Base oils produced at Pascagoula will add to capacity from the company’s refinery in Richmond, California, and a joint venture facility in Yeosu, South Korea, approximately doubling Chevron’s production capacity and positioning it to be the world’s largest producer of premium base oil, the company said in the statement.

The unit is designed to manufacture 25,000 barrels per day of API Group II base oil using Chevron’s proprietary Isodewaxing technology and will supply customers in the U.S. East Coast, Europe and Latin America, with Richmond continuing to supply the U.S. West Coast, and both Richmond and Yeosu supplying Asia, the company stated.

U.S. buyers confirmed that they had already received a shipment of material from the plant. They have sent actual production samples to the additive companies so they can start supplying their customers, a source added.

Other base oil producers have been dreading the arrival of the new product to the market, as the additional supply could potentially exert downward pressure on posted prices.

However, so far there have been no signs of any price adjustments because the market remains fairly tight moving into August, given consistent orders and the current turnaround at the Excel Paralubes facility. The Excel Paralubes plant in Westlake, La., can produce 22,200 b/d of Group II oils and was taken off-line in late June for a two-month turnaround.

Come September, the market situation may change, as the restart of the Excel Paralubes plant will coincide with the typical demand slowdown at the end of the summer, several sources commented.

Meanwhile, Group I suppliers confirmed that demand was pretty good for July, and that the heavy neutrals and bright stock were still snug. Blenders are all telling me that they are having a good year and demand is up a little, a supplier commented.

Group III suppliers also agreed that requirements had been fairly steady throughout the summer.

However, producers also conceded that requirements could decline from the end of July through early September as is normal for the time of year. Sources also said that the extra Group II supply would likely have an impact on all segments of the market.

Chevron has also been in the news because of a minor fire at the Richmond, Calif., refinery on July 16. The fire was apparently caused by hydrocarbon leaking at the fluid catalytic cracker–which produces gasoline–and was extinguished in less than an hour with no injuries reported, according to local media reports.

In a press release, Chevron stated that the fire had occurred while preparing a non-operational area for maintenance work using a specialized hose and steam. The producer also assured that there had been no threat to neighbors or the community in general.

In August 2012, a pipe in a crude oil processing unit at the Richmond refinery burst, leaking hydrocarbon and causing a massive fire that sent about 15,000 people to hospitals because of smoke inhalation.

The base oil unit at the refinery remained off-line for several months after the fire.

The latest incident occurred just days ahead of a county hearing regarding Chevrons Richmond Refinery Modernization Project. The project involves the replacement of some of the facilitys oldest processing equipment with modern technology that is safer and has been designed to meet some of the nations toughest air quality standards.

In other production news, contrary to rumors circulating the market, Motivas refinery in Port Arthur, Texas, is running well and no base oil output issues have been reported.

Maintenance is under way on the Heartland Petroleum rerefinery in Columbus, Ohio, with a restart rescheduled for next week, an executive with Warren Distribution, which is a co-owner of the rerefinery, told Lube Report yesterday. The rerefinery has 1,500 b/d of Group II rerefined base oil capacity.

Upstream, West Texas Intermediate crude traded higher on speculation that U.S. crude inventories have been drawn down since last week.

WTI settled on the CME/Nymex at $104.42 per barrel on July 22, up $4.46 from a settlement at $99.96/bbl on July 15.

Brent crude was trading around $107.33 per barrel on the CME, up $1.31 from $106.02/bbl a week ago.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.