A power outage Thursday caused an unscheduled shutdown of the Excel Paralubes base oil plant in Louisiana. ConocoPhillips said it expects to resume normal operations today, but the weeklong loss of production was expected to further tighten U.S. supply of Group II base oils.
Excel Paralubes is a 50-50 joint venture between ConocoPhillips, which operates the plant, and Shell Oil Co., which has agreed to sell its stake to Flint Hills Resources Inc. Located next to ConocoPhillips Lake Charles refining complex, the plant is the second-largest North American base oil refinery, with capacity to produce 21,500 barrels per day of Group II stocks.
The electrical outage, which affected ConocoPhillips own onsite power system, caused an immediate closure of the entire complex. Resumption of operations was delayed because plant personnel were not able shut down equipment in an orderly manner.
Supply of Group II was already snug because Motiva Enterprises has shifted its output from Group II to Group II-plus, in an effort to help the market cope with production problems at ExxonMobils Baytown, Texas, refinery. Observers said ConocoPhillips problem could exacerbate the situation, especially since Excel Paralubes has scheduled a 10-day maintenance turnaround for next month. That shutdown was originally scheduled for October but the joint venture decided recently that it could not wait that long.
We were already going to have less time than wed like to build inventories, because of the fact that we had to move up the turnaround, a ConocoPhillips official said. Now well have even less time, and we lost a week of production. Were managing our way through, but were already tight on a couple grades. The official said he did not know the status of Shells supply from the refinery.
The price of crude oil rose 13 cents on the New York Mercantile Exchange yesterday to close at $28.54 per barrel, a dime higher than a week ago.
U.S. posted paraffinic base oil prices were unchanged this week.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.
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