UpdateEnterprise fire burning out as US supply concerns linger

09 February 2011 19:41  [Source: ICIS news]

(updates paragraphs 2-5, adds paragraph 12)

HOUSTON (ICIS)--The fire at the Enterprise Products west storage facility in Mont Belvieu, Texas, is burning itself out, sources said on Wednesday, with the market shifting its focus to potential supply shortages and rising feedstock costs.

Market sources said the flames early on Wednesday were minimal compared with Tuesday, although the company said small hot spots remained.

Enterprise spokesman Rick Rainey said pipelines near the fire were not near capacity, so the fire would not burn as long as it would if they were full, according to news reports.

One contractor was still missing as of midday Wednesday, news reports said. Otherwise, no other injuries or fatalities were reported.

Enterprise had said it would not be able to fully assess the damage until after the fire was extinguished, but added on Wednesday that the fire had weakened enough for investigators to enter the area.

The company noted that its main facilities at Mont Belvieu were not damaged and remained operational, including its natural gas liquids (NGL) fractionators, propylene fractionators, butane isomerisation units and octane enhancement facility.

Enterprise’s north and east facilities as well as its import and export terminals on the Houston Ship Channel were also operational, the company said.

US ethylene bids and offers spiked following the fire, which was also causing some crackers to run at reduced rates because of constraints on ethane supply, market participants said.

The ethylene bid-offer range was at 45.50-48.00 cents/lb on Wednesday morning, sources said, up from 44.00-45.50 cents/lb prior to the fire.

The spike resulted from higher ethane prices, market sources said. A deal for ethane was done on Wednesday morning at 62.625 cents/gal, up roughly 8% from a range of 57.500-58.500 cents/gal on Tuesday.

Prices for butane and propane also rose on Wednesday, market sources said.

A Wall Street analyst said US petrochemical producers were likely to be significantly impacted by the fire because of anticipated higher near-term costs and supply shortages.

To that end, LyondellBasell said it reduced rates at its nearby cracker in La Porte. A source with knowledge of company operations said on Wednesday that its two Channelview crackers, however, had not been impacted.

Also on Wednesday, a market source familiar with Huntsman operations said that company’s Port Neches chemical complex had not been affected.

The source said Huntsman typically receives about 17,000 bbl/day of isobutane from Enterprise’s isomerisation unit in Mont Belvieu for methyl tertiary butyl ether (MTBE) production, and that there was no impact thus far on operations.

ExxonMobil said on Tuesday that it had taken precautionary steps to keep its giant Baytown chemical plant and refinery complex operational, adding that it was still meeting customer commitments.

Meanwhile, Chevron Phillips Chemical, which operates an olefins facility nearby in Cedar Bayou and a polyolefins facility in Pasadena, would offer no comments regarding any potential fire impact.

Shell said the fire had no impact on its downstream operations or those of Motiva, but was still assessing the situation.

Enterprise's complex in Mont Belvieu is among the world's largest underground storage centres for NGL. Crackers in the US rely on ethane as feedstock for ethylene.

The Enterprise facilities provide storage services for mixed natural gas liquids, ethane, propane, butanes, natural gasoline and olefins.

Enterprise Products also operates an NGL fractionation plant in Mont Belvieu with a total capacity of 305,000 bbl/day, the company said.

The fire in Mont Belvieu, located about 30 miles (48 km) east of Houston, began at about 12:30 hours Houston time (18:30 GMT) on Tuesday.

(Additional reporting by Sheena Martin, William Lemos, Brian Ford and Al Greenwood)

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By: Ben DuBose
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