A South African energy giant plans to build an $8 billion to $10 billion natural gas complex in Calcasieu Parish, making it one of the largest industrial developments in the state’s history.
Sasol Limited, an international energy and chemical company based in Johannesburg, said Tuesday it plans to build a facility that will convert natural gas to other energy sources like diesel and other products.
The Louisiana Economic Development department estimates the project will create about 850 jobs, with average salaries of about $89,000, not including benefits.
The company plans to first conduct a feasibility study in the next 18 months, which will consider two options of a 2 million-tons-per-year and a 4 million-tons-per-year facility.
If all goes as planned, construction is expected to start in 2013, and the complex would be built in two phases with completion in 2018.
Large natural gas deposits, such as the Haynesville Shale in northwest Louisiana and others in Texas and other states, will help supply the new gas-to-liquids operation, company officials said.
“We believe Sasol’s GTL (gas-to-liquid) technology can help unlock the potential of Louisiana’s abundant natural gas resources and contribute to an affordable, reliable fuel supply for the United States,” said Ernest Oberholster, Sasol managing director for new business development, in a statement.
“We look forward to continuing to work with the people of Louisiana to make a long-term and sustainable contribution to the state.”
“Sasol has selected Calcasieu Parish as their preferred location in the U.S. for one of the largest industrial projects in Louisiana history,” Gov. Bobby Jindal, said in a statement.
“Without question, the Haynesville Shale and other unconventional natural gas plays are transforming the energy economy in the U.S., and we are positioning Louisiana to be one of the chief beneficiaries of that transformation.”
At full production capacity, the facility would consume about 305 billion standard cubic feet of natural gas per year, which would represent roughly $1.3 billion to $1.5 billion per year in natural gas purchases at current prices.
The state has actively cultivated gas-to-liquid projects with Sasol and other energy companies around the world for about two years, say LED officials, who note the state is particularly positioned for this sector due to its proximity to the Haynesville Shale and other emerging deposits; Louisiana’s tax structure and incentive offerings for manufacturers; a well-entrenched petrochemical infrastructure; and one of the largest port complexes in the world.
LSU recently completed an economic impact analysis — commissioned by Sasol — which suggests construction alone will generate another $1.73 billion in additional business activity and more than 12,000 new jobs associated with $577 million in personal earnings during the five-year construction period.
Once the Sasol gas-to-liquids complex is fully operational, it would lead to additional economic activity in the state of almost $919 million a year, the study found.
Sasol considered several other states before selecting Louisiana as its U.S. location for this facility. At the Lake Charles Chemical Complex, Sasol employs about 400 workers and previously announced construction of a $175 million ethylene tetramerization unit in December. That project is under way.
It’s not yet clear what economic incentives the state will make available for Sasol. Those negotiations are still is in progress, state officials said.