Executive confidence still strong: James Fitterling

22 March 2013 13:43  [Source: ICB]

Like many major petrochemical companies, Dow Chemical is taking a cautiously optimistic outlook for the industry in 2013 and the years immediately afterward. Beyond that, however, the expectation for Dow is for a healthy future for the industry.

For Dow, the optimism derives from the advent of the shale gas revolution and the benefits it is projected to bring to US manufacturing. The caution, by contrast, stems from uncertainty over US fiscal policy and economic headwinds in both Europe and Asia.

James Fitterling, executive vice president with oversight for feedstocks, performance plastics and operations in the Asia-Pacific region and Latin America, says Dow, through its investments in both North America and the Middle East, is well positioned to take advantage of the new peak in the ethylene cycle.

Fitterling says Dow expects to have a somewhat better 2013 than 2012, in which the company faced the same challenges as other petrochemical majors: weakened demand across many parts of the globe - especially the eurozone with its continuing debt crisis - and slowing growth in China.

"We're projecting 2.5 to 2.6% gross domestic product growth across the globe in 2013," Fitterling notes. While hardly spectacular, that incremental growth is much better than that seen in the depths of the recession. Fitterling adds that Dow expects the global economy to begin a more robust growth rate in 2014-2015.

For Dow, the shale gas phenomenon is a once-in-a-lifetime (if not even rarer) opportunity for the US to restore its manufacturing base after years of offshoring. The "ethane advantage" afforded by plentiful shale gas - made more accessible by hydraulic fracturing and horizontal drilling - will put American chemical manufacturers in good stead against competitors in Asia and elsewhere.

Fitterling says Dow is moving at a rapid rate to capitalise on that advantage with a host of new investments. These include a planned 1.5m tonne/year ethylene cracker in Freeport, Texas, scheduled for start-up in 2017; the recent start-up of its formerly idled 380,000 tonne/year cracker in St Charles, Louisiana; a 750,000 tonne/year propane dehydrogenation (PDH) unit in Freeport set for completion in 2015; and an ethane conversion at its cracker in Plaquemine, Louisiana, also set for completion in 2015.

In the Middle East, Dow is in the midst of completing its planned gas-based feedstock chemical complex in Saudi Arabia, a joint venture with state oil firm Saudi Aramco called Sadara Chemical Company. "Sadara is well under construction," Fitterling says. First production is set for the second half of 2015.

HARD TIME PLANNING
Fitterling says Dow leaders are most immediately concerned with the economic uncertainties posed by continuing wrangling by US policymakers - President Barack Obama and Congressional Republicans - over fiscal issues. Those include the so-called sequester, an extension of the federal budget and the debate over raising the government's debt ceiling. As long as those battles continue, Dow and other businesses will have a hard time planning for the future, Fitterling says.

For Dow (and some other US petrochemical companies), the shale gas phenomenon comes with a major caveat. While many natural gas producers are seeking federal permits for the export of liquefied natural gas (LNG), Dow and many of its cohorts are arguing for more limited exports. Dow CEO Andrew Liveris, in both media outlets and in testimony before Congress, has argued that nearly unlimited exports of LNG will drive up prices, offsetting the feedstock cost advantage now enjoyed by manufacturers.

Fitterling says Dow is not opposed to all LNG exports, and in fact supports exports if they are part of a broader national policy that takes full advantage of the shale gas phenomenon.

"We need to be prudent [about exports]," Fitterling says. Keeping much of the newly discovered natural gas in the country, both for feedstocks energy uses, would help spur a renaissance in US manufacturing. "Five million jobs can be created," he says.


By: John Baker
+44 20 8652 3214



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly