Base Oil Price Report


Imperial Oil Ltd. confirmed recently that production of Group II base oils may decrease next year due to operational changes at its refinery in Sarnia, Ontario.

An official told Lube Report two weeks ago that the refinery is changing feedstock and tweaking processes to comply with Canadian regulations that will require ultra-low sulfur levels in diesel beginning in the fall of 2006. Lubricants and Specialty Products Supply Planning Manager Andrew Yates said it is likely that those measures will result in less Group II output at the refinerys base oil plant.

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According to the National Petrochemical and Refiners Associations 2005 Lubricating Oil and Wax Capacities report, that plant currently has capacity to make 6,600 barrels per day, including 3,800 b/d of Group II and/or Group III stocks.

We believe volumes will go down, but we are a little bit unclear about how big the change is going to be, Yates said. He added that Imperial has alerted customers about the changes and made arrangements to accommodate a moderate drop in Group II production. The company emphasized that the base oil plant in Sarnia will continue to make some amount of Group II.

The Sarnia plant is one of four base oil refineries in Canada and one of two capable of making Group II oils. Petro-Canadas plant in Mississauga, Ontario, has capacity of 12,500 b/d, entirely Group II and Group III. But Petro-Canada plans to debottleneck its plant next year.

ExxonMobil owns a 69.6 percent stake in Imperial, with the remaining share allocated to publicly traded stock.

The U.S. base oil market was quiet the past week, with many individuals in the industry on holiday. Posted prices for paraffinic base oils were unchanged. The price of crude on the New York Mercantile Exchange closed yesterday at $57.78 per barrel, according to Bloomberg. That was down 36 cents 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.

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