The Dow Chemical Company announced that it plans to increase ethane cracking capabilities on the U.S. Gulf Coast over the next two to three years, and improve its ethane cracking capabilities by 20 – 30 percent in this timeframe.In addition, Dow announced it is reviewing joint venture options for building a Natural Gas Liquids (NGL) Fractionator to secure this supply of ethane.
Both actions are intended to capitalize on the current favorable supply dynamics in North America, and further bolster the competitive advantage of Dow’s Plastics franchise, as well as its high-margin, downstream performance businesses.
Dow is the world’s largest ethylene producer. The Company plans to use its well-developed infrastructure to participate with producers in fractionation, transportation and storage of NGLs.
Dow produces approximately 55 percent of the Company’s ethylene from ethane, and the Company’s competitive U.S. cost position provides a key strategic advantage for its higher-margin specialty plastics businesses, such as Linear Low Density Polyethylene, as well as its Performance and Advanced Materials businesses.
“Ethane is an advantaged feedstock in the United States and we anticipate a favorable oil to gas ratio to continue,” said Raja Zeidan, Global Business Vice President for Dow Hydrocarbons. “Bringing additional fractionation capacity online and expanding our ethane cracking capabilities will further improve Dow’s feedstock flexibility and competitive positions in the United States. Couple that with our feedstock flexibility in Europe and with our advantaged feedstock positions in the Middle East, Western Canada and Argentina, we truly have a competitive advantage – evidenced by the strong returns delivered by Dow’s ethylene derivatives this year.”
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