08 April 2010 18:12 [Source: ICIS news]
HOUSTON (ICIS news)--US base oil capacity rose to 214,500 bbl/day as of 1 January, up 6% year over year, following expansions at Ergon and Calumet, according a report released by the National Petrochemical & Refiners Association (NPRA) on Thursday.
Despite the ongoing trend to consolidate Group I base oil production, capacity rose slightly by 1.5% to 63,700 bbl/day as of 1 January, compared with 62,700 bbl/day for the same time last year, according to the NPRA’s report.
Group II and III capacity increased by 3%, reaching 105,800 bbl/day, up from 102,300 bbl/day in 2009.
Naphthenic base oil capacity rose the most - by 19% - to 44,600 bbl/day, from 37,400 bbl/day in 2009, following a large-scale expansion at Ergon’s refinery in Vicksburg, Mississippi.
By the fourth quarter of 2009, Ergon had completed its expansion, which boosted hydrotreated naphthenic base oil capacity of its Vicksburg refinery in Mississippi from 12,000 bbl/day to 20,000 bbl/day.
In addition, Calumet added 4,800 bbl/day to its Shreveport refinery in Louisiana.
Earlier this year, Stephen Ames, managing director of SBA Consulting, told delegates at the 14th ICIS World Base Oils & Lubricants Conference in London that the global market was oversupplied and as much as 10m-12m tonnes/year of global base oils nameplate capacity could close by 2014.
Ames said Group I closures in the Atlantic Basin were most likely as the supply buffer expands well above historical averages and production continues to be subject to refining trends.
Indeed, the Americas market was already seeing closures in 2010, which could show as a decrease in next year’s total capacity numbers.
Shell Canada and Imperial Oil have separately announced that they would discontinue base oil production at their respective Canadian refineries.
Shell is closing its 130,000 bbl/day crude oil refinery in Montreal East, Canada, which houses a 2,700 bbl/day Group I base oil plant and a 1,300 bbl/ay unfinished wax unit, beginning in June. Shell would convert it into a fuel hub for gasoline, diesel and aviation fuels.
Imperial Oil would stop producing base oils, wax and process oils at its refinery in Sarnia, Ontario, Canada by 2011. The plant has the capacity to make 2,800 bbl/day of Group I base oils and 3,800 bbl/day of Group II base oils.
Despite the closings, the prospect of additional capacity remains.
Chevron will add 25,000 bbl/day of Group II base oils to its global supply with the expansion of its refinery at Pascagoula, Mississippi.
The start-up of the new plant was expected to begin in 2013, and the addition would bring Chevron’s Global II base oil capacity to 2.6m tonnes/year, or 52,000 bbl/day, said Chevron's Alan Outhwaite, who was speaking at the 14th ICIS World Base Oils & Lubricants Conference in London.
($1 = €0.75)
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