Sasol moves ahead with feasibility study on US cracker project

30 November 2011 15:52  [Source: ICIS news]

(adds capacity information in third paragraph)

HOUSTON (ICIS)--Sasol’s board of directors has approved a feasibility study for a possible cracker and derivatives project at Lake Charles, Louisiana, the South African energy and chemicals major said on Wednesday.

The project could cost between $3.5bn and $4.5bn (€2.6bn and €3.4bn), Sasol said.

"The envisaged capacity of the cracker will be to produce between 1m and 1.4m tons of ethylene per annum," Sasol said.

The feasibility study is scheduled for completion in the second half of 2013, the company said.

In another major move, Sasol also said on Wednesday it would pull out of the Arya Sasol Polymers joint venture in Iran.

Sasol’s decision to move to a feasibility study on the US project comes after the company completed a pre-feasibility study, which confirmed that a world-scale ethane cracker with downstream ethylene-derivative units at the Lake Charles site “offered an attractive investment opportunity with a sustainable competitive advantage,” it said.

The rapid development of the shale gas industry in North America and the resulting decoupling of the crude oil and natural gas prices created several opportunities for growth for Sasol in both fuels and chemicals, it said.

In particular, the availability of significant volumes of natural gas liquids, and specifically ethane, opened up opportunities in the ethane feedstock area for cracker-based chemicals, the company said.

Sasol’s proposed US cracker complex would also support its growth plans and “deliver on targets to expand our chemical businesses,” it said.

Sasol’s board approved the advancement of the project to a feasibility study to assess in more detail the technical and commercial viability of such a world-scale ethane cracker and the development of possible strategic partnerships, the company added.

A number of firms, including Dow Chemical, Chevron Phillips Chemical, Braskem and Shell, are looking at plans to build new crackers in the US to benefit from low feedstock costs on the back of the shale gas boom.

Shell expects to announce a possible site for its cracker in the US northeast early next year. However, Shell also said that its plans are only in the early stages.

A LyondellBasell executive recently voiced scepticism over the many announcements for new US ethane cracker projects. LyondellBasell said previously it would focus on debottlenecking projects in the US before considering new investments.

Meanwhile, Canada-based NOVA Chemicals has contracted with producers in the Marcellus Shale region to ship ethane to its petrochemicals complex at Corunna in southern Ontario. NOVA's Corunna cracker is about 300 miles (483km) from the Marcellus formation.

($1 = €0.75)

Additional reporting by Lane Kelley and Sheena Martin
For more on Sasol and other producers visit ICIS company intelligence

By: Stefan Baumgarten
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