Sector News

Sasol gives final go-ahead to $8.1-billion Louisiana investment

October 28, 2014
Chemical Value Chain
Sasol has made a final decision to proceed with an $8.1-billion ethane cracker and derivatives project at its Lake Charles, LA, site. It will be the company’s largest-ever investment outside South Africa. The project will include units for the production of ethylene derivatives polyethylene, ethylene oxide, ethylene glycol, and a variety of specialty alcohols and ethoxylates, but plans to include an alpha olefins unit have been postponed.
 
Sasol will make a final investment decision on plans to build an $11-14 billion gas-to-liquids (GTL) plant at Lake Charles in 24 months.
 
David Constable, president and CEO, says the decision is a “defining moment” for Sasol. “Once commissioned, this world-scale petrochemicals complex will roughly triple our chemical production capacity in the United States, enabling Sasol to further strengthen its position in a growing global chemicals market,” he says. “The US Gulf Coast’s robust infrastructure for transporting and storing abundant, low-cost ethane was a key driver in our decision to invest in America.”
 
The ethane cracker will produce 1.5 million m.t./year of ethylene, about 90% of which will be consumed by six downstream derivative units. They include 900,000 m.t./year of polyethylene capacity split almost equally between LDPE and LLDPE. Sasol plans to build a 300,000 m.t./year crude ethylene oxide unit as well as ethylene glycol (EG) plant. The company would not specify EG or high-purity EO output. The investment also includes 300,000 m.t. of Ziegler and Guerbet alcohols. The site will also produce ethoxylates.
 
Plans to include an alpha olefins unit have been postponed. “We… considered originally as part of the flow-scheme a tetramerization plant,” says Fleetwood Grobler, group executive for global chemicals at Sasol. “We recently started up a tetramerization plant in Lake Charles, and we are still busy ramping up and getting through the first-of-a-kind technology issues to settle down. So we’ve decided not to make tetramerization part of the flow-scheme yet, but we believe that as time progresses and we bed-down the operations, we would be in a position to consider that going forward.”
 
Sasol has all necessary permits in hand, and construction will begin shortly, says Stephen Cornell, executive v.p./international operations. Start-up will be phased over six months. In the fourth quarter of 2017, Sasol will bring online a derivative unit, which will initially take feedstock ethylene from the company’s existing production at Lake Charles. Sasol plans to start the cracker in the first quarter of 2018, and the other derivative plants will begin operation in the second quarter of 2018.
 
Cornell says that Sasol has already secured contracts for 70% of the ethane feedstock, and that the company is still considering whether to contract more or rely on the spot market.
 
“In spite of a largely volatile macroeconomic outlook, we are confident that we will deliver this project successfully, by drawing on our experience of executing world-scale fuel and chemical facilities, and enlisting the best employees and industry partners,” Constable said. “The Sasol team and our contractors have strong track records in project management, engineering, fabrication and construction of similar large-scale petrochemical complexes, with deep expertise along the US Gulf Coast.”
 
Sasol has selected Fluor Technip Integrated, a joint venture of the two contractors, as the primary engineering, procurement, and construction management contractor for this project. The award follows the front-end engineering design contract awarded to Fluor last year. The contractors will be responsible for the ethane cracker, downstream derivatives units and associated utilities, offsites and infrastructure. The scope of work covers the overall project management, detailed engineering, procurement and construction management, together with startup, commissioning and performance testing support to Sasol operations. Technip will provide its Technip Stone & Webster ethylene technology. Sasol’s project management team is also supported by WorleyParsons.
 
An additional $800 million will be invested in infrastructure and utility improvements, as well as land acquisition, to establish the Lake Charles location as an integrated, multi-asset site that will enable future growth.
 
Sasol says it is well-advanced in raising the funds required for construction and will utilize a variety of international US dollar-based sources.
 
“The economic benefits of this project will extend to all of our shareholders, 67% of whom are located in South Africa, and will also enable us to pursue further growth opportunities in Southern Africa,” Constable says. “In addition, this project will deliver significant benefits to the State of Louisiana and the United States. More specifically, it will enhance local investment and job creation in the surrounding communities, while strengthening downstream manufacturing and increasing exports.”
 
By Natasha Alperowicz and Clay Boswell
 

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