IN THE SPOTLIGHT

JULY '14

IN THIS ISSUE:

FAST&FORWARDInsights and innovations to help you accelerate performance

ISSUE

6

The Increasing Importance of PAO in Modern Engine LubricantshBy Todd Matvick

It’s possible you’ve never heard of PAO, but chances are you’ve used it in your car or off-road recreational vehicle. PAO (Poly Alpha Olephin) is a synthesized oil base stock used in high-end motor oil applications. It is made from LAO (Linear Alpha Olephins) linked together to form a molecule that has ideal cold temperature, volatility and lubricating properties. This makes for a highly stable, highly-refined lubricant. In the world of base stocks, PAOs are considered Group IV synthetics, higher in quality than Group I and II mineral oils and even Group III synthetics because of this synthesis process.

PAOs are expensive to produce. But, with their ultra-stable molecules, they offer superior lubricating properties and have begun to play an ever-increasing role in modern engine oils, especially the thinner grades aimed at helping vehicles meet EPA fuel economy regulations such as Honda’s 0W-16. And it’s not just Honda, many OEMs are looking at thinner oil blends to help them meet fuel economy standards. With more modern engine oils leaning on PAO blends, there are ever-increasing demands for PAO feedstock and that creates tightness in an already tight market. For the shop owner and consumer this “tightness” is felt in the cost of the product – your oil changes are more expensive.

IN THE SPOTLIGHT Why PAO is More in Demand Than Ever

TECH TRACKER Use of Neat Oils in Modern Metal Removal

SUSTAINABLE SUCCESS Lube-Tech Teams with MADA at Minneapolis Auto Show to Feature Automotive Recycling Services

MARKET WATCH

Prices Climb as Market Remains Tight

SHOP TALK The Importance of Diesel and Biodiesel Fuel Testing

SOCIAL ACTION Jared Allen’s Homes for Wounded Warriors Helps Veterans

Photo Credit: Center for Liquefied Natural Gas

IN THE SPOTLIGHT

Today, GIII covers most of this demand, but balancing low viscosity requirements and volatility can require some PAO depending on overall formulation. If the trend toward thinner oils continues it could be increasingly difficult for GIII to meet manufacturer’s needs. PAO demand will at least stay stable and will probably increase. PAO is also in demand for such applications as drilling, where it is the preferred lubricant.

The brightest light on the horizon for PAO supply is that one of the major producers of PAO is planning a LAO plant and expansion of LAO production which will mean increased supply of PAO. Until supply is increased or demand is tempered, costs for PAO blends will remain high. However, with this high cost comes a superior lubricant that helps your car last longer and run more efficiently. Ultimately that makes PAO less of a problem and more of an attraction for OEMs and consumers.

LAO: THE BUILDING

BLOCKS OF PAO

Ethylene is the basis for a wide range of chemicals including plastics and various solvents. Ethylene is also the basis of Linear Alpha Olefins, which are produced by the oligomerisation of ethylene. Linear Alpha Olefins (LAO) have carbon chain lengths of four or higher and are the basis for such things as polyethylene, oxo alcohols used in detergents and plasticizers and Poly Alpha Olefins, which are used in the production of synthetic lubricants.

ETHYLENE

LAO

PAO

Photo Credit: Center for Liquefied Natural Gas

Use of Neat Oils in Modern Metal RemovalhBy Andy Ellinghausen

The term “neat” describes a cutting oil that is not mixed with water. Cutting oils mixed with water, better known as “water extendible” fluids, are designed to provide better cooling during the machining process, especially high-speed processes. In an emulsion, water provides cooling and oil provides lubrication. While neat oils have traditionally been used in low-temperature applications such as slow-speed machining, they are becoming used more and more in higher speed applications, edging out water extendible fluids, for a variety of reasons:

• More difficult alloys are being used in many machining processes and machining processes are becoming more complex, both requiring better lubrication

• Water-extendible fluids require a unique waste disposal process since the water is typically contaminated with metals

• Use of tri-purpose fluids for machining, hydraulic/waylube and stock feed minimize inventory requirements

Other advantages to using neat oils in the machining process are higher tool speeds and stock feeds, longer drain intervals, consumption reduction and overall fluid-related cost reductions.

BASE FLUIDS

Traditional base fluids for industrial neat oils are napthenic and paraffinic petroleum fluids. Group II paraffinic is being increasingly used due to widespread availability. GII paraffinic brings benefits such as high temperature viscosity and oxidation stability as well as lower volatility, but it also has lower additive solvency which is a concern.

