The Lubricants Market – A Profitable and More Sustainable Purpose to the Crude Oil

Introduction

The improvement in fuel efficiency and growing market of electric vehicles tends to decline the participation of transportation fuels in the global crude oil demand. Furthermore, new technologies like additive manufacturing (3D printing) have the potential to produce great impact to the transportation demands, leading to even more impact over the transportation fuels demand. These trends added to the necessity to minimize the carbon intensity of the energetic matrix reinforces the trend of reduction in fossil fuels complete a real hostile scenario for the fossil fuels.

On the other hand, non-energetic derivatives like petrochemicals and lubricants presents a growing consumer market and higher added value than fuels. According to trend analysts and recent forecasts, the lubricants market size was valued at USD 165 billion in 2022, will grow by compound annual rates around 3,0 % and can reach a total value of USD 188 billion in 2027. Figure 1 presents the growing trend for lubricants market by consumer sector.?

Figure 1 – Growing Trend in the Demand by Lubricants (McKinsey & Company, 2018)

Like others crude oil derivatives, the economic and technology development have been required the production of lubricating oils with higher quality and performance, moreover with lower contaminants content.

The main quality requirements for lubricating oils are viscosity, flash point, viscosity index (viscosity change with temperature), fluidity point, chemical stability, and volatility. ?

According to the American Petroleum Institute (API), the lubricating base oils can be classified as described in Table 1.?

The lube oils from groups II, III, and IV have higher quality than base oils from the group I, the content of contaminants like sulfur and unsaturated compounds are significantly reduced, moreover, the viscosity index is superior for groups II, III, and IV.

Lubricant Production Routes

???????????The first step in the lubricant production process is vacuum distillation of atmospheric residue obtained like bottom product in the atmospheric distillation processes. ?For vacuum distillation units dedicated to producing lubricating fractions the fractionating needs a better control than in the units dedicated to producing gasoils to fuels conversion, the objective is to avoid the thermal degradation and to control distillation curve of the side streams, a typical arrangement for vacuum distillation unit to produce lubricating fractions is presented in Figure 2. A secondary vacuum distillation column is necessary when it’s desired to separate the heavy neutral oil stream from vacuum residue.?

Figure 2 – Typical Arrangement for Vacuum Distillation Process to Lubricating Oil Production

???????In lubricating production units based on the solvent route the following steps are basically physical separation processes with the objective to remove from the process streams the components which can prejudice the desired properties of base oils, mainly the viscosity index, and chemical stability.?

Figure 3 shows a block diagram corresponding to the process steps to produce base lubricating oils through solvent extraction route.??

Figure 3 – Processing Scheme for Base Lubricating Oil Production through Solvent Route

???????????As aforementioned in the vacuum distillation step, the fractionating quality obtained between the cuts is critical for these streams to reach the quality requirements like flash point and viscosity. After the vacuum distillation step the side cuts are pumped to the aromatic extraction unit and the vacuum residue is sent to the propane deasphalting unit. The Propane deasphalting process seeks to remove from vacuum residue the heavier fractions which can be applied as lubricating oil. ?The Propane deasphalting units dedicated to producing lubricating oils apply pure propane like solvent because this solvent has higher selectivity to remove resins and asphaltenes from deasphalted oil. ?

???????????In the aromatic extraction step, the process streams are put in contact with solvents selective to remove aromatics compounds, mainly polyaromatics. The main objective in remove these compounds is the fact that they have low viscosity index and low chemical stability, this is strongly undesired in lubricating oils. ?As the nitrogen and sulfur compounds are normally present in the polyaromatic structures, in this step the major part of sulfur and nitrogen content of the process stream is removed. The solvents normally applied in the aromatics extraction process are phenol, furfural, and N-methyl pyrrolidone.

???????????The subsequent step is to remove the linear paraffin with high molecular weight through solvent extraction. ?This step is important because these compounds prejudice the lubricating oils flow at low temperatures, a typical solvent employed in the solvent dewaxing units is the Methyl-Isobutyl-Ketone (MIK), but some process plants apply toluene and/or methylethylketone (MEK) for this purpose.?

After paraffin removing, the lubricating oil is sent to the finishing process, in this step are removed heteroatom’s compounds (oxygen, sulfur, and nitrogen), these compounds can give color and chemical instability for the lube oil, furthermore, are removed some remaining polyaromatic molecules. Some process plants with low investment and processing capacity apply a clay treatment in this step, however, modern plants and with higher processing capacity use mild hydrotreating units, this is especially important when the petroleum processed to have higher contaminants content, in this case, the Clay bed saturates very quickly. ??

???????????The paraffin removed from lubricating oils are treated to removing the oil excess in the unit called wax deoiling unit, in this step, the process stream is submitted to reduced temperatures to remove the low branched paraffin which has a low melting point. ?Like the lubricating oils, the subsequent step is a finishing process to remove heteroatoms (N,S,O) and to saturate polyaromatic compounds, in the paraffin case generally, is applied a hydrotreating process with sufficient severity to saturate the aromatic compounds that can allow to reaching the food grade in the final product.

