Fuels & Lubes International by F+L Asia

Quarter Two 2010 Volume 16 Issue 2

I N T E R N A T I O N A L

GREEN PLANES, SHIPS AND TRAINS FLYING HEADS / MEET JAE CHO SERENDIPITY / THINK BIG

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Editor’s Corner Fuel Economy & Emissions

“Collaboration among equipment builders, the oil and additive industries and government is critical in achieving the twin goals of reducing fuel consumption and CO2 emissions.” Vicky Villena-Denton Editor-in-Chief & Publisher

FOR OUR READERS WHO WERE NOT ABLE TO attend F+L Week in Singapore in March, this issue features some of the highlights from this meeting. Included are the keynote presentations by Shell’s Andrew Foulds and Chevron Oronite’s Andy Tugendhat. Both gentlemen agree that collaboration among equipment builders, the oil and additive industries and government is critical in achieving the twin goals of reducing fuel consumption and CO2 emissions. Also featured in this issue is one of several papers presented in the fuel economy and emissions session, on a fuel economy screening test for aged oil. Continuing on our theme of “Fuel Economy & Emissions: Exploring Beyond Today’s Limitations,” our cover story in this issue focuses on “Green planes, ships and trains” by Hank Hogan. You will find out what the aviation, shipping and railroad industries are doing to boost the fuel efficiency of their fleets as well as reduce their carbon footprint. Highlighting the diversity of our industry, this issue also features the crucial role of lubricants in magnetic disk storage in an article written by Phillip Britt. Finally, this issue features a profile on Jae Cho, the new vice president and managing director of Afton Chemical for Asia-Pacific, as well as on Rhein Chemie, whose activity in Asia-Pacific is picking up steam with the opening of its new plant in Qingdao, China.

F U E L S & L U B E S I N T E R N AT I O N A L

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CONTENTS P H O T O CO U R T E S Y O F G E T R A N S P O R TAT I O N

GREEN PLANES, SHIPS AND TRAINS Flying the green skies . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Slowly but surely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Cutting carbon while rolling along . . . . . . . . . . . . . . 30

Features Rhein Chemie pursues “profitable growth” in Asia . . . . . . . . . . . . . . . . . . . . . . . 12 Flying heads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Meet Jae Cho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Serendipity: Afton Chemical investment in Asia-Pacific comes at a fortuitous time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Think big: Collaboration is the key to innovation . . . . . . . . . . . . . . . . . . . . . . . . . 38

8 Asia starts to drive global base oil market 4

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page

“We’ve taken fresh oil, aged it in the lab, run a bench test in the lab, and it’s told us with a pretty good degree of accuracy how much fuel economy we would retain if we were to run a full length VID test.” page 6

Meet JAE CHO

Columns Automotive: Screening aged oil for fuel economy . . . . . . . . . . . . . . . . . . . . 6 Base Oil: Asia starts to drive global base oil market . . . . . . . . . . . . . . . 8

THINK

BIG

Editor's Corner . . . . . . . . . . . . . . . . . . . . . 3 Advertisers’ Index . . . . . . . . . . . . . . . . . . 42

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AUTOMOTIVE COLUMN I L LU S T R AT I O N BY C H I L I D O G S

Screening aged oil

by Hank Hogan

for fuel economy

Lubricants offer some of the best bang-for-the-buck in terms of fuel economy, according to Trevor Miller, an engine oil formulator with Chevron Oronite in Richmond, Calif., U.S.A. In a presentation at the Annual Fuels & Lubes Asia Conference in Singapore in March, Miller said that cars are going ever longer between oil changes. In addition, mandated fuel economy standards are rising worldwide, he said. >>

HAT MAKES FUEL ECONOMY retention important. Unfortunately, traditional testing of the ability of aged lubricants to continue to deliver fuel economy is time consuming and expensive. A sequence VID test, for example, takes four days and costs tens of thousands of dollars. A team from Chevron Oronite has developed a much quicker and cheaper approach, Miller said. “It’s something that now takes us two days and not much money as compared to something that takes 100 hours and US$30,000.” “We’ve taken fresh oil, aged it in the lab, run a bench test in the lab, and it’s told us with a pretty good degree of accuracy how much fuel economy we would retain if we were to run a full length VID test,” he said. Old oil, new opportunity

In his presentation, Miller noted that engine lubricants offer a fuel consumption

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reduction to cost ratio roughly three times the alternatives. Also, lubricant changes can be implemented immediately. Today, though, cars are being driven for longer distances between oil changes. Five years ago, surveys showed that U.S. drivers averaged 6,860 kilometers between oil changes. Last year, the corresponding figure was 7,697 km for cars equipped with an oil life monitoring system. Thus, the fuel economy delivered by aged oil is increasingly important. The Sequence VID test addresses engine oil aging, running in two phases to match the ef-

“While lower viscosity plays a major role in better fuel economy, results from VID tests show that viscosity has almost no effect on fuel economy retention.”

fects of 10,500 km of vehicle mileage. Due to the cost and time involved, however, the VID approach is far from ideal. Nonetheless, it has produced some valuable information. Miller said that while lower viscosity plays a major role in better fuel economy, results from VID tests show that viscosity has almost no effect on fuel economy retention. That could be good news for Oronite and other additive companies. “There’s a very clear effect from the additive package. So if we can take advantage of that and exploit that to some degree, I think there’s an area within our industry to really make some good strides moving forward.” Running rough

Miller noted that Oronite has a screener for the first VID phase, which tests for fuel economy after 16 hours. The “Screening aged oil...” continued on page 33 >>

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BASE OIL COLUMN I L LU S T R AT I O N BY C H I L I D O G S

Asia starts to drive global base oil market

HE WORLD IS CHANGING. In 2009, base oil prices started at the bottom with prices around US$420 per metric ton for SN500 FOB Europe. A strong pull from the Asian countries prevented the market to collapse even further. Nevertheless, it was a year full of uncertainty and cautious buying. Prices rebounded from March onwards, reflecting an improved sentiment in the financial market, improving macro-economic data and a substantial increase in crude oil prices which started in mid-February 2009. After the summer, economic data got more mixed and crude prices started to move sideways and seemed to trade range bound. As buyers in the base oil market were still cautious and unwilling to take on stock, prices peaked and then stayed basically flat until the end of the year. In the first quarter of 2010, prices were at US$810 per metric ton FOB Europe for SN500, which is almost twice as much as selling prices in March 2009 but close to year-end 2009 prices. The most activity in 2009 was seen from February to July. European and U.S. selling prices were at very low levels, which created buying interest from countries like India and China. Prices kept on rising over the next months to US$840 per metric ton FOB Asia. After the depreciated feedstock had been depleted and refineries adjusted their productions levels, the global base oil market found a new equilibrium. Little activity was seen for the rest of the year. This continued into the first months of 2010. In March, prices rose again to US$1,010 per metric ton FOB Asia for

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by Jeroen Looye

BS150. This was due to tightness for especially heavy grades in the Asian region. In Asia, buying activity remained stable up to the Lunar festivities in mid-February. At the end of February, there was upcoming interest due to seasonal demand for lubes in China. Prices started to firm up as Petrochina and Sinopec increased their domestic prices. The shutdown of S-Oil refineries for Group II and III, the explosion at the Pertamina refinery in Indonesia and the shutdown of some refineries of Petrochina and Sinopec added to the tighter supply conditions. Base oil prices for SN500 rose by about US$80 per metric ton in the last five weeks of quarter one. European and Russian base oil prices were also mainly stable in the first quarter of 2010. Prices started to rise only in the second half of March. Recent prices heard were US$775 per metric ton FOB Europe for SN150. Price movement in Europe was mainly due to production and demand from the Far East and Africa. European demand for base oils remained weak nevertheless. From Russia, exports are expected to decrease due to domestic â&#x20AC;&#x153;This time, the start-up demand and the closure of the Asian engine of the Yaroslavl refinery for maintenance. Another comes together three refineries are exwith the tightness of to go off-line for availability of base oils pected maintenance in May. in Asia, Russia and the This quarter, India imU.S., driving up base oil ported more than 230,000 metric tons of base oils. market prices.â&#x20AC;?

