Dow Chemical withdraws from natural gas export project(Read article summary)
Dow Chemical publicly disavowed a $6.5 billion project for a natural gas export terminal that it partly owns, Alic writes. Dow is opposed to this project because its senior management believes high volumes of LNG exports will lead to higher prices at home.
Dow Chemical CO. (NYSE:DOW) is opposed to the idea of unlimited US natural gas exports, and this opposition has led it most recently to completely disown a $6.5 billion project for a Texas export terminal that it partly owns.
Earlier this week, Dow management publicly disavowed Texas-based Freeport LNG, which it partly owns with a limited partner status.
Dow vice president of energy and climate change George Biltz toldÂ Bloomberg: â€śDow is not going to be part of the new investment. We have taken no role and havenâ€™t worked with them at allâ€ť on the export proposal.â€ť
The Freeport LNG export terminal is hoping for federal permission to cool 1.4 billion cubic feet of gas into liquid natural gas (LNG) daily. This LNG would be transported to overseas markets.Â (Related Article:Â Betting on Mediterranean Shale: 3 Plays, 1 Winner)Â
Dow is opposed to this project because its senior management believes high volumes of LNG exports will lead to higher prices at home, which in turn would bode ill for the future construction of chemical plants and Dowâ€™s overall bottom line.
Dowâ€™s limited partnership status in the company has brought the conflict of interest to the forefront, not least because it owns a gas-important facility right next to it. Essentially, Freeport wants to expand this gas-import terminal into an expert facility, complete with the necessary refrigeration units and storage tanks. It needs $6.5 billion to do itâ€”and Dow has made it clear that it will not invest a penny in the venture.
Dow rose 1 percent to $34.43 at the close inÂ New York. The stock has increased 6.5 percent this year. Dow is worried that unlimited exports and sees its future in using the shale gas revolution to boost domestic projectsâ€”not exports.
In this battle, Dow also finds itself at odds with Exxon Mobil Corp., one of the most vocal proponents of unlimited US gas exports, the profits from which it insists will outpace any potential prices increases at home.