Synthetic Base Oil Outlook - PAO

09/06/2015
Synthetic Base Oil
Outlook - PAO
C h e v r o n Ph i l l i p s C h e mi c a l s In t e r n a t i o n a l N V
Chevron Phillips Chemicals International NV
Agenda
• Overview of Chevron Phillips Chemical
• Polyalphaolefins Industry Update:
– A quick look at the production process and feedstock
– Advantages of the properties of PAOs in today’s and next generation
formulations
– Polyalphaolefins Supply / Demand Outlook
• Summary
• Questions
Chevron Phillips Chemicals International NV
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Company Founded in 2000
Chevron Phillips Chemicals International NV
About Us
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•
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Manufacturer of petrochemicals that are
essential to manufacturing over 70,000
consumer and industrial products
Currently $12.3 billion in assets and
more than $14.1 billion in annual
revenues
Trusted supplier to customers in 140
countries
A highly educated and diverse
workforce of approximately 5,000
employees working on four continents
across the globe
Chevron Phillips Chemicals International NV
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Safety Culture
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SAFETY is foremost in Chevron Phillips
Chemical’s culture
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Achieved a 60 percent reduction in the
combined employee and contractor
Recordable Incident Rate (RIR) since
2002
•
Active OSHA Voluntary Protection
Program (VPP) Participant – 17 Star Sites
•
Combined employee and contractor
performance in 2013 was in the top
quartile among American Chemistry
Council (ACC) peer companies
•
Committed to company’s Tenets of
Operation
Chevron Phillips Chemicals International NV
Manufacturing Locations
Belgium
United States
South Korea
Qatar
China
Saudi Arabia
Singapore
Colombia
Chevron Phillips Chemicals International NV
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Chevron Phillips Chemical: Next Planned
Investments
Alpha Olefin Expansion
• 100 kMTA expansion
• Planned start-up in 2015
Low Viscosity PAO Expansion Study
• 10 kMTA expansion
• Planned start-up in 2016
USGC Petrochemical Project
• 1,500 kMTA ethylene unit
• 2 - 500 kMTA polyethylene units
• 10,000 engineering and construction jobs
• 400 direct jobs
• Planned start-up in 2017
Chevron Phillips Chemicals International NV
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PAO Industry Update
• Production of Polyalphaolefins
• Advantages of Low and High Viscosity Polyalphaolefins
• Polyalphaolefins Supply / Demand Outlook
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How PAO is Produced
Synfluid®
Ethylene Cracker
PAO 2 – 9
Feedstocks
mPAO65 - 150
Ethane
Ethylene
Propane
Unit
Ethylene, C2=
Butane
Natural Gas
Liquids
Normal
Alpha
Olefins
Unit
Naphtha
Others
PAO Unit
Octene, C8=
Decene, C10=
Dodecene, C12=
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NAO Applications
Carbon Number Fraction Overview
C4
Polyethylene Comonomer
C6
C8
PAO
C10
C12
Surfactants
C14
C16
Lube Oil Additives
C18
C20
Wax Applications
Relative production Output
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Advantages of PAO
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PAO: Properties
PAOs offer the following advantages compared to mineral oils:
• Improved heat transfer capabilities
• Better low temperature viscometrics
• Lower friction
• Better oxidative stability
• Better energy efficiencies
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Role of Base Oil in Fuel Economy
• Engine oil related friction has
a great impact on energy
efficiency
• Better energy efficiencies
results in improved fuel
economy
• There is a friction reduction
from Group III to PAO of
~22%
less friction,
better energy efficiencies
Source: B. J. Hardy, K. K. Bjornen, S. F. Bell, “Group III Base Oils: Their Role & How to Take Advantage of Them”, 9th ICIS-LOR World Base Oils Conference, 2005
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Chevron Phillips Chemicals International NV
Pressure (psi)
Improving Base Oil Improves Oxidation Time
Group II
0
500
Group III
1000
1500
PAO
2000
2500
RBOT Time (min)
0.5wt% DPA for PAO
0.5wt% DPA/PhoenolicAO for Group II/III
less oil degradation, improved durability
Source: K. Hope and D. Twomey, SAE Paper 2002-01-1637, 2001
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Lower Volatility
less emissions, improved durability
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Specific Heat / Thermal Conductivity
• PAO has a 10-15% higher specific
heat than mineral oil
– PAO will absorb more heat and
run at lower temperatures than
mineral oil
• Furthermore, PAO has a 20% higher
thermal conductivity than
equiviscous mineral oil
– PAO will better conduct heat
away from lubricated parts
less oil degradation,
improved durability
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Low & High Viscosity PAO
Supply and Demand
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Chevron Phillips Chemicals International NV