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It seems there is a surplus of inventories. Therefore, buyers were reluctant to accept the increase in domestic prices being imposed by some major refineries, including Bharat Petroleum, Hindustan Petroleum and Indian Oil, in April. Hindustan Petroleum even tendered a total quantity of 5,000 metric tons of SN500 and BS150 for export in March. In the U.S. market, base oil prices remained fairly unchanged in the first few months of 2010. In mid-February, there was an explosion at the Calumet refinery at Shreveport, Louisiana. This refinery was offline for three weeks. Nevertheless, prices started to rise only in mid-March. Domestic prices were around US$970 per metric ton for SN500. Tight supply of the heavier base oil grades was mainly caused by crude oil prices and expectations of higher demand for vacuum gas oil. These developments indicate that base oil markets worldwide are now currently pre-dominantly driven by the Asian economies. This time, the start-up of the Asian engine comes together with the tightness of availability of base oils in Asia, Russia and the U.S., driving up base oil market prices. Jeroen Looye spent seven years as a base oil trader for AP Chemicals in Belgium. He is now an entrepreneur based in The Netherlands and is director of the Dutch company Losiwo B.V. that launched the base oil platform, www.baseoilmarket.com, in 2008.

This is not surprising considering the fact that substantial economic growth can only be found in Asia and some emerging economies elsewhere. The U.S., Europe, the U.K. and Japan are recovering slowly from the worst economic crisis since the 1930â&#x20AC;&#x2122;s. However, a large part of the economic growth seen in these countries is due to huge government stimulus programs and both conventional and unconventional monetary policy from central banks. We expect growth in these economies to fall back once the inventory cycle ends and governments start to address their fast-growing deficits. Asian countries will remain the growth engine of the world and will claim a larger position in the world economy. The ever increasing importance of Asian countries in the base oil market reflects this fundamental development. It remains to be seen whether high growth in Asian countries and emerging countries around the world will be sufficient to offset the structural lower growth in the U.S., Europe and Japan. Both crude and base oil prices ultimately depend on the level of economic growth and the related demand for finished products. The uncertainty of future economic development is now higher than usual. We will closely monitor economic developments in the coming months to see where the world economy is headed and what the longer term trend in crude oil and base oil markets will likely be. In the meantime, it pays to be cautious.

2009-2010 Base oil SN500 prices ($/MT) $900 $850 $800 $750 $700 $650 $600 Sep Oct FOB Europe

Nov Dec Jan Feb Mar FOB Asia FOB Middle East FOB Baltic

2009-2010 Base oil SN150 prices ($/MT) $900 $850 $800 $750 $700 $650 $600 Sep Oct FOB Europe

Nov Dec Jan Feb Mar FOB Asia FOB Middle East FOB Baltic

2009-2010 Base oil BS150 prices ($/MT)

$1000 $950 $900 $850 $800 $750 $700 Sep

Oct Nov Dec FOB Europe FOB Asia

Jan Feb Mar FOB Middle East

2009-2010 Base oil SN500 prices ($/MT) $900 $850 $800 $750 $700 $650 $600 Sep

Oct

Nov Dec Jan Feb CFR NE Asia CFR India

Mar

2009-2010 Base oil SN150 prices ($/MT) $900 $850 $800 $750 $700 $650 $600 Sep

Oct

Nov Dec Jan Feb CFR NE Asia CFR India

Mar

2009-2010 Base oil BS150 prices ($/MT) $1200 $1100 $1000 $900 $800 $700 $600 Sep

Oct

Nov Dec Jan Feb CFR NE Asia CFR India

Mar

Source: www.baseoilmarket.com

10 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

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FE AT U R E

Rhein Chemie pursues “profitable growth” in Asia

by Vicky Villena-Denton

From left: Stefan Limbach, Philipp Junge and Klaus Wuscher

12 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

HILIPP JUNGE, 33, is the new executive vice president of Rhein Chemie’s Lubricant Oil Additives (LOA) Division. The boyish-looking executive VP was in Singapore recently for F+L Week, where he and Stefan Limbach, senior manager of lubricant oil additives for ASEAN and Australia/New Zealand, met with the F+L team, together with Klaus Wuscher, technical service manager for the Asia-Pacific Region. “I think 2009 was a challenge for all of us,” said Junge. However, he is optimistic that demand will recover in 2010. “We’ve had a very strong first two months of this year, although this is compared to a very weak first quarter in the crisis year 2009. I’m on the optimistic side that 2010 is going to be a good year.” Rhein Chemie, a wholly owned subsidiary of the LANXESS Group, markets a very broad range of specialty, high-performance additives and formulations. These include extreme-pressure additives, anti-wear additives, corrosion inhibition additives, watermiscible additives, antioxidants and specialty products, as well as additive packages for metalworking fluids, hydraulic, turbine, compressor, gear and multi-purpose oils. Rhein Chemie officially opened its first manufacturing facility for lubricant additives in Asia-Pacific last September in Qingdao, China. The plant, which produces a whole range of additive blends, was built at a cost of US$7 million. It has an annual capacity of 4,500 metric tons. Rhein Chemie has been in Qingdao, a major city in

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eastern Shandong province, since 1995. Qingdao is also where China’s famous Tsingtao beer is brewed. Aside from lubricant additives, Rhein Chemie has two other business lines. One of those is rubber additives. “The company has built up a good infrastructure there, including laboratories, and has an experienced team. These are perfect foundations for Rhein Chemie to set up production of LOA

additives in Qingdao,” said Limbach. Besides Qingdao, Rhein Chemie has plants to manufacture its LOA product slate in Mannheim, Germany, where the company is headquartered, and in Antwerp, Belgium. In comparing Qingdao with Mannheim, Junge said the Mannheim plant can do more chemistry than Qingdao because it’s a larger plant, with more

At the end of 2008, Rheim Chemie began production of additives for industrial lubricants in Qingdao, China.

14 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

“Metalworking is one of the core strengths of Rhein Chemie...But even in the other industrial lube applications, we have a variety of high-quality products. And we put a lot of focus on those in particular these days.” chemical reactions possible, for example, sulfur carriers. “However, both plants are equipped with stateof-the-art production technology. For the set-up of the new plant, our employees from Mannheim and Qingdao worked together in close coordination with one another. It goes without saying that we comply with our high international standards for product quality and plant safety.” “Metalworking is one of the core strengths of Rhein Chemie,” said Limbach. “That is where we are really very strong and have a lot of expertise. But even in the other industrial lube applications, we have a variety of high-quality products. And we put a lot of focus on those in particular these days.” According to Junge, the LOA production facility and technical laboratory in Qingdao were built primarily to serve as a base for customers in greater China and other countries in the Asia-Pacific region. “In Qingdao, we can manufacture a wide range of additives for industrial lubricants,” he said. But the focus is on customized additive formulations, he said. In China, Rhein Chemie is up against a lot of companies. “There are a couple of local competitors but Rhein Chemie is really up against the international ones that we have in the region,” said Junge. “In terms of the challenges for China, I think we’ve been very lucky that we have a great team over there which has been in close contact with research institutes and universities for more than 10 years,” he said. According to Wuscher, Rhein Chemie’s main focus is to develop and manufacture additive packages for hydraulic oils, turbine oils, compressor oils, metalworking fluids and industrial greases, both for neat oil and water-based. In the future, Rhein Chemie also plans to manufacture automotive gear oil packages and industrial gear oil packages.

