Hurricane Harvey Impacts PAO Production
ChevronPhillips Chemical has declared force majeure on its polyalphaolefin and metallocene PAO produced in North America, due to impacts of Hurricane Harvey. Industry sources say the company warned disruptions could last until December…read more
Motiva declared force majeure yesterday on base oils produced at its plant in Port Arthur, Texas, indicating that deliveries of all grades will be disrupted due to damage from Hurricane Harvey…read more
Lubrizol Restarts Deer Park Plant
Lubrizol said it has resumed production and shipments of material from its plants in the Houston area, including its Deer Park additive plant…read more
Facilities Impacted by Hurricane Harvey
A number of facilities have been closed as a result of the Hurricane…read more
With floodwaters receding along the coast of Texas, U.S. lubricant companies are anxiously waiting news about the damage that Hurricane Harvey caused to their supply chains…read more
Storm Closes Port Arthur, Baytown, Other Plants
Base oil and additive plants along Texas Gulf Coast were forced to close as Hurricane Harvey brought record flooding to one of the worlds highest concentrations of raw material supply for the lubricant industry…read more
By George Gill, Katie Kellenberger and Boris Kamchev September 27, 2017
Chevron Phillips Chemical has declared force majeure on its polyalphaolefin and metallocene PAO produced in North America, due to impacts of Hurricane Harvey. Industry sources say the company warned disruptions could last until December.
The hurricane brought record flooding to southeastern Texas in late August, resulting in the closing of Chevron Phillips Chemicals Cedar Bayou petrochemical refinery, which has a 58,000 t/y PAO plant; ExxonMobils Baytown refinery, which includes a 50,000 metric ton per year high-viscosity PAO plant; and ExxonMobils Beaumont refinery, which includes a 146,000 t/y PAO plant. ExxonMobil announced last week it was making good progress toward restoring operations to pre-storm levels. Meanwhile, Ineos said its PAO plant in La Porte, Texas, wasnt impacted by the storm, though it did have to cope with logistical disruptions.
Chevron Phillips Chemical notified customers in a letter at the end of August that problems caused by Hurricane Harvey had severely limited the companys ability to produce and deliver PAO and mPAO from its facilities in North America. Therefore, effective immediately and until further notice, Chevron Phillips Chemical Company LP is declaring force majeure on all Synfluid PAO and Synfluid mPAO produced in North America, the company stated in its letter, adding it was evaluating the expected duration and would provide customers with updates as more information became available.
A Chevron Phillips Chemical representative declined requests from Lube Report for comment.
Industry sources, speaking on condition of anonymity, said Chevron Phillips Chemical doesnt expect to restart the plant or resume deliveries until December. One of those sources said the company expects to stay on force majeure for the balance of the year. The same source said the facility at one point had several feet of standing water and that electrical components need inspections and repairs.
Another industry source, also speaking on condition of anonymity, recounted being told they would not receive any PAO product from Chevron Phillips Chemical until December. This source suggested that would likely create tightness in the market but noted that companies can turn to imports to hold them over until the Cedar Bayou plant is back in operation.
Chevron Phillips Chemical also has a 63,000 t/y PAO plant in Beringen, Belgium, and 9,000 t/y of high-viscosity PAO toll-manufactured for it in Pasadena, Texas, according to LubesnGreases 2017 Nonconventional Base Stocks Guide.
Consultancy Kline & Co. estimated the global PAO market at around 480,000 to 500,000 tons per year in 2016. While there is surplus capacity for the high-viscosity PAOs, the low-viscosity PAO plants run at higher rates with limited surplus capacity, Anuj Kumar, a project manager in Klines energy practice, said in an emailed statement.
Chevron Phillips Chemical completed an expansion of around 10,000 tons per year at the Cedar Bayou Texas plant earlier this year. Including that expansion, Kumar said Chevron Phillips Chemicals share of the global PAO market would be in the 15 percent to 16 percent range. Hence, this is an important plant for the PAO market, he noted. Depending on the length of the production outage at this plant, the impact could vary from minimal to significant.
ExxonMobil said in a press release Sept. 21 that it is working to restore chemical and lubricants manufacturing operations at its Baytown and Beaumont sites, though it did not specify the status of operations at its PAO plants. The company said its Baytown chemical plant had resumed normal operations. The Beaumont chemical plant and lubricants blending and packaging plant have resumed operations and are ramping up toward pre-storm production capacity, ExxonMobil stated.
Because of our extensive planning and preparation efforts, we were able to protect the infrastructure of our manufacturing plants and are well positioned to resume operations at sites impacted by the storm in a timely fashion, Neil Chapman, president of ExxonMobil Chemical Co., said in the news release.
