Imperial Oil to quit making base oils, waxes in Sarnia

04 February 2010 16:15  [Source: ICIS news]

HOUSTON (ICIS news)--Imperial Oil will stop making base oils, process oils and wax at its Sarnia, Ontario, refinery in Canada because market conditions better support full-time fuels manufacturing, the company said in a letter to its customers on Wednesday.

Imperial Oil is an affiliate of ExxonMobil and has capacity to produce 2,800 bbl/day of Group I base oils and 3,800 bbl/day of Group II base oils at its Sarnia facility. It also can produce 2,400 bbl/day at its Strathcona facility, also in Canada.

Manufacturing of base oils, process oils and waxes is expected to cease by 2011, the company said.

The company could not be reached immediately for comment.

Imperial Oil said in its letter to customers that it was working in advance with them to ensure a smooth transition.

Imperial Oil on Tuesday said that its fourth-quarter fell a worse-than-expected 19% as weak refining margins weighed on the bottom line. Net income was $534m (€384) for the fourth quarter of 2009 versus $660m for the fourth quarter of 2008.

The announcement is the second Canadian refinery to announce it would quit making base oils this year.

Shell Canada announced in January it would convert its 130,000 bbl/day crude oil refinery to a fuel terminal for gasoline, diesel and aviation fuels. The refinery includes a 2,700 bbl/day Group I base oil and 1,300 bbl/day unfinished wax plant. The company has not yet announced a final timeline for the conversion.

The conversion follows closures by Marathon and Citgo in 2008. Citgo stopped production at its 9,500 bbl/day Group I base oil plant in Louisiana. And Marathon shut its 6,800 bbl/day Group I base oil plant in Kentucky.

“The supply balance for Group I heavy viscosity oils remains fragile to say the least,” one large-volume buyer said.

Other Group I base oil producers in North America include ExxonMobil, Holly, Valero, American Refining, Ergon and Calumet.

($1 = €0.72)

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By: Heather McGuire Doyle
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