Dark Days for the Oil Producers!
 

Interesting read, this will have a direct impact on lubricant prices and availablity - all the more reason to use the good stuff!

Dark Days for White Oils

By Tim Sullivan

Much of the North American lubricant industry is laboring under a barrage of disruptions that have battered base oil supply in recent months, but the white oils market may be hurting most of all. All three of the major U.S. suppliers are operating under force majeure declarations triggered by feedstock shortages.

One of those suppliers, Sonneborn, has gone so far as to end its purchasing agreement with its supplier of paraffinic oils and has begun to produce them on its own. Another, Penreco, has also been forced to cope with a strike at one of its plants.

Sources say white oil users are feeling the effects of the feedstock disruptions and will continue to do so until normal operations resume.

The United States has three major white oil suppliers: Sonneborn, Penreco and Citgo. Citgo, which markets white oils manufactured at Lyondell-Citgo Refining’s plant in Houston, has had its force majeure declaration in place since the fourth quarter of last year, after Hurricane Rita temporarily closed one of its primary feedstock suppliers. The company has not publicly identified the supplier, but Rita closed two Group II base oil plants: the Excel Paralubes joint venture at Westlake, La., and the Motiva plant at Port Arthur, Texas.

Citgo appeared this month to be recovering, as it relaxed allocations to 75 percent of normal deliveries. A recent announcement about allocations for March suggested a bump in the road, however. An industry source said caps for oils 100 SUS and lower will be loosened to 100 percent, but allocations on heavier grades will be ratcheted to 50 percent.

Sonneborn Inc., of Tarrytown, Pa., declared force majeure Jan. 10, three days after a fire closed one of two production trains at Petro-Canada’s base oil plant in Mississauga, Ontario. That train made paraffinic white oils that Sonneborn sold under a supply agreement entered in 1998.

On Jan. 25, Sonneborn distributed a letter informing customers that it had stopped buying white oils from Petro-Canada and planned to permanently resume making them at its own plant in Petrolia, Pa. Since entering the agreement with Petro-Canada, the company has used Petrolia to make naphthenic white oils as well as waxes, petrolatums, and other high purity hydrocarbon specialties. It also made paraffinic white oils there in cases of emergency.

Sonneborn said it is still working to secure enough feedstock to fully supply its business and that its force majeure declaration remains in effect. Management stressed that the Petrolia plant has maintained its registration with the U.S. Food and Drug Administration and stated that the white oils made there will be equivalent to those made by Petro-Canada.

As reported in a late edition of last week’s Lube Report, Penreco declared force majeure and imposed allocations on some grades Feb. 10, after a fire closed Excel Paralubes, one of its primary feedstock sources. On Friday the company instituted caps of 100 percent on several other grades in order to prevent a run on products not covered by the initial allocations.

Penreco is also dealing with a strike at one of its two factories, although the company insisted that it has nothing to do with its force majeure declaration. United Steel Workers members employed at its Karns City, Pa., plant went on strike Feb. 13. The union had worked under a contract extension since its previous contract expired Jan. 31, but was unable to resolve unspecified differences with management.

Penreco said salaried employees are operating the plant at normal levels and should be able to continue doing so.

“We have implemented contingency plans that will allow us to continue operating the Karns City facility,” President Thomas C. Readal said. Penreco also makes white oils at its plant in Dickinson, Texas, which is running at normal levels.

In addition to the problems at American plants, a Feb. 6 fire at ExxonMobil’s refinery in Port Jerome, France, has reportedly affected operations at one of the largest white oils producers outside the United States. Market sources said this week that white oils were not among the products that the plant has placed on allocation, but ExxonMobil was limiting spot sales.

Industry sources said white oil users are struggling to cope with the supply constrictions.

“We are getting a lot of panicked phone calls,” said one marketer, who spoke on condition of anonymity. “But the bottom line is, with all of these problems we have right now, there is a definite shortage in the market and no alternative sources to fill it.”

Buyers concurred.