Ineos PAO business in La Porte, Texas, sustained no physical damage to its plant during Hurricane Harvey, company spokesman Kevin Ratliff told Lube Report. The plant has 105,000 t/y capacity, with additional volumes via a toll manufacturer, according to LubesnGreases 2017 Nonconventional Base Stocks Guide.
The impact was primarily focused on logistic aspects of our business – moving product, Ratliff explained. The majority of our feedstocks are produced at our [linear alpha olefin] plant located in Alberta, Canada. The only issue that we experienced with supply of LAO was some delays in rail car arrivals due to the temporary rail stoppages. These were quickly corrected after rail lines were re-opened.
By Tim Sullivan and Gabriela Wheeler September 13, 2017
Motiva declared force majeure yesterday on base oils produced at its plant in Port Arthur, Texas, indicating that deliveries of all grades will be disrupted due to damage from Hurricane Harvey.
In a letter to customers, a copy of which Lube Report obtained, the company advised that the 40,300 barrel per day plant and associated logistics systems were directly affected by the storm. The company implied that it plans to implement allocations but did not discuss how steep they will be or provide information about how long the disruption is likely to last.
That left customers – and others – anxious for more information about the status of the plant, which is by far the largest source of base stocks in the Western Hemisphere.
Until the situation is defined by them, we dont really know how big of a problem this is, said one customer, who spoke on condition of anonymity. We expect to be without our normal supply for some period of time. If the gap is large and lasts for months, that would be a very big impact. If the allocations are small and the situation is resolved this month, it could be minimal.
The industry received better news last week whenLubrizolsaid its lubricant additive plant in Deer Park, Texas, had resumed production and was scheduled to return to full operation by Sept. 9. The facility is Lubrizols largest North American source of lubricant additive packages. It halted operations Aug. 30 because of flooding and sustained minor damage.
The U.S. Gulf of Mexico Coast is home to numerous facilities that produce base stocks and additives, which account for all of the raw materials used to manufacture lubricants. Harvey and the record flooding that it caused disrupted operations at four oil refineries that include base oil plants and numerous chemical plants producing lubricant additives or building blocks used to make them.
The other refiners, including ExxonMobil – which operates the continents second-largest base oil plant at its Baytown, Texas, refinery – have said their refineries are returning to normal operation but refused to comment on the status of base oil plants. Lube blenders said rail deliveries of base oils from Baytown have been halted because of disruption to rail service.
The Baytown plant has capacity to make 28,000 b/d of Group I and II stocks.
Force majeure is a condition permitting suppliers to depart from strict terms of contracts because of events that could not be reasonably foreseen or controlled. Companies that declare force majeure often implement allocations that limit contracted customers to receiving specified portions of normal deliveries until disruptions end and supply chains are restocked. As sources noted yesterday, the amounts that customers receive under allocations can vary from 100 percent of normal levels to the low double-digit percentages or less. It is also possible that Motiva would set different levels of allocation for the different grades of base oil produced at Port Arthur.
This is the big daddy of U.S. base oil plants, said a second customer, who also spoke on condition of anonymity. You can bet everyone is going to be waiting to hear whats going on there.
By George Gill September 8, 2017
We have returned to full production as of this week, implementing a very robust business continuity plan that has worked very effectively, a company spokesperson told Lube Report. As such we expect minimal disruptions. We have made some small adjustments to our standard order lead times for the month of September to catch up with the demand, and expect to return to normal lead times by the beginning of October.
The spokeperson said the company acknowledges this remains a dynamic situation for the entire industry impacted by this most recent storm. And Lubrizol continues to carefully monitor our raw material supply, logistics in the area and potential weather disruptions in the region.
The Deer Park site suspended operations on Sunday, Aug. 28, and the company said subsequently that it had sustained minimal damage due to minor flooding.
The Deer Park plant is Wickliffe, Ohio-based Lubrizols main additive packages facility in North America, manufacturing additive packages using both components manufactured on-site and brought in from elsewhere. The site also has a plant with capacity to make 90,000 metric tons per year of polyisobutene, according to LubesnGreases 2017 Nonconventional Base Stocks Guide.
In 2015, Lubrizol announced plans that in conjunction with a technology license agreement with Daelim Industrial, it would construct a new polyisobutylene unit at the Deer Park facility. Expected to be fully operational in the first half of 2019, the unit will provide the company with capacity for highly reactive polyisobutylene, or HR PIB, a key raw material for dispersants and lubricants.
