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Shale Bounty Spurs Dow to Construct Texas Ethylene Unit

Dow Chemical Co. plans to build a world-scale ethylene production plant at its Dow Texas Operations in Freeport, TX, as part of a plan to capitalize on low-cost feedstocks available from growing U.S. shale gas supplies, the company said Thursday.

"For the first time in over a decade, U.S. natural gas prices are affordable and relatively stable, attracting new industry investments and growth and putting us on the threshold of an American manufacturing resurgence," said Dow CEO Andrew N. Liveris. "Dow is proud to have been among the first manufacturing companies to declare a comprehensive plan to take advantage of these favorable market dynamics [see Shale Daily, April 25, 2011], further enhancing our footprint in the Americas and the profitability of our global businesses while supporting economic revitalization in the communities in which we operate."

Dow's operations in Freeport represent the company's largest integrated manufacturing site and the largest single-company chemical complex in North America, the company said. Facilities at the site manufacture 44% of Dow products sold in the United States and more than 20% of Dow products sold globally. The new ethylene production unit project is on track for start-up in 2017. Dow said it is continuing to develop feedstock supply arrangements for the unit.

"The outlook for advantaged U.S. natural gas was a significant factor in Dow's decision to invest $4 billion to grow our overall ethylene and propylene production capabilities in the U.S. Gulf Coast region," said Dow's Jim Fitterling, president of feedstocks and energy, and corporate development. "Today, 70% of the company's global ethylene assets are in regions with cost-advantaged feedstocks -- and we've seen the benefits this advantage provides given oil-based naphtha margin pressure in Europe and Asia."

Speaking recently at the IHS Chemical World Petrochemical Conference 2012 in Houston, Fitterling expressed some concern that policies of the federal government still could stifle the development being sparked by shale gas.

"Shale gas will be monumental, maybe. It's still early enough in this process that success is not guaranteed," he said. "As a nation and as an industry, we have the capacity to drop the ball on this."

It happened before, Fitterling said. About 15 years ago federal government policies drove up gas demand, and prices, to levels that drove chemical companies away to other countries. "None of us quit making product; we just started making it elsewhere," Fitterling said. "In a single decade there was a $26 billion swing in trade in the chemical industry away from the U.S. [see Shale Daily, March 29]."

Projects announced as part of Dow's U.S. Gulf Coast investment plan are proceeding according to schedule, the company said.

Last March Dow said it would develop a world-scale propylene production facility to be constructed at Dow Texas Operations. Basic engineering work for the new on-purpose propylene production facility has begun, and the project is on track for production start-up in 2015. Last December Dow and UOP LLC, a Honeywell company, signed a technology licensing agreement, enabling on-purpose propylene production at the facility. Dow will license UOP's proprietary UOP C3 Oleflex process technology for manufacturing on-purpose propylene from propane. Dow also signed catalyst supply and performance guarantee agreements with UOP.

Also in the Gulf Coast, work on an ethylene production unit at Dow's manufacturing site near Hahnville, LA, is progressing as planned, and the unit is on track to restart at the end of this year, the company said.

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