INTERVIEW: Dow closures hit Ontario chem hub hard

08 September 2006 19:19  [Source: ICIS news]

TORONTO (ICIS news)--Southwest Ontario has no immediate prospects for attracting new chemical investments to replace the loss of Dow Chemical’s plants at the Sarnia petrochemicals hub, an official said on Friday.

 

While Dow’s presence in Sarnia had been declining in past years, “We did not expect this .... It was a shock,” said George Mallay, general manager of the Sarnia-Lambton Economic Partnership (SLEP). The SLEP private-public partnership is charged with attracting and maintaining investment in the Sarnia region.

 

Dow said last week it will close all of its manufacturing plants in Sarnia by the end of 2008 due the unavailability of affordable feedstock following the suspension of ethylene shipments on the Cochin pipeline. The 1,900-mile, 12-inch-diameter Cochin pipeline moves petrochemicals from Alberta, through the US Upper Midwest, into Ontario.

 

Dow's is closing plants making low density polyethylene (ldPE), polystyrene, acrylate latex and propylene oxide derivatives. The company had closed its epoxy resin plant in 2004 and last year it closed a polyethylene wax facility.

 

Mallay said the impacts of the latest closures in Sarnia will go far beyond the 340 employee and 40 contractor positions that Dow said will be lost. “Typically, there is a 3 to 1 impact, that is, for every job lost, three more jobs in the region will be affected or lost,” he said.

 

He added that Dow’s closures would have been more devastating 10 years ago. The region has diversified beyond chemicals and petrochemcials into automotive parts, call centre services, bio-products and other sectors, he said. He noted the recent start-up of Suncor’s 200m litre/year ethanol plant, Canada’s largest such facility yet.

 

Mallay said SLEP will work with Dow to find potential investors for the idled plants.  He said there are no concrete prospects for any new chemicals investments at Sarnia.

 

Mallay said he did not expect the Cochin situation to trigger additional closures of Sarnia-based chemicals plants, given that both Nova Chemicals and Imperial Oil are producing ethylene feedstock in Sarnia.

 

BP, which operates the Cochin pipeline via two subsidiaries, suspended ethylene shipments in March, citing an incident of stress corrosion cracking and ethylene’s high vapour pressure. But a BP official told ICIS news earlier this week the company plans to resume ethylene shipments after 2007 if there is demand.

 

Excluding Dow’s operations, Sarnia is still home to petrochemicals and chemicals firms Nova Chemicals, Imperial Oil, Shell, Lanxess, Suncor, Royal Group/Georgia Gulf and Basell. These firms produce a range of petrochemicals and chemicals, including ethylene, propylene, polyethylene, polypropylene, polyvinyl chloride, benzene, toluene, xylene, butyl rubber and isopropanol.

By: Stefan Baumgarten
+1 713 525 2653

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