lubes & greases may 2013

ThreeElectrifyingTales

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M A Y 2 0 1 3 V O L . 1 9 I S S U E 5

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3LUBESNGREASES

LUBESNGREASESThe Magazine of Industry in MotionLNG Publishing Company, Inc.6105-G Arlington Blvd.Falls Church, VA 22044 USAPhone: (703) 536-0800Fax: (703) 536-0803Website: www.LNGpublishing.comE-mail: [email protected]

Nancy J. DeMarco Publisher Lisa Tocci Managing EditorRichard Beercheck Senior EditorGreg Whitlow Art DirectorSheryl Unangst Circulation ManagerRobert Green Circulation Assistant ManagerLaura Hughes Production Assistant

George Gill, Tom Glenn, Jack Goodhue,Carolyn L. Green, Boris Kamchev, David McFall, J. Berkshire Miller, Tim Sullivan, Steve Swedberg Contributors

Gloria Steinberg BriskinManaging Director/Vice President, AdvertisingPhone: (703) 536-7676

(800) [email protected]

Megan Matchett Account [email protected]

LubesnGreases (ISSN1080-9449), an independenttrade magazine, is published monthly by LNGPublishing Company, Inc., 6105-G Arlington Blvd.,Falls Church, VA 22044 USA. Copyright 2013, LNG Publishing Company, Inc. Printed in USA.

Subscriptions to the print edition are free to qualiedsubscribers in the United States and Canada who areactive in the lubricants industry as man ufacturers, marketers, volume buyers and users, or as supplierswho maintain close ties to the lubricants industry.Qualication is subject to publishers approval.

Subscriptions to the print edition outside theUnited States and Canada: $115 for 12 issues;$215 for 24 issues.

Subscriptions to the digital edition are free to qualied subscribers worldwide.

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Lubes n Greases is a registered trademark of LNG Publishing Company, Inc.2002 FolioShow Editorial

ExcellenceAwardGold Winner

lists companies by name, geo-graphic location, principal prod-ucts, and more. If you receivedour 2013 e-mailed survey, pleasereply today. The 2013-2014Sourcebook will go live on July 1.Only companies that provide cur-rent information will be included.

Check it out at www.LNGSourcebook.com. If your compa-ny isnt listed but should be,please let me know. Listings arefree. The Sourcebook draws anaverage of more than 11,000

monthly page views,and attracts anywhere from 300to 750 unique new visitorsevery month.

Its a real pleasure to introducethe newest member of oureditorial team, Joe Beeton. Joejoined LNG Publishing in mid-March as a staff writer, and hesalready applying his reportingand writing talents to LubeReport and LubesnGreases.

Joe is a 2011 graduate of George MasonUniv. in Fairfax, Va., where he majored inEnglish and wrote extensively for studentmedia. Welcome, Joe.

Nancy J. [email protected]

PUBLISHERS LETTER

As Steve Swedberg writes, lubricantcompanies that are tapping alterna-tive energy sources are gainingmore than bragging rights. They are lower-ing their energy costs or bringing in cold,hard cash; theyre gaining favorable taxtreatment and incentives from local, stateand federal governments; customers arepaying favorable attention; and yes, theydo get to brag a little.

Ultrachem, in New Castle, Del., is meetingall of its electricity requirements with a newsolar photovoltaic system on its roof, andselling excess power to the local grid.Crodas synthetic esters plant inAtlas Point, Del., is tapping intotrash, burning landfill gas to runits boiler system and generatesteam and will shortly begin pro-ducing electricity as well.Wilmington, N.C.s South AtlanticServices has installed more than2,000 solar panels on its ware-house roof, generating electricityto sell to the local utility.

For a look at what these companies are doing, turn toEnergy: Intensive on page 16.

Last month we began surveying key con-tacts in U.S. and Canadian companies:Its time to update your listing in the onlineLubricants Industry Sourcebook. This valu-able directory of the lubricants industry

More than bragging rights!

Lisa Tocci, Nancy DeMarco & Gloria Steinberg Briskin

Joe Beeton

4 MAY 2013

TABLE OF CONTENTSF E A T U R E S :

16 Energy: Intensive. Homemade electricity is still arelative rarity, and requires a big commitment. Threelubricant companies tell us how and why they flippedthe switch.

22 Rerefinings Gold Rush. Rerefining in the UnitedStates will grow by 50 percent to reach more than 1.2million metric tons of capacity by 2017, a new reportpredicts.

26 Oil and Water Dont Mix. As long as waterwaysand machinery live side-by-side, oil leaks and hydraulicblow-outs will occur. Use the right lubricant to lessenthe damage, and your liability.

32 A Fork in the Road for Small Engines. The market forsmall-engine lubricants is split into two camps, withAsia on one side, the U.S. and Europe on the other.Can one oil serve both?

40 Big Ideas at Pinnacle Oil. Kimball Morris thoughtconvenience stores and gas stations might like tohave their own engine oil brands. Heres how thathunch has paid off since 1987.

46 Too Many Choices? Twenty years ago motor oilbrands offered two tiers: good or best. Todays retailshelves carry six tiers or more, says Larry Solomon,and the message is sheer confusion.

Page 26

Page 32

Page 46

M A Y 2 0 1 3 V O L . 1 9 I S S U E 5

D E P A R T M E N T S :

3 Publishers Letter6 Automotive

14 Need to Know54 Product News

60 PlacesnFaces66 Advertiser Index68 Base Oil Report70 Your Business

On the cover: Pinnacle Oil

Theres no magic formula. The secret to success is still hard work, a healthy dose of persistence and true partnership. Its how Oronite does things. The performance of our high quality additives is unsurpassed. Our motivated, growth-oriented people are dedicated to your business. Above all, we do things the right way, aiming to protect your equipment and your business and reduce emissions that can harm our environment. If youre looking for performance and protection, it all adds up. To learn how we can add to your business, visit oroniteaddsup.com.

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A case in point: In earlyNovember, EPA announcedit had found discrepanciesin the fuel economy claimsfor more than 900,000Hyundais and Kias aboutone-third of units sold inthe United States since2010. The sister brandshad overstated their milesper gallon by about 3 per-cent, and had to relabel allof their 2012 and 2013

MAY 2013

Your Mileage May Vary

AUTOMOTIVE

BY STEVE SWEDBERG

6

models. Hyundai knockeddown most by 1 or 2 mpg,but took a 6 mpg whack atthe Kia Souls rating.

EPA said it had receiveda number of consumercomplaints about theHyundai mileage esti-mates, which led it to auditthe vehicles test results.Hyundai and Kia acknowl-edged making proceduralerrors when running EPAsfuel economy tests, apolo-gized to customers, andmoved to reimburse themfor their added fuel costsfor as long as they own thecar. Ouch!

This costly mistakereminds us why automak-ers insist on getting anddocumenting every ounceof fuel economy improve-ment they can. Engine oilsmay deliver only 1 or 2 per-cent better fuel economy(which is invisible to indi-vidual drivers), but thatsvital to an OEM.

Of course, you and Iknow that your mileagemay vary. No two vehicleswill get the same mileage,primarily because of theperson behind the wheel.Its really amazing how

Drivers, governmen-tal agencies andoriginal equipment

manufacturers continue tobe frustrated by the differ-ence between the mileagefigures shown on new-vehicle window stickers,which are based on U.S.Environmental ProtectionAgency testing protocols,and the cars real-worldfuel consumption.

Continued on page 8

Certifying enginesto CAFE require-

ments is onlygoing to get

tougher, alongwith demands on

lubricants. (Photo: HyundaiMotor America)

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much the driving habits ofeach of us affects howmuch fuel we burn. In fact,the American TruckingAssociation found that fueleconomy in big rigs canvary by as much as 35 per-cent, based on the driverstechnique.

It reminds me of a film(thats right, a film not avideo) from my high schooldrivers education classmany moons ago. In it,Goofy (of Disney fame)portrayed a mild-manneredgentleman by the name ofMr. Walker. However, whenhe got behind the wheel ofhis car he became Mr.Wheeler, who was mania-cal and drove with a leadfoot, one arm hanging outof the window, and wasgenerally a menace. Thelesson for us young mindswas not to be aggressiveand reckless when driving.But it wasnt to conservefuel, which only costaround 25 cents per gallon.

Fast forward to today. Westill need to be courteouson the road, but withprices approaching $4 pergallon the fuel economylesson is much more sig-nificant.

