Dow Fights Energy, Raw Materials Costs

Like most manufacturers, The Dow Chemical Co. is wrestling with ways to combat rising energy and raw materials prices. In the third quarter of 2007 the Midland, Mich.-based chemical producer reported a $400 million increase in feedstock and energy costs compared with the year-earlier period. In recent years, the company has responded in some instances to the high prices by closing plants. But some relief might be in sight with the pending construction of a new gasification facility.

The company has entered into a tentative agreement with Hunton Energy to build a petroleum coke gasification plant at Dow's Oyster Creek property in Freeport, Texas. If and when the deal is finalized, Dow would purchase synthetic natural gas from Hunton to produce electricity and steam for Dow's Texas Operations manufacturing site also located in Freeport. The alternative fuel source is expected to provide multiple benefits for the company's Texas plant, according to Rich Wells, Dow's vice president of energy.

"This agreement with Hunton Energy is an example of how Dow is pursuing diverse sources of energy as part of our overall strategy to mitigate rising feedstock and energy costs," said Wells when the deal was announced in December 2007. "As an added benefit, the process used to produce the steam consumed by Dow will capture CO₂ emissions to be sold for enhanced oil recovery use." The new technology also will help the company attain its goal to reduce greenhouse gas emissions by more than 20% by 2015, Wells notes.

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