The Castrol/Mobil "court case" - how it went down

[kschachn]

Originally Posted by Nyogtha
I haven't seen anything independent showing Visom is superior to all other Group III base stocks, it was simply proprietary to XOM and thus no dependence on any outside entity for its supply.

All right, especially if you use the word "independent." I was going off the presentation where it said:
Quote
Visom is the only non-PAO stock that can deliver the required performance to
formulate a 0W grade oil that meets European OEM engine oil specifications.
Visom is not available to our competition.

Also where they show the results of the thin film oxidation test. I'm probably reading too much into it, I thought ExxonMobil was saying Visom was superior to other available Group III base stocks (and is why they gave it the Group III+ label).

 

[Virtus_Probi]

Originally Posted by Onetor
It's all about the $$$$$. Especially in the USA. Even the Roman Empire could not last. I don't mean to detract, but it's greed. We the consumers get *&OY@!
Wait till a group of wealthy people take it to Federal Court....The article stated "Almost as good." Almost? I digress.

The Roman Empire transmuted into the Catholic Church...which is having some big troubles of its own now, as we all know!

 

[Kjmack]

Originally Posted by Onetor
It's all about the $$$$$. Especially in the USA. Even the Roman Empire could not last. I don't mean to detract, but it's greed. We the consumers get *&OY@!

Wait till a group of wealthy people take it to Federal Court....The article stated "Almost as good." Almost? I digress.


The Roman Empire was partly destroyed by the overall lack of moral fiber . Over time with good economy it was whatever felt good , sec with your friends wife , drunk all the time , drugs etc . Kinda what a group of nuts wants the US to turn into . A society has to have morals to survive .

 

[Nyogtha]

Originally Posted by kschachn
Originally Posted by Nyogtha
I haven't seen anything independent showing Visom is superior to all other Group III base stocks, it was simply proprietary to XOM and thus no dependence on any outside entity for its supply.

All right, especially if you use the word "independent." I was going off the presentation where it said:
Quote
Visom is the only non-PAO stock that can deliver the required performance to
formulate a 0W grade oil that meets European OEM engine oil specifications.
Visom is not available to our competition.

Also where they show the results of the thin film oxidation test. I'm probably reading too much into it, I thought ExxonMobil was saying Visom was superior to other available Group III base stocks (and is why they gave it the Group III+ label).

And, knowing Shell had been operating their Malaysian GTL plant since 1997, and Mobil 1 0W-40 MSDS no longer showing Visom but instead showing GTL starting 2016, plus the fact XOM shelved vonstruction of their planned GTL plant so any GTL base stocks ised in XOM's products must come from outside XOM, tends to put XOM's claims that Visom was the only non-PAO base stock capable of meeting European reqirememts in a 0W oil, less than probably fully factual. If XOM had included "readily available to XOM in required volumes" in it's claims for Visom, it might be fully factual. But surely someone needed to paint Visom as some miracle product after Exxon had produced and stopped producing Exxsyn base stocks at the Fawley UK facilty for internal political purposes. After the formation of Exxon Mobil, the facility was revamped to include Mobil technology in order to produce Visom. So it's probably possible that Visom could have been produced by Exxon purchasing Mobil technology and paying Mobil royalties I think it's unlikely Mobil woild have licensed their technology to Exxon in order to provide their largest competitor ready availability of a base stock competitive with all the PAO Mobil produced.

It is interesting discussion on Visom in M1 0W-40 ceased around the same time Shell mothballed a large scale solvent dewaxing base stock plant, I don't think it's coincidence. I think as production facilities have shifted to catalytic dewaxing the availability and probably cost for feedstock for processes like Visom put it out of the market as significant quantities of GTL base stocks evidently became more widely available in the market place around the same time.

And now, with the surfeit of natural gas sn7d NGL's spurring lots of petrochemical plant construction in the US, in turn creating more feedstock for PAO facilities and new PAO facilities being commissioned, the whole driver for XOM to produce and use Visom, or GTL base stocks, may evaporate. How things can change in the span of a decade or so (Katrina was in 2005).

 

[userfriendly]

So what you are saying, cost of a finished product and availability of feed stocks is the driver of base oil plant construction?

 

[Nyogtha]

No my main point is any claims that Visom was superior to any other Group III base stock at the time of the slideshow presentation is likely not the whole truth, knowing simply Shell had been operating their Bintulu GTL facility since 1997 alone as a fact.

A secondary point is opportunities in operating costs including costs of feedstock, typically the single largest variable cost for any oetroleum and petrochemical facility (energy costs,are second largest variable cost) and meeting finished product specs have evolved as well as associated economics within the time period XOM started using Visom in M1 0W-40. The tight PAO market mentioned in the slideshow presentation at that time is unlikely to be in that situation agaon for the foreseeable future at this point. What effects that will have on operation of facilities like the Visom plant and the Shell Pearl facility base stock plant should be interesting to watch.

