Axiall Corp. held an unveiling ceremony for its logoed storage tank in August of 2013. The tank, which previously displayed the PPG logo, is visible from Interstate 210 and various waterways. (Rick Hickman / American Press)
Last Modified: Wednesday, August 06, 2014 9:12 AM
Estimated capital expenses for the region’s proposed megaprojects have topped $70 billion, according to an updated report released Tuesday by the Southwest Louisiana Economic Development Alliance.
Southern California Telephone & Energy’s proposal for a $9 billion LNG plant on Monkey Island and Axiall’s $3 billion plan for an ethane cracker and monoethylene glycol facility in Westlake are two additions to the report. Both megaprojects had a significant impact on the report’s revised $70 billion figure, which is up from $65 billion, a number the American Press reported in April.
David Conner, the alliance’s vice president of economic development and international commerce, said SCT&E’s LNG project is listed at $2.4 billion, which was its initial cost estimate prior to the company’s decision last month to triple the size of the proposed facility.
Conner said new megaprojects and revised capital expenses are not added to the list until company executives verify the information in writing with the alliance. He said the alliance cannot list SCT&E’s project at its current $9 billion estimate until the company authorizes it to do so.
“That could happen any day now,” he said.
Magnolia LNG’s capital expense increase from $2.5 billion to $3.7 billion was also factored in the report’s most recent total, Conner said. He said several megaproject proposals, including Cheniere’s Sabine Pass LNG plant and Sasol’s ethane cracker and gas-to-liquids facilities, have seen increases in their estimated capital expenses over the past five years.
“The first announcement from Cheniere Energy was $6 billion for their LNG terminal,” Conner said. “Now it’s up to $20 billion. As they were doing their planning, they realized that the market demand was greater than they anticipated. So they went ahead and did expansions.”
Sasol’s combined megaprojects, Conner said, began at $8 billion and are now at $16 billion-$21 billion.
“Most of these projects are moving towards final investment decision,” Conner said. “We add projects on this list at different states. Some of them are under construction. Some of them have just announced their project through the media.”
The list also takes into account the estimated cost of many ancillary services that will be needed to support the region’s industry expansion projects. Hotels, casinos, temporary and residential housing projects and rail improvements are among the non-industry capital expenses listed in the report.
Conner said the region’s “massive boom” in project announcements is an anomaly and not a trend.
“This is so far above and beyond anything that’s going on in this country right now that you really can’t call it a trend,” he said. “It’s market conditions being right for these projects right now.”