A recent Wall StreetJournal article on the sub-ject found that the variationin fuel economy resultsand consumer satisfactionwere enormous: MikeYoung, 24, says he getsabout 22 miles per gallonin the city and as much as

30 to 31 mpg on the high-way in his 2002 NissanAltima V6. That is consider-ably better than the cars17 city, 24 highway ratingbased on the EPA testingprotocols. Mr. Young, whoworks in public relations inthe Philadelphia area, sayshe drives fairly fast onthe highway, but tries tohold a constant speed.Im not one of those peo-ple whos on the gas andoff the gas.

However, there is alwaysan opposing view, the arti-cle went on. On the otherend of the spectrum isBrent Wardle of Meridian,Idaho, who says hes plan-ning to trade in his 2012Hyundai Sonata hybridbecause hes only averag-ing about 22 mpg in a carthat in 2012 was rated bythe EPA at 35 city, 40 mpghighway.

Youve got to suspectthat some variation in dri-ving style is at work here.There are other factors too,but its gotten to the pointthat the feds and theOEMs are working on mod-ified test protocols to try tominimize the differences.

The EPA protocols arepretty dated, originallygoing back to the mid-1970s. In 2008 the EPAadded new tests whichsimulated highway speedsup to 80 mph, as well asdriving in hot and coldweather. Its also consider-ing tests using gasolinecut with 10 percent

8 MAY 2013

Continued from page 6 ethanol, like most com-mercially available fuel,instead of the pure gaso-line prescribed now. The10 percent ethanol blendstend to drop mileage by 3to 4 percent, the agencysays.

So where does thatleave us? I think that itsimportant to review thedrivers for fuel economy,the steps that have beentaken to date, and thosecoming in the near future.

First, the drivers. Theoriginal fuel economy man-dates came at the time ofthe first Arab oil embargoin the 1970s, a time whenfuel economy was around17 mpg. Long waiting linesat the service station;rationing (anybody remem-ber odd/even days for fuel-ing? Anybody?); and thecost of gasoline rising from25 cents a gallon to 65cents were some of theoutcomes. There wasanother oil crunch in theearly 1980s, and since thengasoline has steadily risenin price. The national aver-age at the pump as I writethis is $3.68/gallon forregular.

Congress reactedalmost reflexively in 1975and dictated that 27.5mpg would be the corpo-rate average fuel economygoal by the 1985 modelyear. In the meantime, allthe technical details need-ed to be developed,including test procedures

Continued on page 10

AUTOMOTIVE

Fast forward totoday. We still needto be courteous onthe road, but with

prices approaching$4 per gallon

the fuel economylesson is much

more significant.

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picture of the fuel cost ofdriving. There are advocatesfor changing the EPA num-bers to this configuration.

Recognize that the U.S.light-duty vehicle fleet isaround 250 million unitsstrong and that their aver-age age is about 11 yearsnow, the rate of replace-ment of vehicles is probablyabout 3 to 4 percent annual-ly (barring a recession orother impact on income).That means many vehicleson the road will still be con-suming fuel at the 27.5mpg rate in 2015. In fact,there will still be significant

numbers of these gashogs on the road in 2025.

But if you carry my calcu-lations out to their logicalconclusion, a compliant2025 model would savemore than $6,000 worth ofgasoline over its life versusits 2015 counterpart. Andeven more if fuel prices goup (as history says they will).

To give the devil his due,without regulations I reallydoubt that current engineswould have become so effi-

as well as how to calculateCAFE. Since then, themantra has been to reducedependence on foreign oil,even as the light-vehiclefleet continued to grow.

Weve lived with CAFE of27.5 mpg for the past 30years but beginning in2015 new cars sold mustmeet a 35.5 mpg target,with additional emissionsrequirements. In 2025 themandate rises to a stagger-ing 55 mpg. (Heavy-dutytrucks face their ownmileage hurdles, which Illsave for another day.)

I did some basic math,with an eye to getting ahandle on the impact ofthese rules and regulationson the average drivers fuelcosts. For simplicity, I used$4 per gallon as the baseprice for all years. Table 1,above, shows the results.

In Europe, fuel economyis reported as gallons per100 miles (actually,liters/100 km). While thisdoesnt change as dramati-cally as mpg, it gives a clear

cient so quickly; otherwisewe might still have largenumbers of big, carburetedV-8s on our roads, insteadof sophisticated V-6s withfuel injection controlled byamazingly complex on-board computers. I continueto be awed by the designimprovements in enginesand transmissions that haveoccurred in my time as anindustry participant.

Engine and transmissionlubricants have played theirsmall but significant part inthis evolution. Engine oilshave become much lighterin viscosity and much moreadvanced in additive tech-nology. Whod have thoughtthat SAE 0W-20 would bethe oil viscosity rising startoday, when the oil of the1980s was SAE 10W-30 andSAE 5W-30 led in the 90sand even into the early partof this century? Now wesee Honda specifying SAE0W-16. Obviously, the lowerthe viscosity, the lower thefrictional drag and churningeffects of the oil.

When you look at theimpact on fuel economyfrom the engine oil, you maybe tempted to say, so what?The requirements for vari-ous grades of current ILSACGF-5 or API SN engine oil tobe labeled as resource con-serving (per the AmericanPetroleum Institutes fueleconomy standards) areshown in Table 2.

Basically, the impact of anSAE 0W-20 on fuel econo-

10 MAY 2013

Continued from page 8AUTOMOTIVE


Table 2. Limits for Resource Conserving Engine Oils

Fuel Economy Gain vs. 25W-30 Reference OilSAE viscosity grade Fresh oil, % After 100 hours aging, %

XW-20 2.6 min. 1.2 min.

XW-30 1.9 min. 0.9 min.

10W-30 and other non-ILSAC grades 1.5 min. 0.6 min.

Table 1. Where CAFE Is Leading

Model year CAFE target Gal per 100 miFuel cost per Savings v.

mi @$4 per gal 1985 (per 100 mi)

1985 27.5 mpg 3.64 $14.56 2015 35.5 mpg 2.82 $11.28 $3.282025 55.0 mpg 1.82 $7.28 $7.28

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Proven performance in water-dilutable formulae used in machining and forming

which determine CAFE. This elimi-nates the use of oils which mightgive better fuel economy but whichwould not be available to consumers.

Similarly, automatic transmissionfluids have undergone significantadvances in the same time frame.They now have much more durableviscosity retention and better friction-al characteristics as well as some-

my at the current 27.5 mpg would be0.7 mpg new and 0.3 mpg after 100hours of aging. Not much, it seems but it does improve the OEMsopportunity to successfully certifyengines for the EPA rating. They alsoare required to use widely available,competitively price commercialengine oils in the test programs

12 MAY 2013

Industry consultant Steve Swedberg

has over 40 years experience in lubri-

cants, most notably with Pennzoil

and Chevron Oronite. He is a long-

time member of the American

Chemical Society and SAE

International, where he was chair-

man of Technical Committee 1 on

automotive engine oils. He can be

reached at [email protected].

what lower viscosity to capture everybit of longevity and fuel saving in thetransmission. Drain intervals for ATFare now of such duration 100,000miles or longer that you mightchange the fluid once or twice duringthe average 11 years you own thevehicle. New transmission designsare counting on these durable lubri-cants to protect them and to maxi-mize their efficiency.

The base oil and additive technolo-gies to achieve these impressiveresults have been evolving right alongwith the engines and transmissions.In fact, the engineering changes havedriven the introduction of better basestocks, new antioxidants, andimproved friction modifiers, antiwearagents and dispersants.

For me, the bottom line is that theOEMs and oil/additive industry haveworked together (sometimes con-tentiously and sometimes coopera-tively) to develop superior technolo-gies to make our lives a little betterand more luxurious. The modernautomobile is a technological won-der, so enjoy the ride.

Continued from page 10

If you have been in the lubricantsbusiness for any length of time,you have doubtless heard some

blenders or marketers say, but thereis a market for it. Right away, youtook note of the operative and sepa-rating word but. This is becausethey likely were justifying why theysell obsolete, unlicensed and off-spec motor oils.

As you were processing this state-ment, the speaker twisted the lemonfurther, adding, Although I dontwant to sell these products, my cus-tomers ask for it, and I have to sell itif I want to compete.

While an interesting argument andone that could garner some sympa-thy, it reminds me of what my moth-er used to say when I made lameexcuses to explain my (rare) dubiousactions as a child: Two wrongsdont make a right. Truth be told,she was correct.

So lets get it right: Is there any-thing wrong with knowingly sellingobsolete, off-spec unlicensed lubri-cants, or ones with misleadinglabels, to customers who want theseproducts? And if others are doing so,does that make it right for us to dothe same?

