contaminants - the strategy · pdf file · 2013-08-02contaminants by michael herson...

AUGUST 2013 • LUBES‘N’GREASES EUROPE-MIDDLE EAST-AFRICA20

COPINGContaminantsBY miChael herson and BoB Bell

Gas enGine oils ChallenGed BY alternative Gases

WITH

7-GasEngine.indd 20 7/22/13 3:41 PM

Tim

Text Box

Editor's note: This is the first of a two-part series. Part Two covers how lubricant formulators cope with contaminants in alternative types of gas.

Tim

Sticky Note

Please reinsert this in a color screen like you had it. I didn't realize that I crossed it out when I rewrote the headline.

LUBES‘N’GREASES EUROPE-MIDDLE EAST-AFRICA • AUGUST 2013 21

“everything in this business is about trials.”

biogas from various sources, landfill gas and syngas.

These alternatives offer flexibility to users and money-making oppor-tunity to generators. They also create problems, though, because some of the alternatives contain contaminants that can damage engines and foul their lubricants. Many operators cope by employing oil analysis and short-ening oil change intervals. Lubricant marketers formulate different oils for different gases.

Europe: Gas Engine CentralThere are no reliable public domain

data for sales of gas engines as trade

statistics are not discretely logged. Also engine manufacturers are un-derstandably nervous about sharing data because recent acquisitions have concentrated manufacturing capac-ity, prompting a 2011 monopolies investigation in the European Union. The Strategy Works, a London-based strategic marketing consulting firm, analyzed the market for gas engines used in power generation – and the oils that lubricate them – by con-ducting in-depth interviews with 25 engine manufacturers, engine operat-ing and maintenance companies and lubricant and additive suppliers.

Based on those interviews and desk

most of the world was impacted by the steep rise in en-ergy prices during the past decade. In some places, though, there are con-cerns not only with cost but also with energy security – the certainty, or lack thereof, that the energy required will be available without interruption.

A growing number of businesses and institutions are finding a prag-matic way to address both of these concerns – on-site power generation with gas engines. The increasing popularity of this approach has also led to the tapping of different types of gas, and a variety of alternatives to natural gas now exist, including

— Paul nadin-salter, Chevron

Photo courtesy of GE



research, TSW estimates that global sales of large gas engines – those capable of generating more than 500 kilowatts – exceed 6,000 megawatts per year. Of that amount, 64 percent is in Europe, the Middle East and Africa. Europe is also the epicen-ter for production of gas engines. GE says that 90 percent of the gas engines that it sells worldwide are manufactured in Austria by subsid-

iary Jenbacher. U.S.-based Caterpillar relocated its gas engines center to the Mannheim, Germany, manufactur-ing facilities of subsidiary MWM, and another large U.S. manufacturer, Cummins, has 42 percent of its gas engine sales in Europe, the Middle East and Africa.

“Europe is most important to us as there are more gas engines there than in other places, especially in Eastern

European countries like the Czech Republic, Bulgaria or Estonia, but also in Italy and in Germany,” said Frank Merbitz, chief applications consultant at Addinol, a lubricant marketer based in Leipzig, Germany. “Nowadays Europe accounts for a large share of our total turnover of gas engine oil, and it’s growing still.”

Sources interviewed for this article agreed that use of gas engine oils will probably continue to rise. Shell Lubricants Global Marketing Manager Richard Holdsworth said there is a move toward independent backup power and a real shift from heavy fuel to gas. He predicted that liquefied natural gas will be tapped as an alternative to heavy fuel in many parts of the world.

Maxim Donde, general director of LLK-International, the lubricants arm of Russian energy giant Lukoil, says the global outlook for gas engine oils is rosy. “The dynamics of sales is positive,” he said. “Market volume of these oils around the world is grow-ing at about 5 percent per year, which is associated with an increase in the number of working gas engines.”

TSW estimates that total installed capacity of gas engines in EMEA is 40 gigawatts and is growing at around 8 percent per year. Based on average oil consumption figures, this equates to over 2.5 million metric tons per year of gas engine oil used in these regions, making their lubricant market worth around €600 million. Gas engines run continuously at full power, require frequent servicing and use considerable volumes of engine oil.

