American Press

Wednesday, May 24, 2017
Southwest Louisiana ,
(Special to the American Press)

(Special to the American Press)

The eight petrochemical companies fueling upcoming economic boom

Last Modified: Monday, November 18, 2013 3:19 PM

By Frank DiCesare / American Press

The next six years will bring unprecedented change to Southwest Louisiana. It will be a time of development and economic opportunity, one that is expected to bolster the lives of thousands in the area.

Eight petrochemical companies — and possibly more — will build new plants or expand their existing facilities in Calcasieu and Cameron parishes, bringing thousands of job opportunities to qualified people in labor and management. Some will build new liquefied natural gas plants; others will expand their LNG production and begin exporting. One company will refine natural gas into gasoline; another will harness the science of “cracking” ethane molecules to produce ethylene, a gas compound found in many of the products we use every day.

When taken in the aggregate, the estimated $47 billion in projects have many state and local officials predicting an economic boom for Southwest Louisiana.

“It’s a historical event,” said Larry DeRoussel, executive director of the Lake Area Industry Alliance. “We’ve not seen anything this large in the way of expansion of business and industry in the Lake Area, ever.”

In a recent meeting with the American Press’ editorial board, state Economic Development Secretary Stephen Moret described Southwest Louisiana’s fiscal outlook as “amazingly positive” and cited the proposed new and expanding plant projects as his primary example. He described the area’s present day as “the calm before the good storm.”

Loren Scott, professor emeritus of economics at LSU, has projected job growth in greater Lake Charles to top 8 percent in the next two years.

“For Southwest Louisiana the expansions mean the biggest boom you’ve ever had in your history,” he said. “But it also means you’ve got some challenges.”

Today, most of the projects remain queued in the political pipeline that is the permitting process. Companies looking to produce liquefied natural gas must first get a permit with the Federal Energy Regulatory Commission, which oversees construction, safety, environmental impact, transportation and air quality.

Companies seeking to export LNG to countries with whom the United States has a free trade agreement must get a permit from the U.S. Department of Energy. If a company also wants to export LNG to a non-FTA country, a separate DOE permit must be obtained.

“Things can get very political in Washington; it’s the nature of the beast,” said Octavio Simoes, president of Sempra LNG, the San Diego-based company that plans to expand its Cameron LNG plant in Hackberry. “A lot of debate has emerged about should the U.S. export natural gas, even though we have this bounty of natural gas.”

Companies seeking to build gas-to-liquids plants in Louisiana must get air and water permits signed by the state’s Department of Environmental Quality. If a project alters wetlands that are defined by the Environmental Protection Agency and the U.S. Army Corps of Engineers as “jurisdictional,” a wetlands modification permit from the Corps must be received. Once the air and wetlands permits have been issued, construction on the plant can begin. When the water permit is granted, the plant can open for operation.

Plant construction will require the skills of welders, pipefitters, millwrights, machinists, ironworkers, concrete specialists and carpenters. During peak periods, companies will need as many as several thousand workers to ensure the projects are completed on time and, hopefully, on budget.

New and expanded plants will also need the skills of operations people, managers, engineers and administrative personnel. In the next few years, hundreds of these people will be in demand in Southwest Louisiana.

Company executives have stated their hopes to hire their labor and management locally. They stress, however, that qualifications will trump geography.

“There’s definitely a desire to ensure as many people are hired locally as possible,” said Nancy Tower, Sasol’s North American operations training and communications manager. “The question is, how many qualified applicants do we have? There are people available who are interested in getting the skills and knowledge, but they have to gain that.”


Of all the plant expansions slated for Southwest Louisiana this decade, Sasol’s ethylene and GTL complexes are the largest and most expensive of them all. In the next six years, the company will spend between $16 billion and $21 billion to construct these facilities to increase their ethylene production while producing about 96,000 barrels of diesel fuels and chemicals each day.

“This is a major expansion of our existing facility,” said Michael Hayes, Sasol’s public affairs manager for U.S. megaprojects. “It’s not a traditional expansion in that a traditional expansion builds off of existing operations. This is a project that brings entirely new operations to the facility.”

Sasol’s ethylene complex will feature an ethane cracker expected to produce about 1.5 million tons of ethylene each year. The cracker will transport ethane from a pipeline to a furnace where it will be heated in metal tubes in excess of 1,500 degrees Fahrenheit. The metal acts as a catalyst for the heat, which cracks the ethane.

Once the ethane has been cracked, two of its six hydrogen molecules are removed and a double bond is created between its two carbon molecules. The result is ethylene, a flammable and colorless gas found in such products as antifreeze, textiles, polyurethane foam and pharmaceuticals.

