Sasol multi-billion project ready to roll
Published 9:28 am Tuesday, October 28, 2014
Let the dirt fly. Sasol’s multi-billion ethane cracker is about to become a reality.
Sasol executives announced Monday that they have reached Final Investment Decision on the cracker project, which is now estimated at $8.1 billion. The announcement means Sasol can move forward with hiring for the cracker’s construction and operation.
The project, which will increase ethylene production at the company’s Westlake plant, is expected to create more than 5,000 construction jobs at peak times and more than 500 full-time positions.
In a formal presentation at the SEED Center before federal, state and local officials that included Gov. Bobby Jindal, David Constable, Sasol’s president and CEO, said the company’s board of directors in South Africa made its decision to approve FID on the cracker project on Friday. He called the board’s decision “a defining moment” in Sasol’s history.
“Once commissioned, this world-sale petrochemical complex will roughly triple our chemical production capacity in the U.S. alone,” Constable said. “This will enable us to further strengthen our position in a growing global chemicals market.”
Constable added that Sasol is committed to building its new facility in an “environmentally-friendly fashion.” He said the company’s wetlands mitigation program will increase “the quantity and quality” of the wetlands in the Calcasieu Watershed.
Under the program, he added, Sasol will replace every acre of impacted wetlands with 2.6 acres of “higher quality wetlands.”
In addition to spending $8.1 billion on the new facility, Sasol will invest $800 million in land acquisition and site development.
Michael Thomas, Sasol’s vice president of U.S. operations, said the company made a full presentation of the ethane cracker project to its board, analyzing both its cost and the company’s ability to run it once construction was complete.
“Once they were satisfied, they said, ‘We agree; we approve. You are free to build the project,” he added.
Thomas said Sasol will own the new facility outright and not seek outside investors.
“We will go out and find financing for portions of the project and Sasol will pay for some of the project directly on its own,” he said. “But Sasol will wholly own this project.”
He added that Sasol’s decision to expand its plant without outside investors does not pose a financial risk to the company because it already knows its market.
“This project builds on existing businesses for Sasol,” Thomas said. “So we know these businesses. We have dominant market shares in many of the products we will be making. So we are not as dependent on single off-takers of product like the LNG facilities are.”
Jindal called Sasol’s announcement “a historic day” for the region and Louisiana.
“This is going to be Louisiana’s best generation, thanks to the opportunities we’re creating for our children and our grandchildren,” he added. “We’re proud that this global company is making this large commitment and investment in our state. This speaks volumes about their prospects for growth right here in Southwest Louisiana.”
Sasol has selected Fluor Technip Integrated, a joint venture, to build the cracker. Sasol awarded Fluor its Front-End Engineering and Design (FEED) contract for the cracker project in July 2013. Sasol awarded
Technip its FEED contract for its proposed $11 billion gas-to-liquids complex last November.
FID on Sasol’s GTL complex is scheduled for the end of 2016, Constable said.
Sasol’s ethane cracker will produce ethylene, which will be used to make products such as synthetic fibers, detergents, paints and fragrances. The facility, which is scheduled for full operation in 2018, is expected to produce about 1.5 million tons of ethylene a year.
Kacie Forrest, communications and public affairs representative for Fluor, said hiring for construction on the cracker project is expected to begin in early 2015.
Construction on the facility is expected to begin next spring.