Hurricane causes fire, shutdowns, lower output; Huntsman sells Venator stake to SK; Mexico lost $683M on ethane contract

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Huntsman's headquarters in The Woodlands, Texas. Photo courtesy of Huntsman Corporation.

Hurricane Laura causes chemical fire, shutdowns, reduces Gulf of Mexico oil production

Hurricane Laura hit the Louisiana coast early Aug. 27 as one of the five strongest hurricanes ever to hit the continental U.S. and left at least four people dead in that state but also destruction including a chemical fire, shutdowns, and reduced oil and gas production in the Gulf of Mexico.

Louisiana governor John Bel Edwards tweeted on Aug. 27 that there was “a chemical fire in the Westlake, Moss Bluff, Sulphur area.” He asked people near those locations to close doors and windows.

NPR issued a report the night of August 27 saying that a fire started during the hurricane was still burning 20 hours later. It created a thick cloud of smoke that contained chlorine. Authorities said the chemical would fall and dilute in a lake so it would not pose air danger, the report added.

Bio Lab Inc., which produces at the plant chemicals for disinfectants and sanitizers, said the afternoon of Aug. 28 that the fire had been “brought under control.” Employees evacuated just before the hurricane as part of a preventive shutdown.

Several petrochemicals and energy assets in both western areas of Louisiana and eastern parts of Texas also stopped operations ahead of the hurricane.

Over 800,000 electricity customers still did not have power after Laura toppled power lines, USA Today reported on Aug. 28. At least four people died in Louisiana due to the storm, it said. The date for the full return of electricity and in some cases water supplies looked uncertain, local reports added also on Aug. 28.

Limited damage

Some initial reports from companies in areas directly hit by the hurricane reported some material damage as well as uncertainty regarding restarts.

Westlake Chemical Partners said on Aug. 27 there was “limited physical damage” and employees were safe.

Westlake Chemical OpCo LP, where the partnership has a 23% stake, will decide on the reopening of facilities based “upon the availability of electricity, industrial gases and other feedstocks.”

Company facilities around Lake Charles, Louisiana process ethane and propane into petrochemicals.

Meantime, Venture Global LNG reported on Aug. 27 that its Calcasieu Pass LNG facility under construction in Cameron, Louisiana “sustained minimal impacts.”

“A walk-through inspection of most areas of the site following the storm confirmed that the project site's robust storm protection system, including a perimeter wall and storm water pumping system, performed as designed,” it said. All workers were safe.

Venture is working with its EPC contractor to restore utilities and gradually return to work.

Oil and gas production loss

The Bureau of Safety and Environmental Enforcement (BSEE) said on Aug. 28 that offshore oil and gas operators in the Gulf of Mexico reported workers remained evacuated from 257 oil production platforms, or 40% of the 643 manned platforms. By Aug. 29 that fell to 28%.

As of Aug. 29 personnel remained evacuated from seven non-dynamically positioned rigs (those in fixed locations), or 58% of rigs of this type. All dynamically positioned rigs (those that float in a fixed location using thrusters and propellers) had returned to their working locations.

BSEE estimated on Aug. 28 that 84% of oil production in the Gulf of Mexico remained shut-in. As for natural gas, 60% remained shut-in. On Aug. 29 that changed slightly to 82% of oil production and 59% of gas output shut-in.

The shut-in production as of Aug. 29 was 1.5 million barrels per day of oil and 1.6 Bcf/d of gas, equivalent to 60% of the Gulf of Mexico’s offshore production.

Huntsman sells to SK Capital a stake in pigment producer Venator for $100 million

Huntsman Corporation said on Aug. 28 it agreed to sell to SK Capital Partners a stake in pigment producer Venator Materials Plc. for $100 million in cash, with an option to sell more shares.

Venator, which produces titanium dioxide used for paints, coatings and cosmetics as well as other products like toothpaste, said the stake represents about 40% of outstanding shares.

“Proceeds to be received will further bolster our balance sheet and only enhance our flexibility for further growth," said CEO Peter Huntsman.

Huntsman Corp., based in The Woodlands, Texas, produces polyurethanes, performance products and adhesives. Its 2019 revenue was about $7 billion.

SK Capital’s portfolio generates about $9 billion in sales revenue annually, according to the company. SK, with offices in New York and Boca Raton, Fla., runs 86 plants in 24 countries.

It was SK’s second purchase within a month. It had announced on July 27 it agreed to buy the specialty polymers business from Baker Hughes, with operations in Barnsdall, Okla. It produces low molecular weight olefin polymers.

Mexican president says Brakem contract resulted in $683-million loss

Mexican President Andres Manuel Lopez Obrador said on Aug. 22 that a Mexico-Odebrecht contract to supply ethane to a Braskem-Idesa plant in the state of Veracruz has so far created a loss to Mexicans of 15,000 million pesos ($683 million), La Jornada newspaper reported on Aug. 22.

A third of the loss was due to the need to buy ethane and deliver at a lower cost, he said. 

“To that we need to add what is being paid in fines. Until before 2019 payments were 2,184 million pesos (nearly $100 million) but we stopped paying, and we have not paid 2,100 million pesos,” he said.

In addition, Mexican state institutions granted credit lines at different times equivalent to $50 million, $280 million and $190 million to the venture partners.

“All of this implies influences and bribes,” he said.

Some 70 former government officials, including two former presidents, have been linked to bribery in ongoing investigations, the report added.

Brazil-based Odebrecht and Braskem are Latin America’s biggest construction and petrochemical companies, respectively.

The ethane contract was signed in 2009 after bidding. It led to construction of an ethylene-polyethylene plant, completed in 2016. Braskem, which has denied wrongdoing and sought to collect fines, is in negotiations with Mexican government officials.

By Petrochemical Update