Katrina KOs Additive Plant, Base Oil Terminal


Hurricane Katrina laid some punches on the U.S. lubricant industry as it barreled ashore Monday. Chevron Oronites main additive plant in the United States was caught up in the devastation that overwhelmed New Orleans, as was a primary terminal for Group III base oils marketed by ConocoPhillips. Both companies said little information was available about the status of facilities, making it impossible to predict when they might reopen.

The monster storm also appeared to have shut down a few blending plants, although scant information was available due to communication disruptions. Industry observers said damage may complicate rail, river and road transportation for the Midwest, but added that they do not expect those problems to be serious or lasting.

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Katrina was a Category 4 hurricane with winds of 145 miles per hour when it struck the U.S. Gulf of Mexico coast Monday morning. As it moved inland, the storm cut a wide swath of destruction across three states: Louisiana, Mississippi and Alabama. New Orleans seemed initially to have avoided the worst of the damage as Katrinas eye passed to its east. On Tuesday, though, a giant hole opened in the dike between the sub-sea-level city and giant Lake Pontchartrain to its north. The lake flooded in, and by late afternoon 80 percent of the city was underwater.

The Oronite plant is located in Belle Chasse, La., on New Orleans southeast edge, and is one of three primary factories that the company operates around the world. (The others are on Jurong Island, Singapore, and in Gonfreville, France.)

ConocoPhillips uses the Stolthaven terminal located at Braithwaite, just east of New Orleans. Operated by Stolt, the terminal receives and dispenses Group III oils produced by South Korean refiner S-Oil and marketed in the United States by ConocoPhillips under the Ultra-S brand name.

Like many businesses along the coast, both facilities closed ahead of Katrinas arrival. Oronite and ConocoPhillips both said they were still trying to determine the status of their facilities late yesterday afternoon but that little information was available. It was a common predicament, as access to the area remained difficult, if not impossible. ConocoPhillips officials said Stolt had not managed even an aerial view of the terminal, although it hoped to fly over in a plane today.

Were evaluating conditions now, Oronite Vice President of Manufacturing and Supply Bill Schumacher told Lube Report. Its too soon to tell what the situation is, so we cant predict how long this will last.

Both Oronite andConocoPhillips saidthey expected to begin obtaining information in coming days,before formulating plans about when their facilities might reopen. There is more at issue than just determining whether the facilities themselves were damaged; news reports speculated it could take weeks at least before power is restored to the city.

ConocoPhillips said it will first work with Stolt to determine when the terminal could resume operations, then decide if it needs contingency plans to tide it over.

Its early in the game, said a spokesman who asked not to be identified. Were committed to doing what we need to do to avoid disruptions to our customers, if thats possible.

ConocoPhillips also terminals S-Oil imports on the West and East coasts, although Braithwaite supplies most of the volume that it supplies east of the Rocky Mountains. Group II oils produced at its Excel Paralubes joint venture with Flint Hills Resources do not pass through New Orleans and were not affected by the hurricane.

Delta Petroleum Co. operates the largest lubricant blending plant in the area, at St. Rose, La., just up river from New Orleans. A company official confirmed that operations had been halted but added that management had reason to hope it was not flooded. It was working to assess the situation and was already taking steps to move office operations from its St. Rose headquarters to facilities in Houston. Delta also operates plants in Chicago, Bayonne, N.J., and Henderson, Colo., and may transfer blending operations from St. Rose if necessary.

Davison Oil Co. operates a blending plant in Mobile, Ala., which was also hit hard by the hurricane. Telephone service to that area was also out yesterday.

The Mississippi River is a major conduit for base oils, chemicals and finished lubricants transported by barge between the Gulf and blending plants in the Midwest. Observers said they did not expect big disruptions in that traffic because the waterway appeared intact. The U.S. Coast Guard has suspended traffic, but industry sources said it could resume within a few days.

New Orleans is a major rail hub, but observers said there is reason to hope for no serious disruptions, even if the city itself takes a long time to return to normal.

It may not be easy, but the railroads have alternative routes that they can use to go around New Orleans, one base oil marketer said. They have to do that every month for little problems that crop up and that dont get as much attention as a hurricane. I imagine they can work around this, too.

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