The base oil industry of America is moving strongly into Group III. The base stock used in 2018 as new vehicle engines will require more of the light viscosity oils.
Based on this growing need for light viscosity base oils, 2018 will see additional Group III enter the base oil market in both production and commercial presence.
Petro-Canada and Group I producer HollyFrontier is now posting its base oil prices, broadening its position in the Group III production space for 2018.
The Petro-Canada Lubricants plant is the largest producer of base oils in Canada with 15,600 bbl/day of lubricant production capacity.
With the addition of the Petro-Canada Lubricants business, HollyFrontier is now the fourth largest lubricants producer in North America with a capacity of 28,000 bbl per day. It is approximately 10% of North American production.
Until the entry of Petro-Canada and Calumet, Group III base oils were imported. Imports were mostly from production in South Korea and handled by SK Lubricants and Phillips 66 for the Americas markets. Neste also sent in Group III oils for US distribution.
However, in 2018 Petro-Canada and Calumet will not be the only Americas-based Group III production.
Another change in America’s base oil market is the retreat of Flint Hills Resources (FHR) from base oil production, handing full production responsibility at the Lake Charles, Louisiana, Excel Paralubes base oil facility to Phillips 66.
Despite Group III base oils surging to the forefront of market discussion, Group II base oils remain the workhorse base stock of the industry. Group II oils are able to fulfill approximately 97% of motor oil requirements, according to comments over the past two years from Group II producers and from buyers.
Original Equipment Manufacturers (OEMs) have moved to new vehicle engine designs that will continue to push the base oil industry in 2018 and beyond. Increasing use of Group II and III will gain more use in passenger car motor oils and in heavy-duty vehicle applications.
These drivers will move the base oil industry toward light viscosity, premium performance, motor oils that can only be achieved by the use of Group II, II+, III, III+ and Group IV base stocks.