The United States lubricant industry seemed to largely dodge a major scare as facilities along the Gulf of Mexico coast appeared to have avoided serious damage after Hurricane Ida barreled ashore Sunday.
Stolt-Nielsen did state today that its Stolthaven terminal in New Orleans – a key distribution point for API Group III imports to the U.S. – was closed and that the company had declared force majeure for the facility. Officials said the terminal was undamaged but that its power and water supplies had been knocked out.
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“Although there are no guarantees, marine operations are expected to resume by the weekend, and we are hopeful of resuming our own operations, although at a reduced capacity, within a week,” said Philip Watt, the terminal’s general manager.
The market was still awaiting word from Chevron Oronite, which operates its main North American lubricant additive factory in Belle Chasse, Louisiana, on the southeast edge of New Orleans. Oronite did not respond by press time to questions from Lube Report.
Otherwise news for the lubricants industry was mostly good. Despite a path of heavy destruction through Louisiana and Mississippi, operators of several major base oil plants and of finished lubricant blending plants reported that their facilities closed during the storm but were reopening by Tuesday or that they did not suffer significant damage and would soon resume operations.
The second hurricane to make landfall in the United States this season, Ida threw a scare into the lubes industry by quickly strengthening to a Category 4 storm shortly before coming ashore near the Louisiana-Mississippi border Sunday. Its sustained wind speeds of 150 miles per hour at the time of landfall tied it for the highest of any hurricane ever recorded in Louisiana.
Base oil suppliers and lubricant blenders were especially concerned because base oil inventories are quite low at the moment. Supply was constrained for more than a year because of cutbacks in production of base oil feedstocks triggered by the COVID-19 pandemic. Demand, meanwhile, bounced back much more quickly, drawing down on storage tanks.
Storms of lesser intensity have caused major disruptions along the Gulf Coast, the heart of U.S. base oil production, but the pace at which Ida moved inland appeared to have limited its impact. ExxonMobil closed its fuels and chemicals refining complex in Baton Rouge, Louisiana – which houses a 16,000 barrels per day API Group I unit – during the storm but said Tuesday that the facilities did not sustain significant damage and were restarting.
Chevron’s base oil plant in Pascagoula, Mississippi, which has capacity to produce 25,000 b/d of Group II base oils, was understood to be running well, but dock operations had been impacted by the storm and “were inoperable at the moment,” according to market sources. There was no direct producer confirmation forthcoming. Chevron was also heard to be looking at shipping a 3,000 metric ton cargo of two base oil grades from Ulsan, South Korea, to Houston in mid-October, possibly to supplement its U.S. production.
Phillips 66 began the process of curtailing operations at its Lake Charles Manufacturing Complex in Westlake, Louisiana, before Ida reached the coast but resumed normal operations by Monday. The refinery provides feedstock for its joint venture Excel Paralubes, which is adjacent to the refinery and has capacity to make 22,000 b/d of Group II. Phillips 66’s Gulf Coast Lubricants Plant in nearby Sulphur was also expected to reopen its finished
Ergon’s refinery in Vicksburg, on the Mississippi River, was not impacted by the storm, the company said in a press release. “The refinery is fully operational and customers should not expect to see any disruptions through Ergon’s supply chain,” the statement noted. The refinery houses a 3,000 b/d Group I and 22,000 b/d naphthenic base oils unit.
The Motiva base oil plant in Port Arthur, Texas, which is located close to the Louisiana border, was heard to be running at normal rates, according to sources.
Although facilities generally appeared to have escaped significant damage there was still potential for disruptions to the base oil supply from the area. Power supply is a major concern as the storm knocked out service for more than a million households and businesses in Louisiana and 90,000 more in Mississippi. Refineries and terminals were among the businesses affected. Estimates of how it will take to restore service ranged from a few days to more than two weeks.
Stolthaven offered an example of companies trying to cope as Watt said the New Orleans terminal was using its own generators and was having water shipped in to cover operational requirements. Transportation loomed as another potential problem as companies waited for detailed reports about the hurricane’s impact on rail lines, roadways, river and inner-coastal traffic and loading facilities – all key to movement of raw materials and products for some companies.