Other speakers said chemical companies are currently making investments in capacity to supply lubricant additives and predicted increased investment in waste lubricant rerefining.

From 2010 to 2020, ExxonMobil calculates that 300,000 barrels per day (approximately 15 million metric tons per year) of new base stock capacity came online, Sepulveda said, an average of 30,000 b/d over that span.

“That is out of roughly 750,000 barrels per day of global base stock demand,” he said, “so quite significant, and far exceeding demand growth and Group I rationalization.”

Refiners around the world have announced projects that would add a total of 50,000 b/d over the next five years, he said. “So a much lower pace of additions versus history.”

Sepulveda said there are two main reasons for the decrease in investments. First, ExxonMobil forecasts that growth in lubricants demand will slow, although Sepulveda also predicted demand will remain robust. Second, many expect that the push to reduce greenhouse gas emissions will erode lubricant and base oil demand, largely by spurring a shift to electric vehicles, which do not use engine oils.

“It makes it hard to justify some of these [base oil] investments if you end up with a scene where we decarbonize rapidly,” he said.

Base oil availability has been snug around the world for the past year of the COVID-19 pandemic, but at least some analysts maintain that global nameplate capacity still far exceeds demand and that a surplus will be evident if and when refiners resume normal operations. Sepulveda said ExxonMobil shares that view.

“We think despite the lower capacity growth in the future, there will still be an excess of base stock capacity going forward for years to come as there is still an abundance of capacity today due to the overbuild during the 2010s,” he said.

Nearly all of the new capacity introduced over the past two decades has been Group II and III, and many Group I plants closed as demand shifted to Group II and III. Sepulveda predicted Group I plants will continue to be under the same pressure. He added that bright stock and wax – products made primarily by Group I plants – should continue to accumulate in value.

Sepulveda addressed the conference as part of a panel of speakers discussing supply conditions in the lubricants industry. Afton Chemical Vice President and Managing Director for Europe, the Middle East, Africa and India Catherine Martin said lubricant additive producers are investing in capacity to try to meet demand and to overcome supply chain disruptions.

A cascade of disruptions in availability of certain materials, combined with severe transportation and logistical challenges have had an enormous impact on the industry, she said.

“I can’t remember a time in the last 18 months where we haven’t had a major challenge” with some part of the business, she said.

Joel Garrett, senior vice president of waste oil rerefiner Safety-Kleen Oil, predicted further construction of rerefineries, which recycle used lubricants into base oils and industrial fuel. Safety-Kleen is among the companies hailing the sustainability contributions of rerefined base oils.

“I think that the need to grow in the rerefined segment is critical,” he said.

Valvoline Marketing Director Mike McCabe said supply chain disruptions make it extra challenging for lubricant marketers to continue manufacturing products that meet their performance claims, but he urged companies not to release substandard products. In some cases, he said, companies might consider scaling back on the number of engine oil specifications that they try and claim to meet.

McCabe also said that despite forecasts of continued rapid growth in electric vehicle sales, the world will continue to have vast numbers of vehicles with internal combustion engines, ensuring high demand for automotive engine oils for years to come.