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El Dorado Chemical power failure results in $10 million expense

Friday, June 22, 2018

A power failure on June 4 will cost an El Dorado company at least $10 million.

LSB Industries, Inc., said that the El Dorado Chemical ammonia plant was taken out of service after the power failure.

An assessment of repair needs determined that the power outage resulted in tube failures in the ammonia plant’s boiler.

It will be the end of June before repairs aree completed, and ammonia production resumes. LSB Industries estimates the total impact to EBITDA in the second quarter of 2018 resulting from unplanned repair expenses, reduced absorption of fixed costs relating to the downtime and lost sales will be approximately $10-11 million.

The “good” news is that while the ammonia plant is out of service, the company moved up most of the work in a previously planned September 2018 turnaround. The work will shorten the planned turnaround in the third quarter to five days, from the previously revised 12 days, resulting in additional third quarter production and reduced turnaround expense.

Additionally, the ammonia plant at LSB’s Pryor, OK chemical facility was taken out of service for short periods at multiple points during the quarter to repair leaks to the waste heat boiler. Management estimates the second quarter EBITDA impact from the downtime at Pryor to be approximately $3-4 million.