LA: Sasol Breaks Ground on $8.1B, 500-Job Ethane Cracker Complex at Westlake
31 Mar, 2015
Gov. Bobby Jindal highlighted the start of construction for Sasol’s $8.1 billion ethane cracker complex as company and regional officials gathered for groundbreaking at the Calcasieu Parish site. The world-scale petrochemical complex will include an ethane cracker and six chemical manufacturing plants, to be built near Sasol’s existing Westlake facilities. The project will roughly triple Sasol’s chemical production capacity in the United States.
Sasol will create 500 direct new jobs with an average annual salary of $88,000, plus benefits. Louisiana Economic Development estimates the project will result in 2,395 new indirect jobs, and the company estimates 5,000 construction jobs will be generated by the project during the next several years.
Gov. Jindal said, “With work getting underway for this historic project, we congratulate Sasol Ltd. for choosing Louisiana and committing to develop this $8.1 billion project. This industrial complex of an ethane cracker and six affiliated chemical plants is an important component of the remarkable economic success story that is Southwest Louisiana. Our hard work to create and sustain the nation’s best business climate and a first-class workforce led Sasol here, and the result will be hundreds of high-paying permanent jobs and thousands of quality construction jobs to benefit generations of Louisiana families.”
In addition to the $8.1 billion capital investment for the petrochemical complex, Sasol will spend $800 million for infrastructure improvement, land acquisition and utility improvement costs at the site.
“By the time construction is complete in 2018, Sasol’s investment will total almost $9 billion, making it one of the largest investments in our company’s history,” said Steve Cornell, Sasol’s executive vice president of international operations. “Along the way, we’ll create more than 5,000 construction jobs and more than 500 full-time positions, 100 of which have already been filled.”
Ethane cracking is the process of converting molecules of ethane extracted from natural gas to create ethylene, one of the building blocks of the petrochemical industry. Sasol’s ethane cracker complex will produce 1.5 million tons of ethylene annually, with approximately 90 percent of the complex’s ethylene output converted into a broad range of chemicals used to make everyday products such as detergents, synthetic fibers, fragrances, paints, film and packaging.
The ethane cracker, which is expected to launch commercial production of ethylene in 2018, is one of two projects announced in December 2012 during the feasibility stage, with the other being a large-scale gas-to-liquids facility that would increase the total number of new direct jobs to more than 1,250. Sasol announced in January that it is delaying a final investment decision on the GTL plant, as part of a comprehensive plan to conserve cash in response to lower international oil prices. The company said it would continue to advance the GTL facility at a slower pace as it evaluates the possibility of phasing in that project going forward.
Louisiana’s role in cultivating the Sasol project began in early 2011, when LED’s Business Expansion and Retention Group, or BERG, joined the Southwest Louisiana Economic Development Alliance and the Port of Lake Charles to identify potential sites in Southwest Louisiana using GIS mapping technology. Ultimately, a 650-acre site near Sasol’s existing Westlake facilities was identified as optimum for the project’s needs.
To secure both the GTL and the ethane cracker projects, Louisiana offered Sasol a performance-based grant of $115 million for land acquisition and infrastructure costs associated with the facility. Sasol must develop the GTL project to receive that incentive. The company will receive the services of LED FastStart®, the nation’s No. 1 state workforce training program for both projects. In addition, the GTL project will qualify for Louisiana’s new Competitive Projects Payroll Incentive while the ethane cracker project will qualify for the Quality Jobs Program, with the payroll incentives applied for up to 10 years. To support Sasol’s workforce needs during construction and operations, the state is investing $20 million for a new training facility and associated equipment focused on industrial technology at SOWELA Technical Community College in Lake Charles. Gov. Jindal broke ground on that SOWELA Sasol Regional Training Center with company and college officials in October 2014. Finally, Sasol is expected to utilize the state’s Industrial Tax Exemption Program for both the ethylene and GTL facilities.
“The importance of the petrochemical sector to Calcasieu’s economy is well-known, and Sasol has been a significant player in this parish for many years,” Calcasieu Parish Police Jury President Nicholas E. Hunter said. “With the groundbreaking of its world-class ethane cracker project, Sasol is taking the industry to a whole new level, and the positive economic impact for our region will be tremendous.”
Sasol has selected multiple Louisiana-based contractors to support construction of its ethane cracker and derivatives project, representing a commitment of more than $1 billion in contracts. Cajun Constructors Inc. and James Industrial Constructors will perform site preparation and piling and foundation work. ISC Constructors LLC and MMR Constructors Inc. will perform electrical and instrumentation work. Turner Industries will conduct mechanical, structural steel and piping work. Selection of the Louisiana construction contractors followed Sasol’s appointment of the Fluor Technip Integrated joint venture as the primary engineering, procurement and construction management contractor.
“We are delighted to see this major project getting underway,” said David Conner, vice president of the Southwest Louisiana Economic Development Alliance. “This demonstrates the commitment Sasol has made to our area. We are very appreciative of the support the state, Louisiana Economic Development and Sasol have given us, as we continue to work for a strong and vibrant regional economy.”
Sasol Limited is an international integrated energy and chemical company that leverages the talent and expertise of more than 32,400 people working in 37 countries. Sasol develops and commercializes technologies, and builds and operates world-scale facilities to produce a range of high-value product streams, including liquid fuels, high-value chemicals and low-carbon electricity. For more information about Sasol, visit http://www.sasol.com. For more information about the Westlake project, visit http://www.sasolnorthamerica.com.