Natural gas by the quart: Shell’s new oil isn’t crude

Natural gas probably isn’t running your car, but it may soon be lubricating your engine.

Royal Dutch Shell, which owns Pennzoil, Quaker State and other brands, is announcing Friday that it has already started selling a premium motor oil that is derived from natural gas and not crude.

The process begins with Shell’s $19 billion Pearl GTL, a gas-to-liquids facility in Qatar, where the company converts natural gas into a variety of fuels and feedstocks, including the base oil used to manufacture the motor oil found on the shelves of auto supply stores.

Shell began producing base oil at Pearl in 2012. But while base oil is typically derived from crude, the company said it now will use only base oil made from natural gas at Pearl for its premium motor oil brands.

“Shell is unique in having this product, and they are not selling it to others, and it will make a great motor oil, there’s no doubt about it,” said Stephen Ames, managing director for SBA Consulting, which consults for the lubricants and refining industries. “Will it be better than other people’s motor oil remains to be seen.”

Shell’s base oil from natural gas is cheaper than that derived from crude, which Ames said gives the company an advantage.

“Everybody is fascinated, to be honest, at the consumer level,” said Istvan Kapitany, president of Shell Lubricants Americas. “If you look at the base oil, it looks like clear water.”

Producing clear base oil from crude is like trying to filter muddy water, Kapitany said.

“You still have impurities in it,” he said.

A clearer base oil can produce motor oil that keeps engines cleaner and running more efficiently, he said.

“It is, of course, pure and it also offers lower viscosity levels to be achieved which is, in modern engines, becoming more and more important,” Kapitany said.

Others may dispute that description, Ames said.

“It depends how you define purity,” he said. “All the other base oils are 100 percent pure base oil.”

Shell is now producing motor oil using the natural gas-based substance at a lubricants blending plant in Houston, the company’s largest such facility.

Shell believes the innovation, which it calls “Shell PurePlus technology,” will help it capture more customers in an era when new vehicles don’t require motor oil derived from crude, Kapitany said.

“Whether it’s going to be 10 years or 20 years, synthetic lubricants will be dominating the marketplace, and this product will enable us to compete very effectively,” Kapitany said.

Shell’s lubricants business makes up a small portion of the company’s downstream operations, which accounted for about a quarter of the company’s earnings in 2013.

Global demand for lubricants was 38.7 million tons in 2012, with the United States accounting for 22 percent of consumption, according to data from Kline & Company, a market intelligence firm.

If the motor oil could be made using natural gas produced in the United States, there could be domestic benefits, said Daniel Whitten, spokesman for America’s Natural Gas Alliance. He said the organization would need to know more about the technology.

“Any product that uses natural gas, we feel, is a step in the right direction,” Whitten said. “If there is a potential for it to be made from American natural gas, that would be something we would like to know more about.”

Chron