PAO Global Producers
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4
2
3
5
6
7
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COMPANY
1 CPChem
2 CPChem
3 CPChem
4 Chemtura
5 Chemtura
6 ExxonMobil
7 ExxonMobil
8 ExxonMobil
9 Ineos
10 Ineos
11 NACO
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LOCATION
CAPACITY, kTA
Cedar Bayou, TX
48
Pasadena, TX
9
Beringen, Belgium
63
Elmira, ON
16
Ankerweg, Netherlands
15
Gravenchon, France
60
Beaumont, TX
85
Baytown, TX
50
Feluy, Belgium
120
La Porte, TX
90
Shanghai, China
15
Source: Lubes'n'Greases / CPChem
Low Viscosity PAO
Manufacturing Facility
High Viscosity PAO
Manufacturing Facility
Low & High Viscosity
Manufacturing Facility
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PAO Supply
• CPChem PAO Capacity: 120 kMTA
– U.S. and EU production
• Cedar Bayou, TX
• Pasadena, TX
• Beringen, Belgium
– High and Low Viscosity PAO
producer
2014 WW PAO Capacity
Capacity, kTA
140
North America LV
120
North America HV
100
Europe LV
Europe HV
80
Asia HV
60
40
– Three regional offices to cover
global sales
– Producer of ethylene and alpha
olefins (feedstock security)
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XOM
INEOS
CPChem
Chemtura
Naco
Source: Lubes'n'Greases / CPChem
Chevron Phillips Chemicals International NV
PAO Demand Trends
• Transportation
– Low viscosity base oils improve energy efficiency
– Emission and fuel economy standards and regulations driving movement towards higher
performance lubricants
– EU has set a target of 95g/km CO2 emissions for passenger vehicles by 2020
• Industrial
– Modern manufacturing equipment is being employed in developing regions as economic
conditions recover
– Lubricants being developed to provide improved energy efficiency, higher stress
operating conditions, and targeting reduced maintenance
• Grease
– Environmental drivers continue, longer life, energy savings
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Low Viscosity PAO Supply / Demand
• Anticipate low viscosity PAO AAGR of 4 to 6% from 2013 through 2015
• Low viscosity PAO operating rates expected to be elevated above 95% and
depend on feedstock availability due to the growing demand for PAO
• Limited growth in feedstocks have constrained the growth of low viscosity
PAO
• First grassroot expansion has been announced
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High Viscosity PAO Supply / Demand
• High viscosity PAO demand forecast to grow at 4 to 7% AAGR from 2013 to
2015
• Demand driven by higher performance requirements in industrial and
automotive applications
• Recent expansion of HV PAO supply (Chemtura, ExxonMobil and NACO)
• Limited growth in feedstocks have constrained growth of high viscosity PAO
• Two technologies exist on high viscosity PAO: conventional and metallocene
• Chevron Phillips Chemical produces high viscosity metallocene based mPAOs
based on Octene, C8= feedstock
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Synfluid® mPAO in Industrial Oils
Viscosity Index
180
In blends with a low viscosity PAO,
mPAO offers higher viscosity index and
lower pour points (<-50°C)
160
140
120
These improved properties are
achieved while requiring less HV PAO,
which provides for a more economical
formulation!
Percent HV PAO
Savings
1000
-10
-20
-30
PAO 40
mPAO 65
mPAO 100
mPAO 150
*All blends made with
PAO 8 to achieve the
ISO PAO
320 target
40
mPAO 65
mPAO 100
mPAO 150
-40
C h e v r o n P h i l l i p s C h e m i c a l s I n t e r n a t i o n23
al NV
Foaming Characteristics
(Sequence I ASTM D892)
mPAO 100
Conventional
PAO 100
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Summary
• Next generation lubricants will require higher levels of PAO to meet increasing
performance requirements
• PAOs provide a number of technical advantages when compared against
other base oils
• Low and high viscosity PAO demand increasing at roughly 4 to 6 % AAGR
• Chevron Phillips Chemical Company continues to show commitment for future
growth to help meet increasing customer demand
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Questions?
Forward Looking Statement Disclaimer
Certain statements in this presentation are forward-looking statements that are subject to risks and uncertainties. These statements are not guarantees of future
performance and actual outcomes and results may differ, perhaps materially, from what is expressed herein. Actual results could differ materially, based on a number of
uncertainties, factors and risks (collectively, “the Risks”), many of which are outside the control of the presenter or Chevron Phillips Chemical Company LLC and its
affiliates, employees, directors, or officers (collectively, “CPChem”). Any or all of the Risks could cause results to differ materially from those referred to in this
presentation. Recipients of this information are cautioned not to rely on these forward-looking statements. CPChem undertakes no obligation to update or revise any
forward-looking statement, whether as a result of new information, future events, or otherwise
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