Dow Chemical nears completion of Freeport expansion

Dow Chemical’s multibillion-dollar expansion in Freeport is nearing completion with the crown jewel ethylene plant coming online mid-year — getting a head start on competing projects from Exxon Mobil and Chevron Phillips Chemical in Baytown.

“We’ll be one of the first out of the gate, so we feel pretty good about that,” said Doug May, Dow’s business president over chemicals and aromatics.

Dow’s nearly-completed, massive ethane cracker project will manufacture 1.5 million tons per year of ethylene, which is the primary building of most plastics. Dow also will bring new plastics production plants online in Freeport too. The 1.5 million tons is nearly triple the capacity of Occidental Petroleum’s ethane cracker that just started production in Ingleside.

The Exxon Mobil and Chevron Phillips ethane crackers will produce the same amount of capacity as the Dow project, but they’ve faced some delays and won’t commence production until late 2017, or even early next year as May suspects. A lot of the projects were authorized at similar times to take advantage of the cheap and ample shale gas unlocked by horizontal drilling and hydraulic fracturing in Texas and other regions.

“Originally there was a fear we were going to have all that capacity at once,” May said. “The reality though is the world needs that capacity. But it’s going to be more spaced out than expected.”

The ethane cracker is the largest piece of Down’s more than $6 billion expansion along the Gulf Coast, mostly in Freeport and Lake Jackson, to add more ethylene, polyethylene, propylene and other plastics manufacturing. Most of the production will go toward delivering plastics to the developing world.

If anything, May said he’s also pleasantly surprised that global plastics demand remains strong in China with more potential growth in India and other developing parts of the world.

The Freeport complex south of Houston is Dow’s largest in the world; the Michigan company designed and built Lake Jackson 73 years ago to house workers when it chose rural Freeport as an operations site. Dow employs more than 6,000 people in the Greater Houston area, mostly in Freeport and Lake Jackson.

The massive ethylene cracker is expected to come online about the same time Dow completes its massive, $130 billion merger of equals with DuPont. But May emphasized Dow’s Texas operations will see little impact.

The primary goal of the merger is to create a stronger agri-chemical business to pit against Monsanto and other. When DowDuPont is formed at the end of June, the merged company will begin its process of splintering into three separate companies, including one still named Dow that would continue to own and run the Freeport complex.

The materials science business would operate under the Dow name, the agribusiness under DuPont and specialty products under a yet-to-be determined brand. The splintered Dow will eventually add nearly 1,500 DuPont workers in Texas along with DuPont’s chemicals and plastics complex in Orange near the Louisiana border.