The product qualitys going to be consistent with what we have been producing, said Bill Anderson, vice president for sales and marketing at Calumet Specialty Products Partners. With the new equipment we installed at the plant, we hope to improve the quality on several cuts.

In addition to modifying existing units, the expansion project added several new units, including a diesel hydrotreater, sour crude unit, an additional sulfur recovery unit and a second hydrogen unit. A new reactor and associated equipment increased lubricants production. Total nameplate crude capacity also bulked up, to approximately 57,000 b/d. (It formerly was 42,000 b/d.)

SWEETNSOUR

Located in the northwest corner of Louisiana, the Shreveport refinery consumed mostly low-sulfur, sweet crude until recently. Now heavier, higher-sulfur sour crudes will have a bigger place on the menu, thanks to the upgrade of an existing vacuum unit which boosted ability to accept sour crude, pointed out Kevin Farley, director of business planning in Shreveport for the Calumet Lubricants subsidiary.

Depending on what happens with wax prices, lube prices or resid prices, we can swing different types of crude in there, and still make the same quality and mix of products, he explained. Whereas before, we were pretty well locked into one slate.

Almost all the sour crude comes from the Middle East, Farley said, except for a very small portion from Arkansas. We do have the opportunity to get some West Texas sour in here, he said. It takes some scheduling we havent looked at yet.

The idea of running the sulfur crude is to try and provide ourselves a cheaper feedstock across the board for making our specialty products, as well as asphalt, commented Anderson, who is based in Indianapolis. Its just trying to take advantage of the pricing differential between sour crude and sweet crude.

In its most recent earnings statement, the company said, As of early May, we are processing approximately 16,000 barrels per day of sour crude oil at the Shreveport refinery, and will continue to increase these rates up to operational limits. In certain operating scenarios where overall throughput is reduced we expect we will be able to increase sour crude oil throughput rates up to approximately 25,000 barrels per day.

CUSTOMERS AND PRODUCTS

The additional base oil output is expected to go almost entirely to Calumets existing customer base and for internal use. We dont have to go out and find a whole bunch of new customers for it, Farley said.

With whats going on in the marketplace today, with the announcements by Citgo and Marathon [the two Group I refiners both are exiting base oil], Id foresee most of the barrels getting absorbed by existing accounts, Anderson agreed.

He was quick to add that Calumet is always open to talking new customers. We have probably an average of around 60 new specialty products customers every year, Anderson said. Were always taking on new accounts to some degree.

Weve had no problem selling the volume that we had, said Liz Swaine, Calumet Lubricants communications director. The markets look good. We have been very successful selling these products. When customers want more, its a good time to look at giving them more.

The expansion also has added the ability to make some products new to Shreveport. We will have the ability to produce a base oil that is approved for the production of PC-10 heavy-duty engine oils, Anderson said. PC-10, designated CJ-4 by the American Petroleum Institute and introduced in late 2006, is targeted to new heavy-duty diesel engines meeting the U.S. Environmental Protection Agencys 2007 emission standards for on-highway trucks.

Also, we are going to introduce a paraffinic transformer oil sometime this summer, called Paratran, Anderson continued. We havent quite finalized all the paperwork and details surrounding that product. The companys Princeton, La., refinery already produces both Type I and Type II transformer oils.

According to Farley, the expansion also will enable the company to produce correction fluids. Thats a very high viscosity index oil that you use to adjust motor oil blends, Farley explained. You can take a Group I to a Group II with a correction fluid, and improve your Group II to a Group II+. Well be able to make a fair amount of that. Anderson added that the correction fluid will likely come to market during this quarter.

Farley said the Shreveport refinery will also be able to make an 80-vis technical-grade oil, one step below food-grade quality.

DEWAXING CHOICES

Calumet has owned the Shreveport refinery only since May 2001, when it purchased the facility from Pennzoil-Quaker State. Farley is an old hand at the refinery though, having been there since 1981.

Pennzoil was anxious to get rid of it, and in fact they had already announced it was going to be closed, he recalled. Calumet got a lot of the assets for a pretty reasonable value.

Swaine noted that Calumet already owned two other refineries locally in Cotton Valley and Princeton, La. So there was the opportunity for synergy between the three facilities, she added.

As part of the construction project, Calumet converted and expanded its existing lubes dewaxing process into a higher-capacity dewaxing operation. The expanded lube train uses ExxonMobils proprietary lube catalyst technology, including MSDW catalytic dewaxing and Maxsat hydrofinishing catalysts, and the corresponding reactor design.

The major reason is that we already had a dual-purpose unit, Farley said. We already had the technology, so we just modified an existing unit to make it a full-blown catalytic dewaxer. As we started looking into it, the project got to where it is today. We have been streamlining and fine-tuning it.

Waxes are another key product here, including highly refined paraffin waxes, custom candle blends, specialty application blends and a variety of scale, slack and soft waxes. The company also offers assistance in blending waxes for specialty applications along with a number of FDA-compliant products.

SHIPPING OUT

The refinery receives crude from common-carrier pipelines, including crudes from regional wells and ones brought from afar to Louisianas offshore oil terminals. Some fuels go out by pipeline as well, but tank-trucks and railcars pulling in to load up on base oils, waxes and other specialty products are a constant sight at the Shreveport refinery. They account for over 70 percent of its shipments.

Although there is direct access to a port nearby on the Red River where barges can be loaded, it isnt yet a strong shipping option. We dont have the economy of scale yet for river traffic, Swaine said regretfully. Theres not enough traffic inbound on the river for us to get an economy of shipping that way.

In 2007, the Shreveport operation shipped about 79 million gallons of lubricants, waxes and by-products via rail, plus another 40 million gallons of lubricants and waxes via truck. From here, products went to to all states except Alaska and Hawaii, and to export markets led by Mexico, Canada, South America and India.

In all, about 10 percent of Calumets total business is exports, while its Penreco subsidiary does about 25 percent of its business through exports. We export to probably 40 different countries around the world, Anderson said. Thats from small bulk containers and drums, to thousand-metric-ton shipments. However, Shreveports exporting is predominantly in large volumes to a few locations. We dont do any drumming for Shreveport – its all bulk.

Specialty products, including lubricants, will remain key for the Shreveport refinery. Either side will drive which slate we run, but lubricants – specialties – are definitely our focus, Farley said. We dont have the high-end technology on the fuels side. We think specialty products is our niche, and we are a small refinery.