Dow Chemical Co. (DOW), the largest U.S. chemical maker, said domestic supplies of natural gas shouldn’t be exported “indiscriminately” because the industry is counting on continued low prices to justify factory investments.
Gas exports and U.S. government incentives to encourage its use in vehicles may undermine chemical makers’ confidence that prices will remain low, Jim Fitterling, executive vice president for energy and feedstocks at Midland, Michigan-based Dow, said today in a speech at the IHS World Petrochemical Conference in Houston.
Dow plans to spend $4 billion to boost production on the Gulf Coast, joining chemical makers vying to build the first new U.S. ethylene plants, which use gas to make the plastics ingredient, in more than a decade. Added production from shale gas deposits has caused prices to decline to the lowest in a decade on the New York Mercantile Exchange.
“We are all nervous that we could get into a five-year project and the gas is all being exported and prices spike up,” Fitterling said in an interview. “Securing what is right for America and then exporting the balance makes sense.”
Cheniere Energy Inc. (LNG) and Dominion Resources Inc. are among companies that have proposed building export plants that would liquefy gas for shipment overseas via tankers.
The U.S. Energy Information Administration is currently studying the “proper” number of LNG export terminals that should be permitted, Fitterling said. Export limits would provide time for new chemical plants and converted power plants to boost gas demand, he said.
To contact the reporter on this story: Jack Kaskey in Houston at firstname.lastname@example.org
To contact the editor responsible for this story: Simon Casey at email@example.com