Logan Industries expanding staff for new facility at Port of Iberia _lowres

Advocate staff photo by LESLIE WESTBROOK -- Work on part of the Sasol ethane cracker project in Westlake is underway at Dynamic Industries at the Port of Iberia Wednesday, April 6, 2016, in New Iberia, La.

Sasol's decision to walk away from plans for a multibillion-dollar natural gas-to-liquids plant in Westlake means the state won't be on the hook for more than $200 million in incentives.

Sasol abandoned the GTL plans last week but is continuing to build an $11.1 billion ethane cracker near Lake Charles, now almost 80 percent complete.

The state package that lured Sasol's GTL plant included $115 million for land acquisition and infrastructure costs.

It also included a rarely used rebate program designed to lure new industries and technologies. Under the Competitive Projects Payroll Incentive, Sasol could have gotten a payroll rebate of up to 15 percent for each GTL job, for up to 10 years, according to Louisiana's economic development department. Sasol expected the GTL project to create 750 jobs with an average annual salary of $88,000. Based on those numbers, the rebate would have amounted to about $9.9 million a year over 10 years.

Separately from those incentives, the Industrial Tax Exemption, a state-granted break on local property taxes, would have been worth an estimated $1.7 billion to $2 billion to Sasol had the GTL project gone forward.

The state spent $20 million on an advanced manufacturing center at SOWELA Technical Community College, LED Secretary Don Pierson said. The new center trained Sasol's ethane cracker workers initially but benefits the entire region, he said.

"Sasol's decision not to build a GTL facility in Louisiana is a reflection of market conditions. We have surmised, since the company indefinitely delayed the project nearly three years ago, that today's low-cost energy environment is not conducive to an expensive investment in gas-to-liquids technology," Pierson said.

Sasol announced Thursday that low oil prices and market volatility made building the gas-to-liquids facility, whose cost was estimated at $13 billion to $15 billion, "noneconomic." The GTL plant and Sasol's $11.1 billion ethane cracker combined would have been the largest industrial investment in Louisiana history.

In 2012, when Sasol proposed building the facility to turn natural gas into diesel and other refined products, oil was around $100 a barrel and diesel about $4 a gallon and the project was estimated at $8 billion. Oil prices are now about $58 and diesel is around $2.80.

Meanwhile, Pierson said the state is focused on "the tremendous benefits" southwest Louisiana is reaping from the $11.1 billion Sasol is investing in its Lake Charles Chemicals Project.

Of the roughly 6,000 construction workers on-site, roughly nine of 10 are skilled Louisiana craft workers, Pierson said.

Turner Industries Group, for example, has doubled its Lake Charles construction workforce, Pierson said. Sasol's permanent workforce has grown by 450 to nearly 1,000 people, paid an average of $80,000 per year.

More than 1,500 entrepreneurs have gone through Sasol-sponsored training and counseling about small business opportunities for the chemical complex, which will begin coming online in the second half of 2018. Among other things, that effort resulted in 43 new startups and helped create 163 new jobs. Minority- and veteran-owned businesses received more than $39 million in procurement contracts.

The ethane cracker and related chemical plants will break natural gas into smaller molecules to make ethylene, used in a number of products from detergents and lotions to packaging and adhesives. Sasol's chemical complex jobs will be eligible for the state's Quality Jobs incentive, a 6 percent payroll rebate for up to 10 years. Sasol expects the complex to create 500 jobs paying an average of $80,000. At full employment, the rebate would amount to $2.4 million a year.

Since 2014, when Sasol began hiring for the chemical complex, the company has received a little over $1 million in Quality Jobs payroll rebates, according to LED. The complex ended 2016 with 147 jobs and a payroll of $14.3 million.

The Industrial Tax Exemption for the project could be worth as much as $1.5 billion.

However, the value of that local incentive will not be fixed until the project is complete, final spending is verified and the eligible amount is applied by the assessor to the appropriate taxing jurisdictions and their millage rates, according to LED.

Follow Ted Griggs on Twitter, @tedgriggsbr.