In the technical laboratory, Rheim Chemie can develop new products and perform a full range of key tests for its Asian customers.

“We, like many of our customers, are increasingly globalizing—not only our presence but also our supply chain and production set-up. My role is to drive the growth of our business. This is what I’m actively going to pursue in Asia and also globally,” said Junge. Rhein Chemie has been part of LANXESS since 2005, when the chemical operations of the Bayer Group were spun off. Since then, the Leverkusen-based company has managed to become the leading, listed specialty chemicals company in Ger-

16 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

many, with revenues of about €5.06 billion (US$ 7.05 billion) in 2009, said Wuscher. “We have had a strong local presence in China and also in Japan for more than 10 years,” said Junge. Only recently has Rhein Chemie decided to appoint an ASEAN representative, which highlights the growing importance of Southeast Asia. “I think the overall commitment to the region has been there ever since. We celebrated our 10 years of production of rubber additives in China last year. And we have ties with the whole of LANXESS, which also aims for strong growth in Asia,” he said. With the new plant in Qingdao, Rhein Chemie will see more of its business move towards Asia, Junge said. However, currently Rhein Chemie’s key market continues to be Europe, which accounts for about 50% of the company’s

sales. This is followed by the Far East, “where we are aiming to achieve the strongest growth in the future,” said Junge, and the Americas. With the global economic recession last year, Rhein Chemie’s revenue was €226 million (US$315 million) in 2009, down about 20% from 2008. “We, like many of our customers, are increasingly globalizing—not only our presence but also our supply chain and production set-up. My role is to drive the growth of our business. This is what I’m actively going to pursue in Asia and also globally,” said Junge. “We are in growth mode, especially in Asia, that is very obvious,” added Limbach. Junge said that Rhein Chemie is constantly optimizing its portfolio and reacting quickly to market opportunities. “Our goal is profitable growth,” he said.

e slider and disk ain m ui eq n as th hea b r d o ll e

tic

disk

by Phillip Britt

storage

18 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

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FE AT U R E

ODAY’S COMPUTER HARD drives are much more efficient than those of only a few years back. It wasn’t too long ago when hard drives of 40 megabytes were considered to be larger than many would ever need. Now 1 terabyte drives are not uncommon, and hard drives offering even more storage capability aren’t too far away. The drives themselves aren’t any bigger physically than they were before. In fact, some of the hard drives in laptops, notebooks and other smaller devices are smaller than the typical personal computer hard drive. What has changed is that the density has increased, thanks in no small part to novel perfluoropolyether (PFPE) lubricants. These lubricants were initially developed for the U.S. space program, according to Bruno Marchon, manager, interface materials for the San Jose Research Center of Hitachi Global Storage Technologies. After being developed for the space program in the 1960s, engineers saw how the lubricants might be adapted for use in the computer industry. The same properties that made these lubricants essential for the space program make them ideal for protecting hard drives from wear and tear, as well as making them very expensive to produce. The lubricants cost anywhere from US$100,000 to US$200,000 per kilogram. But each hard drive disk uses less than 20 micrograms of lubricant (which equates to about US$0.0075-0.015 per disk), so millions of disks can be coated with a very small amount. The specific amount of lubricant materials a hard disk manufacturer actually uses is a closely guarded secret, according to Donald Perettie, president of X-Lubes, Inc., a developer of specialty lubricants based in San Jose, Calif., U.S.A. Perettie says that even his customers won’t tell him the percentage that they use in their products and coating processes.

PFPE Properties

In addition to being effective at microscopic levels, these lubricants are chemically very stable, so they don’t evaporate or oxidize, unlike other oils. All potential disk lubricants must also have very low vapor pressure because the disk surface is exposed to air and the lubricant itself cannot be reapplied once the disk is manufactured, explains Frank Talke, professor of mechanical engineering

at the University of California, San Diego. The lubricants are part of a complex system that keep hard drives from wearing out from normal use. To protect the magnetic layer on the hard drive, protective carbon overcoat is deposited on the magnetic material. To protect the carbon overcoat, a thin lubricant film is deposited on the disk surface via “dip-coating,” which enables very tiny amounts of the lubricant to be applied, providing protection to the drive without obstructing its operation. These lubricants enable the “slider” that reads and writes data to be only a few nanometers (nm) above the computer hard disk, reducing friction and enabling it to read and write disk data more efficiently, while moving at very high speeds. “The hard drive moves at the speed of a race car, about 100 miles per hour. No other system has such a high velocity at such a short distance,” Marchon says. The relative high speed also means that the lubricants must include a bonding agent in order to stay in place. If the lubricant was to come off during the operation, the hard drive would quickly become worn, damaged, and eventually useless.

“The hard drive moves at the speed of a race car, about 100 miles per hour. No other system has such a high velocity at such a short distance.” Due to the special properties and the cost of producing the lubricants, only some 100 kilograms are produced worldwide each year, with only a handful of companies involved in the actual production, according to Marchon. In addition to X-Lubes, there is Italy’s Solvay Solexis S.p.A., Italy, and Japan’s Moresco Corp. and Asahi Glass Co., Ltd. The closer together the slider and the hard drive are, the higher the possible density, though there are other factors as well. The lubricants have been used in combination with smoother disks and improved carbon overcoats to improve the disk head interface, resulting in higher hard disk capacity. “They’re all components of the same system,” Talke says. In present-day hard drives, the flying height is between 5 and 20 nm, according to Talke. At that closeness and with the speed “of a race car,” there is partial contact between the slider and the disk during the operation of the hard drive.

In this partial or semi-contact scenario, the ideal head-disk interface would consist of a slider where 99.999% of the weight is supported by the air bearing force that is developed beneath the slider as the disk spins. In other words, the normal load on the disk due to the slider is only 0.001% of the total weight of the slider, P N F

N CF3

X-1P

resulting in lower friction and wear at the head-disk interface. However, control over the interactions between the head and the disk during flying is limited by tolerances in the slider and suspension geometry and the materials and processing parameters used in the industry. Due to the closeness of the slider and the disk, it is essential that a minimal amount of lubricant be able to protect the disk from friction and wear. The coating itself must be precise, because overcoating will cause more contact between the slider and the hard drive, says Talke. Looking Ahead

Marchon sees the next evolution of the lubricants to have bonding in the middle of the polymer in addition to bonding at both ends, to ensure that the lubricant remains bonded even as the slider and disk head come even closer together, a process that is in the infancy stage now. Also, Talke says that new heat-assisted magnetic recording technology will require lubricants that can withstand much higher temperatures. The new technology, which is still under development, relies on a laser pulse that heats up the magnetic layer prior to recording, exposing the lubricant film on the disk surface to temperatures in excess of 400OC. Perettie says his firm and others are working on newer lubricants to meet the needs of the magnetic recording technology. Talke expects commercial development and availability to be two to five years away. Phillip Britt is a veteran journalist who has spent more than 30 years covering various industries for magazines, newsletters, newspapers and online publications. He is based in suburban Chicago.

