SK Plant Damaged By Fire


It appears that even foreign suppliers are not to be left out of the disruptions that have afflicted the U.S. base oil market this year. A fire broke out at SK Corp.s Ulsan, Korea, refinery Oct. 20, causing damage that left the plant operating at less than 60 percent capacity.

The company, which sells Group III oils into the United States through agent Lithcon Petroleum USA Inc., said it hoped to resume normal operations in one month and did not expect customers – at least those in North America – to be affected.

SK said no one was injured in the fire at its refinery, which was triggered by an explosion in a boiler adjacent to the hydrocracker of its heavy oil upgrading plant. The company said its base oil plant was undamaged, but cannot run at full capacity because its feedstock comes from the heavy oil upgrading plant.

Officials said it will take approximately one month to restart the hydrocracker. In the meantime, the base oil plant will run on inventories of feedstock and other raw materials. SK said the plant, which normally has capacity to produce 8,500 barrels per day, is now producing 5,000 b/d. The company said it had already scheduled a two-week maintenance turnaround so that the practical amount of time lost may be no more than two weeks. It added that it does not expect to have to purchase base oil in order to meet customer orders.

As a major supplier of Group III oils to North America, SK joins a sizable list of producers to experience disruptions this year. Three plants underwent maintenance shutdowns, two lost time to power outages and another put customers on allocation for several weeks because of operational problems.

Some base oil buyers predicted that SKs problems may not have a big impact on the market.

There are other Group III suppliers who are actively selling, so there is [Group III] to be had if you need it, said one buyer, who spoke on condition of anonymity.

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