Naps Nipped in 1st Half


U.S. refiners produced 32.7 million barrels of base oil in the first half of this year, just a nose ahead of the 32.5 million barrels produced in the first six months of 2007.

According to data released last week by the Energy Information Agency, output of paraffinic base oils in the first half reached 28.2 million barrels, a 3 percent gain from first-half 2007. Naphthenic base oils, however, suffered from supply hiccups that hobbled overall growth. Pale oil production fell nearly 12 percent, to just 4.5 million barrels, from 5.1 million barrels in the year-ago period.

Equipment outages at naphthenics base oil refineries were to blame for most of the dip in supply, various sources agreed. For example, scheduled shutdowns for maintenance corked the flow early in the year at the world’s largest naphthenic refinery, Ergon’s 12,500 barrel per day plant in Vicksburg, Miss., and at San Joaquin Refining’s 8,100 b/d plant in Bakersfield, Calif., the West Coast’s sole pale oil refiner.

“We were not at full production for part of the year,” confirmed Vice President James “Mike” Burnett of Ergon. “First, we had a turnaround early on, then we had another issue to address that took a while. So we did not get back to our full rate of production until May.” He declined to give specifics about the operational problems at Vicksburg, citing proprietary issues.

Jack Eberly, sales and marketing director at San Joaquin Refining, said Bakersfield also had a scheduled turnaround last winter, but then was dinged by various interruptions and equipment problems, some lasting a few days. “Like anyone, we had some unscheduled downtime,” Eberly related. “However, when we have downtime on production equipment, we don’t have much chance to make it up. Independents like us are usually running at close to 100 percent of capacity, unlike the majors who may run at say 80 or 85 percent. If they have an outage, they can maybe run a little harder and catch up some of it. We may be able to work from inventory for a few days if we’re down, but for us, there’s no opportunity to make up that lost production. It’s lost forever.”

Despite the disruptions, both Eberly and Burnett said supply has recovered and is now balanced with demand — although certain viscosity grades are tight. Both said 100 vis pale oils are extremely short.

San Joaquin’s next turnaround for routine maintenance is scheduled for January or February, Eberly added.

Ergon’s Burnett said a brief turnaround is in the cards at Vicksburg early next year, too, “followed by our expansion on the first of March, whch will add significant naphthenic volumes to the marketplace.” He anticipates minimal disruption to the plant’s operations when the 7,500 b/d addition comes on stream, because tie-ins to the new units were put into place during the previous turnaround. “So we can connect without bringing the whole plant down for any length of time.”

Although output was strong in the first four months of the year, paraffinic production began to flag in May and June, the EIA data shows. This possibly was due to slowing operations at Citgo’s 9,500 b/d base oil plant, which in April announced it would curtail supply and close. Also in April, Marathon said it was winding down its 6,800 b/d plant in Catlettsburg, Ky., and would close it this year.

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