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AND TRAINS

22 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

I L LU S T R AT I O N S BY C H I L I D O G S

COV E R

S TO RY

The cost of moving a package from point A to B could soon get cheaper—at least in terms of carbon. In part, that’s because of the desire of retail giant Wal-Mart and others to grade the greenness of everything they sell. This now small, but growing, effort includes gauging the carbon footprint of the supply chain, which in Wal-Mart’s case reaches around the world. There are also greenhouse gas regulations to consider, a stick to go along with the retail carrot. The situation there is still fluid, although the consensus seems to be that something will eventually be enacted. Given all of this, cutting the carbon output of transportation seems to be increasingly important. A look at planes, trains, and ships shows how and why carbon output reductions are being accomplished.

by Hank Hogan F U E L S & L U B E S I N T E R N AT I O N A L

Q u a r t e r Tw o 2 010

FLYING THE

green skies

ENDING TONS OF METAL HURTLING THROUGH THE SKY may be commonplace but it isn’t cheap, at least as far as carbon emissions go. That can be seen in what it takes to move things by air as compared to the most efficient alternative, shipping by sea. “Air freight is anywhere from 40 to 80 times more CO2 intensive,” says Jon Gilbert. He is a senior logistics consultant with the supply chain and environmental research firm Technology Forecasters Inc., which is based in Alameda, Calif., U.S.A. The aviation industry is taking steps to lighten its carbon footprint. Part of the reason for doing this is that it will also reduce their fuel consumption. Since fuel typically accounts for 30% of an airline’s expenses, cutting the fuel burn rate—and the rate of CO2 production—pays off on the bottom line.

Targets to meet

In addition, there are regulatory targets to consider. For example, the 2020 goal of the Advisory Council for Aeronautics Research in Europe (ACARE) calls for a 50% reduction in fuel burn and CO2, an 80% reduction in the production of oxides of nitrogen (NOx) and halving of perceived aircraft noise. All of these numbers are compared to the year 2000 figures. For engines, those goals translate into a 20% decrease in CO2 emissions, said Robert Nuttall. He’s vice president of strategic marketing for future programs at aircraft gas turbine engine maker RollsRoyce plc, which is based in Derby in the U.K. Nuttall said his company’s products are on track to hit that target, based on data regarding fuel efficiency improvements over the last 15 years. Over that span, progress on this front has been fairly steady. “It comes out, roughly speaking, to about 1% a year. That seems to be a pretty good average,” said Nuttall. This improvement is typically the result of small, incremental changes to the literally thousands of compo-

nents that make up a modern, large-body aircraft engine. Some of these improvements can be retrofitted into earlier engines, making them more efficient. RollsRoyce, for instance, introduced its Trent 700 engine in 1994, upgraded it in 1998, and did so again in 2008. Each upgrade brought some efficiency improvements. There are, however, some futuristic concepts on the horizon which could be game changers. Because they are so radically different, they will never be incorporated into older engines. For the same reason, they won’t enter into service for close to a decade. One such is an unducted or open rotor, an engine which has the fan blades exposed. These will be much more efficient, but also much noisier than current gas turbines. That trade-off of one attribute for another illustrates why all the ACARE targets may not be met. In general, quieter engines tend to burn more fuel while noisier ones tend to be more efficient. Nuttall noted that the aviation industry, for the most part, prefers greater fuel efficiency over quieter operation. Thus, improving fuel efficiency

I M AG E S CO U R T E S Y O F R O L L S - R OYC E

Rolls-Royce open rotor engine concept

Rolls-Royce Trent 700

Improvements to aircraft engine design, whether incremental or radical, boost fuel efficiency and cut carbon emissions.

24 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

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F U E L S & L U B E S I N T E R N AT I O N A L

Flying the green skies 787 Dreamliner

has been the focus of engine makers. Aircraft savings

Another 20% in CO2 reductions are expected to come from the aircraft itself. With regard to that, airframe maker Boeing of Chicago, Illinois, U.S.A., has committed to cutting CO2

“The real challenge now is creating an adequate supply to meet the anticipated demand that appears to be growing.” emissions by 15% with each new generation of commercial aircraft. Bill Glover, managing director of environmental strategy for commercial airplanes at Boeing, said that two new jetliners are being tested. The 787 Dreamliner and the 747-8 Freighter should see a 20% and 16% improvement, respectively, over the models being replaced. “We’ll know more as the flight test program for each concludes and we have actual test data to compare,” said Glover. “But so far, so good.” Boeing is also working toward creating a sustainable aviation fuel supply, in part by investigating advanced-generation biofuels. From an aircraft point of view, these fuels have to be drop-in compatible and virtually indistinguishable with existing fuels. Any difference would raise potential safety

747-8 Freighter

concerns and could require massive testing and regulatory recertification of engines and aircraft. The industry’s goal is to produce biofuels using plants that grow on land and in conditions not suitable for the vast majority of food crops. Another requirement is that the plants not be irrigated, since depending only on rainfall will avoid the diversion of water away from other agriculture. Flight tests have been conducted using a 50/50 mix of jet fuel, specifically Jet A1, and fuel produced from the jatropha plant. The first such test took place on an Air New Zealand Boeing 747-400 powered by Rolls-Royce engines in December 2008. It used jatropha oil sourced from southeastern Africa and India. The flight was a success, as have been others Boeing was involved with. One of the latest was a flight in November 2009 by Dutch carrier KLM in Amsterdam. Glover noted that these tests have shown that sustainable biofuels will work in a commercial jetliner. He also noted that recent announcements by British Airways and other airlines highlight growing commercial interest in using these new fuels when they become available. It also brings to the fore the next problem that must be confronted. “The real challenge

26 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

now is creating an adequate supply to meet the anticipated demand that appears to be growing,” said Glover. The industry is focusing on scaling up production. In the future, there could be regional projects in different parts of the world aimed at commercializing these advanced biofuels. Taking a smarter path

The final chunk of CO2 reduction, some 10%, will come from how aircraft operate. Some of the steps that can be taken include using a single engine to taxi or reducing the usage of auxiliary power units (APUs). Beyond that lie other operational efficiencies, including changes in the speed planes fly or the way they land and take-off. GE Aviation, which is based in Evendale, Ohio, U.S.A., has long been involved in making and servicing aircraft engines. It’s now branching out into the business of cutting fuel consumption. GE recently bought two privately owned companies—BMB Fuel Consulting Services and Naverus— that offer this expertise. Plans call for this knowledge to be integrated into GE’s offerings worldwide. Donna Gerber, GE Aviation services marketing manager, explained that the first acquisition gives the company a software tool that makes it possible to look at operational data and fuel burn. This enables the savings from various projects to be assessed. Operators can then do the projects in an order that makes the most economic sense. Finally, when projects are complete, operators can see what the actual results were versus what was predicted. The savings can be substantial. Gerber gave an example of one customer who had more than two dozen projects identified, with a projected savings of nearly US$40 million. By implementing only eight, the client saved US$24 million. The second GE acquisition allows airlines to avoid taking an indirect route. Every passenger has experienced flights where planes travel past an airport and then circle back, sometimes for long distances, to land. Such roundabout approaches burn fuel and aren’t the most efficient approach. The technology that corrects this situation is sometimes called performancebased navigation and sometimes required navigation procedures. No matter what the name, one thing is true, Gerber noted. Such a more direct approach can only be taken safely if everyone in the airspace is aaware of what is going on. If successful, the payoff can be more than just reduced fuel consumption and th less CO2 emissions. One of the benefits can le aalso be less noise, since optimizing descent ccan allow flying using idle thrust alone. While accomplishing all of these goals ccan require some sophisticated software, the concept itself is pretty simple, said th Gerber. “Really, it’s all about how do we G gget that direct landing so you’re coming in on a much smoother descent.” o