September 7, 2017
- Motivas Port Arthur, Texas, refinery, which includes a 40,300 barrel per day Group II base oil plant, the worlds second-largest base stock plant; closed Aug. 30 but has resumed production and expects to operate at 40 percent of capacity by Sept. 10;
- ExxonMobils Baytown, Texas, refinery, which includes a 28,000 barrel per day base oil plant, the nations second-largest, and a 50,000 metric ton per year high-viscosity polyalpha olefin plant; began shutting down Aug. 27 but reopened and is ramping up operations;
- ExxonMobils Beaumont, Texas, refinery, which includes a 146,000 t/t PAO plant; began shutting down Aug. 30 and remains closed;
- LyondellBasells Houston refinery, which includes a 4,600 b/d Group II and naphthenic base oil plant; underwent a partial shutdown during the storm; now reopened but not operating because it lacks sufficient feedstock;
- Valeros Three Rivers, Texas, refinery and 2,400 b/d base oil plant; began shutting down Aug. 24 and has been reopening and ramping up operations since Aug. 30;
- Lubrizols lubricant additive plant in Deer Park, Texas, the companys largest in North America; shut down Aug. 30 but has resumed production and expects to return to full operation by Sept. 9;
- Chevron Phillips Chemicals 58,000 t/y polyalphaolefin plant in Cedar Bayou, Texas;
- TPC Groups 141,000 t/y polyisobutene plant, the largest in North America, in Houston; closed during storm;
- Huntsmans chemical refineries in Port Neches, Texas, which includes a polyalkylene glycol plant, remains closed after a safe shutdown. Huntsmans refinery in Conroe, Texas, which also includes a PAG plant, reopened Thursday;
- Dows chemical refinery in Freeport, Texas, which includes a 55,000 t/y PAG plant, had closed earlier but was ramping production back up Thursday, PetroChem Week reported.
By Katie Kellenberger and Tim Sullivan September 1, 2017
As floodwaters receded along the coast of Texas, U.S. lubricant companies are waiting anxiously for news about damage that Hurricane Harvey caused to their supply chains.
Some facilities that supply base stocks and lubricant additives have resumed operations after temporary shutdowns but others remain idled – whether still flooded or for lack of power, employees or raw materials.
Industry insiders said the scale of the impacts will depend on the extent of damage to the downed facilities.
The question is, when will plants be back online, said Jim Kudis, president of Allegheny Petroleum Products Co., an independent blender based in Wilmerding, Pennsylvania. I hope people are okay and that theres not too much damage, but in terms of our business, I want to know when I can get product from them.
There was good news on the transportation front, as ports that had been closed began to reopen, though operations are not yet back to normal. The U.S. Coast Guard gave permission Thursday for daytime traffic to resume at the ports of Corpus Christi, Texas City, Galveston, Houston and Freeport, Texas. The upper part of the Houston Channel remained closed.
One analyst, who spoke on condition of anonymity, told Lube Report that the channel was unlikely to have sustained serious damage but that ships would probably run into delays after ports reopened. Land-based transportation is still hampered by closed roads, unavailability of trucks and lingering issues on some railroads.
Right now its very bad, Kudis said. We supply a couple manufacturing plants, and we cant find trucks to make deliveries. I dont expect that to last a long time, but right now its making things very difficult.
Lubricant blenders said they were more concerned about the potential impact to base oil supply if production is disrupted for long. Valeros refinery in Three Rivers, Texas, which includes a 2,400 barrel per day naphthenic base oil plant, was in the process of restarting Thursday, and LyondellBasells Houston refinery, which includes a 4,600 b/d paraffinic and naphthenic plant, was reportedly ramping back up after a partial shutdown.
Two large plants remain closed, however: Motivas 40,300 b/d Group II plant in Port Arthur, Texas, and ExxonMobils 28,000 Group I and II plant in Baytown, Texas. Together they account for 24 percent of U.S. base oil capacity.
Several sources opined that the global base stock market would be impacted if those plants do not reopen within two weeks. Lubricant blenders that buy directly from those plants will experience problems sooner, they said.
Right now, parts of the U.S. supplied by the Houston region will be using their stocks and then the stocks of their distributors, said Annie Jarquin, director of Kline & Co. consultancys Energy Practice. She predicted that plants will bounce back quickly after the flood waters recede but added that problems could still arise due to the time it takes to replenish stock levels.
Lube companies are also worried about the state of plants that supply additives or chemicals used to make additives. Lubrizol said its additive plant in Deer Park, Texas – the companys main facility in North America – was closed and sustained a small amount of damage. The storm also forced the closing of numerous petrochemical refineries that produce building blocks for materials such as detergents, dispersants and emulsifiers used in the production of lubricants, as well as glycols, synthetic esters and polyalphaolefins.
Its not just base oils, said Ronald M. Powell, president of Moroil Technologies, an independent blender in Concord, North Carolina. Additives are also an issue, and you need to consider not only supply of additive packages but also individual components. Lubrizol and other large additive companies supply additive packages used in such high-volume types of lubricants as engine oils, but many independent lubricant manufacturers purchase individual additive components to make various types of industrial lubes.
