Evangeline Pipeline System Delayed to Restart, Ethylene Price Up In Louisiana

Evangeline pipeline restart delayed to end November, triggers ethylene price increase in Louisiana

30-Oct-14

Ethylene spot prices in Louisiana rose on Wednesday on news that a restart of the Evangeline pipeline system will be delayed, sources said in Platts. The Evangeline system, which Chevron Pipe Line sold to Boardwalk Pipeline Partners for US$295 million in early October, is a a 176-mile interstate pipeline that can move about 2.6 bln lbs of ethylene per year and is supported by long-term, fee-based contracts. The 16 inch diameter pipeline is the largest between Texas and Louisiana and has been down since October 10 when a small amount of ethylene leaked. In an October 20 order from the US Department of Transportation's Pipeline and Hazardous Materials Safety Agency, Chevron was directed to take certain corrective actions following the October 10 incident in Cameron Parish, Louisiana. Chevron remains the operator of record until November 1. The price difference between the two states started to decline in early May, after the line was restarted following a shutdown for repairs in August 2013. The shutdown was cited as the main reason for a record buildup of ethylene stocks in Texas, and higher prices and supply constraints in Louisiana . "We currently estimate that Evangeline will be down the entire month of November, with the potential for the outage to extend into December," a Boardwalk Pipeline company source with knowledge of operations said. "During this time, we will continue to work with PHMSA to determine what other requirements, if any, may be necessary to bring the pipe back into commercial service," the source added. Trading sources remained bearish on the supply expectations in Louisiana, even though Williams Partners announced plans to restart its Geismar, Louisiana, olefins plant in November, the company said in early Wednesday. The facility had been shut by a fire.