Marathon Petroleum Co. yesterday began notifying customers of its plans to exit the base oil, wax and aromatic extracts markets, and to eventually shut down its base oil plant in Catlettsburg, Ky., several sources told Lube Report. The base oil plant has 6,800 barrels per day of API Group I capacity.
Linda Casey, communications manager for Marathon Petroleum, on April 23 confirmed the companys plans. Finished products specifications and commodity markets have changed significantly over the past few years, Casey told Lube Report. It has become increasingly difficult to compete and address these changes without additional large capital investments. As a result, prior to year-end, Marathon will discontinue the production of all base oils, slack waxes and extracts and will permanently shutdown the Catlettsburg, Ky., lube plant. Until that time, we will work to fill orders for lube plant products.
Jim Kudis, vice president of blender Allegheny Petroleum Products, Wilmerding, Pa., told Lube Report that Marathon informed him by phone yesterday of its plans to shut down its lubricants plant and exit the base oil market. Marathon did not give a date for the shut-down, said Kudis. They said they will run for a short period of time.
An official with a buyer of slack wax confirmed that Marathon had contacted the company by phone about its plans to exit the lubricants and wax markets, and was told that a notification letter would go out to customers today.
A base oil buyer said they were also informed by phone yesterday, and told that Marathon sought to exit the lubricants business by the end of the year. Reasons given included that, the economics no longer support the base oil operation. Marathon told the buyer that it wanted to work with its customers to make sure everyone is covered.
The first reaction is shock just because Marathon has been in business so long, the source said. From our standpoint, they are known as a stable, high quality supplier. In 2006 when everyone else was on allocation and having problems, Marathon was there and they were just about the only base oil company not having problems. Marathon has never wavered from their commitment to their customers.