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July 28, 2003
Volume 81, Number 30
CENEAR 81 30 p. 12
ISSN 0009-2347


BUSINESS

MTBE DECLINE HITS PRODUCERS HARD
Economic and regulatory issues take their toll on Houston-area operations

ANN THAYER

Citing the drastic and likely permanent decline in demand for methyl tert-butyl ether (MTBE), Texas Petrochemicals has declared bankruptcy, while Global Octanes has shut down its only plant. The two companies rank among the top 10 U.S. producers of the gasoline additive.

PHOTO BY DAVID J. HANSON
Consumption of MTBE in California has fallen significantly, and the state is on track to ban it in 2004. Some refiners there have already begun switching to ethanol as a gasoline oxygenate. Meanwhile, Congress has been debating legislation that might limit or exclude MTBE use nationwide.

Texas Petrochemicals curtailed MTBE output at its Houston facility in the first quarter because of unfavorable operating margins. The company says high raw material and energy costs, along with declining MTBE sales, have hurt its cash flow. It’s been unable to make interest payments on its debt, which the company now hopes to restructure.

“We expect to emerge from the reorganization with a significantly improved financial structure that will position Texas Petrochemicals for long-term success in our core butadiene, specialty chemicals, and gasoline alkylate businesses, while phasing out our on-purpose MTBE production,” Chief Executive Officer Carl S. Stutts says.

Global Octanes, a joint venture of the Japanese firms Daicel and Mitsui & Co., has closed its 12,500-barrel-per-day plant in Deer Park, Texas. The 13-year-old plant employed 85 company workers and 20 contractors.

MTBE plant closures have been expected, Chemical Market Associates reports. Because MTBE production is a major consumer of isobutylene, declining demand is also apt to cause major shifts in the disposition and pricing of C4 olefin streams throughout the world, the Houston-based research firm adds.



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Copyright © 2003 American Chemical Society



 
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