Conventional Unconventional Gas Trends in Latin Unconventional Gas Trends in Latin America - ... Built Asia’s first world-scale lubricant additive plant in Singapore ... Gas Market Trends in Latin ...

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  • Conventional & Unconventional Gas Trends in Latin America -Impacts on Lubricants

    Marcos DaviJuly 01st, 2015

  • Presentation Contents

    Brief Oronite Introduction

    Whats Natural Gas

    Gas Market Trends in Latin America

    Natural gas resources, policy initiatives

    for unconventional & non-natural gas utilization

    Brazil & Argentina Overview

    Emission & Dual Fuel Trends

    OEM Trends

    Impacts on Lubricants

  • The Oronite brand name has been synonymous with specialty petroleum-based products since 1917 when it was part of Standard Oil Company of California (SOCAL).

    Oronite evolved into a truly global business after the successive formation of non-U.S. Joint ventures (JV), JV buy-outs, building the Singapore manufacturing plant and strong organic growth.

    New technology is the lifeblood of the business.

    Oronite Almost 100 Years Old

    3

  • Oronite A Heritage of Innovation

    1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

    1917Global fuel and lubricant additives company was established

    2004First fully qualified ILSAC GF4 product

    2005Patented additive technology for new generation of low emission diesel engine oils

    Polybutene-based dispersant for CJ-4

    2008Patented Marine Trunk Piston Engine Oil Carboxylate Technology

    First railroad oil additive formulated for low sulfur fuels

    1935First diesel fuel additive

    1938First compound oil for diesel locomotives

    1941First detergent oil for passenger cars

    1954Revolutionary gasoline additive to keep carburetors deposit free; first thermally stable phenate additives for marine engine lubricants

    1960Dispersant for natural gas engine oil

    1980Fuel additive specifically for unleaded gasoline cars

    1984First engine oil formulation for Group II base oils

    1989Additive for multi-grade diesel locomotive engine oil

    1920sIntroduction of Zerolene F, an anti-chatter additive used to lubricate fabric transmission bands in the historic Model T Ford

    1998Introduction of Polyether carrier fluids

    1998Oronite acquired the PARATONEviscosity index improver business

    1999Built Asias first world-scale lubricant additive plant in Singapore

    2000Oronite became wholly owned subsidiary of Chevron Corporation

    4 2014 Chevron Oronite Company LLC. All rights reserved

  • What is Natural Gas?

    Typically a major portion of methane with lesser

    quantities of longer chain hydrocarbons such

    as - ethane, propane, butane, etc

    Wellhead, Landfill, Digester, Pipeline, Shale Gas, mine gas or coal

    seam gas, etc

    Some inert constituents of natural gas are

    carbon dioxide, nitrogen, hydrogen sulfide, etc

    Shorter chain hydrocarbons generate

    higher energy per weight % fuel

    Pipeline quality natural gas typically contains 90

    % + of methane

    Digester and Landfill gas with much lower

    Methane content (50%)

  • Presentation ContentsBrief Oronite Introduction

    Whats Natural Gas

    Gas Market Trends in Latin America

    Natural gas resources, policy initiatives

    for unconventional & non-natural gas utilization

    Brazil & Argentina Overview

    Emission & Dual Fuel Trends

    OEM Trends

    Impacts on Lubricants

  • Remaining Natural Gas ResourcesGrowth will be sustained by Unconventional

    7 2013 Chevron Oronite Companies. All rights reserved.

  • Global Shale Gas Resources

    U.S. Energy Information Administration | Technically Recoverable Shale Oil and Shale Gas Resources, 2013

  • Policies & Regulatory InitiativesNon-Conventional Fuel Sources

    Increased non-

    conventional gas

    utilization

    Gas Plus Program implemented for promoting exploration of non-conventional sourcesMore than 50 projects approvedInvestment of approximately US$ 4.2 billion

    National Policy for Solid Residues converting dumps to landfill sites

    Developers to Expand in Peru After 2015 Renewable Power Auctions (Biomass included)

  • Presentation ContentsBrief Oronite Introduction

    Whats Natural Gas

    Gas Market Trends in Latin America

    Natural gas resources, policy initiatives

    for unconventional & non-natural gas utilization

    Brazil & Argentina Overview

    Emission & Dual Fuel Trends

    OEM Trends

    Impacts on Lubricants

  • Argentina Overview (1/2)

    Energy economy largely dependent on hydrocarbons (~88%)

    Drive to restore self sufficiency in hydrocarbons

    Became net gas importer in ~2008

    Became net oil importer in ~2012

    Recent legislative changes to accelerate shale oil and gas development

    Investment fromo CNOOC, Sinopec, Gazpromo Chevron, Shell, Others

    Shale reserve estimateso Oil, 27 Billion Barrelso Gas, 802 TCF

  • Argentina Overview (2/2)

    Shale overview

    Initial development is in the Vaca Muerta shale (Neuquen Basin) focusing on oil rich areas

    o Loma Campana, and Loma La Lata areas are already producing ~30,000 bbl/day of oil and 4 million cuft/day of gas

    Initial vertical wells have been logged to provide geologic maps for placing horizontal wells

    Well drilling and completion costs are initially high, but expected to drop to NA norms when geological mapping is defined, and pad drilling techniques are used

  • Brazil Overview (1/2)

    Brazil is the 8th largest total energy consumer and 10th largest producer in the world

    ANP estimates Brazil has 15.6 billion barrels of proved oil reserves (2013)

    The largest importers of Brazilian crude in 2013 were;

    China, 115,000 bbl/d

    US, 110,000 bbl/d (however the US exported 179,000 bbl/d of petroleum products to Brazil in 2013)

    India, 49,000 bbl/d

  • Brazil Overview (2/2)

    Even though the ANP estimates that, at the end of 2013, Brazil had an estimated16 TCF of proved natural gas reserves, second in South America after Venezuela, consumption still exceeds production.

