Nynas USA yesterday denied rumors that production at the Valero naphthenic base oil plant in Three Rivers, Texas, has been hampered since completion of an upgrade and expansion this past summer. An official said business is going as planned – which includes exporting much of the plants output.
The Three Rivers plant is owned by Valero, but Swedish naphthenics supplier Nynas invested $15 million earlier this year as part of a 2003 agreement that called for Nynas to take all of the plants output. The project was intended to improve the quality of oils produced and to increase capacity by 50 percent to 3,500 barrels per day.
The pale oil market has buzzed in recent weeks with rumors that the plant was falling short of quality and/or output expectations. Nynas USA General Manager Simon Day told Lube Report that such speculation is false.
The shutdown took a week or two longer than originally anticipated, he said. But we did have a 50 percent increase in capacity, and we are producing all grades that we want.
Day speculated that observers may have assumed the project did not go as planned because they have not noticed any increase in availability from Three Rivers.
I think what has probably happened is that people were expecting us to go out into the [U.S.] market to try to place the additional supply, he said. But that was never the plan. We said all along that we were going to export most of the increase, and that is what were doing.
As a result, Day said, Nynas has turned away requests from U.S. buyers for additional oil. He added that demand by U.S. customers has risen approximately 25 percent this year, partly because damage from Hurricane Ivan caused a big spike in orders for electrical transformer oils. Nynas, like other U.S. suppliers, has been sold out of light grade naphthenics used to make transformer oils.
U.S. posted prices for paraffinic base oils were unchanged this week. Crude oil prices fell again. The price on the New York Mercantile Exchange closed yesterday at $46 per barrel, down $1.07 from a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.