Dow signs LAO ethylene off-take deal from planned US cracker

18 March 2013 12:36  [Source: ICIS news]

LONDON (ICIS)--Dow Chemical has signed an initial agreement for long-term ethylene off-take from its new US Gulf Coast cracker for a linear alpha olefins (LAO) unit planned by a joint venture between Japan’s Idemitsu Kosan and Mitsui & Co, the US-based chemicals major said on Monday.

The Japanese partners announced their new US LAO joint venture and plans for a 330,000 tonne/year unit earlier in the day.

Dow said that the joint venture would “contribute significant capital” for rights to supply LAOs to its performance plastics business, without giving  details. LAOs are used a comonomers throughout that business.

Dow also did not give details of the proposed LAO plant or of the performance plastics production expansions that it also announced on Monday.

Those plans include a previously announced metallocene ethylene propylene diene monomer (EPDM) plant; facilities to produce high melt index (HMI) elastomers for hot melt adhesives; polyethylene (PE); and specialty low density polyethylene (LDPE).

The company told investment analysts in December that about 1.1m tonnes/year of ethylene output from the new cracker would be used to make its own derivatives.

“Today’s announcement further illustrates Dow’s commitment to invest in high-return projects that deliver advantaged feedstocks for our differentiated, downstream derivatives, while simultaneously building strategic partnerships that drive economies of scale and improved capital efficiency,” Dow Chemical CEO, Andrew Liveris, said.

“As an investor in Dow’s Gulf Coast project, Idemitsu and Mitsui will receive ethylene integration benefits while improving the capital efficiency of the cracker from a Dow perspective, said executive vice president,  Jim Fitterling.  “In addition, Dow secures a reliable, integrated, cost-advantaged source of comonomers for our performance plastics franchise.”

Construction and start-up of the LAO units is targeted at 2016, Dow said, although a production location and a final investment decision has yet to be made. Front end engineering (FEED) for the plant will be complete in 2014, it said.

Dow said that its plans for a new 1.5 mt tonne/year ethane cracker at Freeport, Texas are progressing with detailed engineering and the purchase of long lead time equipment having been approved. Supply to the Idemitsu/Mitsui joint venture will be mainly from this cracker.

Dow is also lifting ethane cracking capability at its Plaquemine, Louisiana, site. It restarted its cracker in St Charles, Louisiana, in December 2012.

By: Nigel Davis
+44 20 8652 3214

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