ILMA Compoundings - October 2018 - 33

and less bright stock as well," Puckett said. "That shift to
lighter fuel-producing crudes has to do with overall refinery
economics and not the economics of base oil production.
Given that bright stock and base oils make up only a small
percentage of a typical refinery's overall production, it's likely
that higher value for their largest production streams (fuel)
will drive their crude selection process."
Puckett added that it is important to remember that a
very small percentage of the world's refining capacity is used
to convert crude to base oils. "The vast majority of refining
is for the purpose of producing fuels," he said.
What's more, price might be affected. "There is a limited
amount of sweet crude, and it is currently all spoken for. If
they want to switch to sweet crude, they may have a difficult
time getting their hands on sufficient quantities," Ames
explained. "With light sweet crude being in high demand,
the price spread between that and heavy sour crude is going
to widen."
Alfano said that refinery economic optimization may place
price pressure on adjacent products, including fuel oil, diesel

and base stocks, as low-sulfur diesel demand increases.
"Customers and suppliers should continue discussing the
changes and new market challenges and opportunities IMO
2020 will bring," she said.
Puckett said there are several relevant questions that
finished lubricant manufacturers should be asking their
suppliers. "Every refinery is different and will respond to
IMO 2020 in a way that best fits their unique assets and
their core market objectives," he said. "A purchaser of base
oils should understand how their particular supplier will
shift operations with IMO 2020 and how it will impact
their specific supply capabilities. That understanding
should involve not only volume, but consistency of the
product as well."
Ergon's core business is the production of specialty base
oils. "We certainly participate in the fuels market at both
of our refineries, but our vision and focus continues to be
excelling in specialty markets. That being said, not a lot will
change in our production plan as a result of IMO 2020,"
Puckett said.

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ILMA Compoundings - October 2018

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