN 150 NR 300 SN 300 NR 500 SN 500 NR 600 SN 600 Density (kg/m3) 0,873 0,849 0,867 0,859 0,871 0,868 0,886 0,876 0,889 0,879 0,876 0,880 FP COC ( C) PP ( C) C (cst) C (cst) 3,1 2,9 4,2 3,7 5,0 5,2 7,3 7,8 10,2 10,7 12,6 12,2 VI Aniline Pt. ( C ) Sulfur (m-%) 0,02 0,2 0,01 0,2 0,04 0,2 0,02 0,2 0,03 0,3 0,02 0,3 CA CN CP Refractive index 1,477 1,468 1,475 1,472 1,479 1,477 1,485 1,481 1,487 1,483 1,481 1,483

47 The New Range ISO VG vs. SN reference base oils NR ISO VG 32 SN 150 NR ISO VG 46 SN 300 NR ISO VG 68 SN 500 NR ISO VG 100 SN 600 Density (kg/m3) 0,866 0,868 0,872 0,876 0,874 0,879 0,875 0,880 FP COC ( C) PP ( C) C (cst) C (cst) 5,3 5,2 6,7 7,8 8,75 10,7 11,1 12,2 VI Aniline Pt. ( C ) Sulfur (m-%) 0,02 0,2 0,02 0,2 0,02 0,3 0,02 0,3 CA CN CP Refractive index 1,476 1,477 1,478 1,481 1,479 1,483 1,480 1,483

48 Technical evaluation of the Group I replacement base oils

49 Some important base oil properties investigated Two of the important properties of the new base oils are Low temperature behaviour Investigated as Pour Point measurements Compatibility of seals and O-ring material Examined in an elastomer material compatibility study

50 Some preliminary conclusions The low temperature behaviour of the new base oils was very favourable Low Pour Points were reached at -50% lower treat rate of Pour Point depressant (PPD) additive Seal materials generally changed very little when tested in the new base oils, and compared to Group I base oil and hydraulic fluids Small changes of rubber hardness and swelling

51 Hydraulic Fluids based on the new base oils

52 Formulation of Model Hydraulic Fluids I Hydraulic fluids are mainly composed of Base oils (ca 98.5%) An additive package (anti-oxidant, anti-wear, rust & corrosion inhibition, anti-foam) ca 1.0 % Viscosity Index Improvers (VII) (in HV only) and Pour Point Depressants (PPD) ca 0.5% Viscosities (KV@ 40 C) range from 15 cst to 100 cst The largest market volumes are in ISO VG 46 and ISO VG 32

53 Formulation of Model Hydraulic Fluids II We have made a series of hydraulic fluids based on the new base oil range All important properties measured and compared to technical standards and existing commercially available products Blending with existing products All key properties were comparable The test fluid were compatible with the existing fluids Our screening studies support our design idea for Group I replacement base oils

54 Summary A new Group I replacement base oil range has been created This is targeted towards industrial and metalworking lubricants The key design parameters were viscosity and solvency Lab trials were conducted to elucidate PPD expression Elastomer (seal and O-ring) material compatibility Several model hydraulic fluids were created, and: Benchmarked vs leading commercially available fluids Evaluated vs technical standards Evaluated vs elastomer compatibility Our lab trials and evaluations strongly support the utilization of Nybase in hydraulic fluids

55 Nynas Group Head Office P.O. Box SE Stockholm Sweden Tel Fax

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