Eastman to bring down Texas cracker in Q3, expects lower H2 earnings

(adds Eastman comments clarifying type of pipe, paragraph 9)

HOUSTON (ICIS)–Eastman Chemical plans to bring down the largest of its four crackers at Longview, Texas, for a major three-week maintenance turnaround, beginning towards the end of the third quarter, the company’s top executives said on Tuesday.

The shutdown will weigh on Eastman’s second-half operating earnings, which are expected to be down sequentially from the first half, CEO Mark Costa told analysts during Eastman’s second-quarter earnings call.

Eastman reported first-half operating earnings of $797m, compared with $821m in the first six months of 2013.

“Expect costs from planned outages in the second half to be greater than costs from planned and unplanned outages in the first half,” Costa said.

The Longview outage will add about $20m to Eastman’s maintenance costs in the fourth quarter, chief financial officer Curt Espeland added.

The shutdown will be maintenance only and is not aimed at reconfiguring the cracker to take in more ethane feedstock.

During the call, Espeland also said the Eastman’s dispute with Westlake Chemical over a common-carrier ethylene pipeline between Longview and Mont Belvieu has not yet been resolved.

As for the second quarter, earnings were hit by an unplanned outage at Eastman’s chemicals site in Kingsport, Tennessee. That outage particularly hurt the company’s specialty fluid and intermediates segment, which saw operating earnings down almost 19% year over year to $96m, the executives said.

In related news, Eastman reportedly had an outage at a Longview ethylene unit on Sunday (27 July) because of process-pipe failure.

Additional reporting by Al Greenwood and John Dietrich