SLOWLY but surely

OR SHIPS, AS FOR OTHER MODES OF TRANSPORTATION, one of the easiest ways to lighten the carbon footprint and cut fuel consumption is to go slow. This approach can pay immediate dividends. An example can be seen in the super slow steaming program initiated a few years ago by the world’s biggest freight shipping line, Copenhagen, Denmark-based A.P. Moller-Maersk AS. According to Soren Stig Nielsen, Maersk’s senior director of sustainability, the shipper’s entire fleet is now capable of poking along at 12 knots, or a little over 22 kilometers per hour, in open water. That is about half what had been the industry’s standard cruising speed. Doing so for an entire voyage translates into a fuel and carbon emission reduction of about 30%. That figure represents about the best that can be done today, said Nielsen. “The optimal speed depends on the individual vessel, the engine, utilization, and so on. It does not make sense to reduce below 10% engine load, which is around 12 knots.” There are some other operational changes that can be done to boost fuel efficiency and cut carbon emissions, added Nielsen. Adjusting the paint of the underwater part of the hull reduces drag and thereby improves efficiency. Optimizing trim and voyage planning do the same. Together, these deliver an improvement in fuel burn of a few percent. Designing in savings

Super slow steaming does add time to a voyage, turning a three-week trip from Europe to China into an affair lasting a month or more. That

28 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

extra time comes at a price. For one, having product at sea longer means that a larger inventory must be financed and is at risk. Because there are limits as to how slow a ship can profitably go, Maersk has been working to improve the efficiency of its ships. Doing so will let the company cut its carbon footprint further. Nielsen said Maersk’s latest

Coming up with regulations to cover efficiency and carbon emissions, while accounting for changing conditions, would be challenging.

ships are 30% more efficient than standard, offthe-shelf designs. These improvements have been achieved by adjusting such parameters as hull design, engine type and size, propeller design, and so on. Getting that done and convincing shipyards to build nonstandard vessels has been close to impossible, said Nielsen. “However, when we ordered our latest ships, we managed to re-design the vessels together with the yard to achieve significant energy efficiencies.” The reluctance to build ships that are different from the norm is something familiar to Bryan Wood-Thomas,

Maersk Maritime Technology tested and implemented a bulbous-shaped piece on the bow of the ship to decrease resistance as the ship moves through water thereby increasing the vessel’s efficiency by 5.2%. Of the three different bulb designs tested, the third bulb was most efficient.

vice president of the World Shipping Council. The Council, which has offices in both Washington, D.C. in the U.S.A., and in Brussels, Belgium, represents container ships and transoceanic vehicle carriers. Wood-Thomas said that shippers often have little leverage with ship builders during boom times, which may be when the bulk of new vessels are ordered. That’s one reason why the Council has proposed mandatory efficiency standards for new ships. That standard would be based on what is called the energy efficiency design index (EEDI), which has been developed by the International Maritime Organization (IMO). The proposed regime would not be a static one, he said. “Vessels built in 2015 would have to meet a particular standard. Vessels in 2020 would have to meet even more stringent standards. In other words, it would become even more stringent over time.” An approach requiring designed in efficiency that increases steadily has a number of advantages from the Council’s point of view. For one thing, it removes operational variables. A vessel traveling the stormy North Atlantic will typically burn more fuel than one traveling calmer waters. Coming up with regulations to cover efficiency and carbon emissions, while accounting for changing conditions, would be challenging. There are proposals being advanced, though, to do just that. Another important advantage of the Council’s approach from the industry’s vantage point is that the result will be more efficient ships. Other possible regulatory schemes, such as fuel tax proposed at the Copenhagen climate change talks held last year, may not do so. Instead they may lead to the transportation industry effectively acting as a collector of funds, with nothing to show for it. The Council’s fear is that a tax will simply be passed along as part of the cost of doing business. By itself, it won’t serve as enough of an incentive to push the industry into creating lasting assets, such as ships, that are more efficient.

Lost at sea?

The Council is hoping that its idea will catch on and is working through the IMO to make it happen. If it does, it will apply to many but not all ships, said Natasha Brown, IMO spokesperson. “Generally, IMO measures usually apply to seagoing ships on international voyages, usually those over 400 gross tonnage.” Brown stated, though, that the IMO was the proper organization for such proposals. In explaining why,

consider as a possible negotiating venue. The main focus of the UNFCCC has been on bunker fuels, the heavy petroleum products that power most of today’s ships. That may not be the situation in the future. Maersk, for instance, is now testing biofuels and evaluating a number of alternative energy sources as part of the company’s sustainability strategy and targets. This is in line with other voluntary actions taken by industry par-

To cut fuel consumption, propeller and other ship features below the water line, including the paint, are being redesigned.

she cited its mandate under the United Nations Law of the Sea and the IMO’s own convention to develop measures to address pollution from ships. In this context, greenhouse gases are treated as just another pollutant. Others aren’t quite as sure the situation is as clear as the IMO claims it to be. Matthew Auer, a professor in the school of public and environmental affairs at Indiana University in Bloomington, Indiana, U.S.A., noted that there have been divisions over which international organizations should be the proper forum to hash out carbon emission questions. In addition to the IMO, there is the UN Framework Convention on Climate Change (UNFCCC) to

ticipants, like operating ships at slower speeds, said Auer. Such actions cut carbon but they also cut fuel costs, which may be more important to the industry. Auer noted that on the governmental and regulatory side there was very little progress made on the maritime front at Copenhagen. In part, he attributed this lack of movement to a UNFCCC choice that ties sea and sky together, perhaps to the detriment of regulating carbon emissions in both. “Maritime emissions have been coupled with aviation emissions in the context of UNFCCC negotiations. Having the two emission sources together has complicated already divisive talks,” said Auer.

