Dow's Board of Directors Approves Final Investment Decision for Path2Zero Project

Rhea-AI Summary

Dow (DOW) announces a $6.5 billion investment in Fort Saskatchewan, Alberta, to build the world's first net-zero Scope 1 and 2 emissions ethylene and derivatives complex. The project is expected to deliver $1 billion of EBITDA growth per year at full run rates over the economic cycle while decarbonizing 20% of Dow's global ethylene capacity.

Positive

• The investment is expected to deliver $1 billion of EBITDA growth per year at full run rates over the economic cycle.
• The project will decarbonize 20% of Dow's global ethylene capacity.
• The Fort Saskatchewan site is expected to be one of Dow's most cost-competitive in the world.

Negative

• The project will require a significant amount of investment, totaling $6.5 billion.
• The project's first phase is expected to start up in 2027, with the second phase starting up in 2029, adding new capacity in phases.

• Brownfield investment in Fort Saskatchewan, Alberta, will be the world's first net-zero Scope 1 and 2 emissions ethylene and derivatives complex
• Delivers 2 million MTA of organic growth in attractive, high-end markets while decarbonizing 20% of Dow's global ethylene capacity
• $1 billion of EBITDA growth expected at full run rates over the economic cycle; expected to be one of Dow's most cost-competitive sites in the world
• Eliminates 1 million MTA of CO₂e by converting hydrogen from cracker off-gas as a clean fuel as well as CO₂ capture and storage
• Best-owner mindset leverages additional $2 billion of investment from third-parties for circular hydrogen, CO₂ capture, and other infrastructure assets
• Subsidies and incentives from federal, provincial, and local authorities support Dow's targeted returns

MIDLAND, Mich., Nov. 28, 2023 /PRNewswire/ -- Dow (NYSE: DOW) today announced that its board of directors has declared Final Investment Decision on the Company's Fort Saskatchewan Path2Zero investment to build the world's first net-zeroⁱ Scope 1 and 2 emissionsⁱⁱ integrated ethylene cracker and derivatives facility in Alberta, Canada.  

The $6.5 billion project, excluding governmental incentives and subsidies, includes building a new ethylene cracker and increasing polyethylene capacity by 2 million MTAⁱⁱⁱ as well as retrofitting the site's existing cracker to net-zero Scope 1 and 2 emissions. The investment is expected to deliver $1 billion of EBITDA growth per year at full run rates over the economic cycle while decarbonizing 20% of Dow's global ethylene capacity.

This new capacity will enable Dow to capture growing customer demand in high-value markets, such as packaging, infrastructure and hygiene, among others, with potential additional value captured from commercializing low and zero-emissions products. The project builds on Dow's expertise in successfully implementing large projects, such as its TX-9 cracker in Freeport, Texas, which has delivered more than 15% return on invested capital since its 2017 start-up through best-in-class capital intensity, conversion cost, and low emissions intensity.

The board's approval enables the Company to begin construction in 2024. Capacity additions are expected to come online in phases, with the first phase starting up in 2027, adding approximately 1,285 KTA^iv of ethylene and polyethylene capacity, and the second phase starting up in 2029, adding an additional approximately 600 KTA of capacity.

To achieve net-zero Scope 1 and 2 emissions, the Fort Saskatchewan Path2Zero project will deploy Linde's air separation and autothermal reformer technology to convert the site's cracker off-gas to hydrogen, which will be used as a clean fuel to supply the site's furnaces. In addition, carbon dioxide emissions will be captured and stored, reducing existing emissions by approximately 1 million MTA of CO₂e while abating all emissions from the addition of the site's new capacity.

The Canadian and Alberta Advantage
Dow selected the Fort Saskatchewan site for this investment as Western Canada offers highly cost-competitive natural gas relative to other regions, as well as cost-advantaged ethane, a key feedstock for ethylene production. At full run-rates, the site is expected to be one of Dow's most cost-competitive in the world. The region also features access to existing CO₂ transportation and storage infrastructure with available capacity to fully support decarbonization of the project. It is home to a high-class workforce and Dow has been part of the community for more than 60 years.

Additionally, the governments of Canada, Alberta, and Fort Saskatchewan have made subsidies and incentives available to support this project and to drive innovation in low-emissions manufacturing in Canada. It will be the first project to access Canada's new ITC program.

Dow's investment leverages approximately $2 billion of investment from third-party companies for circular hydrogen, CO₂ capture, and other infrastructure assets critical to the project execution. Earlier this year, Dow announced that Linde had been selected as its industrial gas partner for the supply of clean hydrogen and nitrogen for the site, and Fluor was selected for front-end engineering and design. Additionally, Dow is partnering with Wolf Midstream, which will provide CO₂ transportation along the Alberta trunk line, and with Ravago which will provide third-party logistics for finished products from the site.

Attributable Quotes
Jim Fitterling, Dow Chair and CEO

• "The project serves as a leading example that industrial decarbonization is both possible and profitable."
• "The opportunity to decarbonize our assets while driving growth is central to Dow's business strategy. All our stakeholders benefit from this investment – creating value for our customers and shareholders, new opportunities for our employees, economic growth for the community, and fewer greenhouse gas emissions for the environment."

Karen S. Carter, Dow President, Packaging & Specialty Plastics

• "This investment paves the way for growth of our entire Packaging and Specialty Plastics portfolio. It gives us the opportunity to become the industry's first provider of zero-emissions products and solutions. Our commitment to innovation and designing products for circularity allows us to meet the evolving needs of our customers across growing sectors such as packaging, infrastructure, and hygiene, among others."
• "Plastics have long been recognized for their environmental advantages, with a greenhouse gas footprint that is typically less than half of alternative materials. With this strategic investment and our commitment to transform plastic waste to create circular and renewable solutions, we are poised to achieve even greater reductions in emissions, empowering our customers to make significant strides in their sustainability efforts."

