US Williams delays restart of Geismar cracker to late July

HOUSTON (ICIS)–Williams expects to start up its expanded and rebuilt Geismar cracker in late July instead of late June, with ethylene sales starting in mid-August, it said on Sunday.

Not only is the work at Geismar taking longer, it is also costing more money, the company said. Williams now expects the project to cost $715m, up by $65m.

Because of the delays and costs, Williams is lowering its 2014 guidance, although 2015 and 2016 remain the same.

This year, adjusted segment profit should be $2.05bn-2.25bn, the company said.

While Williams prepares the cracker for restart, it is still trying to recover $500m in insurance proceeds, it said.

In May, insurers approved $50m, which would bring total insurance receipts to $225m, Williams said.

The insurers, though, are still evaluating the company’s claims and questioning key assumptions Williams made about interrupted business, it said.

Because of these questions, the insurers will delay making a partial payment, Williams said.

Risks concerning the insurance proceeds could put distributable cash flow at risk − even with the new guidance, Williams said.

The Geismar cracker was in midst of a turnaround for an expansion when an explosion occurred in June 2013 that led to two deaths and numerous injuries.

The expanded plant will have a capacity of 885,000 tonnes/year, up from 613,000 tonnes/year.

Additional reporting by Jeremy Pafford