*Texas ethylene prices drop
*Evangeline restart unlikely until late November or December
Ethylene spot prices in Louisiana rose Wednesday on news that a restart of the the Evangeline pipeline system will be delayed, sources said.
The Evangeline system, which Chevron Pipe Line sold to Boardwalk Pipeline Partners for $295 million in early October, is a a 176-mile interstate pipeline that can move about 2.6 billion pounds of ethylene per year and is supported by long-term, fee-based contracts, Boardwalk said on its website. The 16-inch-diameter pipeline is the largest betweem Texas and Louisiana and has been down since October 10 when a small amount of ethylene leaked.
In markets, one deal via the Choctaw pipeline system in Louisiana was concluded Wednesday at 68 cents/lb for November delivery, up 4 cents from a Choctaw deal Monday for October delivery. The 68-cent deal in Louisiana was well above the three November deals concluded in Texas in the 56-56.5 cents/lb Mont Belvieu Williams pipeline system. The pricing differential for ethylene between the two states was as low as 0.5 cent on September 17, when October deals were heard concluded at 74 cents/lb Choctaw in Louisiana compared with 73.5 cents/lb MtB Wms in Texas.
Wednesday ethylene spot ranges indicate bids at 55.75 cents/lb MtB Wms and 66 cents/lb Choctaw, against offers at 56.75 cents/lb MtB Wms and 72 cents/lb Choctaw.
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.
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.
PHMSA said the 29-mile affected section of line has to be flared to remove the product. The failure occurred near milepost identifier MP 16.65, the agency added.
“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.
“All major construction related to the rebuild of the damaged plant, the expansion project and the safety-related equipment installation is now complete,” it said.
– Platts.com