F U E L S & L U B E S I N T E R N AT I O N A L

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CUTTING CARBON

while rolling along

OR RAILROADS, cutting carbon emissions is not the law, at least not yet. Nonetheless, it is happening. According to figures from the Association of American Railroads, a trade organization of freight and passenger operators in the United States, the industry has seen its fuel efficiency increase by 94% since 1980. In 2008, the last year with data, that translates to moving a U.S. ton of freight an average of 457 miles per gallon of fuel. Outside of the U.S., those numbers would be 900 kilograms transported an average of 194 kilometers per liter of fuel. Since burning fuel generates carbon, greater fuel efficiency means fewer emissions of greenhouse gas. But the industry isn’t driven to do this primarily by the prospect of any environmental benefit. Instead, it largely has to do with fuel charges. “It’s their number two cost behind per-

sonnel,” said Harold Holmes, manager of the engineering evaluation section of the Sacramento-based California Air Resources Board (CARB). “So when they look at their financial books, the main driver for them is to reduce their fuel costs.”

today’s cleanest engines, which are Tier II. The expectation is that some sort of exhaust gas aftertreatment will be needed, much as is done in cars today. Sulfur level limits in diesel fuel for locomotives are being cut from 500 parts per million (ppm) to 15 ppm as of June 2012 in anticipation of this. Given that locomotive emission standards are harmonized to some degree between different parts of the world, these changes could have a global impact. They also could drive up fuel burn and carbon usage. P H O T O CO U R T E S Y O F G E T R A N S P O R TAT I O N

New technology coming down the line

For his part, Holmes and regulators at the U.S. Environmental Protection Agency (EPA) are concerned with emissions, but not CO2. Instead their focus is on reducing oxides of nitrogen (NOx) and particulate matter generated either by line-haul trains or by switch locomotives in rail yards. These efforts may impact carbon emissions, particularly going forward. In 2015, Tier 4 standards will go into effect for new locomotives and those will require a NOx reduction of more than 75% and a 70% reduction in particulate matter compared to

30 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

D A

C B

In a GE hybrid locomotive, some of the energy generated by the traction motors A during braking is captured in a series of lead-free, rechargeable batteries B . The captured energy can be used in combination with the engine C and the electrical system D to deliver the required horsepower or as the primary power source.

GE’s Trip Optimizer, which operates like a jetliner’s autopilot feature, can potentially reduce fuel consumption by up to 32,000 gallons per year per locomotive. The system evaluates train length, weight, grade, track conditions, weather and locomotive performance to calculate the most efficient way of running the train while maintaining smooth train handling.

That possibility worried regulators when Tier 2 locomotives came on line in 2005. It was thought that there might be an efficiency hit. Instead, manufacturers made the opposite happen, said Holmes. “They redesigned the engine from 16 to 12 cylinders so that they would get those emission reductions but also so that they would get 5 to 10% less fuel burn.” Based in Erie, Penn., U.S.A., GE Transportation made some of the

The hybrid approach is expected to cut fuel consumption by as much as 15% and emissions by as much as 50% compared to most of the freight locomotives in use today. first Tier 2 locomotives. The company, which has been in the railroad business for over a century, is working on the next generation of engines. One of the ideas being touted is a hybrid locomotive, which like similarly named cars will carry batteries. When the engine brakes, the energy in the tons of moving metal won’t be lost. Instead it will be captured and stored in the batteries, where it

can be used later. As of now, the GE hybrid locomotive uses lead-acid batteries. These will enable a temporary power boost of about 45% when the batteries are discharged, allowing more efficient operation at higher altitudes and up steep inclines. The hybrid approach is expected to cut fuel consumption by as much as 15% and emissions by as much as 50% compared to most of the freight locomotives in use today. Plotting a steady trip

Getting such technology deployed will take years, particularly since the lifetime of a locomotive is measured in decades. However, there are steps that can, and are, being taken to cut the carbon emission and fuel usage of existing engines. One of these is a software solution that comes from GE. Company Spokesman Stephan Koller likened the software to an automated throttle control, with a train’s path analyzed so the proper action can be taken. “It already knows when you go up a hill, how much speed you need and then when you get up to the top how

32 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

much speed the train needs to pull itself down. So it’s a perfect fuel profile for every trip,” said Koller. The idea sounds simple but in practice there are a number of complicated factors to consider. The length of the train, the weather, and the terrain all have to be accounted for. In the case of a train going up a hill, for example, too little speed can lead to links snapping and cars separating. Too much speed going down a hill, on the other hand, can lead to cars bunching up and a derailment. A pilot project with Canadian Pacific resulted in up to a 10% fuel savings. Given that the Calgary, Alberta-based company runs through something like a billion liters of fuel a year, implementing the technology across the company’s fleet could cut carbon emissions significantly. Doing so for all trains across North America would save 2.4 billion liters of fuel a year, according to GE.

Siemens Mobility’s high-speed train, the Velaro

Exploring alternatives

Other railroads are also exploring ways to cut fuel consumption. One such is the Burlington Northern Santa Fe (BNSF) railway, which is based in Ft. Worth, Texas, and operates in the mid- and western U.S. BNSF has upgraded its locomotives to newer and more efficient engines. It also is installing low-torque wheel bearings in its rail cars as they come in for regular maintenance. To date, this has been done to about two-thirds of the fleet, said Company Spokesperson Suann Lundsberg. There are also some operational improvements being implemented, such as the installation of idle control equipment and the training of personnel to be fuel conscious. Another operational change is the lengthening of trains, which improves aerodynamics and thereby cuts fuel consumption. In 2001, the average length was 140 containers or trailers, while in 2006 it was 170. Lundsberg said that the company has safely operated trains up to 12,000 feet or 3.6 km long. Finally, the company, and the industry as a whole, is looking at alternative fuels. These include biodiesel, liquefied natural gas, and even more exotic possibilities. “We also are testing an experimental hydrogen fuel cell switch locomotive, along with the U.S. Department of Defense,” said Lundsberg. When it comes to power sources, trains, at least, have an option that is not available to ships and planes. Because they run on Hank Hogan is an Austin, land-bound tracks, trains don’t Texas-based freelancer who writes have to actually carry any fuel about business, energy, technology with them. Instead they can and science. Like others in Texas, run on electricity, which can be he’s sold exploration rights to an generated from a non-carbon independent but a gusher hasn’t producing source. come in yet. Siemens Mobility, part of >>

the European conglomerate, has a presence in the North American rail market, focusing on manufacturing light rail vehicles that operate on electricity. The company is so green that it builds these vehicles using solar power. Its U.S. manufacturing plant in Sacramento, Calif., currently has a megawatt of solar energy installed and a second megawatt is being added. Given all of this, the response of Spokesperson Becky Johnson Sabin when asked about reducing carbon emissions and rail travel is no surprise. “High-speed trains using non-polluting electric locomotives, like our Velaro, could reduce CO2 emissions by two million U.S. tons annually.”

“It looks good so far. We’re excited about it.” methods. They also evaluated the lubricity of the two groups through high-frequency reciprocating test rigs and by other means. When they were sure that they had the right recipe, the Oronite researchers used their bench test on lab-aged oils. They looked at the fuel economy retention for

three of these as compared to the same oils from the VID end-of-test. The results were encouraging enough that additional testing is underway with other oils. The hope is that the bench test will enable better understanding of additive degradation mechanisms and their impact on fuel economy retention. An inexpensive and quick screen test like the one developed by Oronite is convenient. Miller cautioned that the results presented were preliminary. In summing up, though, he said, “It looks good so far. We’re excited about it.”

