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Dow Expanding U.S. Gulf Coast Ethylene Capacity, Citing Benefit From Shale Gas Economics

Dow Chemical Co. on Thursday launched a five-year, $4 billion petrochemical buildout, mostly for U.S. projects, that would add a 600,000 metric ton polyethylene unit on the Gulf Coast and expand a new Texas ethylene cracker to create the largest facility of its type in the world.

Some of the new investments would benefit “from shale gas economics, further enhancing feedstock flexibility and reducing volatility from these advantaged inputs,” management said.

The $4 billion of investments through 2020 “underscores Dow’s commitment to driving the next phase of our growth through a comprehensive set of investments that will benefit our shareholders, customers, employees and the communities in which we operate,” said CEO Andrew Liveris.

“Manufacturing plays a vital role in driving economic growth and prosperity across virtually all sectors of society. The positive investment environment in the U.S. chemical and materials sector, driven by competitive feedstocks and a skilled workforce, is a driver for Dow to further invest in the U.S.A.”

The investments are designed to “stimulate economic activity, primarily in the United States, while also creating a significant number of jobs tied to state-of-the-art manufacturing and infrastructure investments,” according to the Midland, MI-based chemical giant. The company said it also is continuing efforts to train and educate the workforce and “close the skills gap for tomorrow’s manufacturing careers.”

Phased online beginning in 2020, the North American investments include:

  • Expanding capacity at the TX-9 ethylene cracker in Freeport, TX, by adding two furnaces, bringing total capacity to 2 million metric tons, the largest facility of its kind in the world;
  • Constructing a world-scale 600,000 metric ton polyethylene unit on the U.S. Gulf Coast for specialty packaging, health and hygiene, and industrial and consumer packaging applications; and
  • Undertaking incremental projects to debottleneck the global asset network to deliver about 350,000 metric tons of additional polyethylene, most of which would be in North America.

Dow also plans to spend $400 million to transform its Midland, MI, manufacturing operations and has “a series of investments” earmarked to build the polyurethanes franchise. In addition, a world-scale 450,000 metric ton polyolefins facility is planned for Europe.

The projects extend Dow’s U.S. growth investments to more than $12 billion over a 10-year period and are forecast to employ 5,500 people at peak activity and 300 permanent jobs.

U.S. investments “would support the largest job creation, reaching 3,500 construction jobs and 200 full-time technical, vocational and professional careers,” management said.

“The Trump administration seeks to drive structural economic reform across the regulatory and tax environments, fair trade and job creation -- envisioning an economy that motivates U.S. business to once again focus on domestic growth and restoring America’s long-term competitiveness,” Liveris said. “Dow’s announcement...as well as our U.S. investments over these past many years, align with this thesis and position our company to continue strengthening the manufacturing sector and the many industries it supports.”

Over the last four years, Dow estimated that it has created more than 10,000 direct and indirect jobs in the United States, mostly the result of its $6 billion-plus of manufacturing investments currently underway on the U.S. Gulf Coast.

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