I never mentioned construction costs, but here are my thoughts in that context. I don't know UK tax rules, but capital costs for the revamp of the Exxsyn facility to produce Visom would only be partially depreciated if done in the USA in the time frame before M1 MSDS started showing GTL base stocks. That is a clear example of stranded capital if the Visom facility ceased operation at that time.

 

[MolaKule]

When I first studied this non-legal issue and its outcome many years ago I said to myself, "If I wanted to bring a technical (chemistry) issue against a competitor, what's the Dumbest and most Stupidest thing I could do?? I would go to a NON-TECHNICAL business association to have the issue settled."

Sure, it involved some "Slippery Slope Advertising and Marketing," BUT in the main circus arena would be the question of whether or not a certain Group of base oil could be defined as, 'Synthetic.'

Now in reality I would first have a sit-down meeting with that competitor and discuss the issue, with my attorney's and chemists in tow. Most likely the competitor would say, "Bug off!," which I would have anticipated.

SOOOO, my next step would be to ask The American Chemistry Council to convene a special committee to hear the technical issues involved and then have that committee report out to the full board and its membership, with the ACC ultimately issuing a finding and a public statement.

HOWEVER, if I knew the most likely outcome of a business group ruling would ultimately benefit my company, because I knew that that Group of base oils could substitute for my low supply of expensive PAO's, what better way to slowly introduce my Group III's into my formulations without the outside world taking notice??

Except for BITOG of course!

 

[4WD]

Think the OEM's have become increasingly active in the process as well … and at the end of it all we have decent prices for the approved products along with the freedom to spend twice as much for something a bit better …
(Approved or not) …

 

[BMWTurboDzl]

I think it's worth mentioning that at least in BITOG it is OEM approvals which are typically cited as a reason to use/not use XYZ rather than the composition of a particular oil. That seems to be a step in the right direction.

 

[Garak]

Originally Posted by aquariuscsm
What's so ironic is how Mobil as said in their technical paper "Switched from pao base stocks to Visom group 3 base stocks without the consumers' knowledge". Pot meet kettle. I wonder if that paper is still online somewhere?

You can be rest assured that Mobil (and most others) realized they'd be winners irrespective of the way things worked out in the wash. After all, if Castrol can sell Group III as synthetic, so can everyone else.

 

[Nyogtha]

Originally Posted by MolaKule
When I first studied this non-legal issue and its outcome many years ago I said to myself, "If I wanted to bring a technical (chemistry) issue against a competitor, what's the Dumbest and most Stupidest thing I could do?? I would go to a NON-TECHNICAL business association to have the issue settled."

Sure, it involved some "Slippery Slope Advertising and Marketing," BUT in the main circus arena would be the question of whether or not a certain Group of base oil could be defined as, 'Synthetic.'

Now in reality I would first have a sit-down meeting with that competitor and discuss the issue, with my attorney's and chemists in tow. Most likely the competitor would say, "Bug off!," which I would have anticipated.

SOOOO, my next step would be to ask The American Chemistry Council to convene a special committee to hear the technical issues involved and then have that committee report out to the full board and its membership, with the ACC ultimately issuing a finding and a public statement.

HOWEVER, if I knew the most likely outcome of a business group ruling would ultimately benefit my company, because I knew that that Group of base oils could substitute for my low supply of expensive PAO's, what better way to slowly introduce my Group III's into my formulations without the outside world taking notice??

Except for BITOG of course!


I don't think XOM ever "stategically planned for" or "engineered for" several strong hurricanes making landfall in the Gulf Coast striking their primary PAO production facilities in order to use Visom in Mobil 1 products, unless you're truly a believer XOM is controlled by a mystical cabal with powers beyond mortal humans I suppose.

 

[MolaKule]

Originally Posted by Garak
Originally Posted by aquariuscsm
What's so ironic is how Mobil as said in their technical paper "Switched from pao base stocks to Visom group 3 base stocks without the consumers' knowledge". Pot meet kettle. I wonder if that paper is still online somewhere?

You can be rest assured that Mobil (and most others) realized they'd be winners irrespective of the way things worked out in the wash. After all, if Castrol can sell Group III as synthetic, so can everyone else.



Yes, and that was my main "non-mystical"

point. Either way EXMOB would benefit.

But doesn't it seem bizarre that a company, and this was my other point, with a large staff of chemical PhD's, would bring a highly technical issue to a business organization for a decision unless they knew that ultimately it would benefit them as well; hurricane or no hurricane?

 

[Nyogtha]

XOM's corporate culture prides itself on it's legal team above all other sectors of the business, a hallmark of the Exxon side pre-merger corporate culture. Mobil's corporate culture was overwritten after the merger (buyout) as is typical of the mergee (purchasee) in such transactions. One example: when I worked for Marathon assigned to issues of USEPA re-interpreting 1990's CAA provisions in 2000-2003, a consirtium of industry players with FCCU's formed a "battered CAA Consent Decree" roundtable group with USEPA participation; XOM steadfastly refused to even discuss these re-interpretations with a "we'll see y'all in court" response until the very end. I can understand how this may seem unusual to those not directy participating in the private sector for a large scale company if I step back for a more objective perspective.

