Hurricane Harvey Impacts PAO Production

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Chevron Phillips Chemical has declared force majeure on its polyalphaolefin and metallocene PAO produced in North America, due to impacts of Hurricane Harvey. Industry sources say the company warned disruptions could last until December.

The hurricane brought record flooding to southeastern Texas in late August, resulting in the closing of Chevron Phillips Chemicals Cedar Bayou petrochemical refinery, which has a 58,000 t/y PAO plant; ExxonMobils Baytown refinery, which includes a 50,000 metric ton per year high-viscosity PAO plant; and ExxonMobils Beaumont refinery, which includes a 146,000 t/y PAO plant.ExxonMobil announced last week it was making good progress toward restoring operations to pre-storm levels. Meanwhile, Ineos said its PAO plant in La Porte, Texas, wasnt impacted by the storm, though it did have to cope with logistical disruptions.

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Chevron Phillips Chemical notified customers in a letter at the end of August that problems caused by Hurricane Harvey had severely limited the companys ability to produce and deliver PAO and mPAO from its facilities in North America. Therefore, effective immediately and until further notice, Chevron Phillips Chemical Company LP is declaring force majeure on all Synfluid PAO and Synfluid mPAO produced in North America, the company stated in its letter, adding it was evaluating the expected duration and would provide customers with updates as more information became available.

A Chevron Phillips Chemical representative declined requests from Lube Report for comment.

Industry sources, speaking on condition of anonymity, said Chevron Phillips Chemical doesnt expect to restart the plant or resume deliveries until December. One of those sources said the company expects to stay on force majeure for the balance of the year. The same source said the facility at one point had several feet of standing water and that electrical components need inspections and repairs.

Another industry source, also speaking on condition of anonymity, recounted being told they would not receive any PAO product from Chevron Phillips Chemical until December. This source suggested that would likely create tightness in the market but noted that companies can turn to imports to hold them over until the Cedar Bayou plant is back in operation.

Chevron Phillips Chemical also has a 63,000 t/y PAO plant in Beringen, Belgium, and 9,000 t/y of high-viscosity PAO toll-manufactured for it in Pasadena, Texas, according to LubesnGreases 2017 Nonconventional Base Stocks Guide.

Consultancy Kline & Co. estimated the global PAO market at around 480,000 to 500,000 tons per year in 2016. While there is surplus capacity for the high-viscosity PAOs, the low-viscosity PAO plants run at higher rates with limited surplus capacity, Anuj Kumar, a project manager in Klines energy practice, said in an emailed statement.

Chevron Phillips Chemical completed an expansion of around 10,000 tons per year at the Cedar Bayou Texas plant earlier this year. Including that expansion, Kumar said Chevron Phillips Chemicals share of the global PAO market would be in the 15 percent to 16 percent range. Hence, this is an important plant for the PAO market, he noted. Depending on the length of the production outage at this plant, the impact could vary from minimal to significant.

ExxonMobil said in a press release Sept. 21 that it is working to restore chemical and lubricants manufacturing operations at its Baytown and Beaumont sites, though it did not specify the status of operations at its PAO plants. The company said its Baytown chemical plant had resumed normal operations. The Beaumont chemical plant and lubricants blending and packaging plant have resumed operations and are ramping up toward pre-storm production capacity, ExxonMobil stated.

Because of our extensive planning and preparation efforts, we were able to protect the infrastructure of our manufacturing plants and are well positioned to resume operations at sites impacted by the storm in a timely fashion, Neil Chapman, president of ExxonMobil Chemical Co., said in the news release.

Ineos PAO business in La Porte, Texas, sustained no physical damage to its plant during Hurricane Harvey, company spokesman Kevin Ratliff told Lube Report. The plant has 105,000 t/y capacity, with additional volumes via a toll manufacturer, according to LubesnGreases 2017 Nonconventional Base Stocks Guide.

The impact was primarily focused on logistic aspects of our business – moving product, Ratliff explained. The majority of our feedstocks are produced at our [linear alpha olefin] plant located in Alberta, Canada. The only issue that we experienced with supply of LAO was some delays in rail car arrivals due to the temporary rail stoppages. These were quickly corrected after rail lines were re-opened.

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