A fire broke out Saturday night at Ergon’s refinery in Newell, West Virginia, damaging a fuels unit and forcing the whole facility to shut down.
The company said Tuesday that it was in the process of restarting most operations, including the site’s base oil plant.
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Nevertheless the company declared force majeure Tuesday on base oils and other materials, including fuels.
The incident caused additional consternation for base oil buyers and traders already struggling with an extremely tight market. Buyers said they hoped Ergon would be able to resume normal operations and lift its force majeure soon so as to minimize impacts on overall supply.
“Obviously the supply situation is already dire,” said a buyer for one lubricant manufacturer, who asked not to be identified. “The Newell plant is not very big, but at this point any additional disruption can only make things worse for the market’s overall availability.”
The base oil plant at the Newell refinery, which is located in West Virginia’s northern panhandle along the Ohio River, has capacity to make 2,900 barrels per day of paraffinic Group II base oils and 1,900 b/d of Group I.
The fire broke out around 11 p.m. Saturday, according to local news reports, and led authorities to evacuate residents in the surrounding area for three hours. No one was injured according to Ergon.
The company said the fire started in the Unifiner process, a unit involved in gasoline production. The company did not disclose the extent of damage nor estimate how long it will take to repair. But it did say late Tuesday afternoon that it was taking steps to restart all areas except the Unifiner.
The Newell refinery recently completed a maintenance shutdown. Startup was delayed, leaving inventories critically low, Ergon said, and this contributed to the company’s decision to declare force majeure, a legal term for clauses that businesses invoke when unforeseen circumstances prevent them from fulfilling contractual obligations.
Ergon did not estimate how long the declaration would last.
Base oil availability around the world has been extremely tight for months, primarily because of reductions in fuels output that have constrained production of base oil feedstocks. Numerous smaller disruptions have exacerbated the situation.