US Eastman still working to resolve Texas ethylene pipeline dispute

25 October 2013 15:34  [Source: ICIS news]

US Eastman still working to resolve Texas ethylene pipeline disputeHOUSTON (ICIS)--Eastman Chemical is still working to resolve its dispute with Westlake Chemical over a common carrier ethylene pipeline in Texas, but the CEO of the US-based chemicals major said on Friday that it remains unclear when a resolution will be found.

The pipeline connects the Longview site, where both companies have plants, with the natural gas and liquids hub at Mont Belvieu. Eastman is objecting to changes Westlake made to the pipeline’s tariff and the terms of its usage, costs and service.

Eastman CEO Jim Rogers, responding to analysts' questions during Eastman’s third-quarter earnings call, said that the issue must be resolved before Eastman can move ahead with plans to find a solution for the 700m lbs/year (318,000 tonnes/year) of excess ethylene it produces at Longview.

In an update, Rogers said that Eastman’s effort to resolve the issue with the Texas Railroad Commission, which is the regulatory authority for pipelines in Texas, did not “move as fast as we would like”.

Eastman had an initial hearing with the commission and is now waiting to hear back what the process for the dispute’s resolution will be, he said.

“I wish I knew the timing [for a resolution], but I am almost betting that it will take longer than either you or I would want it to take,” Rogers told the analysts.

While third parties are interested in Eastman’s excess ethylene position at Longview, they needed to know the terms of their access to the pipeline before making any deal with Eastman, he said.

Rogers added that while Eastman may have other legal options, pursuing the matter through the commission was the “right way to approach this issue”.

If the commission’s decision should not be in Eastman’s favour, “then we will consider what our options are”, he said.

Eastman produces about 1.4bn lbs/year of ethylene at the site but uses only about 50% of it for its own operations.

By: Stefan Baumgarten
+1 713 525 2653

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