Dow Chemical Seeks U.S. Permit for Biggest Ethylene Plant

Dow Chemical Co. (DOW), the largest U.S. chemical maker by sales, applied for a federal permit to build the company’s biggest ethylene plant as cheap natural gas gives manufacturers a cost advantage.

The plant in Freeport, Texas, would have capacity to make 1.5 million tons of ethylene a year, Nancy Lamb, a Dow spokeswoman, said today by phone. That’s the same size as Texas ethylene plants proposed by Chevron Phillips Chemical Co. and Exxon Mobil Corp. (XOM) and it would be Dow’s largest in the world, according to data compiled by Bloomberg.

Construction of the $1.7 billion plant would begin in January 2014 with operations to begin in January 2017, Midland, Michigan-based Dow said in an air-emissions permit application submitted Dec. 4 to the U.S. Environmental Protection Agency. Dow first discussed the project in April 2011 and announced the location a year later.

Chemical makers are vying to build the first new U.S. ethylene plants, known as crackers, since 2001. Hydraulic fracturing, known as fracking, has increased supplies of natural gas liquids such as ethane and propane, which are converted to ethylene for use in plastics, antifreeze and hundreds of other products.

Dow is investing a total of $4 billion in Texas and Louisiana through 2017 to increase output of ethylene and propylene. The Gulf Coast investments will boost earnings by at least $2 billion a year after the new cracker starts, Andrew Liveris, Dow chairman and chief executive officer, said in a Dec. 3 presentation.