The main application for gas engines in Europe, the Middle East and Africa has traditionally been and continues to be power genera-tion, whereas in North America it is for pipeline applications such as gas transmission and compression. In fact, GE produces its Waukesha

Continued on page 26

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range of gas engines in the United States, primarily for gas compression, while its European-built Jenbacher range is for power generation. The increasing availability in the U.S. of low-cost shale gas produced by frack-ing could change the market dynam-ics there, but energy generation will remain the dominant driver within Europe, the Middle East and Africa.

Gas engines are ideal for convert-ing gas into valuable heat and energy, especially for suppliers wanting to harvest biogas from sources such as landfills, farm crops or sewer plants. The engines can be sited near the source of the feedstock and sized to match the level of gas production. (Sixty-eight percent of engines are in the range of 500 kilowatts to 3.5 MW.)

Power generation is rarely the busi-ness of the enterprises where engines are installed. Therefore the work is

farmed out to specialist operation and maintenance providers since plants can be required to operate at full power around the clock. Many companies that sell generating equip-ment also seek to secure the operat-ing and maintenance contracts. Any loss of output is lost revenue, so choosing and buying the right gas en-gine oil is a critical decision operator.

Gaining ApprovalOil formulators must go through

lengthy processes to get product

approvals for an oil, a key step for marketing purposes. “Each OEM has its own specific approval process that you need to satisfy, so there are a lot of coordination and careful planning that have to go into running the field test and putting the data packages together and then making the presentations to the OEMs,” said Alan Beckman, original equipment manufacturer liaison for natural gas engine oils at Chevron Oronite.

The process starts with the gas engine manufacturers specifying the

Continued from page 22

On-site Energy Demand

Factories

Hospitals

Broadcasting studios

Hotels, leisure centers

Horticulture facilities

On-site Energy Supply

Farms with organic waste

Meat or vegetable processing plants

Water/sewage treatment plants

Landfills, waste recycling plants

Coal mines

Embedded Power Generation by Gas Engines

Source: The Strategy Works

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lubricating oil performance param-eters required by their engines. Some go further and also provide a list of approved oils, allowing the end user – typically the operating and mainte-nance company – to select a product suited for their type of application and gas. OEMs strive to provide a wide choice of approved oil brands, so the lists are generally comprehen-sive, and most OEMs strongly avoid recommending any one brand

Some OEMs, like Cummins, also have their own brand of oil. “We have a marketing agreement with Valvoline,” said Andrew Stone, direc-tor of energy solutions at Cummins. “If you had a maintenance agree-ment with Cummins we do have a preference for Valvoline but you have the option to use other specified oils dependent on availability, application etc.”

The one exception is Guascor, an Alava, Spain-based subsidiary of

Dresser Rand, which recommends only its own brand of gas engine oil. “We incentivize the use of our oil, which has been tested and designed for our engines and the specific ap-plications that we’re in,” said Jose Maria Bilbao, sales director for power environmental solutions at Guascor. “During the warranty period, we will not warrant the engine unless our oil is used.”

Once outside the OEMs’ war-ranty period – which typically last 12 months – operating and maintenance companies are free to choose the gas engine oil that they use, but they usually won’t switch oils until they have run trials to prove that the new oil is better for them in their fleet. These trials are conducted over many months and are often funded by oil manufacturers.

“As part of the product develop-ment process, ExxonMobil will sponsor field tests to obtain OEM ap-

provals and provide lubricant proof of performance, including oil supply, power cylinder assembly installation, borescopic inspections and in-service oil analysis,” said Kathleen Tellier, a product research and technology specialist for commercial, marine & gas engine oils with ExxonMobil Lubricants and Specialties.

Chevron Technical Manager Paul Nadin-Salter added, “Everything in this business is about trials.”

Arevon Energy operates and main-tains gas power generation plants at 35 mature landfills in the U.K. with a total output of 64 MW. Arevon Asset Manager Mark Woolams explained how the trial procedure works from an end user’s perspective. If the trial oil is less expensive than the one that has been used, then the first stage is a like-for-like trial, without altering oil change intervals. If results are sat-isfactory the operator will adopt the new product but run additional



tests to see what benefits can be achieved by increasing oil change intervals. Initial trials can take six months to a year, he said, with the oil company usually underwriting the commercial risks and providing the test oil either free or at a reduced cost. This allows operating compa-nies to benefit from effectively being the trial resource for oil companies.

