If there is any good news (and it's not much) for base stock buyers in this announced closure, PTI says "the Lake Charles plant will only take API Group I out of the supply pool. In fact, for many this closure comes as no surprise since the specifications in the US market continue to favor the use of API Group II base stocks over Group I. As such, it was clear CITGO was under increasing pressure to either invest heavily to upgrade the Lake Charles facility to produce Group II to meet captive demand, or cease production and purchase base stocks on the merchant market."

Understanding CITGO recently announced it was reducing production at the Lake Charles plant, it appeared only a matter of time before the other hammer would drop. It did, just a little faster than many thought. And maybe the reason it did is tied to the alternative value of base stock feed (Vacuum gas oil - VGO) as cat cracker feed to make fuel.

Because as those who took the time to read Time to Get Cracking in the full print edition of JobbersWorld this month, petroleum refineries do not have to produce lubricant base stocks. Instead, it can use those hydrocarbons as catalytic- or hydro-cracker feed. Crackers are an integral part of the refinery and they convert feed to fuel by breaking long chain (heavy) hydrocarbons into smaller chain (light) hydrocarbons. Although the decision to direct the base stock feed to a cracker is multidimensional, in a large part it's driven by alternative value economics. In the case of base stocks, the alternative value is the difference in margin between hydrocarbons used to produce base stocks as compared to cracking it to fuel. In other words, what makes more for the major - turning the feed to fuel or to base stocks? And with the price for a gallon of diesel fuel currently higher than the price for a gallon of base stock, that may have helped accelerate CITGO's decision to cease base stock production at Lake Charles.

As background, the Lake Charles Louisiana refinery is an API Group I facility with a reported capacity of 9,500 B/D. The plant operates at near capacity and the base stock slate produced is primarily solvent refined 150N. Virtually all of the 150N is consumed captively to make CITGO lubricants. Such other grades as 600N and bright stock are consumed captively and sold on the merchant market for use in industrial and other heavy viscosity products.

The CITGO base stocks are considered to be on the higher end of the Group I category based on its high saturates and low sulfur content. These are important factors with today's automotive oils and one of the reasons why CITGO base stocks continued to be used in these products, as compared to other Group I base stocks that have limited or no capability due to their lower saturates and higher sulfur levels. But once again, directionally the automotive market continues to move away from Group I and even the higher end Group I will increasingly struggle to find a home in this segment.

Houston-based BioBlend, the leading manufacturer and marketer of bio-based lubricants, oils, and greases, today announced Sam Burkett as their new president. This announcement comes on the heels of recent news of their backing by Archer Daniels Midland Co. (ADM).

Under Burkett's leadership, BioBlend plans to double its distributor network in 2008, which already includes Pumpelly Oil Company, Suburban Oil, Haycock Petroleum, and Dennis K. Burke, Inc. A graduate of the U.S. Military Academy at West Point with a degree in Nuclear Engineering, Burkett's experience in the petroleum industry is impressive, including work as a Manger for the Industrial Business Line at Exxon-Mobil. He has also worked with Houston-based Fuel Quest, DTN Energy, and Panda Ethanol.

Burkett's new position is another decisive move in the company's continued dedication to the growth of renewable, biodegradable products. As president of BioBlend, Burkett will also oversee the launch of a retail products division offering consumers a line of biodegradable, environmentally friendly products for home use.