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Base Oil Report


By mid-April, base oil production in North America was finally approaching normal levels. There is a wide gap, however, between normal output and normal supply, and the market seems destined to relearn that lesson throughout 2006.

Half of Petro-Canadas Mississauga, Ontario, plant and all of the Excel Paralubes plant in Westlake, La., restarted in March and April, respectively, after each was idled for two months by fire. Ergons Newell, W.Va., plant resumed normal production in April after a maintenance turnaround that came on the heels of another fire. To top things off, the massive expansion at Motivas Port Arthur, Texas, plant, came on line in mid-March, six weeks behind schedule..

The sole remaining disruption, then, appeared to be at ExxonMobils plant in Beaumont, Texas, which shut down for four months in the wake of Hurricane Rita. It reopened in January, but sources said ExxonMobil officials admitted last month that output remained below normal.

Now for the bad news. The production train not damaged in the Petro-Canada fire is scheduled to begin a five-week turnaround May 8, and sources say the company is warning supplies may run short during the closure. Marathon was said to have voiced the same concern for a shutdown of its Catlettsburg, Ky., plant, scheduled in the second half of the year.

These developments will undoubtedly draw extra attention to any other turn-arounds this year. At least two are scheduled: for a portion of Motivas plant in June, and for Chevrons Richmond, Calif., facility later in the year. Meanwhile, several producers continue with sales allocations in place and expect to maintain them at least through the end of this month. Observers say it reflects the fragile state of the industry as it strives to rebuild depleted supply chains. Most if not all producers appear to be turning away new business, and availability of heavy neutrals is especially tight.

Id say availability is slightly improved from a month ago, but troubles are far from over, one blender said. Theres still a chance that we could run out of some oils.

The market will see soon just how far it is from normal production to normal supply.

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