Answering these questions startswith defining who your customer is,and what he or she is asking for.

Although you might assume a mar-keter speaking about a motor oil cus-tomer is referring to a vehicle owner,in many cases they are not. This isbecause lubricant marketers sellmost of their motor oil to retailers

and installers. The retailers andinstallers in turn provide the productsto their customers, the motoringpublic. So there are several defini-tions of customer in the valuechain.

Whereas the wants and needs ofeach layer of customers in the lubri-cant value chain are often aligned, insome cases they are not. When thathappens, its the motoring public the ultimate customers who canget burned by bad oil.

An example of this may be seenwith a retailer that asks for the low-est priced product a lubricant mar-keter can offer. To meet this cus-tomers needs, the marketer puts acompetitive price on the table for itsfighting-grade, licensed ILSAC GF-5/API SN engine oil, and says thisproduct will meet the requirementsof virtually all cars currently on theroad and its a great price. Theretailer quickly pushes back, sayingthe price is much too high; what elsedo you have? With reluctance, themarketer pitches a lower price for anunlicensed product labeled as suit-able for use in applications requiringAPI SN GF-5. The marketer mightadd a sketchy story about the prod-uct meeting the latest specs, but atlower price point because the manu-facturer doesnt have to pay a licens-ing fee to the API.

Although the retailer asks a fewquestions, its clear theres no inter-est in the worth of this product oranything to do with API, SN, GF-5 orwhatever. My customers are poor

But theres a market for it ...

NEED TO KNOW

BY THOMAS F. GLENN

MAY 201314

If others are sellingobsolete and off-

spec motor oils, doesthat make it right for

us to do the same?

15LUBESNGREASES

people who drive old cars that burn alot of oil and they dont need the lat-est and greatest, the retailerasserts, adding, They just need oil so give me a better price.

Many reputable marketers wouldhave walked away from this opportu-nity before getting pulled into discus-sions about unlicensed motor oil, butnot the marketer in our example.Instead, he or she puts a price onthe table for API SA or some otherobsolete motor oil category, andmakes the sale. Even knowing thatSA oil is unsuitable for cars builtsince 1933 and can cause harm tomost engines currently on the road,the marketer justifies the deal by say-ing, I gave my customer what hewas asking for.

Sad to say, maybe he did.But is this what the retailers cus-

tomers are asking for? Are theydemanding motor oils that will likelycause damage to what might betheir only means of transportation the vehicle they use to go to work,drive their kids to school, go shop-ping, and visit grandma? Likely not.Instead, they probably trusted theretailer the marketers customer to provide a good price on a lubri-cant that protects their engines fromdamage.

This takes us to the second pointmarketers sometimes make whenthey sell swill: I dont want to sellobsolete, unlicensed and off-speclubricant, but my customers ask forit, and I have to offer it if I want tocompete.

Painfully true. Some with little elseto offer have to dance with the devilby selling obsolete, off-spec, untest-ed and unproven motor oils to com-pete. Doing so, they knowingly putconsumers cars at risk, and ofcourse they try to explain away thisdecision.

So lets get it right. Its wrong tosay but there is a market for itwhen selling potentially harmfulmotor oils. And marketers dont haveto do it to compete. Both state-ments are lame excuses for dubiousactivity.

If you think otherwise, listen to themany good major and independentlubricant manufacturers and mar-keters who compete by producingquality, on-spec motor oils. You wonthear excuses from them.

Tom Glenn is president of the consulting firm PetroleumTrends International, the PetroleumQuality Institute of America andJobbers World newsletter. Phone: (732) 494-0405. E-mail:[email protected]

Energy:IntensiveA

lternative energy is a hot, hot topic. While the U.S.energy mix still relies heavily on traditional sourceslike coal, natural gas, petroleum, hydroelectric andnuclear, renewables like solar, wind and biomass aremaking inroads into electricity generation. Thecountrys unofficial energy policy can easily be

referred to as all of the above.Still, homemade electricity is a relative rarity in the commer-

cial or industrial landscape, and it is costly to get up and run-ning. This leads many manufacturers to view the leap into alter-native energies as risky. To overcome some of these objections,various municipal, state and federal agencies have offered incen-tives to encourage early adoption.

Three lubricant companies Ultrachem, Croda and SouthAtlantic Services have found that extra push helped tip thedecision in favor of alternate energy. Each now boasts solar capa-bility in their operations, and one is also completing an ambitiousproject to generate its electricity from waste landfill gas.

LubesnGreases talked to each of these about why they tookthe leap, the costs and the payback. The benefits, we heard,include an attractive return on investment, financial incentives,an easing of energy cost volatility and bragging rights forthemselves and their employees.

16 MAY 2013

U ltrachem Inc. is an inde-pendent specialty lubri-cant compounderapproaching its 50th anniver-sary. Privately held since 1984by a group of key employees,Ultrachem supplies OEMs andthe industrial maintenancemarkets, and has been heavilyinto synthetic lubricants sinceopening its doors in 1965.Major product lines includesynthetic compressor oils,industrial hydraulic and gearoils, lubricants for the foodprocessing industry, and pri-vate-label products.

Last May, Ultrachemannounced that it wouldinstall a 185 kilowatt solar pho-tovoltaic system on the roof ofits manufacturing plant andheadquarters in New Castle,Del. The now-complete sys-tem generates enough elec-tricity to serve its annualneeds with power to spare.

Robert Whiting, president,and Glenn Krasley, director of

Sunny in Delaware

BY STEVE SWEDBERG

Ultrachems solar array in New Castle, Del.

sales and marketing, said theyhad been thinking aboutgoing green for two to threeyears before making themove. They found theiropportunity in a state pilotprogram that promotes thepurchase, installation and useof solar cells, the DelawareSolar Renewable EnergyCertificate.

Ultrachem would have tofollow strict program guide-lines, Krasley observed, butthe chance to create almost200,000 kilowatt-hours a yearof green electric power wastempting. The rooftop instal-lations photovoltaic panelswould be manufactured byDelaware-based MotecPanels and guaranteed for 20years. And weather patternsfor the past 15 to 20 yearsconservatively showed thatsolar is a good choice fortheir location, said Whiting.Beyond the green appealthere were tax incentives,too, which proved to be thedeciding factor.

Some 770 individual solarpanels now cover Ultrachemsplant roof, which is free ofinterfering buildings that couldcast energy-robbing shadows.Whiting noted that all ofUltrachems electrical require-ments are satisfied with thesolar array, and excess electrici-ty is sold to the local grid atretail rates. The project isinterconnected to the NewCastle Municipal ServicesCommission utility system.

Krasley remains enthusedabout the project. Wheneverindustry can reduce environ-mental impact, its contribut-ing to the betterment of theentire planet, he said proud-

ly. Sustainability should notjust be a buzz word that youcan tell your customersabout. It needs to have realvalue and contribute toreducing your overall carbonfootprint.

When you implement asustainability program, itmust start from the top andyour entire organizationneeds to embrace the com-mitment. It should alsoinclude your supply chain.Once your employees beginto understand the impactand value, youll be amazedhow the ideas start flowingfor additional ways toreduce waste and conserveenergy. Thats why we feelits so important to shareour success with anyonewho is considering an ener-gy conservation or reductionprogram.

A tlas Point, Del., home toCroda Inc.s syntheticesters plant, is wherethis company has chosen toinstall a landfill gas-to-powerproject. Croda, an interna-tional chemicals companyheadquartered in the UnitedKingdom with operations in34 countries, has beenaggressive in its pursuit ofsustainability, including theuse of renewable energiessuch as solar, wind and nowbiomass power.

Croda put a solar array atopits U.S. headquarters inEdison, N.J., in 2011, but thelandfill gas project wouldprove far more complex andambitious. Robert Stewart,Atlas Points site manager,shared some informationabout the project, whichbroke ground last June andwas completed at year end.

17LUBESNGREASES

Tapping into Trash

Landfill gas generates steam and electricity for Crodas Atlas Point esters plant, shown here.

The plant, he noted, is locat-ed about three and a halfmiles from the Cherry Islandlandfill, which is owned bythe Delaware Solid WasteAuthority. This made it conve-nient for Croda, since manylandfill sites are too farremoved to be practical. Thereclaimed landfill gas,methane, is delivered to AtlasPoint via a pipeline, andburned in a 2.2-megawattcombined-heat-and-powergenerator made by CumminsPower Generation.

