Motivas Port Arthur, Texas, refinery has a few units in start-up mode, but a full restart is not expected for a while, according to company sources.

Direct buyers of ExxonMobil base oil say the company reported that the Beaumont lube plant was in start-up mode as of this past weekend. According to these sources, ExxonMobil lost approximately three weeks of production in Beaumont as a result of Hurricanes Gustav and Ike. The Baytown facility lost an estimated seven to 10 days of production, but is nearing full rates, sources added. The ExxonMobil Baton Rouge, La., facility is running at full rates.

As reported last week, both Flint Hills Resources, which markets half of the Excel Paralube plants output, and Motiva declared force majeure following serious damage caused by Hurricane Ike. Strict sales allocations programs were also being upheld by Motiva, Flint Hills and ExxonMobil.

Sources said Flint Hills expects Excel Paralubes to resume normal operation by late October.

The 45-day planned shutdown at the Motiva Port Arthur facility, which was to have commenced last week, has been postponed until late January, not early January as reported last week. The planned 30-day outage at Petro-Canadas Mississauga, Ont., Canada, refinery is set to get under way during second half October, according to market sources.

Nynas said that Lyondells Houston Refining Co. complex, whose base oils Nynas markets, has resumed normal operation, but Nynas is abiding by a 100 percent sales control for the short term.

Due to heavy congestion of railcar traffic in the Houston area, base oil customers nationwide should anticipate delayed shipments. There is also a backup in waterborne deliveries, sources pointed out, affecting paraffinic and naphthenic orders being shipped out of the Texas-Louisiana region.

Industry participants located across the U.S. are experiencing logistical headaches in the wake of hurricane-related issues. There is a shortage of railcars in the Mid-Atlantic and Northeast and even up into the Chicago distribution area as a result of the disruption the recent storms caused.

Spot Prices
Prevailing upward pressure is felt on spot prices, although completed deals are extremely rare for any Group I, II/II+ or III neutral base oils. A few suppliers expecting to have small volumes of surplus product in about a months time are eyeing a premium to posted prices.

In one transaction that was reportedly concluded within the past week, a small amount of light viscosity solvent neutral was sold at or near a Gulf Coast FOB posting. In a few other situations, several customers unable to secure additional Group I or II/II+ base stocks are paying up for Group III in an effort to supplement their requirements.

Meanwhile, the crude oil market has been exceptionally volatile in the wake of the U.S. financial bailout plans collapse. It seemed yesterday that the bailout plan would be resurrected after being rejected in Congress Monday. Crude has fallen about $25, or 20 percent, in the last seven days, dipping to around $94 per barrel, but it topped the $101/bbl mark during intraday trade yesterday.

At the close of the Tuesday, Sept. 30, NYMEX session, light sweet crude future prices settled at $100.64 per barrel, shedding almost $6 compared to the $106.61/bbl settlement reported on Sept. 23.

Note on price postings: Valero has discontinued production of its Group II 150 viscosity base oil and is in the process of replacing it with a Group II 220 viscosity base oil. The posting that was used for 150 vis will remain representative of the new 220 vis and is effective immediately.

Carolyn L. Green, based in Houston, can be reached directly at carolynlgreen@gmail.com.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.