Texas chems struggle to restart plants after Ike

26 September 2008 21:11  [Source: ICIS news]

By Al Greenwood

HOUSTON (ICIS news)--Chemical plants and refineries in Texas were still struggling to restart plants nearly two weeks after Hurricane Ike made landfall, a trade group said on Friday.

"The industry is not back to normal," said Dan McGowan, spokesman for the Texas Chemical Council (TCC).

Some plants have suffered fairly serious damage, he said. The trade group was developing an assessment of Ike's effect on the state's industry.

In the days following Ike's landfall on 13 September, the Texas Chemical Council estimated that the storm affected more than 100 petrochemical plants.

The disruptions started well before Hurricane Ike made landfall, as companies shut down plants in preparation for the storm.

Immediately after the storm, nearly all of the offshore natural gas production in the US Gulf was shut-in, according to the Minerals Management Service (MMS). Operators still have not fully restored Gulf production.

As of Friday at 11:30 hours Houston time (16:30 GMT), 57.4% of the Gulf's crude oil production was shut-in, the service said. The gulf has a daily capacity of 1.3m bbls.

In addition, 52.8% of the Gulf's natural gas production was shut-in, the MMS said. The gulf has a daily capacity of 7.4bn cubic feet (bcf).

Feedstock constraints, power outages and logistical hurdles further delayed restarts.

On Friday, Occidental Chemical (OxyChem) resumed limited production of its plants in Houston because of constrained feedstock supplies, said Richard Kline, company spokesman.

Plants at limited production include the company's Battle Ground chlor-alkali plant and its polyvinyl chloride (PVC) plant in Deer Park, Kline said.

Formosa Plastics said raw-material shortages and transportation disruptions were affecting the restart of its Point Comfort complex in Texas.

In many cases, most companies said their plants suffered little, if any, damage.

So far, it appears that Hurricane Ike caused less plant damage than hurricanes Rita and Katrina in 2005, said Richard O'Reilly, an equity analyst at Standard and Poor's.

Nonetheless, some companies are reporting damage.

ExxonMobil said on Thursday that its plant in Beaumont remained shut down because of water damage. Parts of its refinery could restart next week.

Regardless of their causes, the extended shutdowns are already affecting earnings.

PPG Industries lowered its third-quarter earnings by $35m-40m (€24m-27m) due in part to outages at its complex in Lake Charles, Louisiana.

Because of shutdowns, Celanese expects to lose $10m-15m in operating earnings before income, taxes, depreciation and amortisation (EBITDA).

JP Morgan lowered its third-quarter earnings estimate for Lubrizol as a result of the shutdown of the company's plant in  Deer Park, Texas.

Praxair could lose $75m in third-quarter revenue as a result of hurricanes Gustav and Ike, JP Morgan said.

Air Products lowered its fourth-quarter earnings estimate – in part – because hurricanes Gustav and Ike reduced short-term demand from Gulf coast companies,

Additional reporting by Leela Landress

($1 = €0.68)

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By: Al Greenwood
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