Croda put $5.5 million intothe project, and received a$500,000 grant from theDelaware Energy EfficiencyInvestment Fund, for a totalinvestment of $6 million.Crodas president, KevinGallagher, estimated that the

project will pay for itself infive to six years.

Already, the site is burningmethane to fuel its boiler sys-tem and generate up to halfof Atlas Points steam require-ment, and soon will beginproducing electricity as well.At full load, the Cumminsengine will supply up to 75percent of the plants electric-ity, or the energy equivalentof 3,500 homes. Croda is stillworking through the processof hooking up to the localgrid, and hopes to be com-pletely on line next month.

Stewart cited a number ofbenefits to the landfill gas sys-tem. Its a renewable sourceof energy for the site for thenext 20 years, which fitsCrodas corporate goal of gen-

18 MAY 2013


Atlas Points 2.2-megawatt combined-heat-and-power unit

Human Energy

Blending Heavy-Duty Lubricants

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erating 25 percent of the com-panys energy usage fromnon-fossil fuels by 2015, heexplained. It provides a pre-dictable and efficient source ofpower both steam andelectricity at a lower cost.The site also will earn produc-tion tax credits equivalent to1.1 cents per kWh generated.

Reduced emissions areanother benefit; previously themethane gas was flared at thelandfill site but now its a valu-able resource. The landfill willbe active for a long time,Stewart added. Currently theestimate is that theres about35 years of usable methane gasavailable. And as the areaswhich are currently active arecovered, the gas generatedcould last much longer.

20 MAY 2013

Continued from page 18 The Skys No LimitSouth Atlantic Services turned its roof (an under-used asset) into a revenue stream.

(Pho

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ourt

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of U

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ed R

enew

abl

e En

ergy

LLC

)

F ounded in 1971, SouthAtlantic Services Inc. inWilmington, N.C., aims tobe one of the top contractpackagers in the country. Inaddition to automotive andcommercial lubricants, it sup-plies antifreeze, diesel exhaustfluid, dry chemicals, cleanersand agricultural products. SASservices some very large cus-tomers, and must meet theirdiverse packaging require-ments, delivery schedules andquality specifications in a cost-effective manner.

Frank Hamilton III, presi-dent, and Jeff Grizzle, opera-tions vice president, sharedsome insights into their deci-sion to go solar. For Hamilton,the decision was prompted byfinancial considerations, whichincluded incentives from the

state (North Carolina offers ahefty tax credit) and the fed-eral government. Plus, theroof of SASs warehouse wasan under-utilized asset whichcould be improved by theaddition of a solar array whichis essentially maintenance-free.

Thirty-five thousand squarefeet of that roof now sport a500 kW solar energy system.The 2,033 panels are clampeddirectly to the standing-seammetal roof, so as not to pene-trate its surface. Local work-ers installed the panels, andthe project was managed byUnited Renewable Energy, acontractor with offices inWinston Salem, N.C.Hamilton pegged the invest-ment at roughly $1.4 million.

Hamilton and Grizzle noted

that SAS does not use theelectricity it generates butsells it all to the local utility,Duke Energy. This brings insignificant revenue, as thesolar array creates enoughpower to supply the electricalneeds of 50 homes. If kept in-house, the electricity wouldmeet one-third of the SASspower needs.

There are some intangiblesassociated with the installa-tion as well, Hamilton point-ed out. One is that the panelsmay actually extend the life ofthe roof. The project may alsobe of interest to customerswho are supportive of greeninitiatives. Retail giant Wal-Mart, for example, is stronglyinterested in reducing its car-bon footprint and encouragesall its suppliers to follow suit.

E ach of these companiesemphasized that the useof green energy hasenabled them to gain favor-able tax credits and incen-tives from local, state andfederal governments. Thishas given them early pay-outs for their investmentand the promise of morestable energy costs into thefuture.

Each chose a differentpath for the energy gained,channeling it either toreduce their costs or to gainrevenue. In addition theyhave chosen different ener-gy sources.

And happily, all threepoint out, green energy is auseful tool for their salesforce to gain favorable atten-tion from their customers.

21LUBESNGREASES

Rerefining capacity in theUnited States is projected toincrease from less than800,000 metric tons per year(about 16,000 barrels a day)

in 2012 to more than 1.2 million metrictons by 2017, according to Kline & Co.Thats a 50 percent gain some ofwhich is due to gush very soon.

The U.S. rerefining industry is poisedto take off, with big growth expected inthe used oil business, said Anuj Kumar,project lead for Klines Energy Practice,during a March webinar based onKlines first comprehensive analysis ofthe used oil and rerefined lubricantmarket in the United States. In 2011,the studys base year, U.S. rerefiningcapacity stood at about 485,000 tonsper year, according to Kline. The 2017projection includes several announcedrerefineries, although not all will panout as base oil producers.

Recently there has been a gold rushto occupy all the good spots for usedoil rerefining by good spots, wemean those locations that have plentyof used oil supply, with limited or nocompetition, said Kumar. Once a rere-fining plant is set up and used oil vol-umes are tied, there will be increasedcompetition for feedstock if a new plantcomes up in vicinity of an existing plant.

Any plans to set up rerefineries in asparsely populated region where usedoil generation is quite low may not actu-ally be genuine, he cautioned. Webelieve this could maybe be merely ameans of discouraging others fromthinking about a particular region.

Not every project is a mirage, ofcourse, and several new players haveaffirmed to LubesnGreases that theyare quite far along in their plans and/orconstruction.

As this issue goes to press, JuanFritschy, CEO of Universal

22 MAY 2013

BY GEORGE GILL

Environmental Services (which is adopt-ing the name Avista Oil USA), confirmedthe company is commissioning its rere-finery in Peachtree City, Ga., from mid-April to mid-May. The rerefinery isexpected to have capacity to process 30million gallons of waste oil per year andto produce nearly 1,300 b/d of Group Iand/or II base oil. We will start produc-ing on May 2, and we expect to be infull production by June 1, Fritschy said.

In Florida, NexLube Tampa contin-ues to move towards commissioning itsrerefinery in the last quarter of 2013.That facility is expected to process 24million gallons of used oil annually andproduce 20 million gallons of Group IIbase oil.

FCC Environmental began engineer-ing and site preparation work early lastyear for a rerefinery in Baltimore. Thestart-up for the FCC refinery is currentlyprojected for late Q4 2014, FCCEnvironmental Vice President VincentGlorioso told Lube Report. We aregoing through the permitting and finalengineering process, and believe thestart-up date to be realistic.

Transformer oil collector and rere-finer Hydrodec, which uses a catalyticrerefining process to make naphthenicprocess oil at a plant in Canton, Ohio,now is working on a scheme for makingadvanced paraffinic base stocks.Hydrodec CEO Ian Smale in March toldshareholders that the technology willsoon move to the pilot plant stage, andoffers potential for new types of high-quality base oils such as Group II, II+and III. If the planned rerefinery is ableto stick with crankcase materials asfeedstock, the company anticipatesroughly 75 percent will be rerefinedinto base oil, or about 30 million gallonsper year.

All of these schemes are aiming tobenefit from several key drivers which

23LUBESNGREASES

oil quality more repeatable.A second industrywide challenge is

consumer acceptance of finishedlubricants made from recycled baseoils. Global lubricant blenders and[major] marketers would considerrerefined base stock as a marketingplan to portray an environmentallyfriendly image, Kumar said.However, the product does not reallyalign with their supply chain. Theyhave sourcing

Klines Kumar enumerated in his webi-nar. These include significant improve-ment in the used oil collection infra-structure in recent years; a gradualdecrease in the share of do-it-yourselfoil change customers; greater collec-tion volumes due to increasing aware-ness of used oil collection services; andadvanced processing technologies thatresult in better-quality rerefined basestocks.

Moreover, theres more pressure nowto collect every last barrel of used oil,Kumar said. As the price of finishedlubricants and base stocks increases,the value that could potentially berealized by rerefiningthe used oilincreases.

The industrydoes face chal-lenges however.First is access toused oil supply,he said. To runa seamless usedoil rerefinery, itscritical to have anuninterrupted feed-stock supply. Lately we haveseen a trend where rerefiners are tak-ing over collection companies orspreading their geographical footprintto secure used oil supply.

As well, some used oil collectors haveannounced plans to set up rerefineries,hoping to capture the same limitedused oil supply. That is an indicationthe industry is attempting to mitigatethis risk, he said.

