Lyondell expects slightly higher impact to second-quarter 2019 from ITC fire
Lyondell Basell Industries expects slightly higher impact to second quarter 2019 results from disruptions caused by a March fire at the Intercontinental Terminals Deer Park, Texas, storage tank farm than in the first quarter of the year, Chief Financial Officer Thomas Aebischer said.
“The impact was primarily felt within our Intermediates and Derivatives segment and was not material to the company’s first quarter results,” Aebischer said during a conference call to discuss first quarter results.
“We are still assessing ongoing disruptions, and we expect second quarter impact will be similar to slightly higher than the first quarter,” he said.
The March 17-20 fire destroyed 11 large storage tanks at the Mitsui & Co Ltd subsidiary’s site, which is along the Houston Ship Channel like Lyondell’s 263,776 barrel-per-day (bpd) Houston refinery and two petrochemical plants.
Chemicals from the destroyed 80,000-barrel storage tanks and those used in firefighting spilled into the Houston Ship Channel on March 22, stopping shipping along the waterway for three days and constraining it for nearly a month.
Chief Executive Officer Bob Patel said the refinery ran at 98 percent of capacity in the first quarter after the completion of a planned overhaul.
Patel also said the refinery is in a position to profit from a coming change to low sulfur marine fuel that begins on Jan. 1, 2020.
“As the refining markets adapt to new marine fuel regulations, we’ll be ready to capture improved margins with our continued stable operations,” Patel said.
The International Maritime Organization has mandated that marine fuel have a sulfur content no greater than 0.5 percent as of Jan. 1, 2020. Currently, marine fuel can have a sulfur content up to 3.5 percent. The changeover is expected to tighten the supply of diesel fuel, strengthening refining margins.
The Houston refinery has replaced dwindling supplies of Venezuelan crude oil with shipments from Colombian producers and other markets, Patel said.
Reporting by Erwin Seba; Editing by Jonathan Oatis and Chris Reese
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