The Dow Chemical Company announced today that its Board of Directors has authorized capital to finalize detailed engineering and purchase long lead-time equipment for a new, world-scale propylene production facility to be constructed at Dow Texas Operations.

This represents the latest move in the Company’s comprehensive strategy to increase its ethylene and propylene production and connect its operations with low-cost feedstock opportunities available from increasing supplies of U.S. shale gas.

“This authorization marks yet another significant milestone in Dow’s comprehensive plan to create competitive advantage for our downstream Performance Materials and Advanced Materials businesses by further connecting our U.S. operations with cost-advantaged feedstocks,” said Jim Fitterling, executive vice president of Dow and president of Feedstocks & Energy and Corporate Development. “This investment directly supports Dow’s transformational strategy to enhance its feedstock flexibility and integration strength, and positions the Company for growth in attractive markets and geographies.”

Basic engineering work for the new on-purpose propylene production facility at Dow Texas Operations has commenced, and the project is on track for production start-up in 2015.

In December 2011, Dow and UOP LLC, a Honeywell company, signed a technology licensing agreement, enabling on-purpose propylene production at the facility. Under the terms of this agreement, Dow will license UOP's proprietary UOP C3 Oleflex TM process technology for manufacturing on-purpose propylene from propane. Dow also signed catalyst supply and performance guarantee agreements with UOP.

On-purpose propylene production from propane will create better economic value for Dow compared with high-priced purchased propylene.

“The availability of cost-advantaged feedstocks from U.S. shale gas developments represents a value-creating opportunity for our downstream businesses, and Dow is capitalizing on this,” said Brian Ames, vice president of Olefins, Aromatics and Alternatives. “Our Company was among the first in our industry to declare a comprehensive plan to take advantage of the increasing supplies of U.S. natural gas liquids, and we remain on track to implement that plan, which will create thousands of domestic jobs.”