INSIGHT: Hurricane Harvey impact leads to 50,000 tonnes/day ethylene loss

By Nigel Davis

LONDON (ICIS)–It may take weeks to reach pre-hurricane production levels in the flood hit areas of Texas and Louisiana, the American Chemistry Council said on Friday.

Its assessment indicates that the cumulative loss of ethylene production from the storm will be 300,000 tonnes or a 1.0% of total US capacity. Seventeen crackers with a combined capacity of 11.2m tonnes were shut down while other olefins units were running at reduced rates.

The current loss of production is about 50,000 tonnes/day. Plants will come back on-stream but start-up is reliant on numerous factors, most of which are outside companies’ control.

Of course, it is not just ethylene; the ICIS chart accessible from the link at the end of this article shows the status of a wide range of chemical production plants and port facilities in Texas.

The ACC said some 30% of US propylene, butadiene and benzene capacity was shut down in the face of the storm.

Other facilities closed include ones producing methanol, on-purpose propylene (propane dehydrogenation), abroad range of plastics – low density, high density and linear low density polyethylene (LDPE, HDPE and LLDP. Polypropylene (PP) and polyvinyl chloride (PVC) among them – synthetic rubber, downstream derivatives such as acrylic acid, cumene, ethylene oxide (EO), monoethylene glycol (MEG) , propylene oxide (PO), and styrene, chlor-alkali and air separation plants.

The list is not exhaustive.

Similarly, the ACC stressed that important issues when it comes to re-starting production plants will be the availability of power, natural gas and other materials and supplies. And, as we pointed out last week, the physical ability of plant employees other than emergency crews on-site, to return to work.

“The timing of resumption to normal activity will depend on how quickly the unprecedented waters recede from roads, railways etc to allow inspection and repair to possible damage as was as restoration of the movement of employees, raw materials and finished products. Restart procedures will begin as soon as the storm passes but it may take weeks to reach pre-hurricane levels,” the trade group said.

And ExxonMobil was saying over the weekend that the re-start of its Baytown refinery and chemicals plants in Texas was largely dependent on the transport infrastructure. The company was working with the Port of Houston to speed the movement of vessels through the Houston Ship Channel as well as coordinating with railroad companies on repairs.

The company’s Beaumont refinery remained shut but the polyethylene plant at the site was being started up.

Only last week the ACC was talking about a strong start for the chemical industry to the third quarter. The chart shows how production had ramped up particularly strongly on the US Gulf cost from April, to May, to June and July,

US chemical production was up 2.3% in July, year on year. Not a spectacular by any means but the upward trend was improving. The surge of investment on the US Gulf Coast over the past few years helped push up regional production by 5.8%.

That, of course, has changed, at least for the time being.

The macroeconomic effect on the US may only be less than 0.5 percentage points and the ACC talks about a modest national effect in the third quarter that will turn positive in Q4 as re-building activity adds to economic growth.

For Houston and the surrounding areas most heavily affected by the storm however, the economic effects will be more extensive.

The ACC said that estimates of between $40bn and $100bn of damage is likely to be higher than that for Hurricane Katrina. The call from Texas Governor Greg Abbott for $125bn in federal support has to be put into context of the country’s $19,247bn economy.

Oil production in the Eagle Ford filed in Texas and in the Gulf of Mexico were hit by the storm and 10 oil refineries and 3.1m barrels per day of US refining capacity was shut down – around 17% of the total, with 1.1m bbls/day running at reduced rates.

It could take a week or longer to re-start refineries and plants. 1.3m bbl/day of refining capacity was being re-started on Friday.

Port closures affected 39% of waterborne chemicals trade.

The ICIS Dashboard has a list of all the plants, ports and markets affected by the storm. Click here to view an interactive map of petrochemical plants in Texas. Use the drop-down menu to see plants by products, and zoom in to see more details.