Sasol Ltd. has given the green light to an $8.1 billion ethane cracker and chemical complex near Lake Charles that could morph into a near-$22 billion investment, if a proposed gas-to-liquids plant is also built.
The final decision on the gas-to-liquids project is expected within 24 months. That would bump the industrial construction project up to rival the largest in Louisiana history.
Site preparation is underway for the ethane cracker and its six accompanying chemical plants in Westlake. The cracker will create 500 direct jobs with an average annual salary of nearly $88,000, plus benefits.
“Sasol’s decision to move forward with this project is a defining moment in our company’s history and an important milestone in the execution of our growth strategy,” David Constable, president and chief executive officer of Sasol, said Monday. The Johannesburg, South Africa, company expects the Westlake ethane cracker to begin operations in 2018. It will break natural gas into smaller molecules to make ethylene for chemicals used in products such as detergents, lotions, cleaners, packaging, paints and adhesives.
An additional $800 million will be invested in infrastructure and utility improvements, as well as land acquisition, for the cracker’s location near Sasol’s existing Westlake facility. There are currently 435 employees at the facility.
Louisiana’s economic development department estimates the project will result in 2,395 indirect jobs. Sasol said up to 5,000 construction jobs will be supported by the project during the next several years.
Sasol has proposed building a gas-to-liquids facility in Westlake for an estimated price between $11 billion to $14 billion — raising the company’s total investment, including the ethane cracker, toward the $19 billion to $22 billion range.
That could eclipse the estimated $20 billion Sabine Pass liquefied natural gas export project by Cheniere Energy. It is under construction in Cameron Parish and considered the largest single capital investment in Louisiana history.
“This is one of the most significant days in the industrial history of southwest Louisiana,” said George Swift, president and CEO of the Southwest Louisiana Economic Development Alliance. “Sasol has provided products and jobs in our region. Today’s announcement puts us on the road for more tremendous development with their megaprojects.”
An estimated $81.7 billion in potential industrial projects are in the works in the Lake Charles area, many of them driven by low-cost natural gas used as a raw material for products, according to an LSU economic forecast.
“Today, Louisiana is the epicenter of an industrial renaissance surpassing anything we’ve witnessed since perhaps the industrial revolution in 19th-century America,” Gov. Bobby Jindal said Monday.
The ethane cracker project will triple Sasol’s chemical production capacity in the United States, enabling the company to strengthen its position in a growing global chemicals market.
“The U.S. Gulf Coast’s robust infrastructure for transporting and storing abundant, low-cost ethane was a key driver in our decision to invest in America,” Constable said.
The ethane cracker will produce 1.5 million tons of ethylene annually. About 90 percent of the cracker’s ethylene output will be converted into a diverse list of chemicals used in consumer products. It will serve markets in which Sasol has a strong position, the company said.
Sasol has awarded a contract for the design and construction of the ethane cracker and derivatives complex to a joint venture between Fluor Corp. and Technip, with Australia-based consulting firm WorleyParsons providing project management support.
The GTL complex would produce more than 96,000 barrels of diesel fuel, naphtha and other chemical products each day. Technip has been awarded the front-end engineering contract for the facility.
Together, Sasol’s facilities, first announced in 2011 and 2012, would create more than 1,250 direct jobs.
To secure both the ethane cracker and GTL projects, Louisiana offered Sasol a performance-based grant of $115 million for land acquisition and infrastructure costs associated with the 650-acre facility.
Sasol will use the state’s FastStart job-training program. The state is investing $20 million for a new training facility and associated equipment focused on industrial technology at SOWELA Technical Community College in Lake Charles.
The company will qualify for Louisiana’s new Competitive Projects Payroll Incentive, which would provide up to a 15 percent payroll rebate for each GTL job, and Quality Jobs Program, which would give up to a 6 percent payroll rebate for each ethane cracker job, for up to 10 years. Sasol is expected to use the state’s Industrial Tax Exemption Program for both the ethylene and GTL facilities.
Including direct and indirect effects, the Sasol project will produce a total economic impact over the next 20 years of $46.2 billion in Louisiana, according to an economic impact study commissioned by LED and completed by the LSU Division of Economic Development.
Sasol is an energy and chemical company with more than 33,000 people working in 37 countries.