A growing alternative to petroleum-based fluids are vegetable-based fluids and synthetic esters including canola, soybean, rapeseed, sunflower, palm and others. These fluids are not new, but are increasing in use due to airborne mist being safer than petroleum-based oils, availability, environmental impact and pricing coming more into line with traditional fluids.

ADDITIVES

Chlorine has long been the go-to additive for machining lubricants because it is polar (clings to metal) and has an active temperature range that is suitable for typical machining processes. However, chlorinated parrafins are being increasingly regulated by the EPA as they fall under similar classifications to chlorinated solvents. Short chain CP’s have already been discontinued. Active sulfur has limited applications due to potential staining of various metal alloys. The current trend is toward phosphorous, inactive sulfur and blends of the two to meet regulatory criteria as well as needs for higher speeds, feeds and temperatures at the tooling surface.

THE FUTURE

As environmental concerns and their associated costs become a more prominent factor in the use of water extendible fluids, we expect to see the use of neat oils, especially bio versions, increase. As we learn more about the use of these fluids and their associated additives their viability and desirability will increase.

TECH TRACKER

SUSTAINABLE SUCCESS

Lube-Tech Teams with MADA at Minneapolis Auto Show to Feature Automotive Recycling ServiceshBy Bob Palmgren

The Twin Cities Auto Show is where dealers, manufacturers and trades get together to display their services and inform visitors and industry people about their business. The Auto Show typically features over 450-vehicles and the value on the floor is estimated at more than $15-million dollars. This year Lube-Tech teamed up with the Minnesota Automobile Dealers Association (MADA) and fielded a booth that displayed its automotive recycling services.

On March 12 Lube-Tech sponsored a MADA Service Council Private Preview and Reception and ESI (Equipment Service Installation) sales representatives Dirk Palmgren and Mike Marrs gave an equipment demonstration in front of over 100 dealership fixed operation managers. In the Lube-Tech booth, people were encouraged to fill out a “score card” quiz which had answers hidden in Lube-Tech’s display booth signage, and then enter to win a portable cell phone charger. In all 140,000 people attended this year’s Twin Cities Auto Show. Lube-Tech offers complete automotive recycling services including used oil, used oil filters, antifreeze and cleaning solvents.

ONE-GALLON OF USED MOTOR OIL CAN BE

RECYCLED INTO ROUGHLY 2.5 QUARTS OF LUBRICATING

BASE OIL.

LOOKING FOR A PLACE TO RECYCLE YOUR USED OIL?

WWW. EARTH911.ORG

LETS YOU SEARCH FOR OIL RECYCLING PLACES BY ZIP

CODE.

ONE-GALLON OF USED OIL, IMPROPERLY DISPOSED, CAN CONTAMINATE ONE-MILLION

GALLONS OF WATER.

RECYCLING TWO-GALLONS OF USED OIL IS EQUIVALENT

TO GENERATING THE ELECTRICITY TO POWER AN AVERAGE HOUSEHOLD FOR

24-HOURS.

SOURCE:

HTTP://WWW.RECYCLEOIL.ORG/

RECYCLING FACTS

Prices Climb as Market Remains TighthBy Brooke Sunde, Commodity Sourcing Manager at Lube-Tech

Recent announcements concerning base oil pricing are sure to make some waves for both blenders and consumers in the near future. In the GI arena, Exxon, Holly and Paulsboro all stepped out with a $0.10/gal increase on Bright Stock in mid-March.

Bright Stock and GII 600 continue to be tight with limited spot availability. Chevron announced a $.20/gal increase across the board again in mid-March. So far no one else has followed Chevron in this increase so prices are staying fairly stable. ICIS Base Oil Report summed up the market as of mid-March well: “Market share considerations and wobbling crude oil prices are said to underpin the hesitant stance in the Group II tier” (3/17/15). The GII 600 tightness

may eventually drive the rest of the market to follow Chevron’s increase lead, but we are still waiting. Spot pricing has been moving upwards – an indication of things to come - but thus far, no further announcements.

In the PAO market, product continues to remain tight. There have been many discussions on expansions and Ineos released a formal announcement the last week of March regarding their plans to expand PAO production by 2018 and build a LAO plant (PAO feedstock) by the end of 2017. In the immediate term, they are working on reducing bottlenecks to existing production and increase output. The other major PAO manufacturers are also contemplating expansions on both PAO and LAO so there may be more announcements to come in the future.

