This is great news, said one lubricant blender, who provided details to Lube Report on condition of anonymity. The market has gotten very tight over the past couple months. Its still going to take awhile for things to get better. But this takes the edge off, just knowing that we are going to start getting supply.

With capacity to make 21,900 barrels per day, Excel Paralubes is the second-largest base oil plant in the Western Hemisphere, but it shut down completely after the fire. Market sources said the plants wax isomerization unit was restarted last week, allowing production of finished base oil from existing intermediate feedstock. The other major unit – a hydrocracker that was damaged by the fire – was brought online Monday, sources said, adding that the plant was expected to ramp up to normal production levels this week.

ConocoPhillips and Flint Hills Resources could not be reached for comment late yesterday afternoon.

Resumption of operations at Excel Paralubes is the latest in a series of steps toward recovery for the U.S. market. Last week Motiva announced the opening of a 15,000-b/d expansion at its Port Arthur, Texas, plant – an opening delayed approximately six weeks, reportedly by conflicts with maintenance work. Earlier in March Petro-Canada restarted a production train damaged during a Jan. 7 fire at its Mississauga, Ontario, plant. That train accounts for half of the plants 12,500-b/d capacity.

The combination of those problems drove most of the continents Group II base oil suppliers to impose sales allocations and further depleted supply chains already choked by the impact of last years Hurricane Rita. Lube blenders have scrambled to find the stocks they need most of this year, and industry sources say some have begun to run out of certain grades the past couple weeks.

We, like a lot of other companies, have been borrowing base oils from other people, said the blender quoted above. But thats not a healthy way to run your business, and its not something you can sustain for very long.

Buyers and sellers agree availability problems wont disappear immediately because it will take some time to rebuild inventories. In the near-term, some say, low inventories will force producers to run shorter batches than they otherwise would, hampering efficiency and slowing the recovery. Many predict demand and supply will not return to balance until the third or fourth quarter.

In its letter, ConocoPhillips said it will maintain sales allocations on Group II oils made at Excel Paralubes. For the month of April those caps range from 62 percent to 85 percent of normal purchases.