Last month the National Petrochemical and Refiners Association released this years edition of its annual Lubricating Oil and Wax Capacities report, the industrys most widely consulted source of information about productionof North American base oil plants. The six-page document is a popular reference for lube blenders who want to identify potential base oil suppliers, and for buyers and sellers conducting market analyses.
But the reports release also spurs debate about the accuracy of data in it. Some observers think the report tends to overstate capacities, while others contend that it understates. And although most believe that it gives a reasonable approximation of the overall size of the market, a few claim that numbers for individual plants are off significantly.
NPRAs capacity report lists every base oil and waxrefinery in North America and some in South America, and describes the processes used by each. It also lists the daily base oil and wax capacity of each plant, specifying the amounts dedicated to Group I and higher grades.
Many who use the report agree that the numbers listed differ from the true capacities. Some say the report tends to list numbers that are less than actual plant capacities.
There is a certain amount of capacity creep that takes place in a lot ofplants as they do things here and there to fine-tune operations and debottleneck production, said a base oil supplier on the Lubricants and Waxes Statistical Subcommittee that oversees compilation of the report. A lot of times there is a lag of a year or two for those increases to show up in the report, because even the operators dont know ahead of time how theyre going to shake out.
Others suspect the report of overstating the amount of base oil that plants mightrealistically be expected to produce.
There are so many factors that affect actual output and many of them are hard to pin down, another supplier said. He speculated, for example, that some suppliers factor in downtime for maintenance work but others do not. (The association instructs suppliers to factor in downtime.) And if a Group II producer decides to make more Group II-plus, it lowers their overall yield. There are so many variables that are hard to take into account.
Most people questioned for this article, even those who suspect the reported capacities of being off, said they believe that any inaccuracies are small enough not to affect the documents usefulness. More than one, however, claimed the difference between reported and actual capacities for some plants is significant. One supplier contended that capacities at some newer plants are 20 percent higher than shown in the report.
The Group II plants are all relatively new, which means that they havent yet exhausted all the large measures they can take to debottleneck and improve their operations,he said. So they are in an ongoing, continuous process of increasing capacity. And they go two or three years without reporting an increase because they have no incentive to go out on a limb to predict how large of an increase it will be until they are absolutely sure.
When youre talking about a difference of 20 percent [at someplants], thats a big, big difference, especially during times like these when there is so much speculation going on about whether there is going to be a shortage of Group II, and people are using these numbers as the basis of projections.
Posted prices for paraffinic base oils in the United States were unchanged this week. The price of crude on the New York Mercantile Exchange closed yesterday at $36.40 per barrel, down 66 cents from the previous week.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.