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New Enterprise Texas PDH plant commissioning to last another month: CEO

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New Enterprise Texas PDH plant commissioning to last another month: CEO

Houston β€” Enterprise Products Partners' new 750,000 mt/year propane dehydrogenationplant will continue undergoing commissioning for a further month, CEO JimTeague said Wednesday.

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"We are operating our PDH facility, which is producing polymer-gradepropylene. We expect commissioning to last another month," Teague said duringthe company's quarterly earnings call.

"By the end of February, things ought to be humming along, that's ourplan," Teague said when asked when the PDH would be fully operational.

Enterprise had repeatedly delayed the new unit's startup. The companyintended to begin operations in July 2017, but was still commissioning whenHurricane Harvey hit the Texas Coast in late August, causing further delays.

Its full startup comes after strong propylene pricing in January stifleddemand in downstream markets, leading to reduced run rates, particularly forpolypropylene, according to market sources.

Last week spot polypropylene prices reached a three-year high on the backof high feedstock propylene pricing because of an ongoing outage at DowChemical's 750,000 mt/year PDH plant in Freeport, Texas, and the delayedstartup of Enterprise's new unit in Mont Belvieu, Texas.

However, the highs were short-lived amid growing market talk of improvingsupply and weaker demand from downstream producers because of expectationsthat Dow will restart its PDH plant in early to mid-February, and Enterprise'sproduction of on-spec propylene during commissioning.

"Every pound we produce in the PDH during commissioning is sold to ourcustomers as we go. We're selling PGP right now on a propane basis," R.B.Herrscher, senior vice president of unregulated NGL assets and petrochemicals,said during Wednesday's earnings call.

Market sources said polypropylene producers are not inclined to producevolumes in excess of contractual obligations amid reluctant buyers who expecta declining market.

Diminished demand comes after a fire erupted Thursday at Braskem'spolypropylene plant in Freeport, Texas, and polypropylene producer PinnaclePolymers declared force majeure last week, citing production issues stemmingfrom recent severe cold snaps.

In addition, high US propylene prices prompted a major buyer to securecargoes from Brazil and Europe, adding more downward pressure from reducedexport demand.

Enterprise has said the new PDH plant aims to fill a gap of propyleneoutput lost to ethane cracking and export excess supply. Cracking ethaneyields mostly ethylene and no propylene, while cracking propane, butane ornaphtha yields 15% to 17% propylene and less ethylene.

--Kristen Hays, kristen.hays@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com