Motiva Boosts Port Arthur Output


Motiva made a big splash in the base oil market this summer when it announced plans for an enormous 13,700-barrel-per-day expansion at its Port Arthur, Texas, base oil plant. The company is being much more low-key, however, about a smaller but significant production increase that has already occurred.

The company – a joint venture between Shell Oil Co. and Saudi Refining Inc. – confirmed last week that capacity at the 22,000-b/d Group II plant increased after a maintenance turnaround earlier this year. Motiva declined to discuss the size of the increase, but market sources said they believe it to have been a few thousand barrels per day.

Its a big deal, one marketer said. Thats a sizable number of barrels to bring onto the market all of a sudden, and it may help explain why Group II prices have been kind of soft lately.

If it’s as big as observers believe, the recent increase would make the Port Arthur plant the worlds biggest source of base oil. South Koreas S-Oil currently claims that distinction with a 23,000-b/d plant in Onsan, South Korea. A government-owned refinery in Azerbaijan has greater nameplate capacity but has for years been operating at much lower levels. The Motiva plant was narrowly the biggest in the Western Hemisphere, edging outthe Excel Paralubes plant in West Lake, La., and ExxonMobils plant in Baytown, Texas, which report capacities of 21,300 and 20,500 b/d, respectively.

Motiva said nothing publicly about increasing capacity when it closed the Port Arthur plant for scheduled maintenance last winter. Although the company did not say so at the time, the work done during that shutdown included installation of new catalyst material. ExxonMobil Research and Engineering Co.announced July 22that Motiva had signed license and catalyst lease agreements to replace a previous catalyst with ExxonMobil’s newest commercialized MSDW lube isomerization dewaxing catalyst at Port Arthur. The announcement made nomention of capacity.

In the past couple weeks, however, word began circulating in the market that output had been raised at Port Arthur. When questioned by Lube Report, a Motiva official said capacity has increased due to installation of the ExxonMobil catalyst.

Some observers say a significant jump in production at Port Arthur could help explain why the market for Group II base oils has failed to tighten as much as expected this year. Many in the industry predicted early on that Group IIs would snug up – some warned of possible shortages – due to tougher requirements for the new GF-4 passenger car motor oil standard. (Some contend that demand for Group II hasnt jumped yet because motor oil blenders are largely holding off on converting from the previous GF-3 specification.)

Several sources suggested this week that the increase in Motivas capacity was even more significant in light of the larger expansion, which is scheduled to be complete by January 2006. These sources said they foresee the possibility of Motiva making enough barrels to challenge the leadership of ExxonMobil, the supplier that has held the most sway on prices the past few years. ExxonMobil has three U.S. plants that together account for one-quarter of U.S. base oil capacity.

If you add [Motivas planned expansion] on top of what they did this year, now youre talking about capacity of around 40,000 barrels per day, one observer said. At that point Motiva could become the leader in determining prices, especially for Group IIs.

Most of ExxonMobils U.S. capacity isGroup I.

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