Kumar emphasized that volumes ofused oil supply have not been growing;theyve at best been flat due to theextension of recommended engine oildrain intervals. Oil consumption hasdecreased, as recommended oil inter-vals have gone up due to use of syn-thetic lubricants in recent years, hesaid.

At this point, he added, the used oilcollection industry is ripe for some con-solidation, as this would help reducecosts and standardize collection prac-tices, which in turn would make used

lubricants remains a big unknown.Valvoline has launched its NextGenseries of products blended with rere-fined base stocks, but its impact has yetto be known, Kumar noted. However,if more marketers follow suit, con-sumers could be convinced of the useof rerefined lubricants.

Industrial lube consumers also couldbe potential customers for rerefinedlubricants because they practice on-siterecycling. So we think they should beopen to experimenting, he noted.

Rerefined base stocks produced inthe United States

represent lessthan 5 per-cent ofthe fin-ished

lubricantconsumption,

Kline found. Thecompany has esti-mated U.S. fin-ished lubricantsconsumption at 8.4

million tons in 2011.Of that, it estimated only about 60

percent was generated as a used oil the rest was either lost or not classifiedas used oil.

Klines study indicated about 80 per-cent of used oil generated in theUnited States in 2011 was collected.That figure is higher in densely popu-lated states like California, and lowerin less-populous states like Montanaand Wyoming. About 69 percent ofcollected used oil is processed asindustrial fuel, whereas only 14 per-cent is sent for rerefining, he said.The remaining 17 percent includesused oil that is exported, mainly fromthe U.S. Gulf Coast to Europe, LatinAmerica and China.

Of the used oil directed to rerefining,about 66 percent was converted torerefined base stock, while the rest wasconverted into other products likenaphtha, diesel and asphalt.

Klines report is titled, Used Oils andRe-refined Lubricants: U.S. MarketAnalysis and Opportunities.

24 MAY 2013

arrangements both in-house and frommerchant markets. Use of rerefinedbase stocks would mean realignmentof their supply chain, which becomesdifficult especially when a marketingcompany has its own supply of virginbase stocks.

By contrast, an independent or mid-tier marketer would consider usingrerefined base stocks if the company isconvinced about the perceived costbenefits. Among lubricant end users,[original equipment manufacturers]are not really worried about the sourceof a base stock as long as it is highquality and performance is delivered,Kumar added.

Commercial fleets in particular havepotential as candidates to considerrerefined base stocks, and would con-sider setting up a closed-loop system asa track record is established, he noted.

He said the reaction of installers anddo-it-yourself customers to rerefined

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SUCCESSTOGETHER

26 MAY 2013

Oil and Water Dont Mix

The DeepwaterHorizon oil spill inthe Gulf of Mexicorenewed interest in

using environmentally accept-able lubricants near, in orover water to reduce environ-mental impact and liabilities.While the impact of a largespill of lubricant such ashydraulic fluid is much lessdevastating than a blowout ofcrude oil, there is still a nega-tive effect on the environ-

the public to be proactive inprotecting the environment.It is becoming good businessthese days to go green.

Why Do This?The main concern for anybusiness is, of course, thebottom line. This meansavoiding the costs involved inspills of oil or hazardous sub-stances, including the costsof cleanup, fines, litigation,remediation and work stop-

Environmental ProtectionAgency terminology pur-chasers first should ask howthe product will benefit theircompany, and whether it willactually help reduce or elimi-nate financial liabilities, finesand cleanup costs.

EPA is revising the VesselGeneral Permits for 2013 andis including a new categoryfor vessels shorter than 79feet, called small VesselGeneral Permits. These regu-

By using an approved EAL,the vessel operator earns anexemption from the require-ment to maintain comprehen-sive daily logs, to monitor allfluids and levels, and to reportthem a strong incentive forgoing green. Failure to com-ply or falsifying data andlogged information can leadto some very large fines.

Common BeliefWhen switching to an EAL,

27LUBESNGREASES

Environmentalcompliance

compels a different choice

BY JAMES BURTON

ment that can have bothimmediate and lasting conse-quences.

In the immediate aftermathof a spill, the oil itself is theculprit, as wildlife, plants andshorelines become coated inoil, causing a series of seriousproblems. Secondary andlong-term effects of a spillresult from the heavy metalsand toxins that bio-accumu-late and impact the aquaticfood chain. Adding to theproblem is that some oilsmay take a very long time todecompose.

Businesses involving ves-sels or equipment operatingin or around water are feelingthe pressure from federal,state and provincial laws andregulations, as well as fromenvironmental groups and

pages. The other major blowto a company involved in amajor spill is the negativepublic relations that canaffect everything from stockprices to future projects.

Many articles have coveredconverting to and using envi-ronmentally acceptable lubri-cants, the types of fluids avail-able, and the pros and consof each. However, compli-ance and regulatory issues inthe United States and Canadagenerally have not beenaddressed. The message thatseems to be lost is, Why arewe converting to these fluidsin the first place, and howwill it affect us in the event ofa spill?

In considering a move toan environmentally accept-able lubricant EAL in U.S.

lations are due to take effecton Dec. 19 this year. Bothkinds of permits limit anddictate what can be legallydischarged from a vessel,including oily bilge water,sewage, oil or other haz-ardous substances. Onemajor change is to mandatethat approved EALs must beused in any oil-to-sea applica-tion such as stern tubes,bow thrusters and cranes that could leak oil directlyinto the water in the event ofa seal or hose failure.

EPAs list of approved EALsincludes vegetable-based oils(classified as HETG), syn-thetic esters (HEES) andpolyalkylene glycols (HEPG).The HEPG products can beeither oil soluble or watersoluble.

the common belief is that ifthe label says biodegradableor inherently biodegradable,the only concern is howmuch it costs and how sim-ple it is to convert to it.However, approved EALs donot include inherentlybiodegradable mineral oils,defined as any type of miner-al oil or lubricant with abiodegradability rating of lessthan 60 percent in 28 days.This is the same standardused by most Europeancountries and various state,provincial and regulatoryagencies. At least 60 percentdegraded in 28 days is thebasic criterion for using theterm Readily Biodegradable.

Even so, this overlooks thefact that spills of many EALsare still a violation of the

g

dvco

m -

Foto

lia

Photo courtesy Bluewater West Ltd.

Canadas regulations. (Seewww.tc.gc.ca/ for details.)

Fisheries and OceansCanada (DFO) is mainly con-cerned about monitoringaquatic toxicity. Its main con-cern is fish health, not neces-sarily the oil spill and pollu-tion portion of the CanadaShipping Act. Therefore, anoperator could meet the min-imum standards set out byDFO regarding the use of andaccidental discharge ofbiodegradable lubricants but still may violate theCanada Shipping Act.

All Oil PollutesEnvironmentally friendly andbiodegradable oils weredeveloped for use in eco-sen-sitive terrestrial areas. Theywere meant to have a lesserimpact and to biodegrade in

Clean Water act of 1990, andwill result in fines regardlessof whether the oil is non-toxic or biodegradable. WhileEPA has established approvedEAL categories, users mustalso abide by a second set ofregulations: The Discharge ofOil Overview under theClean Water Act, commonlyknown as the sheen rule.(See www.epa.gov/emergencies/content/lawsregs/sheenovr.htm fordetails.)

In Canada, maritime regula-tions are monitored andenforced by Transport Canadaand the Canadian CoastGuard. This includes enforc-ing the Canada Shipping Act,which contains a sectionreferring to maritime pollu-tion incidents, as well asenforcing Environment

soil, not water. Evenbiodegradable vegetable oilsspilled into water can have adevastating impact onwildlife. For an example, in1999 a large canola spill inVancouvers harbor killedthousands of seabirds.

Any oil spilled into water,regardless of whether its veg-etable or mineral based (orester), can seriously affectmarine birds or mammals. Itcan coat the animal, getunder its fur or down andinterfere with the animalsability to insulate itself. Thiscan and does lead to deathby hypothermia, and cancause severe illness fromingesting the oil that they tryto lick off themselves in theprocess. This is one reasonwhy EPA also prohibits thedischarge of any type of oil

into any waterway in theUnited States.

Using a biodegradable oilbasically avoids long-term,lingering effects of the oilitself and reduces or elimi-nates bio-accumulation andtoxic effects on wildlife. Theonly negative concern of arapidly biodegradable lubri-cant is potential oxygendepletion during biodegra-dation.

In other words, while alubricant may be an approvedEAL, it may still be considereda pollutant and violate theClean Water Act if dischargedinto water. Because this regu-lation classifies all vegetableoils and synthetic esters as oil,the only EALs that are compli-ant under the regulation arewater-soluble polyalkyleneglycols, PAGs.

