Pascagoula on Target for 4Q


Chevrons $1.4 billion, 25,000 barrels per day API Group II base oil plant project in Pascagoula, Miss., is on budget, and on track for startup in the fourth quarter of 2013.

We will be mechanically complete, and go through our commissioning and startup in the fourth quarter, Patti Leigh, general manager for Chevron Lubricants base oil group, told Lube Report in an exclusive interview on Monday. As we line out the exact details of what that means – you have to build the waxy intermediate stocks, and then start up the finishers – it looks more like the first quarter [of 2014] before we have commercial quantities of oil for sale. Were hoping very early in the first quarter.

We have been lucky with the weather, she continued. We have survived the last two hurricane seasons with no direct hits. The project is going remarkably well.

As of February 2013, work on 16 new tanks at the Pascagoula project site is largely complete, Leigh said. Some adjustments and piping work are ongoing, she added. Were still making progress on the new processing units, like the Isodewaxing unit, and on the existing conversion of process units as well.

A large part of the project, beyond the actual plant, involved construction of a new Chevron wharf. Then were demolishing an existing wharf and building a second one, Leigh said. This will allow the company to handle the additional capacity needed for the base oil. The plant is located in a small channel off the Gulf of Mexico.

Pascagoulas products slate will include 60, 100, 220 and 600 Group II vis grades. The 100, 220, and 600 will be part of our global slate, Leigh said. They will look like what we currently produce at Richmond. The 220 and 600 will look like what we produce out of our [GS-Caltex] JV facility at Yeosu. The 60 neutral is new for us, and Pascagoula is the only place where we will produce that.

Chevrons Richmond, Calif. plant has 20,000 b/d of Group II capacity. GS Caltex, a 50-50 joint venture of Chevron and South Korean firm GS Holdings, has 23,000 b/d of Group II and 3,000 b/d of Group III capacity in Yeosu, South Korea.

In terms of distribution, Leigh said, Chevron plans to put its Pascagoula base oils into the U.S. Gulf Coast, Europe and Latin America, with a little bit to Africa and the Middle East over time.

While Chevron had some terminal capacity in areas where Pascagoulas products will go, the company has taken steps to address infrastructure needs globally. This is in addition to 10 global supply hubs already in place.

We have finished the design work on our global infrastructure, Leigh said. We have added tankage in a terminal position in Hamburg [Germany] to better serve our European customers. Were looking at further tankage in Europe, and were in the negotiation process on that. Then we have expanded capacity in Singapore.

Were exploring commercial tankage in Latin America, and then weve also expanded our tankage in the U.S. Gulf Coast outside of Pascagoula, which serves as contingency and to better serve customers in the Gulf Coast from multiple locations. The company is also expanding an existing position in Antwerp, Belgium.

Chevrons experience in the months following an August 2012 fire at the Richmond refinery reinforced the importance of the company having multiple base oil plants. We better recognize the value of having the security of supply available once [the Pascagoula base oil plant] starts up, to be able to weather the ongoing challenges that refineries have, Leigh said.

Having multiple base oil supplies is a very compelling issue with the companys customers, said Brent Lok, base oil marketing and business development manager, who also participated in the Feb. 25 interview. Very soon were going to have three locations where we can manufacture the same base oils, Lok pointed out. That really gives customers an extra security blanket they very much value.

According to Leigh, the growing number of Group III base oil plants and expansions has not affected Chevrons Group II plans. We have always had a belief in Group II base oil due to the changing specs, particularly in Europe, and being able to deliver Group II into Europe to serve that market, Leigh said. So not a lot is going on outside of what were doing at Chevron that really changes our view and our strategy in growing our Group II capacity.

Lok observed there is little overlap between Group II and III applications. They are more complimentary than competitors, he said. Group III are the very lightest vis applications, the fuel economy grades, and the Group IIs are the mainstream grades, and all the industrial oils and industrial engine oils.