U.S. Gas Export Limit of 10% Would Be ‘Smart,’ Dow CEO Says

Dow Chemical Co. Chief Executive Officer Andrew Liveris said it would be “smart” for the U.S. to limit natural-gas exports to 10 percent of output because expansion plans in his industry are rooted in low gas prices.

Exporting more than 15 percent of the country’s gas production would tighten markets too much and lead to higher prices, Liveris said today in a telephone interview. Excessive exports of liquefied natural gas, or LNG, could “kill” chemical investments like the company’s $4 billion expansion in Texas and Louisiana, he said last week.

“We think 15 percent is about right,” Liveris, CEO of the largest U.S. chemical company by revenue, said in the interview. “Ten percent or less would probably be smart.”

Dow, which uses gas as a raw material and power source, is among chemical makers expanding and building new U.S. factories amid the lowest gas prices in a decade. Long-term U.S. gas prices will stabilize around $4 per million British thermal units, Liveris said today on a conference call. Gas futures traded today at $2.11 per million British thermal units in New York and dropped to less than $2 per million Btu for the first time since 2002 on April 11.

Ethane, the component of natural gas that is most used to make the plastics ingredient ethylene, is sometimes included in LNG exports, Liveris said.

“That is one of the reasons we worry,” he said.

Propane, another gas component, is removed from gas destined for LNG exports, Liveris said. That will keep prices low for the company’s planned $1 billion propylene plant in Freeport, Texas, regardless of how many LNG terminals are built, he said.

Propylene is an ingredient in coatings, epoxies, polyurethanes and other Dow products. Ethylene is the world’s most used petrochemical, found primarily in polyethylene, the plastic used to make garbage bags and packaging.

Dow, based in Midland, Michigan, today reported first-quarter net income fell to 35 cents a share from 54 cents a year earlier.

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