>> “Screening aged oil...” cont. from page 6

screener consists of a mini-traction machine test rig, with a steel ball rotating on top a spinning steel disk. The lubricant under test is heated to 120 OC and bathes the two contacting surfaces. The standard disks in this test are smooth, with an average surface roughness of 5 nanometers (nm). That’s much smoother than typical for engines, but for this screener the lack of similarity to real world is unimportant. That’s because, as is the case with fresh oil fuel economy, viscosity is king and surface roughness plays a very minor role. Aged oil is different. For that reason, the Oronite team used much rougher disks, averaging 150 nm. Using these, they developed a test that predicted VID fuel economy retention when using oils from the end of the VID test. They then had to extend this approach to include lab-aged oil. To do this, they devised a scheme to turn fresh oil into a close facsimile to that at the end of the VID test. They did that through a micro-oxidation bath, heating the oil and exposing it to an oxidant. They also aged the oil mechanically, sending it through a mini-traction machine test rig. To make sure that the lab-aged oils were similar to those from the Sequence VID end-of-test, they compared the two using spectroscopy, nuclear magnetic resonance and other analytical

F U E L S & L U B E S I N T E R N AT I O N A L

Q u a r t e r Tw o 2 010

FE AT U R E

Meet

Jae Cho by Vicky Villena-Denton

Singapore—Jae Cho, born in Korea and raised in California, U.S.A., is the new managing director and vice president of Afton Chemical for Asia-Pacific, based here. He joined the company eight months ago, in anticipation of Jon Rock’s move back to Afton headquarters in Richmond, Virginia, U.S.A. Cho officially took over Rock’s position on October 1. Rock is now vice president of product development. >>

FAMILY WAS A BIG FACTOR IN CHO’S move to Singapore, from Shanghai where he was previously based. His wife is a concert pianist and now regularly plays at the largest Baptist church in Singapore. A process engineer, with a degree in chemical engineering from the University of California, Berkeley, Cho started his career in the semiconductor industry. After graduating from Berkeley in 1984, Cho joined United Technologies in Colorado. “That’s when United Technologies had a very sizeable business in memory chip manufacturing. 1984 was probably the first major recession that hit the semiconductor industry and basically that’s when U.S. companies started losing their competitive edge against the Japanese. At the time, we were looking to launch 256KB RAM memory chips, and we weren’t able to get our yield up, which meant that our cost base was very high.” “In semiconductor, particularly in memory chip manufacturing, the name of the game is getting your yields up, getting your chip sizes as small as you can—and the Japanese basically won out in that game.” United Technologies decided to close down its state-of-the-art manufacturing plant in

34 F U E L S & L U B E S I N T E R N AT I O N A L Q u a r t e r Tw o 2 010

When we met that Saturday, Cho had some more 1985, so Cho returned to California. He joined another exciting news to share with Fuels & Lubes International: semiconductor company and worked there for seven years. its acquisition of Polartech, a Manchester, U.K.-based “During that time, I went to get my MBA and decided metalworking additive supplier. that I want to be on the business side. And that’s when “So all of a sudden in Asia, we’re going from zero I started talking to ICI.” manufacturing base to having three plants.” Cho worked for ICI for the next 17 years. Polartech, which has plants in China and in India, “Within ICI, I moved around in different business sides. has gross revenues of about US$50 million annually. I went from electronic materials—highly specialized, high “Metalworking additive is globally more than value, very much niche market, very global—Asia being a a US$600 million market. Our existing business is tiny very strong manufacturing center—to some product lines within metalworking and Polartech gives us a pretty that are highly commoditized like industrial adhesives.” significant market share,” he said. “I think that our His first overseas stint with ICI was in Korea, where customers will be very excited that they’ll have he spent seven years in their electronic materials business. another very significant player, very credible player During those seven years, Cho set up a fully functioning in the market.” manufacturing, sales and technical organization On the technology side, Polartech has some waterbefore returning to ICI’s electronic materials business based technology that does not exist in Afton’s current headquarters in California as global marketing director. product portfolio, so the acquisition “certainly brings He served as marketing director for three years, before some new technology and also a lot of application in the leaving ICI to start up a dot.com. Unable to raise fresh metalworking side,” he said. funds, he rejoined ICI, where he ran the adhesives and “But we do believe that some of the components specialty polymers business in southeast Asia for National that we have could be leveraged Starch, in Singapore. to develop certain products for “Shortly after I landed here, “What keeps me awake additives as well,” they gave me India, and then at night is really hiring the metalworking he added. Australasia. So my portfolio was right people on a timely Cho said that the most ASEAN, plus India and Australasia. exciting part of the acquisition I ran this business for about three basis in the region. To is that Polartech was not perceived and a half years.” me, people are the most a pure-play additive supplier, as In 2004, Cho was posted in important part of running as the company also had a formulated Pusan, South Korea, to manage ICI’s a good business.” lubricant business. global footwear adhesive business. “Whereas now, we’re very “They had manufacturing sites much a pure-play additive supplier so we can go to all over Asia plus a factory in Mexico and we were just any finished fluid metalworking customer and partner getting into Brazil and into India. So it was actually a very without the customer having to worry about what’s going exciting business. I was travelling a lot, all over the world.” to happen to my technology—whether it’s going to leak In 2007, when ICI was in discussions to sell the entire out to my competition. So from that standpoint, I think company to AkzoNobel, Cho decided to join Honeywell’s Afton acquiring Polartech really extends the pie that specialty chemical business in Asia-Pacific. A highly we can go after.” diverse company, Honeywell’s specialty chemical business One of the smaller players of the big four additive was a hodgepodge of six very different businesses, with companies, Afton’s headcount in Asia-Pacific is about 110, a very distinct and very diverse set of customers. of which 35 are based in Singapore. “I saw it as a great career move. And also, I saw it “What made me excited about Afton was that Afton, as a great opportunity to bring my family together because as you know, is not a leader in the industry. In Asia-Pacific, the position was in Shanghai.” we’re even less represented in many markets we serve, even At that time, Cho’s wife and children had been compared to the rest of the world. So I felt there was a lot of living in California as Pusan at that time did not have headroom in terms of growth. I also saw a lot to do in terms an appropriate school for his children. of organization and growth and felt that I could bring a lot While in Shanghai, Cho helped shut down one of of value. I’m very busy but I’m having a lot of fun.” Honeywell’s manufacturing plants in Korea and helped Cho said that Afton is recruiting actively throughout divest it. He left the company and Shanghai in June 2009 the region. “What keeps me awake at night is really and joined Afton Chemical in Singapore in July. hiring the right people on a timely basis in the region. “It’s a long winded-story, but that’s how I got to To me, people are the most important part of running Singapore.” a good business.” On the day that we interviewed Cho, Afton His short-term goal is to get a fair share of the market Chemical had just finished celebrating the opening of a in Asia, “as much as we have in North America and Europe manufacturing facility in Singapore, its first in the region, and beyond that, we’ll take it one day at a time.” at the St. Regis Hotel, with no less than President Warren Huang on hand.

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by Vicky Villena-Denton

SERENDIPITY

Afton Chemical investment in Asia-Pacific comes at a fortuitous time

T WAS A LONG TIME COMING. As far back as 2000, Afton Chemical started considering investing in a plant in the region. A plant in China was among those considered. The decision to invest in a plant in Singapore was approved at the height of the global economic crisis. “Afton was actively evaluating a strategic investment in Asia prior to the economic crisis in late 2008,” said Jae Cho, Afton Chemical’s vice president (VP) and managing director (MD) for Asia-Pacific. “We conducted a rigorous assessment that included sites with developed and shared infrastructure,” said Cho. Cho described the timing and business relationship as serendipitous. “This turned out to be a golden opportunity for Afton to make a very strategic move,” he said. Afton will start producing products in Asia-Pacific in the second quarter. In the past, it had relied on its worldscale plant in Sauget, Illinois, in the U.S., to supply the region. Sauget is the only Afton plant that produces detergents. It also produces dispersants. A medium-size plant in Feluy, Belgium, which produces dispersants, also supplies products to the region. Afton also has plants in Houston, Texas, and in Sarnia, Ontario, Canada.