28 MAY 2013

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No Sheen or SlickEPA, the U.S. Coast Guard andTransport Canada have alldesignated water-solublePAGs, such as DowChemicals Ucon brandTrident, as Not an Oil: Theyare considered nonhazardouschemicals. In fact, TransportCanada does not classify PAGsas marine pollutants andviews them as nontoxic.

Although water-solublePAGs are anhydrous water-free they sink if spilled intowater and dissolve rapidly,leaving no sheen or slickbehind. They also do not cre-ate an emulsion beneath thesurface, and they dissipate toavoid any bio-accumulation inaquatic life. Water-solublePAGs designed for marine useare considered ReadilyBiodegradable in that they

are at least 60 percentbiodegradable in 28 days andhave the same rate ofbiodegradability as vegetableoils (over 80 percent in 28days in the OECD 301 F test).EPA classifies these fluids asPractically Non-Toxic.

One major advantage ofwater-soluble PAGs overother EALs is that they areexempt from the 1990 OilPollution Acts spill cleanupregulations because they pro-duce no slick or sheen. Inaddition, they require noaquatic cleanup or remedia-tion.

This can lead to enormoussavings in penalties, cleanupand site remediation costs inthe case of a spill. Water-solu-ble PAGs are the only type ofEAL that passes all five stagesof EPAs static sheen test

described in 40 CFR 435,which is used to enforce theClean Water Act.

The other issue with anaquatic oil spill is that water isusually moving. Wind, waves,river and tidal currents canmake cleanup dangerous forcrews as well as difficult andineffective. Quite often, thisresults in an expensive exer-cise in futility.

Many equipment and vesseloperators feel that if they usea lubricant considered to beenvironmentally friendly,biodegradable or an approvedEAL, they are in full environ-mental regulatory compli-ance. This is not necessarilythe case if the operations arein, on or around any body ofwater. The United States stillconsiders any product classi-fied as oil to be a pollutant if

spilled or released into water.Hence, the only EALs thatshould be considered accept-able for marine environmentsare products that are not clas-sified as oil or as hazardoussubstances.

Canadian pollution regula-tions consider all petroleumproducts to be pollutants, butthey also state that the termpollution refers to any sub-stance that has any detri-mental effect on humans,wildlife or plant life.Vegetable oils and biodegrad-able synthetic esters may fallinto this category and can beconsidered pollutants in cer-tain instances. In contrast,water-soluble PAGs are notoil, are not pollutants underthe Pollution from Ships Act,and are viewed as nontoxic.

29LUBESNGREASES


Making the ChangeThe best environmental prac-tice is to prevent any sub-stances from entering anybody of water, because somejurisdictions consider any for-eign material discharged intoany body of water as a poten-tial pollutant. However, aslong as waterways are usedfor commerce involvingmachinery, problems such asoil leaks and hydraulicblowouts will occur. The bestalternative is to use the mostproactive and preventive mea-sures available to minimizeany potential environmentalimpact.

EALs generally cost two tothree times more than con-ventional lubricants. Thesecosts are likely to drop as thelubricants become morewidely used and sales vol-umes increase. However,because they are still consid-ered specialty lubricants,they tend to occupy a nichemarket.

Companies considering aswitch to an EAL should alsoreconsider their maintenancebudgets. Often, these budgetsare set to accommodate thepurchase of conventionallubricants, and the additionalcost of an EAL can appearprohibitive. This can result instrong resistance from main-tenance supervisors.

However, sizeable spillsgenerally lead to heavyexpenses from fines, litiga-tion, cleanup/remediation andwork stoppages. While thesecosts do not come out of themaintenance budget, theyhave a negative effect on thecompany as a whole.

Any company consideringconverting to an EAL mustinvolve all affected depart-

ments in the decision.Beyond cost, factors to con-sider include performanceand ease of conversion, butmore importantly the level ofcompliance the product willoffer.

Questions to ask include: Isit still going to violate any pol-lution laws such as the CleanWater Act (or 40 CFR 435) ifthere is a spill? What isinvolved in a cleanup or siteremediation? What costs areinvolved, and will there stillbe any pollution fines orpenalties?

When converting equip-ment to biodegradable lubri-cants, use an EPA approvedEAL designed specifically forthe purpose and workingenvironment intended. If youare not going to receive fullbenefits of using an EAL andgreatly reduce environmentalliabilities, dont invest thetime and money in the firstplace. EALs are much like pur-chasing insurance policies:Know what the package cov-ers and what you are stillliable for.

Jim Burton is the fuel andmarine lubricants executivefor Bluewater West Ltd. Hehas been involved in thepetroleum and lubricantsindustry for over 35 years,with both Canadian and U.S,companies. He can bereached at (604) 358-9219 [email protected].

30 MAY 2013


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This fork in the market presents challenges forboth four-stroke small-engine builders and lubri-cant marketers, she continued at the conference,which was held in Moscow in November. In theWest, the economic downturn caused sales ofnew machines to fall while sales of pre-ownedbikes grew. After the recession, growth of bikesales in the United States is expected to getstronger by 2015. Sales are flat at the moment,with an increase in the scooter segment only.

Recent statistics from the Motorcycle IndustryCouncil support this appraisal. The trade groupsaid U.S. sales of new units reached 452,400 in2012, around where demand has lingered since2010. Thats a far cry from the hot-paced days of2003, 2004 and 2005, when the industry wasmoving more than a million units a year. U.S.scooter sales rose at a faster clip than othertypes, but still amounted to only 34,000 units in2012. Europe is seeing a similar trend: TheEuropean Association of Motorcycles recentlyreported its fifth straight year of declining sales,with only 1.3 million two-wheelers sold in 2012.

With demand for new units in a slump andowners holding on to their bikes longer, thesemotorcycle populations are increasing in age,McTavish pointed out. There are around 10 mil-lion bikes in the U.S. fleet and over half are morethan seven years old. In fact, almost a quarter ofthem predate 1995, and roughly that number aremodels from 2000 to 2004. Only 3 percent are2010 or newer.

This shows that it is increasingly important forthese engines to be well maintained and their lifeto be prolonged with a proper lubricant choice,McTavish said.

Worldwide, the market for small-engine lubricantsis divided into two general camps, with Europeand North America on one side, Asia on the other.End users in each of these two regions have verydifferent approaches to how they use and main-tain their small engines, and what they want fromthe lubricants they buy, a market study found.

Generally, the small-engine automotive seg-ment consists of gasoline-fueled motorcycles,scooters and mopeds (plus popular three-wheeled versions in Asia), while the leisure mar-ket includes inboard and outboard marineengines for fast boats, personal watercraft andsmall yachts another market that demandscareful attention from lubricant sellers.

Global motorcycle production in 2010 amount-ed to around 55 million units, according to theadditive manufacturer Infineum. A big share ofthe world demand for motorcycles, 84 percent,comes from Asia, Katie McTavish, the companyssales manager for Europe, Middle East and Africa,told the RPI Lubricants Russia conference. Theglobal motorcycle market is expected to growaround 7 percent annually, driven by the hugedemand in Asia.

In Asia, however, small engines are basicallyused for personal mobility, she explained. In Asiaconsumers increasingly demand fuel-efficientbikes [and] the oil required is fit-for-purpose,with growing demand for higher quality oils.

In the West, by contrast, small engines aremainly used for leisure, the motorcycle popula-tion is older, and engines are expected to have alonger working life with the use of a lubricantthat offers good protection, said McTavish, whois based in Oxford, England.

32 MAY 2013

A Fork in the Road for Small Engines

By Boris Kamchev

Phot

o: H

onda

Mot

or

33LUBESNGREASES

An Infineum survey of U.S. motorbikeowners asked what they value most inlubricants, and how it influences theirpurchasing decision. The two most-prized qualities, respondents said, wereengine protection and product quality.Almost 75 percent believed that havingthe correct viscosity grade is importantor very important, and 70 percent saidthe oil should be formulated specificallyfor motorcycle use. While still importantto half of bikers, price or fuel economyare much further down the priority list,she said.

The market action now has moved toAsia. In 2012, almost 13 million motorcy-cles were sold in Indonesia, Japan,Malaysia, Philippines, Singapore, Thailandand Taiwan, according to the Federationof Asian Motorcycle Industries, and theChinese Association of AutomobileManufacturers reported that countryssales of two- and three-wheelers topped23.6 million units.

