Dow Chemical completes $6B Gulf Coast expansion

Dow Chemical announced Tuesday its completion of an enormous ethane cracker plant in Freeport, just south of Houston, which will be its “crown jewel” of a more than $6 billion expansion along the Gulf Coast.

The facility will produce 1.5 million metric tons a year of ethylene, which is procured from natural gas liquids and is used as the primary building block of most plastics. The plant is a part of Dow’s sprawling complex in Freeport and Lake Jackson, it won’t fully get going until midyear.

“The Freeport ethylene unit is the cornerstone of our $6 billion investment in the U.S. Gulf Coast,” said Andrew Liveris, Dow’s chairman and CEO. “Our growth investments leverage the advantaged shale gas supply available in the U.S.”

There are a number of new ethane crackers in Texas in the works that are planning to take advantage of Texas’ ample and cheap natural gas supplies unlatched by the shale revolution.

Just one day before Dow’s announcement, Paris energy giant Total announced its plans to build an ethane cracker with a 1 million ton per year capacity at its Port Arthur facility, along with a new plastics plant in La Porte, a town located just east of Houston.

Occidental Petroleum, Exxon Mobil and Chevron Phillips Chemical will all be completing major ethane cracker and plastics plan projects this year along the Texas Gulf Coast, as well as the Houston area, for the exact same purposes. They’re manufacturing both chemicals and plastics that are likely to be exported to developing countries with growing middle classes, especially Asia.

Dow’s ethane cracker is expected to come online at about the same time it completes its $130 billion merger with DuPont. The combination received conditional approval from the European Union on Monday, but the U.S Justice Department’s review remains pending.

Liveris stressed that Dow’s Texas operations wont be greatly effected by the merger, with the exception of the divestment of one local facility. After the merger, DowDuPont will be separated into three separate companies, including one named Dow that will continue to own and control the Freeport complex.

The materials science business will operate under the Dow name and the agribusiness under DuPont. Speciality products will operate under a brand that hasn’t yet been determined.

Article written by HEI contributor Lydia Ezeakor.

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