Hydrocarbon Engineering

March

2017

HYDROCARBON

ENGINEERING

134

been banned in many countries because of the toxic, acid

sludge byproduct.

Vacuum distillation is used to extract base oil from

used oil, producing Group I base oil only. The product is

not suitable for automotive use, but can be used as bar and

chain oil or burned as marine diesel fuel. In order to make

oil that is suitable for automotive, or other uses requiring

higher quality oil, an additional step is needed, such as clay

treatment, solvent extraction, or hydrotreating.

Clay treatment can remove contaminants such as sulfur

and odour from the product to produce a higher quality

Group I base oil, suitable for some automotive use.

Solvent extraction removes contaminants and

unsaturated hydrocarbons, producing a high quality Group I

base oil often suitable for automotive use. This process is

unable to reduce sulfur levels to reach Group II product. In

addition, during the process of removing unsaturated

hydrocarbons, the product yield is reduced.

Finally, hydrotreating is a process that utilises

hydrotreating catalyst and hydrogen to remove contaminants

and convert unsaturated hydrocarbons into saturated

hydrocarbons. This ensures the highest yield and quality of

Group II base oil. In addition, by using a blend of proprietary

catalysts, Chemical Engineering Partners’ (CEP) hydrotreating

process is able to produce Group III base oil products.

By renewing the base oil, hydrotreating effectively

reduces the need for base oil to be refined from crude oil.

Figure 1 shows a direct comparison between used oil

re-refining and crude oil refining (primary equivalent

processes).

Re-refining is a key factor in helping to prevent the

degradation of the environment. Ideally, a ‘closed loop’

cycle is desired, which, as shown in Figure 2, maximises the

lifetime of the renewable resource. In this closed loop, the

used oil that comes from car engines is collected and

re-refined in order to become the same engine lubrication

oil again.

Product trends

The automotive industry accounts for the major

application share in the global base oil market. Advances in

engine technology that improve efficiency put a bigger

strain on the lubricating oil and require higher quality oil to

be used. This sector has gradually transitioned towards

higher quality base oils (Group II, III or higher). Group I base

oil is expected to experience a downward trend in terms of

consumption, especially in highly developed areas such as

Europe and North America. This is primarily due to the

substitution of Group I oil by higher quality Group II or III

oil. Figure 3 shows the global projected base oil demand

trend.

Although Group I still has a substantial place in the

market due to developing countries’ demand, it is

nonetheless declining steadily. Group II and III markets are

growing as vehicles become cleaner and more energy

efficient. Worldwide Group I plant closures further confirm

this trend; for example, Shell’s Pernis refinery, the Kuwait

Petroleum refinery, Colas France refinery and ExxonMobil’s

Beaumont refinery are just some of the facilities to have

shut down in recent years. Figure 4 shows the adaption in

base oil production. The increase in Group II and III

production is observed by announcements of new Group II

and III plants being built worldwide.

Market outlook

The re-refining business is greatly affected by the cost of

used and base oil. The difference between base and used

oil prices dictate the profit margin for re-refiners.

Although the used oil re-refining economics are difficult

due to recent low base oil prices, there are some silver

linings. In North America, legislation has made it illegal to

improperly dump used oil. Additionally, the price of used

oil is decreasing, and even shifting, so that used oil

collectors do not have to pay to pick it up. In some cases,

re-refiners even get paid to pick up used oil from

generators (reported up to US$0.15/gal.), significantly

improving their margins.

The world over, used oil disposal is becoming more

regulated. In Vietnam, there are efforts to establish

legislation that prohibits improper disposal or burning of

Figure 3.

Base oil demand projection.

Figure 4.

Change in base oil production 2010 – 2020.

Figure 5.

Average Group I, II and III base oil prices.