Valero Energy announced Friday that economic conditions and weak demand have prompted it to permanently close its fuels refinery in Delaware City, Del. The decision is not expected to affect base oil operations in nearby Paulsboro, N.J., a company official told Lube Report. Although the two refineries were once yoked to the same crude supply chain, recent changes have unlinked Paulsboro’s operations from those of its sister refinery, so it can stand on its own.
Valero acquired the Delaware City refinery along with three others from Premcor in 2005. It soon found that the Delaware operation could support base oil production at Paulsboro if the two locations, which are only about 35 miles apart, shared crude shipping and terminaling arrangements.
In early and mid-2006, Valero had wavered on keeping Paulsboro’s lube unit open, but the Delaware City deal cemented its resolve. Citing increased flexibility in crude supply, it said the base oil operation would continue.
Will Delaware City’s fate now cast a shadow on Paulsboro? Not likely, said Terrence Hoffman, director of base oils at Valero Marketing and Supply in San Antonio, “because we made another change in the meantime with our crude sourcing for Paulsboro. We’re not dependent on Delaware City for feedstocks, so the Delaware City shutdown doesn’t affect us on the base oil side.”
Valero has owned and operated the Paulsboro refinery since 1998, after acquiring it from Mobil. It is the only Group I refinery remaining on the U.S. East Coast. The lube unit there has capacity to make 11,000 b/d of API Group I base oils and 500 b/d of Group II.
Crude sourcing is a continuing issue for all lube refineries, Hoffman observed. Next week, he’ll deliver an overview of Group I supply and demand trends at the ICIS Pan-American Base Oils and Lubricants Conference.
Other speakers at the event, Dec. 3 and 4 in Jersey City, N.J., will describe developments with engine oil specifications; lubricant demand in the Americas; shipping and terminalling issues; and more. See www.icis.com/panamericanbaseoils for the agenda and registration details.