Sasol advances gas-to-liquids plan in Louisiana
South African chemical and energy company Sasol Ltd. said it could spend up to $21 billion to build a complex in Louisiana to turn natural gas into chemicals, diesel and other fuels.
Part of that could be a $5 billion to $7 billion chemical plant, similar to the type of plant a Shell subsidiary has discussed building in Western Pennsylvania. The market for these plants, known as ethane crackers, is becoming increasingly crowded because of the supply of cheap natural gas from shale.
Some experts have estimated that only half of the 10 potential projects may make it, with major competition for supplies, customers and even construction support. About half have committed to building, with the chemical arm of Royal Dutch Shell plc and a start-up from West Virginia each still considering whether to build plants in Beaver County and West Virginia.
“We can monetize these gas resources in North America,” said Sasol CEO David Constable.
The company will begin initial engineering work on a long-discussed complex in Westlake, La. A final decision on the project — and its final expected price — won't be offered until 2014. The complex, if built, will employ 7,000 construction workers during peak construction and 1,200 permanent workers, the company said.
The company expects to spend $5 billion to $7 billion on a chemical plant and later add an $11 billion to $14 billion gas-to-liquids plant that will turn natural gas into diesel. Sasol's estimated cost has risen recently by nearly $6 billion because it decided to go ahead without a partner and to expand the number of chemicals and other products the complex can make.
The chemical plant would begin operation in 2017, and the diesel plant would come on line in two stages beginning in 2018 and 2019. The diesel plant would produce a total of 4 million gallons of diesel per day.
Constable cited the low price of natural gas, the high price of oil, Sasol's strong balance sheet, and lucrative tax incentives from the state of Louisiana as reasons to begin work on the project.
“We want to grow,” he said. “We want to go to regions where we can leverage our proprietary technology.”
Sasol has long turned coal, which is abundant in South Africa, into liquid fuels. It can also use the process to spin the carbon and hydrogen in natural gas into more complex hydrocarbons that fetch higher prices because of the high price of oil.
Other chemical companies have announced plans to expand operations in the U.S. or build new ones that use natural gas as a feedstock to take advantage of U.S. natural gas prices, which have been half or below what they are in Europe and Asia.
U.S. drillers have learned to unlock enormous amounts of natural gas from shale formations under several U.S. states, which has driven down the price and given companies confidence that the price could stay relatively low for years to come.
The Associated Press and Trib Total Media staff writer Tim Puko contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Amusement parks fight off home entertainment threat
- State officials prompt UPMC, Highmark to go to mediation to resolve Medicare dispute
- S&P 500 logs 47th record high close for year
- Federal agency checking whether Highmark has enough doctors in Medicare plan
- Caution creeps into economic picture as consumer, business spending taper
- Retailers that won’t open on Thanksgiving hope move pays off
- Westinghouse to construct colossal nuke plant in Turkey
- Household debt on the rise after 5-year decline
- Wilkins woman leads PNC’s multicultural marketing efforts
- Butler County firm Deep Well Services tackles tough gas wells
- Iron ore price decline hurts U.S. Steel’s cost advantage over rivals