The Dow Chemical Co. announced today that it plans to build a new ethylene production plant in Freeport that will create thousands of jobs, representing the latest company to take advantage in the boom in domestic natural gas drilling.
Dow’s new $1.7 billion plant will employ 2,000 workers at its construction peak and is scheduled to be completed by 2017. The plant is part of the company’s $4 billion plan to expand four Houston-area Dow facilities that could bring thousands of jobs to the region.
Chief Executive Officer Andrew Liveris said the recently announced facilities will process various chemicals and produce jobs that will have a multiplying effect on the economy. He said the thought of multibillion-dollar investments in new Texas chemical plants would have been unrealistic a decade ago due to rising costs.
“And then along came shale gas — this gift, this miracle,” Liveris said alongside Texas Gov. Rick Perry and Lt. Gov David Dewhurst during the announcement Thursday.
Liveris said the cheap source of energy and its liquid byproducts, such as ethane, could herald a new era of American production and manufacturing that Dow intends to be a part of.
In total, the four plants will create as many as 600 permanent jobs that would pay an average salary of $75,000. Most positions will require only a two-year technical degree. Liveris said two of the plants alone will bring up to 4,800 jobs at their construction peaks and could generate 35,000 jobs in the region.
The main attraction, an ethylene cracker, will convert natural gas byproducts, such as ethane, into a building block of plastics that can be used in water bottles and vinyl.
Liveris said the Texas Enterprise Fund will invest $1 million in the new facility. The total is only a small fraction, roughly 1 percent, of the plant’s overall costs, but Perry said the investment played into the company’s decision to locate the plant in Texas.
“They can go everywhere in the world,” Perry said. “They’re not coming here just because we have great weather — in April and May. They’re not coming here just because we’ve got great music and great barbecue. They’re coming here just because they know this is the type of environment that they want to be associated with. This is the place they want to do business.”
Liveris called Texas’ partnerships with businesses an example for the nation to follow.
“I know when I get red carpet and I know when I get red tape,” Liveris said. “And I get red carpet in the state of Texas.”
While the Texas Enterprise Fund was a small factor, the plant’s location will allow for it to easily be integrated with Dow’s existing facilities here, said Jim Fitterling, Dow’s president of feedstocks, energy and corporate development.
Dow, of Midland, Michigan, expanded its operations to the Texas coast 70 years ago and has maintained a strong presence ever since. The new plants will make Freeport Dow’s largest petrochemical complex and one of the largest in the world, Liveris said.
The American Chemistry Council hailed Dow’s announcement today, saying it is great news for many industries, such as the auto industry, that rely on chemistry and plastics.
“Dow’s announcement is further evidence that the chemistry industry is a growth engine helping to revitalize America’s manufacturing sector,” said Cal Dooley, ACC President and CEO. “Thanks to abundant, affordable natural gas, the nation’s chemical companies have entered an era of renewed global competitiveness which can help generate new domestic investment, jobs and manufacturing exports.”
The surging production of domestic natural gas has produced more natural gas liquid byproducts, such as propane, butane and ethane, and has prompted some companies to talk of major investments. Some petrochemicals companies, however, have been cautious as the shale boom brings a glut of gas to the market.
Liveris hailed the shale boom as a revolutionary step in resource production within the United States. He spoke out against exporting natural gas and natural gas liquids, arguing that they should be exported in solid form after being converted and processed into products like the ones his company helps make.
“If we export it and we export too much, some say as much as 15 percent of it exported, we will bring the price of oil back to this economy, thereby killing investments like this,” Liveris said. “Why don’t we take this gas and create 15 to 20 times value add and not export it as liquid but export is as solid.”
Plants needing cheap electricity would also benefit from continued low prices of natural gas.
Liveris said the cheap feedstocks could lead to more investments in plant and manufacturing infrastructure within the United States, which would help to add jobs and spur economic development for years to come.