Base Oil Price Report


The U.S. base oil market continues its gradual recovery from a long series of supply disruptions. Ergons paraffinic plant in Newell, W.Va., and San Joaquin Refinings naphthenic plant in Bakersfield, Calif., are completing maintenance turnarounds this week.

Larger problems at Group II plants had already been resolved the past few weeks. ConocoPhillips said last week that Excel Paralubes – its 50-50 joint venture with Flint Hills Resources – had resumed production.The Westlake, La., facility was closed for more than two months by a Feb. 1 fire. One of two production trains at Petro-Canadas Mississauga, Ontario, plant suffered its own two-month layoff due to a Jan. 7 fire, but it restarted last month.

Motiva recently launched a 15,000-barrel-per-day expansion at its plant in Port Arthur, Texas – a project delayed more than six weeks by operational issues. Going back to last autumn, four plants lost weeks of production because of Hurricane Rita.

Now the market is shaking off some smaller disruptions. Ergon expects this week to restart the final unit idled by a scheduled maintenance turnaround at its Newell plant, which has capacity to make 4,800 b/d of paraffinics. The company said the plant should ramp up to normal production levels by early next week.

Ergon intends to maintain sales allocations imposed last month in anticipation of the turnaround. The companys supply situation was subsequently aggravated by a fire at the plant. It currently limits orders for its 70 solvent neutral at 70 percent of normal levels while capping other products at 100 percent. Those allocations will last through the end of May, officials said.

San Joaquin said the solvent extraction unit at its plant resumed production yesterday and should be back to normal output by the end of this week. The unit, which accounts for 2,400 b/d of the plants 9,300-b/d capacity, had been closed for scheduled maintenance. The plants hydrotreating unit restarted last week, three days behind schedule after undergoing its own maintenance.

Lubricant blenders said they are encouraged to see production returning to normal levels, but added that base oil shortages will probably persist into summer.

All of these plants are producing again, but there is such a vacuum in the supply chain because of all the problems we had, one blender said. Quite a few suppliers are behind on orders, and [the lubricant market] is getting into its busy season. Its going to take three or four months to get back to normal.

Posted prices for paraffinic oils were unchanged again this week. The price of crude on the New York Mercantile Exchange closed yesterday at $68.94 per barrel, according to Bloomberg. That was $2.75 higher than the price 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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