Three quarters of the bike owners inThailand, Vietnam, Indonesia and Indiahave machines that are under three yearsold, McTavish said. Unlike in the West,ownership of motorcycles in thesenations is driven by the fundamentalneed for personal mobility and commut-ing. Popular brands include Honda,Yamaha and Honda Hero.

When it comes to lubricant selection,Asia presents a different picture fromthe West. In a survey of the four coun-tries named by McTavish, Infineumfound that customers look for highquality lubricants because theirmachines are used day-to-day.

Overall, the highest demand from bikeowners is for products that offer goodheat protection. The second criteria isgood friction reduction, while the third isthat oils must provide smooth enginestartup, McTavish said. Motorcycle work-shops are ubiquitous in these countries,and many of their mechanics recommendproducts that offer long drain intervals.

Asian motorcycle oil marketers are fac-ing two big challenges. First, how toposition their products on the marketversus automobile oils. The second chal-lenge is how to effectively communicate

34 MAY 2013


Source: Infineum

U.S. MotorcyclePopulation by Age

Fleet size: 10 million units

2005-2009: 40% 2000-2004: 23%

1995-1999: 11%

1994 or older: 23%2010 or newer: 3%

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36 MAY 2013

the product quality to their customers,she said. Infineums survey found thatmotorcycle owners have very little knowl-edge of API oil specifications. Instead, itappears that the strength of brand repu-tation and explicit product quality claimsare the two key differentiators in thismarket, McTavish observed.

A number of Asian OEMs are introduc-ing fuel economy initiatives. Honda leadsthe way with its new engine and stop/idletechnology, as well as with its dual-clutchtransmissions, an improved system thatreduces fuel [consumption] around 7 per-cent with practically zero emissions, onengines up to 125 cubic centimeters, shesaid. The OEM is promoting a new high-quality motorcycle engine oil conceptbased on SAE 10W-30. Honda toldInfineum the oils can offer reduced vis-cosity and greater operating efficiencywithout sacrificing engine protection.

However, remarked McTavish, thereare some concerns that reducing viscositymight introduce some challenges relatedto engine oils, such as protection of gearsand transmissions. Equally, using an oilwith higher viscosity [such as 20W-40]brings concerns about fuel consumption,engine durability and low-temperatureperformance. The ideal solution wouldbe a lubricant that bridges the gapbetween these concerns and also address-es fuel economy, but todays riders shouldheed the viscosity recommendations oftheir motorcycles manufacturer.

These OEMs are increasing the pace ofchange, and introducing new machineswith higher operating temperatures andgreater power. An Infineum field trial inThailand last year concluded that four-

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Very Important

ImportantJASO certifiedExtended waranty

ILSAC certifiedSynthetic blend

Full syntheticFuel economy

PRICEAPI certified

Formulated for motorcyclesViscosity grade

QUALITYENGINE PROTECTION 35% 50%

50%34%43% 31%

32% 38%40% 19%

19%18%

18%13%10%

11%10%

32%33%

24%29%31%

28%28%

U.S. CustomersWant Engine

Protection,Quality

Importance of OilSelection Criteria

Source: Infineum

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38 MAY 2013

clutch simultaneously. In order to pro-tect the engine from wear and deposits,the gears from pitting and wear, and todeliver clutch performance as bikersexpect, tailored bike lubes are becomingincreasingly essential, she stressed.

Passenger car engine oil is simply notup to this job, as it is being optimized forfuel economy through the use of frictionmodifiers and lower viscosity grades.Unfortunately, when used in motorcycles

stroke bike oils today need to deliver alevel of performance that passenger carlubricants are not formulated to address.For example, motorcycle oils run hotter,and because of the small sump the oilcycles through the engine much more fre-quently, which means that a really robustoil is needed, McTavish contended.

Furthermore, in many motorcycles theoil must lubricate the engine, gear and

the former may affect clutch perfor-mance, and the latter can increase gearpitting, noise and oil consumption.

In her presentation, McTavish alsopointed to trends in the leisuremachines market; here too, automotiveoils are not suitable for the four-strokesmall engines used in boating and per-sonal watercraft. These engines runfaster and with long periods of extremespeed; they operate in a corrosive envi-ronment, but spend long periods out ofuse. They need oils that can increase thebearing durability and provide wear andrust protection, as well as shear stabilitythat passenger car oils are not designedto provide.

Marine engine oils are not immune toemission regulations, which could drivemore hardware changes. The NationalMarine Manufacturers Association main-tains a standard for four-stroke marineengine oils, called FC-W, and certifies oilsthat meet it. Only NMMA certified oilscould deliver required protection, andCO2 regulations will bring new chal-lenges for OEMs in the future, McTavishconcluded.


Marine engines need shear-stable oils thatcan increase bearing life and provide wearand rust protection. (Image: Honda Motor)

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Licensed DEXRON -VI base oils supplied byCopyright 2013 Phillips 66 Company.The Phillips 66 logo is a registered trademark of the Phillips 66 Company in the U.S.A. and other countries.

DEXRON -VI is a trademark of General Motors Corporation. 2013 Allegheny Petroleum Products Company. 800.600.2900 www.oils.com

40 MAY 2013

BIG IDEAS ATPINNACLE OIL

In 1987, Kimball Morris had an inspi-ration. He saw that conveniencestores and gas stations were largelylimited to carrying major brands ofmotor oil and other automotivelubricants. Wouldnt they welcomethe opportunity to leverage their cus-

tomers loyalty by marketing their own brands,and thus keep more of the profits for themselves?

So he founded Pinnacle Oil with a vision to pro-vide quality passenger car motor oils under pri-vate-label brands for the convenience store indus-try in the Midwest. Prior to that, only the larger,super-regional or national chains could afford tohave their own brands.

Through another business, I owned somepackaging machinery, the Indianapolis-basedbusinessman told a visitor from LubesnGreases.So I opened up with about 12,500 square feetand six tanks. We made an SAE 10W-30, a 10W-40and a transmission product. We started with threepeople and served a three-state area.

Morris hunch paid off. Today Pinnacles private-label brands are marketed in nearly 50,000 C-stores, groceries, retailers and gas stations acrossNorth America, said Kent Morris, his son andPinnacle Oils president. While many of our cus-tomers are located in a 500-mile radius aroundIndianapolis, we serve a broad range of nationaland even international customers. We make prod-ucts for virtually every end-use market.

Having grown organically over 26 years,Pinnacle today employs 75 people and operatesout of three facilities in Indianapolis. It occupiesmore than 275,000 square feet of manufacturingand warehousing space, and recently leased125,000 sq.ft. more. The company has 1.5 million

41LUBESNGREASES

BY RICHARD BEERCHECK

Pinnacle uses dedicated transfer lines for eachlubricant product family, to minimize cross-contamination and quality problems.

Phot

os: P

inn

acl

e O

il

utors in a 500-mile radiusaround Indianapolis, KentMorris said.

Pinnacle is active in Indiana,Ohio, Michigan, Illinois,Wisconsin, Minnesota, Iowa,Missouri, Kentucky andTennessee. And it has cus-tomers as far east as RhodeIsland and Atlanta. Smallerbut growing volumes areexported to customers incountries ranging from theDominican Republic toRussia, from Turkey toCanada.

On the manufacturing side,the company holds ISO9001:2008 certification and isaudited annually. Our blend-ing and manufacturing proce-dures for each product aredocumented and controlledby a proprietary quality sys-tem to eliminate errors, theyounger Morris said. Noproduct or component comesinto our plant or leaves ourfacilities before going throughour quality control lab.

Pinnacles blending system

gallons of tank storage, withan additional 250,000 gallonsunder construction. It oper-ates a rail siding with posi-tions for 24 cars.

We are one of CSXs mostactive users in Indianapolis,Kent Morris noted. We haverail service here every night,switching out and spottingcars. And we have substantialrolling stock of base oils andadditives in a local railyard.

From day one, our focushas been on quality, KimballMorris continued. All of ourproducts are produced to thelatest industry specifications.We dont play in the low-cost,non-licensed world.

Building from his early C-store marketing successes,Morris diversified by enter-ing three more key seg-ments: contract blendingand packaging for major oilcompanies; contract blend-ing and packaging for OEMs;and the distributor market.The company now servicesmost major lubricant distrib-

tomers. Its quality control lab-oratory participates in theASTM InterlaboratoryCrosscheck Program toensure that its testing capabil-ities meet industry standards.And most lab equipment isautomated to ensure testingaccuracy and reproducibility.

