The negative impact of Hurricanes Katrina and Rita on the chemical industry was evident in September, according to the American Chemistry Council (ACC).
The direct damage to chemical industry facilities was worse during Hurricane Rita, and significant amounts of petrochemical capacity remained shut during the first part of October. This likely will be evident in next month’s data.
Chemical production in the Gulf Coast region declined 13.9 percent in September from August levels. Compared to September 2004, production was down 15.7 percent. The decline was 1.5 percent on a year-to-date basis.
During September, chemical production was down in the Gulf Coast, Midwest, Ohio Valley, Southeast, West, and Mid-Atlantic regions. The Northeast was the only region that experienced modest growth during the month of September.
However, reflecting the general improvement in the manufacturing sector during 2005 prior to the hurricanes, all regions posted gains on a year-to-date basis with the exception of the Gulf Coast region.
Chemical production in the Gulf Coast regions was down sharply during September for several reasons. Lasting energy disruptions from Hurricane Katrina constrained raw material supplies. During much of September, many of the large gas processing plants that strip ethane, propane, and other liquids from raw natural gas were not operating due to extensive flooding and other hurricane damage.
During September, more than 50 percent of natural gas production and more than 70 percent of petroleum production in the Gulf of Mexico was shut-in due to the hurricanes. Thus, feedstock and fuel availability were reduced.
There was direct damage to chemical facilities from the hurricanes. Hurricane Katrina damaged plants in Mississippi and southeast Louisiana. Then, on September 24, Hurricane Rita made landfall just east of Beaumont TX, a major petrochemicals center.
Also affected were the Lake Charles LA and Port Arthur TX areas. Production at these facilities and others along the Gulf Coast was halted before the hurricane in preparation for landfall and subsequently when many stayed shut for days and weeks to assess and repair damage.