It may be too soon to know the extent of disruption in availability of such materials, but blenders said theyve already begun making contingency plans.
I imagine most companies are identifying their critical raw materials and looking at how those are sourced and where they are produced, Powell said. And if they have materials that are coming from the Gulf, they are doing whatever is prudent to try to make sure that their supply of those materials is not interrupted.
In addition to the question of obtaining materials that they need, blenders also expressed concern that competitors of plants that close may raise prices.
– Joe Beeton, Boris Kamchev, Gabriela Wheeler and George Gill contributed to this report
By Tim Sullivan August 30, 2017
Base oil and additive plants along Texas Gulf Coast stand idle as Hurricane Harvey brought record flooding to one of the worlds highest concentrations of raw material supply for the lubricant industry.
With water levels still rising, companies said it was too soon to say when facilities would reopen. The industry awaited damage assessments as the rain spread eastward from Houston, raising the threat of similar impacts for more plants near the Texas-Louisiana border.
It will take some time to bring plants back online after they have been shut down – longer if they were damaged by flooding, Jamie Brunk, manager for lube studies at HSB Solomon Associates, said on Monday.
More than a quarter of U.S. base oil capacity now stands idled. Motiva was the latest company to announce a closing, issuing a statement early this morning that it had begun a controlled shutdown of its Port Arthur, Texas, refinery because of increasing flooding. That refinery includes the worlds second-largest base oil plant, a Group II facility with capacity of 40,300 barrels per day.
Photo: Twitter/@caroleenarn via Reuters
Among the other facilities that closed are:
- ExxonMobils Baytown, Texas, refinery, which includes a 28,000 barrel per day base oil plant, the nations second-largest, and a 50,000 metric ton per year high-viscosity polyalpha olefin plant;
- ExxonMobils Beaumont, Texas, refinery, which includes a 146,000 t/t PAO plant;
- Valeros Three Rivers, Texas, refinery and 2,400 b/d base oil plant;
- Lubrizols lubricant additive plant in Deer Park, Texas, the companys largest in North America;
- Chevron Phillips Chemicals 58,000 t/y polyalphaolefin plant in Cedar Bayou, Texas;
- TPC Groups 141,000 t/y polyisobutene plant, the largest in North America, in Houston; – Huntsmans chemical refineries in Port Neches and Conroe, both of which include polyalkylene glycol plants.
The Port Arthur plant, ExxonMobils Baytown plant and Valeros Three Rivers facility account for a combined 27 percent of U.S. base oil capacity.
All of the companies with confirmed closings said it was too soon to say when their facilities will reopen. Lubrizol said its facilities sustained minimal damage, but other companies said damage had not yet been assessed.
Harvey was expected to produce additional rainfall accumulations of 6 to 12 inches to the north and east of Houston, from far east Texas into southwestern Louisiana, the National Weather Service said in an advisory and 48-hour outlook late yesterday. Elsewhere, Harvey is expected to produce total rainfall amounts of 5 to 10 inches across portions of southern Louisiana.
According to media reports, water was overflowing two key reservoirs – Addicks and Barker – within 15 miles of Houston despite intentional water releases by operators. Officials said conditions were unprecedented, and that they were uncertain how the reservoirs would handle the situation.
The big questions for the lubricant industry will be how long until the closed plants reopen and whether large plants near the Texas-Louisiana border also have to halt operations. Motivas 40,300 b/d plant in Port Arthur, Texas, is the worlds largest, and the Excel Paralubes 22,000 b/d plant in Westlake, Louisiana, is the nations fifth largest.
The industry does not have to look back so many years to recall the type of trouble hurricanes can cause it. In 2008, ExxonMobils Beaumont PAO plant sustained damage during Hurricane Ike that forced the company to impose customer allocations for synthetic lubricants that lasted for four months. In August 2005, flooding from Hurricane Katrina caused damage to Chevrons Oronites main North American lube additive plant, in Belle Chasse, Louisiana, which did not reopen until October of that year.
Harvey hit Texas southeast coast Friday as a Category 4 hurricane, but while winds and sea surge did cause some damage, it quickly became more of a flood threat as winds slowed and the storm settled over Houston.
While wind damage could have initially been the reason for closures, the bigger peril is now apt to be flooding, especially in Port Arthur and Beaumont [Texas] area, Stephen B. Ames, of SBA Consulting in Pepperpike, Ohio, said on Monday. In addition to the impact on their suppliers, he added that Harvey stands to affect lubricant blenders own manufacturing facilities.
The many lubricant blend plants in the Houston area may have been heavily impacted from possible flooding and the likely disruption of logistic services that move raw materials and finished products in and out, he said.
– Gabriela Wheeler and Boris Kamchev contributed to this report