Kent Morris continued, Wework hard to differentiateourselves from our competi-tion. Our approach to qualityis one way we do this, andan emphasis on customer ser-vice is another. Our cus-tomer service team has beenrated among the mostresponsive and best in theindustry. Thats really impor-tant to us.

The plant manufactures afull range of engine oils,including synthetics, thatmeet the latest heavy-dutyand passenger car interna-tional specifications. Thecompany also offers a full lineof automatic transmission flu-ids, gear lubricants and two-cycle oils. And it manufac-tures industrial lubricants,including hydraulic oil, tractorhydraulic fluid, gear oil, cut-ting fluids and other special-ties. We literally can make alllubricants outside of greaseand white oils, KimballMorris said proudly.

Pinnacle ships about 40 per-cent of its product in bulk intank trucks, totes and railcars.But packaged products arethe lions share of the busi-ness, ranging from 3.2-ouncebottles to 55-gallon drums.

42 MAY 2013

is designed to eliminate prod-uct contamination and waste.Were a little unique in thatwe blend and store productin every tank, Kent Morrisexplained. We dont have acommon area, where weblend in kettles and thenmove product to storagetanks. And we dont in-lineblend. Instead, a single prod-uct is blended and stored ineach tank until it is packagedor shipped out in bulk.

The Indianapolis plant haseight dedicated tank farms forvarious product families. Webelieve this set-up allows usto ensure better productintegrity and high productquality, said Kent Morris. Itminimizes potential for conta-mination, simplifies the clean-ing of lines, and allows us tohave dedicated piping byproduct family throughoutthe plant.

Pinnacle has also investedheavily in its laboratories,with the aim of mimickingthose of its major oil cus- Continued on page 44

One of the plants six packaging lines

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Compressor Oils t Engine Oils t Gear Oils t Greases t Hydraulic Fluids t Metalworking Fluids t Turbine Fluids

Visit us at STLE,booth #313

invested in mass-flow fillingtechnology, which measuresthe density, viscosity andtemperature of the product.Then it corrects for theseconditions to control theamount of oil put into eachbottle. The fill of a galloncontainer, for example, isaccurate to plus-or-minus 2 grams.

The company works close-ly with major additive com-panies and customers todevelop product formula-tions, Kent Morris said,strictly following protocolsestablished by licensingagencies such as API, as wellas requirements set forth bythe customers.

He explained, Were doingmore and more with our cus-tomers to come up with cus-

The plant has six automatedfilling lines, each a high-speedoperation:

Quarts (300-plus bottlesper minute).

Larger-format (90-plus gal-lon bottles/minute).

Small-format for pints. 2.5-gallon line (40-

plus/minute). Pails (20 or more/minute). Drums, filled at rates of

more than 400 per shift.To speed processing, the

plant uses robotic palletizingand stretch-wrapping, andon the pail line, robotic pail-stacking equipment. Theserobots are very accurate,cost-effective and flexible intheir operation, KimballMorris added. And on itslarger-format line, Pinnacle

tom blended products. Forexample, we might workwith a customer to develop aheavy-duty engine oil thathelps differentiate theirproduct from that of a majoroil company. That mightinclude additive selectionand formulation work, fol-lowed by running field tests,documenting the results andassisting with productapprovals and literature.When they go to the mar-ketplace, they have substanti-ated, empirical data to sup-port their claims, notedKent Morris.

Its also alert when cus-tomers need other assistance.For example, after HurricaneKatrina, some major oil com-panies lost their ability to sup-ply SAE 5W-30 and 5W-20

motor oils. For months,Pinnacle manufactured theproducts on their behalf toensure continuity of supply.

Another customer, a majorC-store chain, wanted to sellits branded motor oil outsidenear the gasoline pumps, butexposure to weather causedthe labels on their quart bot-tles to deteriorate. Pinnaclesuggested a plastic labelmaterial used by a shampoocompany which solved theproblem, and resulted inincreased sales.

Today, Kent Morris saysPinnacles major challenge isto continue to invest in ourbusiness to provide cost-effective solutions withoutsacrificing quality. Weredoing that with our invest-ments in the robotics and our

44 MAY 2013


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mass-fill technology.Kimball Morris added, We

are going through the processof installing a complete enter-prise resource planning sys-

tem that will give us data oneverything from real-timeinventory numbers to 100percent traceability of ourproducts throughout the

supply chain, includingincoming raw materials, fin-ished products, transfers toour warehouse, and ship-ments out the door.

Our number one strategicgoal for 2013, Kent Morrisconcluded, is to get that sys-tem fully implemented. It willgive us high-quality data fromwhich we can make moreinformed decisions.

The company expects tosee continued organic growthin all its major segments.Since 2008, its volume hasgrown by over 40 percent,the Morrises said, and theyare actively targeting and pur-suing strategic accounts. Thetwo also see some opportuni-ty to grow through mergersand acquisitions and saytheyll jump when the rightone presents itself.

45LUBESNGREASES

Tanks are dedicated to a specific family of products.

Prior to 1994,

motor oil retail

categories

were quite

simple. There

were conven-

tional motor oils and syn-

thetic motor oils. Thats all.

From a technical standpoint,

conventional motor oils

were made mostly from API

Group I solvent-refined min-

eral base oils. Synthetics

were made from costly

man-made chemicals

such as polyalphaolefin.

Conventional oils were

about $1 a quart, synthetics

cost at least four times that

much.

With a clear technical sepa-

ration between the two

46 MAY 2013

types, and pricing that

underscored it, the con-

sumers choice was uncom-

plicated: Conventional

motor oils were Good and

expensive synthetics were

the Best motor oils. Mobil

1 synthetic dominated the

latter segment, and every-

one else on the shelves (led

by Castrol, Mobil, Pennzoil,

Quaker State and Valvoline)

was good. Simple.

Fast-forward to 2013. The

same five leading brands

have 30 product offerings at

auto parts stores and quart

prices range from $4.79 to

$9.59. The shelves are now

segmented into Good

($4.79-$5.49)/More Good

($5.99)/Better ($6.59)/More

Better ($7.99)/Best ($8.99)

and More Best ($9.57).

How did we get to this

multi-tiered pyramid of

prices? And more important,

does each tier have a clear

message to help consumers

distinguish one price posi-

tion from another? In some

cases, the answer may be no.

A Simpler TimeLets go back to 1993, when

the first break-away tier was

born. At that time, Valvoline

was seeking a new class of

Too Many Choices?


With Six Motor Oil Tiers, Retail Appears Unruly

By Larry Solomon

Bertold Werkmann - Fotolia

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email: [email protected]. Well help

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product to capture market

share and looking to Europe

for ideas. In Europe, it

noticed, full synthetic and

synthetic-blend motor oils

held solid market positions.

European oil change inter-

vals were longer, nearly dou-

Better segment to the

United States, Valvolines

marketing team launched

into a new product develop-

ment initiative. The team

conducted extensive qualita-

tive and quantitative market-

ing research (which this

author coordinated) which

Valvoline did not yet have

a notable full synthetic (its

SynPower brand came about

a year after DuraBlend), so

DuraBlend remained posi-

tioned as a less expensive

alternative to full synthetics

in general. Within a year

Quaker State had introduced

48 MAY 2013


Pre-1994: Two Motor Oil Tiers

Price Per Top Five Motor Oil Brands

PriceQuart Segment

$3.99 Mobil 1 full synthetic BEST

$0.99 Castrol GTX conventional GOODMobil conventionalPennzoil conventionalQuaker State conventionalValvoline conventional

1994: Three Tiers

Price PerTop Five Motor Oil Brands

PriceQuart Segment

$3.99 Mobil 1 full synthetic BEST

$1.99 Valvoline DuraBlend synthetic blend BETTER

$0.99 Castrol GTX conventional GOODMobil conventionalPennzoil conventionalQuaker State conventionalValvoline conventional

ble that of U.S. change inter-

vals. Further, in some coun-

tries (like England) oil

changes were a once-a-year

event, as part of annual

vehicle servicing.

Because European

blenders knew that a large

portion of vehicle maintain-

ers could not easily afford

regular oil changes with full

synthetics, they offered syn-

thetic-blend oils as an alter-

native, mixing mineral base

oils with PAO. That brought

many of the performance

benefits of a full synthetic

but at a less-expensive price.

This was the original reason

to have synthetic-blend

motor oils, and selling them

in tandem with full synthet-

ics offered a solid business

proposition for European

lube manufacturers.

Seizing the opportunity to

introduce a mid-tier,

lubes & greases may 2013

Documents

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