Dow Chemical completes crown jewel of $6B Gulf Coast expansion

Dow Chemical said Tuesday it completed the massive ethane cracker plant in Freeport that’s the “crown jewel” of its more than $6 billion expansion along the Gulf Coast, primarily just south of Houston.

The cracker facility will churn out 1.5 million metric tons a year of ethylene, which is derived from natural gas liquids and is used as the primary building block of most plastics. The plant, which is part of Dow’s sprawling complex in Freeport and Lake Jackson, won’t fully commence operations 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.”

Indeed there are a bevy of new ethane crackers in Texas under construction that are all planning to take advantage of Texas’ ample and cheap natural gas supplies unlocked by the shale revolution.

Dow’s announcement comes just one day after Paris energy giant Total said it will build an ethane cracker with a 1 million ton per year capacity at its Port Arthur facility, as well as a new plastics plant just east of Houston near La Porte.

Occidental Petroleum, Exxon Mobil and Chevron Phillips Chemical all are completing major ethane cracker and plastics plant projects this year along the Texas Gulf Coast, including the Houston area, for the same purposes. They’re producing chemicals and plastics, much of which will be exported to the developing world with growing middle classes, especially Asia.

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

Liveris has emphasized that Dow’s Texas operations will see little effect from the merger, with the exception of the divestment of one local facility. After the merger, DowDuPont will be splintered into three separate companies, including one 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.