Blast at Texas Chemical Plant Injures Three, Shuts Waterway

An explosion at a chemical plant near Texas’ Gulf Coast injured three people early Wednesday and led to the shutdown of a waterway connecting oil refineries to the Gulf Coast.

The blast involved a processing unit at TPC Group Inc.’s Port Neches facility, the company said a statement. The Sabine-Neches channel, which connects refineries and terminals in Beaumont and Port Arthur with the Gulf of Mexico, has shut, according to a group that manages traffic on the waterway. The plant is about 100 miles (160 kilometers) east of Houston.

“Emergency responders are still working to bring the event under control, and are doing so as quickly and safely as possible,” TPC said in a statement at 6:40 a.m. local time. “Unfortunately, the event resulted in injuries to two employees and one contractor at the site.”

The city of Port Neches is under a shelter-in-place order, a fire department representative said, while a similar order for Orange County was lifted earlier this morning, Assistant Emergency Coordinator Leon George said by phone.

Ships have been excluded from a two-mile safety zone along the Sabine-Neches waterway on either side of the TPC facility, said Keith Pierre, the executive officer of the U.S. Coast Guard for the marine safety unit in Port Arthur. Three vessels are waiting to enter or leave the area, and shipments will be allowed to move on a case-by-case basis, Pierre said. Winds are taking the smoke plume from the fire away from the channel, he said.

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 also wasn’t affected, according to a spokeswoman.

The Port Neches plant produces more than 900 million pounds a year combined of butadiene, used to make rubber, and raffinate, used to make a gasoline additive. Teams have been dispatched to conduct air monitoring along the plant’s fence line and in surrounding neighborhoods, according to TPC.

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 LP. 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.

TPC’s bonds fell the most in junk bond trading early Wednesday. The company’s 10.5% bonds due in 2024 fell 7.25 cents on the dollar to $1 as of 9:28 a.m. in New York, according to Trace bond trading data.

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.

The blast at Port Neches follows 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.

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.

–With assistance from Mike Jeffers, Adam Cataldo, Stephen Cunningham and Sheela Tobben.