Texas deep freeze lessens grip as petrochemical industry looks to recover

HOUSTON—Disruption in the rubber and overall petrochemical industry has been worse during the recent cold snap in Texas compared with a pair of hurricanes that caused havoc last year, according to an industry expert.

As executive director of olefins and elastomers for IHS Markit, Bill Hyde keeps track of market conditions. He said the widespread power outages caused facilities to quickly close as the power grid in Texas was strained under power demands created by the unseasonably cold temperatures.

Last year's hurricanes hit specific geographic areas, but the cold snap has caused widespread shutdowns, he said. Exactly when individual plants reopen "depends" on the amount of damage, if any, they suffered while offline.

Facilities that had to cease operations in a hurry could face more repairs before they can resume compared with those that were able to have a systematic shutdown, Hyde said.

While some ethylene plants could begin to start back up over the weekend or early next week, rubber makers will face a bit of a delay in their ability to resume if they were forced to close, Hyde said.

That's because butadiene is a byproduct of ethylene production, and it will take time to resume that supply chain, he explained.

Meanwhile, Lion Elastomers was among the companies that were forced to temporarily halt operations as a result of the winter weather.

"Lion Elastomers enacted its severe weather and freeze precaution procedures ahead of this storm, but the magnitude of this event overwhelmed the regional infrastructure and the Lion Elastomers facilities' ability to maintain operations online," the company said, noting it was reviewing the full impact of the weather-related damages.

"Things are getting better from a weather standpoint. We've got one more cold night to go and then I think we're back into kind of the normal-ish range. By the middle of next week, it's supposed to be warm again. It's just kind of a freak occurrence," Hyde said.

"The plants, almost the entire petrochemical infrastructure along the Gulf Coast, certainly in Texas especially, but also to an extent in Louisiana, has gone down. So we don't know exactly what caused every single unit to do down," he said.

Not only can cold weather damage equipment, but the interruption of power also can create problems for facilities when they try to resume.

"The petrochemical assets along the Gulf Coast are just not designed to operate reliably in subfreezing temperatures. Most of our design parameters are around let's shed as much heat as we can during the summertime. But they are not about protecting sensitive equipment from extreme cold in the winter," Hyde said.

"We can go several years between freezes and a typical freeze here is for a few hours overnight. It's not for four days, so the impact to the industry can be significant," he said.