Ethylene Producers in Texas and Louisiana Nearing End of Storm Repairs

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Researched by Industrial Info Resources (Sugar Land, Texas)--As Hurricane Gustav rolled onto the Louisiana coastline in late August, it left 15 ethylene units and hundreds of industrial plants without power, water and basic utilities. The effects of the storm reached the eastern portions of the Texas coast, idling ethylene units in Port Arthur and Beaumont. Ethylene producers in Geismar and the central coast of Louisiana suffered major power outages and mandatory evacuations that left only essential personnel at the plant for more than a week. Some of the forced turnarounds have dragged on for a full month of downtime, including the Plaquemine, Louisiana, site of Dow Chemical (NYSE:DOW) (Midland, Michigan). The site's two ethylene units are just now ramping up to full rates after beginning the restart process this week.

Hurricane Ike landed on the Texas coast only two weeks later with a direct blow on the industry in the Houston Ship Channel and surrounding industrial communities. With only a couple of exceptions, almost every ethylene producer in Texas went offline on September 12. Several stayed offline for many weeks and others are still offline. Ike dealt a second blow to those ethylene units in the eastern-most portions of the Texas coast and the western edge of the Louisiana coast. Rising water, the loss of electricity and mandatory evacuations in that region equaled another round of unplanned downtime for several producers.

ExxonMobil Chemical Company, a subsidiary of ExxonMobil (NYSE:XOM) (Irving, Texas), is nearing completion and start-up for two ethylene units in Beaumont and expects to be at full rate by the week's end. Seven other ethylene units are scheduled to be back online by this weekend. This will leave only one producer still offline. Dow Chemical's major 2.9 billion-pound-per-year ethylene unit at the Freeport, Texas, Plant B site will remain offline until late October because of the loss of a cooling tower and some major items related to the hurricane.

Overall, the two hurricanes equaled more than 40 unplanned individual ethylene unit turnarounds during a two-week period, more than what was seen in both hurricanes Rita or Katrina combined. The path of these storms and the massive storm surge of Hurricane Ike dealt this industry segment a significant blow. The recent decline in feedstock costs and demand simultaneously could help producers deal with the unexpected inventory loss over the short term.

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