The Force Majeure Nobody Has Lifted
Chevron Phillips Chemical told customers on June 9 that critical equipment had failed at the normal alpha olefins units at Cedar Bayou and the units were down. One hundred and six days later there is no lifting notice, no restart date and no tonnage. The only public figure that touches the event at all sits in a filing by the company that owns half of CPChem, and it never mentions the outage.
A force majeure letter is a clock. It starts when the letter goes out and it stops when the producer sends the second letter.
Chevron Phillips Chemical sent the first one on June 9. The company had "experienced an unplanned outage involving critical equipment at its normal alpha olefins ('NAO') units at Cedar Bayou, which resulted in a shutdown of the units," and it was "working to restore operations as safely and quickly as possible and is currently assessing the expected duration of the interruption."
That was 106 days ago.
We went looking for the second letter this morning and could not find one.
No lifting notice on CPChem's newsroom. No restart date in any filing.
No tonnage attached to the event by anybody, the company included.
"How do you plan around an outage when the operator has published a start and no end?"
What the Letter Actually Says, and What It Leaves Out
Read the language again, because it is doing careful work.
"Critical equipment" puts the failure inside the units, on a machine, with no weather and no upstream feedstock to blame.
And it names no unit count, no fraction range, and no share of the site.
"Assessing the expected duration" in June was a reasonable thing to write. Still reading it in late September tells you something about the repair.
And the scope matters more than the cause. AlphaPlus is CPChem's normal alpha olefin line, sold in fractions from C4 to C30+, which the company calls the widest selection available. Those fractions do not go to one market. The light end is polyethylene comonomer. The C10 is polyalphaolefin feed for synthetic motor oils. The C12 through C18 range runs into detergent alcohols, surfactants and lubricant additives, and the heavy end goes to paper sizing and specialty applications.
So "the NAO units" is a phrase that can mean a small problem for a polyethylene buyer and a serious one for a lubricant formulator, and the letter does not say which.
Cedar Bayou Is Not a Small Site
CPChem's own fact sheet for the complex puts it in Harris County, 28 miles east of Houston, running since 1963, with 1,142 employees and 2,160 onsite contractors, and an annual regional economic impact the company states as $3.5 billion.
The alpha olefins there are not a side business either. In June 2014 CPChem sanctioned a 100,000 metric ton per year NAO expansion at Cedar Bayou on its own proprietary technology, with completion anticipated in July 2015. Mark Lashier, then running olefins and polyolefins, described it as a move to "leverage North American shale gas development by continuing to grow our U.S. based Olefins and Polyolefins footprint."
That expansion was deliberately co-located with the 250,000 metric ton per year 1-hexene plant, described in the same release as the world's largest, sharing infrastructure and workforce.
Worth holding onto: the 1-hexene plant is an on-purpose unit and the NAO units are the full-range oligomerisation. They are neighbours on the same fence line, and the June letter names the NAO units.
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