Sasol’s ethylene complex will also house an ethylene oxide unit; an ethylene tetramerization unit; an expanded Ziegler alcohol plant, which will increase the company’s production of ethoxylates; and a small Guerbert alcohols plant. The complex will also produce low-density and linear low-density polyethylene.

Construction on the ethylene complex is expected to begin next spring after the final investment decisions has been made. The project is scheduled for completion by mid-2017.

Sasol’s GTL complex will feature a synthesis reactor that will link natural gas’s single carbon methane molecule into long-chain molecules. The chain is then put through a refining process that converts the natural gas into diesel fuel, naphtha, paraffin waxes, lubricating oils and liquid propane gases.

The complex will also house Sasol’s second linear alkyl benzene unit, which will increase the company’s production of detergent alkylates. Sasol’s LAB units convert paraffin steam into linear alkyl benzene, a compound used as a surfactant in laundry detergent.

Two years into the construction of the ethane cracker, Sasol officials expect to receive the final investment decision on their GTL complex. Construction on the complex is scheduled to begin in 2016 and conclude in 2020.

Construction on Sasol’s projects will require the work of up to 7,000 construction workers during peak times. Company officials also estimate hiring up to 1,200 permanent employees to operate and manage the facilities.

Sasol’s Tower said it is possible that many of the workers hired to build the ethane cracker will also be needed to construct the GTL complex.

“Moving most of the workers from the ethane cracker to the GTL units would be the ideal situation,” she said. “We’re clearly not promising that because there is so much yet to be determined about when final investment decision will be made on GTL and when construction will begin.”

Hiring for construction on the ethane cracker is expected to begin in 2015. As work concludes on the cracker, hiring will begin on the GTL jobs in late 2017 to early 2018, Tower said.

Sasol officials are in the middle of the air and water permitting process with DEQ. Hayes said Sasol expects to complete that process by early next year.

The company has also applied for a wetlands modification permit with the Army Corps of Engineers.

“We’re doing the permitting on all of these projects in parallel so that all of the impacts are reviewable at the same time,” Hayes said. “We’re doing it in such a way that we’re not asking for any relief from any regulatory standard; we’re not asking for any special dispensation.”

Juniper GTL

While Sasol’s proposed GTL complex will be the first of its size in North America, one of the first to break ground will be Juniper GTL.

Slated for construction on the former Praxair site on Interstate 10 West in Westlake, Juniper’s $100 million facility will produce about 1,100 barrels a day of diesels, waxes and naphtha.

“The objective is to reuse as much as we can, to repurpose it, and only add new equipment where it is needed,” said James Davis, senior vice president of SGC Energia, Juniper’s parent company. “Praxair has some assets there, primarily the steam methane reformer, which is an ideal size for exactly what we need.”

About 125 people will be needed each year to build the facility, Davis said. Construction is expected to begin in January and continue through the fall. Davis added that Juniper officials are confident the facility will be operational by summer 2015.

Juniper’s project will reportedly create 29 direct jobs, which pay an average of $85,000 a year, plus benefits. Louisiana Economic Development estimates the facility will create 112 indirect jobs.

“We’re going to start hiring supervisory personnel within the next two to three months,” Davis said. “These people will help us develop policies and procedures. They will be experienced hands who have run complex facilities before.”

Davis said Juniper will apply for its water permit with DEQ sometime early next year. The company received its air permit from the department in September.

Davis added that Juniper will not apply for a wetlands modification permit with the Corps of Engineers.

“The whole support structure within the state of Louisiana was also an important consideration for us,” he said. “In other places that we’ve looked, instead of being a facilitating capability it’s more of a gauntlet to be run.”

Cameron LNG

Sempra Energy opened its Cameron LNG plant in 2009 as a regasification import terminal. Now, the company is seeking to expand its facility with an estimated $7 billion liquefaction plant, which will allow the company to liquefy and export natural gas.

“We decided that since we already had the regasification component in place it would make sense to add a liquefaction facility,” Sempra’s Simoes said. “Rather than taking LNG that came in on ships and then regasifying it and putting it into the pipelines, we would take the gas from the pipelines, liquefy it and put it into ships to take it wherever there is demand.”

The LNG process begins when natural gas is brought in from a pipeline as a feedstock. The gas is then transported to a liquefaction train that freezes it to minus-260 degrees Fahrenheit at atmospheric pressure. The freezing compresses the gas to one-six-hundredth the volume it had in its pipeline state. After compression, the gas becomes liquefied, creating LNG.

