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Hurricane Harvey May Delay New Plant Start-Ups

Posted on September 1st, 2017 by in Chemicals Industry News and Analysis

hurricane

The disruptions caused by Hurricane Harvey could delay the start-up of new plants that were expected during the upcoming months – on top of all the shutdowns it caused to existing sites.

Harvey made landfall on 25 August just north of Corpus Christi, Texas, which is home to several petrochemical plants and refineries.

Companies had already shut down many refineries and plants in preparation for the storm, which was among the most powerful to hit the US.

Harvey also created bands of moisture that brought tremendous amounts of rain to Houston and regions to the south of the city, all of which make up the petrochemical hub of the US.

As a result, companies had shut down these plants even though they are far from where Harvey made landfall.

More could follow. Although Harvey is no longer a hurricane, meteorologists expect Harvey to produce a lot of rain as it moves through Texas.

Even the current number of plant shutdowns will disrupt markets, given their breadth and scale. Already, gasoline prices have risen because of the refinery shutdowns, and ethane prices have fallen because of the cracker shutdowns.

Meanwhile, companies are in the midst of starting up the new plants that make up the first wave of new capacity in the US.

The potential for any delays caused by Harvey will depend, in part, on which stage each plant is in the development process.

Some plants are mechanically completed and are in the process of being commissioned.

The following table lists the plants for which companies have announced mechanical completion. Capacity is listed in tonnes/year.

mechanical completion table

With the exception of Dow, this new polyethylene (PE) plants will ultimately be fed by crackers that Chevron Phillips and ExxonMobil intended to complete by the end of this year. Until those crackers are running, the companies expected to rely on other sources for ethylene.

Right now, it is too early to say if the companies will meet their target dates to start up their new crackers. Chevron Phillips and ExxonMobil have not commented about how Harvey will affect their start-up schedules, if at all.

But if there is a delay, that means the new PE plants will be competing for ethylene at a time when several Gulf Coast crackers are already down because of Harvey.

In the case of Dow, it has completed its new cracker in Freeport and has already started feeding it feedstock.

Of course, these are not the only new plants that companies are building.

The table below lists the plants in Texas that are scheduled for start up in the upcoming months.

Updated graphic for Hurricane post

 

For the case of Enterprise Products, is expected to start up its propane dehydrogenation (PDH) unit in September.

ExxonMobil and LyondellBasell each have new PE plants that they expect to start up later in 2019. LyondellBasell has already broken ground at its plant, which is in La Porte.

As far as the existing plants that have shut down, it is still too early to determine how quickly they could resume operations.

In the best-case scenario, the plants would suffer no damage. If that happens, companies will inspect their plants during the weekend and look to restart as early as week commencing 4 September, said Kevin McCarthy, a partner at Vertical Research.

In the worst-case scenario, the damage inflicted by the storm could cause a plant to be down for several weeks, if not months, he said.

For the petrochemical plants and refineries, the biggest threat is flooding, McCarthy said. The plants are designed to withstand strong winds, but floods can cause problems with utilities, logistics, and operations.

Even if the plant suffers no damage, floods can prevent employees from getting to the plant or material from entering and leaving the site, he said.

Read more news and analysis stories from ICIS, go to www.icis.com/about/news/

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All opinions shared in this post are the author’s own.

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