Shell Chemical LP said Monday it will invest $717 million in a new linear alpha olefins manufacturing unit at the company’s Ascension Parish complex.
The project will create 20 new jobs with an average salary of $104,000, according to Shell. The company already employs 650 people at its Geismar site.
Louisiana’s economic development department estimates the project also will generate 93 indirect jobs. Shell estimates the project will also require 1,000 construction jobs at peak building activity.
Alpha olefins are chemicals used to produce a variety of consumer and industrial products, including stronger and lighter plastics for packaging and bottles as well as engine and industrial oils and drilling fluids.
Shell has three alpha olefins units on its 800-acre Geismar site, located on the east bank of the Mississippi River. The new unit will produce about 468,000 tons of alpha olefins a year. The new unit’s production will lift Shell Geismar’s total capacity to more than 1.4 million tons, making Shell Geismar the largest alpha olefins production site in the world.
“Obviously Shell takes the long view of these things, but our view is the market is there. It will be robust, and it supports this investment,” Shell Geismar General Manager Rhoman Hardy said.
Shell doesn’t make the end products that consumers buy, he said. Shell’s customers use the olefins to make those products, which typically go to parts of the world where the population and/or the population’s wealth is increasing.
Both Shell and its customers believe there will be a market for those products, he said.
The global alpha olefins market is expected to grow from 3.82 million tons in 2013 to 5.2 million tons by 2020, according to research firm Radiant Insights Inc. By then the market will be valued at $10.7 billion.
Shell expects to begin construction on its new unit during the first quarter of 2016, with operations beginning in 2018.
“This important investment demonstrates our ongoing commitment to the growth potential in chemicals,” said Graham van’t Hoff, executive vice president for Royal Dutch Shell Plc’s global chemicals business.
The new alpha olefins unit is the latest megaproject to land in Ascension Parish.
There have been so many plants and developments built that parish officials have warned the east bank of the river is running out of space for large industrial projects.
Louisiana Economic Development and Shell began discussing the project in November 2013. Shell is expected to use the state’s Enterprise Zone and Industrial Tax Exemption programs.
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