March 1, 2017
Volume 17 Issue 52
U.S. Base Oil Eased Off in 2016
Operating at a relaxed but steady pace for most of the year, U.S. base oil refiners delivered a respectable 60.6 million barrels of paraffinic and naphthenic stocks in 2016, according to data released yesterday by the federal Energy Information Administration.
That fat, round number is near-echo of the 60.7 million barrels that domestic producers supplied two years ago in 2014, and is one of the best full-year totals since the recession slashed output to just 55 million barrels in 2009. Nevertheless, it suffers in comparison to its immediate predecessor, 2015, when supply reached a 10-year peak of 65.4 million barrels. Versus that buoyant performance, 2016 retreated almost 7.4 percent.
The brakes were applied with equal pressure on both sides of the market, paraffinic and naphthenic alike, EIA’s data show. The 2016 tally included 51.7 million barrels of paraffinic base stocks, a decline of 7.3 percent from the 55.8 million barrels manufactured in 2015. If not for that 2015 spike, though, 2016 would have been acclaimed as the best year since 2008; it instead has to settle for second-best.
Naphthenic refiners, who represent about 18 percent of the country’s current capacity for base oil manufacturing, generated 8.9 million barrels in 2016, versus their 2015 total of 9.6 million barrels – a decline of 7.5 percent and the sixth straight year of waning pale oil output. More startlingly, 2016 was the first year in EIA’s records (which extend back to 1993) that naphthenic producers failed to punch through the 9 million barrel mark. Even during the 2009 economic downturn, production exceeded that level.
EIA also tracks refinery production of paraffin waxes, a co-product of base oil manufacturing. These volumes also are withering because wax is extracted from base oil by solvent refining processes, which only a handful of U.S. refiners continue to use. Wax output, which regularly topped 5 million barrels just 10 years ago, in 2016 came to just 1.7 million barrels.
According to the 2016 Guide to Global Base Oil Refining, published by Lubes’n’Greases magazine (a sister publication of Lube Report), the country’s pool of base oil refiners includes 10 facilities that make only paraffinic base oils, five that are devoted to naphthenics, and two that have some capacity for both.
The country also has eight significant rerefineries that recycle used oil into lubricant-quality base oil. The EIA does not collect data from these facilities, which have a combined capacity of more than 15,000 daily barrels of base oil.