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Fires Burn On After Blasts Rock Chemical Plant in Texas

Rachel Adams-Heard and Catherine Ngai

(Bloomberg) -- Fires were still burning at a Texas chemical plant after multiple explosions injured three workers and forced residents of Port Neches to evacuate.

As of about 6 a.m. local time Thursday, the fire was still burning and the evacuation order remains in place, an officer at Port Neches police department said by phone.

The first blast at TPC Group Inc.’s facility on Wednesday morning occurred in the site’s south processing unit at a tank with finished butadiene, the company said on its website. A second explosion about 12 hours later sent flames and debris high into the air. Jefferson County Judge Jeff Branick declared a state of disaster.

“It is not clear at this time for how long the plant will be shut down,” TPC Group Inc. said on its website on Wednesday, adding that affected products included both raw materials and processed butadiene and raffinate.

The facility about 100 miles (160 kilometers) east of Houston produces more than 16% of North America’s butadiene, and 12% of gasoline additive methyl tert-butyl ether, or MTBE, according to data provider ICIS. Butadiene is used to make synthetic rubber that is used for tires and automobile hoses, according to TPC.

Bonds in closely held TPC, which is headquartered in Houston, fell as much as 8% on the news, making them the worst performer among junk-rated securities.

The blasts at Port Neches follow a string of similar accidents in Texas this year. An explosion at a chemical plant northeast of Houston in March left one person dead, just two weeks after a blaze at an oil storage facility caused thousands of gallons of petrochemicals to flow into Houston’s shipping channel. Exxon Mobil Corp.’s suburban Houston refining and chemicals complex erupted in flames in July.

The Jefferson County evacuation order issued late on Wednesday covered a radius of 4 miles that included parts of Port Neches, Groves, Nederland and Port Arthur.

“I don’t think the focus is on putting the fire out, but letting the materials in there burn themselves out and keeping the surrounding tanks cooled with the water being sprayed,” Judge Branick said at a press conference.

The Coast Guard said earlier that traffic was moving with restrictions on the Sabine-Neches channel, which links refineries and terminals in Beaumont and Port Arthur with the Gulf of Mexico.

TPC said the initial blast injured two employees and one contractor. All three have since been treated and released from medical facilities, Troy Monk, director of health, safety and security at TPC, said at a press conference Wednesday.

“You don’t want to be downwind of this,” Monk said. He couldn’t say when the fires would be extinguished, saying the main goal was “fire suppression.”

Total SA’s Port Arthur refinery hasn’t been affected by the chemical plant fire, a company spokeswoman said in an email. BASF SE’s steam cracker in Port Arthur and Exxon’s Beaumont refinery also weren’t affected, according to representatives for the companies.

Royal Dutch Shell Plc shut the Nederland station on its Zydeco oil pipeline, which pumps crude oil from the Houston area to refineries in Louisiana, a company spokesman said by email.

TPC received 11 written notices of emissions violations from September 2014 to August 2019, according to Texas Commission on Environmental Quality records. Three of those were this year and were classified as “moderate” violations. The company also received several high-priority violation notices from the U.S. Environmental Protection Agency.

TPC was taken private in a $706 million deal in 2012 by private equity firms First Reserve Corp. and SK Capital Partners, which staved off a rival bid from fuel additives maker Innospec Inc. that was backed by Blackstone Group. The company, formerly known as Texas Petrochemicals Inc., competes with LyondellBasell Industries NV in the butadiene market and is run by former Lyondell senior executive Ed Dineen.

“Our hearts go out to them as well,” Port Neches Mayor Glenn Johnson said of TPC at a press conference Wednesday. “We appreciate TPC,” he said twice.

Spot butadiene prices in the Gulf region are down 43% this year to 26 cents per pound, according to data from Polymerupdate.com. The decline is due to weak tire demand caused by the slump in global car sales, analysts at Tudor, Pickering, Holt & Co. said in a note Wednesday. Lyondell, which also makes butadiene, may benefit if a significant outage at the TPC plant leads to an increase in prices, the analysts said.

Port Neches is a city of about 13,000, halfway between the refining centers of Beaumont and Port Arthur, Texas. Located on the Neches River, the city has long been associated with oil refining and petrochemicals.

(Updates with police comment on status of fire in second paragraph, details on location of blast, affected products in third and fourth paragraphs. An earlier version of the story corrected the name of the company.)

--With assistance from Mike Jeffers, Adam Cataldo, Stephen Cunningham, Sheela Tobben, Kriti Gupta, Dan Murtaugh, Bill Lehane and Fred Pals.

To contact the reporters on this story: Rachel Adams-Heard in Houston at radamsheard@bloomberg.net;Catherine Ngai in New York at cngai16@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada, John Deane

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