Ethylene Producers Plan Few Turnarounds for 2007 as Demand Remains Strong

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Researched by Industrial Info Resources (Sugar Land, Texas). Ethylene producers completed a relatively light load of planned turnarounds in 2006 thanks to strong demand and a tight supply of capacity. Industrial Info reported just nineteen turnarounds at ethylene plants located in the United States and Canada last year, of which eleven turnarounds were unplanned events. Despite these turnarounds that totaled 186 days, it was still a significant decrease in turnaround activity compared to the 50 turnarounds completed in 2005 when hurricanes swept the Gulf Coast region and idled nearly every ethylene plant in Texas and Louisiana. This dramatic decrease in turnaround activity last year was largely due to an increase in demand from polyethylene and other downstream olefins remaining strong and even increasing in some cases.

Looking into the New Year, Industrial Info is currently tracking an estimated 257 days of planned turnaround activity from just nine ethylene units producing only 12 billion pounds per year (lb/yr) of the nearly 68 billion pounds of installed capacity. All of these turnarounds will take place in Texas or Louisiana with the exception of a 35-day turnaround of Nova Chemicals Corporation’s (Coraopolis, Pennsylvania) 1.8 billion lb/yr E2 unit located in Joffre, Alberta. Six of the planned turnarounds are all events taking between 30 and 50 days of downtime each, while the remaining turnarounds are much shorter in duration between ten and eighteen days each.

According to Industrial Info’s Ethylene Database, there are currently 54 operational ethylene units located in the United States and Canada at 36 individual plant locations. From a distance, it would appear that total ethylene capacity in the United States will get even smaller after the recent announcement by Eastman Chemical Company (NYSE:EMN ) to shutter one or more of its four ethylene units located in Longview, Texas later this year. No new capacity of any significance has been announced other than a debottleneck of the Olefins 1 ethylene unit owned and operated by Formosa Plastics Corporation USA in Point Comfort, Texas.

The only prospects for a substantial amount of capacity in the short term would be the restart of an idle Lake Charles, Louisiana ethylene unit owned by Equistar Chemical Company. The restart of this 750 million-pound per year unit has been considered repeatedly over the past several years. Shintech, Incorporated is rumored to be considering a new ethylene unit in Louisiana to support its vinyl complex currently under construction in Plaquemine. The first phase of the nearly $1 billion vinyls complex will startup this year, with phase two beginning construction later this year.

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