Dow Chemical's new cracker at Freeport, Texas, to cost $1.7 billion
Houston (Platts)--19Apr2012/506 pm EDT/2106 GMT
Dow Chemical's plans to build a world-scale steam cracker in Freeport,
Texas, are part of a US Gulf Coast expansion strategy estimated to represent
$4 billion in investment, the company said Thursday after announcing the site
of the new ethylene plant.
Dow's plans call for the construction of a 1.5 million mt/year cracker
at its sprawling Texas Operations complex some 60 miles south of Houston at a
cost estimated at $1.7 billion, a company spokesman said.
Dow said it expects the new cracker to begin operations in 2017.
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"This plan represents a game-changing move to strengthen the
competitiveness of our high-margin, high-growth derivatives businesses as we
continue to capture growth in the Americas," said Jim Fitterling, Dow's
executive vice president and president of Feedstocks and Energy and Corporate
The Dow's olefins expansion plans, first unveiled in April 2011, also
includes the construction of up to two on-purpose propylene plants -- the
first one slated for startup in 2015, also in Freeport -- the restart of an
idle steam cracker in Hahnville, Louisiana, and the improvement of feedstock
flexibility capabilities at its existing plants in Plaquemine, Louisiana, and
Together, the projects would increase Dow's ethylene production capacity
by as much as many as 2.3 million mt/year by 2017 and propylene production
through the propane dehydrogenation process by as many as 900,000 mt/year,
the company has said.
"For the first time in over a decade, US 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," Dow CEO Andrew Liveris said in a statement early Thursday (See
story, 1344 GMT). "Dow is proud to have been among the first manufacturing
companies to declare a comprehensive plan to take advantage of these
favorable market dynamics, 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.
"Constructing this new ethylene cracker at Dow Texas Operations will
create a long-term advantage for our downstream businesses and for our
company as a whole, and the benefits will accrue not only to Dow but to the
state and national economy."
The projects are at the core of Dow's strategy to take advantage of low
feedstock costs -- particularly natural gas liquids and specifically ethane
-- projected for years to come because of abundant natural gas stemming from
shale gas development.
"The outlook for advantaged US 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 US Gulf Coast region," Fitterling
said. "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."
With the expansion projects, Dow aims to deliver as much as 90% of its
North American ethylene from ethane, which currently yields US producers the
second-best cash cost advantage in the world, second only to Middle East
Dow is not alone in its quest to seize on advantaged feedstocks for the
production of olefins and derivatives.
Chevron Phillips Chemical, Formosa Plastics and Shell Chemical, Sasol
and startup Aither Chemical are among the companies looking build ethylene
plants over the next five years.
Others including LyondellBasell, Ineos and Westlake plan to expand
ethylene capacity through debottleneckings/expansions.
Formosa's olefins plans also call for a propane dehydrogenation unit to
be built in Texas.
All but Shell's and Aither's plans call for the new olefins plants to be
built near shale gas plays in the US Northeast and away from the US Gulf
Coast region, which market sources say has unmatched infrastructure and is
better suited to handle derivatives exports.
Proposed greenfield projects through 2017 in the US could total 5.3-6.7
million mt/year of additional ethylene capacity. Brownfield projects could
bring an additional 2.3 million mt/year of capacity.
--Bernardo Fallas, firstname.lastname@example.org