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When Dow Chemical announced last month that it was planning a $19 billion global venture, it reaffirmed that growth of the area’s petrochemical industry represents stronger positioning in U.S. and world markets.

For the Capital Region, it represents an economic windfall from new construction and job growth with billions committed to upgrades, expansions and new facilities at a time when the nation is shuddering with economic worries.

Dow Chemical plans to sell 50% interest in five of its global businesses for $9.5 billion to Petrochemical Industries Co., a subsidiary of state-owned Kuwait Petroleum Corp.

The agreement, pending definitive agreements and regulatory approvals expected late this year, would form a U.S.-based joint venture company to make and market polyethylene, polypropylene (both plastics used in food packaging or milk jugs), polycarbonate (thermoplastic used in optical media or lighting), ethylenamines and ethanolamines (both are widely used in treating wood, pharmaceutical processing and coatings).

“We’re creating a petrochemicals company that will be a global leader from its first day of operation, an $11 billion company,” Dow chairman and CEO Andrew Liveris says.

The venture would affect Dow’s plants in Plaquemine and Hahnville. It will employ 5,000 people worldwide with most of its current employees making up that total.

In his 2008-09 forecast, economist Loren Scott highlighted billions of dollars worth of construction projects expected to create more than 14,000 jobs in the region in the next two years.

ExxonMobil, for example, apparently plans to add a refinery to produce lower-sulfur diesel at its Baton Rouge facility, according to Mayor-President Kip Holden’s message in his 2008 annual operating budget. Although the company is not prepared to detail the deal, the investment could exceed $350 million.

“We have counted $45 billion in construction projects in the area, by far a record number for the region,” Scott says. While other parts of the country struggle economically, the Capital Region is experiencing growth in part from its expanding petrochemical industry.

“First of all, this is where our markets are—in the U.S. and Canada,” says area Plant Manager David Wise of Texas-based Shintech, which initiated a $1 billion PVC manufacturing complex in mid-2005 just south of Plaquemine. “But more importantly, Shintech places a high priority on political stability. We’re in a democracy. We know if we build a facility, it will remain in our possession as long as we want it so.”

Appreciation for political stability apparently enabled Shintech, a subsidiary of Japan-based Shin-Etsu Chemical Co., to announce a second $900 million phase for the not-yet-completed PVC complex. When the facility starts up early next year, it will provide 200 full-time jobs with an annual payroll of $7 million. When the second phase is completed by early 2009, total employment will rise to 300 jobs.

“The area offers all the elements we needed—a source of raw materials, good transportation infrastructure, including that wonderful Mississippi River, and an industrial infrastructure such as machine houses,” Wise says. “And quite frankly, one of the big determining factors is we’ve been able to find a good, dedicated work force capable of construction and operating our facilities.”

Shintech anticipates 3% to 5% market increase for PVC, which is driving its plant expansions.

Placid Refining Co. in Port Allen recently increased its upgrade from $200 million to $300 million and is already in full construction mode. More than 100 workers are on site, a figure expected to grow to 250 soon and peak at 1,600.

“No new refineries have been built in over 30 years in this country and prospects do not appear promising for that trend to change,” Refinery Manager Joey Hagmann says. Placid sees ample opportunities in this environment.”

Placid buys domestic crude oil from Louisiana and produces transportation fuels, which are distributed across the Southwest U.S. It also produces military jet fuel for U.S. military defenses. Once completed by 2010, the expansion will create 20 to 25 full-time jobs.

Anticipating continued growth in the vinyl market, PVC manufacturer Formosa Plastics Corp. on Gulf States Road has started its $100 million expansion. Startup is anticipated by early 2009. Construction will create about 300 jobs but no new permanent jobs.

Company spokesman Steve Rice says PVC decking and fencing are also anticipated big markets for Formosa’s resin. Additionally, the company has new polyfins products for the appliance and auto industries, as well as caustic soda, which it also supplies, finding its way into new products and industries.

“Despite offshore jobs, Formosa is very devoted to the U.S. business and we’re putting about a $1 billion capital plan (new plants, expands and core infrastructure upgrades) into our U.S. sites,” Rice says. The local expansion will be finished by late 2008. “We’re here, and we’re putting our stake in the ground. We see it as a long-term market.”

Offering advantages like site materials, transportation, barge traffic and natural gas supply, Rice says Baton Rouge was an easy choice for one of their plants.

Pioneer Chlor Alkali Co.’s new owner, Missouri-based Olin Corp., is proceeding with a $142 million expansion in St. Gabriel, Plant Manager David Gasper says. U.S. and area customers were a driving force in keeping—and expanding—the facility. Until May, Texas-based Pioneer Companies owned the plant.

“We are focused on meeting the growing needs of our customers,” Gasper says. “The St. Gabriel facility provides a great location to provide our customers with quality products. We expect the market for our products in this region to remain strong in the coming years.”

Shaw Group’s Shaw Capital, representing several investors, has lined up capital for an ethanol plant with planned construction at the Port of Greater Baton Rouge, President Dan Shapiro and Vice President Bengt Jarlsjo say. While a contract is not in hand, the project is fully permitted with the U.S. Environmental Protection Agency.

An actual project estimate is not yet available although they say an ethanol plant typically costs $125 million to $150 million. Shapiro says they hope to finalize funding next year, with construction to begin shortly afterward and the plant completed in 18 to 24 months. Expected to employ up to 40 people, the facility will produce a projected 55 million gallons of ethanol a year.

“One or two years ago, we started to look at renewable energy and biofuels projects all over North America,” Jarlsjo says. Attention focused on Louisiana and, ultimately, Baton Rouge because it “is the crossroads of traditional energy and agriculture with the Mississippi River and deep water, and a tremendous amount of petroleum processing here.”