Salt Lake-based Huntsman Corp., the fifth-largest U.S. chemical maker, said Tuesday that its olefins plant in Port Arthur, Texas, which was damaged by a late April fire, won't open this year.
A second Texas plant also closed unexpectedly for nine days.
The Port Arthur plant accounts for 30 percent of the company's production capacity for ethylene, a key plastics ingredient, and the Port Neches, Texas, facility has about 10 percent, spokesman Don Olsen said Tuesday. The schedule for resuming production at Port Arthur will be known in "several more days," he said.
Huntsman is run from Salt Lake City and Houston.
"We are going to rebuild and restart that unit," Olsen said. "It will be out for the rest of the year. The big unknown is the condition of the compressors."
Port Arthur closed on April 29. Housings of two compressors were damaged in the explosion and fire, and investigators later this week will determine the extent of any internal damage, Olsen said. The shutdown idled 1.8 percent of North American ethylene production, tightening supplies and helping producers such as Dow Chemical Co. halt a five-month slide in contract prices.
Analysts including Kevin McCarthy of Banc of America Securities had said the Port Arthur plant would be shut for the rest of the year.
Shares of Huntsman fell 34 cents, or 2 percent, to close at $16.46 Tuesday on the New York Stock Exchange. They have dropped 15 percent in the past year.
Also Tuesday, Huntsman said in a prepared statement that the sale of some Port Neches plants to Houston-based Texas Petrochemicals for $262 million had closed. Huntsman got $192 million and will receive an additional $70 million after butadiene production resumes at Port Arthur. Proceeds will be used to reduce debt and invest in other businesses, Huntsman said.
The assets that were sold make butadiene, used to make rubber and nylon, and methyl tertiary butyl ether, a gasoline additive known as MTBE. They had $645 million in sales last year, Huntsman said. Other facilities at Port Neches and Port Arthur weren't part of the deal.
"This transaction reflects our strategy to pursue the sale or spin-off of our commodity businesses and to focus more of our attention and resources on our differentiated portfolio," Chief Executive Officer Peter R. Huntsman said in the statement.
Huntsman shut its Port Neches ethylene plant on June 23 after discovering a tiny leak in a propylene line, Olsen said. The company decided to extend the shutdown through July 2 for maintenance that had been scheduled for later, he said. The closure will have "no impact at all on our business," Olsen said.
Ethylene produced at Port Neches is used internally, he said. Should inventories run out, Huntsman will buy the chemical on the spot market, he said. The plant was shut for less than a week earlier this month after a power failure, Olsen said.
The Port Arthur plant can produce 1.4 billion pounds of ethylene a year, 800 million pounds of propylene and 460 million pounds of benzene, Huntsman said. Products from the plant generated about $25 million of first-quarter profit for Huntsman before interest, taxes, depreciation and amortization. That's less than 10 percent of the company's total.
The Port Arthur fire was preceded by an explosion at the plant's propylene refrigeration unit, the U.S. Chemical Safety Board, an independent federal agency, said last month. No one was injured. Huntsman hasn't determined the cause of the fire, Olsen said.
Dow is the largest U.S. chemical maker by 2005 sales, followed by Exxon Mobil Corp., DuPont Co. and Lyondell Chemical Co.