For those of us who lived and worked at similar facilities affected by hurricanes Katrina & Rita and throughout the aftermath, these events were not simply experiences to be dismissed via conspiracy theories, and in fact are clearly mentioned in a bullet point of the XOM slideshow presentation.

These unpredictable sources of disruption to supply of the PAO market for unpredictable durations are what I *think* supplied the catalyst as it was for XOM to start using VISOM in M1, no matter what slowly plodding internal studies on PAO vs Gp III (+?) may have previoudly been predicting to be outcomes including gaining internal experience for XOM lubricamts organization in using base stocks with similar performance properties as GTL base stocks as mentioned in the slide show, on an industrial instead of pilot or demonstration facility scale. I think reading between the lines, XOM found the internal cost of keeping M1 free of Gp III (+?) stocks in such a sudden sudden unpredictable event for such an extended period without foresight to predict such a disruption and stockpile in anyicipation to be unpalatable, as well as the alternate solution to let such M1 products absorb the market impact of such disruption by passing along those costs in terms of longer term effect on market share.

 

[Nyogtha]

Hurricane Ike in 2008 probably strongly reinforced this.

 

[Nyogtha]

And the ability to source a variety of base stock supplies for M1 was undoubtably beneficial after Hurricane Harvey in 2017

 

[MolaKule]

Nyo, you haven't addressed the question, nor have you proposed an alternative Hypothesis as to why a very large and visible energy company would take a very technical topic of this kind to a Business organization, rather than taking it to an organization which would have members with expertise in the subject matter.

And possibly, there is no real answer, because we (you nor me) cannot know what went on inside EXMOB at this time in history.

 

[Nyogtha]

I disagree with significant experience working for such organizations and find your hypotheseis condition of "hurricane or no hurricane" is invalid to begin with.

To posit such a large organizatiom to have PhD's at the forefront of the business mentality is likewise unrealistic as XOM deliberately conjuring hurricanes. PhD's are business resources in such organizations but not the ones steering business strategy. So if the finished product met the desired specs, and is formulated in accordance with industry rules, what business is it if anyone what the exact blend contains since that is a business confidential trade secret to begin with, as discussed, not visible on product labels outside one specific portion of the product market segment? So why convene an assembly of competitor representatives to advertise something there is zero business driver to advertise?

Everyone not directly involved in the events can never know *precisely* how events unfolded and it's near-miraculous that XOM slideshow presentation ever got leaked considering how attorney-proud the Exxon corporate culture has always been. However if they had pursued action publicly, it probably would have attracted much more attention than XOM desired from the motoring public.

This doesn't change the fact that while possibilities are endless, probabilities are finite bounded by 0 and 1, and that with large organizations, much like individuals, the best predictor of future behavior is past behavior (and vice-versa).

 

[Tom NJ]

I think XOM was smart to quietly bring the issue to an advertising board rather than a court of law, which would have attracted tons of mainstream media attention. If they won the NAD ruling they would have accomplished the same thing as in a court, i.e. Group III base oils cannot be labeled "synthetic". It wouldn't have the force of law, but the industry would adhere to it. If they lost (as they did), the news stays buried within the industry and the door remains open for them to join the Group III crowd at a later date (which they did). Yes the judging panel were not technical, but then judges rarely are, and many technical experts from the industry were called to testify for both sides.

I'm sure they realized that their later change to Group III would eventually be noticed by a small group of oil-heads (no offense BITOG) who would analyze data, samples, and MSDSs, and the news would circulate around specialty Internet forums. But they also knew that these enthusiasts are a very small number - the entire BITOG membership is only around 0.03% of the adult population in the USA, and most of them are not even active. I also think they handled the Internet uprising smartly, i.e., shut-up, repeat their mantra of "high quality synthetic base oils", and don't say anything publicly that could attract the media - just let the whole mess quietly blow over. I doubt they lost any significant business over this issue.

I should also point out that the NAD did not declare all Group IIIs to be synthetic as many believe. They simply said that Castrol's specific claims for their Group III+ based Syntec oils were acceptable, except for the part about "Unique Molecular Bonding" since they took the POE out of the new formulas. The rest of the industry jumped on this ruling and began marketing all Group IIIs as "synthetic", figuring that no one would challenge them after the NAD ruling and they can enjoy the higher margins from the synthetic market.

We as consumers benefited from this whole deal. With the higher demand for Group III stocks came higher production and wider availability. This allowed the engine manufacturers to ratchet up specifications for motor oils, and the increased competition brought synthetic prices way down (Group IIIs vs PAO/ester). Now we all get many more oil options at different price points in selecting what we feel we need or want for our cars, rather than just the old mineral or PAO/ester. And if we want PAO/ester based oils and are willing to pay for them, they are still available. Overall higher quality oils with more options and price points is a win-win for all.

 

[4WD]

Agree … worked out Ok for the consumer and OEM … and as pointed out often … many motor oils are built from various base stocks depending on target performance …

 

[Nyogtha]

Thanks for the industry professional perspective & insight Tom!