Diego Ordonez, Dow Canada President

• "This project will have a profound positive impact on our employees and the community, creating jobs and economic opportunity while positioning the region to be a leader in low emissions manufacturing. Our collaboration with government officials, the community of Fort Saskatchewan, our Indigenous neighbors, and the host of partner companies involved has been key to enabling this investment to move forward."

Danielle Smith, Premier of Alberta

• "This investment by Dow is further evidence of the opportunity that exists in Alberta. We are proud that Dow has chosen to build and launch their project here. This project does not just mean net-zero emissions, it means more jobs and a stronger economy. I look forward to the next steps, including construction starting next year."

About Dow
Dow (NYSE: DOW) combines global breadth; asset integration and scale; focused innovation and materials science expertise; leading business positions; and environmental, social and governance leadership to achieve profitable growth and help deliver a sustainable future. The Company's ambition is to become the most innovative, customer centric, inclusive and sustainable materials science company in the world. Dow's portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated, science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure, mobility and consumer applications. Dow operates manufacturing sites in 31 countries and employs approximately 37,800 people. Dow delivered sales of approximately $57B in 2022. References to Dow or the Company mean Dow Inc. and its subsidiaries. For more information, please visit www.dow.com or follow @DowNewsroom on Twitter.

Cautionary Statement about Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "may," "opportunity," "outlook," "plan," "project," "seek," "should," "strategy," "target," "will," "will be," "will continue," "will likely result," "would" and similar expressions, and variations or negatives of these words or phrases.

Forward-looking statements are based on current assumptions and expectations of future events that are subject to risks, uncertainties and other factors that are beyond Dow's control, which may cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements and speak only as of the date the statements were made. These factors include, but are not limited to: sales of Dow's products; Dow's expenses, future revenues and profitability; any global and regional economic impacts of pandemic or other public health-related risks and events on Dow's business; any sanctions, export restrictions, supply chain disruptions or increased economic uncertainty related to the ongoing conflict between Russia and Ukraine; capital requirements and need for and availability of financing; unexpected barriers in the development of technology, including with respect to Dow's contemplated capital and operating projects; Dow's ability to realize its commitment to net neutrality on the contemplated timeframe; size of the markets for Dow's products and services and ability to compete in such markets; failure to develop and market new products and optimally manage product life cycles; the rate and degree of market acceptance of Dow's products; significant litigation and environmental matters and related contingencies and unexpected expenses; the success of competing technologies that are or may become available; the ability to protect Dow's intellectual property in the United States and abroad; developments related to contemplated restructuring activities and proposed divestitures or acquisitions such as workforce reduction, manufacturing facility and/or asset closure and related exit and disposal activities, and the benefits and costs associated with each of the foregoing; fluctuations in energy and raw material prices; management of process safety and product stewardship; changes in relationships with Dow's significant customers and suppliers; changes in consumer preferences and demand; changes in laws and regulations, political conditions or industry development; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, including the ongoing conflict between Russia and Ukraine; weather events and natural disasters; and disruptions in Dow's information technology networks and systems; and risks related to Dow's separation from DowDuPont Inc. such as Dow's obligation to indemnify DuPont de Nemours, Inc. and/or Corteva, Inc. for certain liabilities.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled "Risk Factors" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and the Company's subsequent Quarterly Reports on Form 10-Q. These are not the only risks and uncertainties that Dow faces. There may be other risks and uncertainties that Dow is unable to identify at this time or that Dow does not currently expect to have a material impact on its business. If any of those risks or uncertainties develops into an actual event, it could have a material adverse effect on Dow's business. Dow Inc. and The Dow Chemical Company (TDCC) assume no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.

For further information, please contact:

Rachelle Schikorra                                                 
989-638-4090
ryschikorra@dow.com                   

Twitter: https://twitter.com/DowNewsroom 
Facebook: https://www.facebook.com/dow/ 
LinkedIn: http://www.linkedin.com/company/dow-chemical 
Instagram: http://instagram.com/dow_official 

ⁱ Inclusive of Scope 1 and 2 emissions
ⁱⁱ Carbon emissions refer to GHG emissions in CO2e
ⁱⁱⁱ MTA refers to metric tonnes per annum
^iv KTA refers to kilo tonnes per annum

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SOURCE The Dow Chemical Company

What is Dow's (DOW) investment in Fort Saskatchewan, Alberta about?

Dow is investing $6.5 billion to build the world's first net-zero Scope 1 and 2 emissions ethylene and derivatives complex in Fort Saskatchewan, Alberta.

How much EBITDA growth is expected from the investment?

The investment is expected to deliver $1 billion of EBITDA growth per year at full run rates over the economic cycle.

What percentage of Dow's global ethylene capacity will be decarbonized by the project?

The project aims to decarbonize 20% of Dow's global ethylene capacity.

When is the project expected to start construction and begin operations?

Construction is expected to begin in 2024, with the first phase starting up in 2027 and the second phase in 2029.

How will the project achieve net-zero Scope 1 and 2 emissions?

The project will deploy Linde's air separation and autothermal reformer technology to convert the site's cracker off-gas to hydrogen, which will be used as a clean fuel to supply the site's furnaces. Carbon dioxide emissions will also be captured and stored, reducing existing emissions by approximately 1 million MTA of CO2e.

Why did Dow select the Fort Saskatchewan site for this investment?

Dow selected the Fort Saskatchewan site due to cost-competitive natural gas, cost-advantaged ethane, access to existing CO2 transportation and storage infrastructure, and subsidies and incentives from the governments of Canada, Alberta, and Fort Saskatchewan.