SUMMARY

Path2Zero project will decarbonise 20% of Dow's global ethylene capacity. [Image credit: Dow]

By Dale Lunan

Global petrochemical company Dow said November 28 it had reached a positive final investment decision (FID) on its Fort Saskatchewan Path2Zero investment to build the world’s first net-zero integrated ethylene cracker and derivatives facility in Alberta.

Originally announced in 2021, the US$6.5bn (C$8.8bn) project, excluding government incentives and subsidies, includes building a new ethylene cracker and increasing polyethylene capacity by 2mn tonnes/year and retrofitting the site’s existing cracker to net-zero Scope 1 and 2 emissions. The investment is expected to deliver US$1bn of EBITDA growth per year at full run rates over the economic cycle while decarbonising 20% of Dow’s global ethylene capacity.

“The opportunity to decarbonise our assets while driving growth is central to Dow’s business strategy,” CEO Jim Fitterling said. “All our stakeholders benefit from this investment – creating value for our customers and shareholders, new opportunities for our employees, economic growth for the community, and fewer greenhouse gas emissions for the environment.”

Construction will begin in 2024, with the first phase, adding about 1.3mn tonnes/year of ethylene and polyethylene capacity, expected to enter operations in 2027 and a second phase, adding 600,000 tonnes/year of capacity, coming online in 2029.

To achieve net-zero on its Scope 1 and Scope 2 emissions, Dow will use Linde’s air separation and autothermal reformer technology to convert the site’s cracker off-gas to hydrogen, which will be used to fire the site’s furnaces. CO2 emissions will be captured and stored, reducing existing emissions from the site by about 1mn tonnes/year of CO2 equivalent and abating all emissions associated with the new capacity.

It will be the first major project in Canada to access the federal government’s new investment tax credits for carbon capture, utilisation and storage (CCUS) and clean hydrogen, worth an estimated C$400mn, a 12% credit under the Alberta Petrochemicals Incentive Programme, worth about C$1.8bn, and is expected to qualify for Alberta’s planned 12% CCUS tax credit, announced earlier this week.

Dow said it selected the Fort Saskatchewan site for the Path2Zero project because it offers highly cost-competitive natural gas relative to other regions and cost-advantaged ethane, a key feedstock for ethylene production. 

The region also features access to existing CO2 transportation and storage infrastructure with available capacity to fully support decarbonisation of the project.

Dow’s investment leverages about C$2.7bn of investment from third-party companies for circular hydrogen, CO2 capture, and other infrastructure assets critical to the project execution. 

Earlier this year, Dow selected Linde as its industrial gas partner for the supply of clean hydrogen and nitrogen for the site, while Fluor was selected for front-end engineering and design. Additionally, Dow is partnering with Wolf Midstream, which will provide COtransportation along its expanded Alberta Carbon Trunk Line, and with Ravago, which will provide third-party logistics for finished products from the site.

The project will create up to 6,000 construction jobs at its peak and 400-500 full time positions.

“This investment by Dow is further evidence of the opportunity that exists in Alberta,” Alberta Premier Danielle Smith said. “This project does not just mean net-zero emissions, it means more jobs and a stronger economy.”