Dow quietly announced the commissioning of its propane dehydrogenation (PDH) plant in Freeport Texas as a passing mention at the end of its second quarter earnings report. The plant adds 1.65 billion pounds of propylene capacity based on shale gas production.
It comes as the bloom is off the rose of the PDH process, which will add some stability long-term to polypropylene markets.
Several North American plants were announced in 2012 when propylene supplies were tight and oil prices were high. Now oil prices are much lower and polypropylene markets have been weakened by economic doldrums in China. Dow had announced it would build a second unit, but now isn’t quite so sure. Flint Hills Resources, which acquired PetroLogistics last year, has put on hold plans to build a second PDH unit.
Other North American PDH plants that had been scheduled for completion this year or next year quietly have been pushed back three or four years.
According to optimistic predictions, on-purpose production of propylene via the PDH process would account for more than 30 percent of North American output by 2020. That seems unlikely unless oil markets do an about face in the next two years.