The Changes in the Lubricants Market

???????????As cited earlier, the solvent route can produce only group I lubricant oils, however, lube oils employed in severe work conditions (large temperature variation) need be had higher saturated compounds content and higher viscosity index, in this case, is necessary apply the hydro-refining route. A great limitation in the lubricant production by the solvent route is the necessity of paraffinic crude oils that tends to present higher costs and reduce the operational flexibility of the refiners especially related to the crude oil supply in scenario of a geopolitical crisis.

Despite the relevant strategic questions like crude oil prices and supply, the Group I lubricating oils tend to lose market quickly due to the poor performance in comparison with the remain groups, especially considering the growing technology development of the automotive industry, this fact is one of the most relevant driving forces to capital investments to improve the refining hardware capacity to produce high quality lubricating oils through hydrorefining route. Another relevant factor which impact negatively the competitiveness of refiners relying on exclusively the solvent route is that the Group I and II lubricating are lose market in the last years, mainly related to technology requirements of the newest automotive engines, Figure 4 presents a forecast to the market share evolution to different kinds of base oils in the market.

Figure 4 – Base Oils Market Distribution (STATISTA, 2023)

???????????According to the data from Figure 4, is expected a significant reduction in the demand by Group I base oils, leading to a great competitive loss to refiners relying on base oil production exclusively through solvent routes.

The Hydrorefining Route

???????????In the lubricating oil production by hydrorefining, the physical processes are substituted by catalytic processes, basically hydroprocesing processes. Figure 4 shows a block diagram of the processing sequence to produce base lube oils through hydrorefining route. ?

Figure 4 - Processing Scheme for Base Lubricating Oil Production through Hydrorefining Route

???????????In this case the fractionating in the vacuum distillation step have more flexibility than in the solvent route, once that the streams will be cracked in the hydrocracking unit, so another distillation step is necessary.

After the vacuum distillation and propane deasphalting steps, the process streams are sent to a hydrotreating unit, this step seeks to saturate polyaromatic compounds and remove contaminants like sulfur and mainly nitrogen which is a strong deactivation agent for the hydrocracking catalyst.

???????????In the hydrocracking step, the feed stream is cracked under controlled conditions and chemical reactions like dehydrocyclization and aromatics saturation occur which gives to the process stream the adequate characteristics to the application as lubricants. Figure 5 presents a typical process scheme of a hydrocraking unit dedicated to producing lubricants, in this case, it’s applied just one hydrocraking stage.

Figure 5 - Typical Arrangement for Single Stage Hydrocracking Units

???????????The following step, hydroisomerization, seeks to promote isomerization of linear paraffin (which can reduce de viscosity index) producing branched paraffin.

After the hydroisomerization the process stream is pumped to hydrofinishing units to saturate remaining polyaromatic compounds and to remove heteroatoms, in the hydrofininshing step the water content in the lube oil is controlled to avoid turbidity in the final product.

Comparing the lubricant production routes can be observed that the hydrorefining route gives more flexibility in the relation of the petroleum to be processed. As quoted earlier, as the solvent route applies basically physical processes, it’s necessary to select crude oils with a higher content of paraffin and low contaminants content (mainly nitrogen) to the processing. Another solvent route disadvantage is the solvents applying which can cause environmental damage and needs specials security requirements during the processing, production of low value-added streams like aromatic extract is another disadvantage. ?

As advantages of the solvent route over the hydrorefining route can be cited lower capital investment and the fact that the solvent route produces paraffins that can be directed to the consumer market like products with higher added value.?

Brazilian Lubricating Market

???????????The Brazilian domestic market of paraffinic oils is supplied by refineries that apply the solvent route with hydrofinishing step to produce lubricating oils and waxes to a variety of consumers like food and cosmetic industries, among others. The national lubricating production in 2019 was 3,5 million barrels, additionally, the internal market is also supplied by some importers, according to data of Brazilian Petroleum Agency (ANP), the internal consumption of lubricating reached 7,7 million barrels in 2019. Figure 6 the composition of the Brazilian market of lubricating oil in 2019.

Figure 6 – Balance of the Brazilian Market of Lubricating Oils in 2019 (Based on ANP data)

In the Brazilian case, a significant part of the market is supplied to recycled lubricating oil. Recycling or re-refining of used lubricating oil meets a double role: Eliminate a hazardous residue and reduce the necessity of the extraction of higher quantities of petroleum to produce base lubricating oils.

The first industrial process developed to recover the used lubricating oil is called acid-clay process, or Meiken process. A basic process flow diagram for the Meiken process is presented in Figure 7.?

Figure 7 - Basic Process Flow Diagram for Acid-Clay Process

Due to his simplicity, the acid-clay process needs relatively low capital investment, however, due to the high quantities demanded Clay and sulfuric acid, the operational cost is very high. ?The main acid-clay process disadvantage is the acid-sludge production that is a hazardous residue with very difficult treatment.

