Oil Plunge May Impact Sasol Louisiana Plans

15.03.2016 -

As oil prices continue to drop, South African petrochemicals group Sasol is reviewing the cost and timing of parts of its $8.1 billion shale gas-fed cracker complex originally announced to go on stream in 2018 at Lake Charles, Louisiana, on the US Gulf Coast.

Pending completion of the review, some facilities could be expected to go on stream downstream of the 1.5 billion t/y cracker in 2019, CEO David Constable has told news agencies.

In contrast to reports circulating last week, that polyethylene plant start-ups may be delayed, the company has now clarified that these are still due to go on stream in 2018. Other ethylene derivatives facilities could be affected, however.

When announcing the Louisiana project in October 2014, Sasol said the investment would roughly triple the company’s US capacity, adding that the Gulf region's "robust infrastructure for transporting and storing abundant, low-cost ethane” was a key driver in its decision to build.

Along with the planned 900,000 t/y of polyethylene, which includes a HDPE/ LLDPE swing plant and an LDPE plant, Sasol is also building capacity for 300,000 t/year of ethylene oxide and ethylene glycol. It also plans to produce about 300,000 t/year of specialty alcohols for detergents.

Fluor Technip Integrated, a joint venture of US contractor Fluor and the US offshoot of the French engineering firm Technip has the contract for primary engineering, procurement and construction management.

In December 2015, US chlorvinyls producer Axiall and South Korea’s Lotte Chemical said they had made a final decision to build an ethylene plant at Lake Charles as part of a newly formed joint venture, LACC. Start-up has been penciled in for early 2019.

The US-Korean-owned cracker will be designed for around 1 million t/y of ethylene and is expected to provide partial backward integration for Axiall’s vinyls business as well as supplying feedstock for Lotte Chemical’s new monoethylene glycol (MEG) plant at the site.

In January of last year, Sasol cast doubt on the economic feasibility of another project planned for Louisiana, an industrial scale gas-to-liquids (GTL) plant, also to be run on shale gas-derived feedstock.

Plans by Braskem to build a cracker in the US in West Virginia using shale feedstock appear to be in the deep freeze, although this could also reflect the company’s own troubles. Oil and petrochemicals giant Shell has still not revealed whether it will go ahead with an ethane complex in Pennsylvania, but reports suggest the relevant infrastructure is being developed.