Explosion Shuts Down Excel Paralubes


An already-struggling U.S. base oil industry absorbed yet another blow last week when an explosion halted production at the Excel Paralubes joint venture.

Co-owner ConocoPhillips declared force majeure and imposed allocations as stringent as 32 percent. Its partner, Flint Hills Resources, declined to comment about its status, but market sources said the accident redoubled the scramble for scarce barrels.

This is a big problem for the market, said one base oil buyer, who spoke on condition that he not be identified. There was already a definite shortage going on, and this makes it quite a bit worse.

According to a report by the Associated Press, no one was injured by the explosion, which occurred the night of Feb. 1. Neither ConocoPhillips nor Flint Hills Resources issued public statements about the incident, but ConocoPhillips – the plant operator – distributed a letter to customers two days later stating that production had ceased and that it was still trying to determine the extent of damage. A spokeswoman said yesterday that she was unable to obtain information about the plants status.

ConocoPhillips, which has rights to half of the plants output, used its letter to declare force majeure, excusing it from contractual obligations. ConocoPhillips said it would continue supplying customers from inventories, but it imposed allocations for February ranging from 32 percent to 61 percent of normal purchases.

According to the letter, the company expects inventories to run out at the end of this month, and it will notify customers if and when supply becomes available for March. The letter did not project when production will resume, but market sources said ConocoPhillips representatives informed them that the company was aiming for March.

The plant had been scheduled to close temporarily for maintenance in March. ConocoPhillips said it is investigating the possibility of advancing that schedule to conduct the maintenance while repairs are made.

Flint Hills Resources has rights to the other half of the plants output. A spokeswoman for the company declined to discuss its situation yesterday.

Located in Westlake, La., Excel Paralubes has capacity to produce 21,900 barrels per day of Group II stocks, making it the second-largest plant in the Western Hemisphere. The plants closure deals another setback to a market that has yet to fully recover from Hurricane Rita, which temporarily shut Excel Paralubes and three other plants last year.

The Group II market was still tight when a Jan. 7 fire curtailed operations at Petro-Canadas plant in Mississauga, Ontario. That incident sidelined a production train responsible for approximately 6,250 b/d of Group II capacity and forced the company to impose allocations of its own. Petro-Canada has said it hopes to resume normal operations early next month.

Several base oil buyers expressed hope this week that the market may find relief in a massive expansion of Motivas Port Arthur, Texas, plant, scheduled to come online within a week. Comments by Motiva officials, however, suggest the project may not relieve the shortage, at least in the near term. The expansion will increase Port Arthurs capacity by 15,000 b/d, but Motiva officials have suggested that the impact may not be felt until late spring because the company intends to build inventories ahead of a partial maintenance shutdown for an existing part of the plant.

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