Dow to integarate shale gas business in North America

The Dow Chemical Company today announced comprehensive plans to increase the company's ethylene and propylene production -- and to integrate its US operations into feedstock opportunities available from increasing supplies of US shale gas in the Marcellus and Eagle Ford shale regions.

"The improved outlook for US natural gas supply from shale brings the prospect of competitively priced ethane and propane feedstocks to Dow - and the promise of new manufacturing jobs to America," said Jim Fitterling, Dow executive vice president and president of Corporate Development & Hydrocarbons. "Our plan is to further integrate Dow's businesses with the advantaged feedstocks, based on shale gas deposits and long-term ethane and propane supply agreements. These actions will strengthen the competitiveness of our performance plastics, performance products and advanced materials businesses, for example the elastomers product family and the full acrylates chain, as we continue to capture growth in the Americas," he added.

Dow said it is currently finalising plans to increase its ethylene supply and ethane cracking capabilities at existing US Gulf Coast facilities.

Plans include re-starting an ethylene cracker at the company's St Charles operations site near Hahnville, LA by the end of 2012, improving ethane feedstock flexibility for an ethylene cracker at the company's Louisiana Operations site in Plaquemine, LA in 2014, increasing ethane feedstock flexibility for an ethylene cracker at the Dow Texas operations site in 2016 and construction of a new, world-scale ethylene production plant in the US Gulf Coast, for start-up in 2017.

Dow is currently finalising plans to increase its propylene supply by constructing a new, world-scale, on-purpose propylene production facility at Dow Texas Operations, for start-up in 2015. It is also exploring an option to commercialise its own technology to produce propylene from propane, with the potential start-up of a new production unit in 2018.
 
Dow said it hopes to supply the required ethane and propane for these projects through a variety of supply arrangements, including: a possible joint venture fractionator in Texas, supply from existing and future fractionators to be built within the industry, and potential supply deals from various shale gas opportunities such as the Eagle Ford and Marcellus shale regions.

Dow has signed ethane and propane supply contracts based on the Eagle Ford shale gas and is pursuing several more agreements from this area.

In addition, Dow has signed a memorandum of understanding with a wholly-owned subsidiary of Range Resources Corporation, stating plans to enter into a long-term supply agreement for the delivery of ethane from the Marcellus region in southwest Pennsylvania to Dow's existing operations in Louisiana.

"As the largest consumer of propylene in North America, Dow has a unique opportunity to invest aggressively for on-purpose propylene production from propane. Additionally, Dow is the largest producer of ethylene in North America, which provides capabilities to increase our use of ethane in existing ethylene production units - and to grow," Fitterling said. "All of these investments, combined with Dow's planned agreement with Range Resources, will dramatically increase our capability to consume ethane, while maintaining our industry-leading feedstock flexibility."