Dow Chemical DOW said that MEGlobal is planning to build a new world-scale monoethylene glycol (“MEG”) plant at the former’s Oyster Creek site in Freeport, TX.
Dubai-based MEGlobal is a leading producer of MEG and diethylene glycol. It is a fully-owned subsidiary of EQUATE Petrochemical Company, a joint venture between Dow, Petrochemical Industries Company (“PIC”) of Kuwait, Boubyan Petrochemical Company (“BPC”) and Qurain Petrochemical Industries Company (“QPIC”).
MEG is a key raw material for a range of market applications, including polyester fibers, polyethylene terephthalate bottles and packaging, antifreeze and coolants, paints, resins, heat transfer fluids and construction materials.
The new MEG plant at Oyster Creek, which is expected to come online in mid-2019, will be owned by MEGlobal and will be the company’s first manufacturing facility in the U.S. The plant would create 1,400 construction jobs at the project’s peak and MEGlobal will employ roughly 50 new workers when the facility goes on stream. The plant would provide MEGlobal with enhanced flexibility, helping it meet customers’ needs for consistent and reliable delivery of ethylene glycol products, particularly in the U.S. and Asian markets.
The new facility would benefit from a long-term ethylene supply agreement with Dow from its new Freeport ethylene cracker. Dow noted that construction of the new ethylene cracker continues to progress (more than 40% complete) and is on track to be operational in second-quarter 2017. This new cracker (converts ethane into ethylene) represents a major part of Dow’s Texas Operations in Freeport.
Dow will also complete ethane feedstock flexibility for an ethylene cracker at its Louisiana Operations site. The cracker is on track for start-up in the second half of this year.
Dow, earlier this month, also said that its new propane dehydrogenation unit (“PDH”) in Freeport has started operating at full capacity. This achievement marked another key milestone in Dow’s plans to integrate its U.S. operations with cost-advantaged feedstocks from increasing U.S. shale gas supplies. The world-scale PDH unit commenced commercial operations in Dec 2015.
Dow, one of the biggest ethylene producers on the planet, is seeing significant feedstock advantage in North America. The company’s investments in the U.S. Gulf coast and Middle East (including the Sadara joint venture) are focused on boosting this advantage.
Dow’s shares ticked down roughly 0.6% to close at $51.25 on Tuesday.
Dow is a Zacks Rank #3 (Hold) stock.
Better-ranked companies in the diversified chemical space include Arkema S.A. ARKAY, Sinopec Shanghai Petrochemical Co. Ltd. SHI and Koninklijke DSM N.V. RDSMY. While both Arkema and Sinopec Shanghai sport a Zacks Rank #1 (Strong Buy), Koninklijke DSM carries a Zacks Rank #2 (Buy).
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