The conclusion is that the operat-ing and maintenance companies will only switch oil suppliers if the oil is first trialled on engines in its fleet and it reduces operating costs.

Alternative GasesTraditionally most gas engines ran

on natural gas, but alternatives are gaining in popularity. Some of them also bring challenges for gas engines and gas engine oils. Natural gas is al-most entirely methane and is a clean-burning fuel that produces carbon dioxide and water vapour. Most of the alternatives used today are some

type of biogas. These are produced from organic

matter and can either be manu-factured from waste or from crops grown especially for that purpose. Waste-to-energy sources include household, commercial and indus-trial waste as well as vegetable waste from crops, and animal waste such as carcasses and manure. The four main sources of feedstock are: agriculture, public authority waste collection, sewage treatment and the food and drink industry.

The content of biogases can vary substantially depending on the feed-stock from which they are produced, the production process and the de-gree of gas cleaning in the gas plant. However, most contain pollutants that can harm engines, degrade the lubricating oils and add pollutants to the exhaust. The two most common pollutants are hydrogen sulphide, which causes acids, and siloxanes, which form abrasive substances that

cause engine wear.Germany is a particularly impor-

tant market for biogas, with demand growing rapidly because of govern-ment incentives designed to acceler-ate investment in renewable energy. German production of biogas grew 20 percent in 2011, according to Eurobserver magazine.

“Our largest [gas engine oil] market would be Germany, which is the biggest market in biogas, followed by the United Kingdom,” said Sharanie Patterson, category portfolio manag-er for power generation, natural gas engine oils at Petro-Canada. “Ger-many has large potential, with some 7,000 gas engines right now running on biogas.”

The consensus is that landfill gas is declining in the U.K., where no new sites are permitted. (U.K. waste disposal is now moving to anaerobic digestion.) In contrast, volumes of landfill gas are increasing in the rest of the world, creating an opportunity for the U.K. to export its expertise to other markets.

“The whole drive away from dump-ing in landfills, moving to recycling and making use of these materials means that there will be no great prospects for landfill” in the U.K., said Julian Packer, director at operat-ing company Cogenco. Stone added, “[E]lsewhere, landfill is booming.”

Whether from landfills, sewer plants or other sources, the trend to-ward biogas is creating challenges for engine oil marketers. Formulators are addressing these through their choice of base stocks and additives.

Gas Type

Natural gas

Coal mine methane (methane diluted with air, CO2)

Shale/fracked gas

Liquid petroleum gas

Syn gases and industrial process gases

Biogas from anaerobic digestion of farm waste

Biogas from water treatment

Landfill gas

Biogas from anaerobic digestion of public waste

Biogas from pyrolysis

Normal Source

Gas wells, networks

Working and disused coal mines

Extracted from coal seams

Liquefied transport & storage

Many industrial processes generate flammable gases. Syn gas plants convert substances such as coal into gaseous fuel.

Agricultural plant or animal waste

Water or sewage treatment plants

Landfills with wells to capture gases from decomposing organic matter

Similar feedstock to landfills but uses anaerobic digestion

A different process to AD but producing similar gases

Category

A

A

A

A

A or B

Usually B but can be C

Usually B, but C if not treated.

C

C

B or C

Primary Gas Types Used for Power Generation

Source: The Strategy Works

A: Clean methane without significant contaminationB: Methane from anaerobic digestion, pyrolysis or similar process; contains contaminants that

generate acids in lubricating oilC: Methane from landfills or waste treatment; contains abrasives that enter oil

Michael Herson and Bob Bell are ana-lysts with The Strategy Works – a London-based strategic marketing consultancy specialising in market sizing and original business-to-business insight on a global basis. Herson can be reached at +44 208 868 0212 or [email protected] o

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contaminants - the strategy · pdf file · 2013-08-02contaminants by michael herson...

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