US base oil output falls in 2020

US paraffinic base oil production fell in 2020 to an eight-year low, as strategically implemented run cuts and a heavy round of planned and unplanned maintenance curbed output throughout the year.

Paraffinic base oil production of 47.43mn bl in 2020 fell by 6pc from 50.64mn bl in 2019, according to the EIA. The volume was the lowest since 2012.

US paraffinic base oils output fell for a second straight year, after reaching a record high in 2018. Base oil refiners began to cut their production in 2019 to curb a build-up of excess supplies. The Covid-19 outbreak prompted refiners to reduce their production further to keep their supplies balanced amid a widespread slump in demand.

Output remained low even in the second half of last year when base oil margins rose to and held at their highest levels in more than eight years.

Total production on the US Gulf coast fell to its lowest level since 2013. This was before Chevron started its 23,000 b/d Group II refinery in Pascagoula, Mississippi in mid-2014 and before ExxonMobil completed its Group II/II+ expansion at its 18,000 b/d Baytown, Texas refinery in early 2015.

Production in 2020 fell initially because of a heavy round of planned maintenance in the region in the first quarter of last year. Producers then cut output in the spring and summer months in response to the reduced demand caused by the Covid-19 outbreak and lockdowns.

Extended unplanned shutdowns at several refineries from August to October also squeezed production. The refineries had to shut down because of extensive damage caused by Hurricane Laura that hit the western Louisiana coast in late August.

Paraffinic base oil production in 2020 also fell in several other US regions. Steep run cuts dropped US Atlantic coast production to 3.96mn bl, its lowest level since records began in 1993.

US west coast paraffinic base oil production also fell in 2020, dipping to a three-year low of 4.46mn bl.

The exception was production in the US midcontinent, which recovered slightly after falling to a record low in 2019. Output in the US midcontinent rose to 2.23mn bl in 2020, up from 2.09mn bl in 2019. But the volume was still the second-lowest level on record.

Naphthenic base oil production also fell to a record low of 8.19mn bl in 2020, down by 20pc from 10.24mn bl in 2019. The volume was the lowest since records began in 1993. Extended planned maintenance in the first four months of the year and extensive production run cuts throughout the rest of the year contributed to the drop in naphthenic base oil output.

By John Dietrich