Cameron’s plant expansion will consist of three trains, each of which will produce about 12 million tons of LNG per year for export. The trains will take about four years to build, with construction beginning next summer and ending in 2018. The project’s construction will require between 1,500 and 3,000 workers, Simoes said.

Once the liquefaction facility comes online, Cameron LNG will increase its staff from 60 to about 200. Those jobs will include operators, maintenance personnel and engineers. The company will also hire about 40 employees as support staff for their Houston office, Simoes said.

To secure financing for the plant’s expansion, Sempra officials have entered into 20-year tolling agreements with GDF Suez, Mitsubishi Corp. and Mitsui & Co. Ltd. Each of these companies has agreed to pay Sempra manufacturing fees for the next 20 years, totaling about $36 billion. Even if gas prices spike in the U.S. and customers no longer want to buy LNG, Simoes said, Sempra’s partners will still have to pay the manufacturing fee.

“That means there’s a $36 billion guarantee that the companies put in there so that the banks are sure that no matter what happens in the market, the owners of the project are going to get paid the manufacturing fee,” he added. “There’s no other investment in the competitive market like plastic pellets or fertilizer that gets 20-year contracts guaranteed for their product.”

Cameron LNG’s expansion is first in FERC’s queue to receive its permit, Simoes said. He added that Sempra expects to get its FERC authorization by next summer.

Sempra officials received their DOE permit to export to FTA countries in January 2012. The facility’s non-FTA permit from the department, however, is still pending in Washington. Simoes said Sempra is confident it will get its non-FTA permit before the end of the year.

“We know that the typical markets for LNG are Korea, Japan, India and Taiwan,” he said. “These are countries where the demand for LNG is high, and they are natural allies for the United States.

“Their alternative is oil,” he added. “When they are oil-based countries they are dependent on very unstable regions of the world, like the Middle East or Venezuela. By having these countries less dependent on oil, with gas, we actually restabilize the world a lot.”

Sabine Pass LNG

While Sempra prepares to expand its LNG plant, Cheniere has already broken ground on theirs.

Sabine Pass LNG, a facility Cheniere opened in April 2008, remains the area’s only petrochemical project in which construction has begun. The plant’s $5.5 billion expansion, which will enable the company to export LNG, began in August 2012 and is expected to end in 2015.

Cheniere received FERC approval on the Sabine Pass project in April 2012. The company will expand the plant with six liquefaction trains, each of which is expected to produce about 5 million tons of LNG a year.

The expansion will make the facility the first of its kind in the contiguous United States capable of exporting natural gas as LNG. The company’s existing import terminal has regasification and send-out capacity of 4 billion cubic feet a day and can store close to 17 billion cubic feet of gas.

During peak construction, the project will employ about 3,000 workers. The plant’s expansion is also expected to create 150 permanent jobs.

Cheniere received its DOE permit to export to FTA countries back in September 2010.

Officials from Cheniere declined to comment on this story.

Trunkline LNG

The largest LNG plant expansion project now planned for Calcasieu Parish this decade is Energy Transfer’s Trunkline LNG.

Located on Big Lake Road in Lake Charles, Trunkline has been an import facility since it first opened in July 1981. Now, Energy Transfer and its business partner, British Gas, are looking to expand the plant into an export facility.

Trunkline’s expansion will consist of three new liquefaction trains that will increase the plant’s LNG production and allow the company to export to non-FTA countries. The three trains are expected to produce up to 15 million tons of LNG each year.

The plant’s expansion will cost an estimated $10 billion, said Jamie Welch, global chief financial officer for Energy Transfer Equity.

‘Since we now have a preponderance of natural gas in this country, there is a fairly attractive and significant arbitrage for many consumers around the globe when they look at the cost of natural gas, where they don’t have indigenous reserves or resource, and they can import,” Welch said.

“If you thought U.S. gas prices were $4 or $5 and you pay $3 to go and liquefy it, now we’re talking $7 or $8, and then you pay $2 to $3 to ship it,” he added. “You’re effectively looking at a delivered price for a foreign customer in a foreign country of between $10 and $11. If they’re paying today $15 to $20, it’s a pretty compelling proposition. That’s a pretty good delta between paying $11 and $15 to $20.”

Welch said Energy Transfer expects to close on the project’s financing and have its construction contracts in place by mid-2015, after which construction can begin.

At its peak, Trunkline’s expansion is expected to create about 5,000 construction-related jobs. Work on the project is scheduled to run from 2015 through 2020.

When the plant’s new trains go into operation, about 250 permanent jobs will be created, including control room personnel, engineers, cryogenic experts and supervisors.