“There is definitely a shortage at the moment,” said Paul Oakley, communications leader for Dow North American Plastics, which uses white oils as an additive in the production of polystyrene. The Midland, Michigan-based chemical giant is the world’s largest producer of polystyrene, a plastic used to make plastic tableware and other disposable food service items, as well as durable products such as television housings.

“We are managing the situation in our business,” Oakley added. “We are not anticipating any disruptions, but there could be some supply constraint on end-users with injection molding operations.”

White oil marketers said the disruptions probably present more of a problem for customers in the pharmaceutical and cosmetic industries, which have less flexibility to use alternate materials.

Sources said they expect the market will recover relatively quickly once feedstock producers resume normal operations. Petro-Canada has said it hoped to restart the closed train at the Mississauga plant in early March. Sources say ConocoPhillips, co-owner of Excel Paralubes, has predicted that plant will resume production around March 20.

Mike, whats you opinion on different brand oils.
Say, Castrol vs Wolfshead
I have 2 buddies, both refinery workers, Hess and Exxon. They swear up and down that its all the same stuff, no matter what the brand. Same thing with gas.

Dumb question - what is 'white oil'?

So why does the price of synthetic oil climb when the BBL price climbs?

Vinman - your friends are correct. For the most part, any lube coming from a major concern with refineries will be the same stuff. A lubricating oil is a base oil (white oil, bright stock, synthetics, what ever) and some chemicals that will give performance. Some folks will purify the base oil(s) and some even will blend various base oils to get a certain viscosity and/or property. Synthetic oils are made from crude oil. In some cases, it can be nothing more than mineral oil that has been stripped of sulphur and wax and in other cases it can be an actual rearrangement of the molecular structure. White oil is nothing more than a term for the base stock or basic mineral oil. Many things are made from the stuff not just lubes.

The chemicals that they put in the product are "canned" formulas from Lubrizol or Infinium or a bunch of other folks. The oil companies just take the base oil(s) and cold blend in the additves packages to make to end product. These formulas are well understood and designed to meet the bare minimum specs of OEMs.

Independent lube companies like ours look to do more than just meet to the minimums. We have taken the stand that we will develop products that go well beyound any spec and for that matter out performa any other product on the market - both in the lab tests and in actually case studies and even prolonged use at the customer site.

Also, most all plastics come from crude, 70% of pharm & cosmetics come from crude.

That's not a dumb question. White oils are clear oils with low toxicity. In the US, white oil product specifications are regulated by, e.g., 21 CFR 178.3620(b). They are used in foods, pharmaceuticals, etc.

A white oil can be made from a petroleum oil as follows. First, a lube fraction is separated from an upgraded crude oil. Some aromatics, nitrogen, and sulfur are removed using a solvent. The low-aromatics product (sometimes called a raffinate) is then dewaxed to improve lubricating properties, and treated with a hydrotreating catalyst to remove more sulfur and nitrogen. Sometimes the dewaxing precedes hydrotreating, sometimes hydrotreating is first, particularly when hydrodewaxing is used as the dewaxing step. Even a small amount of sulfur and nitrogen can ruin a hydrodewaxing catalyst.

The hydrotreated, dewaxed raffinate (sometimes called a dewaxed oil) is then treated in another catalytic processing step called hydrofinishing where most of the remaining aromatic molecules are saturated. If processed with sufficient severity, the result is a "water white" (clear) oil with low toxicity. Processing is always a balance between product quality and yield. Higher yield can be obtained at the expense of product quality, and vice versa.

White oil can also be made by hydrocracking a petroleum oil fraction, separating a lube fraction from the hydrocracked oil, hydrodewaxing, and then hydrofinishing.

Big oil companies like Chevron and ExxonMobil sell catalysts and processes for making white oil.

So, who is making up for the shortfall if "All three of the major U.S. suppliers are operating under force majeure declarations triggered by feedstock shortages?" Or are we just living with the shortage?

There has been a bunch of price increases but as for production of finiched goods? We are at an all time high!