Dow Freeport PMDI MRU Optimization John Litzinger Sr. Improvement Specialist May 20, 2010

1. Dow Freeport PMDIMRU OptimizationJohn LitzingerSr. Improvement SpecialistMay 20, 2010

2. About Dow • Largest diversified chemical company • Founded in Midland, Michigan in 1897 • Supplies more than 5,000 products to customers in 160 countries • Annual sales of $45 billion • 52,000 employees worldwide • One of the world’s largest industrial energy consumers • Committed to Sustainability

3. Oil & Gas = Energy & Feedstock Feedstock Ethane, Propane Butane, Naphtha Oil & Gas 850,000 Barrels/day Energy Steam, Heat Power, Water

4. Corporate Commitment to Energy Reduction • Public Commitment: • In 1995 Dow Committed: • To Reduce Energy Intensity • By 20% by the year 2005 • From Base Year 1994 The Dow Public Report www.dowpublicreport.com

5. Corporate Commitment & Acountability Corporate Commitment to 2015 Goals • We will further reduce our global energy intensity by 25% from 2005- 2015 • We will reduce our GHG emissions intensity by 2.5 % per year thru 2015 • By 2025, we aspire to reduce absolute emissions within the company “No one in the world is more intensely aware of the need, ultimately, to reinvent our dependency on oil and natural gas than we are… We will lead the way on energy transformation because we have to. And we have taken important steps already.” -- Andrew Liveris Chairman, CEO & President The Dow Chemical Company Liveris Launches 2015 Sustainability Goals

6. Dow Polyurethane PMDI • PMDI (Polymeric Methylene Di-Phenyl Di-Isocyanate) is a raw material in Polyurethane Formulations. • Typical end uses include insulation in Appliances and Construction industries. • Dow directly markets Great StuffTM insulation foam. • Product end use is directly related to energy efficiency improvements in everyday life. • Dow Operates 3 PMDI sites within integrated sites – Freeport, TX; Stade, Germany; Estarreja, Portugal TM – Trademark of the Dow Chemical Company

7. PMDI Energy Efficiency Program In 2005, Dow started up a new PMDI facility in Freeport, TX, with 500 MM lb/year capacity In 2007, the business started an energy efficiency improvement plan with the following results: • High Pressure Steam Optimization / Trap Reliability • Thermal Oxidizer Fuel Gas Optimization • Internal Reflux and Reboiler Optimization for several distillation columns • Furnace Optimization including majority use of Hydrogen when available • Mechanical Refrigeration Unit (MRU) Compressor Optimization

8. MRU Optimization Summary • Project Overview • Approach • Team Resources • Phase 1 Implementation and Results • Phase 2 Implementation and Results • Final Summary • Q&A

9. Project Overview • Desired outcome was to reduce electricity usage while maintaining required process cooling. • The MRU Compressor is a 15,000 HP system with 3 stages and 8 impellers. • Due to plant optimization, the requirements for cooling are 30% less than design. • The project was implemented in 2 phases • Maximize improvements with no hardware changes • Maximize improvements with minimized capital spending, and maximize Net Present Value (NPV)

10. Approach • First Pass - Used compressor curves to determine if unit could be turned down as is • Worked with compressor manufacturer to confirm using its internal modeling system • Dow Process Engineering confirmed modeling results using AspenTM simulation programs. • Tested in field, confirming surge first, then full implementation of Phase 1 • Once confirmed, moved to Phase 2 – Hardware changes

11. Team Resources • Improvement Engineer • Process Engineer • Mechanical Design Lead • Technology Consultant • Rotating Equipment Specialist • Refrigeration Consultant • Mechanical Engineer • Reliability Engineer • Plant Operations Staff • Vendor Input

12. Phase 1 – No Investment (August 2009) • Team reduced Compressor HP by 16% • Overall approach was to create a higher DP, with lower flow on Stages 2 and 3 (left on the curve). • On Stage 1, volume flow was increased (moving right on the curve) • Maintain proper cooling conditions • Minimize false loading throughout the system • Surge testing was attempted, but never confirmed since plant was operational

13. Phase 2 – Minor Capital (February 2010) • Team reduced Compressor HP by additional 17% • Met goal of 30% energy reduction corresponding to refrigeration load • Evaluated different hardware options – • Replace shaft and impeller wheels • Trim existing impeller wheels • Resize Gearbox Reducer • Implemented “Resized Gearbox Reducer” • Decreased Compressor Shaft speed by 5% • Replaced during one-week outage in February • Started compressor when plant was still down to test surge • Surge confirmed on Stage 3, and tested minimum flows on Stage 1 and 2. • Placed “anti-surge” set points at 10% above “tested” on Stage 1 and 2. • Placed “anti-surge” set point at 20% above for Stage 3. • Current Operations • Zero false load on Stage 3 • Minimum false load on Stage 2 • Low false load on Stage 1 • Proper pressure and exchanger level set points to maintain refrigeration

14. Final Summary • Project Value • $2,500,000 savings • 17,330 tons CO2 reduced • Invested hardware cost approximately $250,000 in Phase 2 • Project approach can be adopted throughout Dow, and may already be implemented throughout industry. • De-rates are especially important when electricity is perceived as fixed cost, and energy requirements are lower downstream.

15. Q&A Thank You