Energy Transfer received conditional approval from DOE for Trunkline’s non-FTA permit in August.

“Since we are exporting hydrocarbons from this country and we’re going to non-free-trade-agreement countries, we have to go to the DOE,” Welch said. “There’s been a lot of focus on the impact of exporting natural gas and what that will do to natural gas prices here domestically. DOE’s view is that for an expected threshold, they think the impact will be relatively minimal.”

Energy Transfer will apply for Trunkline’s FERC permit by the end of next spring. Company officials expect to receive approval from the commission by the end of March 2015, Welch said.

“Our customers are just trying to reduce their cost just like any other customer would,” he added. “They use the gas in their local system for their citizens; they need it for manufacturing; they need it domestically for heating or cooling, whatever the case may be. For them, they’re just looking to take advantage of a little bit of an anomaly, to be honest.”

Lake Charles Clean Energy

In the next four years, three companies — Leucadia, G2X Energy and Magnolia LNG — will build new plants on land leased from the Port of Lake Charles. The first of these projects expected to begin construction is Leucadia’s Lake Charles Clean Energy, a $2.6 billion facility that will be built along the Calcasieu Ship Channel near the Citgo refinery.

Lake Charles Clean Energy will use an estimated 7,000 metric tons of petcoke a day to produce more than 1 million metric tons of methanol, 400,000 tons of sulfuric acid and 4.5 million tons of carbon dioxide. The facility will also produce hydrogen and argon. Company officials have an agreement with Koch Carbon to receive the plant’s petcoke from refineries along the Gulf Coast.

Petcoke is an energy-rich waste byproduct produced from refining high-sulfur-content crude oil.

Construction on Lake Charles Clean Energy’s plant has been estimated to take three to four years to complete. Work on the plant is scheduled to begin next spring. At its peak, the project is expected to create up to 1,500 construction jobs. Plant officials have also reported that about 165 full-time employees will be needed to staff the new facility.

In August, the Port of Lake Charles board approved an operating agreement with Lake Charles Clean Energy, allowing the company to handle, store and export methanol. To date, the company has spent more than $50 million on site preparation.

The project received a Prevention of Significant Deterioration construction permit from and an emissions operating permit from DEQ in June 2009. The permits were modified a year later to allow the company to produce methanol and sulfuric acid from petcoke.

Lake Charles Clean Energy was awarded $1.56 billion of Gulf Opportunity Zone and Hurricane Ike tax-exempt bonds by the Louisiana State Bond Commission. The company also received a $261 million grant from DOE as part of an effort to capture carbon dioxide from industrial sources for beneficial use or storage.

In October 2012, the company secured offtake agreements with BP Products North America, Air Products and Chemicals and Denbury Offshore for products that will be produced at the facility.

Officials from Leucadia declined to comment on this story.

G2X Energy

The Port of Lake Charles will also see the arrival of G2X Energy’s natural gas to gasoline plant, a 200-acre facility that will be built on Tank Farm Road along the Industrial Canal.

The estimated $1.5 billion plant, the first of its kind for the company, will convert natural gas into methanol. The company will then refine the methanol into 87-octane gasoline and liquid propane gas, producing about 12,500 barrels each day.

“We license technology from ExxonMobil Research and Engineering that would take methanol to gasoline,” said Trey Fielder, director of project development for G2X Energy. “We’re taking advantage of the local need for methanol by producing it locally and saving on the transport. That way we provide a product at a much lower cost.”

The Lake Charles plant will be G2X’s second methanol-producing facility; its first is under construction in Pampa, Texas. Fielder said the Lake Charles plant will produce about 20 times the amount of methanol made in Pampa.

G2X’s refining process begins with natural gas. The company will blend natural gas with steam to create syngas, which is a blend of carbon monoxide, carbon dioxide and hydrogen. The syngas is sent through a catalyst that synthesizes it into methanol. The methanol is then sent through the catalytic process G2X licenses from ExxonMobil to convert the methanol into gasoline and liquid propane gas.

Fielder said ExxonMobil’s catalytic process is proprietary and declined to comment on how it works.

G2X officials have filed for an air permit with the DEQ and EPA. The company has also applied for a permit with the U.S. Army Corps of Engineers, which will allow the company to build two docks along the facility, one for construction and another from which gasoline will be barged to refiners and blenders in the Houston, Beaumont and Lake Charles areas.

The Corps’ permit will also allow G2X to dredge the waterways in front of its property.

G2X Energy has not yet applied for its water permits, Fielder said.

