Everyone notices that gasoline prices are high, and Calumet Lubricants Co. is no exception. Fuels are profitable enough these days that the company has decided to have its Shreveport, La., refinery start making them again.
Calumet told Lube Report yesterday the Shreveport refinery will start making fuels next January. In doing so, the complex will produce a full range of refined products, as it did before Calumet bought it from Pennzoil-Quaker State in 2001. The operational changes will also boost the facilitys base oil output by 1,000 barrels per day.
This is a substantial step in our refining history, Vice President of Sales and Marketing William Anderson said during a telephone interview. It also completes our evolution as a supplier of wax and lube oils and brings us to the point where we are a complete refiner.
Calumet has been in business since 1916, although the current owners bought it in 1990. In addition to the Shreveport facility, the Indianapolis-based company owns a naphthenic base oil refinery in Princeton, La., a solvents refinery in Cotton Valley, La., and a wax blending plant in Rouseville, Pa.
Shreveport has been evolving since Calumet acquired it. Initially, the company made only naphthenic base oils, but it converted production to paraffinics in 2002. In late 2003, it added hydrotreating equipment that upgraded its oils from Group I to Group II.
Now the company is working to restart fuels refining equipment that is relatively new but has been dormant since the sale by Pennzoil-Quaker State.
Crack spreads were unattractive back then, and we bought the refinery with the intention of running it all for naphthenics, Anderson said. But the fuels market has tightened considerably over the past few years, so its a pretty attractive business now. Plus crude access for Shreveport is much improved, so costs for making fuel have lowered.
The refinery is scheduled for a complete maintenance shutdown beginning in December and will start making fuels the following month. Anderson said it will have capacity to make 12,000 b/d of gasoline and 8,000 b/d of jet fuel. The operational changes will improve efficiency of a dewaxing unit, allowing the increased yield for base oil. Most of the new barrels will be solvent neutral 80 and 150.
I think an extra 30 million gallons [per year] of Group II base oils will be welcomed by the market, Anderson said, especially since the cuts that are increasing are in high demand.
Calumet plans to sell its fuel locally andwill add approximately 25 people to its 100-person payroll. Although the company will rank small among fuels refiners, that part of the business will immediately become a significant portion of its operations. Anderson said the base oil business will be unaffected except for the increase in production.