  • WORLD LNG ESTIMATED SEP 2014 LANDED PRICES Gas Price : A challenge for LA industry growth!

    Source: Waterborne Energy, Inc. Data in $US/MMBtu

    Investments on stationary power plants & increase of gas usage in mobile & transport applications

    Incentives on Biomass,

    Landfill & Renewable

    Souces

    Argentinas & Global

    Shale Gas Reserves

    Brazils Pre-Salt &

    Onshore reserves

  • Presentation ContentsBrief Oronite Introduction

    Whats Natural Gas

    Gas Market Trends in Latin America

    Natural gas resources, policy initiatives

    for unconventional & non-natural gas utilization

    Brazil & Argentina Overview

    Emission & Dual Fuel Trends

    OEM Trends

    Impacts on Lubricants

  • 2014 Chevron Oronite Company LLC. All rights reserved.

    Burn cleaner than diesel with no particulate emissions NOx nitrogen oxides, a criteria pollutant

    Primarily a mixture of NO and NO2 in exhaust

    Toxic, precursor to ground level ozone, and photochemical smog

    CO carbon monoxide Toxic

    Precursor to photochemical smog

    Hydrocarbons (VOC) Methane, other hydrocarbons, and HAPs

    (hazardous air pollutants)

    Precursor to photochemical smog

    Emissions PollutantsGas Engines

  • Possible Future Trends-Dual Fuel

    A seismic shift is underway in the diesel engine market place which will have profound effects on the lubricant and additives businesses

    Three major segments impacted - Change is driven by large price differential between diesel fuels and natural gas on an equal energy content basis, but fueling infrastructure limited

    1. Marine

    Deep Draft (freighter, tanker)

    Trunk Piston (workboats, ferries)- very active area in Europe and NA

    2. Automotive (on-road)

    Heavy Duty (truck and bus)- primarily SI so far

    3. Off Road

    Railroad- FRA holding up the show in NA

    Inland marine- strong interest, testing

    Oil and Gas Industry- rapidly moving into drilling and fracturing fleets

    Mining Industry- gaining traction

  • Dual Fuel - Lubricant ConcernsSome Examples Soot Effects

    Lower dispersant requirement

    Excess dispersant from diesel engine oils may

    Increase water retention, emulsion formation and nitration of excess aminic material

    Lower soot wear may also result in different anti-wear appetite and shift in UOA metals

    TAN

    Could be better (low sulfur)

    Could be worse (oxidation/nitration)

    TBN

    High probability of lower TBN requirements

    High ash may result in combustion chamber deposits (Knocking, Valve issues)

  • Engine Market TrendIndustry Consolidation

    GE acquires Dresser Inc. (Waukesha Engine) Previously acquired

    Jenbacher

    Caterpillar acquires MWM Previously acquired

    MaK Perkins

    Dresser-Rand acquired Guascor Dresser-Rand is now

    to be acquired by Siemens

    Previous acquisitions are still being digestedNo major changes in approval processes yet

    But are sure to come

  • Presentation ContentsBrief Oronite Introduction

    Whats Natural Gas

    Gas Market Trends in Latin America

    Natural gas resources, policy initiatives

    for unconventional & non-natural gas utilization

    Brazil & Argentina Overview

    Emission & Dual Fuel Trends

    Gas Engine Trends

    Impacts on Lubricants

  • Diesel Vs. Gas Engines On the Lubricants & Additive Perspective!

    Die

    sel Engin

    e O

    il Additiv

    e Soot Dispersancy Piston Deposits Valve Train Wear

    Higher Zinc Corrosion Control (Fuel S) Higher Ash (0.8-1.0% ash) Higher Phosphorus (>800

    ppm) API performance

    designation

    Gas

    Engin

    e O

    il

    Additiv

    e Oxidation/Nitration Control Valve Seat/Guide Wear

    Performance Low Combustion Chamber

    Deposits Minimize Spark Plug Fouling Minimize Piston Deposits Catalyst Compatible

    Low ash (~0.5% ash) Low Phos & Zinc (

  • Landfill Gas ApplicationIncreasing Severity on Lubricants

    LFG : A by-product of the decomposition of organic solid wasteo ~50% Methane; ~50% CO2;

  • Relative ease of meeting strictest emissions levels with three way catalyst may lead to more large stoichiometric engines (new Waukesha P9394GSI)High nitrationMay require EGRMaximize engine volumetric efficiencyLowest possible emissions

    Comparatively high cost of SCR may push adoption of the above trend

    OEM Trends for Conventional NGIncreasing Severity on Lubricants

    High BMEP EnginesIncreased knock sensitivityCombustion chamber depositsOil mist/vapor can cause pre-ignition

    Steel pistons with high set rings needed for high pressures and temperaturesHigher temperature and pressure in ring beltGroove and land depositsOxidation and nitration

    High under crown temperatureUnder crown varnish/deposit

  • Thank You!

    A Global company with nearly 100 years of experience

    Market leadership in several major product segments

    Strategically positioned and aligned for Future Growth

    Technology and Innovation are the lifeblood of our business

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