| Shell Deer Park to Close Lubricants Plant
Shell Oil Products US has announced that it will cease the manufacture of Group I paraffinic and naphthenic base oils and waxes at its Deer Park, Texas, lubricants plant effective March 31, 2003.
The plant produces approximately 4,600 barrels per day of paraffinic oil, 5,000 barrels per day of naphthenic oil, and 800 barrels per day of wax. Customers include Shell affiliates, compound blenders, original equipment manufacturers, distributors, candle makers and brokers.
Approximately 110 employees work at the lubricants plant, which includes operations, maintenance and support staff personnel. It is expected that the majority of this workforce will be absorbed into other Shell operations.
The changing base oil marketplace and an anticipated disruption in lube crude from West Texas led to the decision to cease operations.
Reliance on Group I base oils has become less prevalent in motor oil formulations throughout the industry. Paraffinic sales from Deer Park have suffered from poor margins in recent years and the trend is projected to continue. Similarly for naphthenics, demand is projected to slightly decline while industry capacity utilization is reported at about eighty percent.
For many years, the Shell Deer Park Refining Company has used Yates crude from West Texas to produce Shell naphthenic base oils. This crude has been shipped via the Rancho Pipeline in West Texas to Deer Park. Plains All American Pipeline L.P., as operator and on behalf of the owners of the Rancho Pipeline, recently informed Shell that Rancho Pipeline operations will be discontinued effective March 1, 2003. No cost effective options to transport the Yates crude from West Texas could be identified.
"Customer notifications have begun and Shell is supplying remaining inventories on a fair and equitable basis and has asked customers to order product based on historical monthly purchases," said Jamie Brunk, director, base oil manufacturing and sales, Shell Lubricants. "We believe that there is capacity in the marketplace to meet the demand. At the same time we're making all reasonable efforts to meet our customers' needs."
For more information visit www.shelldeerpark.com and www.shell-lubricants.com.
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