Chevron Oronite said last week that it has completed repairs at its Oak Point plant in Belle Chasse, La., and that the facility has sustained full-scale operations for the first time since Hurricane Katrina.
The plant still faces transportation issues, but the completion of repairs is a big step toward alleviating what may be the largest of the many disruptions that have stricken the U.S. lubricants industry in recent months.
At the same time, Oronite said a force majeure declaration remains in effect for its global business and that it still cannot predict when it will be lifted.
During a telephone interview Friday, Vice President of Manufacturing and Supply Bill Schumacher provided an in-depth update of Oronites status, with particular focus on the Oak Point facility, which is located just southeast of New Orleans.
This was our first full week of full-scale operations since we shut down ahead of Katrina, he said, referring to the storm that struck the Gulf of Mexico coast Aug. 29. In terms of production, the plant is about back to normal.
The same cannot yet be said for traffic in and out of the plant.
For the area around New Orleans, logistics are still a bit of an issue, Schumacher said. Trucks and truck drivers are difficult to line up, he explained, because the Federal Emergency Management Agency is procuring so many of them for reconstruction projects. Fortunately, Oak Point transports most of its product by rail, which is in a better situation.
Rail to the north and west is not too bad, Schumacher said. Transit times are about two days longer than normal. The bigger problem is going east. There are still some problems with the lines in that direction, so the trains are flowing north through St. Louis. Thats causing some longer delays, but at least product is getting through.
There are also difficulties getting raw materials into the plant, as the Port of New Orleans is only operating at 30 percent of normal levels.
Like other lube additive manufacturers, Schumacher said, Oak Point is encountering difficulty obtaining the raw materials needed to make its products. A number of chemical plants were also knocked out by Katrina and Hurricane Rita, and Rita sidelined four base oil plants, straining availability of additive diluent.
Raw material supply is quite difficult, he said. We have ourselves covered right now, but a number [suppliers] have placed us on allocation. The good news is most of our suppliers are able at least to tell us what their situation is now.
The lubricants industry has been battered by a rash of problems in recent months, most stemming from the hurricanes, but many observers have pointed to the closure of the Oak Point plant as the most disruptive. According to Thomas F. Glenn of Petroleum Trends International, in Metuchen, N.J.,Oronite is the second-largest lube additive supplier in the United States, claiming nearly 24 percent of the market in terms of dollar value. Oak Point is the companys largest plant in North America.
Oronite officials said the revival of the plant was a monumental task for the company and its employees. An assessment team of eight was helicoptered in to the plant the day after the hurricane, but the plant did not reopen to full staffing until the beginning of October. Many of the plants 300 employees were still homeless at that point.
So Oronite established a temporaryvillage on-site, bringing in trailers and modular homes to house 50 employees and contractors plus their families – approximately 200 people altogether -along withrecreation facilities and other amenities. Beside shelter, the company provides food, water and sewage treatment. Officials said it has meant a lot of work for people already struggling with the task of repairing and restarting the plant – not to mention the personal upheaval they had to deal with.
We certainly dont train our managers and staff to do things like run hotels, and yet, thats basically what some of them are doing now,Schumacher said.
Oronite has offered counseling and flexible schedules to help employees cope with the situation, but officials said individuals are holding up surprisingly well.
Id say the morale of employees is very, very good, Global Marketing Communications Manager Susan B. Boyle said. I think they appreciate the fact that they have a job, that the plant is running and the safety net were able to provide. Many of them told me the plant is the only source of normalcy in their life.
For the company, Oak Points downtime greatly worsened a predicament that was bad even before Katrina. On Aug. 11 Oronite issued a global force majeure declaration attributed to growing additive demand and tight availability of raw materials.
Had it not been for the hurricanes, we would have been close to lifting the force majeure,Schumacher said. Not only did the company lose approximately six weeks of production at its primary North American factory. If you look at the disruption to the plants that produce raw materials, its just exacerbated the supply situation.
The companys other two primary plants – in Singapore and in Gonfreville, France – are operating normally, but the Singapore plant underwent a maintenance turnaround recently, hampering the companys attempts to catch up. Schumacher indicated the company is now in position to resume its recovery, but he added that it cannot predict when the force majeure declaration will be lifted.