Sasol greenlights $8.1bn Louisiana cracker, to triple US output

LONDON (ICIS)–Sasol has given final approval to move forward with a $8.1bn ethane cracker and derivatives complex in Lake Charles, Louisiana, the South Africa-based producer said, to capitalise on the US shale gas boom.

Expected to come onstream in 2018, the 1.5m tonne/year ethylene cracker will include six chemical manufacturing plants, with 90% of product from the plant for captive use in the development of a range of commodity and specialty chemicals, the company added.

Once completed, the cracker is expected to triple the company’s US production levels, it added.

“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,” said Sasol CEO David Constable.

“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,” he added.

Engineering joint venture Fluor-Technip has been awarded a contract for the design, procurement and construction of the plant. The value of the contract was not disclosed, but Fluor said it would book its share of the contract value in the fourth quarter of 2014. Fluor had been awarded  front-end engineering and design contract (FEED) for the mooted project in 2013.

An additional $800m will be invested in infrastructure and utility upgrades around the Lake Charles site, Sasol added. Fundraising is well underway, with a variety of US dollar-based sources expected to be tapped towards the total financing, Sasol added.

Following news that the company received water and air permits for the planned complex in August this year, the cracker and chemicals complex is part of a huge wave of new capacity predicted for the US, centred around the country’s gulf coast, in response to a sharp drop in the cost of feedstock ethane since the development of a shale industry.

Chevron Phillips, Dow, ExxonMobil and Occidental Chemical/Mexichem also have crackers under development or are securing permits. Including the Sasol cracker, these six complexes are expected to increase US ethylene capacity by 30%, and another five crackers are planned.

“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 added.