U.S. Base Oils Dip, Again


Base oil production at U.S. refineries reached 27.8 million barrels in the first six months of this year, slumping 5 percent from the 29.3 million barrels manufactured in first-half 2012.

This marked the second straight year of straitened output from the country’s domestic refiners, whose yields fell disappointingly short of the bright tallies chalked up for January-to-June 2011 (when they cranked out 31.1 million barrels) and 2010 (also 29.3 million barrels).

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This year’s January-to-June output included 5 million barrels of naphthenic base oils and 22.8 million barrels of paraffinic stocks, according to data released at the end of August by the U.S. Energy Information Administration.

For those same six months last year, U.S. pale oil manufacturers reported producing 5.1 million barrels. Paraffinic base oil output totaled 24.2 million.

On the paraffinic side, the lower number largely tells the tale of frustrated output at Chevron’s Richmond, Calif., refinery. The refinery, one of the country’s largest, experienced a fire in its crude unit in August 2012 which left downstream units – including its 20,700 barrel a day API Group II base oil plant – struggling to obtain feedstock.

From the time of the fire until May of this year, the base oil unit at Richmond rarely was able to muster more than one-third of its usual production volumes, which prior to the fire had averaged a half-million barrels per month.

Chevron restored the base oil plant to full operation during May, but had it been humming at its usual rate, it likely would have contributed an additional million barrels to U.S. supply in the first six months of this year alone.

Overall, despite the ongoing contraction in domestic supply, optimists can take comfort in the fact that U.S. base oil production is still well ahead of the recession year of 2009, when first-half output sank to an abysmal 25 million barrels.

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