Construction on the facility is expected to take about three years. G2X officials hope to start some of the groundwork by the middle of next year. If that happens, Fielder said, construction should begin by the end of 2014.

During peak construction, G2X’s Lake Charles plant will create up to 3,000 construction jobs. The facility is also expected to create about 245 full-time jobs. About 200 of those people will work in operations, the rest will be administrative personnel, Fielder said.

LED has estimated that an additional 750 indirect jobs will also be created when the plant opens for operation by the end of 2017, he added.

G2X will export most of its gasoline domestically. Fielder said, however, that the company does have the option to export internationally.

“We will not buy ethanol; we will not blend,” he said. “There will not be any G2X retail gasoline stations. We will sell our gasoline to either other refiners or blenders. The intent is that the methanol we produce would all be used in the United States, so we would be displacing foreign oil and providing gasoline from natural gas.”

Magnolia LNG

The third plant that will be built on land leased from the Port of Lake Charles is Magnolia LNG, an 8 million-ton-per-year LNG export facility.

Magnolia’s estimated $3.7 billion project will consist of four LNG trains, which will be built on 120 acres near the intersection of Henry Pugh Boulevard and Big Lake Road in Lake Charles. Each train will produce 2 million tons per year of LNG, which will be stored in two, 160,000-cubic-meter cryogenic tanks. The facility will also have a berth jetty where ships will dock to receive LNG from the plant for export, said Ernie Megginson, Magnolia’s vice president of project management.

Magnolia will receive natural gas from the 133-mile Kinder Morgan Louisiana Pipeline. On reaching Magnolia’s plant, it will go through its liquefaction trains where it will be frozen and converted into LNG.

From the trains, the LNG will be transported to the plant’s cryogenic tanks for storage. When LNG carriers come into port, Magnolia will pump the LNG from the storage tanks into the ships. After the pumping is complete, the ships will be escorted by the Coast Guard and the pilots’ association back out to the open waters where the LNG will be exported to destinations determined by Magnolia’s clients. The company’s LNG will also be exported land side by trucks that will deliver it to refueling stations in Louisiana and surrounding states.

Since March, Magnolia’s construction permit has been in the prefile stage with FERC. During prefiling, Magnolia officials will work with FERC to develop 13 research reports that will form the basis of a complete environmental statement for the project, Megginson said.

“Once FERC approval is received, we will establish the operations and maintenance philosophy,” he added. “Either we operate or a partner operates or we accept contracts for operations. When we get the FERC permit, we want to reach final investment decision, which is targeted for end of June, 2015.”

In February, DOE officials granted Magnolia a permit to export up to 4 million tons a year of LNG to FTA countries. Last month, the company filed applications to export an additional 4 million tons a year to FTA countries and up to 8 million annual tons to non-FTA countries.

Construction on Magnolia LNG is expected to begin in mid-2015 and end by mid-2018. Megginson said the project will create about 1,000 construction jobs, but not all of them will be needed on site.

“Our actual site labor may be quite a bit less,” he said. “The last estimate I saw was 450 construction jobs.

“The hiring comes in stages,” he added. “We hired an engineering manager. We will be hiring a health and environmental safety manager. Going forward we will be hiring technical and administrative people over the next few months, both in Lake Charles and in Houston. So we will be hiring between eight and 10 people by the end of this year.”

Megginson said the company may hire an operations and maintenance manager next year. The O&M manager, he added, will then hire his own team, which will create 45 permanent jobs at the plant.

“When operations start up in 2018, we’ll have a team that knows every single nut and bolt in the plant,” Megginson said. “They also would’ve already written their operating procedures and they’ve already worked out their scheduling and subcontractors. By mid-2018 that team will turn the key on the plant and start it up.”

Posted By: Nick Doggett On: 1/12/2015

Title: Mr

I appreciate the detail of this article and would like to track these projects.
I am based in Perth Australia and moving to Houston to assist in transportation.

Posted By: Velma Aubert On: 10/10/2014

Title: Velma Aubert, Realtor

Great Story! Where can I procure a list of the Human Resource Manager's for these corporations?

Posted By: Wilfred On: 11/30/2013

Title: Let's get ready but with caution

It's amazing all of the input about the proposed economic boom is coming from industry. I am in favor of an increase in jobs and economic growth but let's make sure we are concern about the quality of environment and health of the future workers and health of the surrounding community. Southwest Louisiana already has a high cancer rate and existing industry plays a major part in that rate.

Posted By: Carolyn Thibodeaux On: 11/23/2013

Title: Get Ready, Get Ready, Get Ready...

Excited to see Great things in the very near future my hometown...

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