US Eastman pleased with ruling on Texas ethylene pipeline

Source: ICIS News

2016/08/26

HOUSTON (ICIS)--Eastman Chemical is pleased with this week’s regulatory ruling on a dispute over a common carrier ethylene pipeline out of its Longview petrochemicals production site in Texas, the US-based producer said in a statement on Friday.

In the ruling from Wednesday, the Texas Railroad Commission (TRRC), which has the power to regulate pipeline rates, set a rate of $2.45/100lb on the 200-mile ethylene pipeline from Longview to the natural gas liquid (NGL) hub at Mont Belvieu near the Houston Ship Channel.

The ruling concludes Eastman's three-year dispute with Westlake Chemical, which owns the pipeline. Originally constructed by an Eastman affiliate, the pipeline was acquired by Westlake in 2006, along with polyethylene (PE) and related manufacturing assets at Longview.

"While we would have preferred that the TRRC adopt a lower tariff rate that was under consideration and supported by one commissioner, we are pleased with the outcome of the hearing," Eastman said in a statement to ICIS.

The protracted dispute dates back to 2013 when Eastman filed a complaint with the TRRC after Westlake nearly doubled its rate for shipments on the pipeline to $3.50/100lb, from $1.90.

The dispute affected Eastman’s options for Longview where it has been seeking to monetise or divest excess merchant ethylene cracker capacities and related assets.

In an earnings call last month, Eastman executives said that the company was talking to potential buyers who were seriously considering the ethylene assets, and that Eastman would pursue the plans despite currently low ethylene prices and pressured olefins margins.

The company has four olefin cracking units at Longview which produce ethylene and propylene.