Assessing petrochem damages by Rita

05-Oct-05

Hurricane Rita, passing over the oil, gas, and chemical industries along the U.S. Gulf Coast has caused less damage than originally expected. But this second blow, closely following Hurricane Katrina's devastating effects a month ago, hurt gas and oil production, shut down petrochemical plants, and further tightened availability of energy and raw materials. Rita resulted in the largest precautionary shutdown of petrochemical and refinery-related assets in the history of the U.S. industry, affecting significant reductions in North American operating rates. The following capacities have been down: 34% of propylene capacity 56% of ethylene capacity 55% of high-density polyethylene 67% of linear low-density polyethylene 68% of butadiene 83% of polybutadiene 49% of benzene 44% of toluene 41% of chlorine. Shortages created by plant damage, lack of utilities, flooding, and scarcity of manpower led to declarations of force majeure from Total, Basell, Innovene and Sunoco for polypropylene DuPont for ethylene copolymers made in Orange, Texas Dupont for and aniline, acrylonitrile, hydrogen cyanide, and acetonitrile made in Beaumont, Texas Akzo Nobel for metal alkyls made in Deer Park, Texas PPG Industries for all products manufactured in Lake Charles, La., including caustic soda, chlorine, vinyl chloride, and various chlorinated solvents. Other plants close to where Rita made landfall were also compromised. Lyondell Chemical says its ethylene glycol plant in Beaumont will be out of service for a month. ExxonMobil's refinery, chemical, and lubricant plant in Beaumont is still without water and electricity. Huntsman's ethylene plants in Port Arthur and Port Neches, Texas, also have no power or utilities, and they could be off-line for a month or more. Dow Chemical's operations in Texas and Louisiana, including those in Plaquemine and Hahnville, La., damaged in the last storm, so far appear to have suffered no significant structural damage from Hurricane Rita. But this latest storm further complicates fuel, gas, and raw material supplies, as well as transportation logistics around the Gulf of Mexico, already significantly stretched because of Katrina.