UpdateOil slick may delay chem shipments to US Gulf markets

06 May 2010 23:53  [Source: ICIS news]

(adds updates throughout)

HOUSTON (ICIS news)--The growing oil slick from the sunken Deepwater Horizon offshore rig could briefly delay chemical shipments along the US Gulf coast, including the petrochemical hub of Houston, market sources said on Thursday.

“Say it does delay shipping, ships would just sail around it,” a polyolefins trader said.

Some ships moving to the Houston area through the Gulf of Mexico had already been delayed by about two days to allow extra time to go around the oil slick, a regional petrochemicals source said.

However, others maintained any impact would likely be confined to ports in the immediate vicinity of the affected area - Louisiana, Mississippi, Alabama and Florida - and not disrupt export shipments from the key port of Houston.

“The oil slick is not a factor yet,” another polyolefins trader said. “It may affect New Orleans, but as far as Houston, I’ve heard of no potential problem.”

Other sources had previously indicated that the oil spill could threaten the export business of US Gulf-based producers.

The blast on Transocean’s offshore rig and subsequent flow of oil from BP’s well it was drilling produced a waterborne oil patch that continued to drift toward the US coastline and the ports and petroleum production sites located nearby.

The BP-operated rig has spewed more than 5,000 bbl/day of oil since the 20 April explosion and fire that killed 11 workers, sank the platform and resulted in three leaks. BP capped one of the leaks on Wednesday, and early on Thursday, it began the process of lowering a 110-tonne containment dome over the well as part of an effort to seal the other two.

BP also continued to use chemical dispersants – both to the surface and under water - in hopes of breaking up and dispersing accumulations of oil.

By Thursday, the use of dispersants had become so prevalent that one surfactants producer was no longer able to fill all customer demand because much of its production was being used to clean up the spill, a market source said. Surfactants are used in dispersants.

Likewise, US producers of ethylene oxide (EO) - which is frequently used as a surfactant - were reporting increased demand and short-term volume increases from buyers related to the Gulf clean-up efforts, a producer said.

However, the demand bump was unlikely to to affect EO pricing unless it lasted a couple of months or more, the producer noted.

BP said it expected to have its underwater dome operational by 10 May, and hoped to capture as much as 85% of the oil via that method and send it by pipe to a ship on the surface.

It would be the first time the system was used at such water depth, the company said.

Additional reporting by Heather Doyle, David Barry and Gene Lockard

For more on BP visit ICIS company intelligence
For more on EO visit ICIS chemical intelligence
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By: Ben DuBose
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