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President Warren Huang announced Afton Chemical’s plan in July 2009, around the same time that Cho came on board as VP and MD for the region. The company has a long-term toll manufacturing arrangement with a privately held specialty chemical company in Singapore called Chemical Specialties (Singapore) Pte Ltd. (CSSL), which has a plant on Jurong Island. The toll manufacturing arrangement with CSSL is “non-traditional,” according to Cho. Citing the special arrangement with CSSL as confidential, he described it as “quite creative and based on longterm past relationships.”

“This turned out to be a golden opportunity for Afton to make a very strategic move.”—Jae Cho CSSL will manufacture, blend, and store petroleum additives for Afton, using dedicated equipment for the petroleum additive company. Raw materials, which will initially be sourced from North America and Europe, will be purchased by Afton. However, Afton plans to start qualifying suppliers in the region. Cho said the advantage that CSSL has is that its principals “have long and trusting relationship with Afton, un-

derstand our needs very well, including quality and HSE standards we require.” “I cannot overemphasize this relationship,” he said. CSSL’s principals have a long track record with Afton in the U.S., where it also toll manufactures select intermediates and products for the additive company there. Toll manufacturing is common practice in the industry nowadays, he said. “Every chemical company is looking at improving return on capital,” Cho said. The challenge is to secure a long-term relationship with a supplier, he said. “Some relationships tend to be very opportunistic.” Also, typically toll manufacturing is not scalable, he said. “At a minimum, you have to have sufficient space to install additional benders, reactors and tanks to allow for scalability.” In this case, Afton’s toll-blending arrangement with CSSL is both scalable and flexible, which were a primary consideration in selecting the plant. As demand grows, so can production. The plant’s initial capacity will represent a small increase to the company’s overall global production. Actual capacity was not disclosed, however. “It can be scaled to near world-scale,” Cho said. Before going into full production,

products have to be qualified and have to undergo a “Management of Change (MOC)” quality process. “Different changes require different MOC,” Cho said. For example, a change in blending or storage tanks could take weeks before the changes are qualified. A switch in raw materials could take months. Afton and its customers both have some form of MOC quality process. “We typically adhere to the stricter of the two,” he said. For products produced or shipped from Singapore, lead times will be reduced from the current average of 70 days to about three weeks for madeto-order products. The plant was started up in February but was shut down, following an accident on the site. CSSL voluntarily decided to shut down manufacturing until a full investigation was completed. Afton had already finished qualifying two products before the accident. “We expect to start the Afton blending plant later in April, or certainly by the end of June, which was our original plan,” said Cho. “In the meantime, we will continue to supply our customers in AP with products out of existing supply points.” Initially, Afton will produce a limited number of engine oil products. By the fourth quarter, the company plans to produce driveline and industrial products as well at the CSSL facility.

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THINK

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FE AT U R E

Collaboration is the key to innovation by Vicky Villena-Denton

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INGAPORE—THE WORLD FACES an unprecedented challenge, according to Andrew Foulds, Shell’s vice president of lubricants technology, based in Thornton, U.K. “Put simply, we need more energy and less CO2. Achieving those aims will be complex and demanding. It will also take time,” he said. Foulds said that the transport sector currently accounts for a quarter of CO2 emissions, so “our industry will be at the heart of the work to meet those future energy and environmental challenges.” “Some of those solutions are available today; some are under development for tomorrow,” he said. Transportation is the primary source of new energy demand, according to Andy Tugendhat, vice president for sales of Chevron Oronite, based in San Ramon, Calif., U.S.A. “Many people in developing economies, such as India and China, have hit the per capita income level in which they are starting to buy more goods that require commercial transportation for distribution. In addition, more people are starting to own personal transportation vehicles. Combined, these result in large gains in the incremental demand for energy in the transport segment.” Tugendhat said that China and India are the single largest drivers of demand growth. Last year, China surpassed the United States as the largest car market in the world. Chinese sales of cars, trucks and other vehicles soared to 13.6 million units, a 46% rise from the previous year’s levels. “Only 33 years ago, there were only one million privately owned cars in the whole of China,” he said. Foulds said there is a clear imperative for industry to develop products which help use less energy and have less impact on the environment. This will require investment in technology across the whole value chain, from engine design to the lubricants and fuels available in the market. In their keynote addresses at the 16th Annual Fuels & Lubes Asia Conference, which had for its theme, “Fuel Economy & Emissions: Exploring Beyond Today’s Limitations,” Foulds and Tugendhat shared the same sentiment, that is, collaboration with government, with equipment builders and within the industry are important in achieving greater fuel efficiency and less CO2 emissions.

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“Only 33 years ago, there were only one million privately owned cars in the whole of China.” —Andy Tugendhat

Cross industry collaboration will need to become even more central to the way we operate in the future, Foulds observed. One of the challenges is the increasing diversity in the properties of fuels, said Tugendhat. It will be a significant challenge for equipment designers, fuel and lubricant suppliers, and additive suppliers to address this diversity. No single biodiesel feedstock has ideal properties as a fuel source, he added. From the regulatory side, governments have made significant efforts to put regulations into place to increase energy efficiency and reduce emissions, he said. “These regulations are generally implemented in a planned and orderly manner to allow OEMs and fuels, lubricants, and additive industries time to develop and introduce new technologies to meet the requirements,” said Tugendhat. “In many cases, the regulations force the introduction of new technologies into the markets.” Thus, emissions regulations and fuel economy are huge drivers in the industry today and are expected to be for the foreseeable future, said Tugendhat. “OEMs, fuels, lubricants, and additive industries all play a major role in technology development to achieve the desired results,” Tugendhat reiterated. Foulds said that a commitment to invest in innovation underpins all these developments. But the global economic crisis, and the recession that followed, has made securing that investment more difficult, he said. “Given the scale of the challenges we face, the process of innovation cannot stop. And collaboration will be key to that innovation,” he said. That means collaboration with governments, first and foremost, he said. “While there is clear customer demand for improved fuel efficiency, their demand for lower emissions and willingness to pay for products which deliver those lower emissions is less clear so governments need to act.” In addition, energy companies paradoxically will need to work to help people to use less of their products, he said. “We are making real progress in this respect already. In my own part of the business we know that the effective use of lubricants in a vehicle engine can improve fuel efficiency by up to 5%, when used in combination with fuel economy gearbox and axle oils.” But even more vital to successful innovation is cross industry collaboration and co-engineering, Foulds said. By collaboration, he means “developing the hardware and lubricant together to give the best overall solution.” For example, “could engine oil systems be developed that deliver the lubricant to the engine at its target viscosity independently of operating temperature? Can we devise continuously variable transmission (CVT) systems in which traction is also independent of temperature? Can both schemes be made to operate simultaneously to deliver exceptional economy and performance?” The energy industry has to focus on the future, he said. It is easy during difficult times to be distracted by the immediate challenges, he said. “Governments across the world are grappling with

huge deficits and much of the corporate sector has been concentrating on short-term survival. And although this region has fared better than many, the picture remains volatile and uncertain and it will take some time for confidence to be restored.” The fundamentals will not change, he said. “Technology and innovation will remain at the heart of our success. Customers will be ever more demanding and the imperative to meet their demands for further improvements in energy efficiency will drive innovation.” “We must secure increasing collaboration across the industry. It is vital that the fuels and lubricants producers are involved from the beginning in the design of new and more energy efficient vehicles and equipment and not simply as an add-on extra. We can achieve so much more when we get that right, when we think BIG.”

“Given the scale of the challenges we face, the process of innovation cannot stop. And collaboration will be key to that innovation.” —Andrew Foulds F U E L S & L U B E S I N T E R N AT I O N A L

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