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Base Oil Report


2005 has just begun and changes are already afoot in the North American base oil market. Within the next couple weeks, an expansion is due to be completed at the regions largest naphthenic base oil plant. The paraffinic market, however, will prepare for even bigger expansions and upgrades as the year goes on.

Ergon shut down its naphthenic plant in Vicksburg, Miss., for a month in mid-January for maintenance and expansion of the plants hydrotreater. Capacity should climb by 11 percent when operations resume to 11,700 barrels per day. Additional barrels are welcome news to pale oil buyers, who have found supply very tight since Shell closed two plants in 2003. But Ergon predicts the market will remain tight for the foreseeable future, partly because the tire industry is expected to increase its use of naphthenics as it stops using aromatic extracts.

Petro-Canada has earmarked money in its 2005 capital budget to evaluate options for expanding its paraffinic plant in Mississauga, Ontario, which has capacity to make 12,500 b/d of Group II and Group III stocks. The company declined to discuss the courses of action that will be considered but said it wants to pick one by the end of the year.

Citgo also expects to make a decision in 2005 about whether and how to upgrade its 9,500-b/d Group I plant in Lake Charles, La. The company is considering the project because of the continuing shift in demand from Group I to premium stocks, and an internal study concluded last year that it should add hydrocracking capacity at the plant. Now Citgo is seeking a second opinion from an engineering firm. Two other alternatives being weighed: installing hydrotreating capacity, which would cost less but yield less improvement; or making no change.

An even bigger project will be in the works throughout 2005 – Motivas massive expansion of its Port Arthur, Texas, Group II/III plant. The company is adding a third lube hydroprocessing unit to raise capacity by 13,700 b/d, to more than 36,000 b/d.

Port Arthurs new lube unit is scheduled to begin operating in January 2006 – a big kickoff for what could be a big year for changes in base oil supply.

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