The Dow Chemical Co. on Tuesday confirmed that it is moving forward to expand two big petrochemical facilities along the Gulf Coast of Texas and Louisiana that would be integrated by “advantaged shale gas.”

The investments in the company’s Performance Plastics franchises in Freeport, TX, were announced in March (see Daily GPI, March 19). The expanded facilities are to use building block materials from an ethylene production facility set to begin operations in 2017 (see Shale Daily, Dec. 13, 2012).

Dow “will be able to further leverage our cost-advantaged position and R&D [research and development] expertise to deliver leading-edge technology that provides a competitive benefit to our customers in many of our most strategic markets,” said Dow Executive Vice President Jim Fitterling. “Our history on the U.S. Gulf Coast reaches back more than 70 years…”

At the Freeport, TX, facility, Dow is expanding the High Melt Index Affinity brand franchise, as well as the Elite polymer unit. The Plaquemine, LA, facilities are to be expanded in two units as well, the Nordel franchise and the low-density polyethylene family of high-performance polymers similar to Affinity.

Once operational, the expanded facilities are expected to generate about $2.5 billion a year in gross earnings. Construction is scheduled to begin soon.

The state’s Louisiana Economic Development (LED) agreed to provide Dow with a $2.84 million modernization tax credit to be claimed over five years for expanding the facilities. In addition, Dow is expected to use the state’s Quality Jobs and Industrial Tax Exemption programs. LED said Dow is spending $1.06 billion on the Plaquemine expansions, retaining 1,380 existing directly employed workers, and would create 71 direct jobs with an average annual salary of more than $49,000/year. The projects also would crate 470 indirect jobs, as well as 1,200 construction jobs and 150 contractor jobs.

The Dow Louisiana Operations in Plaquemine “were the very first investment” by Dow 57 years years ago, said Louisiana Gov. Bobby Jindal. “Between the direct jobs, the contractor jobs and the third-party company jobs supported by Dow here in Plaquemine, and the new jobs that are on the way, Dow will provide 3,750 great jobs for Louisiana families…”

Dow Louisiana Operations Site Director Eduardo Do Val said the company’s employees deserved the win. “They have run this site safely and reliably for many years. With the support of our state and local government and the community in which we operate, we all get to celebrate this win today.”

With Louisiana operations in Plaquemine, Grand Bayou, Sterlington, Greensburg, Hahnville and Weeks Island, Dow supports 6,000 direct and contract jobs in Louisiana with a direct annual payroll of $312 million, LED said.

Fitterling and Dow CEO Andrew Liveris long have enthused about abundant natural gas supplies, but the company has been opposed to exporting large amounts of natural gas because they’ve said it may raise domestic gas prices. “Shale gas will be monumental, maybe,” said Fitterling at a Houston conference last year (see Shale Daily, March 29, 2012). “It’s still early enough in this process that success is not guaranteed.”

Independent analysts this summer have noted the revival in the domestic petrochemical industry, driven mostly by abundant natural gas reserves.

BNP Paribas analyst Teri Viswanath earlier this month said industrial gas use “was more than 3%, or 0.6 Bcf/d, greater during the first five months of 2013 compared to the same period in 2012” (see Shale Daily, Aug. 5).

Earlier this summer Raymond James & Associates Inc. analysts said industrial sector revival would be “the most significant driver” for higher long-term natural gas prices, lifted by new ethylene crackers, ammonia plants and natural gas-to-liquids facilities that are fed by unconventional gas (see Shale Daily, June 25).

“Industrial demand accounted for 26% of total U.S. natural gas demand in 2012, and with the U.S. natural gas forward curve indicating another four to five years of sub-$5.00/Mcf domestic natural gas prices, there is a clear incentive for gas-intensive manufacturers, petrochemical, fertilizer, methanol, gas to liquids and other gas-intensive industries to ramp up their U.S. operations,” wrote Raymond James analyst J. Marshall Adkins.