MARKET WATCH

GAS IS CHEAP, WHY ARE PRICES

RISING?We see on the news and at the gas pump that oil is cheap, so why are base stock prices rising? Good question. The answer has more to do with basic economics than crude pricing. While crude is a major factor in determining base oil pricing, supply and demand will always trump the crude pricing factor. Right now, supply is flush on lighter viscosities, but tighter on heavy grades and that is where base oil pricing would split off from crude and follow market demand. Also, some of the tightness is suspected to be coming from manufacturers dialing back production since crude is down and margins are thinner.

The Importance of Diesel and Biodiesel Fuel TestinghBy Breana Sevilla

Modern, Ultra Low Sulfur Diesel fuels are prone to problems brought on by storage and seasonal temperature changes. In states that have biodiesel mandates such as Minnesota, these problems are compounded as Biodiesel is more susceptible to water contamination. Testing and treating modern diesel fuels is critical to maintaining these fuels, their systems and storage equipment.

SPRING FUEL CONCERNS

During winter months, moisture in diesel fuel storage tanks tends to freeze and “drop out,” or settle to the bottom of the tank. When warm weather returns the water thaws and causes problems such as corrosion. Also, this moisture fosters the growth of microbes that can clog diesel fuel systems.

GENERAL FUEL CONCERNS

• Modern Ultra-Low Sulfur Diesel fuel degrades faster than previous fuels. As the fuel degrades it becomes dirty and sludge-like and is more susceptible to microbial growth. Degraded fuel can clog filters and ultimately damage diesel engines if left untreated.

• Water contamination can lead to corrosion and provides a breeding ground for bacteria. Bacteria and their waste can clog filters and corrode metal parts in the fuel system.

• Lower sulfur levels in fuel make it easier for bacteria to grow in diesel fuel tanks. Bacteria emit gaseous waste that can corrode the walls of fuel tanks and metal parts in the fuel system.

DIESEL FUEL MAINTENANCE

Periodic sampling and analysis of fuel and fuel systems is critical to early detection of diesel fuel system problems or contaminants. Proper diesel fuel treatments can solve existing fuel system problems and help avoid any future problems. Semi-annual testing is recommended to insure a healthy diesel fuel system.

SHOP TALK

To learn more about Lube-Tech, visit lubetech.com.

SOCIAL ACTION

Jared Allen’s Homes for Wounded Warriors Helps Veterans

Colin Faust graduated high school in 2007 and joined the Marines in 2009. About a year later he was on foot patrol in Helmand Province Afghanistan when he stepped on an IED. In the explosion he lost his left leg and his right leg and left arm were severely damaged. Faust came home and enrolled in Minnesota State University but his small patio home in Mankato wasn’t up to his needs as a disabled veteran. Enter Jared Allen’s Homes For Wounded Warriors (JAH4WW). With the help of supporters such as Lube-Tech, JAH4WW was able to build Colin a new home in Minnetrista that suited his needs. Steve Clinton and Russ Drake at Drake Construction as well as the local Carpenters Union, Floor Covering Union, Cement Masons Union, Tile Setters/Brick Layers Union, Electricians Union and Homeco Insulators all worked to complete the home. Shortly after receiving the keys to his new home, Colin proposed to his girlfriend Julia. Lube-Tech is proud to be a supporter of JAH4WW, helping make brave men and women’s lives a little easier.

At Lube-Tech, we believe in being a part of the community in which we do business. That’s why, every year, Lube-Tech employees donate their time and money to help various charities and organizations around the Twin Cities as well as around the globe. Lube-Tech supports these efforts and countless employee volunteer hours by donating a percentage of its annual profits to both local and national charities.

Some of the charities in which Lube-Tech participates include:

High School for Recording Arts

Homes for Wounded Warriors

Second Mile Haiti

Paul Adelman Children With Disabilities

Camp Courage and True Friends

Breakthrough Twin Cities

Bobby & Steve’s Youth Foundation

Pheasants Forever- Full Circle Farms Chapter

Bame Foundation

Children’s Cancer Research Fund

Social Venture Partners

Little Brothers

Autism Society of Minnesota

Global Action Project

Humor to Fight the Tumor

Breakaway, Inc.

Como Friends

Angel Foundation