By OGJ editors
HOUSTON, Sept. 5 -- Independent crude oil marketer and transporter EOTT Energy LLC reported Friday that it will cut its petrochemical production operations starting Oct. 1. Houston-based EOTT's plan will include the "phasing out" of the company's Morgan's Point methyl tertiary butyl ether production complex at LaPorte, Tex.
The plant has been producing about 12,000 b/d of MTBE, which is a gasoline additive designed to boost octane and reduce air pollution. The US Environmental Protection Agency had mandated the use of MTBE as part of its revised gasoline oxygenated standards. MTBE demand is expected to decline sharply after Jan. 1, 2004, however, when California, New York, and Connecticut impose bans on the use of MTBE.
EOTT said it plans to continue operation of its butane isomerization unit as well as its NGL storage and transportation system, which includes an NGL pipeline network in the Houston Ship Channel area, 10 million bbl of underground NGL storage capacity at Mont Belvieu, Tex., and dock facilities at Morgan's Point.
The company also said it will continue to operate "certain other liquids processing, storage, and marketing facilities at its Morgan's Point complex."
EOTT Chairman and CEO Tom Matthews said of Friday's decision, "We're very disappointed to have to take this action, but the time has come to end our financial exposure related to this petrochemical commodity. We've incurred a $13.6 million liquids operating loss predominantly from MTBE operations in the first 6 months of this year. Given the uncertain future outlook for this product, we feel we have no other viable option than to phase out MTBE production at this time."
The "elimination of this nonstrategic commodity production," Matthews added, will allow EOTT's liquids business to "focus on realizing returns from our liquids tolling, terminalling, transportation, and storage asset capacity."
The Morgan's Point complex also processes other petrochemical feedstocks including isobutane and isobutylene mix product. EOTT's Morgan's Point and Mont Belvieu, Tex., liquids business currently has about 112 employees and 60 contract workers.
"Essentially all of the contractor positions and a majority of employee positions will be eliminated by this production phase-out," the company said. Those employees left will operate EOTT's remaining liquids storage, transportation, and processing business once the MTBE phase-out is completed, it said.