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Base Oil Report


By early November, three of the four base oil plants knocked out by Hurricane Rita appeared to be regaining their feet. Citgos plant at Lake Charles, La., Motivas Port Arthur, Texas, facility and the Excel Paralubes plant in Westlake, La., had reportedly all been restored to full capacity.

There remained some question about whether the latter two were truly producing at that level, but buyers expressed relief that production was returning to normal. For a month after the hurricane, the industry was without 42 percent of U.S. paraffinic capacity – a disruption that many called unprecedented.

There was one exception to the recovery: ExxonMobils plant in Beaumont, Texas. Market sources said the facility had not resumed operations and did not expect to do so until mid-December. According to these sources, the delay is due to a maintenance turnaround that had been scheduled to last from late September until early to mid-November. The plant shut down for the turnaround a few days before Rita struck, but the storm apparently swamped the schedule that had been set for the work.

Sources said the plant had built up inventories ahead of the shutdown so it could continue supplying customers during the turnaround. The prolonged downtime, however, forced the company to impose allocations on base stocks produced at Beaumont (70 percent on mid-grades with viscosities of 275 SUS and higher; 90 percent on lighter grades). ExxonMobil confirmed imposing allocations but declined to identify the cause.

ExxonMobil also had imposed allocations on EHC 30 and EHC 45, Group II and II+ stocks produced at its Baton Rouge, La., and Baytown, Texas, plants, and it was not the only supplier to cap volumes. Observers said Motiva limited orders, though the company declined to comment. Citgo previously declared force majeure and then implemented allocations, but later lifted them. Flint Hills Resources, a 50 percent partner in Excel Paralubes, also declared force majeure in Ritas wake.

Fortunately, the industry appeared to have coped surprisingly well with the plant shut-downs, and buyers called the allocations manageable.

Theres going to be cost implications for using alternative suppliers, one buyer said, but I dont think availability is an issue.

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