Another great disadvantage of the acid-clay process is that the technology can produce only Group I base oils, this fact limits the consumer market and impacts strongly the profitability when compared with other available technologies. ?

Another process technology widely employed in the used lubricating oil re-refining is the process called wiped film evaporator. In this process, the used lubricating oil passes through a deasphalting step under vacuum, as described in Figure 8.??

Figure 8 – Process Flow Diagram for Wiped Film Re-refining Process

After the feed stream dehydration step, the lighter fractions are separated in flash vessels. ?The heavy fraction is heated and sent to wiped film evaporators where the deasphalting process under vacuum at temperatures close to 350 oC occurs, the heavier fraction of the oil containing the major part of the contaminants and lubricating degraded products is removed like neutral sludge which can be directed to the asphalt industry. ?

The deasphalting process is insufficient to remove all degraded compounds of the used lubricating oil, hence the used oil passes for a step with a reaction with sulfuric acid (sulfonation) where the remaining contaminants are removed and separated from the base lube oil like acid sludge in a decanter. ?

The acid sludge production is strongly reduced in comparison with the acid-clay process and the environmental impact is quite reduced, this is the main advantage of the wiped film evaporator process when compared with the acid-clay process, nevertheless, the base oil produced by this route attends only the quality specifications of the group I lubricating oils, according to American Petroleum Institute (API) classification. ?

Some re-refiners apply a propane deasphalting process to replace the wiped film evaporators, however, the necessity of constant solvent replacement and additional security requirements can raise the operational costs in this case, although the capital investment is similar to both technologies.

The base lubricating oil production with higher quality can be reached through the application of hydrotreating processes. Figure 9 presents a basic process flow for used lubricating oil re-refining through hydrorefining route. ??

Figure 9 – Basic Arrangement to Hydrotreating Process for re-refining of Used Lubricating Oil

After the dehydration step, the used oil passes through a distillation column where the lubricating oil is separated from the lighter fractions. The bottom product of the distillation column is mixed with hydrogen and heated before the reactor, the process is conducted under mild conditions with temperatures varying 250 to 300 oC and pressures close to 30 bar, the normally applied catalyst is Co-Mo/ Al2O3. The main advantages of the hydrorefining route in comparison to the other available technologies are the higher quality of the base lubricating oil produced and the reduction in the environmental footprint, however, the necessary capital investment is relatively high and is only attractive for process plants with large capacity. ??

???????????Some researchers have dedicated his efforts to the development of new re-refining technologies for treating used lubricating oils and some of these technologies have shown promising like ultrafiltration in membranes, but the technology still in an initial stage of development. ???????????

In Brazil, close to 40 % of the lubricating oil consumption is recovered and sent to processing by re-refiners, according to the Brazilian Petroleum Agency (ANP). Despite this significant data, the Brazilian production of lubricating oils is concentrated in Group I and II oils. As aforementioned, the Brazilian production is carried out by two Petrobras Refineries that apply the solvent route, once there aren’t hydrocracking units in operation in Brazil. A third Brazilian refinery is capable to produce naphthenic lubricating oils to specific markets as isolators to electrical equipment.

Conclusion

???????????As aforementioned, despite the high capital investment of the hydroprocessing units, the higher added value of the Groups II and III lubricants and the growing market can justify the investment mainly considering the trend of reduction in transportation fuels demand at a global level in the middle term that has been leading the refiners to look ways to ensure market share and revenues in the downstream industry through the maximization of high added value derivatives with the growing market as petrochemicals and lubricating oils. Due to the accelerated technological development, especially in the automotive market, the Group I lubricating oil tend to lose market in the next years this fact tends to lead the refiners to look for capital investment aiming to sustain their competitiveness in the lubricating market. Another side effect for lubricating producers based on solvent routes due to the competitiveness loss is raising the imports to supply the internal market, leading to an external dependence of critical production input as well as negative effects on the balance of payments. Another positive factor of the lubricant market is the recycling capacity of the base oils which can help the refiners to reach the desired circularity in the downstream sector, one of the main criticism factors over the fossil fuels.

Bibliography

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McKinsey & Company. Lubes growth opportunities remain despite switch to electric vehicles, 2018.

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Dr. Marcio Wagner da Silva is Process Engineer and Project Manager focusing on Crude Oil Refining Industry based in S?o José dos Campos, Brazil. Bachelor’s in chemical engineering from University of Maringa (UEM), Brazil and PhD. in Chemical Engineering from University of Campinas (UNICAMP), Brazil. Has extensive experience in research, design and construction to oil and gas industry including developing and coordinating projects to operational improvements and debottlenecking to bottom barrel units, moreover Dr. Marcio Wagner have MBA in Project Management from Federal University of Rio de Janeiro (UFRJ) and is certified in Business from Getulio Vargas Foundation (FGV).