Huntsman Corporation's Port Arthur, Texas olefins manufacturing plant experienced a major fire on Saturday, April 29th. The fire has been contained and the facility is not operational, pending an investigation and assessment of damage. Though investigators are in the very early stages of assessing the impact of the fire, it appears that the damage is significant and the plant could be off line for several months.
The fire began at 7:22 AM CDT in the propylene refrigeration unit. The 50 employees and contractors working at the facility at the time of the incident were safely evacuated. None of Huntsman's other Jefferson County, Texas sites were impacted and these facilities remain operational.
The Port Arthur facility, also known as the Light Olefins Unit (LOU), has an annual production capacity of 1.4 billion pounds of ethylene, or about 30% of Huntsman's global capacity. It also has an annual capacity of 800 million pounds of propylene, 680 million pounds of cyclohexane and 460 million pounds of benzene. In the first quarter of 2006, the EBITDA associated with the products manufactured at the LOU was approximately $25 million or less than 10% of Huntsman Corporation's total Adjusted EBITDA.
Huntsman carries normal and customary insurance coverage for property damage and business interruption. The deductible for property damage is $10 million, while, generally, business interruption coverage does not apply for the first 60 days. The Company has already begun discussions with its insurance carriers and intends to explore all options available under its insurance policies, including those related to the repair or replacement of the damaged facility.
Huntsman believes the incident will not significantly impact its plan to pursue a sale or spin off of certain of its commodity assets.