SCG-Dow Group Breaks Ground on Propylene Oxide Plant in Thailand

The Dow Chemical Company (Dow) announced today that the SCG-Dow Group, a joint venture between Dow and The Siam Cement Group (SCG), has broken ground on a propylene oxide (PO) facility in Thailand. The world-scale plant, located within the Asia Industrial Estates (AIE) site near Map Ta Phut, will have a name plate capacity of 390 kilotons per annum (KTA) of PO via the innovative hydrogen peroxide to propylene oxide (HPPO) technology jointly developed by Dow and BASF. The PO plant, which will also include propylene glycol (PG) manufacturing, is expected to come online in 2011.

In July 2007, Dow and Solvay S.A. (Solvay) announced the formation of a joint venture to build a new hydrogen peroxide (HP) plant, which will serve as a raw material source for the new PO plant. Located within the AIE site, the new HP plant will be the largest in the world with a name plate capacity of more than 330 kilotons per annum (KTA) of HP at 100 percent concentration. The HP will be produced using Solvay’s proprietary, high-yield HP technology and supply both the PO plant and Solvay’s regional subsidiary, Peroxythai Ltd., which will use the additional product to meet growing customer demand. Operations for the HP plant are scheduled to begin prior to the start up of the PO plant.

“With an economy that continues to grow at double digit rates, Asia Pacific is an attractive location for Dow,” said Pat Dawson, president of Dow Polyurethanes. “These plants represent a significant strategic investment by Dow in Thailand for the long-term. Moreover, they will support the continued growth of Dow’s performance businesses, such as Polyurethanes, by ensuring that customers who rely on us for materials will be better equipped to compete in their local markets. Together, with BASF, Solvay and SCG, we continue to create sustainable solutions for the production of PO that deliver greater energy efficiency, a reduced physical footprint, and improved environmental performance while also providing attractive economics.”

In 2003, Dow and BASF began a joint process research program to develop and commercialize HPPO technology, enabling the two companies to combine their innovation capabilities and commercialize the technology more efficiently. The jointly developed HPPO technology, which was supported by a partnership with Solvay for the development of a specially adapted HP quality, will be utilized at the AIE site with BASF supporting the world-scale PO plant as a technology partner. In addition, Dow and BASF continue to work together on regional product exchange agreements and other supply agreements to meet their customers’ demand for PO globally. Dow and BASF expect final authorization on these agreements soon.

Feedstock for the PO plant will come from the SCG-Dow joint-venture liquids cracker at Map Ta Phut, scheduled for completion in 2010. Several facilities within the AIE site, including the new PO plant, are also expected to be operated through joint venture agreements between Dow and SCG.

Propylene oxide is a versatile chemical intermediate used in the production of raw materials for a wide range of industrial and commercial products, including polyurethanes, propylene glycol, and glycol ethers.

Benefits of HPPO Technology

Compared with conventional PO process technologies, HPPO offers unique benefits in three areas: economic, enviromental and opportunities for future growth.

Economic benefits

New PO plants built using the HPPO technology are more economical because they:

* Require up to 25 percent less capital to build.

* Avoid the need for additional infrastructure or markets for co-products.

* Require simple raw material integration – just hydrogen peroxide and propylene are needed as raw materials.

Environmental benefits

The new HPPO technology brings environmental improvements to the PO industry by:

* Reducing wastewater by 70 to 80 percent, compared with existing PO technology.

* Reducing energy usage by approximately 35 percent, compared with existing PO technology.

* Reducing infrastructure and physical footprint with simpler raw material integration and avoidance of co-products.

Growth opportunities

HPPO technology provides flexibility when selecting future new plant sites by:

* Reducing the need for complex raw materials and the associated infrastructure.

* Avoiding production of co-products, such as styrene monomer or propylene dichloride, which require conventional PO plants to be located in large, integrated chemical complexes, where the co-products can be used in other processes.